THE LOCAL STRUCTURE OF MILK PRICES 

 IN NEW HAMPSHIRE MARKETS^ 



By ALAN MACLEOD 



The marketing of milk in the United States, once involving only a 

 simple exchange between producer and ultimate consumer, has become 

 progressively more intricate and complex, until today it represents one 

 of the most complicated processes of assembHng, distributing, and pricing 

 undergone by any agricultural commodity. 



As milk is produced more widely than any other agricultural prod- 

 uct and is regarded as a food essential to proper nutrition, the way in 

 which it is marketed affects almost everyone. Inefficiencies, either in the 

 physical process of marketing or in the pricing of the milk at the various 

 stages of its distribution, increase marketing costs and hence must either 

 increase the cost of milk to the consumer or reduce the price received by 

 the producer, or both. 



These inefficiencies may be of two kinds: (1) physical inefficiencies 

 in the use of equipment, personnel, etc., and (2) pricing inefficiencies 

 which prevent smooth and rapid functioning of price-making forces in 

 the market. 



Within the past decade there has been a tremendous increase in regu- 

 lative activity affecting milk marketing. For many years, agencies con- 

 cerned with the quality and healthfulness of milk produced and sold have 

 exercised authority over conditions of production and sale, but only 

 recently has milk received the attention of regulative bodies primarily 

 interested in controlling prices and conditions of sale. In New England 

 there are now milk-control agencies in each of the six states and in addi- 

 tion the Federal Government has issued orders in Boston and several 

 secondary markets. 



These agencies endeavor to set and enforce milk prices. A good deal 

 of variation exists in the methods used and in the extent to which prices 

 are controlled. Federal control, for instance, limits attention to the prices 

 which distributors pay for milk and the allowances which are made for 

 performing the various services necessary to assemble milk from the farm 

 to the city plant. State control agencies have followed the practice of 

 setting resale prices as well as producer prices. There is now no market 

 of any size in New England in which both the producer and resale prices 

 are not administratively determined. 



Another development which has affected the marketing of milk has 

 been the increased concentration of distributive business in the hands of 

 large organizations. In most major milk markets, one or two concerns 

 now handle a large share of distribution. This concentration of power 

 has also progressed far in the case of producers, who in many markets 

 have formed powerful cooperative associations for marketing their milk. 



^ This is a New Hampshire publication in the New England-wide milk marketing study, which is 

 sponsored by the New England Research Council. Acknowledgment is made to Mary L. Geraghty 

 for assistance with tabulations and to the New Hampshire Milk Control Board, the New Hampshire 

 State Department of Agriculture, representatives both of cooperative associations and proprietary 

 companies, and farmers who supplied information for this study. 



