42 New Hampshire Experiment Station [Bulletin 332 



control, operated for approximately 29 cents per hundredweight as com- 

 pared with 23 cents per hundredvv^eight trucking charge on milk from 

 Jefferson, 



This movement of dealers away from Jefferson left a number of the 

 producers in that area without a market and protests were made to the 

 Control Board. Without authority to enforce minimum prices in Maine 

 the Board was powerless to force dealers to continue buying milk from 

 Jefferson producers. It did, however make certain price concessions to 

 attract dealers to buy milk from that area. These efforts were not very 

 effective but probably did prevent Berlin dealers from dropping a still 

 greater number of their Jefferson producers. 



On balance, producers in Jefferson were hurt, rather than helped, 

 by Control Board activities during this period. While a handful may have 

 received better markets because of the price schedules set up by the 

 Board, many of them lost their markets entirely. 



This incident demonstrated that a state control agency cannot set 

 producer prices within the state appreciably above those at which milk 

 can be obtained from an area outside its jurisdiction, without having a 

 shift away from the controlled area into the uncontrolled, with resultant 

 loss of market to producers within the state, 



CONCLUSIONS REGARDING PRODUCERS' 



MARKET RESPONSES TO PRICE 



While only two areas where markets compete for milk have been 

 studied in detail, these two were carefully selected and the effects of 

 certain factors upon producers were found to be similar. Accordingly, 

 it is possible to generalize from the conclusions obtained in the study of 

 these two areas to other areas of the Northeast. 



A differential in prices of one competing market over another, will, 

 if continued for a considerable length of time (several years) arouse a 

 desire on the part of some of the producers in the lo^\'er priced market 

 to shift to the higher priced market. Factors other than price, however, 

 may be sufficiently potent to delay, or offset, or even reverse the action 

 initiated by the price differential. For example, prices received by pro- 

 ducers shipping to a particular market often are not available to new pro- 

 ducers. In fact, frequently, producers wishing to begin shipments to a 

 market may be unable to receive any price— the buyer may have sufficient 

 milk and may refuse (or be unable) to accept additional quantities. 



To the extent to which buyers are capable of exercising absolute 

 control over the amount of milk they purchase, price differentials be- 

 tween markets are of secondary importance. This is especially true where 

 control agencies set, and enforce, minimum prices for Class I and Class II 

 milk, and consequently prevent price competition between handlers for 

 milk going into a particular use. Composite prices within the market may 

 still differ but with control over class prices, handlers may, by regulating 

 their purchases of Class II milk, exercise great influence over the com- 

 posite price which they pay. 



Conditions of sale such as these are far from those usually though of 

 as "free competition," Producers are not able to sell an unlimited quantity 



