44 New Hampshire Experiment Station [Bulletin 332 



an estimate cannot be reduced to refined quantitative terms, but it can be 

 expressed within broad limits, such as "little or no shifting," "slight shift- 

 ing," "considerable shifting," "much shifting," 



These terms are unsatisfactory, but with so many of the factors im- 

 possible to evaluate mathematical!)', or to segregate or keep constant, no 

 object would be served by attempting to use correlation analysis or by 

 attempting to express the results in precise mathematical terms. 



PRICES AND PRICE DIFFERENTIALS ON THE SUPPLY SIDE 

 OF NEW HAMPSHIRE MILK MARKETS 



In this study, prices received on the farm and prices paid at the 

 dealer's plant have been under consideration. Earlier studies have ana- 

 lyzed the cost of country hauling which represents the major part of the 

 differential between farm and plant prices. 



This series of studies has not attempted to collect and publish price 

 data. Not what prices are, but what makes them what they are and how 

 they affect producers, are of primary concern. The studies of milk 

 transportation yielded a method of reorganizing truck routes and market 

 areas in such a way as to reduce charges and showed that present bases of 

 charges are often indefensible and frequently include monopoly elements. 



This final study of the series, after sketching briefly the historical 

 background of milk prices in New Hampshire, shows how in a typical 

 market, prices are not arrived at through any scientific basis, and, as in 

 milk trucking, are certainly not those prices which perfectly competitive 

 conditions would bring about. And yet these markets do not appear to be 

 at all unstable. Apparently, it is normal for producers in New Hampshire 

 markets to receive differing prices for the same quality milk, produced 

 the same distance from market. Some of those differences may be explic- 

 able on the basis of differing seasonality of production, but most of them 

 seem to have no place under condition of perfect competition. Here, as 

 in so many other phases of the milk marketing process, those factors 

 which may be included under the term monopolistic as applied to a par- 

 ticular handler, together with those having to do with personal relation- 

 ships (to some extent these may be included under monopoly elements) 

 are important. 



When markets throughout the state are considered, prices are found 

 to vary much more wideh' than any differences in transportation costs 

 would justify. Here, it appears that prices have not been determined by 

 competitive forces or by conditions of varying degrees of monopoly, but 

 by a third set of conditions, namely, the action of administrative bodies. 

 This is not completely true. Prices are set for milk going into t\\ o classifi- 

 cations; Class I and Class II, but the decisions as to the amount of milk 

 going into each of these classes are made by the handler and the producer, 

 and composite prices are a resultant of administered prices, handlers de- 

 cisions as to the amount of Class II milk which they purchase, and the 

 producers' decisions as to the amount of milk they offer for sale. 



Apparently this condition of varying prices between markets with 

 little reference to transportation costs or other economic factors, is not 

 noticeably unstable. Such price relationships can exist for some time with- 



