Wholesale Distribution of Meat and Meat Products, with Special Reference to Omaha, Nebraska, As a Meat Packing Center Dissertati
WHOLESALE DISTRIBUTION OF MEAT AND MEAT PRODUCTS,
WITH SPECIAL REFERENCE TO OMAHA, NEBRASKA,
AS A MEAT PACKING CENTER
DISSERTATION
Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State U niversity
By
REX VANCE CALL, B. A., M. B. A.
The Ohio State University 1955
Approved by:
Adviser Department of Business Organization ACKNOWLEDGMENTS
The author is deeply indebted to his academic adviser,
Dr. Theodore N. Beckman, whose assistance and advice has made possible the completion of the research for, and the writing of, this manuscript. Full acknowledgment is also made here for the suggestions and counsel of the other members of the reading committee, Dr. H. H. Maynard and Dr. A. J. Wright, in connec tion with the preparation and conclusion of this study.
For direct aid in making the research, the author is indebted to William D. Hardy, Elwood G. Derrick, T. W. Wendell,
Wayne S. Bartley, all executives of packinghouses, wholesale or retail establishments in Omaha, Nebraska, who furnished much of the data used in this study.
ii TABLE OF CONTENTS
Page
LIST OF T A B L E S ...... ,...... vii
LIST CF CHARTS ...... Xi
Chapter I. INTRODUCTION * ...... 1
Purpose of the Study Need for the Study Scope of the Study Objectives of the Study Methods Used in the Study
II. THE MEAT INDUSTRY IN THE UNITED STATES * . 6
Centralization and Beginning Large-Scale Industry 10
Decentralization of the Industry ...... 11
Factors Leading to Decentralization .... 15 Increased Use of Motor Trucks; Develop ment of Market Information; Standardiza tion and Grading; Increased Technology in Refrigeration; Direct Marketing of Live stock.
Present Location of the Industry.. 22
Relative Position of the Meat Packing Industry Among United States Industries » ...... 27
Production Workers...... 27 Cost of Materials...... 31 Value of Product ...... 32 Value Added by Manufacture ...... 33
Importance of Meat Packing in Leading States . . 34
III. THE MEAT INDUSTRY IN OMAHA, N E B R A S K A .... 36
iii Chapter Page
Livestock Market ...... 36
Establishment and Growth...... 37 Relative Importance of Omaha as a Live stock Market...... 40 Quantity as a Basis; Quality as a Basis
Packing I n d u s t r y ...... 46
History and Development...... 46 Present Status of the Industry ...... 49 Omaha's Packing Plants ...... 55
Meat Distribution ...... 59
IV. CHANNELS OF DISTRIBUTION OF MEAT PRODUCTS IN OMAHA 63
Packer-to-Retailer-to-Consumer Channel .... 63
Territory Served ...... 64 Competitive Aspects ...... 69 Competition on Basis of Price ...... 69 Competition on Basis of Service ..... 72
Packer-to-Wholesaler-to-Institution or Retailer- to-Consumer...... 75
Share of Wholesale Business 75 Typical Wholesalers ...... 79 Competitive Aspects ...... 81
Packer-to-Institution-to-Consumer , ...... 82
V. TRANSPORTATION OF MEAT PRODUCTS...... 86
Relative Usage of Rails and Trucks ...... 86 Use of Trucks for Transportating Meat and Meat P r o d u c t s ...... 95
Advantages of Using Trucks ...... 106 Disadvantages of Using Trucks ...... Ill
Use of Rail Transportation for Meat Products . 112 Effects on Wholesaling...... 117
VI. SPECIAL PROBLEMS ARISING FROM SELF-SERVICE, PRE CUTTING AND PACKAGING ' 120
iv Chapter Fage
Self-Service ...... 122
Influence on Buying Habits of Retailers . 129 Quality; Prepackaged Products; Branded Merchandise; Quantities; Time of Purchase and Delivery,
Influence on Packers ...... 133
Attitude of Labor Union ...... 138
Precutting and Packaging ...... 139
Retail Level...... 139 Ivholesale Level ...... 143 Packer Level ...... 145 Advantages of Precutting and Packag ing at Packer Level; Disadvantages of Precutting and Packaging at Facker Level,
VII. SPECIAL FROBLSL.fl ARISING PRO'-' FREEZING MEATS . . 155
Frozen Food Locker Plants ...... 155
Freezer Food Plans and Home Freezers ..... 160
Freezer Food Plans...... 160 Home F r e e z e r s ...... 162
VIII. SPECIAL PROBLEMS INCIDENT TO GRADING AND INSPECTION 165
Grading ...... 165 Grading of Beef; Grading of Hogs; Grading in the Packinghouses,
Inspection ...... 176 Federal Meat Inspection; Omaha City Inspec tion.
IX. ORGANIZATION FOR DISTRIBUTION...... lSl
Decentralized Sales Organization ...... 1&3 Plant Sales; City Sales; Car Routes; Credit Department; Traffic; Local Delivery; Order Handling; Selection and Training Salesmen; Buying Livestock; Buying Supplies and. Equipment.
v Chapter Page
Centralized Sales Organization ...... 193 Product Divisions] Sales Departments.
X. SUM&EY AND CONCLUSIONS...... 200
BIBLIOGRAPHY...... 230
vi LIST OF TABLES
Number of Meat Packing Establishments and Total Value of Product, United States, 1848-1947 ...... 12
Federally Inspected Slaughter: Regional Distribution Hog Slaughter at Principal Markets and. at Other Points in Corn Belt States, Fiscal Years 1920, 1925, 1930, 1940, and 1945 ...... 14
Rural Roads in United States— Approximate Mileage, 1821 - 1951 ...... 17
Total Value of Livestock in United States Per Cent by Divisions ...... 24
Rank in Quantity of Specified Items of Livestock Pro duction or Sale, by Divisions, 1949^ 1944* 1939 • . . 25
Total Livestock Slaughtered in the Corn Belt States, 1948-1952 ...... 26
Total Livestock Slaughtered in Selected States, 1948-1953 ...... 28
Total Cattle Slaughtered in Selected States, 1942-1953 ...... 29
Relative Position of the Meat Packing Industry Among United States Industries, 1937-1951 ...... 30
Importance of Meat Packing Industry to the Economy of Thirteen Leading States According to Number of Employ ees, Salaries and Wages, and Value Added by Manufacture 35
Livestock Movements in the West (in carloads), 1880-1882 ...... 37
Total Receipts and Shipments of Livestock in the Union Stock Yards, Omaha, Nebraska, 1884-1292 ...... 39
Total Receipts of Livestock in, and Ranking of, Lead ing Livestock Markets, 1921-1953 • • ...... 41
vii Table Page
14. Total Receipts of Cattle and Calves at Chicago and Omaha Public Markets, 1947-1953 ...... * ♦ • 42
15. Beef Steers Sold for Slaughter at Chicago, Omaha, and Sioux City by Grade, 1952-1953 ...... • 43
16. Disposition of Livestock at Omaha Public Markets and Total United States Slaughter, 1900-1053 ...... 47
17. Relative Importance of Leading Packing’ Centers Accord ing to Selected Criteria, 1947 51
18. Livestock Slaughter at Nine Leading Packing Centers, 1950-1953 '...... 52
19. Meat Products Manufacturing by Employment, and Report ing Units, Nebraska and Pouglas County, First Quarter,- 1 9 5 1 ...... 54
20. Monthly Employment and Total Wages in Meat Products Industry in Nebraska, 1948-1953 ...... 54
21. Meat Packers Classified According to Selected Criteria, Omaha, Nebraska, 1954 ...... 68
22. Disposition of Livestock from Stockyards to Local Packers, Omaha, Nebraska, 1951-1953 • 70
23. Number of Packinghouse Salesmen and Method Used in Contacting Customers, Omaha, Nebraska, 1954 ...... 73
24. Merchant Wholesalers of Meat and Meat Products in Selected Metropolitan Areas, 194$ ...... 76
25. Wholesale Establishments in the Meat Industry in Omaha, Nebraska, 1939-1948 78
26. Percentage Change in Receipts of Livestock by Truck and by Rail, All Public Markets and Omaha Public Market, 1930-1953 ...... 87
27. Truck Receipts as Percentage of Total Receipts of Livestock at Principal Public Markets, 1939-1950 . . 89
28. Changes in Percentage of Total Unloads or Receipts by Truck, of Livestock at Principal Markets, 1939-45 Peak to 1950 90
viii Table Page
29. Number of Tons of Animals and Animals Originated by Class I Railways in the United States, 1947-1953 • • 91
30, Drive-in Receipts of Livestock as a Per Cent of Total Receipts at All Principal Markets and at Omaha Market, 1951-1953 92
31» Livestock Received in Omaha Market by State of Origin and Type, 1953 96
32. Livestock Shipped From Omaha Livestock Market by Truck and by Rail, 1950-1953 97
33* Disposition of Livestock From Omaha Livestock Market by Destination and Type, 1953 97
34. Percentage of Meat and Meat Products Transported by Truck and Rail in Normal "Wholesale Area Surrounding Omaha, Nebraska, 1940-1953 ...... 102
35. Comparison of Carload and Truckload Rates on Fresh Meat and Packinghouse Products from Omaha, Nebraska, to Selected Shipping Points, 1954 ...... 108
36. Number of Tons of Selected Animal Products Originated by Class I Railroads in the United States and Central Western Region, 1947-1953 ...... * • 114
37. Meat Markets and Combination Stores (Groceries and Keats) in Nebraska, 1929-1948 122
38. Number Self-Service Meat Stores in United States, • 1948-1952 ...... 124
39. Regional Growth of Self-Service Meat Stores, United States, 1948-1952 ...... 124
40. -Number of Self-Service Meat Stores in Illinois, Iowa, and Nebraska, 1948-1952 ...... 125
41. Complete Self-Service Pleat Stores by Type of Owner ship, United States, 1948-1952 125
42. Self-Service Meat Stores in Omaha, Nebraska, by Ownership and Length of Time Operated as Self-Service, 1954 . 127
ix Table Page
43. Per Cent of Stores Selling Most Fresh Meat Prepack aged in 55 Large Cities, September 1 9 5 0 ...... 141
44. Production of Sliced Bacon by Wilson and Company, Omaha Plant During Selected Years ...... 147
45. Frozen Food Locker Plants in the United States, July 1, 1939 to July 1, 1953 156
46. Number of Frozen Food Locker Plants in Omaha, Nebraska, 1945-1954 ...... 153
47. Estimated Number of Frozen Food Locker Plants and Aver age Number of Lockers Installed per Plant in Nebraska, North Central Region, and United States, January 1, 1950 and January 1, 1953 158
48. Families Owning Horae Food Freezers in the Omaha Metro politan Are a, 1950-1954 ...... 163
x LIST Of CHARTS
Chart Page
I. Typical Plant Sales Territory . » ...... 67
II. Organization Chart of Meat Packing Company, Decentralized Operation ...... 185
III. Organization Chart of Meat Packing Company, Centralized Operation ...... 196
xi CHAPTER I
INTRODUCTION
Purpose of the Study. The purpose of this study is to set forth an accurate description of the methods used in distributing meat products in the Omaha, Nebraska area; to bring out the effect of technological improvements, and of certain changes in marketing methods, on meat distribution; and to draw conclusions which should aid distributors of meat at wholesale in solving some of their mer chandising problems. To this end it becomes necessary to observe the trends in channels of distribution being used, the changes in methods of sale, and the impact of technological developments in the field of refrigeration. As a result, one may expect to obtain a more vivid picture than is now had of meat distribution in relation to its condition fifteen years ago and a better understanding of the problems involved.
Need for the Study. Because of developments in commercial as well as in home refrigeration, there have been changes in the wholesale distribution pattern of meat and meat products which need to be brought to light. Modern practices of self-service merchan dising, precutting and prepackaging of meat products, and the atten dant changes in buying habits of the consuming public, have had an impact on channels of distribution and on buying a.nd selling policies
1 of wholesalers, packers, and. retailers. A re-examination of the wholesale distribution of meat products would be especially fruit ful at this particular time.
Scope of the Study. It is beyond the scope of this study to investigate all items— fresh, earned, and processed meats and poul try— which ordinarily are included in meat products. Therefore, attention was directed only to the wholesale distribution of meat in its fresh and frozen form, including fresh or frozen beef, pork, lamb and mutton, and veal. This does not imply that there are no problems in the handling of canned meats, poultry, soaps and cleans ers, and the many other products of the packers, but it was thought best to concentrate on this one area which can be dissociated rather clearly from these other products.
The study is confined to the geographical area around Omaha,
Nebraska, ordinarily referred to as its "normal xdiolesale area."
Although many packers distribute nationally from their plants that are located in and around Omaha, emphasis in this study has been on their local t\foolesale sales as distinguished from their sales made through branch houses and other outlets beyond the normal,Omaha wholesale area.
Objectives of the Study, b’hile the general purpose of this treatise, as has been stated, is to investigate the wholesale distri bution of meat products in a particular geographical area, a definite 3 statement as to specific objectives will furnish concrete goals for which to strive. The objectives of this study, therefore, are the following:
1. To investigate the relative importance of Omaha, Nebras
ka, as a meat packing center.
2. To determine the wholesale trading area of the Omaha
meat industry and the trends in its growth pattern.
3. To explore the impact of precutting and prepackaging
on the wholesaling of meat in the Omaha area.
4. To evaluate the effects of freezer plans and frozen
food lockers on the wholesaling of meat in this area.
5. To investigate the channels of distribution of meat
products for any significant changes not included above.
Methods Used in the Study. The data and other information were obtained by means of:
1. Research in libraries for background material and perti
nent current statistics;
2. Correspondence writh trade associations, packing compan
ies, and authorities in the field; and
3. Personal interviews with packers, wholesalers, and retail
ers in the Omaha, Nebraska area.
The libraries at the University of Omaha and at the Univer sity of Nebraska, together with the Omaha Public Library, have been used extensively, not only for background material on the history of the meat industry, but also for information concerning current hap penings in meat distribution and for necessary government statistics.
Much valuable information was received through correspon dence with members of the meat industry trade association— the Amer ican Meat Institute— as well as with members of the refrigeration and transportation industries' trade associations. Officials of these agencies were most liberal with the information at their dis posal and were of much help in filling and rounding out the picture.
The bulk of the information used was secured through personal interviews. Many executives in the industry were interviewed. Among them were executives in both large and small packing firms, in whole sale meat firms, and in retail enterprises. Most interviewees were highly cooperative and expressed a desire to be of assistance. How ever, because of the intense competition in the industry, there was reluctance on the part of some officials to release certain informa tion that they felt might benefit competitors. This proved to be a handicap, but, nevertheless, sufficient data were secured so that a reasonably accurate picture is available of conditions prevailing in the particular segment of the meat industry under discussion.
The organization and presentation of the material to follow is / suggested by the nature of the study. A rather brief but complete background of the meat industry in the United States is related in
Chapter II, including pertinent facts on the pre-factory era, the cen tralization of the industry and establishment of factories, aid, fin ally, the decentralization of the industry find the factors which con tributed to this decentralization. 5
Chapter III deals with the meat industry in Omaha. Facts
bearing on the establishment of the livestock market and the slaugh
tering industry as well as on the relative position of Omaha today
in each of these important areas are presented.
In Chapter IV, the discussion centers around the channels of
distribution used in the movement of meat from the prime producer to the ultimate consumer. An attempt is made to bring out the relative r importance of each channel, although a positive and statistical treatment is not possible because of lack of concrete data.
The part that transportation plays in the distribution of meat
is discussed in Chapter V. Facts tending to point out the increasing
importance of trucks in this area are related.
Chapter VI, VII, and VIII present a general picture of some major problems and developments facing the industry, such as the im pact of self-service, precutting and prepackaging of meat, frozen food locker plants, freezer food plans and home freezers, grading of
livestock and meat, and the inspection of livestock, meat, and
slaughter houses.
The success or failure of the meat industry depends upon the efficiency of its distribution system. Chapter EC describes the or ganization of the distribution function of institutions which handle over 90 per cent of the meat in the Omaha area.
The final chapter, Chapter X, directs attention to pertinent facts discovered in this analysis. This chapter not only recapitu lates the findings, but it also summarizes the resultant conclusions. CHAPTER II
THE MEAT INDUSTRY IN THE UNITED STATES
Various activities having to do with the procurement and proc essing of meat have for centuries played an important part in man's life. Not only has this important commodity had a singular effect upon man's social life and his physical well-being, but it has also had an influence upon history. It is well known that Columbus set forth on his famous voyage in 1492 and discovered America because he was seeking a shorter route to the East Indies for the purpose of bringing to the civilized world the large quantities of spices which were being imported from the East to preserve and make meat more pal atable. In this era, refrigeration was unknown and it was the prac tice to use spices to camouflage the taste and odor of meat that had been kept a trifle longer than it is our practice to keep it today with the benefit of refrigeration.^
Early settlers introduced cattle and hogs to this country, having brought a few live animals over with them on their ships. Beef cattle and hogs were raised on a very primitive scale from then up to the time of the Civil War in England in 1640. At that time, the New
England Colonists, having mastered the art of "packing2 took over the
^Robert B. Hinman and Robert B. Harris, The Story of Meat (Chicago: Swift and Co., 1942), pp. 5-6.
Explanation of "packing"— taking meat, even of wild animals, and packing it in huge barrels or boxes after having smoked it or salted it down. l 7 trading of livestock, barreled pork, beef, hams and bacor. for sugar, rum, molasses, and spices with the West Indies. This trade, formerly- enjoyed by England, was extremely profitable and became the foundation of many of the fortunes of old, New England families.^
The evolution of the meat industry, in the United States has followed closely the development of this country both economically and geographically. The cycle of development started with small plants being established in and around the early towns and settlements.
The first known American packing plant was established by
William Pynchon of Springfield, Massachusetts in 1655.^ The term _
"packing plant" originated at this time. While it does not accurately describe the industry, the designation has remained until this day. A very small amount of the meat that is processed is actually packed, the main function of the industry being that of slaughtering and dress ing animals for distribution to retail outlets.
In the early days, the industry was decentralized; that is, cattle was raised locally, brought into the community slaughter houses, and the products were processed and distributed within a limited area or else exported to the West Indies. The packing industry spread along the colonial seaboard, mainly to supply meat for local consump tion. The development of the country following the Revolutionary War period necessitated further changes in the industry, with a tendency toward centralization. The Industrial Revolution, which brought with
1Ibid., p. 12.
^Ibid., p. 16. it the use of machinery and mass-production techniques, resulted in, first, the establishment of factories, and second, the growth of towns and cities where these factory workers lived. This urbanization of the population necessitated increasing amounts of meat for the city dwellers.
The greater need for meat to supply these now "dependent" peoples resulted in a western migration to areas where new farm and grazing lands were available. This migration into the rich plains and corn-producing areas of the Middle West, finally led to the establish ment of livestock markets and packinghouse centers where animals could be slaughtered closer to their source.
Necessity for slaughtering livestock and shipping the carcasses to the consuming markets came about as a result of the experiences of driving cattle and hogs overland to the markets. The practice of driving live animals overland was not only time consuming, but it also resulted in great loss of weight in the animals. Of course, the problem was not immediately solved, for, up to 1800, shipments of carcasses
could only be made during the winter months. No way had as yet been discovered to keep perishable, fresh meat for a long period.
As the railroads had not been developed to any great extent, meat was transported to market mainly by waterways— rivers and canals.
The Ohio and Mississippi rivers were used for North and South traffic, while the feeder canals and the Erie Canal connected Eastern consumer markets to the producers. Railroad facilities, improved immediately- following the Civil War, were the deciding factor in the decline of water transportation. 9
Frequently, the meat packer up to 1850 was a "warehouse man," slaughtering the farmer's livestock on a commercial basis. The indus try was formerly composed of small-scale enterprises, dominated, not by the industrial capitalist, but by the merchant. These merchants bought the animals, either slaughtered them in their own packing houses or arranged for slaughtering in other packing houses, and then moved the products into the trade.^
Cities that were favorably located, as far as water and rail transportation were concerned, became the early slaughtering centers.
Cincinnati, nicknamed "Hog Town," or "Porkopolis," was one of these concentration points, as were Buffalo, Milwaukee, and Chicago.
In several of these large packing centers, markets were established to facilitate buying and selling livestock. Large quanti ties of cattle, hogs, and sheep were brought into these markets and sold either for local slaughter or for shipment to meat packers in the
New England and Middle Atlantic states. Most of the livestock, however, was purchased for slaughter by packing companies which had plants at or near the market.
The first livestock exchange was organized at Cincinnati in
April, 1881. Rules and regulations were formulated governing the activities of its members so that fair dealing would be ensured and the interests of the market as a whole would be promoted. These rules and regulations included trading practices, commission rates, trading hours, and the solicitation of consignments. Special services were
-1-Lewis Corey, Meat and Man (New York: The Viking Press, 1950)} p. 37. 10 also rendered including collection of claims against carriers and the establishment of machinery for the arbitration of disputes between members.^
CENTRALIZATION AND BEGINNING OF LARGE-SCALE INDUSTRY
The period following the Civil War was one of invention and technological improvement, as a result of which the meat packing indus try became highly industrialized. Railroads were not only pushing farther West, but means of transporting fresh meat by rail in refriger ator cars was on the horizon. Meat canning received a tremendous boost during the Civil War and this accounted for a large part of the increased output of the industry. The development of refrigeration and the refrigerator car in 1871 provided the final touch that was 2 needed to bring meat packing into a high state of industrialization.
Among the many factors which led to the expansion and indus trialization of this important industry, the following were the most significant:
1. The expansion and industrialization of production in
general.
2. The mechanization of slaughtering and packing in the
meat industry.
3. A growing network of railroad transportation.
4. The invention and increased use of refrigeration,
^Austin Allyn Dowell and Knute Bjorka, Livestock Marketing (New York: McGraw-Hill Book Company, Inc., 1941)* p. 116.
Corey, op. cit., p. 3&. 11
especially the refrigerator car.
5. A net-work of national and international facilities for
the distribution of meat products.
6. The establishment of stockyards at central points.
7. A constant growth of the livestock industry, accompanied
by scientific advances in animal husbandry.
8. An increased diversification of output, including
increased production of by-products from waste.
9. The growing export of American meats.
10. More efficient industrial organization, equipment, and
The meat industry became not only industrialized, but it also became concentrated in larger plants. 'While the earlier packing plants called for small investment in capital goods, mechanization multiplied capital-investment requirements many times. This limited the number of small independent enterprisers who could go into the packing busi ness; it also restricted the number that could continue to operate.
The extent of concentration can be seen from data in Table 1. While the number of establishments increased by 371 per cent over the first thirty-year period covered by the data, the value of the products manufactured in these plants increased by 2,433.3 per cent.
DECENTRALIZATION OF TEE INDUSTRY
During the period following the First World War, the meat 12
TABLE 1
NUMBER OF MEAT PACKING ESTABLISHMENTS AND TOTAL VALUE OF PRODUCT, UNITED STATES, 1849 - 1947
Number of Establishments Total Value of Product Year Per cent Value Per cent Number Increase (#1,000) Increase
1849 185 # 12,000 1859 259 33.3 29,400 95.8 1869 768 196.5 76,000 223.4 1879- 872 13.5 304,000 300.0 1889 1,118 28.2 562,000 85.0 1899 882 - 21.1 784,000 39.6 1904 929 5.3 914,000 16.6 1909 1,221 31.4 1,356,000 48.3 1914 1,279 4.8 1,652,000 21.9 1919 1,304 2.0 4,246,000 157.1 1921 1,184 - 9.2 2,201,000 - 48.2 1925 1,269 7.2 3,050,000 34.3 1929 1,277 0.6 3,435,000 12.6 1933 1,078 - 15.6 1,490,000 - 56.6 1935 1,223 13.5 2,362,000 58.8 1937 1,160 - 5.2 2,786,000 18.0 1939 1,392 20.0 2,648,000 - 4.9 1947 2,153 54.7 n# cl* n.a. n.a. - not available
Source: Census of Manufactures. 1914. Vol II (Washington: Government Printing Office, 1919)1 p. 318; Census of Manufactures, 1921 (Washington: Government Printing Office, 1924), P. 124; Biennial Census of Manufactures, 1937# Part I (Washington: Government Printing Office. 1939). p. 124: Census of Manufactures. 1947, Vol II (Washing ton: Government Printing Office, 1949), P* 68. industry again decentralized. This was decentralization in a differ ent manner, however. Originally, the small local packinghouses were located in and around the centers of population because meat could not be preserved for long periods of time after the animals were slaugh tered. It was easier and more practical to drive the cattle long dis tances overland to the slaughter houses than it was to attempt to transport fresh meat long distances to the consumer. Due to expanding railroad facilities and early refrigeration developments after the close of the Civil War, livestock slaughtering was concentrated in plants that were built adjacent to, and developed simultaneously with, the public markets for livestock. The era of the 1920's, however, brought an increased emphasis on slaughter nearer to the point of pro duction of the meat animals, due to technological improvements which made this reversal possible.
