PEOBLEMS OF COOPEBATIVE MARKETING ASSOCIATIONS 43 



When a car is sold delivered, a draft, covering the price agreed 

 upon, usually accompanies the bill of lading, or payment is mad? to 

 the shipper's agent. Inspection is allowed, as in the case of f. o. b. 

 sales. If the shipper fails to comply with the terms of the sale, the 

 buyer may reject the shipment. 



Many organizations continually offer a portion of their best prod- 

 ucts for sale through the auctions in the belief that the publicity 

 attending this method of sale creates a favorable impression among 

 the trade toward a shipper who offers high-grade products that sell 

 near the top of the market. Auction prices in a measure set the 

 price for similar commodities sold at private sale in the same market, 

 and, to a less degree, in other markets. On the other hand, many 

 shipments that show decay and deterioration are sold at auction 

 because they can be most quickly disposed of by this method. 



The consignment of shipments to commission merchants was for- 

 merly one of the most common methods of marketing fruits and 

 vegetables. At the present time, also, some small cooperative or- 

 ganizations find it a satisfactory method of disposing of their ship- 

 ments. Returns are made to the shipper when the shipment is 

 sold. The commission merchant, however, frequently agrees to 

 accept the shipper's draft for a part of the estimated value of the 

 shipment. 



With the development of cooperative sales agencies, and other 

 large distributing firms, the consignment of fruit and vegetable ship- 

 ments has declined. The direct sale of shipments, either the f . o. b. 

 or delivered, is now the standard method of marketing fruits and 

 vegetables. The advantages of this method are that it permits the 

 organization to influence the distribution of the shipments and the 

 price at which they sell. 



Cooperative associations marketing fruits and vegetables employ 

 practically all types of distributing agencies. Reports from 513 

 associations show that more than half deal directly with commission 

 merchants, auctions, or brokers, and about 45 per cent employ co- 

 operative sales agencies. 



ADJUSTMENTS AND REJECTIONS 



Reports from many fruit and vegetable organizations indicate 

 that the number of rejections and claims to be handled are increas- 

 ing. In part, this condition can be attributed to the fact that buy- 

 ers and shippers do not fully understand the conditions of the 

 methods of sale used, to lax methods of grading and inspection on 

 the part of cooperative organizations, to the tendency of some buy- 

 ers to attempt to find something wrong with shipments when the 

 market is declining, and perhaps to the fact that many sellers do 

 not hold buyers strictly to the terms of the sales contract, because of 

 the fear of losing their further trade. 



There is no specific remedy for the situation, but there are steps 

 that can be taken to reduce rejections to a minimum. Buyers and 

 sellers should understand clearly their rights and obligations under 

 each method of sale. The following rules regarding rejections have 

 been accepted generally by organizations of produce dealers. 13 



13 See footnote 10. 



