122 CIRCULAR 10 0, U. S. DEPARTMENT OF AGRICULTURE 



a fair degree of security from loss due to price fluctuations, pro- 

 gressive growers have an opportunity to reduce their costs and make 

 improvement in production practices which will further increase 

 their profits. Stability in the industry will raise the economic and 

 educational status of the growers, and be conducive to the correction 

 of wasteful methods of producing, assembling, and marketing. 



That a fair measure of stability in the production and marketing 

 of some agricultural products can be achieved is shown by the ex- 

 perience of several of the large associations of milk producers, 

 operating with the cooperation of milk distributors. In the Phila- 

 delphia area, for example, the dairymen's association, by its price 

 policy and surplus plan, has been able to reduce greatly the seasonal 

 surpluses which formerly resulted in low prices to the producers 

 during the spring and early summer. Its policy of maintaining 

 prices that are profitable to the efficient producer, but that at the 

 same time are not so high as to encourage large increases within 

 the area or to invite the competition of distant areas, has resulted 

 in a price which changes infrequently and only with changes in 

 costs. Although many phases of the production and marketing of 

 dairy products and of tobacco are dissimilar, there is reason to be- 

 lieve that similar stability can be obtained in the tobacco industry 

 under a plan of organization which will be outlined later in this 

 circular. 



A tobacco-marketing association can be influential in bringing 

 about a more rapid and wider acceptance of standardized grades. 

 It is generally admitted that the Tobacco Growers' Cooperative 

 Association was successful in this respect. Undoubtedly much prog- 

 ress can be made in the grading, sorting into lots, and further pro- 

 cessing of tobacco in order to meet the requirements of the individual 

 manufacturers or exporters. 



By the payment of market differentials for quality, an association 

 is able to improve production practices. The net result should be 

 more economical and better production which, in conjunction with 

 the factors already discussed, will tend to put the industry on a 

 more stable basis. 



Finally a marketing association can perform a number of inci- 

 dental but important services. It can, for example, through the 

 organization of agricultural credit corporations, assist its members 

 in obtaining production credit from the intermediate credit banks, 

 at lower rates of interest than from other sources. In addition, 

 such an association should be able to represent the growers in all 

 matters that involve relationship between the producers and gov- 

 ernmental agencies, transportation companies, financial agencies, and 

 other groups. 



MANUFACTURERS' INTEREST IN COOPERATIVE MARKETING 



Like the grower, the tobacco manufacturer is interested in the 

 stabilization of supply and price. He is interested in buying at the 

 lowest possible price, but his long-time interests are not served by 

 extremely low prices which drastically reduce acreage and result in 

 a temporary shortage of supplies at high prices. The grower is 

 best able to plan his production practices so as to operate eco- 

 nomically and efficiently, when he has reasonable assurance regard- 