This does not necessarily mean that additional new plants were established at interior points in the country, but it does mean that a relatively smaller proportion of the total slaughter was being done in packing plants at the large public stockyards and that a relatively larger proportion was being slaughtered at points elsewhere. This can be seen from the data in Table 1, which discloses that the actual num ber of plants declined from 1919 to 1937 and that the only significant increase came bet\tfeen 1939 and 1947. During this entire period, how ever, numbers of livestock slaughtered at central market locations declined in favor of plants located in other areas. One typical example is hog slaughter in the Corn Belt states, as shown by the data in
Table 2. Slaughter in principal markets in the Eastern Corn Belt tabu: 2
FEDERALLY INSPECTED SLAUGHTER: REGIONAL DISTRIBUTION HOG SLAUGHTER . AT PRINCIPAL MARKETS AND AT OTHER POINTS IN CORN BELT STATES FISCAL YEARS, 1920, 1925, 1930, 1935, 1940 AND 1945
Year Eastern Corn Belt-'- Northwestern Corn Belt*1 Southwestern Corn Belt3 ended Principal Other Principal Other Principal Other June 30 Markets 4/ Points Markets 5/ Points Markets 6/ Points
Per cent Per cent Per cent Per cent Per cent Per cent
61.0 39.0 76.1 1920 92.6 7.4 \ 23.9
1925 90.7 9.3 60.9 1 39.1 70.7 29.3
1930 86.9 13.1 47.0 ; 53.0 70.8 29.2
1935 85.3 14.7 36.8 \ 63.2 68.6 31.4
1940 81.1 18.9 38.3 61.7 60.7 39.3
1945 74.0 26.0 33.4 66.6 57.8 42.2
1/ Eastern Corn Belt - 0bio, Indiana Illinois, Michigan, Wisconsin. 2/ Northwestern Corn Belt - Minn- esota, Iowa, North Dakota, South Dakota, Nebraska. 2/ Missouri, Kansas, bj Chicago, Cincinnati, Cleve land, Detroit, Indianapolis, Milwaukee, National Stock Yards. *j/ St. Paul, Sioux City, Omaha. 6/ Kansas City, St. Joseph, Wichita. f
Source: Livestock. Meats, and Wool Market Statistics and Related Data 1945. U. S. Dept, of Agri culture (Washington: Government Printing Office, 1946), p. 31. Data for current years not available, according to a letter.from C. L. McColloch, Ch^ef Market News Branch, U. S. Dept, of Agriculture, dated May 27, 1954. {
H ■ P - 15 declined a total of 19.6 per cent from 1920 to 1945; in the Northwest ern Corn Belt, 26.6 per cent; and in the Southwestern Corn Belt, 18.3 per cent. An increasing amount of slaughtering, meanwhile, was done in plants located outside the principal market areas— in "interior plants."^
Factors Leading to Decentralization
No one factor was completely responsible for the trend toward the decentralization of the meat packing industry. While some influ ences were stronger than others, it took a combination of developments to bring about this important movement. These factors are summarized as follows:
1. Increase in the number and mileage of paved roads.
2. Increased use of motor trucks.
3. Development of national communication systems which
encouraged dissemination of market news.
4. Standardization and grading.
$. Increased technology in refrigeration.
6. Tendency of central-market packers to resort to direct
marketing to insure source of supply.
Increase in Paved Roads.— Prior to 1850, meat animals were driven to market or were transported by boats and barges cn convenient waterways. The railroads later dominated the transporting of livestock
■^Plants located away from public markets, in smaller towns and cities situated in areas in which the production and feeding of live stock are important. 16 to market. Wagons were used widely to bring the animals from the farms to points where they were to be loaded onto rail cars for ship ment.
The motor truck, the development of which received a great impetus during World War I, replaced the wagon in these short hauls.
As soon as roads were improved and enough mileage was available to accommodate these trucks, they became more and more widely used by the farmers to transport their livestock to rail points, concentration points, auctions, or interior packers.
From 1921 to 1924, the mileage of surfaced rural roads in the
United States increased by nearly 35 per cent, and by 1930 had in creased by 79 per cent over 1921 (see Table 3). By the end of 1935, total mileage had increased from 337*000 miles in 1921 to 1,063,000 miles, an increase of 175 per cent. These newly-surfaced roads con tributed greatly to the motor trucks* becoming the dominant means of transporting livestock to market.
Increased Use of Motor Trucks.— Motor trucks made a signifi cant contribution to the decentralization of the meat packing indus try. Farmers found that the truck permitted greater flexibility in transporting livestock to market. Other advantages, as summarized elsewhere, are as follows:
The importance of the motor truck in livestock marketing has been increasing because of the savings, compared with railroad shipments, in handling and feeding between the farm and packing house, condition of animals, shrinkage of weight, and elapsed time , in taking advantage of radio-announced prices at central markets. .
^Richard M. Clewett, Ed., Marketing Channels (Homewood, 111.: Richard D. Irwin, Inc., 1954)* P» 211. 17
TABLE 3
RURAL* ROADS IN UNITED STATES— APPROXIMATE MILEAGE 1921 to 1951 (in thousands of miles)
Surfaced Rural All Rural Roads Year Roads Total
1921 387 2,925 1925 521 3,006 1930 694 3,009 1935 1,063 3,032 1940 1,340 2,990 1945 1,495 3,012 1949 1,617 3,003 1950 1,697 2,990 1951 1,723 2,987
*Rural Roads include roads outside of incorporated areas and certain of the more populous unincorporated areas. Figures cover continental United States and refer to existing mileage at end of calendar year.
Source: U. S. Dept, of Commerce, Statistical Abstract of the United States. 1953 (Washington: Government Printing Office, 1953), p. 526.
Development of Market Information.— The receipt of complete and accurate market news greatly aided the producer in deciding where to market his livestock most profitably. This decision is reached after carefully weighing price quotations, transportation charges., commissions, feed, handling charges and probable losses involved in marketing at alternative outlets.
Early market reports in this country were in the form of news paper quotations of prices for provisions and later for livestock. 18
The quotations were made by the week at various markets and there was
much quoting of various papers in order to get a complete coverage.
The Daily Drovers' Journal was established at the Union Stock
yards in Chicago in 1873. This publication started as a weekly news
paper to influence local sentiment and to give comments on the indus
try. It soon began to report market statistics, however, and was
regarded as the leading publication of market information until the
Federal government entered this field.
The Division of Livestock, Meats and Wool, of the United
States Department of Agriculture, began, in 1915-16, to gather and
publish market information regarding livestock shipments and receipts
on a monthly basis and covering all markets. This service gradually
expanded, until today offices are maintained at 28 public markets and
at three other points for the purpose of gathering livestock market
information, wholesale meat statistics, and a limited amount of price
information.
Standardization and Grading.— One of the primary requirements
for the successful marketing of many products is the development and
adoption of uniform grade standards so that buyers and sellers may be
supplied with accurate price and market information. The meat indus try accomplished little in this regard until after the establishment
of large public markets, but even the systems devised here were of
limited value, for each market had developed its own methods and terms
ilbid., p. 320 19
and only those familiar with a particular market could relate the
quoted prices to a particular lot of livestock.
The U. S. Department of Agriculture began studies of the
problem in 1915^ which resulted in official grades and standards for
livestock carcasses and live animals being issued between 1925 and O 1928. These grade standards for livestock and meats were permissive
and optional— not compulsory. The U. S, Department of Agriculture
used these classifications as the basis for its market-reporting ser
vice, however, and, although the various markets were slow in adopting
these standards, the individual producer at least could better judge
the relative value of his product at various markets. One of the most
important implications was that it made trading on description feas
ible and therefore facilitated direct marketing to interior packers
and through concentration points.
Increased Technology in Refrigeration.— While meat packers were using natural ice refrigeration as an aid in storing and in 3 transporting meat as early as 1857, the lack of direct refrigeration
or of machines to make ice was an obstacle to plant refrigeration
and refrigerated transportation. This difficulty was overcome by the
development of a discovery made in Europe— that of cooling a room by
% . C. Davis, Beef Grading and Stamping Service, U. S. Bureau of Agriculture Economic Bulletin 67, p. 2, Sept. 1930,as quoted in Livestock Marketing, op. cit., p. 290.
^Dowell and Bjorka, op. cit.. p. 295.
•3Ibid., p. 58. expanding ammonia in pipe coils.
The resulting improvement in refrigeration, both in transpor tation media and in ordinary storage facilities, influenced decen tralization in the following ways:
1. Eliminated large ice houses.
2. Permitted year-round operations.
3. Facilitated better transporting offresh meat.
4. Reduced costs to the benefit of the interior packer.
Savings in overhead expense, brought about by the elimination of large ice houses and the substitution of smaller refrigeration rooms, could be felt more by smaller, less financially stable packers than by large firms. These economies not only permitted the existence of many smaller interior plants, but they also allowed these same plants to compete on a greater scale with the larger, centralized industries.
Mechanical-refrigeration improvements allowed meat packers to operate year-round, forestalling the necessity of confining operations to the colder, winter months. As these improvements became available to interior packers, it became more feasible to slaughter increasing numbers of animals in producing areas and in any season of the year.
Changes in methods of refrigeration brought about improvements in transporting meat from the packer to consuming markets. These improvements meant not only that meat could be transported faster and arrive in a better condition, but it also meant that meat could be effectively shipped longer distances, or from points further West. 21
To the extent that this continued, it replaced the practice of shipping
live animals long distances, or from surplus- to the deficit-producing
areas.
Interior plants undoubtedly could have existed and have pro
gressed to a certain extent using natural ice as a refrigerant, but
mechanical refrigeration gave the necessary advantages to these plants
to make them a real factor in the meat packing industry.
Direct Marketing of Livestock.— Direct marketing of livestock
refers to the sale and transfer of animals from sellers to slaugh terers without making use of the services of agencies located at pub
lic markets. This was one of the early methods used by farmers in
disposing of their livestock, but this practice died out with the
establishment of public livestock markets. Then, following the devel
opment of railroads and refrigeration, and closely associated with the
expansion of corn and livestock production in the Northwestern Corn- belt states, came the growth of interior packers. With trucks, good highways, and market information available, the farmer was encouraged to sell near home to these interior packers, thus avoiding additional
costs and losses from disease, shrinkage, and central market expenses.
In speaking of the truck and its influence on livestock mar keting, one author summarized it this way:
.... It has brought about a major increase in direct shipment of livestock from farm to packinghouse, widespread development of local auctions, greater use of packers' concentration yards and declines in the importance of local dealers, local co-operative associations, and central 22
public markets.’1’
As can be seen, interior packers enjoyed certain advantages
over packers at the large public markets. These advantages included,
(1) lower cost for plant site, (2) ease in obtaining uniform supply
of live animals throughout the year from farmers located in the imme diate vicinity, (3) reduced overhead costs and savings in yardage, feed, and hauling expenses, (4) less shrinkage of animals in transit, and (5) to some extent, reduced expenses in buying.
This favorable competitive position of interior packers
caused considerable change in buying procedures and, in a few cases, in the production policies of some of the large packers located at central markets. In some instances, these central-market packers purchased interior packing plants or else established new plants so that a competitive position might be maintained. In other cases, these firms resorted to direct purchasing at concentration yards and auctions, in order to secure adequate supplies for their packinghouses.
Thus, the practice of direct marketing followed the increase of slaughtering by interior packers, and this in turn stimulated the large central-market packers to decentralize their operations that they might compete more favorably with these interior packers.
Present Location of the Industry
The trend in meat packing has been toward those areas that
■kllewett, op. cit.. p. 211.
^Bureau of Agricultural Economics, Shifts in the Trade in Western Slaughter Livestock (Washington: Government Printing Office, 1950), p. 21. “ 23 produce the most livestock* This is substantiated in the following tables. Table 4 indicates that the West North Central States have the highest per cent of the total value of livestock in the United
States, which has been true since the 1930's. The various divisions are ranked in Table to show their relative importance in the quan tity of livestock of the different types. According to these data, the North Central States have been the leaders in the production of cattle, calves, hogs and pigs, while the Mountain States and the West have led in sheep and lambs.
As seen from the figures in Table 6, the Corn Belt States, called the Central States in the previous tables, are responsible for over 60 per cent of the livestock slaughtering in the country. Of these states, the Northwestern Corn Belt States are the leaders, fol lowed closely by the Eastern Corn Belt States. Since there was an increase of 11 per cent in total slaughter in the United States, it would be supposed that each section would increase proportionately.
However, it is significant that during this period, the Northwestern
Corn Belt States had an increase of 26 per cent, while the Eastern
Corn Belt States, which ranked first in 1948, had an increase of only five per cent and the Southwestern Corn Belt States showed a decrease of nine per cent during the same period.
Illinois led the nation in total livestock slaughtered in
1948, but gave way to Iowa the following year. This position Iowa has held ever since, mainly because it leads the nation in hog production and slaughter. The leading fifteen states in livestock slaughter are 24
TABLE 4
TOTAL VALUE OF LIVESTOCK IN UNITED STATES PEE CENT .BY DIVISIONS 1930 - 1950
Geographic Divisions 1950 1945 1940 1935 1930
United States 100.0 100.0 100.0 100.0 100.0
New England 1.6 2.1 2.0 2.3 2.1
Middle Atlantic 6.0 7.3 7.4 8.0 7.2
East North Central 18.5 19.4 19.7 20.1 19.0
West North Central 29.5 29.7 27.3 25.1 31.2
South Atlantic 7.0 7.8 8.6 9.4 7.0
East South Central 6.9 6.7 7.9 8.1 6.4
West South Central 13.7 12.3 12.9 12.5 12.0
Mountain 10.8 9.2 8.7 8.3 9.6
Pacific 6.1 5.7 5.5 5.8 5.5
Source: U. S. Bureau of the Census, Sixteenth Census of the United States, Agriculture, General Report, Vol. Ill, T a b l e 1 0 (Wash ington: Government Printing Office, 1940), p. 584; U. S. Bureau of the Census, U. S. Census of Agriculture: 1950. General Report. Vol. II (Washington^ Government Printing Office, 1950), p* 37^. 25
TABLE 5
RANK IN QUANTITY OF SPECIFIED ITEMS OF LIVESTOCK PRODUCTION OR SALE, BY DIVISIONS 1949, 1944, 1939
Divisions Cattle & Calves Hogs & Pigs Sheep & Lambs Sold Sold Sold
1949 1944 1939 1949 1944 1939 1949 1944 1939
The North 1 1 1 1 1 1 2 2 2
The South 2 2 2 2 2 2 3 3 3
The West 3 3 3 3 3 3 1 1 1
Geographic Divisions
New England 9 9 9 9 9 9 9 9 9
Middle Atlantic 8 8 6 7 8 8 8 8 8
East North Central 2 2 2 2 2 2 5 5 5
West North Central 1 1 1 1 1 l: 2 2 2
South Atlantic 7 7 8 4 5 5 7 7 7
East South Central 6 5 5 3 3 3 6 6 6
West South Central 3 3 3 5 4 4 3 3 3
Mountain 4 4 4 6 6 7 1 1 1
Pacific 5 6 7 8 7 6 4 4 4
Source: U. S. Bureau of the Census, United States Census of Agriculture. Vol. II (Washington: Government Printing Office, 1952), p. 487. 26
TABLE 6
TOTAL LIVESTOCK SLAUGHTERED IN THE CORN BELT STATES 1943 - 1952 (1,000's)
Per cent Increase 1948 1949 1950 1951 1952
Total United States /ll.O 106,718 106,979 110,269 111,930 118,427
Ohio 5,155 4,902 5,320 5,401 5,594 Indiana 3,744 4,155 4,179 4,290 4.132 Illinois 11,394 10,921 11,100 11,111 11,328 Michigan 3,243 3,035 3,028 3,183, 3,287 Wisconsin ' 4,477 4,292 4,47.8 4.812 5.133
Western Corn Belt /5.2 28,013 27,315 28,105 28,797 29,474
Minnesota 7,232 8,093 8,189 7,699 8,308 Iowa 10,995 12,990 13,807 14,104 15,019 North Dakota 768 676 487 490 645 South Dakota 2,532 2,455 2,463 2,515 2,906 Nebraska 4,247 4,821 5,133. 5,410 5,661
Northwestern Corn Belt /26.2 25,774 29,035 30,079 30,218 32,539
Missouri 5,715 4,959 5,101 5,513 5,6l6 Kansas 5,235 5,382 5,137 4,116 4,244
Southwestern Corn Belt -9.0 10,905 10,341 10,238 9,629 9,860
TOTAL CORN BELT 64,737 66,691 68,422 68,644 71,873
Per cent to Total United States 60.7 62.3 62.1 61.3 60.7
Source: U. S. Department of Agriculture, Market News, 1951, Statistical Bulletin No. 118 (Washington: Government Printing Office, 1952), p. 21; U. S. Department of Agriculture, Crops and Markets. Vol. 30 (Washington: Government Printing Office, 1953)# p. 57• 27
ranked in Table 7 for the years 1948 through 1953* As can be noted,
the relative positions of the various states have remained fairly
constant, during this period. It is important to observe that, while
one of these states may rank very high or low in total slaughter, its
relative position in terms of slaughter of particular kinds of ani
mals may be entirely different. For example, California ranks fourth
in total livestock slaughter, but it has ranked first in cattle slaugh
ter since 1951* as can be seen in Table 8. Nebraska, also, has been
more important in cattle slaughter than it has been in total slaugh ter.
RELATIVE POSITION OF THE NEAT PACKING INDUSTRY AMONG UNITED STATES INDUSTRIES
The size or importance of an industry is a relative measure, and must be considered in the light of various criteria that can be used as measurements. While there are no doubt many usable criteria, it will be sufficient to show the relative importance of the meat packing industry with a brief discussion of the number of production workers employed per year, the cost of materials used in manufacture, the value of the product produced, and the value added in the process of manufacture.
Production Workers
The meat packing industry, according to the data in Table 9* ranked fifteenth in the nation in the number of production workers in
1937 but climbed to eighth place two years later, although there were TABLE ?
TOTAL LIVESTOCK SLAUGHTERED IN SELECTED STATES 1948 - 1953 (1,000*s)
State 1948 Rank 1949 Rank 1950 Rank 1951 Rank 1952 Rank 1953 Rank
Illinois 11,394 1 10,931 2 11,100 2 11,111 2 11,328 2 10,789 2 California 6,019 4 6,014 4 5,758 4 6,053 4 6,495 4 6,844 4 Texas 4,917 9 3,879 13 4,016 13 4,254 12 4,748 9 5,149 8 Kansas 5,235 7 5,382 5 5,137 6 4,116 13 4,244 12 4,183 13 Iowa 10,995 2 12,990 1 13,80? 1 14,104 1 15,019 1 14,858 1 Minnesota 7,232 3 8,093 3 8,189 3 7,6 99 3 8,308 3 8,073 3 Ohio 5,155 a 4,902 7 5,320 5 5,401 7 5,594 7 5,382 7 Nebraska; 4,247 ii 4,821 8 4,133 7 5,410 6 5,661 5 5,632 5 Missouri 5,715 5 4,959 6 5,101 8 5,513 5 5,616 6 5,423 6 Pennsylvania 5,360 6 4,288 11 4,468 11 4,361 10 4,606 10 4,390 U Michigan 3,243 14 3,035 14 3,028 14 3,183 14 3,287 14 3,691 14 Wisconsin 4,477 10 4,292 10 4,478 10 4,812 8 5,133 8 5,013 9 Indiana 3,744 13 4,151 12 4,179 12 4,290 11 4,132 13 4,223 12 New York 4,111 12 4,446 9 4,496 9 4,484 9 4,411 11 4,545 10 South Dakota 2,532 15 2,455 15 2,463 15 2,515 15 2,906 15 2,787 15
Source: U. S. Bureau of Agricultural Economics, Crops & Markets, 1953 Edition. Vol. 30 (Wash ington: Government Printing Office), pp. 57-59; Market News. 1948-1952, U. S. Dept, of Agriculture, Production and Marketing Administration, Statistical Bulletin No. 127, p. 21; U. S. Dept, of Agriculture, Agricultural Marketing Service, Crop Reporting Board, "Livestock Slaughter, by States, 1953,” May 1954. * TABLE 8
TOTAL CATTLE SLAUGHTERED IN SELECTED STATES 1948 - 1953 (1,000’s)
State 1948 Rank 1949 Rank 1950 Rank 1951 Rank 1952 Rank 1953 Rank
Illinois L>787 1 1,838 1 1,818 1 1,482 2 1,655 2 2,137 2 California L,449 2 1,531 2 1,482 2 1,658 1 1,819 1 2,237 1 Texas 1,182 3 942 7 950 7 989 5 1,175 5 1,658 4 Kansas 1,117 4 1,136 6 1,015 6 776 8 897 7 1,254 7 Iowa L,103 5 1,369 3 1,398 3 1,139 3 1,376 3 1,842 3 Minnesota 1,039 6 1,205 4 1,167 5 800 6 1,042 6 1,360 6 Ohio 1,005 7 891 8 900 8 860 7 874 8 1,115 8 Nebraska 921 8 1,157 5 1,180 4 1,001 4 1,186 4 1,614 5 Missouri 853 9 7 88 9 734 9 681 10 795 9 1,051 9 Pennsylvania 728 10 653 11 688 10 696 9 658 10 742 12 Michigan 671 11 659 10 629 11 615 11 628 11 760 10 Wisconsin 643 12 575 12 608 12 555 12 541 13 696 13 Indiana 528 13 484 13 500 14 439 15 446 15 619 15 New York 461 14 466 14 507 13 526 13 511 14 627 14 Colorado 401 15 442 15 490 15 493 14 579 12 743 11
Source: U. S. Dept, of Agriculture, Agricultural Marketing Service, Crop Reporting Board, ’’Livestock Slaughter by.States, 1953," Mimeographed bulletin, May, 1954; Market News, 1951, p. 21.
N> vO TABLE 9
RELATIVE POSITION OF THE MEAT PACKING INDUSTRY AMONG UNITED STATES INDUSTRIES 1937 - 1951
Number of Wage Earners Cost of Materials Value of Product Value Added by Year Establish Average Fuel purchased, electric Manufacture ments for Year Rank energy and contract work Amount in Amount Rank Amount Rank $1,000 Rank
1937 1,160 127,477 15 $2,386,090,000 2 $2,787,358,000 3 401,267 13
1939 1,478 119,853 8 2,226,539,039 2 2,648,325,552 3 421,787 8
1947 2,153 167,072 6 n.a. n.a. 976,995 9
1949 n.a. 168,884 6 n.a. n.a. 1,134,218 8
1950 n.a. 163,733 6 n.a. n.a. 1,125,453 11
1951 n.a. 167,239 8 n.a. n.a • 1,239,703 11 n.a. - not available.
Source: U. S. Bureau of the Census, Census of Manufactures. 1939. Table 7, Vol. I (Washington: Government Printing Office), p. 46; Annual Survey of Manufactures (Washington: Government Printing Office, 1952), pp. 22-40; and Annual Survey of Manufactures (Washington: Government Printing Office, 1953), pp. 20-36.
VjO o 31
approximately eight thousand fewer wage earners in the industry. By
1947, the meat packers had climbed to sixth place, which position they held until 1951* when they dropped to eighth place again, having been
surpassed by the Radio and Related Products industry and the Aircraft industry.^
Meat packing was rather stable from the period just before
World War I until 1939, as far as the number of establishments and production workers was concerned. Numbers of establishments varied from 1,229 in 1909 to 1,478 in 1939* while the number of production workers employed varied from SB,000 to 127,000 during the same period.
The greatest change in the industry came during the Second World War, when the number of establishments increased by 46 per cent from 1939 to 1947, and the number of wage earners showed a 40 per cent increase during the same period.^
Cost of Materials
It is well recognized that the meat packing industry has always been a high-cost-of-materials industry. In other words, the cost of raw material is a large part of the sales dollar. The 1937 and 1939
Censuses of Manufactures reveal that in those years, this industry ranked second among United States industries in its outlays for raw materials, fuel purchased, electric energy and contract work. This
*kr. S. Bureau of the Census, Annual Survey of Manufactures (Washington: Government Printing Office, 1951), pp. 20-36.
% . S. Bureau of the Census, Census of Manufactures 1947 (Washington: Government Printing Office), p. 54* 32 would reflect a relatively low Value Added by Manufacture and conse
quently a low Value Added Ratio, both of which are measures of r ela- tive importance. The former will be explained later in this chapter.
The Value Added Ratio, from certain viewpoints, is a much more impor tant index of relative importance than is Value Added by Manufacture.
It is computed by dividing the Value Added by Manufacture by the Value
of Shipments.^
There is further question as to the validity of this criterion
for comparison purposes because of the large and varying amounts of
duplication involved, owing to the use of products of one packing plant
as raw materials of another. For this reason, it is more expedient to use other more reliable measures.
Value of Product
Value of product is the criterion most often used in comparing
industries. While this measure should not be applied by itself, the
amount of money which flows through an industry should certainly be
an indication of its magnitude. Using sales as a measure, the meat packing industry ranked third in importance in the late 1930's. How
ever, there is much duplication in sales figures also, and their use for comparative purposes is not wholly valid. The amount of duplica tion is of such consequence that, as of 1947* the U. S. Bureau of the
Census is no longer recording Value of Product and Cost of Materials
Lr. N. Beckman, "The Value Added Concept as Applied to Market ing (institutions) and Its Implications" (Paper read before the American Marketing Association, Detroit, Michigan, December 27, 1954)* 33 figures for the Meat Packing industry and eleven other industries where the incidence of such duplication was known to have exceeded ten per cent.^
Value Added by Manufacture
Value added by manufacture is determined by subtracting the cost of materials, supplies and containers, fuel, purchased electric energy, and contract work from the total value of shipments. Among the many measures available for determining relative importance, the most significant criterion is Value Added by Manufacture. ■
.... In that it approximates the value created in the process of manufacture, value added provides the most satis factory measure of the relative economic importance of given industries available in the Census of Manufactures.
