June, 1941] 



Local Structure of Milk Prices 



21 



shown in March, 1939, between the Boston market and other markets, 

 was as typical as if any other recent month had been taken for purposes 

 of this comparison. 



Figure 7 shows that in a "normal month" there exist a number of 

 different prices and that a range in prices of over 50 per cent is not un- 

 usual. Had other months besides March been considered, this range would 

 have been found to have changed— the extent of the change depending 

 on three factors: (1) the Class I prices in the various markets; (2) the 

 Class II prices, and (3) the proportion of Class I and Class II milk in the 

 different markets. 



Table VI. Average Prices Paid for Milk at Delivery Points in New Hampshire, 



March, 1939 



These factors do not necessarily work in the same direction in differ- 

 ent markets. This is illustrated by figure 8, which shows the relative prices 

 paid at the plant for 3.7 per cent milk sold to three markets and delivered 

 •at North Haverhill, East Haverhill, and Berlin, N. H. (The three markets 

 are respectively, Boston, Mass., Manchester, N. H., and Berlin, N. H.) 



Two markets can have the same Class I prices and the same Class II 

 prices and still exhibit differing seasonal movement of prices. That mark- 

 et which customarily carries the largest proportion of Class II milk is 

 likely to have the widest seasonal movement of composite prices. Two 

 factors are largely responsible for this. They are: first, the tendency of 

 the market which normally carries more Class II milk to be better equip- 

 ped to handle Class II and so receive more than its proportionate share of 

 any seasonal increase in milk production, and second, the tendency for 

 Class II prices to vary inversely with the production of milk, thus adding 

 to the seasonal swing of the composite price. 



Considerations of theory would suggest that where a number of small 

 secondary markets are located in the milkshed of a large primary market, 

 prices at various points would bear some relationship to the distance from 

 the primary market, even though the milk is sold in one of the secondary 

 markets." 



Subject to the qualifications discussed earlier in this section, prices 

 in March, 1939 as shown in figure 7 represent an attempt to show relation- 

 ships between markets. The effect of location on price is shown distinctly, 



1 Approximate, often includes two or more plants in same neighborhood. 



iSee Gaumnitz, E. W., and Reed, O. M., "Soma Problems Involved in Establishing Milk Prices," 

 U. S. D. A. 1937 



Cassels, John M., "A Study of Fluid Milk Prices," Harvard University, 1937 

 Black, J. D., "The Dairy Industry and the A. A. A.," The Brookings Institution, 1935. 



