ii8 THE MARKETING OF WHOLE MILK 



however, why farmers should not inquire why the margin 

 is as wide as it is in the case of their commodity, nor why 

 they should not attempt to narrow it. They are interested 

 in selling as much of their product as they can produce. 

 They believe that a narrower margin would mean lower 

 retail prices and a consequent increased demand, as well 

 as higher farm prices, so that a reduced cost of distribu- 

 tion would directly benefit both them and the con- 

 sumer. 



Furthermore, they are justified in proposing to take 

 up certain phases or all of the distribution, if they think 

 that by doing so they can reduce the margin between 

 themselves and the consumer. 



In much of the discussion the terms "cost" and 

 "spread " are confused. By cost of distribution is meant 

 the expense incurred in moving the product from farm to 

 consumer. It is usually thought of as the difference be- 

 tween what the producer gets and what the consumer pays 

 less the dealer's profit. The latter is commonly believed to 

 be a big item. The term "spread'* has recently come into 

 use to designate the difference between the dealer's selling 

 price for a given unit and the price paid the farmer. This 

 difference cannot be considered synonymous with the term 

 "cost of distribution." For example, a milk dealer sells 

 a part of his milk in quart bottles to retail trade, a part 

 to retail trade in pint bottles, a part to the wholesale trade 

 in quarts and pints, and some to the wholesale trade in 

 bulk, each going at a different price. Obviously the spread 

 or difference between his retail price and the quart price 

 paid to the farmer does not measure his profit nor his true 

 margin. The true margin can only be ascertained by 

 properly weighting the amounts sold in the different ways. 

 Table XX illustrates this point. 



