4 MISC. PUBLICATION 14, U. S PEPT. OF AGRICULTURE 



Normal pri'-e fluctuations in some commoditios (wheat, for instance) 

 may not cause serious risk; but price fluctuations are soniotimes very 

 wide, and then the risk becomes loo <;reat for a sin«rl(' farmer to bear. 



Other lislvs arise from delerioratiou of the product wiule in the 

 proct'ss of bein^ assoinltled and prepared for market, while in transit 

 to nuirket, and while in st()ra<;e. Tliere are also una\()idai)le hnancial 

 risics, .such as credit losses, transj)ortation losses, and many others. 



These marketing; risks are especially important when the producer 

 mai'kets as an indivitUial. The individual producer who assumes 

 these risks may obtain at times considerable profits or he may suiter 

 heavy los.ses. These operations partake of the nature of specula- 

 tion, and the individual farmer does not often have the necessary 

 infornuititm to enable him to specidate with his own products anil 

 compete satisfactorily ^^ith professional traders. In a cooperative 

 association these market iuL' risks and losses, which nuiy be incurred 

 while the protiuct is in the hands of the association, are pooled in the 

 sen.se that profita and losses are sj)r(>ad amon*; all members in pro- 

 portion to the jiroducts contributed by each UKMuber. 



POSSIBILITY OF MARKET EXPANSION 



Several coojieratise a.s.sociations have already demonstrated the 

 value of rational markel-e.\i)ansion policies. For instant-e, the Cali- 

 fornia Fruit Cirowers Exchaiifre has widened its markets throu<rh 

 the estalilishment of brands and the development of recognition and 

 jireference for the product. Cooperative associations representintr 

 the walnut growers, cranberry growers, egg producers, raisin grow- 

 ers, apple growers, butter and cheese producers, and numy others 

 have demonstrated the po.ssibilities of group action in elFective mar- 

 ket development. Few farmers, as individuals, can atl'ord to under- 

 take market development because of the expense involved and the 

 lack of sufRcient supplies to nudce the exi)l()itation jiolicy i)eruuinent. 

 Here, again, the pooling by a large nund)er of growers of the 

 exi)ense, risks, and other featui'es invohed in market exjjansion 

 makes possible a program for widening the market for their prod- 

 uct which is of benefit to the grower, but which would be prohloitive 

 were it undertaken by him individually. 



POOLING MARKETING EXPENSES 



There has been a tendency to grou|) cooperative associations ac- 

 cording to whether they pool sales returns or merely operating 

 ex|)enses. Practically every association might be included in the 

 latter group. In fact, most associations pool sales returns more or 

 less completely. Although these two nnijor pooling practices are 

 identical in piinciple, they dilYer somewhat in their mechanical 

 ap]>lication. 



In mechanical of)erations of marketing, savings accrue from the 

 as.M'mbling of ordinarily acce))(ed commercial imits. For instance, 

 gi-owers wlio have tlieir commodities assembled, gi-aded. processed 

 for shipmeiif, stoi-ed. linanced. smd ti'ansported in qunntities which 

 permit economical handling elfect definite economies in marketing 

 expense. 



