COOPERATIVE PURCHASING AND MARKETING ORGANIZATIONS. 55 



which the manufactured product brings, less the manufacturing, 

 selling, and miscellaneous costs. For example, when two payments 

 a month are made, the farmer will receive a check on the first of the 

 month for his deliveries covering the period from the 1st to the 15th 

 of the previous month, while on the 15th, payment will be made for 

 deliveries from the 16th to the 30th of the previous month. In this 

 way from two to four weeks elapse between the last delivery of the 

 period and the time the settlement is made. This plan is followed 

 by most of the country creameries and cheese factories in the United 

 States, and there seems to be no objection on the part of the farmer 

 to waiting from 15 to 30 days for his " cream check". 



This system of making payments has met with such success among 

 the cooperative plants that some privately owned factories have 

 adopted the same plan. In some communities, however, cooperative 

 creameries have been compelled to pay cash in order to compete 

 successfully with privately owned plants that pay cash. In such 

 cases it becomes necessary for the cooperative organization to secure 

 funds from outside sources, or to create a surplus with which to cover 

 the amount of the patron's products yet unsold for which the patron 

 has been paid. 



The amounts borrowed as shown by Table V, were required for 

 meeting the general running expenses of the business, purchase of 

 supplies, in some cases for the addition of new machinery and repairs, 

 and in other instances for advances to members. 



Of 35 creameries reporting on the security given for loans, 14 used 

 company notes, and it was necessary for 14 others to have the per- 

 sonal indorsement of the directors; 2 obtained funds without any 

 collateral security; 3 gave mortgages on the plant and equipment, 

 and 2, which had cheese in storage, obtained funds on warehouse 

 receipts. This report does not take into account sums borrowed for 

 the construction of the factory and initial equipment. At the outset, 

 where loans for these purposes are secured, members have paid in 

 capital stock or membership fees sufficient to furnish a basis of credit 

 for the amounts required, which usually are obtained from banks. 

 In some instances machinery companies extend credit for the equip- 

 ment. 



Interest. — Thirty-two creameries report interest rates as follows: 





13 



6 



8 

 7 



8 

 7-8 



1 



8 



2 

 10 







The rates charged vary in different localities and depend upon the 

 season, length of loan, and credit rating of the organization. 



Length of loan. — Seven organizations use borrowed money during 

 three months, and six require it from two to three months for advances 

 to members in the summer, when deliveries of milk are heavy. 



