28 BULLETIN 1095, U. S. DEPAETMENT OF AGRICULTURE. 



customers may be added, this method may be profitable, provided the 

 price paid is not exorbitant. Soliciting may be employed where the 

 house-to-house canvassing seems desirable. 



COSTS OF MILK DISTRIBUTION. 



The costs of milk distribution are dependent upon capital invest- 

 ments in plant and equipment, delivery equipment, and operating ex- 

 penses both in the plant and in delivery. 



Data obtained by careful investigations show that capital invest- 

 ments in plant and equipment range from about $20,000 to $150,000, 

 with an appropriate average of $60,000 for plants handling 2,000 

 to 5,000 gallons daily. The investment in delivery equipment varies ac- 

 cording to the amount of wholesale or retail business and the amount 

 handled on each distributing wagon. It is apparent that when retail 

 wagons cost $200 to $300 each and wholesale wagons $350 to $450 

 each, and horses $150 to $225 each, and when from 250 to 400 quarts 

 are handled daily on retail wagons and 1,200 to 1,800 quarts on whole- 

 sale wagons, the investment on retail wagons may range from $1.25 

 to $1.75 per quart sold daily and on wholesale wagons from 50 to 75 

 cents per quart. 



Labor costs on retail and wholesale routes vary in different cities 

 and may range on retail routes from 1^ to 2^ cents per quart, with 

 additional costs for horse feed amounting to $1 or more per day 

 or one-fourth to one-third cent per quart. The delivery costs under 

 different local conditions may range from 40 to 65 per cent of the 

 total costs from producer to consumer, which "spread" or margin 

 may range from 4 cents per quart to 6 or 7 cents, and in some in- 

 stances to 8 cents per quart. 



It is impossible to give an average figure which would fairly repre- 

 sent prevailing conditions, for the costs of labor, supplies, and equip- 

 ment are constantly changing, and conditions are not the same in 

 any two cities. The spread on wholesale sales may vary from 1 to 3 

 cents less per quart than on retail sales. Thus, with a margin of 

 3 cents less, and with the assumption that the retail store handles on 

 a 1-cent margin, it is possible for milk to be sold to consumers through 

 stores at 1 to 2 cents less per quart than on retail routes, making 

 house-to-house deliveries. 



It should be remembered that under any system of plant operation 

 and sales delivery, costs are largely dependent upon local conditions, 

 the extent to which the business is efficiently managed, and whether 

 detail operations are conducted in an economical manner. Perhaps no 

 one thing is more important for proper management and maintenance 

 of low operating costs than a system of accounts and cost records 