In 1937, the meat packers ranked thirteenth in Value Added by Manufacture, but climbed to eighth in 1933, slipped to ninth in
1947* regained eighth place in 1949* but were relegated to eleventh by 1951* having been surpassed by Organic Chemical, the Radio and
Related Products, and the Paper and Board Mills industries.
Other industries which are important in Value Added by Man ufacture, ranked in order of their importance, are: Motor Vehicles and Parts, Steel Works and Rolling Mills, Petroleum Refining, Saw mills and Planing Mills, Newspapers, Aircraft, Paper and Board Mills,
■*"U. S. Dept, of Commerce, Bureau of the Census, 1947 Census of Manufactures. Statistics by Industry. Vol. II (Washington: Govern ment Printing Office, 1948)* P* 17* 2 U. S. Bureau of the Census, Census of Manufactures, 1947. Vol. I (Washington: Government Printing Office, 1949)* p. 20, 34
Cotton Broad Woven Fabrics, and Bread and Bakery Products.^"
IMPORTANCE OF MEAT PACKING IN BEADING STATES
In each state 'which is a leader in meat packing, this indus try is of varying importance in relation to total manufacturing in that state. In some highly industrialized states, the meat industry is less important, relatively, than in a state where manufacturing plays a minor role. For example, Illinois is highly industrialized and also is a leader in meat packing; yet, the meat industry accounts for only about two per cent of the total value added by all manufac ture, and only one person in forty employed in manufacturing is in the meat industry. (See Table 10).
On the other hand, meat packing is much more important in the manufacturing segment of the economy of such states as Iowa, Kansas, and Nebraska. In the latter state, for example, one person out of every five working in a manufacturing industry is employed in meat packing; 24 per cent of the salaries and wages paid and 23 per cent of the value added by manufacturing come from the meat industry. Thus, meat packing accounts for a greater share of the industrial wealth of some states than it does of others, and, as the above facts indicate, it is particularly important to the economy of Nebraska. TABLE 10
IMPORTANCE OF MEAT PACKING INDUSTRY TO THE ECONOMY OF THIRTEEN LEADING STATES ACCORDING TO NUMBER OF EMPLOYEES, SALARIES AND WAGES, AND VALUE ADDED BY MANUFACTURE 1947
ALL EMPLOYEES SALARIES & WAGES VALUE ADDED (#1,000) BY MANUFACTURE STATE All Meat All Meat (11,000) Indus Packing Per Indus Packing Per All Meat tries Wholesale Cent tries “Wholesale Cent Indus Packing Per tries Wholesale Cent
California 663,872 10,353 1.6 2,064,523 34,871 1.7 3,994,981 51,239 1.3 Illinois 1,184,820 29,515 2.5 3,585,093 92,677 2.6 6,680,137 125,546 1.9 Indiana 548,346 8,663 1.6 1,587,518 25,537 1.6 2,977,508 47,268 1.6 Iowa 140,425 22,665 16.1 372,339 66,706 17.9 671,100 92,609 13.8 Kansas 74,624 13,241 17.7 204,801 37,533 18.3 461,061 49,170 10.7 Minnesota 179,986 13,646 7.6 501,355 46,292 9.2 1,022,586 69,144 6.8 Missouri 327,515 9,281 2.8 827,184 28,084 3.4 1,623,145 39,908 2.5 Nebraska 47,031 9,466 20.1 119,923 29,064 24.2 260,658 60,589 23.2 New York 1,775,975 7,211 0.4 5,279,686 22,426 0.4 9,666,588 43,089 0.5 Ohio 1,194,603 8,317 0.7 3,560,075 26,039 0.7 6,359,006 43,894 0.6 Pennsylvania 1,439,534 9,148 0.6 3,918,901 26,006 0.7 6,946,958 44,6l6 0*6 Texas 297,053 10,097 3.4 755,411 27,317 3.6 1,727,464 49,503 2.9 Wisconsin a 6,448 7,482 1.8 1,184,247 22,746 1.9 2,260,574 28,772 1.3
Source: U. S. Bureau of the Census, Census of Manufactures, All Industry Figures, Table 5; State Figures, Table 2 (Washington: Government Printing Office, 1949), pp. 40-68. V*) CHAPTER III
THE MEAT INDUSTRY IN OMAHA, NEBRASKA
The preceding'chapter has dealt with the general nature and background of the meat industry in the United States. To present a complete picture, this chapter is devoted to an examination of the livestock market, the packing industry, and the methods of meat dis tribution in Omaha, Nebraska.
LIVESTOCK MARKET
Omaha gained recognition very early as a concentration point for livestock, due to its strategic location on important rail lines, and to its favorable location in the Corn Belt. Cattle, that had been driven up from Texas and fattened in the Corn Belt for marketing, were being shipped through Omaha to markets in Chicago and points further
East. Local interests, studying the livestock shipments as recorded in Table 11, reasoned that Omaha should not only be a concentration point, but it should' also be a livestock market. In this way it could serve Nebraska and the country West of it, as Chicago was serving
Illinois and the Great West. The following reasons were advanced:
1. A livestock market established at Omaha would offer a
much closer market for the great numbers of livestock
that were being shipped to Chicago and other points. 2. A livestock market established at Omaha would attract
grass-fed cattle during the months when they were fat
enough for beef, and corn-fed cattle during the remain
der of the year.
3. The existence of six strong, competing rail lines cen- 1 tering in Omaha would assure favorable freight rates.
TABLE 11
LIVESTOCK MOVEMENTS IN THE WEST (IN CARLOADS)l/ 1880 - 1882
YEAR Horses Cattle Sheep Hogs TOTAL
1880 1,1^5 13,139 675 9,316 ^ 24,315
1881 962 16,642 1,181 13,082 31,817
1882 1,007 15,506 1,728 10,545 28,786
1/ Over Union Pacific Railroad Union and Kansas Divisions, and the Baltimore Missouri River Railroad.
Source: James W. Savage and John T. Bell, History of the City of Omaha. Nebraska (New York: Munsel Sc Co., 1894), p. 595.
Establishment and Growth
Accordingly, the first successful stockyard to be located in
Omaha was incorporated in 1883 under the name Union Stock Yards
^James W. Savage and John T. Bell, History of the City of Omaha. Nebraska (New York: Munsel & Co., 1894), p. 596. 38
Company of Omaha, (Limited), and capitalized at one million dollars.
Work was commenced in April 1884 on livestock pens and buildings on a 260-acre sight in South Omaha, The first shipment of twenty-five carloads of cattle was received on August 13, 1884, and the first hogs were received on August 27, 1884.
In October 1885, a four-story structure was built at a cost of #60,000 which, when completed, accommodated not only offices of the Union Stock Yards Company, but also offices of commission firms, a bank, a hotel, and restaurant facilities.
Shipments of livestock in and out of Omaha increased each year, as noted in Table 12, and by 1891, the Omaha market was
'•second to none west of Chicago."
Four large packinghouses were operating in Omaha by 1891, with capacities limited only by the amount of livestock received.
Buyers for packers in Boston, New York, New Haven, Indianapolis,
Cleveland, Baltimore, St. Louis, Salt Lake City, and Denver, as well as shippers and speculators, were active in the market in competi tion with local slaughterers, thus assuring a ready sale for live- 2 stock.
During the year 1892, a number of new pens and equipment were added at a cost of #200,000, bringing the total capacity of the yards to 10,000 cattle, 200,000 hogs, 5*000 sheep, and 600 horses and mules.
■klnion Stock Yards of South Omaha, Eighth Annual Livestock Report, as quoted in History of the City of Omaha, Nebraska, ibid., p. 607.
Savage and Bell, op. cit., p. 607. The yards, now covering a total of 50 acres, were serviced by twenty miles of railroad trackage and six locomotives, owned and operated by the Union Stockyards 'Railroad Company.
With the added facilities and capacity, the Union Stockyards, according to its Ninth Annual Report, claimed to be the third largest livestock market in the country at the end of 1892.^
TABLE 12
TOTAL RECEIPTS AND SHIPMENTS OF LIVESTOCK IN THE UNION STOCKYARDS, OMAHA, NEBRASKA, 1884-1892 (by carloads)
Receipts Shipments Year Number Per cent Number Per cent (carloads) Increase (carloads) Increase
1884 4,387 ± 4,089 _ 1885 8,195 86.6 5,306 29.8 1886 13,570 65.6 6,607 24.5 1887 27,423 102.1 10,228 54.8 1888 30,492 11.2 14,365 40.4 1889 42,721 40.1 14,022 ~ 2.4 1890 54,283 27.1 17,160 22.4 1891 47,754 -12,0 14,597 -14.9 1892 58,644 22.8 17,387 19.1
Source: James W. Savage and John T. Bell, History of the City of Omaha, Nebraska (New York: Munsel & Co., 1894), p. 606. 40
Relative Importance of Omaha as a Livestock Market
Quantity as a Basis,--Omaha has not at any time relinquished its position as a leading livestock market. Since 1921, as can be seen in Table 13, it has consistently ranked second among leading markets in total receipts of all livestock, with the exception of ♦ the period 1936 - 1940.
While Omaha ranked second to Chicago in terms of total live stock receipts, it is contending for first place with respect to cattle and calf receipts. Table 14 reveals that cattle receipts in
Omaha not only surpassed those in Chicago in 1951, but total cattle and calf receipts were also greater in that year. In addition, cattle and calf receipts were greater in the Omaha market in 1952, although Chicago surpassed in cattle receipts alone.
In salable receipts of hogs, Omaha ranked fourth in 1953, having been exceeded by Chicago, St. Louis and South St. Paul. Omaha also ranked high in the same year in the receipt of sheep and lambs, 1 ranking third in the nation.
Thus, Omaha stands among the leading livestock markets of the nation, in terms of the numbers of animals being received and sold.
Quality as a Basis.— A comparison of the various livestock markets based on the grade of animals being sold in each market, would furnish some indication of the quality of animals in each
■4j. S. Dept, of Agriculture, Agricultural Marketing Service, Livestock Division, "Total Receipts of Livestock at Public Markets, In Order of Volume, 1953.,” Special report. TABLE 13
TOTAL RECEIPTS OF LIVESTOCK IK, AMD RANKING OF, LEADING LIVESTOCK MARKETS 1921 - 1953 (1,000)
KANSAS Year CHICAGO OMAHA ST. LOUIS ST. PAUL SIOUX CITY DENVER . CITY ST. JOSEPH Number Rank Number Rank Number Rank Uumber Rank Number Rank Number Rank Number Rank Number Rank
1953 6,442 1 5,273 2 5,007 3 4,906 4 3,831 5 3,647 6 3,202 7 3,025 8 1952 6,720 1 6,175 2 5,224 3 5,133 4 4,383 5 4,207 6 3,419 7 3,119 8 1951 6,159 1 5,799 2 5,257 3 4,752 4 4,165 5 4,071 6 2,740 8 3,264 7 1950 6,219 1 5,278 2 5,027 3 5,001 4 3,935 6 4,851 5 3,451 7 2,905 8 1949 6,062 1 5,306 2 4,796 4 5,099 3 3,890 6 3,955 5 3,565 7 2,902 8 1948 6,112 1 5,260 2 4,848 3 4,313 4 3,598 7 4,252 5 3,883 6 2,988 8 1947 6,646 1 5,942 2 5,244 3 5,092 4 4,097 6 3,862 7 4,797 5. 3,028 8 1936- 1940 9,196 1 4,599 4 4,906 3 4,926 2 2,735 7 3.966 5 3,666 6 2,224 8 1931- 1935 L2,805 1 6,695 2 4,833 5 5,365 3 3,867 7 4,002 6 5,168 4 3,105 8 1926- 1930 L5,271 1 7,577 2 5,632 4 5,538 5 4,007 6 3,200 8 6,275 3 3,650 7 1921- 1925 L7,766 1 7,710 2 5,886 4 4,950 5 3,793 6 2.966 8 7,246 3 3,691 7
.
Source: U. S. Bureau of the Census, Statistical Abstract. 1953, p. 660; Annual Livestock Re ports, Union Stockyards Co.; and 1942 Statistical Abstract, p. 753. 42
locality. Complete information for such an analysis is not avail
able; statistics are, however, compiled ■which indicate the numbers
and grade of steers marketed in three large markets— Chicago, Omaha,
and Sioux City. This particular type of animal represents a large
segment of the total number of livestock received at the various
markets, and accounted for 58 per cent of the total in Chicago, 47 per cent in Omaha, and 36 per cent of the total in Sioux City in
1953, according to the data in Table 14 and Table 15.
TABLE 14
TOTAL RECEIPTS OF CATTLE AND CALVES AT CHICAGO AND OMAHA PUBLIC MARKETS, 1947-1953 (l,000*s)
Chicago Omaha Year Cattle Calves Total Cattle Calves Total
1947 2,089 271 2,360 1,910 105 2,015
1948 1*694 188 1,882 1*521 107 1,628
1949 1,850 164 2,014 1*692 119 1,811
1950 1,780 115 1,895 1,638 107 1,745
1951 1,623 106 1*729 1*667 115 1,782
1952 1,853 112 1,965 1,824 161 1,985
1953 2,298 122 2,420 2,162 160 2,322
Source: Statistical Abstract. 1953* p. 680; Special report from U. S. Dept, of Agriculture, Agricultural Marketing Service, Livestock Division. 43 TABLE 15
BEEF STEERS SOLD FOR SLAUGHTER AT CHICAGO, OMAHA, AND SIOUX CITY BY GRADE 1952 - 1953
1 9 5 2 1 ? ? 3 Grade Numbers Per cent of Number Per cent of All Grades All Grades C H t C A G 0
Prime 164,621 14.6 197,664 14.1 Choice 641,534 56.8 812,007 57.7 Good & Commercial 304,002 26.9 374,302 26.6 Utility _J-.fl 22,577 1.6
All Grades 1,129,060 100.0 1,406,550 100.0
0 M A H A
Prime 37,598 4*6 34,973 3-7 Choice 466,500 57.4 612,883 64.8 Good & Commercial 296,681 36.5 285,654 30.2 Utility 11,600 . 1*4. 12.047
All Grades 812,379 100.0 945,557 100.0
S I 0 LJ X CITY
Prime 19,186 4.7 15,125 ' 2.9 Choice 255,984 62.3 348,182 67.7 Good & Commercial 132,682 32.3 148,450 28.9 Utility _ o.7_ 2,210 0.4 ... h a s t
All Grades 410,909 100.0 513,967 100.0
Source: U. S. Dept, of Agriculture, Market News, Statistical Bulletin No. 143 (Washington: Government Printing Office, June, 1954), p. 33. 44
From the data for the years 1952 and 1953, as shown in
Table 15, it is evident that Chicago handled not only more steers
than did the other two markets, but also received approximately five
times as many prime steers as were sold in Omaha and over thirteen
times as many as were handled in Sioux City,
This concentration of prime steers in the Chicago market has
been in existence for many years. Several factors account for a
perpetuation of this practice, namely: (1) packers and brokers who
supply this prime-steer market are heavily concentrated in Chicago;
(2) prices for this type of animal are historically higher in Chi
cago than any other market, even when allowing for freight differ
ential;^ and (3) there is a ’’trade practice” among cattle producers
that is a strong inducement to ship prime steers to Chicago. Family
pride, tradition, and a sentimental desire to "top the Chicago mar- 2 ket," keep some producers of prime steers from changing marketing
patterns.
While the actual number of steers graded Choice being sold
in the Chicago market is greater than the number in either Omahaor
Sioux City, the percentage of all grades of steers that are graded
Choice is greater in the lattertwo markets than in Chicago. In
■^Statement by Mr. W. D. Hardy, Assistant General Traffic Manager, Cudahy Packing Company, September 14, 1954, personal inter view; U. S. Dept, of Agriculture, Livestock Market News Statistics. Statistical Bulletin N o . 143, Table 28 (Washington: Government Print ing Office, June 1954), p« 34* 2 The term "top the market," refers to receiving the top price being quoted that day. 45
other words, in 1953* 57.7 per cent of the steers sold in Chicago were Choice, while 64.8 per cent of the Omaha steers and 67.7 per
cent of the Sioux City steers were Choice. Omaha and Sioux City
also show a higher percentage of Good and Commercial steers.
Another indication of the quality of animals in this market,
and hence of the quality of the meat demanded by the Qmaha-area
consumers, is the absence of a market for baby beef. This is a grass-fed animal, approximately a year old, which, when slaughtered, produces cuts of meat that are smaller, have less fat, and conse
quently are less tender than cuts of meat from grain-fed animals.^"
A
"4)r. D. M. Doty, Assistant Director of Research, American Meat Institute, stated: "Many factors affect the tenderness of a piece of beef. Among the most important of these is the amount of fat within the tissue of the beef." Address before the 11th Annual Convention of the National Association of Hotel and Restaurant Meat Purveyors, as quoted in The National Provisioned October 24, 1953, p. 23. 46
At any rate, the livestock market in Omaha is characterized
by a preponderance of grain-fed, fat cattle, and by an absence of
grass-fed baby beef.
PACKING INDUSTRY
The Union Stockyards Company of Omaha, in addition to being
responsible for the development of a livestock market, was instru
mental in founding the packing industry in Omaha. It was through
the efforts of this company that the first packing houses of any
size were erected and became permanent operations. Some of these
firms are still functioning at their original sites.
History and Development
The apparent objective of the Stockyards Company was to build an industry using raw materials at hand in the form of live
stock. That they were successful is clearly seen in Table 16, which reveals that approximately seventy per cent of the livestock received in the Omaha market has for fifty years been slaughtered in local plants,
G. H. Hammond and Company, a Michigan firm, while not the first to operate a packing plant in Omaha, was the first enterprise of any size to locate permanently contiguous to the new stockyards in South Omaha. The Hammond Company started operation in 1885 in a $60,000 plant built by the Union Stockyards Company. This plant had a daily capacity of 500 cattle and 1,000 hogs, and by 1892, the yearly slaughter was 52,000 cattle, 123,000 hogs, and 9»&00 sheep. 47 TABLE 16
DISPOSITION OF LIVESTOCK AT OMAHA PUBLIC MARKETS AND TOTAL UNITED STATES SLAUGHTER 1900 - 1953
Local Slaughter Local Per cent Total U.S. Year Receipts Shipments as per cent Slaughter Increase Slaughter Total U.S. (1,000's) Slaughter
1900 4,305,905 863,709 3,442,196 — 81,952 4.2
1905 5,290,S50 1,502,967 3,787,883 10.0 82,015 4*6
1910 6,102,717 2,356,262 3,746,455 - 1.1 90,516 4.1
1915 7,129,594 2,463,322 4,666,27224.6 94,697 4.9
1920 7,202,029 2,858,933 4,343,096 - 6.9 99,892 4.3
1925 7,483,578 2,349,264 5,134,314 18.2 108,369 4.7
1930 8,377,872 3,127,362 5,250,510 2.3 106,632 4.9
1935 4,195,306 1,382,2622,813,044 —46,4 93,178 3.0
1940 4,963,333 1,274,219 3,689,114 31.1 123,228 3.0
1945 5,708,164 1,699,138 4,009,026 8.7 131,866 3.0
1950 5,377,639 1,624,671 3,752,968 - 6 .4 121,850 3.1
1953 5,572,825 1,806,594 3,766,231 0.004 118,154 3.1
Source: Union Stock Yards Company of Omaha, Ltd., Omaha, Nebras- ka, 70th Annual Livestock Report. 1953. pp. 17-20; Statistical Abstract. 1952, p..647, 1949, p. 714, 1941, p. 724; U. S. Dept, of Agriculture, Agricultural Marketing Service, Crop Reporting Board, ‘"Livestock Slaugh tered by States, 1953," May, 1954, (mimeographed); pp. 3-12; U. S, Dept, of Agriculture, Agricultural Marketing Service, Livestock Division, "Receipts and Disposition of Livestock at 64 Public Markets, Calendar Year 1953" (mimeographed), (Washington: February 3, 1954), pp. 3-6. 48
In the same year, this concern had sales of $4,302,000 and a payroll of 585 employees."*"
In 1886, work was begun by the Union Stockyards Company on a second packinghouse which had a capacity of 4,000 hogs per day.
This plant was leased to Fowler Brothers of Chicago, which firm was 2 paid a bonus of $135,000 for locating in South Omaha.
A third packing plant, which had a capacity of 1,000 hogs per day, was opened in the fall of 1886 by an English firm, headed by Thomas J. Lipton. This plant was sold, early in July 1887, to the
Armour-Cudahy Packing Company, a $150,000 bonus being paid by the
Stockyards Company to bring this firm to South Omaha. Additional buildings were begun immediately, and the entire plant, when in full operation, represented an investment of $800,000.
Philip D. Armour retired from the Armour-Cudahy Packing
Company in 1890 and the Cudahy Packing Company was incorporated, with Michael Cudahy as president and Edward A. Cudahy, vice presi dent and general manager. This corporation took over the plant and immediately six new buildings were erected and improvements made at a cost of $200,000,
By the close of 1892, the Cudahy plant had sales of #19,000,
000 and a total payroll of $1,200,000. It was killing 620,000 hogs, 157,000 cattle, and 18,000 sheep a year; and was processing dry salt meats, sweet pickled meat, smoked and canned meats, butter-
^-Savage and Bell, op. cit., pp. 623-4.
2Ibid.. p. 625. 49
ine, fertilizers, and sausage, in addition to shipping fresh car
casses.
G. F. Swift concluded negotiations with the Union Stockyards
Company in 1887 for a site cn which a fourth large plant would be
built. The Swift company was given a bonus of eleven acres of land
and about $135,000 for locating here. A $300,000 packing plant was
erected, in which slaughtering of cattle began on April 1, 1888.
From that date until December 31, 1888, the slaughterings were:
cattle, 62,370; sheep, 23,963; hogs, 8,260; calves, 1,803; total,
96,396. Sales for this period were valued at $4,000,000.^
In 1892, the aggregate sales of these four large packing
plants were $45,161,000, which placed Omaha third largest packing 2 center in the United States,
Present Status of the Industry
Although there has been considerable variation in the total
number of livestock slaughtered in Omaha's packinghouses from those
early days up to the present time, as noted in Table 16, nevertheless,
local firms are maintaining their position with regard to total
slaughterings in the United States. It is noteworthy that Omaha
packers slaughtered 3-5 per cent of all animals slaughtered in the
United States during the years 1900-1953.
Omaha is among the five most important packing centers of the nation, according to data in the latest Census of Manufactures,
1Ibid.. p. 630
2Ibid. 50 ranking next to first-place Chicago in total livestock slaughtered, and value added by manufacture. The data in Table 17 also indicates that Omaha ranked third in numbers of persons employed and total wages and salaries paid in the industry.
The latest slaughter data of the United States Department of
Agriculture, more recent than the Census data mentioned above, (see
Table 18), indicates that Omaha was the third largest packing center in 1950, rose t o second place in 1951 and 1952, and was third again in 1953• In terms of types of animals, Omaha ranked second in cattle slaughter, fifth in calves, fourth in hogs, and second in sheep and lamb slaughter in 1953.
Omaha's meat products industry makes up the bulk of the total industry of this type in Nebraska. While there are many small plants located in other parts of the state, the largest plants, employing over 88 per cent of the total number, of workers, are locat ed in Douglas County (see Table 19). The plants in Omaha alone employ approximately 12,000 persons and pay yearly wages of close to
$45>000,000, according to the Nebraska Department of Labor.
Employment in the meat industry for the state increased 32.8 per cent from 1946 to 1953, as shown in Table 20. This increase would be reflected in the Omaha packing plants.
^Letter from N. B. Hadsell, Chief Research and Statistics, Nebraska Department of Labor, Division of Employment Security, Lincoln, Nebraska, dated June 11, 1954. TABLE 17
RELATIVE IMPORTANCE OF LEADING PACKING CENTERS ACCORDING TO SELECTED CRITERIA 1947
Meat Products^1 Persons Employed Total Wages Total Livestock Value Added by Establishments (average for yr.) and Salaries Slaughtered Manufacture Packing Centers Number Rank Number Rank Amount Rank Number Rank Amount Rank ($1,000) ($1,000)
Chicago^ 159 1 31,931 1 99,570 1 6,746 1 152,122 1 2 Omaha 23 5 10,698 3 31,598 3 5,942 2 73,744 2
St. Paul^ 26 4 7,357 5 23,384 5 5,092 4 30,134 5
St. Louis^ 61 2 11,820 2 36,064 2 5,244 3 49,890 3
Kansas City'* 37 3 10,084 4 29,399 4 4,797 5 39,604 4
^■Chicago Metropolitan Area consists of Lake County, Indiana; Cook, DaPage, Kane, Lake, and Will Counties, Illinois. 2Includes Douglas County. Minneapolis, St. Paul Metropolitan Area consists of Anoka, Dakota, Hennepin, and Ramsey Counties, Minnesota. St. Louis Metropolitan Area consists of Madison and St. Clair Counties, Illinois, St. Louis City, St. Charles and St. Louis Counties,Mssouri. ^Kansas City (Mo.) Kansas City (Kansas) Metropolitan Area consists of Clay and Jackson Counties, Missouri; Johnson and Wyan dotte Counties , Kansas. Meat Products Industry includes Meat Packing, wholesale; Prepared Meats; Poultry Dressing, Wholesale.
