Page Sixteen 



THE I. A. A. RECORD 



Juncy 1931 



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Co- operative rroducc Marketing in Illinois 



By Frank Gougler " /:. v ■''^■■■■:'--- \V::. .:.:>/^:^;•^.^^, ■■.,/'' -.- 



THREE reasons Illinois producers of now operating with several more get- mon stock. The "B" stock has no finan- 



butterfat have undertaken to mar- ting ready. As each pool was organized cial interest. County associations in 



: ket this commodity co-operatively may it did its own shopping around to find like manner were incorporated with 



be stated as follows: a buyer for the pooled cream. Early in 2,000 shares of class "A" stock at $25 ; ",.:; 



1. Because they felt they were not 1928 it was found necessary to improve per share 7% cumulative dividends, 

 getting enough for their butterfat in this method of selling to give every 2,500 shares of class "B" stock of no 

 relation to the Chicago butter market, creamery an opportunity to buy pooled par held by the Illinois Produce Mar- 



2. Because many producers were dis- butterfat. A plan was therefore devised keting Association, and 1,000 shares of 

 satisfied with weights and tests received of selling to the high bidder. common stock. The above provisions 

 from some of the creameries buying Asked for Bids are for large counties. Small counties 

 butterfat in the state. " During the organization period of a are organized with only one-half the 



3. Because producers recognized in- pool, careful thought was given to the number of shares in each class, 

 efficiency in the method of assembling number of creameries that might be The Illinois Produce Marketing Asso- 

 butterfat where more and more stations interested in purchasing the butterfat. ciation is governed by fifteen director's, 

 compete for the small volume of cream All creameries that could possibly be This board, in co-operation with the I. 



. coming into a given town. interested were invited to submit bids. A. A., devised the present plan of sell- 

 Before co-operative produce market- They were asked to bid for the butter- ing butterfat, which provides: 

 ing was launched, butterfat was being fat for a period of one year paying on "What Plan Provides 

 purchased from three to six cents under the basis of the Chicago market on the 1. That the initial price paid for but- 

 the Chicago market, the margin being association's weights and tests. - This terfat handled by pools be uniform 

 wider in southern Illinois than in north- plan was followed until the spring of throughout the state regardless of the 

 ern Illinois due to keener competition 1930. At that time representatives of location of the pool, 

 in the latter section and a poorer quali- the processors pointed out objections to 2. For protecting the operating mar- 

 ty of the product in the southern coun- the plan. These were: . gin of the pool. 



ties. The operating costs of private 1. The creamery buying a pool of 3. For division of profits made on 



creaqi stations before pools were organ- cream had no assurance that they would butter manufactured from pooled but- 



ized ranged from four to six cents per have it more than one year. This being terfat between the manufacturer and 



pound. Co-operative cream stations the case, an individual creamery might producers. 



recognized that this cost could be re- lose a number of pools very suddenly. 4. For administering the plan by a 

 duced by handling a larger volume This actually happened in one case so committee of six men — three represent- 

 through their pools than was being han- as to work a great hardship on the com- ing processors and three producers, 

 died by private cream stations. pany. The initial price paid for pooled but- 



^" Higher Average Price 2. Another objection raised was that terfat is based on the daily Chicago 90 ' 



At the present time the price for in many cases instead of moving the score market, which varies according to 



butterfat in relation to the Chicago cream to plants nearby, it was moved the butter market as follows: 



market for northern Illinois will aver- to distant creameries. This reduced the Chicago Price Premium or Deduc- 



age quite closely throughout the year quality of the product instead of im- Range of Butter tion f or Fat 



to the Chicago market, and in southern proving it. 15 - 19^'4 Minus 2^ 



■ lUinobsfrom three to five cents under "With these points in mind, it was 20 - 24% " 1/4 . 



tlve mark« depending upon the time suggested by processors that an effort 25 - 29% " % ' 



o4 year -^nd^-the range in the butter be made to work out a plan to correct 30 - 34% Plus % 



market' prke. X these evils. ^ 35 . 393^ « 1% . '/ 



In regard! to the dissatisfaction of Decide to Federate ' 49 _ 44^ « 2% 



weights and 'tests, \it cannot be said Prior to November, 1929, Illinois 45 _ 49% " 3% 



that producers were dissatisfied with all cream pools were individual county as- 50 - 54% " 4% 



creameries buying butterfat within the sociations with producer members on 55 _ 59% " 4% 



' state. But evidence indicated that some contract to market all their produce Insofar as the contract creameries are 



companies were taking advantage of through the county organization. It concerned, the local produce associations 



' producers in this respect. These condi- was decided to reorganize these associa- are protected by the creamery receiving 



_ tions promoted the organization of the tions in accordance with the Marketing their butterfat to the extent of three / 



first co-operative cream marketing as- Act of 1923 and to provide for capital cents per pound above the price re- / 



. sociation as early as 1924. stock. It was also decided to federate ceived from the creamery. After the 



/ The first station was started in June these county associations into a state- creamery has paid all procurement, 



of that year at Paxton, in Ford county, wide organization. manufacturing and sales costs and is 

 Up to the end of 1928, little attention This was done November 6, 1929, credited with the going return on in- 

 was given to this project. As a result when the Illinois Produce Marketing vestment, the remaining net profits 

 ' only a few additional pools were or- Association was organized providing for made on pool butterfat are divided so -' ..; . >. 

 ' ganized during that period. One of the three classes of stock. Capital stock that one-half goes to the Illinois Pro- 

 early pools organized at Polo, Ogle consists of 30,000 shares of class "A" Juce Mafketing Association for refund- 

 county, was later converted into a co- preferred $25 par value with cumula- i^g ^q the county associations on a : 

 operative creamery which has been op- tive dividends of 7%; 150,000 shares patronage basis. The administration of 

 crating very successfully. of class "B" preferred for the Illinois this marketing plan is in the hands of 



During 1928-29-30 cream pools were Agricultural Association, which ini- six men as follows: 7 



organized over the state until at the tiated, developed and is responsible for fom Borman, Beatrice Creamery, 



^i: present time sixty-five such units are the project, and 75,000 shares of com- (Continued on Page 18) 



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