June, 1941] Local Structure of Milk Prices 13 



by 1917, for in that year it was stated that "no uniform price basis, upon 

 which payments for milk and cream are made, is in vogue in New Hamp- 

 shire."^ A number of different methods of payment then in common use 

 were outlined, varying all the way from a flat price regardless of quality 

 to complicated systems of premiums which sometimes included a "good 

 will" item. 



"The history of price plans in the Boston market is particularly in- 

 teresting, not only because almost every type of price plan has been tried 

 cut at one time or another, but because they were worked out some years 

 earlier than in any other market."" This continuous series if changes in 

 price plans used by the Boston market has continued to the present. 



Local markets in New Hampshire have tended to use either a flat 

 price plan or a method of payment based upon the use of the milk, though 

 variations of both these methods have been frequent. At the present time, 

 most of the larger dealers who purchase milk in New Hampshire for sale 

 either in Boston or in secondary Massachusetts and New Hampshire 

 markets, buy on a use basis. Ordinarily, each dealer pools his purchases 

 and pays a uniform price for milk of 3.7 per cent butter-fat to all his 

 regular producers. Boston dealers are included in a market-wide pool and 

 all producers shipping to that market receive a uniform price (subject to 

 location, butter-fat differentials and association dues). Many of the small 

 New Hampshire dealers, most of whom distribute in local markets, 

 purchase on a flat price basis of so much per quart. 



Prices Received 



Average price series are not trustworthy because of the varied meth- 

 ods of payment used, and in earher years, because of the scarcity of price 

 quotations. But some indication of price movements is contained in Table 

 V and figure 3. 



This series indicates that following a period of relatively stable prices 

 in 1910-16, during which about $2 per hundredweight was received for 

 milk sold at wholesale, a sharp increase occurred until in 1920 a peak of 

 $3.82 was reached. The next year prices dropped, but not to anywhere 

 near their pre-war level, fluctuating between $2.55 and $3.05 until 1931 

 brought a further drop to $2.14. The last ten years have seen prices keep 

 close to the $2.00 level, or shghtly above pre-war. 



PRODUCER PRICE RELATIONSHIPS WITHIN A SINGLE MARKET 



In attempting to present milk prices in New Hampshire, even at a 

 particular point of time, several problems present themselves. First of 

 all, within a commodity such as milk which is purchased on different 

 price bases, one is faced with many different choices. If interest is prima- 

 rily in the operation of distributors, perhaps attention should be focused 

 upon Class I and Class II prices with less attention paid to composite 

 prices. Where producer prices are the prime interest there would seem 

 to be more virtue in dealing with composite or base and surplus prices 

 than with Class I and Class II prices. Furthermore, as at the present time, 



1 Davis, opus cit. 



~ Bacon, Lois B., "Institutional Factors Affecting tlie Marketing of Milk in Boston," Thesis pre- 

 sented to Radcliffe College, 1934. 



