]\lay, 1933] Efficiency Studies in Dairy Farming 9 



Basic Rating* 



Differences in rating account for a large part of the variation in 

 milk prices received by individual farmers. All but nine of the 38 

 farms ^vere under a rating system. The 16 Grade A producers had 

 been on a special rating plan for sonic time. Most of them had at an 

 earlier date established ratings somewhat comparable to the capacity 

 of the farm, and had been able to maintain them l)y producing as 

 much as the requirements during the rating period. 



Thirteen of the Grade B producers had been changed during the 

 year of this study from a modified surplus to a basic rating plan. 

 Their ratings for the calendar year 1932 were based on the average 

 milk production for September, October and November of 1931, and 

 the average production for the same months of the previous year. 

 Since their production was low during this season and since the milk 

 companies carried large surpluses, the Grade B producers had low rat- 

 ing in comparison to the size of the farms. 



After the establishment of the rating, it cannot be raised except by 

 the production of a large surjilus during the fall months. In general 

 the Grade B men with low ratings could not profitabh' secure better 

 ones, but the more fortunate Grade A producers with good ratings 

 could maintain them. 



While the rating has a very great effect on the price received for 

 milk, there is very little the individual producer can do except to shift 

 seasonal production. The purpose of the rating ])lan is to even up 

 production, and probably over a period of years the individual farmer 

 will be ahead if he plans to have a more constant and even output 

 throughout the year. 



Seasonal Production 



As shown by Figure 1, both fluid milk and surplus ]:)rices were 

 higher from September to November, 1931, than for the rest of the 

 year. The lowest prices of the year occurred from January to March, 

 1932; consequently the average price received by an individual farmer 

 depended on the seasonal variation in jiroduction. 



The Grade A producer with a production close to his rating and 

 carrying very little surplus, was able to secure a high average price 

 for the year. The Grade B producers carried a surplus throughout 

 the entire year, and their average composite price for 3.7 per cent milk 

 was lower than the average for the Grade A men. Where production 

 was very uneven and a considerable surplus was marketed, it was an 

 advantage to have the large production come at the season of higher 

 prices. In the case of a few producers who had large production dur- 

 ing the low price season, the annual returns per 100 pounds of milk 

 were lower than average. 



The Grade A producers have been encouraged to eliminate the wide 

 seasonal variation in production. The incentive has come through a 



*A rating of 100 pounds means that the daiiyman would receive a fluid milk 

 price for each fifteen day average of 100 pounds of milk delivered, but only a 

 surplus price for amounts over that. 



