18 New HaxMpshire Experiment Station [Bulletin 332 



tance from market. In this chart, producers' prices within a certain dis- 

 tance from market have been averaged and the average is presented in 

 the chart.' 



To show that price differences do not arise entirely, or even largely, 

 from differences in hauhng charges, the latter are also included in the 

 chart. This is done in such a way that if transportation differences ac- 

 counted for all the difference in prices between zones, the sum of zone 

 prices plus transportation charges would be constant for all parts of the 

 milkshed. A glance at figure 5 shows this is not so. Transportation charges 

 to this market tend to decrease with distance from market. 



Nevertheless, there is a general tendency for prices to decrease as 

 distance from market increases. This tendency of prices to decrease with 

 distance does not result from differences in hauHng charges, (which in 

 this market have the opposite effect) but rather from other differences 

 which are to some extent even masked or offset by the hauling charge. 



In many cases, the reason for this difference is that dealers buying 

 from nearby producers tend to carry little or no Class II (surplus) milk 

 and to pay, therefore, on a higher composite basis than those purchasing 

 from producers living at greater distances from the market. This tenden- 

 cy may partly be accounted for by the ease with which producers living 

 close to the market may get into retail distribution should prices received 

 from dealers not be satisfactory. Those living at greater distances perhaps 

 have no such alternative and must, therefore, accept a much lower price 

 before they are forced into either retail distribution or to selling in other 

 markets located at even greater distances from their farms. 



In figure 6 the individual prices received within a given range of 

 miles from market are presented. This chart indicates that even within a 

 group of producers located the same distance from market there are sub- 

 stantial differences in the prices which they received. These differences 

 are particularly evident when several dealers purchase in the same area, 

 but are even present when all the producers deliver their milk through 

 the one dealer. Had more dealers purchased on rating plans the dispersion 

 of prices within an area probably would have increased. 



The data so far presented indicate that rather than being the excep- 

 tion, variation among producer prices is the rule. Undoubtedly, though 

 these prices are calculated on 3.7 milk, some of the differences may be 

 attributable to quality factors, both from a sanitary standpoint and from 

 a butter-fat content. There is much evidence, however, to prove that 

 quality factors by no means account for all or even a large portion of the 

 differences in price. Strength of bargaining power is one factor that may 

 cause prices to differ. Where producers have access to several different 

 dealers, they are more likely to obtain a relatively high price than where 

 a producer has only one possible market outlet. The location of truck 

 routes has much to do with the bargaining position of a particular pro- 

 ducer. If located favorably with regard to one or more truck routes, a 

 producer is in a much more favorable position to bargain for the sale of 

 his milk than if situated at some distance from a route now operating. 

 This factor of location is important in explaining why some producers 

 have much greater bargaining power than others. 



