POOLING BY COOPER ATm: MARKETING ASSOCIATIONS 6 



One of the conspicuous examples of reduced local marketinff ex- 

 penses brou^lit about by farmers tbrou<rh jioolinji is to be round 

 in cooperative cream stations. The cream statii)n is the chief market 

 outlet for cieam in the less intensive dairy sections, where production 

 is usually i-Htlici- siuall for each producer. 



In most of the small towns in these sections, several competing 

 cream stations aie found. Becau.^e of the small volume of business, 

 the expense of handiiuir cream is often relatively hi^rh in each station. 

 In Idaho, Illinois, North Dakota, and several other States, coopera- 

 tive cream stations have been formed by jrroups of farmers who 

 wanted to secure for themselves the economies that mi<jht result from 

 hauilliuf^ a lar<ier airfrre<rate volume of business. Dairymen who 

 formerly patronized several small independent stations have joined 

 toLTCther, and. by pooling their cream, have obtained a volume suf- 

 lifient to reduce nuiterially the ex])ense of local han(llin<^. Tb.e laiTjcr 

 volume enables the station to be better equipped and to render to both 

 the producer and the buyer more satisfactory service. The number 

 of cream stations has been materially reduced by these cooperative 

 oriranizations. For example, at .some points in Idaho when a co- 

 operative cream station had l»een operatiuLT a year, tiie numbei* of 

 independent stations had decreased. 



'J'he (juestion of whether indii'ect expenses shall be allocated accord- 

 in<r to physical unit, value, direct labor, or accordin<; to .some other 

 basis is one that can not be <reneralized upon. Each case must be 

 considered on its own merits. For example, in stoiin«^ cotton, one 

 bale occupies approximately the same space as any other bale, and 

 the storajre rate recofrnizes this fact. On the other hand, there may 

 easily be ii<50 or more dilFerence in the value of two bales of cotton 

 and, were tiie slora^a^ charge based on value, one owner would thus be 

 assessed considerably more than another for the same service — that 

 is, the rental of a definite amount of space. 



' T\ki pooling' of sales ex})ense ])resents a dillerent problem. As a 

 •^'eneral rule, it is probablv easier to sell a InLdi-grade product than 

 one of inferior quality. When selliniij expenses are pooled on the 

 basis of value per unit, the hi<;h-jj:rade v>i"f>duot is payin«r the hi<:hest 

 char<re. Is this e<|uitable to all meml>ers, or does it tend to i)enalize 

 the membei's who deliver a hi^jrh-cjuality product? Pooling' the sell- 

 in<:j expense on the basis of jihysical imit tends to place a hiLdicr rela- 

 tive char<j:e on the lower «;rad('s. This tends (o penalize tht> lower and 

 inferior ^rrades — which in nuiiiy instances may be justified, as the 

 inferior «rrades ai'e usually disturbing factors in the market (or in the 

 jjrice situation). This illustrates the care with which i)lans for pool- 

 iujr marketing expenses must be worked out before oeinjr j)Ut into 

 effect, and the danirer of <reneralizin«; as to such methods. 



It is believed that |)oolinfj: of actual expi'uses, in short-time pools, 

 is wholly impracticable sinci' many expenses can not be determined 

 by (he end of the poolirij; period, pai'tly because they aic not in- 

 curred for a ))eriod which coincides with the poolin<; jieriod. Under 

 such conditions it is j)referable to fix a definite charj^e |)er unit, which 

 will yield an amount sufficient to cover the costs of performin*; the 

 services, with the thou^dit that any surplus inconje will be returned to 

 members at the end of the year as a patron i;;e i-efund. 



