COST OF DISTRIBUTING MILK. 39 



The Producer as a Distributor in Comparison with the Dealer. 



Any comparison of costs that fails to recognize the difference between 

 the business of the producer who distributes his own milk, or his owti milk 

 plus some purchased from his neighbors, and the dealer who buys all the 

 milk he distributes, is surely inadequate. The data in Tables XI and XII 

 are inserted to exhibit this comparison in some detail. The records of 

 four producers and five distributors whose cost accounts were kept with 

 unusual care are chosen for this comparison. As usual the figures on cost 

 per quart (Table XI) are based on milk sold at retail. From the total cost 

 of doing business 3 cents per quart were deducted for retail cream sold 

 and one-half cent per quart for milk delivered at wholesale. 



The most striking reflection in the whole comparison is the great differ- 

 ence in costs as between individuals whether producers or dealers. Pro- 

 ducers' retailing costs run from 2.51 to 1.67 cents per quart, and dealers' 

 from 2.95 cents to less than half that much, or 1.45 cents per quart. Such 

 wide variations between individuals indicate the fruitlessness of drawing 

 any but the most general conclusions from the final averages. It is evident 

 that much remains to be done in the study of economical and efficient 

 methods of distribution and in profitable investment in equipment and 

 buildings. 



1. According to these figures, the average producer is able to distribute 

 retail milk more cheaply, it costing him 2 cents per quart against 2.16 cents 

 for the dealer. An analysis of the figures, however, shows that the dealer's 

 investment is about 12 per cent, greater than the producer's per 1,000 

 quarts of milk handled. There is some difference in maintenance, but on 

 the whole this is in favor of the dealer. 



2. The labor bill of the average dealer is noticeably greater per quart, 

 notwithstanding he is near his market and saves in time. This is indicated 

 by the fact that the dealer retails 42 quarts per mile to the producer's 20 

 — more than double. The dealer almost always has the advantage of 

 shorter delivery routes. The producer must often travel several miles 

 from his farm before he reaches his first customer and retrace this distance 

 after his load has been delivered. In this instance the producer averaged 

 12f miles per wagon; the dealer, only 6 miles per wagon. 



3. The producer has the advantage in depreciation and working capital. 

 In other words, the dealer invests more in his equipment and buildings, 

 naturally increasing the depreciation and circulating capital accounts. 

 The items of shrinkage and bad bills are significant. These two items are 

 the most important of the overhead costs of the dealers here noted. As 

 a whole the overhead charges and current supplies, i.e., the circulating 

 capital, of the dealers per 1,000 quarts handled are more than 60 per cent, 

 higher than those of the producers. 



4. The dealer gives better service in pasteurizing and clarifying and his 

 labor account is also somewhat reduced by use of better labor-saving devices 

 for washing, filling, etc. 