Source: 1947 Census of Manufactures, Vol. Ill, Statistics by States (Washington: Government Printing Office, 1950); Statistical Abstract, 1952. vn TABLE 18
LIVESTOCK SLAUGHTER AT NINE LEADING PACKING CENTERS 1950 - 1953
Sheep & Cattle Rank Calves Rank Hogs Rank Rank Lambs
1 9 5 3
1,251,709 1 103,753 6 2,658,637 1 624,691 3 1 596,547 7 43,248 8 545,332 7 578,546 4 8 667,936 6 182,273 3 519,742 8 670,571 1 7 785,255 5 162,396 4 427,387 9 263,659 9 9 1,244,818 2 107,370 5 1,745,105 4 668,938 2 3 547,770 8 54,449 7 1,269,506 6 514,131 5 5 851,506 4 317,542 2 2,246,531 2 431,952 6 2 872,818 3 348,757 1 2,020,278 3 417,260 7 4 537,665 9 40,886 9 1,306,005 5 361,491 8 6
i 9. 5 2 1,018,566 1 95,001 6 3,303,021 1 686,583 1 1 466,200 6 25,706 9 638,582 8 466,226 4 8 359,269 9 96,098 5 747,891 7 507,259 3 7 601,696 4 102,990 3 589,597 9 245,901 9 9 895,898 2 101,110 4 2,325,481 3 642,210 § 2 397,614 8 43,016 7 1,562,076 6 396,041 5 5 553,638 5 245,438 2 2,315,249 4 325,989 7 4 641,884 3 296,967 1 2,395,381 2 359,898 6 3 425,355 7 29,913 8 1,621,021 5 247,745 2 6 TABLE IS— Continued
PACKING Sheep & CENTER Cattle Rank Calves Rank Hogs Rank Rank TOTAL Lambs Rank
1 9 5 1
Chicago 909,347 1 91,189 2 3,406,366 1 351,810 4 4,758,712 1 Denver 384,£61 6 16,076 8 690,235 8 346,707 5 1,437,879 8 Fort Worth 255,970 9 82,522 3 714,690 7 433,642 2 1,486,824 7 Kansas City 475,961 4 62,811 5 523,817 9 188,223 9 1,250,812 9 OMAHA 783,739 2 74,798 4 2,482,414 2 471,772 1 3,812,723 2 St. Joseph 335,459 8 28,658 7 1,634,446 5 358,277 3 2,356,840 5 St. Louis 426,910 7 56,589 6 2,372,088 3 246,056 6 3,291,643 4 St. Paul 542,158 3 253,582 1 2,335,499 4 219,829 7 3,351,068 3 Sioux City 389,584 5 12,617 9 1,538,404 6 193,844 8 2,134,449 6
1 9 5 0
Chicago 1,149,445 1 102,784 3 3,170,901 1 423,291 7 4,846,421 1 Denver 394,145 7 22,649 8 628,193 8 510,909 2 1,555,896 8 Fort Worth 294,500 9 64,556 5 628,395 7 473,661 3 1,461,112 9 Kansas City 653,093 5 62,665 6 466,539 9 468,436 4 1,650,733 7 OMAHA 964,471 2 68,169 4 2,180,567 3 539,761 1 3,752,968 3 St. Joseph 390,235 8 32,211 7 1,402,032 6 464,407 5 2,288,884 5 St. Louis 714,837 4 298,607 2 2,523,432 2 455,793 6 3,992,669 2 St. Paul 755,029 3 345,181 1 2,169,321 4 296,527 8 3,566,058 4 Sioux City 495,764 6 18,460 9 1,308,977 5 233,297 9 2,056,498 6
VJ1 Source: U. S. Dept, of Agriculture, Agricultural Marketing Service Livestock Division, "Receipts and Disposition of Livestock at 64 Public Markets," for respective years. 54
TABLE 19
HEAT PRODUCTS1 MANUFACTURING BY EMPLOYMENT , AND REPORTING UNITS, NEBRASKA AND DOUGLAS COUNTY* FIRST QUARTER, 1951
Number of Total Number of Reporting Units Employees Reporting by Employee-size Class Area Mid-March Units 0- 4- 8- 20- 50- LOO 250Over 3 7 19 49 99 ll9 $ 9 500
Nebraska 14,746 79 11 17 13 10 7 12 2 7
Douglas County 12,112 26 5 4 3 2 4 2 6 ing, and the manufacture of sausage casing, sausages, and other pre pared meat products. ^Qmaha j_s located in and includes most of Douglas County. For all practical purposes, all Douglas County industries are in Omaha.
Source: U. S. Dept, of Commerce, Bureau of the Census, County Business Patterns (Washington: Government Printing Office, 1953), pp. 132-134.
TABLE 20
MONTHLY EMPLOYMENT AND TOTAL WAGES IN MEAT PRODUCTS INDUSTRY IN NEBRASKA, 1946-1953
Monthly Total Year Employment* Wages
1946 11,426 #33,020,219 1949 12,761 36,340,141 1950 13,775 40,576,625 1951 15,064 51,316,103 1952 15,064 52,951,747 1953 ,15,171 58,906,821
^Covers only employers with eight or more employees; however, this is approximately 90 per cent of the total employers in the industry.
Source: Letter from N. B. Hadsell, Chief Research and Statis tics, Nebraska Department of Labor, Division of Employment Security, Lincoln, Nebraska, dated June 11, 1954* Omaha's Packing Plants
Seventeen packinghouses are in operation at the present in
Omaha, four of which are operated by large national concerns. These four plants process all types of animals— beef, hogs, sheep and lambs, while the remaining thirteen are beef packing plants only. Of this latter number, eight are classified as shippers— in that their entire output is shipped to outlets in the East, and five distribute their products in Nebraska only, due to the fact that their plants and products are not Federally inspected and therefore not eligible to ship in interstate commerce.^
The four national packers— Swift and Company, Armour and Com pany, Wilson and Company, and the Cudahy Packing Company— are known in the industry as the "Big Four."
Swift and Company's Omaha plant is one of 56 packing plants owned by this company. This large concern also operates 128 dairy and poultry and ice cream plants, 31 cottonseed and soybean mills,
10 refineries, and 23 plant food factories. Products include fresh beef, pork, lamb and veal; cured products such as ham and bacon, sau sage and cooked meats; dairy and poultry products; dog food; and by products such as soaps, hides and leather, wool, animal feeds, fer tilizer, glue, and gelatin. These are marketed under such brand names as Swift's Premium, Swift's Brookfield, Allsweet, Jewel, Swiftning,
•'■The Meat-Inspection Act, approved June 30, 1906, 34 Stat. 674. 56
Pard, and Sunbright through 276 branch houses and 1,200 sales routes. 1
The Omaha plant of the Swift Company— the third largest in the organization— employs approximately 2,400 persons and produces many of the items that are marketed nationally under Swift brands.
Those that are manufactured here are as follows:
1. A complete line of fresh meats.
2. Refinery products made from oils, such as lard, short
ening, frying fats, tallows and greases for commercial
and industrial use.
3. Sausage products, with the exception of dry sausage.
4. Canned meats, except corned beef.
5. Dog food. This is one of four Swift plants that process
this product.
6. Animal feed products. Only three other Swift plants
process feeds.
The local plant of the Cudahy Packing Company is not only the largest of the Cudahy operations, but is also the largest packing plant in Omaha. Approximately 3*000 of the total 47*000 workers in the Cudahy organization are employed in the Omaha facilities. The main offices, located in Chicago since 1911, were moved to Omaha in
1950 and now occupy a modern five-story office building at the plant site.
1Local data from personal interviews. Information on national packers in this section obtained from Richard M. Clewett, editor, Mar keting Channels (Chicago: Richard D. Irwin, Inc., 1954)* pp. 231-2. Products produced by the local plant include the following:
1. A full line of fresh meat products.
2. Smoked cured meats.
3. Canned meats. The facilities for canning are the largest
of any Omaha plant, and the largest in the Cudahy organ
ization. Both sterile and semi-sterile canned items are
produced.
4. A full line of dry sausage. Some items in this line are
processed only in the Omaha plant.
5. Clix, an hydrogenated lard.
6. Pharmaceutical items, including insulin, cortisone, ACTH,
liver extracts, thyroid, and many other products of great
value.
7. Animal feeds.
8. Casings.
A total of 12 packing plants are owned by the Cudahy firm, in addition to 26 dairy and poultry establishments, an Old Dutch Cleanser factory, and facilities for producing other soap products. The many items produced are distributed through this firm’s 65 branch houses located throughout the country. Its products are marketed under such brand names as Puritan, Gold Coin, Rex, Tally-Ho, Old Dutch, Gibson, and Rival.
In 193^, the plant of the Bold Packing Company was purchased by Wilson and Company, third largest of the "Big Four." The company later purchased The Omaha Packing Company plant, which it utilized 53 for slaughtering beef cattle for the fresh meat trade. The Omaha facilities of Wilson Company, although the smallest of seven pack ing plants operated in the United States by this concern, employs an average of approximately 1,200 employees, including office workers.
Other packing plants are operated in South America in addition to
25 dairy, poultry, and egg plants, and other production facilities in the United States.
Products manufactured by the local plant of Wilson and Com pany include the followings
1. A full line of fresh meats.
2. Sausage products.
3. A full line of luncheon meats.
4. Smoked meat products.
5. Bacon products.
6. Animal and poultry feeds.
7. Canned hams.
The above products and those manufactured in other Wilson plants are sold through 115 branch houses and many plant sales routes under such brand, names as Korn King, H'ilsco, Ideal, Certified, Bri dal Bouquet, Laurel, Bakerite, Creamade, and Evon.
Armour and Company, the second largest of the "Big Four,” operates 39 packinghouses in Worth and South America, in addition to its Omaha plant. Items similar to those of Swift and Company are being produced in its packinghouses, its 47 dairy and poultry plants, its highly-developed organic chemical and pharmaceutical products division, and in its many other manufacturing facilities.
Armour1s products are distributed through 258 branch houses under such brand names as Armour's Star, Cloverbloom, Dexter, Banner,
Dial, and Treet. While all Armour products are not produced in the
Omaha plant, those that are processed here include the following:
1. A complete line of fresh meats.
2. A complete line of canned meats
3. A full line of luncheon meats.
4. Sausage products.
5. Glue.
6. Animal feeds.
7. Tallows and greases.
Approximately 2,400 to 2,600 workers employed during the year are responsible for the items produced in Omaha.
MEAT DISTRIBUTION
A discussion of Omaha's meat industry would not be complete without brief mention of the distribution of meat and related prod ucts that are produced in these packinghouses.
As Nebraska is not a thickly populated area, and as its packing industry is one of the nation's largest, a good share of the total output of meat and meat products is shipped to other sections of the country. Among the smaller packers, some ship their entire output to Eastern and Western markets (see Table 21) and others dis tribute their products locally. The "Big Four" packers ship part of 60 their output for distribution through branch houses and car routes,
and the remainder is marketed through Plant and City Sales depart ments at the packing plants.
Locally, meat products are distributed by the following types
of institutions:
1. Packinghouses.
2. Merchant wholesalers.
3. Wholesaling retailers.
4. Specialty food manufacturers.
5. Packers not located in Omaha, through their local branch
houses or sales routes.
Prior to the 1930's, all packinghouses operated sales branches
in downtown Omaha, from which they contacted their customers and dis tributed their products. As deliveries were made by horse and wagon, it was necessary to have a distribution point as near to the custom
ers as possible. When trucks came into common use, the packers dis
continued these expensive branch locations, and began distributing through Plant and City Sales departments located at the packinghouses.
At the present time, no Omaha packer has a branch house within the
city, nor within a 300- to 400-mile radius.
While packinghouses account for most of the wholesale meat
sales, other institutions mentioned above are by no means unimportant.
Specifically, these are as follows:
Meat Wholesalers
1. Lipsey Meat and Produce Company 61
2. Nebraska Meat Supply
3. Simon Wholesale Meat Company
4. Omaha Steak Company
5. Table Supply Meat Company
Wholesaling Retailers
1. Benson Locker Company
2. Andy Bly Market
3 • Central Market
4. Hansen's Frozen Food Lockers
5. Heckman's Frozen Food Lockers
6. John Tesar Meat Market
Wholesaling Manufacturers
1. Benak Provision Company
2. Glaser's Provision Company, Inc.
3. Joseph Kirschenbaum
Manufacturers' Sales Branches
1. Geo. A. Hormel and Company
The wholesalers' establishments serve mainly the restaurant and institutional trade, as do the two large retailers— Andy Bly
Market and Central Market. These two firms, together with Table
Supply Meat Company, are the largest suppliers of meal purveyors^
-1-Meal purveyors include those establishments which serve meals— restaurants, hotels, hospitals, government institutions. 62 in Omaha, Remaining retailers are small concerns whose main business is serving locker patrons, but they also make wholesale sales to small restaurants in their neighborhoods.
Sausage items are produced and distributed widely in this area by the provision manufacturers. The largest of these— Glaser
Provision Company, Inc.— employing 100 persons, manufactures 50 dif ferent sausage products. This firm has 22 salesmen-drivers who cover the states of Nebraska, Iowa, and South Dakota, distributing Glaser products from refrigerated trucks to grocery stores and meat markets.
Packers in other parts of Nebraska and in Iowa send salesmen into Omaha and the surrounding area, and as a result, they account for some of the wholesale meat business in this market. Salesmen of
Morell Packing Company of Ottumwa, Iowa, and Roth and Company of
Glenwood, Iowa, solicit orders from local retailers and ship their products in by truck once a week. The Geo. A. Hormel Company of
Fremont, Nebraska, followed the same pattern until a few months ago when it opened a sales branch in downtown Omaha. This branch will serve as this firm's sales and distribution headquarters for this area.
A more detailed description of the firms and methods involved in distributing meat will be presented in the following chapter. CHAPTER XV
CHANNELS OF DISTRIBUTION OF MEAT PRODUCTS IN OMAHA
Preceding chapters have sketched the establishment, devel opment, and relative importance of the meat industry in the United
States and in Omaha, Nebraska. The present chapter is concerned
■with a description of the channels through which meat is distributed, and the importance of these channels in the distributive process.
There are a number of avenues through which meat products pass on their way to the consumer, all relatively short because of the perishability of the products.
The large national packers with plants in Omaha distribute part of their output through their branch houses and other outlets in distant parts of the country. Some part of this output is also exported. The concern in this treatise, however, is with the meat products that are distributed in the normal wholesale area surround ing Omaha. Therefore, the channels that are principally used to distribute meat in this area will be discussed.
PACKER-TO-HETAILER-TO-CONSUMER CHANNEL
The packer-to-retailer channel dominates the local meat- marketing picture even as it does the national scene. The 1939
Census of Business indicated that United States packers distributed
63 64
30 per cent of their output through their own wholesale branches, and 45 per cent direct to retailers, while wholesalers and jobbers were only accounting for approximately 16 per cent of the meat sales.'*'
While accurate and exact figures are not available which would per mit a logical comparison, an idea of the local situation can be gained by considering not how the packers distribute their products, but how the retailers purchase for their retail customers. It is the concensus of those interviewed that local retailers secure 90-
95 per cent of their needs from the packinghouses, and the remaining 2 five to ten per cent from independent wholesalers.
Territory Served
The trading area served by Omaha packers varies considerably as between large and small packers and according to the particular type of operation. The large packers distribute nationally, of course, and much of their product is shipped from Omaha plants direct to their Eastern or Western branch houses. Territories covered by plant sales divisions of the packinghouses— referred to as the normal wholesale area— may include all or part of three or four states.
■4j. S. Bureau of the Census, Sixteenth Census of the United States. 1940. Census of Business. Vol. V., Distribution of Manufac turers Sales, 1939 (Washington:Government Printing Office, 1942), p. 13. Data not classified in this manner in 194# Census. o Opinion of sales executives in all major packinghouses in Omaha. This same estimate was expressed by the majority of whole salers contacted. There is no distinct pattern and limits of the plant sales territory of each company are not necessarily governed by competitive consid erations but by rail rates and services in effect when all meat prod ucts were shipped by rail. Almost without exception, these territor ies have remained static for 20-25 years, even though much of the meat being shipped by some firms, and all of the meat being shipped by others, is handled by truck*
Among the reasons advanced for maintaining the status quo of these territories are the following:
1. Plant salesmanagers jealously guard their territories
and resist any endeavor to make changes.
2. Transportation agencies are willing to make rate adjust
ments so that present areas can continue to be served
from Omaha.
In other words, salesmanagers do not want to examine terri tories from an economic or time standpoint, for fear of adjustments which will not be to their advantage. Further, when making a deci sion as to whether a certain area should be served from one plant or another, very often a transportation agency will make an adjustment in its rates so that the area can still be served from Omaha, rather than transfer the servicing to another plant and lose the business.
One national concern made a study regarding the advisability of servicing South Dakota from its Denver, Colorado, plant rather than from its Sioux City, Iowa, plant, from which the area was served at the time of the study. The decision to continue the present method 66 m s based entirely on a rate change made by the trucking line."*"
Chart I illustrates a plant sales territory of one of the national packers. It is the most representative of all plants oper ating here. The territories covered by the other companies may be either larger or smaller depending upon circumstances peculiar to that particular company. For example, one company's Kansas City plant was made inoperative by a flood in 1952 and closed down. Con sequently, much of the territory formerly covered from Kansas City is now served by the Omaha plant. The plant sales territory for this particular concern, then, extends down into Missouri to include
Springfield and St, Louis, and over into Kansas to include the North eastern section. Another packer covers northern Nebraska and north ern Iowa from its Sioux City plant, only going as far north as Onowa,
Nebraska from its Omaha plant.
Of the packinghouses not classified as national packers (see
Table 21), five confine their operations to Nebraska, and principally to Omaha. As these plants and their products are not federally 2 inspected, sales can be only in intrastate commerce.
Eight of the packers with plants in Omaha are known as "ship pers," in that they ship almost their entire output to outlets in the
East or far West. These concerns sell very little of their output, less than three to four per cent, to local accounts.
^Interview with traffic executive in national packing firm, 2 The Meat Inspection Act, op. cit. CHART I
TYPICAL PLANT SALES TERRITORY TABLE 21
MEAT PACKERS CLASSIFIED ACCORDING TO SELECTED CRITERIA OMAHA, NEBRASKA, 1954
Packers of Operations Operations Output PACKERS Beef, Lamb Packers of Federally City Only Shippers^ Distributed and Pork Beef only Inspected Inspected Locally^
Armour & Co. XX X Corrihusker Packing Co. X XX Cudahy Packing Co. X X X Eagle Packing Co. XXX Greater Omaha Packing Co. X XX George Hoffman Packing Co. XX X Kingan and Co. XXX Merchants Packing Co. X X X Midwest Packing Co. X X X Nebraska Beef Company X XX J. F. O'Neill Packing Co, X XX Omaha Packing Company X X X John Roth and Sons X X X M. Rothschild and Sons XXX Swift and Co. X X X Union Packing Co. XXX Itfilson and Co., Inc. X X X
TOTALS 4 13 12 5 8 9
■'"Ship output to Eastern or other markets. ^All or in part.
Source: Annual Livestock Report (Omaha: Union Stockyards Company, Ltd., 1953), p. 6; and Personal interviews.. a> 69
Another packer operates trucks vdthin a 100-mile radius of
Omaha, and two other packers serve Omaha, Lincoln, and the small towns between the two cities.
Competitive Aspects
Omaha's large packers, as has been explained, dominate the market and supply most of the needs of retailers in this wholesale area, this being true especially in Omaha and the area immediately surrounding the city. The extent of concentration can be seen in
Table 22 which shows that 91-94.5 per cent of the livestock from the local stockyards is slaughtered in plants of the four largest packers* Of course, the entire output of these plants is not distri buted locally; nevertheless, if only 50 per cent of their products is sold to retailers in this wholesale area, which is the case in one instance,^ they still dominate the market considerably, as the remaining packers (beef packers only) that distribute in this whole sale area, have available for s ale a t otal of not more than eight per 2 cent of the beef slaughtered here.
Competition on Basis of Price
There exists very little competition for carcass meat on the
"4ir. G. C. Walker, general sales manager Wilson Packing Com pany, Omaha plant, states that approximately 50 per cent of the out put of the Omaha plant is distributed through branch houses and the remainder through city sales and car routes in the surrounding whole sale area.
2Computed from figures in Table 22, assuming that the "Big Four" distributed 50 per cent of the beef they slaughtered in this area. TABLE 22
DISPOSITION OF LIVESTOCK FROM STOCKYARDS TO LOCAL PACKERS OMAHA, NEBRASKA, 1951 - 1953
1953 1952 1951 PACKER Livestock Per cent Livestock Per cent Livestock Per cent Received of Total Received of Total Received of Total
Armour and Company 1,201,354 31.2 1,281,722 31.6 1,355,156 34.4 Swift and Company 970,664 25.1 855,518 21.8 774,538 19.6 Cudahy Packing Company 831,869 21.5 1,142,231 28.1 1,126,325 28.6 Wilson and Company 509,955 13.2 533,939 13.1 452,665 11.5 *Kingan and Company 74,417 1.9 63,608 1.6 54,372 1.4 *J. Roth and Sons 66,091 1.7 46,743 1.2 51,351 1.3 ^Nebraska Beef Company 33,357 0.9 10,444 0.3 22,156 0.6 *Cornhusker Packing Co. 33,212 0.9 26,468 0.7 24,288 0.6 *Union Packing Company 27,044 0.7 21,258 0.5 15,518 0.4 ^Greater Omaha Packing Co. 27,027 0.7 17,202 0.4 10,722 0.3 *34. Rothschild and Sons 25,268 0.7 21,974 0.5 23,761 0.6 *Omaha Packing Company 23,236 0.6 18,820 0.5 18,237 0.5 *Midwest Packing Company 6,101 0.2 4,638 0.1 4,103 0.1 *George Hofman Company 5,536 0.1 4,523 0.1 4,191 0.1 *J. R. O'Neill Packing Co. 5,353 0.1 (1) (1) *Merchants Packing Co. 4,738 0.1 4,002 0.1 3,147 0.1 *Eagle Packing Company 3.617 0.1 3,426 0.1 2,985 0.1
TOTALS 3,848,839 100.0 4,057,566 100.0 3,943,526 100.0
*Beef packers only. (1) Not in business. o Source: Annual Livestock Reports for the appropriate years (Omaha: Union Stock Yards Company of Omaha, Ltd.) 71 basis of price at the packer level. The wholesale price of meat on
any one day, or for any short period, is determined largely by what the packer had to pay for the live animal. As packers purchase most of their livestock from the various commission firms at the livestock market, and as the competition is very keen due to the fact that there are a number of buyers and many sellers, prices paid for live
animals at any time are fairly uniform, i.e., nearly the same prices are paid by all firms on the same day. This results in a situation such that prices set by the packers to the retailers are somewhat the same; therefore there is, by and large, very little price buying on
carcasses or wholesale cuts.
Of course, if one packer buys heavily in one type of meat and it must be moved, a price concession may be made. Unlike manufactur ers of staple products, the meat packer cannot hold much of his prod uct for future sale. He cans and freezes a small amount, but approx imately 75 per cent of all meat is sold as fresh meat Consequently, the product must be sold at the price that will move the current supply into consumption.
Even the small packers' prices are rather consistent with those of the larger packers. This consistency could be due to the reason already cited above, or it could be the desire, on the part
^"Wesley Hardenbergh, "An Industry Behind the Meat Counter," Food Marketing, edited by Paul Sayres, (New York: McGraw-Hill Book Company, Inc., 1950), p. 276; also confirmed by local packinghouse executives. 72 of the smaller packers, to follow the lead of the larger members of the industry who are setting the pattern.
Competition on Basis of Service
Competition among the packers serving the retailers of this area is very keen. As has been pointed out, this competition is not on the basis of price, but on the basis of the services that can be performed by each seller. Some packers emphasize personal atten tion by the sales representatives, while others make more frequent deliveries. One packer will deliver smaller quantities than the others, and another packer invites buyers to personally visit the plant to select their purchases.
Table 23 discloses the number of salesmen employed by the various packing companies who distribute their products in this area.
Also shown in the table are other pertinent data relating to service given the customers by these salesmen.
The number of salesmen employed does not necessarily indicate the territory covered by a particular concern, nor the volume of its sales. It may, however, reveal a sales policy which calls for an intensive coverage of the trade and more personal attention to the customers' needs. For example, Packer "C" employs 24 salesmen in its City Sales department. Seven of these are specialty salesmen and two are institutional salesmen, calling on restaurants, hotels, and institutions. Instead of a policy which endorses increased use of the telephone for selling, as is true of the majority of local 73 packers, this organization concentrates on personal selling. As a result, approximately 60 per cent of the volume of city sales and
90 per cent of the country sales of this firm are developed through personal calls.
Packers, •with the exception of three, made personal calls on their customers. One small packer felt that as it was well estab
lished, few personal calls were necessary; therefore, all business was obtained over the telephone.
