Types and Market Classes of Live Stock 67 



Averages of Swift and Company's cattle, beef, and by-products operations, for fiscal 

 years 1915-1922, ending November 5^ 



Cost of Total 



Fiscal live Beef By-product expenses Profit 



years animal proceeds returns including and loss 



freight 



1915 $72.49 $63.28 $18.58 $ 7.73 $1.64 



1916 73.68 63.98 19.08 7.73 1.65 



1917 84.45 68.97 24.09 7.32 1.29 



1918 92.70 81.45 22.06 9.79 1.02 



1919 102.82 88.21 25.59 11.68 .70 loss 



1920 93.85 86.31 21.17 13.69 .06 loss 



1921 67.53 75.32 8.51 15.17 1.13 



1922 64.72 67.25 13.45 13.46 2.52 



Note that high freight rates affect the beef producer in two ways. 

 They not only increase the cost of marketing cattle, but they also 

 lessen the price the packer can pay for cattle after they reach the 

 market. The packer ships carlots of dressed beef and other products 

 from his plants to his branch houses located in all parts of the country. 

 High freight rates on dressed beef shipments operate to increase the 

 cost of beef to the consumer and to decrease the price paid the producer 

 for the live animals. Higher costs to the consumer tend to lessen beef 

 consumption. Thus, when freight rates are high, the producer is con- 

 fronted by higher marketing expenses, a lower price, and a lessened 

 demand. Freight rates are controlled by the Interstate Commerce 

 Commission. The packer is protected against high rates to a con- 

 siderable degree because his freight bill is passed along to producers 

 and consumers. The consumer has no recourse except to eat less beef, 

 and the producer has no recourse except to discontinue beef production 

 if it proves unprofitable. 



Do packers control prices?— In the foregoing paragraph the writer 

 does not intend to intimate that the packer can at will mark down the 

 price of cattle and mark up the price of beef. There is competition 

 among packers and there is competition between packers and local 

 butchers who do their own slaughtering. Even assuming, as has been 

 charged, that some of the large packing companies are combined to 

 control prices, there is a narrow limit beyond which they cannot go 

 without injury to themselves. If they fix the price of dressed beef too 

 high they greatly lessen beef consumption. If they fix the price of 

 live cattle too low they greatly lessen production. In either case they 

 lessen the volume of their business, and volume of business is the most 

 important factor in the welfare of the large packing companies. 

 Packers are equipped with immense plants and employ large numbers 

 of people. In order to make a profit they must keep the wheels 

 turning; they must have a constant and adequate supply of live animals 

 and a constant outlet for beef. Fully 95 per cent of the beef produced 



1 Swift and Company Year BcJbk, 1923, p. 16. 



