June, 1941] Local Structure of Milk Prices 39 



not readily apparent, and it seems likely that if any differences exist they 

 are largely psychological differences, some producers being more prone 

 to try new markets than others. 



The net change in the proportion of Jeft'erson producers shipping 

 milk to Berlin, has been shown in figure 13. As in the case of Haverhill, 

 the absolute figures are unimportant, being dependent upon the arbitrary 

 limits selected for the area, but the relative change is significant. Contrary 

 to Haverhill, a net change over the whole period of 11 per cent or a 

 change from 19 per cent to 30 per cent was observed. 



No attempt has been made to establish a relationship between the 

 relative advantage of Berlin over Boston and the per cent of producers 

 shipping to Berlin in a particular month. Milk producers shift markets 

 so seldom that it is unlikely that they would respond to the differential of 

 a particular month. Nor have the effects of other factors than price been 

 eliminated. 



However, it may be that a price differential continued over a long 

 period of time may have a cumulative effect on producers, and there 

 seems no doubt but that over the eight years, the sustained net price ad- 

 vantage for Berlin has brought about the shift to that market. 



This study has not answered the question of how long a differential 

 must be in effect before it produces a shift. Presumably the bigger the 

 differential, the shorter is the period that is required. While a comparison 

 of the two series by yearly averages, with differing time lags, might be 

 made to yield a positive correlation, such a correlation may be largely a 

 mathematical accident, because, to use one example, in 1935-36, when the 

 price differential was high, new producers were not taken on by the Ber- 

 lin market, and a number of old producers were dropped. 



Another, and more probable explanation of shifts between markets' 

 is that following a price differential which has been sustained for some 

 time, a reserve of producers is created who, given the chance, will shift 

 to the market with the higher price. Institutional factors, however, may 

 retard or even prevent such adjustments to price being made. Other 

 factors than price must not be lost sight of, as they have influenced pro- 

 ducers to ship to particular markets. Consideration such as financial se- 

 curity, methods of sale, personal loyalties, etc., have been important. 



However, in spite of many of the factors other than price working 

 in the direction of influencing producers away from the Berlin market, 

 the percentage of producers selling to Berlin has increased from 19 to 30. 

 This indicates the importance of price differentials in determining the 

 channels through which milk flows to market. 



Difficidties of Price Fixing by a State Agency in a Market Near a 

 State Line 



Before leaving the consideration of the Jefferson area, a part of the 

 period under review can be made to yield information of value to control 

 agencies, as well as to shed light on the effect of prices on milk supply. 



1 See page 3L 