TABLE 23
NUMBER OF PACKINGHOUSE SALESMEN AND METHOD USED IN CONTACTING CUSTOMERS, OMAHA, NEBRASKA - 1954
Use of Number of Salesmen Method of Contacting Telephone as Customer Packer3* Compared to Personal Five Years City Country Calls Telephone Ago
A 8 n.a. yes yes same B 7 40 yes yes more C 24 40 yes yes less D 9 50 yes yes more E 0 0 no yes same F 3 5 yes yes more G 1 0 no yes same H 3 1 no yes more
■^Identity of packinghouses kept confidential at request of majority of packers, n.a.— not available.
Source: Personal interviews with all packers. 74
Two large and two small packers use the telephone for sol
icitation to a greater degree than in years past. One salesmanager
for a large packer, commenting on the practice of his salesmen
using the telephone daily from 2:30 until 4:00 P.M. for soliciting
orders, stated that he is not in favor of the practice, for the
reason that "competition is getting keener and customers need more
personal attention."^ Other salesmanagers stated that their sales
men are using the telephone more now for the reason that larger
retail organizations, centralized buying, and standardized grading
lend to the necessity for fewer personal calls and for added use of
quick telephone calls at frequent intervals to keep buyers apprised
of the market.
The frequency with which deliveries are made to retailers
in this area is standard within the industry with but few exceptions.
It is the practice to deliver twice a week to ordinary customers, three times a week to larger accounts, and emergency deliveries will be made when conditions warrant. Most concerns attempt to secure orders of a minimum size ($50 in the city, $100 in the country) to keep the frequency of deliveries as low as practicable, consistent with competition.
Practice varies in the matter of personal visits of buyers to packinghouse cooling rooms for the purpose of inspecting and selecting meats first-hand. One major firm encourages only large
^Statement by Mr. Frank Dragoon, City Salesmanager, Armour and Company, personal interview. 75 buyers to personally select their purchases, although an average of only one per cent follow this practice,^ Other packers discourage personal visits of retail buyers, maintaining that such shopping is 2 disrupting to ordinary work routines.
PACKER-TO-WHOLESALER-TO-INSTITUTION OR RETAILER-TO-CONSUMER
Service and Limited Function Wholesalers do not play as large a part in the distribution of meat and meat products in Omaha and the
surrounding area as would be the case were Omaha not an important meat packing center. While these merchants are the main suppliers of restaurants and institutions and also supply some of the needs of retailers, they still are few in number and their sales are relative ly small for a city of this size. This may be validated by glanc ing at Table 24 and observing the number of establishments and the sales in metropolitan areas of a size comparable to that of Omaha.
These areas are not packing centers and each has a larger number of establishments which gross more sales per year than do the merchant wholesalers in Omaha.
Share of Wholesale Business
Local wholesalers account for approximately 18 per cent of
■^Statement by executive of Cudahy Packing Company, personal interview.
^Typical opinion, expressed by executive of Armour and Company. 76
TABLE 24
MERCHANT WHOLESALERS OF MEAT AND MEAT PRODUCTS IN SELECTED. METROPOLITAN AREAS - 1948
Metropolitan Number of SALES Areas Establishments (#1,000)
Omaha, Nebraska 10 4,542
Miami, Florida 16 10,358
Toledo, Ohio 11 6,223
Wilkes-Barre, Hazelton, Pennsylvania 23 13,644
Hartford, Connecticut 17 18,880
Syracuse, New York 13 7,423
Charleston, West Virginia 10 5,448
Source: U, S. Census of Business, 1948, Wholesale Trade, Table 1H (Washington: Government Printing Office ), p. 0.25. 77 the meat sales in this area, according to the best available esti mate. "*■ Should conditions today approximate those of 1939, this estimate would be nearly correct, for according to the 1939 Census of Business, sales of Service and Limited Function Wholesalers were
16.7 per cent of those of the packinghouses made through their sales branches. (See Table 25).
As the packers discontinued Omaha sales' branches in the early 1940's, figures were not available in later census data with which to compare sales of merchant wholesalers. The 1948 Census of
Business does reveal, however, (See Table 25) that the sales of these merchants increased a total of 60.3 per cent from 1939 to 1949> even after adjustments for price change. This increase in sales was attributable to the following factors:
1. Increase in population.
2. Increase in per capita meat consumption.
3. Increased share of the total meat business.
Population in Omaha grew approximately £.9 per cent from 2 1940 to 1947, and this would, quite naturally, account for part of the increase in sales of the meat wholesalers. A share of this in crease in sales can also be accounted for by a rise in per capita
■'■Statement by Mr. Frank Dragoon, City Salesmanager, Armour and Company, personal interview. 2 Statistical Abstract, 1953, Population Standard Metropol itan Areas, p. 20. TABLE 25
WHOLESALE ESTABLISHMENTS IN THE MEAT INDUSTRY IN OMAHA, NEBRASKA 1939 - 1948
Types of Number of Number of Payroll Sales Sales Adjusted Establishment s Establishments . Employees (#1,000) ($1,000) for Price Changes*
1939
Wholesale E stablishment s 11 170 279 7,120 $10,113,600
Service and Limited- Function Wholesalers 6 47 1,111 1,563,920
Manufacturers' Sales Branches 5 123 205 6,009 8,549,680
1948
Merchant Wholesalers 10 49 162 4,542 2,507,284
*1926 = 100. Sales adjusted for price changes by dividing the sales by the Index of Wholesale Prices— Foods, for the appropriate year. Index for 1939 is 70.4, and for 1948 is 181.2.
Source: U. S. Bureau of the Census, Census of Business, 1939, Wholesale Distribution, Vol. II (Washington: Government Printing Office, 1942), p. 383; U. S. Bureau of the Census, Census of Business, 1948, Wholesale Trade. Area Statistics. Vol. V. (Washington: Government•Printing Office), p. 26.04; Indices of Wholesale Prices-Foods from U. S. Dept, of Labor, Handbook of Labor Statistics: 1950. Table D-5, p. 118. -o 79 consumption of meat, assuming that the local population was in line 1 with the national average. This does not account for all of the increase in sales, however. Therefore, it must be assumed, by indi rection, that the wholesalers are doing a larger share of the meat business than they did a few years ago.
The general concensus, among packinghouse executives, is that wholesalers are performing an important service in that they fabricate carcasses and wholesale cuts for the convenience of small restaurants and other meat purveyors. Their position, however, in the distribution of meat in this area is considered relatively static, and the possibility of their becoming more important in the 2 near future is rather remote.
Typical Wholesalers
Simon Wholesale Meat Company is a typical small meat whole saler. This concern has a total payroll of ten persons, including two general salesmen and two truck salesmen. A full line of fresh meats is handled, in addition to sausage, cold meats, cheese, and
■^Meat consumed per capita in the United States increased from 132.9 pounds per person in 1939 to 156.1 pounds per person in 1947, an increase of 19.1 per cent. Geoffrey Shepherd, Changes in the Demand for Meat and Dairy Products in the United States Since 1910. Research Bulletin #368, Agricultural Experiment Station, Iowa State College of Agriculture and Mechanical Arts, November 1949, p. 382.
^This opinion was also expressed by wholesalers interviewed. The fact that the packers are the suppliers of the wholesalers gives them the opportunity for a close check on the activities of these middlemen. 80 other dairy products, and a few items are processed, including corned beef.
One truck route covers the territory within a 50-mile radius of Omaha. The other operates out of Norfolk, Nebraska (90 miles north) and has a territory within a 50- to 60-mile radius of that city. Fresh merchandise is shipped daily to Norfolk for delivery by that truck, while the Omaha driver stocks his truck each morning at the main plant.
This company made 50 per cent of its sales in 1953 bo retailers and the other 50 per cent to institutions, while in 1952, sales were 20 and 80 per cent, respectively. This is not a typical experience of Omaha wholesalers, but is a shift in emphasis for this one concern due to the acquisition of new managerial talent during the year.
One of the largest meat wholesalers in Omaha is the Table
Supply Meat Company. It numbers among its customers not only some of the larger restaurants and hotels of Omaha, but also United Air
Lines and the Union Pacific Railroad. Shipments are made in con siderable quantities to the states of New York, Illinois, Texas,
California, Florida, Arizona, and others. Sales circulars are mailed to outstate trade and orders of 100 pounds minimum are shipped by Rail Express or refrigerated truck.
Table Supply buys the bulk of its meat from the "Big Four" packers, and a small amount from packers located in other parts of 81
Nebraska and Iowa. Beef, lamb, and veal are bought in carcasses,
while pork is purchased by cuts— loin, butts, shoulders, legs, and
spareribs. All meat is purchased fresh and aged properly before
it is sold to the large number of restaurants and institutions which are supplied by this firm in Omaha and the area within a 100-
mile radius.
Competitive Aspects
Merchant wholesalers, concentrating primarily on serving
restaurants, hotels, and institutions, supply an estimated 65-75 per
cent of the needs of these meal purveyors. This is true principally because wholesalers are able to fabricate carcasses into small cuts, make more frequent deliveries, and give more personalized service to these accounts than can the large packers.
Packers take a common-sense approach to this typical market
ing problem. One executive, when questioned about this situation, replied:
Why should we compete with one of our largest accounts? If we tried to take his customers away from him, we would lose all his business. As it is, we are supplying him with all the meat he sells, and at a low sales cost to us. He is taking all the grief of fabrication and servicing the small, and often risky, restaurant and institutional trade, and we couldn't do it any better or cheaper. We are satisfied.
While wholesalers secure their meat from the packinghouses
and in turn sell these same products to restaurants and other
■'‘Statement by Mr. Frank Dragoon, City Sales Manager, Armour and Company, personal interview. 82
institutions, it is logical to assume that competing on a price
basis with the packers would be difficult. Competition is not
primarily on a price basis, therefore, but on a service basis.
Wholesalers purchase carcasses from the packers, fabricate them into
steaks, chops, and other retail cuts for the institutional trade,
and make daily deliveries in much smaller amounts than could be
secured from the packinghouses. The cuts of meat that cannot be
sold to institutions, are offered to retail stores or to sausage makers and meat processors at prices lower than packer prices.
Wholesalers often secure part of their meat supply from these sausage makers and meat processors. Choice cuts from car
casses purchased by these manufacturers are often sold to whole
salers, 1he remainder of the carcasses being used in their own pro
cessing. These cuts are secured by wholesalers at prices less than would be paid packers for the meat. This permits the wholesalers to compete more favorably with the packers on the basis of price.
PACKER-TO-INSTITUTION-TO-CONSUMER
It has been estimated by various members of the industry that only 25-35 per ©nt of the meat sales to restaurants, hotels, and institutions are made by packers. These firms cannot service this trade as well as can independent wholesalers. Small restau rants and institutions that require daily deliveries in small quan tities are not profitable for the large packer whose overhead and 83 operating expenses are so much greater than those of the smaller wholesaler.
Only one of the large packinghouses has any appreciable amount of institutional business, and this packer is expanding its sales and attention in this area. The salesmanager of this concern is of the opinion that larger hotels, restaurants, and hospitals are becoming more cost conscious and are therefore demanding portion 1 2 cutting, a service that can best be offered by the packinghouse.
Reasons for this opinion \^ere stated as follows: (1) packers can best afford the expensive equipment necessary to perform this func tion of portion cutting on a large scale; (2) packers can best util ize the trimmings, bone, and other waste involved in this operation;
(3) packers are in a better position to do the research necessary to develop this service.
SUMMARY
Meat and meat products reach the consumer through one or the other of these important channels of distribution, the particular channel chosen in each instance being influenced by the method of
^Refers to fabricating carcasses and wholesale cuts into steaks, chops, and other small portions ready to be cooked and served to the patron without any trimming or cutting necessary by the meal-purveying institution.
^Statement by Mr. M. T. Taylor, City Salesmanager, Swift and Company, personal interview. 84 operation of the seller and the needs and desires of the buyer.
The retailer or institution purchases meat and meat prod ucts from either the wholesaler or packer, dependent upon the services offered which meet his needs or desires. For example, the small restaurant buys supplies from the wholesaler because the lat ter will deliver every day or even twice a day, while the packer will only deliver once or possibly twice a week. Furthermore, the wholesaler is much more lenient in his credit terms than is the packer, which influences the smaller restaurants and institutions to patronize the wholesaler. On the other hand, the packers are better able to give point-of-purchase helps to a buyer, thus influ encing the retailer to deal direct with the packer. Other services which are offered by the large packers which influence large insti tutions and retailers to purchase their needs through this channel include personal calls, telephone calls, and advice and counsel of their many general and specialized salesmen.
Certain practices in the trade influence the channels through which meat flows. For example, wholesalers are fabricators, and for that reason, restaurants and institutions that cannot perform this function themselves, purchase their needs from the wholesalers.
Most packers do not perform the fabricating function. It is also generally true that wholesalers specialize in fresh meats, while packers carry a diversified line of fresh meats, provisions, sausage items, and dairy products. Thus the retailers that require a divers 85 ified line of merchandise are influenced to patronize packers rather than wholesalers.
Price influences the channel through which meat passes to the consumer in that the packinghouse, as a general rule, can offer a lower price for meat in wholesale cuts or larger than can the wholesaler, Miolesalers are often able to compete price-wise with the packers by making special purchases from non-slaughtering pack ers, but by and large, retailers and large institutions will buy direct from the packinghouse if they can buy carcasses, sides, or primal cuts, because of price differentials.
Many restaurants and institutions purchase from wholesalers because they can sscure small size orders. A small restaurant can secure an order of five or ten pounds of hamburger, a few chops and steaks from a wholesaler while it would be impossible to get delivery of a like order from a packinghouse. Packers attempt to keep orders to a $50 minimum in the city and #100 minimum in the country. CHAPTER V
TRANSPORTATION OF MEAT PRODUCTS
An important step in marketing meat and meat products
involves transportation, or the physical movement of these products
from the packinghouse to the point of sale. In this present chap ter, consideration -will be given to the trends in transporting live
stock and meat products, the advantages and disadvantages of using
rail or trucks in performing this function, and the effects on
■wholesaling meat caused by these trends.
RELATIVE USAGE OF RAILS AND TRUCKS
Mention has been made in a previous chapter of the rise in
importance of the truck for transporting livestock to market, and
of the effect it has had on the entire meat industry. This trend has continued up to the present time, with the result that truck ing is a major factor in the transportation of animals and animal products alike.
This increasing importance has come about at the expense of the railroads, as evidenced by the fact, according to Table 26, that the total numbers of livestock received today in the principal markets have not increased appreciably in the last 20 years, whereas
86 87
TABLE 26
PERCENTAGE CHANGE IN RECEIPTS OF LIVESTOCK BI TRUCK AND BY RAIL, ALL PUBLIC MARKETS AND OMAHA PUBLIC MARKET 1930 - 1953
All Public Markets Omaha Market
Year Per cent Per cent Per cent Per cent Number of Received Received Number of Received Received Livestock by Truck by Rail Livestock by Truck by Rail
1930 91,094,417 n«£ia n.a. 8,377,872 28.8 71.2
1935 67,269,726 44.3 55.7 4,195,306 51.1 48.9
1940 77,834,154 56.6 43*4 4,963,333 54.8 45.2
1945 82,644,026 51.1 48.9 5,708,164 52.4 47.6
1950 73,901,649 71.0 29.0 5,377,639 78.9 21.1
1951 74,177,699 72.4 27.6 5,789,648 82.7 17.3
1952 77,516,772 73.3 26.7 6,174,588 80.6 19.4
1953 73,602,08176.1 23.9 5,572,825 85.5 14.5 n.a.— not available.
Source: Data for 1945-53 from U. S. Dept, of Agriculture, Agricultural Marketing Service, Livestock Market News and Related Data: data for 1935-40 from U. S. Dept, of Agriculture, Agriculture Statistics, 1945: data for 1945 from U. S. Dept, of Agriculture, Agriculture Statistics, 1946 (Washington: Government Printing Office). 8$ the percentage of livestock receipts hauled by truck has increased tremendously. There could be only one result— direct loss of this traffic by the railroads.
Not all types of animals are being diverted from the rail roads in the same proportion, however. According to data in Table
27, the percentage of cattle, calves, and hogs that are being moved into the markets by trucks is much greater than the percentage of sheep and lambs, although the trend, even here, is in favor of trucks. The greatest increase, percentagewise, since the peak of
1939-45, was made in sheep and lambs, as is shown in Table 28,
Railroad statistics also denote a loss in tonnage of animals and animal products. Table 29 reveals that the number of tons of animals and animal products that were originated by the Class I railways of the nation decreased by over 30 per cent from 1947 to
1953. A decrease of 30 per cent was also evident in the experience of the Class I railways in the Western District.
Livestock receipts and trucking activity in Omaha's market closely parallel those of the other markets in the country. In other words, as far as total livestock received is concerned, the numbers have remained about constant since 1930, but the percentage of the total received by truck has materially increased. (See Table 26)
With regard to particular types of animals, the Omaha market has received a higher percentage of some types than the principal markets' average, and less of others. Table 30 indicates that a 89
TABLE 2?
TRUCK RECEIPTS AS PERCENTAGE OF TOTAL RECEIPTS OF LIVESTOCK AT PRINCIPAL PUBLIC MARKETS 1939 - 1950
Date Cattle Calves Hogs Sheep & Lambs
Per cent Per cent Per cent Per cent
1939 62 61 68 29
1940 66 64 68 32
1941 69 67 70 34
1942 64 64 69 32
1943 58 65 67 33
1944 59 67 67 32
1945 58 65 60 34
1946 57 62 61 36
1947 66 70 70 38
1948 69 73 74 42
1949 72 75 77 44
1950 76 78 79 44
Source: U. S. Dept, of Agriculture, Bureau of Agricultural Economics, ‘'Transportation of Selected Agricultural Commodities to Leading Markets by Rail and Motortruck, 1939-50" (mimeographed) (Washington: Government Printing Office, June 1951), p. 16, 90 higher percentage of cattle and hogs is received by truck in Omaha than is the average throughout the country. Other markets, however,
receive a larger percentage of calves, sheep, and lambs, by truck
than does Omaha.
TABLE 28
CHANGES IN PERCENTAGE OF TOTAL UNLOADS OR RECEIPTS BY TRUCK, OF LIVESTOCK AT PRINCIPAL MARKETS 1939-45 PEAK TO 1950
Per cent change in truck 1939-45 Type 1950 percentage, 1939-45 peak peak to 1950 Per cent Per cent Per cent
Sheep and lambs 34 44 29
Calves 67 78 16
Hogs 70 79 13
Cattle 69 76 10
Source: U. S. Dept, of Agriculture, Bureau of Agricultural Economics, "Transportation of Selected Agricultural Commodities to Leading Markets by Rail and Motortruck, 1939-50" (mimeographed), (Washington: June 195l)> p« 10.
Reasons for these variances can be found in the following:
1, Motor carriers have the advantage in fast service and
generally lower over-all charges for relatively short
movements.
2. The Omaha market is in the center of the hog-raising
and cattle-feeding area of the country. 91
TABLE 29
NUMBER OF TONS OF ANIMALS AND ANIMALS ORIGINATE^ BY CLASS I RAILWAYS2 IN THE UNITED STATES 1947 - 1953
United States Western District Year Per cent Per cent 'Jumber of tons Increase Number of tons Increase
1947 19,715,818 — 13,000,407 —
1948 16,86$,397 - 14.5 11,020,066 - 1$.2
1949 1$,284,266 - 9.3 10,178,994 - 7.6
1950 14,321,369 - 6.3 9,329,945 - 8.3
1951 14,362,184 0.3 9,594,976 2.8
1952 14,601,723 / 1.7 9,919,782 / 3.4
1953 13,767,935 - 9,099,688 - 8.1
Per cent Increase 1947-1953 - 30.2 - 30.0
•‘•Tons originated are used so as to eliminate the duplication in- cluded in total freight traffic classification. 2Class I Railways originate approximately 95 per cent of tonnage originated by all classes of railways. See Interstate Commerce Commission 65th Annu al Report on the Statistics of Railways in the United States (Wash ington: Government Printing Office, 1953)? p. 38.
Source: Interstate Commerce Commission, Bureau of Trans port Economics and Statistics, Freight Commodity Statistics. Class I Steam Railways in the United States, for year ended December 31* 1953 (Washington: Government Printing Office), Statement No. $4100, p. 92
3. Most sheep and lambs coming into this market come orig
inally from the far ¥est.
4. Most of the calves received in Omaha are shipped from
ranges in the West— Wyoming, Colorado, and Western
Nebraska.
TABLE 30
DRIVE-IN RECEIPTS OF LIVESTOCK AS A PER CENT OF TOTAL RECEIPTS AT ALL PRINCIPAL MARKETS AND AT OMAHA MARKET 1951 - 1953
All Principal Markets Omaha Type of Animal 1951 1952 1953 1951 1952 1953
Cattle 75.4 75.7 79.7 84.2 83.3 90.6
Calves 79.1 80.4 82.3 56.1 52.7 60.6
Hogs 80.0 81.3 85.2 94.2 97.0 98.3
Sheep and Lambs 45.0 48,8 52.1 40.1 37.1 47.5
Source: U. S. Dept, of Agriculture, Market News (Washington: Government Printing Office, June 1954), Table 10,
That highway transportation is more economical than rail for short hauls in almost all lines of business, but especially in 93 the grocery trade, has been known for many years.^ This is confirmed in late studies, one of which reveals that the preponderance of most 2 perishable food stuffs is moving to market by truck.
Distance from the market is a primary determinant in choosing a method of transportation.
The importance of distance in the proportion of truck move ment is indicated by the fact that markets close to producing areas receive relatively large fractions of their total ship ments by highways. . .3
This accounts for the high percentage of hogs and cattle shipped short distances from raising and feeding lots to the Omaha market. Moreover, it explains the higher percentage of calves and sheep and lambs arriving locally by rail, for these animals, in the main, are originally shipped in from relatively long distances.
Sheep and lambs originate in the Western States— Colorado,
Idaho, New Mexico, and Montana. Upon arrival, approximately 40 to
50 per cent go directly to the packinghouses for slaughter, depend ing upon the season.^ The remainder are reshipped to feeders in
•^Theodore N. Beckman and Nathanael H. Engle, Wholesaling (New Yorkj Ronald Press, 1951), p* 521.
Study by U. S. Dept, of Agriculture, Bureau of Agricultural Economics, Transportation of Selected Agricultural Commodities to Leading Markets by Rail and Motortruck. 1939-1950. (Washington; Government Printing Office, June 1951), pp. o-l6.
^Ibid.
^On October 10, 1954, out of 13,500 sheep and lambs in the Omaha market, 6,000 were slaughtered and the balance shipped to fee lots. Not more than 10 per cent of the sheep and lambs received in this market originate in Nebraska. Data from Mr. Fred Smith, Head buyer, Cudahy Packing Company, October 10, 1954* 94
Nebraska, Iowa and other states in the Corn Belt. They are fattened
and later returned to the market; this time, however, they arrive
principally by truck.
Calves come in mainly from the ranges in doming, Western
Nebraska, and infrequently from Southern Kansas. Ninety-five per
cent of these calves are stockers and feeders, that is, they are
reshipped from the Omaha market to nearby feed lots, there to be
grain fed and returned to the market as matured animals.
Calves are shipped by rail for another important reason. As
calves should not be shipped in the same car or compartment with
heavier animals, it is advisable to put them in separate cars or to
divide the car with a partition. This arrangement is more practic
ally carried out in a rail car than in a truck; therefore, many
cattle raisers ship their stock by rail when calves are to be in
cluded in the shipment.
One packinghouse buyer made the following comment:
Most calves shipped into Omaha are stockers and feeders, and they come in in the fall of the year. Most of them are reshipped by rail car because of the distance from the ranges. A good percentage of those within a radius of 500 miles are shipped by truck•
Not all truck shipments of animals into the Omaha market are
from short distances, however. One local packer has received ship- o ments of sheep by truck from as far away as central Idaho, It is also logical to surmise, that if 85 per cent of the livestock coming
^Personal interview with a buyer of the Cudahy Packing Company.
^Statement by an executive of the Cudahy Packing Company. 95 into this market arrives by truck (see Table 26), at least part of these animals would have been hauled relatively long distances, for
animals received at the Omaha market originate in at least 26
states, according to the data in Table 31* Thus, there are other
considerations besides distance in the shift from rail to truck.
Factors influencing this trend will be discussed later in this chap ter.
