COOPERATIVE PURCHASING AND MARKETING ORGANIZATIONS. 7 



some localities these plants have been able to compete successfully 

 with the farmers' organizations, with the result that some coopera- 

 tive creameries have been forced to discontinue operations. 



While the farmers' creameries have not had as systematic compe- 

 tition as the farmers' elevators, there have been other handicaps to 

 their success. In some cases factories have been established before 

 the supply of raw material was large enough to make their operation 

 economical. The farmers have in some instances been the victims 

 of professional promoters. The benefits of a creamery to a commu- 

 nity were set forth in such a way that the farmers were led to expect 

 success when it was impossible. Often the promoters received a 

 contract for the creamery equipment for which the farmers paid an 

 exorbitant price. Many creameries have been established in this 

 manner in communities where the number of cows was far too small 

 to make their operation profitable. When such conditions have 

 existed it is not surprising that the cooperative spirit in some of 

 these communities has waned, and that many of the plants which 

 were established have failed. 



The farmers' creameries as a general rule are operated in accord- 

 ance with cooperative principles to a greater extent than are the 

 farmers' elevators. This is accounted for by the differences in the 

 two lines of business. In the grain business the production is sea- 

 sonal and the market is fluctuating; the farmers also are accus- 

 tomed to receive their money at the time of delivery of the grain. 

 The production of dairy products is not as seasonal as grain pro- 

 duction, and the changes in the market are usually less evident. 

 Patrons of creameries in many places are accustomed to receiving 

 the money for milk or cream once a month. It is therefore a common 

 practice among cooperative creameries to deduct the expenses of 

 operation, set aside whatever is needed as a reserve, and divide the 

 net proceeds of the business among the patrons each month in 

 accordance with the amount of butter fat delivered by each. Many 

 of the farmers' creameries, therefore, are truly cooperative in every 

 sense of the word. Some cooperative creameries set aside a suffi- 

 cient amount to pay interest on capital invested, while others pay 

 no interest on the capital. Many of the creameries are nonstock 

 organizations; the necessary capital for building and equipping 

 tne plant is borrowed, and the money is paid back by a small monthly 

 assessment on the business transacted. In a few cases a creamery 

 has retired its capital stock by purchasing it from the holders with 

 the surplus funds obtained by levying a small monthly assessment 

 on the raw material delivered to the factory. 



Not all the farmers' creameries are as near a strictly cooperative- 

 type as those described. Some farmers' creameries pay cash for the 

 raw material as it is delivered. Such plants are not able to operate 



