54 BULLETIN 547, U. S. DEPARTMENT OF AGRICULTURE. 



hedging prevail in about 95 per cent of the elevators. Primary ele- 

 vator capacity is not sufficient to hold all grain offered for storage 

 during the height of the season. This fact has made it necessary for 

 elevators to sell stored grain and to secure protection by hedging in 

 the terminal markets. In certain instances elevator managers have 

 taken advantage of the presence of the stored grain in the elevator 

 and have speculated in futures to the direct loss of their employers 

 because of inefficient methods of bookeeping. The adverse sentiment 

 which prevails in some producing sections with regard to grain stor- 

 age is partially due to such losses. 



An elevator which is financed by a commission firm is handicapped 

 in some instances in that it is impossible to take advantage of other 

 markets which may from time to time offer better prices than can be 

 obtained in the one in which the commission firm is located. Ele- 

 vators not dependent in any way upon the commission house can ship 

 first to one market, then to another, and in this way promote compe- 

 tition among the commission men in securing the best prices possible. 

 It must be remembered, however, that the commission houses have 

 served a useful purpose in the financing of the farmers' elevators 

 in that they sometimes gave financial aid when it was impossible to 

 to secure it elsewhere. Elevators are turning more and more each 

 year to local sources for their funds, which is a fortunate arrange- 

 ment, and it has been demonstrated that the elevator which is able 

 to finance its operations without securing any outside help is in a 

 position to obtain the best results. As soon as possible an elevator, 

 by the accumulation of a surplus, should place its business in such 

 shape that but little outside financial assistance is necessary. Where 

 outside assistance is needed, it is preferable to obtain it from the 

 local bank, using as security the company's surplus, and the general 

 moral rating secured by conducting the business on a conservative 

 and efficient basis. 



FARMERS' CREAMERIES AND CHEESE FACTORIES. 



The average farmers' creamery and cheese factory has little diffi- 

 culty in financing its manufacturing and marketing operations, 

 because of the plan of withholding payment to the producer until 

 returns are received from products shipped. Manufacturing costs 

 are small, and can be met from the returns received from sales. 

 Where funds from outside sources are needed, the plant and equip- 

 ment in most cases are amply sufficient to cover any loans secured 

 and serve as a basis of credit. 



As fast as milk or cream is received it is manufactured into butter 

 or cheese, a large part of which is shipped immediately, very little 

 being held in storage. Payment to the members is made for periods 

 varying from two weeks to a month, on the basis of the average price 