It is also evident, from data shown in Tables 32 and 33 j that there is a trend toward increased use of highway transportation in moving livestock from the Omaha market to other points. While the rails are continuing to carry the greatest percentage of out going livestock, the recent trend should result in trucks surpassing rails in the near future. These outgoing shipments of livestock include stockers and feeders, going to points mainly in Iowa and
Nebraska, and also animals for slaughter in packinghouses as far distant as the East Coast
USE OF TRUCKS FOR TRANSPORTING MEAT AND MEAT PRODUCTS
The foregoing discussion deals with the relative share of the total volume of livestock moved by the several modes of trans portation. There has for many years been a keen interest in this
■''Because of differentials between freight rates for live animals and rates for fresh meat and packinghouse products, national packers with packinghouses in the East often find it advantageous to ship livestock to these plants to be slaughtered rather than slaughtering in their Omaha plants and shipping the meat by refrig erator rail car or refrigerated truck to the Eastern markets. 96
TABLE 31
LIVESTOCK RECEIVED IN OMAHA MARKET BY STATE OF ORIGIN AND TYPE 1953 (Numbers)
ORIGIN Cattle Hogs Sheep TOTAL
Arizona 1,056 MW 1,056 Arkansas 122 - - 122 California - —— 650 650 Colorado 44,063 513 42,190 86,766 Georgia 58 — - 58 Idaho 1,708 1 81,131 82,840 Illinois — 141 — 141 Iowa 599,655 1,336,219 166,333 1,991,207 Kansas 102,113 3,770 31,331 137,214 Louisiana 174 — 174 Minnesota 178 658 3,852 4,688 Missouri 13,267 57,726 13,931 84,924 Montana 11,958 72 18,532 30,562 Nebraska 1,406,262 989,918 385,649 2,781,829 Nevada 157 — 773 930 New Mexico 1,487 — 10,147 11,634 North Dakota 1,185 — — 1,185 Ohio 49 — — 49 Oklahoma 11,339 — 389 11,728 Oregon 584 — 1,801 2,385 South Dakota 20,080 18,301 18,773 57,154 Texas 11,920 — 10,479 22,299 Utah 952 — 19,302 20,254 Washington 63 — 653 716 Wisconsin 56 — — 56 Wyoming 92,731 ... ;._.4i 149.432 242.204
Totals 2,321,117 2,296,360 955,348 5,572,825
Source: 70th Annual Livestock Report (Omaha: Union Stock Yards Company of Omaha, Limited, 1954), p. 5* 97
TABLE 32
LIVESTOCK SHIPPED FROM OMAHA LIVESTOCK MARKET BY TRUCK AND BY RAIL, 1950-1953
Shipped by Truck Shipped by Rail Year Total Number Number Per cent Number Per cent of Total of Total 1950 1,624,671 690,933 42.53 933,738 57.47
1951 1,935,853 811,840 40.83 1,174,013 59.17
1952 2,209,889 973,369 44.05 1,346,520 55.95
1953 1.806.594 871.705 48.25 934,889 51.75
Total 7,627,007 3,344,847 43.90 4,279,160 56.10
Source: 70th Annual Livestock Report (Omaha: Union Stock yards Company of Omaha, Limited, 1954)., p. 10; 68th Annual Livestock Report (Omaha: Union Stockyards Company of Omaha, Limited, 1951), p. 10.
TABLE 33
DISPOSITION OF LIVESTOCK FROM OMAHA LIVESTOCK MARKET BY DESTINATION AND TYPE - 1953
Cattle Destination and Hogs Sheep TOTAL Calves Local Packers 1/ 1,416,875 1,763,673 668,291 3,848,839
Other Packers 2/ 480,002 548,821 116,879 1,146,702
Stockers and Feeders 2/ 488,927 1,434 169,531 659,392
1/ Some of the livestock purchased by local packers was shipped to other cities; 2/ packers in 218 other cities— located in 36 states; 2/ stockers and feeders at country points in 27 states.
Source: 70th Annual Live Stock Report (Omaha: Union Stock yards Company of Omaha, Limited, 1953), p. 6. 98 subject, and statistics are readily available for portraying the situation as it exists. It is evident that motortrucks predominate in the hauling of most types of livestock, as is also true in the case of poultry and its products, in milk, butter, cream, and apples,'*' Other agricultural products are not shifting to the motor truck in the same proportion as are the aforementioned productsj however, there has been some inroads made by trucks in the movement of almost all agricultural commodities. Percentage changes in receipts of agricultural commodities by rail and by truck at the principal markets have shown increases for trucks of from 2 to 209 per cent since 1939* while decreases up to 97 per cent have been 2 registered by the rails.
The factors which appear to explain the choice of a trans portation agency for a particular commodity are as follows:
1, Average distance, from supply areas to market— the
less the distance, generally, the greater the advan
tage for motortrucking, especially in over-all trans
portation costs; the longer the distance, typically, 3 the more the advantage of shipping by rail.
^"Ezekiel Limmer, Transportation of Selected Agricultural Commodities to Leading Markets by Rail and Motortruck, 1939-1950, Study made under the authority of the Research and Marketing Act. U, S, Dept, of Agriculture, Bureau of Agricultural Economics, June, 1951, p. 10.
2Ibid., p. 13. 3 See pp. 93-94 for application to livestock. 99
2. Differences between rail and truck charges on account
of factors other than distance. Commodities that have
a high value per pound and are bulky (hence, load light
ly) generally have comparatively high rail rates; on
the other hand, commodities of low value which load
heavily, typically have relatively low rail rates.^
3. Variations in susceptibility of the various commodi
ties to spoilage in transit. Shipments by rail are
frequently considered to be more subject to damage
than shipments by truck because of more jolting and 2 handling.
Rates for livestock by rail or by truck are lower than rates for fresh meat or packinghouse products, regardless of the distance involved. Further, rail and truck rates for livestock are compar able for relatively short distances, generally speaking, but when shipments are for distances in excess of 500 miles, differences be tween rail and truck rates favor the rails. 2 Shipments of livestock by rail, however, result in a lower loss ratio than shipments by truck, according to statistics com piled by Livestock Conservation, Inc., Regional Office, Livestock Exchange Building, Omaha, Nebraska. One function of this non profit organization is to determine ratios of cripple and dead ani mals as a percentage of total numbers of livestock received by truck and by rail at the Omaha Stockyards. The ten-year averages, 1944- 1954* Tor cattle are as follows: Crippled: 0.039 per cent by truck, 0.032 per cent by rail; dead: 0.022 by truck, 0.014 by rail. The ten-year averages for hogs are: crippled: 0.213 by truck, 0.187 by rail; dead: 0.168 by truck, 0.059 by rail. 100
4. Differences among various commodities in their require
ments for fast service.^ Trucks generally offer ser
vice from door-to-door idiich is typically faster than 2 rail freight up to very long distances.
The available statistics and the studies that have thus far been made concern the movement of commodities from producers to the markets. However, there is a paucity of data concerning the move ment of products from the markets or processors to the various functionaries in the channels of distribution. Here the data are meager and limited, due, not to the lack of interest, but rather to the difficulties involved in their accumulation.
First of all, packing companies and processors are reticent to release figures for competitive reasons. Second, these products may be transported by rail or by private, common, or contract motor 3 carrier. Meat packers use all transportation agencies, some more
1 It is very important to the farmer to move his livestock to the market as fast as possible to avoid shrinkage. For this reason he m i l choose a method of shipment that will place his livestock in the market in the shortest possible time. Truck ship ments predominate in relatively short shipments and are being used increasingly in long shipments because of their greater speed, i.e., there are no delays due to waiting for freight trains, switching time in railroad yards, etc. Rails are also subject to Federal 28-hour law, by which animals must be unloaded for feed, water and rest every 28 hours if they are going to be in transit more than 36 hours. This law does not apply to trucks.
2Ibid., p. 7. 3 A private carrier is not for hire, that is, it is trans porting goods for its own use or as incident to its business or 101
than others, depending on the policy of the particular firm.
While there are agencies which regulate, to some extent, the
activities of these carriers, there is no law which compels report
ing of loads hauled by commodity. Hence the data are not available
from governmental sources, and these firms do not, as a rule tabu
late for their own use, freight hauled by commodity.
As a result of many interviews with executives in the indus
try, it was apparent that there has been a definite trend toward
the use of trucks for transporting meat and meat products from
packinghouses to wholesalers, retailers, and institutions in areas
outside Metropolitan Omaha. While all "Big Four" packers would not
reveal even relative percentages, the data in Table 34 indicates
the experience of three of the four packers. The other packer, it
is well known in the industry, is shifting rapidly from rail to
truck, not only for its cross-country shipments, but for transport
ing meat and meat products to its outlets in its plant sales terri
tory, Recent alterations were made to this firm's loading docks to
facilitate the night loading of large, over-the-road trailers, so that they could be put on the road in the early morning hours.
occupation. A common carrier offers its services within the limits of its capacity to shippers generally who desire such transportation as it undertakes to furnish. A contract carrier serves a single patron or a very limited number. The contracts do not cover single shipments but are contracts under which the carrier agrees to trans port a series of shipments over a period of time. Definitions from D. Phillip Locklin, Economics of Transportation (3d edj Chicago: Richard D. Irwin, Inc., 1951)> PP» 711-15• 102*
TABLE 34
PERCENTAGE OF FEAT AND FEAT PRODUCTS TRANSPORTED BY TRUCK AND RAIL IN NORMAL WHOLESALE AREA SURROUNDING OMAHA, NEBRASKA 1940 - 1953
1945 1940 Packer 1953 Truck Rail Truck Rail Truck Rail
A 95 5 25 75 5 95
B 100 0 100 0 100 0
C 50 50 60 40 SO 20
Source: Personal interviews with executives in each organ ization.
The reason for the variation between packers in the amount of their respective outputs that are transported by truck or by rail lies in the size of their respective plant sales territories, (See
Chart I). Packer A covers a territory that extends approximately
350 miles west of Omaha, 350 miles east of Omaha, and 100 miles north and south. Products of this concern can be delivered to outlets in this entire territory most economically and speedily by truck, this company feels.
Packer B'u plant sales territory is the smallest of any major packer. It extends west to the Colorado line, north into the southern part of South Dakota, south to include the northern-most part of Kansas, and east as far as Des Moines, Iowa. All points 103
are readily reached by truck, and the company has used commercial
trucks for delivery for many years*
The territory covered by the Omaha plant of Packer C is much greater than that of any other large Omaha packer. It includes
all of Nebraska, most of Iowa, western Illinois, Missouri as far
south as Springfield, and part of northeastern Kansas. Due to the
closing of the firm's Kansas City plant in 1951* this territory cov
ered from Omaha took on larger proportions. As a result of the dis
tances to be covered, it was found advantageous to use rail trans
portation for the bulk of their more distant shipments. This firm
also closed plants recently in Sioux City, Iowa, St. Paul, Minne
sota, Fresno, California, and Albany, Georgia,^ According to com
pany officials, this will result in the further expansion of the
Omaha plant sales territory and the percentage of rail transporta
tion will again increase.
In general the pattern of distribution of meat and meat
products from the Omaha packing plants to outlets in the normal
wholesale area is as follows:
1. Trucks are used exclusively for the distribution of
meat in the state of Nebraska. All shipments in the
state, with the exception of those to Lincoln, are on
an FOB basis and the same truck lines handle the res
pective shipments of all four of the large packers who
~hfe.ll Street Journal. September 27, 1954* P» !♦ 104
distribute state-wide. In other words, these commer
cial truck lines pick up shipments simultaneously from
each packing plant, assemble, and deliver outstate.
2. Trucks— either company-owned, commercial, or contract-
carriers— are used for distributing meat in part of
Iowa, up to approximately 175 miles from Omaha. The
normal practice is to use trucks as far east as Boone,
Ames, and Marshalltown, Iowa, and rails to more-distant
points. One major packer, however, used trucks for all
deliveries in Iowa.'*"
The experience of one of the other large packers in
serving Iowa and eastern Illinois was as follows:
In 1 9 3 central and southern Iowa towns and points in western Illinois were serviced by the Omaha plant. Refrigerator cars were shipped to break-bulk points— Boone, Marshalltown, Ottumwa, Cedar Rapids, Burlington, and Galesburg— from where commercial trucking firms delivered the individual shipments to local trade and to towns immediately surrounding these break-bulk points. Customers in these territories were sold on CAF or prepaid basis due to competition of interior Iowa packers who were delivering to the trade with their own trucks. Equipment used by some commercial truckers was somewhat outmoded. It lacked proper refrigeration and was not flexible enough to meet competition of packers using their own trucks, hence a change was made, whereby company trucks were assigned to handle merchandise from the plant to this entire a r e a .2
■^Company did not wish name revealed. 2 Letter from W, D. Hardy, Assistant General Traffic Manager, Cudahy Packing Company. This practice was soon discontinued, however, due to the fact that return hauls of merchandise were not always available from these eastern points. As long as back hauls could be obtained, the cost of shipping meat was minimized. However, when large truck and trailer units had to return to Omaha empty, the increased cost made this practice impractical. Company trucks are now used to make deliveries in the nearer points and car routes
(rail) are servicing the eastern-most cities, when shipments can be made in carloads.
Trucks are used to serve towns to which it is not feas ible to ship by rail. "Where a town or a city is either not on a rail line, or the demand for the particular company1s product is not great enough to justify car load shipments, orders are grouped with those for out lets in one or two nearby towns, and the aggregate is shipped by truck. In these cases, trucks leave Omaha at night and deliveries in.each locality can be com pleted by noon of the following day, thereby realizing for the shipper monetary, as well as time, savings*
Large refrigerated motortrucks— either company owned, or commercial carriers~are used to transport full carloads of meat to either coast. "While it is generally conceded that most long-distance shipments of this perishable product go by rail, there is a tendency to
use the highway to a greater extent now than ever before
These large highway units can now leave Omaha on Monday
and arrive in San Francisco or Los Angeles for third-
morning deliveries, whereas shipments moving by rail
carloads take fourth afternoon or fifth morning deliv
eries. Likewise, truckload shipments to the Atlantic
seaboard arrive for third-morning delivery, whereas
rail takes twenty-four hours longer.2
Advantages of Using Trucks
The very high proportion of meat and meat products carried
by motortruck is due to many factors, some of which have been men
tioned previously in this section in relation to agricultural prod
ucts in general. Following is a list of the advantages claimed for
the use of motortrucks in transporting the products of the meat
packing industry:
1. Flexibility
2. Lower cost
3. Faster service
1 For example, Wilson and Company, within the past six months began shipping by truck to the West Coast. At present, an average of two to three large truckloads a week are moving from the Wilson Omaha plant to California points,
^Statement by W. D. Hardy, Assistant General Traffic Manager Cudahy Packing Company. 4. Personalized service
5. Higher technical efficiency
6. Permits smaller inventories
7. Product arrives fresher
8. Less handling
One of the outstanding advantages of using trucks for moving any commodity is their flexibility. The shipper is not confined to certain time schedules, nor is he limited geographically to those localities that are on rail lines. He can ship his product at any time of day or night, to any city, town, or village. While Omaha packers do not lack for adequate service by the railroads— there being five main lines running east and south out of Omaha— time schedules are limiting to the shipper of a perishable commodity.
It is -well known that truck rates are lower than rail rates for commodities in less-than-carload lots. Truck rates are also lower than rail in some instances where car-load lots are being shipped. Table 35 shows carload and truckload rates on fresh meat and packinghouse products from Omaha to various cities in Iowa which are located in the normal wholesale area and served by Omaha packers.
It can be noted that truck rates are lower into Burlington and Dav enport, and when the railroads add the 15 per cent surcharge, truck rates are also lower into Cedar Rapids, Dubuque, and equal to rail rates into Ottumwa. In most cases, minimum weight requirements are likewise lower for trucks, due to their smaller capacity. This 108 TABLE 35
COMPARISON OF CARLOAD AND TRUCKLOAD RATES ON FRESH MEAT AND PACKINGHOUSE PRODUCTS FROM OMAHA, NEBRASKA TO SELECTED SHIPPING POINTS 1954
(in cents per cwt.)
Fresh Fresh Packing Canned Shipping Point Medium Meat Salted house Lard Meat Meat Products (State of Iowa)
Burlington Rail1 B-522 C-52 C-52 C-48 D-42 Truck A-47 A-47 A-47 A-47 A-47
Cedar Rapids Rail B-41 C-41 C-41 C-41 D-39 Truck A-42 A-42 A-42 A-42 A-42
Davenport Rail B-52 C-52 C-52 C-49 D-43 Truck A-47 A-47 A-47 A-47 A-47
Des Moines Rail C-26 C-26 C-26 C-26 C-26 Truck A-39 A-39 A-39 A-39 A-39 Rail A-33 A-33 A-33 A-33 A-33
Dubuque Rail B-52 C-52 C-52 C-51 D-45 Truck A-57 A-57 A-57 A-57 A-57
Ft. Dodge Rail B-41 C-41 C-41 C-34 D-30 Truck A-52 A-52 A-52 A-52 A-52
Ottumwa Rail B-41 C-41 C-41 C-41 D-36 Truck A-47 A-47 A-47 A-47 A-47
-*-Rail rates subject to 15 per cent surcharge (Ex Parte 175-B, May 2, 1952, Decisions of Interstate Commerce Commission, Vol. 286, 1953). ^Letters refer to minimum weight requirements: A-20,000 lbs., B-21,000 lbs., C-30,000 lbs., D-36,000 lbs.
Source: Tarrif number 9500, Chicago, Burlington, and Quincy Railroad; 9545-N, Illinois Central Railroad; 13514-K, Chicago and Northwestern Railway System; 29600-L, Rock Island Lines; and 1300-M, Milwaukee Road; truck rates from Midwest Motor Freight Bureau, Tarrif Number 4A. 109 accounts for the fact that truck rates are often lower than rail when quantities shipped are less than rail carload minimums. The trucks are able to offer lower rates because the shipment may re quire a less than carload rate by the railroad but may be entitled to a truckload rate by motor carrier.
Shipments by truck are faster than rail, especially in door-to-door delivery. This is readily apparent in the following analysis. The operations to be performed when merchandise is handled by truck are:
1. Goods are loaded into the truck.
2. Truck moves over the highway to the premises of buyer.
3. Merchandise is unloaded.
On the other hand, the movements that are necessary when this same merchandise is moved by rail are:
1. Goods loaded into refrigerator car.
2. Car is attached to train.
3. Train moves to locality of buyer,
4. Refrigerator car moved to siding.
5. Merchandise unloaded into trucks.
6. Delivered to premises of buyer.
It seems evident that truck shipments would, in all cases, take less time than rail. Ill other things being equal, terminal- to-terminal time for rail and truck are the same within the boundar ies of this particular wholesale area. The advantage to be gained 110 by the motortruck is in the added time taken by the railroads in terminal time, unloading time, and delivery time. Further, as most deliveries are not terminal-to-terminal, an efficient truck operation will place most orders in the hands of the purchasing middleman in less time than will the railroads,
Drivers of company-owned motortrucks, or of commercial or contract carriers, give both shipper and customer a more personalized service than would be received were goods shipped by rail. In the latter case, local draymen make the deliveries from rail cars to buyer's premises, and these haulers, not having come in close con tact with the shipper, do not have his interest at heart as do the drivers of either the company-owned trucks or contract carriers.
Trucks ordinarily hold a more even temperature than do refrigerated rail cars. Mechanical refrigeration is used which can be set thermostatically, thereby securing any desired temperature.
Few rail cars in use today are equipped with mechanical refrigera tion equipment.
Transporting meat and meat products by truck, because it is faster, permits the retailer or wholesaler to buy oftener and in smaller quantities. The resulting smaller inventory means less investment, faster turnover, less shrinkage, and a minimum loss through spoilage.
As far as the packer is concerned, any move that he can make that will put his products in the hands of the retailer, or whole Ill saler, and hence into the consumer's possession before any appre ciable shrinkage takes place is to his advantage. Time is of the essence. Hence, the packer m i l move as much merchandise by truck as is feasible because it is a better m y of merchandising, and leads to higher consumer and retailer satisfaction.
As is plainly evident, there is less handling involved in motortruck transportation. The additional handling always gives rise to the possibility of pilferage, damage to the products, or loss through shrinkage.
Disadvantages of Using Trucks
There are some disadvantages inherent in using motortrucks for transporting meat products, among -which are the following:
1. Truck rates are often higher than rail rates. Out of
the number of examples mentioned in Table 35* truck
rates exceeded those of rails into Des Moines and Fort
Dodge. Truck rates also exceed those of rails for the
movement of canned meats in all localities mentioned
in the table.
2. Most branch houses are constructed to accommodate rail
road freight cars and consequently have no facilities
for receiving truck shipments.
3. Trucks must be unloaded immediately. Railroad refrig
erator cars, on the other hand, can be put on a siding 1 1 2
and used as a storage facility as long as the car is
iced and demurrage charges are met.
Use of Rail Transportation for Meat Products
Rail facilities necessary to successfully transport meat and meat products are slightly different than those needed to haul live stock. Refrigerator cars to keep products at low, even temperatures, and fast trains running at convenient hours to transport these refri gerator cars, are imperative in handling perishable commodities.
All these physical conveniences and facilities are avail able in Omaha. It is one of the country*s largest railroad centers, and among the many lines running in and out of the local yards are numbered the Chicago, Burlington and Quincy; the Illinois Central;
Chicago and Northwestern; Rock Island; Missouri Pacific; Chicago,
Milwaukee and St. Paul; and the Union Pacific Railroads. The latter line moved its main offices and shops to Omaha in 1936 and is respons ible for the largest payroll in this area. Ample trackage and spurs are provided to the various packinghouses and all major packers own and have available refrigerator cars in which to move their products.
In spite of all this, packers do not make full use of these available facilities as they are finding that truck transportation is more suit able in certain situations, as outlined earlier in this chapter.
A graphic picture of the amounts of animal products that 113 were originated by the country's Class I railroads in the past
seven years is seen in Table 36. The data indicates that whereas
losses were sustained in transporting meat and meat products over this period, these losses were not as great as those experienced in moving livestock (see Table 29). In fact, there was even an increase
in the amounts of cooked, cured, dried and smoked meats and in pack
inghouse products hauled in the Central Western Region during the period covered by the data. Further, the tonnage of fresh meat originated by the railroads in the same area decreased much less than the national average, and the 1953 tonnage actually was larger than the 1949 tonnage.
The continuing use of rails for the movement of meat and meat products was explained by one executive as follows:
The main meat consumption areas are concentrated along either coast. Some packing plants are close enough to these areas to make truck shipments feasible. However, those pack ing concerns located in the interior— in the Corn Belt area— are too far away to make truck shipments practical at all times. For this reason, rails are still being extensively used by Missouri river-plant packers for the shipment of meat and meat products to heavy consumption areas,
While there has been some diversion of tonnage of meat prod ucts from rail to truck for relatively short hauls, the large Omaha packers continue to ship most of their output to their branch houses in the East and South by rail. This practice continues for
"^Statement by Harold Anderson, Head of Commercial Research Department, Cudahy Packing Company, personal interview* TABLE 36
NUMBER OF TOWS OF SELECTED ANIMAL PRODUCTS ORIGINATED BY CLASS I RAILROADS IN THE UNITED STATES AND CENTRAL WESTERN REGION, 1947-1953
United States Central Western Region
Fresh Per Cooked, Per Edible Per Fresh Per Cooked, Per Edible Per Meats cent cured, cent packing cent Meats cent cured, cent packing cent Year In dried In house In In dried In house In crease smoked crease Products crease crease smoked crease Products crease Meats Meats
1947 4,168,578 — 816,456 — 948,344 — 892,936 — 154,677 — 145,108 —
1948 3,665,731 -12.1 837,927 2.6 853,616 -10.0 758,638 -15.0 169,880 9.8 115,789 -20.2
1949 3,598,149 - 1.8 783,878 - 6.5 960,052 12.5 813,466 7.2 184,116 8.4 166,138 43.5
1950 3,341,956 - 7.1 843,276 7.6 895,627 - 6.7 772,370 - 5.0 188,158 2.2 160,968 - 3.1
1951 3,057,459 - 9.4 975,527 15.7 1,050,26017.3 721,047 - 6.6 206,117 9.5 183,739 14.1
1952 3,351,008 9.6 910,918 - 6.6 1,039,080 - 1.1 802,776 H . 3 190,866- 7.4 175,893 - 4.3
1953 3,326,027 - 0.7 802,471 -11.9 844,519 -18.7 865,864 . 7.9 171,221 -10.3 160,534 - 8.7
Per cent) 1947 Increase) - 53 -20.2 - 1.7 -10.9 - 3.0 10.7 10.6
Source: Interstate Commerce Commission, Bureau of Transport Economics and Statistics, Freight Commodity Statistics. Class I Steam Railways in the United States, Table 3, for appropriate years. m
•p- the following reasons:
1. These are long-distance hauls, rates for which favor
the railroads,
2. Froducts are shipped in carload lots, rates for which
again favor the railroads,
3. Branch houses are built to receive rail freight cars
and have no facilities for receiving truck shipments.
Branch house operation, however, is expensive, and in the areas nearer to the packinghouses, car route distribution has been developed as a substitute. The car route method of distribution requires that orders of buyers in particular cities and the terri tory adjacent thereto be assembled and loaded into one rail car and consigned to the shipper in care of a drayman or trucker located at the break-bulk destination. Upon arrival, the drayman unloads the car and makes delivery by truck direct to retail stores, or in some cases, to merchant wholesalers or institutions. Cars in which route shipments move usually contain from 40 to 70, or even more, orders.
Years ago, so-called peddler cars were used for handling
LCL shipments. . Those small orders were loaded at the shipping plant in station order and the cars stopped for partial unloading at various stations along the specified route. The peddler car method of distribution was discontinued by packers in the late 1930's, having become obsolete due to such developments as mechanical 116
refrigeration for motortrucks. The car-route method of distribution puts the product in the establishment of the buyer in from one to two days, whereas the
peddler car would take from five to six days to make deliveries.
