18 MASS. EXPERIMKXT STATION BULLETIN 304 



Cost of Distribution 



In the case of most of the distributors it was extremely difficult to determine 

 the exact cost of using trucks or other vehicles for the distribution of milk. No 

 accurate accounts were kept, and the vehicles were used for other business and 

 family needs. For the purpose of this study, the cost of running a truck or auto- 

 mobile was assumed to be 6 cents a mile, inasmuch as this figure was most fre- 

 quently mentioned by the distributors. (See also Bulletin 272 of the New Hamp- 

 shire Experiment Station.) 



The regulations in all three markets required every distributor to have a 

 special milk room, built according to certain specifications, for the handling of 

 milk prior to distribution. These rules, however, could not be enforced very 

 strictly in the case of man}- small distributors who, complying on the whole with 

 the necessary safeguards in the handling of milk, often had very rudimentary 

 provisions for this purpose. Mainly for this reason the cost of depreciation and 

 interest on investment per quart of milk for small distributors was lower than for 

 those handling 200 quarts or over. The latter group ordinarily had more expensive 

 equipment and, in several cases, pasteurizing plants. Neither were the small 

 distributors at a disadvantage in their average current expenditures, including 

 the cost of bottles, caps, ice, advertising, and other items involved In selling milk 

 direct to the consumer. The higher cost of handling milk by small distributors 

 was caused by the expense of delivery, where a partially loaded truck was used 

 to carrv milk over an extended route. The highest cost of deliver)' was found 

 among those handling under 50 quarts and the lowest in the group selling between 

 150 and 199 quarts. A slight increase in the cost of delivery per quart was found 

 in the group selling over 200 quarts, largely because the amount of milk handled 

 in some cases involved the use of two vehicles, not fully loaded. 



Milk Prices, Cost of Distribution and Producer-Distributors 



For 57 producer-distributors whose cost records were obtained in the three 

 areas, the average cost of distribution was 1.3 cents per quart, not including the 

 cost of labor. (Table 15.) Except for a few large producer-distributors, the milk 

 business of these operators was carried on without any hired labor; and in their 

 decision to enter the distributing business the main consideration was the differen- 

 tial between the price paid by the dealers and that obtained in the retail trade. 

 The average price paid to the producers in the Gardner market was 4.1 cents; 

 in Attleboro, 6 cents; and in Newburyport, 4.8 cents. If to these alternative 

 prices are added the average expenses involved in distribution, the total cost of 

 milk to the distributor would be 5.4 cents in the Gardner market, 7.3 cents in 

 Attleboro, and 6.1 cents in Newburyport as compared with much higher pre- 

 vailing retail prices in these markets. 



In all these markets, therefore, and especially in Gardner, there was consid- 

 erable inducement for producers not dependent on hired labor to enter the distrib- 

 uting business and to obtain customers even by making a reduction in the re- 

 tail price. It is not to be assumed, however, that every producer is in a position 

 to begin the retailing of milk exclusively on the basis of the advantage in price 

 and availability of the necessary labor. There are many limiting factors both 

 from the standpoint of adequate equipment and ability to sell milk at retail in 



