6 MISC. PUBLICATION 14, U. S. DEPT. OF AGEICULTURE 



POOLING SALES RETURNS 



One e.;sential result to the grower, among the other advantages 

 that may accrue from the pooling of sales returns, is the averaging of 

 fluctuations in luarlvct prices. An equitable distribution of sales 

 returns to growers involves at least three essential considerations: 

 (1) Pooling on the basis of ([Uality, (-) pooling lime, or leugtli of 

 the p(K)ling period, and (3) pooling area, or the area to be included 

 in the pool. 



ON THE BASIS OF QUALITY 



The aim of pooling by quality should be to reflect back to the indi- 

 vidual grower the differentials in price which the market affords for 

 the various grades of his product. The grower who, by better 

 selection of his seed, better cultivation, and better harvesting and 

 handling, delivers a superior ))roduct for market should have the 

 benefit of the market-value dillerentials, as reflected in such better 

 l)rices as the market is willing to pay. Tii(> determination of the 

 market-value differentials on products handled by cooperative as.so- 

 ciations, however, should be given special attention, as these better 

 prices for superior products serve as a stinudus to better production 

 practices. 



Cooperative as.sociations with seasonal pools are often confronted 

 with tlie problem of determining market difFirentials between grades 

 and varieties of the same conunodity, in order to reflect back to the 

 gnnver e(|uitable normal price dill'crentials Ijetween the difFcrent 

 qualities of product, under varying market conditions. This prob- 

 lem arises because the year-to-year changes in the relative supply of 

 different grades of the commodity may upset usual price differen- 

 tials, so that the average annual price of a low-grade pool for a 

 particndar sea.son may be ecjual to that of a high-grade pool because 

 of sale of one grade at one period of the season and another grade 

 at a different time, following a radical change in prices. This 

 situation also arises where, during a sliort period of relatively high 

 market prices, larger quantities of low-priced grades are being sold. 

 Such price situations reflect short-time changes in demand. They 

 do not reward the producer who plans his operations to meet long- 

 time needs, but tend to place a temporary ))remium on haphazard 

 production. In other words, so far as market differentials ])ermit, 

 sales I'cturns to growers should, over a long perioil of time, reflect 

 the extra cost and troui)le incuired by the jiroducer of high-quality 

 products. 



The obvious accounting procedure for reflecting to growers the 

 value of tiu'ir products would be to keej) separate the expenses and 

 returns for each grade. This is im|)racticable for several reasons: 

 (1) Some expenses, such as rent, advertising, and salesmen's salaries, 

 are incurred for several grades jointly and any division of these joint 

 exjK'nses nuist be arbitrary. (2) The sale of two or more grades is 

 often made at a flat price.' The buyers pay a price slightly in excess 

 of the value of the lower grades as a means of obtaining the better 

 grades at a .slightly reduced price. (3) Tiie keeping of records of 

 expenses and income for eacii quality handled is very costly and 

 involves at all times a small measure of arbitrary division. 