Because of faster delivery, merchants are buying in smaller quanti
ties, and therefore have less of an investment in inventory, less
shrinkage and spoilage. Some of the extreme eastern points in the normal wholesale
area covered from Omaha, then, are served mainly by this car route method, rates for carload shipments by rail compensating for the
less-personalized service of draymen and local haulers in the break-bulk points. Each packer may ship any where from one to six
or seven cars per week to points in eastern Iowa, western Illinois, and at least in one case, to larger cities in Missouri and eastern
Kansas, The advantages and disadvantages of rail transportation are opposite to those previously mentioned for trucks, and for that reason they will not be listed again. It should be understood that the choice of a mode of transportation does not depend upon one factor alone. For example, when large cities in eastern Iowa or western Illinois lie on a rail line and the demand for a firm's products is great enough to warrant carload shipments, railroads are
often used even though the delivery time may be greater than that which could be realized by motortruck. In these cases, rail rates 117 would be enough less to compensate for the difference in delivery time, should this difference not be great enough to constitute a competitive di sadvantage.
Effects on “Wholesaling
The developments in transportation since 1930 have had def inite effects upon the distribution of meat and meat products. The improvements of trucks and highways, by enabling the farmer to mar ket his livestock more efficiently, has resulted not only in rela tively lower prices to the consumer, but in greater profits and purchasing power to the farmer. New developments in refrigeration, allowing thermostatically-controlled temperatures, have assured the delivery of perishable commodities in better condition than has ever been possible before in the history of the meat industry. In sum mary, the benefits on the wholesale distribution of meat and meat products brought on by improvements and changes in modes of trans portation are as follows:
1, Meat packers are able to deliver a better product. This
does not mean that better products are being processed
today, but it does mean that these products are arriv
ing at the retail store in a superior condition. Short
ened delivery time and evenly-controlled temperatures
tend to insure a much higher quality product going
through the wholesale channels of distribution. Lower cost. In short distances, in less-than-carload
shipments, and often in long distance deliveries— particularly when made by contract or private carrier— truck rates are lower than traditional rail rates, thereby permitting the packer or wholesaler to deliver his product at a lower cost. This could result in lower prices to the consumer, greater profit margin to the packer or wholesaler, or both.
More hand-to-mouth buying. Increased speed of delivery has resulted in the wholesaler and retailer tending toward hand-to-mouth buying to satisfy consumer demands.
This allows the merchant to keep his stocks more closely aligned with demand, thereby giving better service to the consumer and suffering less loss from spoilage in return.
Lower inventories. Closely associated with the above is the tendency to carry lower inventories. Numbered among the benefits to wholesaler and retailer are: less investment in inventories, greater turnover, less shrinkage loss, less storage space needed, and lower operating costs. Less handling. More deliveries made by motortruck has resulted in less handling of the product, less loss from damage and pilferage. 119
6. Trend toward precutting and packaging of meat has been
aided. This subject will receive further treatment in
the next chapter. It is sufficient to mention here that
prepackaged meat, because it has a limited shelf life,
must be displayed as quickly after packaging as possible.
Speedy delivery means added display time for those
products which lend themselves to this type of merchan
dising.
7. Packers are able to increase their efficiency of dis
tribution. Improvements in transportation— size,
speed, refrigeration technology— are enabling packers
to work out a better solution to one of their most dif
ficult problems, that of distributing large volumes of
perishable product to markets which are normally far
removed from producing and processing areas.
8. Many branch houses have been discontinued. The use of
large, over-the-road trucks has contributed more than
any other factor to the discontinuance by national
packers of many branch houses.^ The elimination of
these branches and their overhead has resulted in
reduced distribution costs for the packers.
^There were 191 fewer branch houses in 194® than there were in 1939* according to the U. S. Census of Business, 194®* Wholesale Trade. Bulletin No, 1-W-O, United States Summary, Table 1C (Wash ington: Government Printing Office, 1951)* p. 0.06. CHAPTER VI
SPECIAL PROBLEMS ARISING FROM SELF-SERVICE, PRECUTTING AND PACKAGING
Many new products and innovations, both in processing and distribution have occurred in the food industry in recent years.
These changes and the variations that are encountered weekly, monthly, and yearly, are a challenge to those engaged in either marketing or in manufacturing food products. It is a real test of market analysis and inventory control on the part of retailer, dis tributor, and manufacturer alike to predetermine the items and the amounts that the consumer will demand on a shopping day. The marketer of products must be fully aware of shifts in buying habits as well as innovations in marketing institutions and products to cope with everyday problems.
For example, people are eating more today than in years past, the average consumption per person being 1,600 pounds per year as compared with 1,500 pounds in 1 9 3 5 The composition of the diet has changed; for example, the intake of vitamins, iron, and calcium has increased approximately 32 p e r cent since 1909.
•'•Paul Sayres, editor, Food Marketing (New York: McGraw-Hill Book Company, Inc., 1950), pp. 4-5.
120 121
The consumers' demand for convenience has brought many technological advances in the processing industries, including canning, milling, and quick freezing. Prepared foods in paperboard packages, canned or quick-frozen foods ready cooked, and prepared baby foods are but a few of the new items appearing in late years.
There are transformations, too, in methods of merchandising brought on by the food retailers' pursuit for greater volume. Self- service is replacing the service store in many lines, supermarkets are dominating the food marketing picture, and the appeals offered by home freezer plans and frozen food lockers are having no little effect upon merchandising methods.
The meat industry has had its share of innovations and has felt the impact of many of these changes that have affected the entire food industry. The general market— combination grocery and meat market— is replacing the separate individual grocery store and meat market. In Nebraska alone, as shown in Table 37, combination stores increased 69.9 per cent from 1929 to 1948, while meat markets decreased by 77.8 per cent. Self-service is well entrenched in meat distribution, many changes are taking place in precutting and pack aging of meat products, frozen food lockers and home freezers are awakening demands for frozen meat items, and improved transportation methods have brought shifts in marketing methods. To an extent, the meat industry in a particular geographical area such as Omaha, will be modified by these changes, the amount of such modification to be 122 determined by the receptiveness of the consumers to new ideas, and the willingness and desire of the industry to innovate.
TABLE 37
MEAT MARKETS AND COMBINATION STORES (GROCERIES AND MEATS) IN NEBRASKA, 1929-1948
Year Meat Markets Combination Stores Number Sales* Active Number Sales* Active (#1,000) Proprietors ($1,000; Proprietors
1929 393 $10,204 456 1,243 $46,489 1,359
1935 229 3,492 237 1,905 49,349 1,870
1939 221 3,541 233 2,232 63,854 2,144
1948 87 5,040 107 2,112 200,435 2,211
■^Unadjusted.
Source: 1929, 1935, 1939 data from Census of Business, 1939, Retail Trade, Part 3 (Washington: Government Printing Office, 1941), p. 45j 1949 data from 1948 Census of Business, Vol. Ill, Retail Trade, Area Statistics, (Washington: Government Printing Office, 1951), p. 26.02.
SELF-SERVICE
The introduction of self-service m s a revolutionary develop - ment in the retailing of meat products. The first modern self- service meat market in the United States was established about 1940, and, while further development along this line was impeded by the war, growth since 1946 has been rapid in the entire nation. One 123 survey showed only 2 8 complete self-service meat stores in 1946.^
A later study, the results of which are shown in Table 38, revealed that the number of self-service meat markets in the United States increased from 178 in 1948 to 5,363 in 1952.2
Table 39 shows the increase in self-service meat markets on a regional basis, while the growth in Illinois, Iowa, and Nebraska is indicated in Table 40. It is clear that while the North Central states are not leading this movement, they are progressing normally in relation to their relative populations. Nebraska, for example, has approximately one per cent of the nations population, and also has one per cent of the total number of self-service meat stores in the nation.
In the early years of self-service meat, most stores were operated by independents. However, as the trend became more apparent, the chains increased their number of total self-service stores and surpassed the independents in a few years. (See Table 41). Only thirty per cent of the total number of self-service meat stores 3 were chain operated in 1947; however, by 1952 this percentage had increased to 77 per cent.
■^Godfrey M. Lebhar, "The Story of the Food Chains, 1925- 1950." Chain Store Age. June 1, 1951. 2 Fifth Annual Report on Self-Service Meats. Armour and Company, April 1952, pp. 6-8. A later edition of this report has not been published. 3 ^"Self-service Meat Boom Continues, Survey Shows," National Provisioner. October, 1951, p. 10. 124
TABLE 38
NUMBER SELF-SERVICE MEAT STORES IN UNITED STATES 1948 - 1952
Per cent Year Number Increase Increase
1948 178 110 162
1949 3 78 700 393
1950 1,983 1,105 126
1951 3,972 1,989 100
1952 5,363 1,391 35
Source: Fifth Annual Report on Self-Service Meats. Amour and Company, April 1952, pp. 6-8. (Later editions of this report have not been published).
TABLE 39
REGIONAL GROWTH OF SELF-SERVICE MEAT STORES, UNITED STATES 1948 - 1952
1948 1949 .. 1950 1951 . 1952 Per Per Per Per REGION Number Number cent Number cent Number cent Number cent In- In In In creas g crease crease crease
Northeast 41 300 632 685 128 1,364 99 1,790 31 Southeast 29 155 434 521 236 922 77 1,308 42 North Central 10 93 930 275 196 510 85 682 34 Southwest 27 92 - 341 215 134 461 114 567 23 Mountain 24 101 321 142 41 383 170 481 26 Pacific 47 137 * 191 145 6 222 129 525 61 Total 178 878 393 1,983 126 3,972 100 5,363 36
Source: Fifth Annual Report on Self-Service Meats. Armour and Company, April 1952, p. 12. (Later editions of this report have not been published). 125
T A B L E 4 0
NUMBER OF SELF-SERVICE MEAT STORES IN ILLINOIS, IOWA, AND NEBRASKA 194S - 1952
Per cent of STATES 1948 1949 1950 1951 1952 U. S. Total (1952)
Illinois 6 20 76 143 169 3
Iowa 4 14 41 68 102 2
Nebraska 3 4 16 25 51 1
Total United States 178 878 1,983 3,972 5,363 100
Sources Fifth Annual Report on Self-Service Meats, Armour and Company, April 1952, p. 13.(Later editions.of this report have not been published).
TABLE 41
COMPLETE SELF-SERVICE MEAT STORES BY TYPE OF OWNERSHIP UNITED STATES, 1948-52
Per cent of Total Self-Service Meat Stores
Ownership 1948 1949 1950 1951 1952 Chain Stores*4 45 59 69 75 77
Independents -21 _2£ -22 100 100 100 100 100
*Four or more stores under common ownership are classified as chain stores.
Source: Fifth Annual Report on Self-Service Meats. Armour and Company, April 1952, p. 14« (Later editions of this report have not been published). 126
The situation with regard to self-service meats in the Omaha area is similar to that in the nation as a whole. Early self- service markets were established by independents, followed a few years later by the chains. Table 42 indicates that the first full self-service market was established some seven years ago by the
Crestwood Shops, followed two years later by Shaver*s Market— both independents. Chain stores then began to convert their service mar kets to self-service and the new general markets which they opened had self-serve meat departments. At the present time, there are
26 complete self-service meat stores in Omaha, six of which are inde pendents. In other words, 78 per cent of the local self-service stores are operated by chains, a slightly higher percentage than the national average.
Both chain organizations, which operate self-service markets, have stores outside Omaha that are served from their Omaha head quarters. Hinky-Dinky Stores have two complete self-service mar kets in nearby cities and the Safeway organization has 22 in Nebras ka, Iowa, and Kansas, all of which are served from Omaha. These self-service markets have been opened within the last four or five years and future plans of both chains include self-service instal lations. Hinky-Dinky will install self-service meat facilities in all new stores that are opened, although present service markets
■will not be converted.^" Safeway, on the other hand, in addition
■'■Statement by official of the Hinky-Dinky Stores, personal interview. 127
TABLE 42
SELF-SERVICE MEAT STORES IN OMAHA, NEBRASKA BY OWNERSHIP AND LENGTH OF TIME OPERATED AS SELF-SERVICE 1954
Years Operated OWNERSHIP Number as Self-Service
Independents
Crestwood Shops 1 7 Shaver's Market, 40th and Farnam 1 5 Ross's IGA 1 q 1. ■*¥ Al's Super Market 1 Shaver's Market, North 30th Avenue 1 i t Phillips Department Store 1 i-ii
Total ...... 6
Chains
Hinky-Dinky Stores (local chain) 8 1-4* Safeway Stores (national chain) 12 1-4*
Total ...... 20
■^Conversion was gradual. Most changes were made in the last three years.
Source: Owners of each independent marketj meat buyers of the chain groups. 128 to opening a number of new markets in the three states— Nebraska,
Iowa, and Kansas— plans to convert eighty stores outside Omaha and
22 service markets in Omaha to self-service, all within the next 1 year.
It has been estimated that twenty per cent of the 496 retail meat outlets in Omaha have some self-service, either one hundred per cent or partial, and that fifty per cent of the total meat sales are made by self-service markets. This includes inde pendents and chains.^
A conclusion that self-service has taken the Omaha area by storm would be erroneous. Some consumers, of course, favor the greater selection and close inspection offered by self-service.
Others demand the services of a butcher. Self-service markets are being installed in spite of the prejudices of many of the stores' customers. "They complain at first, but they get used to it. In the long run it is better for them and us too," was the comment of 3 one executive.
^Statement by Mr. H. M. Kilpatrick, Meat Buyer, Safeway Store3, Omaha, Nebraska, personal interview. 2 Statement by Mr. Louis Kavan, Secretary Independent Grocers and Meat Dealers of Omaha, personal interview. 3 Statement by Mr. Wayne Bartley, Meat Buyer,, Hinky-Dinky Stores, personal interview. 129
Influence on Buying Habits of Retailers
The influences which this trend toward self-service has had
on the retail merchant have been many and varied. There has been
a reduction in the number of specialized meat outletsMerchants
have been called upon to make added investments in equipment and
space, often resulting in added traffic and sales. Store layouts
have had to be rearranged, adjustments have had to be made in the
number and type of employees. Operating procedures and controls
have had to be modified to coincide with this new type operation.
New practices in the buying of meats have also gradually evolved,
and these latter are the changes with which this study was primarily
concerned.
Quality.— One important factor, affecting the buying poli
cies of retailers, is the quality of meat demanded by the consumer
who patronizes the self-service market. The housewife now demands
a higher quality meat than was formerly the case; at least, higher
quality as far as her rather limited knowledge is concerned.
Appearance is the prime factor, and for this reason the retail meat merchant is having not only to buy higher quality meats from his
suppliers, but he is having to cut and wrap each package with close attention to eye-appeal.
■'■Census of Business, 1939* Retail Trade. Part 3 (Washington: Government Printing Office, 1941)* P* 45* Census of Business, Vol. Ill, Retail Trade, Area Statistics, (Washington: Government Print ing Office, 1951)* p« 26.02. 130
Consumer demand for higher-quality meat is being felt even
by the prime producer. The local concensus concurs ■with a state
ment by the head of meat merchandising for one of the national
chains:
.... There is a need for 'streamlined1 cattle for self-service meat, .... retailers will want cattle that can be cut with less waste and fewer undesirable cuts.
In other words, local consumers are demanding better quality meat
from the retailer and hence from the supplier— the wholesaler or
packer. The supplier in turn is upgrading his demands on the prime
producer.
Prepackaged Products.— One of the problems that the retail merchant has been facing in recent years is rising operating costs,
of which wages are a large part. Because such factors as wages con
tinue regardless of sales, the merchant must either reduce his need
for higher-cost labor or else increase his sales accordingly.
Retailers are attempting to reduce their labor costs by buying cold meats— bacon, luncheon meats, sausage, weiners, and other items—
from packers who have prepackaged these items ready for retail. The retailers are becoming more and more aware that the packer is better able to perform this service, and as long as quality is maintained, the retailers will purchase a larger share of their table-ready meats in this fashion.
■*'"IGA Quality Control Boosts Beef Sales." Supermarket News, March 15, 1954, p. 9. 131
The independents are stocking packer-packaged cold meats almost 100 per cent. The largest chain organization continues to prepackage part of' its cold-meat line on the premises of each out let, but the largest share is now being packer-processed. Because of a dislike for the appearance of the packaging material used by the packers, and because of a desire for closer control of quality, the other chain organization continues to process all its own cold meats. This organization is convinced that its total prepackage costs are lower than the packers."*"
Branded Merchandise.— Along with the increasing demand for prepackaged products is the need for branded merchandise. One fac tor that has been holding back self-service merchandising is the fear on the part of the consumer that the meat in the package will be inferior as to freshness, quality, or cut. The feature that best overcomes this drawback is quality merchandise under a brand label that can be recognized and repurchased. The retailers are becoming increasingly aware of the need for branded merchandise so as to overcome this fear on the part of the consumer and are therefore buying such items in increasing quantities from the suppliers.
The salesmanager of one of the large Omaha packing firms had this to say:
The qualitjr of meats sold to a. self-service market must be
1 -‘-Statement by executive of chain organization, personal interview. 132
higher than in years past. Self-service is an aid to the producer of high-grade products. The retailer must ha.ve top quality stuff. The shopper prefers branded, known meats of good quality.1
It is the general feeling among retailers and packers alike, that the time is close at hand— -as soon as technology guarantees a product of reasonable quality and shelf life— when all cold meats will be purchased from the packer in prepackaged form under a brand name.
Quantities.— Opinions and practices concerning the quanti ties of products purchased by self-service meat merchants as com pared to service operators are varied. Some retailers feel, and some packers concur, that with the same tonnage per month of sales, the quantities purchased at one time under self-service conditions are no different than under service. However, there is a strong feeling among the majority of market operators and their suppliers, that purchases are made oftener and in smaller quantities to conform more closely to the demand. For example, bologna was formerly purchased in sticks by the retailer and then sliced for the customer.
Today, this same retailer can purchase bologna by the small package— one to three dozen, six-ounce packages— in order to keep his stock fresh.
Time of Purchase and Delivery.— There is evidence that the
"'’Statement by Mr, M. T. Taylor, City Sales I-ianager, Swift and Company, personal interview* 133
self-service meat store operator purchases earlier in the week in
order to get deliveries earlier. Some merchants expressed them
selves this way, "In this type of an operation, it is necessary to
start getting ready for the week-end trade earlier in the week. I
don't have extra help, so my regular employees have to start Wed
nesday afternoon or Thursday morning to prepare for Friday and
Saturday's business. This means that I have to have deliveries by
Thursday morning at the latest.”
One packinghouse salesmanager said, "Retailers in self-
service want deliveries on Thursday or before. The Packer's sales man who is there first gets the business.”^
There seems to be a difference of opinion, however, among packers and merchants, and there is no conclusive evidence that the
above is a standard pattern. Other merchants and suppliers expressed the view that it makes no difference whether your business is serv
ice or self-service, deliveries must be made in time to get ready for the week-end trade and there is much preparatory work in either type of operation. It must be concluded then, that the desire for early deliveries is not a function of the type of market that is being operated, but an individual desire on the part of the particu lar operator.
Influence on Packers
This tendency toward more self-service meat stores has had
^Statement by Mr. William Cronquist, Plant Sales Manager, Cudahy Packing Co., personal interview. 134 its influence on the wholesalers and meat packers who supply these retailers* Because only a small amount of meat is distributed to the retailers by wholesalers in this area, the discussion here will be limited to the influence of self-service on the merchandising methods of the packinghouses.
Precutting and Prepackaging,— The successful meat retailer of today attempts to secure an efficient operation by building vol ume and spreading costs. Self-service enables a store to handle increased traffic or intermittent flows of traffic with equal ease because the product is being fabricated and wrapped for display by a minimum number of employees working at a constant rate over the entire work day. This precludes hiring extra workers for rush-hour periods, and thereby reduces labor costs. Because the merchant is desirous of further cutting labor costs, he is attempting to pass back to the packer part of this function of precutting and prepack aging meat products. Details of his success and the extent to which packers are performing this function will be discussed in a later section.
Frozen Meat Items.— Although prepackaging fresh meat cuts for self-service continues to be handled mainly at the retail level, due largely to the perishability of the product, there has been a limited amount of activity in packaging fresh frozen-meat cuts at the packer level. The stimulus for this activity has come partly from the housewife and partly from the desire of the retailer for 135 lower operating costs. The consumer is not only readily accepting
frozen meat in precut and packaged form, but is also demanding more meat cuts in this form. Packers generally feel that the efficiency
in meat distribution will reach its peak when fresh, red meat is processed and frozen at the packer level.
This subject will be treated further in a later section.
Advertising and Promotion.— In the service type of operation, the packer sold and delivered wholesale cuts or carcasses to the retailer and it was largely the responsibility of the retailer to fabricate and sell the product. Under self-service, the retail merchant no longer sells the package of meat, it must sell itself.
Packers must be more than ever interested in attractive packaging and point-of-purchase promotional material that will substitute for the personal suggestions formerly supplied in person by the butch- er.
While all large packers carry out national advertising cam paigns for their well-known products, only one does any extensive promotional work at the point-of-sale level. This firm employs men especially for this type of work and their products are always prom inently displayed in markets where they are stocked.
As more branded items appear, and as competition for space in display cases become keener, pressure for added emphasis on pro motional work will be felt by all distributors of meat products. 136
Attractive labeling, recipes on labels, and posters are but the
forerunners of devices that will be used.
Production for Sales.— The self-service merchant, being
fully aware that he must keep a full meat case in order to have
available a varied choice for the buying consumer, attempts to fill his case with cuts of meat that are in demand and that will sell
readily. To prevent spoilage, he therefore displays only those cuts that are likely to be sold during the day. In this process he is
changing from a policy of "selling what I buy" to a policy of
"buying what I can sell,"
This thinking is being passed back to the packer in that the packer is now forced to coordinate sales and production more closely. Where formerly Sales sold what was produced, now the Pro duction Department produces for anticipated sales, Salesmanagers contact their large buyers and then set weekly quotas, which in turn are used for weekly production schedules. According to packing house executives, there is closer coordination between sales and production today than has ever before been the case in the packing industry,^ due principally to this trend toward self-service.
Branded Merchandise.--Self-service merchandising of meat is continuing to face objections in this area, even as it is on a 2 national scale. These .objections are: (l) Lack of personal contact
1Ibid. o Details of survey completed by Supermarket Institute given 137
with butcher. Many housewives prefer dealing directly with the
butcher, so that she can either tell him exactly what she wants and
he will cut it for her, or she can tell him her needs and he will
make appropriate suggestions. (2) Fear that inferior merchandise
is being prepackaged.
Retailers are attempting to overcome these objections by
making available special services to those consumers who desire
fresh cuts and products that are not seen in the self-service cases.
The packers are trying to instill confidence in their products by
branding an increasing number of items. Consumers are then able not
only to identify the product readily, but are also able constantly
to secure the same quality merchandise.
An idea of the increase in the number of branded items com
ing out in the past five years is evident from the experience of
one of the major local packers. Five years ago, this packer was
distributing locally six branded items; one year ago, twenty-six;
and today, 39 branded products are being processed. Of this latter
number, twelve are self-service freezer case items and the remainder
require just normal refrigeration."'" in address by Henry J. Eavey, president, at 17th Annual SMI Conven tion, entitled "Opportunities in Your Self-Service Meat Depart ment," and released May 24, 1954*
-'-Statement by Mr. James Kimmel, Sales Representative, Swift and Company, August 30, 1954, personal interview. Attitude of Labor Union
One of the basic factors influencing the trend toward self-
service is the savings in labor cost at the retail level. The
retailer does not have to employ extra meat cutters during the
week-end peaks of trade, in the self-service market. In addition,
the duties of wrapping, weighing, and pricing the meat are handled by less-expensive, clerical help. In this way, the market that
under service conditions operated with four butchers during the
■week and one extra on the week end, under self-service can operate
successfully with two and not more than three meat cutters and two
or three wrappers and pricers.
In the aggregate this would ordinarily result in the employ ment of fewer butchers and in the displeasure of their labor union.
However, such is not the case in Omaha. All butchers who care to work are working, and it appears that there will be no unemployment
of members of this craft in the near future. The lack of an
apprenticeship program has limited the membership, therefore there
are virtually no new entrants to offer competition for the existing
jobs. As a result, there is no local resentment against this trend toward self-service, as may well have been expected at first glance
^Data secured in interview with Mr. Joe Silhacek, Business Agent and Secretary-Treasurer, Meat Cutters Union, Local 44, AFL, 11132 Douglas Street, Omaha, Nebraska, June 23, 1954* 139
PRECUTTING AND PACKAGING
In today's pattern of living* families are unwilling to
give more time than is actually necessary to shopping for* or to preparation of* food. It is therefore a tendency to use a minimum
amount of time for selecting the food supply and to pass on to com mercial processors and distributors as much of the task of prepara tion as is possible. The result has been the introduction into the market of many items which lend to speed in selection and prepara tion* such as frozen foods of many varieties* precut and prepack
aged fresh and processed meats and poultry* precooked meats* and even complete meals* partially precooked and packaged for quick preparation. These and many other items, developed to keep pace with a changing society* are worthy of lengthy discussion, but the coverage here will be limited to meat products which are precut and packaged* and to the effect of this processing on the retail* whole
sale* and packer levels of distribution.
Retail Level
From all indications* the Omaha area is slower to accept the trend toward precutting and prepackaging meat products than most other sections of the country. This may seem in contradiction to the data in Table 40* page 125j however* results of interviews with retailers and with leading packers who are experimenting in this area* and results of other studies indicate the reticence of the 140 local consumer for wholehearted acceptance of precut and packaged meat.
