areas in Massachusetts currently adopting tank assembly, some appreciation 

 of the additional assembly costs for New Hampshire is apparent. 



Tank Assembly for Large Producers 



By a process of selection a dealer could develop a tank-truck route for 

 the larger producers. This would isolate the lower cost segment of the assem- 

 bly job and leave a higher cost for assembly of milk from producers too 

 small to justify a farm tank. 



Any reduced costs of assembly by tank made possible by a route com- 

 posed of large-size producers could be passed on to those producers, or 

 it could be used to subsidize the assembly of smaller producers. The policy 

 followed would depend on the ownership of the assembly facilities. If assembly 

 were hired, then the smaller producers would probably have relatively higher 

 hauling charges for their milk. This would either provide incentives for in- 

 crease in size of herd and the purchase of a farm tank or would further 

 encourage small producers to go out of business. There would be short-term 

 problems of haulers' rates and producers' returns which would have to be re- 

 solved if tank assembly wexe offered by a dealer. 



What Size of Tank Truck? 



The minimum size farm tank of 60 gallons as currently available from 

 manufacturers places certain price limits to its use at less than capacity as 

 shown in Charts 1 and 2. For example, a 2-can producer would use only 

 a third of the tank capacity which would cost as much as 70 cents per 

 hundredweight payable over a 2-year period, or nearly twice that much 

 if payable over a 1-year period. 



Similarly, the assembly of milk by tank truck is justifiable only if sav- 

 ings over the present method are apparent. Such a route is limited to those 

 producers operating farm tanks, and the cost of assembly will vary with the 

 distance travelled and the proportion of capacity in use. 



The variable costs of gasoline, tires, and repairs will not likely differ 

 greatly from the van-type truck of comparable size now in use. The major 

 difference will be in the capital cost and depreciation charges and probably 

 labor. The tank and the chassis will be depreciated over different lengths of 

 time and the costs can again be expressed per hundredweight of milk. The 

 larger the tank truck or the more the capacity of a tank is utilized, the lower 

 the unit cost of operation per hundredweight of milk hauled. This re- 

 emphasizes the importance of acquiring a tank truck which will provide no 

 more nor less than the necessary capacity. 



To facilitate this decision Chart 4 relates the pounds of milk picked 

 up to the price of truck tanks and the estimated cost per hundredweight per 

 day. An assembly load of 43 hundredweight, using a 500-gallon tank to ca- 

 pacity, would cost about 6 cents per hundredweight of milk per day. The 

 cost of hauling the same volume of milk would increase as the tank size in- 

 creased — for example, 7.5 cents per hundredweight per day for a 750-gallon 

 tank, 11 cents for a 1,650-gallon tank, and 15 cents for a 2,500-gallon tank. 

 An increase in the size of tank will lower unit costs, however, when used to 

 capacity. As the size of tank increases a larger truck chassis is required. 

 Therefore unit capital cost may not decrease evenly as the size of the tank 

 increases to the same extent that it would if the tank were the only item of 

 expense. 



13 



