June, 1938] The Transportation of New Hampshire Milk 29 



This study has considered only the first of these possibilities, the 

 adjustment of rates to a competitive basis. For unless charges take 

 into account the costs of services rendered, there is no guarantee — 

 even should truck routes be reorganized so that a particular route 

 carries twice as much milk while traveling the same distance as be- 

 fore — that the charge on that route would be reduced and the producer 

 share in the benefit. The possibilities for improving the efficiency of milk 

 collection by route reorganization and reallocation of markets are left 

 to a future publication. 



Reduction in charges, such as these outlined above, would have the 

 same direct effect on producers' incomes as a reduction of production 

 costs or an increase of production etficiency. All producers would not 

 share alike in such reductions since all producers are not now paying 

 rates out of line with the costs of services rendered. Many efficient 

 routes operate and many charges are reasonable and fair. 



In this study several measures have been applied to determine the 

 extent to which rates actually charged coincide with those expected 

 under conditions of perfect competition. These measures showed a 

 very marked divergence of actual charges from those which might be 

 expected were competitive forces active in adjusting rates. It was 

 found to be the rule and not the exception that in groups of routes 

 similar in length and volume differences in average rates charged 

 amounted to 10 cents or more. 



Charges did not vary consistently with any variations in distance 

 traveled, volume carried or other factors generally regarded as infiu- 

 encing costs of truck operation. Individuals distant from market 

 sometimes paid lower rates than those near by. With the exception of 

 a few routes, the rate structure appeared to l3e without plan and to be 

 based more upon custom and bargaining power than upon services 

 rendered. 



When routes collecting the same amount of milk from about the same 

 number of farms and traveling about the same distance have average 

 charges varying from 15 cents a hundredweight to 30 cents a hundred- 

 weight either some rates are too high or some are too low. Though a 

 few instances may be found where rates are below the level necessary 

 to maintain equipment and ensure continued efficient operation, these 

 are not frequent. In the analysis of routes similar in length and vol- 

 ume, many routes falling near the lower end of the range of charges 

 had been in continuous operation for a length of time sufficient to in- 

 dicate that an adequate income was being received from the route to 

 continue it in efficient operation. This being true, it must be concluded 

 that routes with average rates toward the upper limit of the group 

 are charging more than efficient operation would warrant. 



To make more concrete the savings possible by adjusting rates, con- 

 sider the estimate that if only one route out of five reduced its average 

 rate only five cents per hundredweight, a saving of about $12,000 a year 

 would be realized by the milk producers of New Hampshire. 



No attempt has been made in this study to estimate the size of the 

 possible reduction in trucking charges if truck rates throughout the 

 state were adjusted to competitive levels. There is no doubt, however,, 

 but that it would be considerable. 