For example, two of the leading national packers, having plants in Omaha, are conducting experiments in prepackaged meats, but have selected cities in other sections of the country for their market testing, mainly because of the arduous task of intro- 1 ducing new ideas and new products in Omaha.
A recent study made by the United States Department of
Labor further indicates that some sections of the country are accepting prepackaged meat faster than are consumers of Omaha.
From the data in Table 43 it is evident that the per cent of all stores selling most fresh meat prepackaged in cities sampled in the
West North Central Region (which includes Omaha) is equalled or exceeded by most regions of the country. Also within this West
North Central Region, Omaha has the lowest per cent of stores sell ing most fresh meats prepackaged of any city included in the sur vey.
Of course, the amount of precutting and packaging being done at the retail level is directly related to the number of self-
■^Mr. John Larkin, General Sales Manager, Cudahy Packing Company, states that they are carrying on experiments in one of the southern cities rather than in Omaha because of the difficulties encountered previously in getting people of this city to accept new products readily. The population is made up of too many distinct nationality groups and the introduction of one new product is not readily accepted by all groups. Wilson Packing Company is also ex perimenting with this process, but in another city due to similar reasons. 141
TABLE 43
PER CENT OF STORES SELLING MOST FRESH MEAT PREPACKAGED IN 53 LARGE CITIES, SEPTEMBER 1950
All Independent Chain Region and City Stores Stores Stores y
United States (55 cities combined) 2 2 14
New England (6 cities) 2 1 12
Middle Atlantic (7 cities) 1 1 17
East North Central (9 cities) 4 4 11
West North Central (7 cities) 3 3 11
Cedar Rapids 0 0 0 Kansas City 1 0 16 Minneapolis 3 3 5 Omaha 2/ 0 2 St. Louis 5 5 5 St. Paul 5 5 14 Wichita 4 0 40
South Atlantic (9 cities) 5 4 23
East South Central (6 cities) 3 2 11
West South Central (4 cities) 3 1 31
Mountain (3 cities) 5 5 14
Pacific (4 cities) 1 1 6
1/ Independent store and chain store results have been combined into "all stores" to.tal by a weighting ratio of the number of independent stores and the number of chain stores to the total number of food stores in the city. 2/ Results less than 0,5 per cent.
Source: "A Survey of Frozen Food Cabinets and Prepackaged Fresh Meats in Retail Food Stores of 55 Large Cities." U. S. Dept, of Labor, Bureau of Labor Statistics, January, 1952, Table 3, pp. 61-62. (mimeographed). 142
service meat markets. That is, if self-service is flourishing,
there is a good chance that a large part of the fresh and table-
ready meats are being precut and packaged at the retail level. As
has been pointed out previously in this chapter, the number of self-
service markets in Omaha is about on a par -with the national aver
age, although this is no measure of the volume of business per
store.
Another factor that affects the amount of precutting and
packaging at the retail level is the amount of this processing that
is being done at the wholesale or packer level. As the middlemen
and packers assume this function, it gradually relieves the retailer
of its performance. Miile figures are not available, the evidence
is strong that this trend is taking place here. Although the packers
are not as yet precutting and distributing fresh meats, at least
one of the major packers is processing table-ready meats and in
addition to serving many small outlets, has succeeded in placing
its prepackaged products in the national chain operating the largest
number of retail food stores in this area. VJhereas this chain was previously precutting and packaging its own luncheon and cold meats, it is now supplied with a full line of these products by this packer. Several packers, not located in this immediate area, are
also shipping in limited quantities of prepackaged merchandise, and this is further reducing the amount of prepackaging necessary at the retail level. 143
There is some resistance, however, to the shifting of the prepackaging process to the packer level. One chain organization
prefers to precut and package all its fresh and table-ready meats
for the following reasons:
1. It is better able to control quality.
2. It is better able to coordinate inventories with sales.
3. It feels that its costs of prepackaging are lower than
those of the packer.^
One drawback of self-service and the attendant precutting
and packaging processes, is the investment requirement. The fix tures and equipment for this type of operation are much more e:xpen-
sive than for the service market. One rule-of-thumb method for
comparing the costs for each type of installation is that the nec
essary equipment for self-service m i l cost fifty per cent more than 2 that needed for a service market of a comparable size.
“Wholesale Level
Wo Omaha wholesaler at the present time is fabricating meat
(cutting into steaks, chops, and other retail cuts) for distribution at the local level; however, the trend in other parts of the
^Interview with Mr. Wayne Bartley, Hinky Dinky Stores, August 24, 1954* In regard to item 3* he said, "For example, we are selling a particular type of luncheon meat, sliced and packaged, for 39# a pound. The same product, if purchased in a vacuum-sealed package from the packer, must retail for 35# per eight-ounce pack age, or 70# per pound."
2Ibid. 144 country is in that direction^ and local wholesalers are expecting to have to start here. Wholesalers here not only do not fabricate meat, but they do little in the way of freezing meat for wholesale purposes. This being a large meat center, the consumers are fresh meat conscious. An analogy would be— trying to sell frozen fish in
Boston or Seattle. Small hamburger restaurants buy frozen patties fron the wholesalers, but retail markets buy little frozen meats, either in small retail packages or in wholesale cuts.
One local development which may have an influence on the amount of precutting and packaging that will be done at the whole sale level in the future, concerns the new $8-10 million plant of the Safeway Stores organization and the use to be made of the large meat storage warehouse to be included. This huge plant is now being built on a 46-acre tract just west of the city. When completed, this food distribution center will be one of the nations largest.
The meat warehouse alone will include 65,000 square feet of space 2 and accommodate eighty carloads of beef at one time.
The use that will be made of the meat facilities in this new center may have a bearing on the future activities of the whole salers in this area. While the Safeway officials maintain that the
^Supermarket Mews, May 31» 1954. Tom Boy Stores, 225- store voluntary chain in St. Louis, just completed new installation of department for warehouse-precutting and packaging of f rozen meats. Reason— smaller stores cannot economically prepackage fresh meats,
^Omaha World-Herald, November 9* 1953* p. !• 145 new warehouse w;ill be an aging and distribution center for meat to company stores in Iowa, Nebraska, Kansas and Missouri, there is the feeling among competitors and others in the industry, that a cer tain amount of centralized fabricating will be done. This company at the present time does fabricating and breaking down of carcasses and wholesale cuts at one central location for a group of their stores within the city. The question is, will Safeway expand this operation and centrally fabricate meat into retail cuts for all or part of its retail stores in this four-state area? Should this come about, pressure would be exerted on wholesalers to offer simi lar services to their customers.
Packer Level
The volume of meat products being precut and packaged at the packer level in Omaha is not large at the present time, although all major packers are making experiments and market tests with an eye to entering actively into this important new phase of meat mar keting in the near future. This testing and experimenting is mostly being done with table-ready meats, as wrapping film and processing technology in general has not proceeded far enough to make central precutting and packaging of fresh red meats feasible.
One large local packer has, within the last year, placed on the market a complete line of vacuum-packed luncheon meats, which is being distributed locally. As mentioned previously, these products are being handled at the retail level by the largest chain organiza 146 tion, and also by many small, independent units. Other packers are in the experimental stage with these items and are distributing few prepackaged products locally. Those that are being precut and pack aged are in the sausage and bacon category.
The increased volume of business in table-ready meats was explained by one sales executive as follows:
There are approximately 600 per cent more table-ready meats being produced and sold novr than there was fifteen years ago. This has come about because first, there is more entertaining being done in the average home; second, there is more need today for quick meals; third, there is better packaging material available and more variety in packaging materials; and fourth, incomes are higher,-*■
In regard to bacon prodxicts, there is a definite trend toward more precutting and processing by the packer prior to the time the product gets in the hands of the retailer and consumer. For example, in November 1939s 52,600 pounds of bacon were sliced and distri buted by one packer. In November 1953, 708,000 pounds were sliced 2 and sold, although total belly products had not changed appreciably.
In making comparisons on a yearly basis, it can be seen from the data in Table 44 that while hog slaughter actually declined between
■^Statement by Mr. M. T. Taylor, Omaha City Salesmanager, Swift and Company, December 8, 1953? personal interview. 2 Statement by Mr. Robert Wheeler, Manager Provision Dept., Wilson and Company, December 22, 1953, personal interview. "There is also a trend toward canned meats— hams, boneless meats, ham rolls, cooked hams— because they are easier to keep and store. The cus tomer is willing to pay the difference in cost for the extra serv ices of the packer. There is also another factor— the packer is better able to utilize the fat parings, bones, and other trimmings.” 147
the period 1941-42 and 1952-53* the amount of sliced bacon produced
actually increased approximately 222 per cent.
TABLE 44
PRODUCTION OF SLICED BACON BY WILSON AND COMPANY OMAHA PLANT DURING SELECTED YEARS
Fiscal Year Hogs Sliced Bacon Slaughtered Produced (pounds)
1940-41 346,000 2, 04s , 000
1941-42 429,000 2,455,000
1952-53 411,000 7,900,000
Source: Interview with Mr. Robert Wheeler, Manager Provi sion Department, Wilson and Company, December 22, 1953.
Precutting and packaging frozen-fresh meat is on the
increase in this area, although it has not reached the stage where
much of it is available at the retail level. A few products like
chip steaks and hamburger patties, pork tenderloins are being pro
cessed and distributed by smaller packers, but not in great volume.
Much of this type of product is being processed for the institutional
trade in 6- and 12-pound packages, although the one large packer
that is specializing in supplying institutions -with fresh-frozen meat products, feels that the future will see most of this type of product going directly to the consumer because the market is 148 larger ."*■
The prevailing attitude and experience, with regard to pre- cutting and packaging fresh meat in the Omaha area, and in fact, in the industry as a whole,., has been summarized in the Fifth Annual
Report on Self-Service Keats, published by Armour and Company:
1948 Report: So far as fresh red meats, such as steaks, roasts, etc., are concerned, it does not look as though the packer will be able to prepackage these items for self-service for a long time to come. 1949 Report: So far at least, it does not look as if fresh meats will be prepackaged by the packers. 1950 Report: To date, we know of no shining examples idnere this is being done successfully. 1951 Report: One or two instances have come to our attention and that only on a limited scale.
These statements are just as applicable today as they ever were. We know of no packer, chain or independent operator who has been able to prepackage centrally on any large s cale with success. There are, however, a few multi-unit operators who are centrally packaging and distributing items such as poultry, sliced luncheon meats, and smoked meats. Their main purpose is to relieve the load in the cutting and packaging rooms of the individual stores, and to reduce costs.
The greatest problem in this type of operation appears to be the setting up of efficient production schedules at a cen tralized point, based on anticipated orders from individual units, A certain percentage of these products must be pack aged ahead, and close attention must be paid to day-by-da.y needs to prevent a shortage or oversupply. Returns also pose a problem.
In general, however, there have been no major developments in centralized prepackaging, particularly of red meats, during the past year, or even the past five years.2
■'"Taylor, op. cit.
^Fifth Annual Report on Self-Service Meats (Qhicago: Armour and Company, April 1952), pp. 19—22. 149
Advantages of Precutting and Packaging at Packer Level.--
While nearly 100 per cent of the fresh meat and a diminishing amount of the sausage and cold meat products are precut and packaged at the retail level, there are certain advantages to be gained by-
shifting this entire function to the packinghouses. These advan tages are as follo-ws:
1. The packer would be in a better position to handle
the large investment requirements for equipment.
2. Advantages -would be gained v.hich are normally inherent
in large-scale operations.
3. Products would be available to small merchants who
either do not now handle meat products, or who cannot
afford the space or equipment necessary to precut and
package meat items.
4. Packers could make use of trimmings— bone, fat, and
other waste— in by-products, thereby reducing over
all costs.
5. Products would tend to be more uniform and of higher
quality if they were to carry the brand name of a
packer.
6. Congestion would be relieved in stores that now have
service markets.
7. Space in retail stores now devoted to work areas could
be utilized for productive sales space. 150
8. Labor cost and personnel problems of the retailer would
be reduced.
9. It would furnish a good medium by which a packer would
be able to place his brand names before the housewife.
10. It would permit flexibility in buying qualities for
different markets in the various economic level areas.
Disadvantages of Precutting and Packaging at Packer Level.—
Disadvantages would also be present should the packer completely assume this function of precutting and packaging. There is no doubt that the trend is in this direction, that the packer is being forced to consider these inevitable problems, and that continuance of this trend wills
1. Shorten the shelf life of precut and packaged meat and
meat products.
2. Require large investments.
3. Burden the packer with one more service to be performed
in a low-profit industry.
4« Necessitate careful selling on the part of the packer
to prevent overstocking the retailer.
5. Necessitate careful market research programs.
6. Pose an extremely difficult problem of quality control.
The shelf life of fresh meat is very short in comparison to that of sausage and other processed meats. Under the best conditions of correct temperature, packaging materials, light, and handling, the maximum time that fresh meat can be displayed after cutting is approximately 60-72 hours. Processed meats can be displayed longer, depending upon such factors as the type of product, the packaging materials and processes used, and the temperatures that are main tained. But even under the best conditions, the time that precut and packaged products can be displayed will be reduced by the time taken by the packer to perform the precutting, packaging, and delivery functions. Miile this is of relatively minor significance when considering processed meats, it is of major consideration when fresh meat is involved. The time factor is the primary deterrent to further progress toward centralized precutting and packaging on a large scale.
Expansion of the packinghouses into the precutting and packaging area would necessitate huge investments in equipment which have not as yet proven sufficiently efficient to result in lower meat costs to the consumer. By machine it is possible to slice and wrap up to BO packages a minute with the employment of two or three girls. This would compare with a production of four to six packages per minute by hand operations."'' Even with these production-line techniques, the precutting and packaging costs at the packer level are from 8.65$ to 19# a pound, depending on the equipment that is 2 being used and the volume of production. The minimum cost of one
•^•"Prepackaging of Sausage and Heat Specialties," American Meat Institute, October 3» 1953> p« 26. (mimeographed)
^Statement by Chris E. Finkbeiner, President, Little Rock Packing Company, Little Rock, Arkansas, in "Panel on Packaging," 152 slicing and packaging machine is approximately $60,000 and its out put is limited. This initial outlay could be recovered rather quickly if consumer spending power continues high and adequate prices could be charged for the machine's output. However, should incomes drop appreciably, consumers would become price conscious to the point where the demand for precut and packaged meat would surely decline.
In addition to outlays for equipment, provision would have to be made for the space and manpower requirements needed to accom plish the objective. These provisions, together with the investment requirements mentioned above, and coupled with an unpredictable sales picture, makes this an extremely hazardous venture, is the 1 fear expressed by industry executives. Further, profit margins, 2 being as low as they are in the meat packing industry, would be further jeopardized by an undertaking where profits were so uncer tain.
The National Provisioner, May 9* 1953> pp. 90-93.
^Interview with Mr. Art Berthel, Manager, Sausage and Lasting Flavor Dept., Wilson &. Co. "'Ihe time is not ripe to go into prepack aging because of the tremendous cost involved in equipment. We may be headed for a general recession and when that time comes, help will be easy to get and labor costs of slicing and serving in the retail store will be less than prepackaging at the packer or wholesaler level. The costs of prepackaging at the present time are out of line. For example, bologna sells for 39$ a pound in the piece, 45$ a pound when sliced in the store. Mien this same product is pre sliced and packaged by the packer in six-ounce packages, it costs the consumer at the rate of 75$ to 80$ a pound. The film packages cost 2g$ each in quantities of 1M." 2 Wall Street Journal, December 14, 19533 reports earnings of Swift and Company as 1.3 cents per dollar of sales. 153
Should the packinghouses accept the responsibility of pre cutting and prepackaging to any great exbent, they -will also be obliged to guard closely against overloading the retailer with perishable merchandise. As it would not be feasible for the packer to guarantee his packaged goods, he would have the problem of keep ing inventories closely adjusted to demand to prevent spoilage and dissatisfied consumers.
Another facet of the intricate problem of inventory control would be the problem of providing the types of products and sizes of packages of each that would meet the regional, religious, national ity, and seasonal preferences of the consumers. This problem could more easily be met by each individual retailer, who is closer to his clientele. When this responsibility is shifted to the supplying organization, the difficulty is multiplied many times. The problem of inventory control has been met and often solved by firms of varying sizes and types, but it is difficult enough in an industry producing non-perishables. When faced by a manufacturer of perish ables, inventory control plays a magnified role in the firm's pro duction and marketing responsibilities.
Quality control would also pose a problem for the packer.
Because his product is perishable, and because it carries his brand, he must supervise the refrigerating of the product, the appearance of the display, and the freshness of the inventory so that he would be able to guarantee high-quality merchandise to the consumer. 154
In summary, the factors which evidently are influencing the local trend toward increased precutting and packaging of meat and meat products, whether the functions are performed at retail, wholesale or packer level, are the following:
1. Increasing popularity of self-service merchandising,
not only of meat, but of many other lines.
2. Increasing consumption of all types of frozen foods.
This tends to engender less antipathy toward frozen,
precut meats,
3. More freezers in the homes, together with the inclusion
of freezer sections in refrigerators.
4. Faster, refrigerated trucks equipped with mechanical
refrigeration that deliver a fresher product to the
wholesaler and retailer.
5. Improvements in packaging films.
6. Increasing demands for quick meals.
7. The packers and meat processors facing up to the fact
that the housewife desires more speed and convenience
in her shopping and meal-preparation duties. CHAPTER VII
SPECIAL PROBLEMS ARISING FROM FREEZING MEATS
One example of the dynamic character of the food marketing system is the rise of the frozen-food. industry. Within the last twenty years a whole new enterprise has been built since ways have been found to transport frozen foods in large volume, store them, offer them for retail sale, and keep them in homes. Frozen foods have had some impact on the meat industry, the results of which will be discussed here in relation to frozen food locker plants, freezer food plans, and home freezers.
FROZEN FOOD LOCKER PLANTS
The number of frozen food locker plants for processing and storing foods by the American public increased rapidly until 1951, and has since declined slightly. Plants increased from 1,269 on
July 1, 193S to 11,608 on July 1, 1951, and then declined to 10,954 on July 1, 1953, according to a recent survey shown in Table 45*
While the total volume of food processed in all plants of this nature is well over a billion pounds a year, from a national viewpoint local locker plants have not affected commercial marketing of meat products to any significant extent. It is estimated that the meat obtained from slaughter for storage in frozen food lockers
155 1 5 6 is about six per cent of all meat produced by commercial slaughter.
The bulk of this amount -would have been slaughtered on the farm for home use by farmers, in the absence of locker plants.'*'
TABLE 45
FROZEN FOOD LOCKER PLANTS IN THE UNITED STATES JULY 1, 1939 to JULY 1, 1953
Year Number Year Number
1938 1,269 1946 8,025 1939 1,861 1947 9*529 1940 2,870 1948 10,617 1941 3*623 1949 11,245 1942 4*323 1950 11,595 1943 4*559 1951 11,608 1944 5*282 1952 11*427 1945 6 ,4 6 4 1953 10,954
Source: L. B. Mann and Paul C. Wilkins, Frozen Food Locker Plants , U. S. Dept, of Agriculture, Farm Credit Administration, Miscellaneous Report 146 (Washington: Government Printing Office, March 1951)* p. 2j Miscellaneous Report 177* July 1953* supplement to previous publication.
The situation in Omaha in Particular and in Nebraska in gen eral, with regard to frozen food lockers and their effect upon the marketing of meat products, is similar to that in the country as a
North Central Livestock Marketing Research Committee. "Frozen Food Lockers and Freezers in Meat Distribution." Wisconsin Agriculture Experiment Station Bulletin 490, 1950, p. 8. 157
•whole. That is:
1. Frozen food locker plants increased in number during
the 1940* but decreased slightly in the past few
years, (see Table 46)
2. Most meat that is stored in lockers would not have
been produced by commercial slaughter.
3. Most locker patrons live on farms.
4. The volume of slaughtering handled by local locker
plants is relatively small.
A large percentage of the frozen food locker plants in Nebras ka are located in smaller farming communities. As can be seen in
Table 47> there were 510 locker plants in Nebraska in 1953. Six of these plants are in the city of Omaha, leaving 504 to be scattered throughout the state. It is estimated that 75 per cent of the patrons of the latter locker plants live on farms and use locker facilities so as to dispense with slaughtering and storing on the 1 farm.
"While the total number of locker plants in operation and the total number of lockers available is not conclusive evidence of the usage of these facilities for purposes of storing meat, the fact that the facilities that were available remained static for a period of four years and then decreased slightly lends some credence to the
■^L. B. Mann and Paul C. Wilkins, Frozen Food Locker Plants, U. S. Dept, of Agriculture, Farm Credit Administration, Miscellan eous Report 146 (Washington: Government Printing Office, March 1951), P. 13. i5a
TABLE 46
NUMBER OF FROZEN FOOD LOCKER PLANTS IN OMAHA, NEBRASKA. 1945 - 1954
Affiliated with Not Total Approximate Meat Market or Affiliated Number Number of Year Grocery Lockers Available
1945 1 1 700 1946 1 2 3 1,200 1947 2 4 6 2,268 1948 2 4 6 2,268 1949 3 4 7 2,618 1950 3 4 7 2,618 1951 3 4 7 2,618 1952 3 4 7 2,618 1953 3 3 6 2,518 1954 3 3 6 2,518
Source: Telephone directories of the Northwestern Bell Telephone Company for the respective years, and personal interviews with locker managers.
TABLE 47
ESTIMATED NUMBER OF FROZEN FOOD LOCKER PLANTS AND AVERAGE NUMBER OF LOCKERS INSTALLED PER PLANT IN NEBRASKA, NORTH CENTRAL REGION, AND UNITED STATES, JANUARY 1, 1950 AND JANUARY 1, 1953
Estimated Number Average Number of Area of Plants Lockers Installed ... 1950.. . 1953 1950 1953 Nebraska 506 510 370 n • s. « North Central Regior 6,071 5,882 423 n.a. (12 states) United States 11,442 10,954 459 n.a. n.a.— not available
Source: L. B. Mann and Paul C. Wilkins, Frozen Food Locker Plants. U. S. Dept, of Agriculture, Farm Credit Administration, Miscellaneous Report 146 (Washington: Government Printing Office, March 1951), pp. 4-5> and Miscellaneous Report 177, supplement to same publication, July 1953. 159 argument that (l) the use of frozen food lockers in Omaha has not reached the saturation point, and (2) the services offered, such as chilling, cutting, wrapping, freezing, slaughtering, curing, smok ing, and lard rendering have not become so profitable that others have been attracted to this business.
It should also be born in mind that frozen food lockers are used mainly for the storage of meat,'*' and any increase in the num ber of plants or in the rental of available lockers is a direct measure of the amount of meat that is being diverted from the regu lar wholesale-retail channel of distribution.
All packinghouse executives interviewed expressed the view that sales to frozen food lockers were not only negligible but 2 static. From personal observation and from interviews with manage ment personnel of the locker plants, it is evident that there is little expectation of an expansion of locker plant facilities for use of urban dwellers due to the increasing popularity of the home freezer. Consequently, locker plant owners are becoming more active as dealers in supplies for home freezers. They are taking
•^Approximately 87 per cent of the food processed for each locker is meat, four per cent is poultry, three per cent game, and about six per cent fruits and vegetables. Ibid., p. 33*
A sales executive of a major packer who did not wish to be quoted, expressed the following, "Sales to frozen food lockers are static. They are not much of a factor in the city. They are important in country areas but will never be too important." 160 on lines of frozen food, and processing and curing poultry and meat not only for locker patrons, but also for home freezer owners. Of the six plants operating here, only one does any slaughtering, and this is primarily custom, slaughtering for farmers. All other meat that is processed by locker plants for locker patrons or for owners of home freezers is purchased principally from the packers, and from the wholesalers in small amounts.
FREEZER FOOD PLANS AND HOKE FREEZERS
Freezer Food Plans
Freezer food plans have run their cycle of popularity in
Omaha, as they have in many other cities of the country. In the first few years following World War II, many of these plans were introduced in Omaha; hoxrever, today only a few remain in business.
Under freezer food plans, a freezer buyer is offered the chance to stock the box with large quantities of edibles at below retail prices. The buyer can pay for both food and freezer on the installment plan.
The original freezer food plan operators obtained their meat from butchers in outlying districts and from one or two small packers.
Large wholesalers and packers did not want to have any direct con- 1 tact for fear of repercussions from freezer buyers.
Statement by Mr. Lester Simon, Manager Table Supply Meat Company, July 20, 1953* personal interview. 161
At the present time there exists five freezer food plans in the city of Omaha. Two of these are operated in connection with business enterprises, while three have processing plants in connec tion with appliance sales stores. Meat is obtained from smaller packers, end, in some instances, from one of the major packers.
The larger packers express themselves in the following way regard ing sales to freezer food plans:
We make no sales to freezer food plans. We are putting out educational material to inform the public regarding claims of food plans.
We will sell to a freezer plan if they have a legitimate wholesale house in connection with the enterprise.2
So far we are not aware of any important influence on the wholesale distribution of meat caused by food freezer plans, frozen food lockers and home freezers. Most of the influence in this connection has been at the retail level. We are mar keting a line of frozen products in g-pound and one-pound packages, including hamburger, boneless pork chops, veal cut lets, a chipped beef steak product and some others. These are principally convenience items which can be kept on hand in the freezer compartment of a refrigerator. They are becom ing quite popular but they compete more with canned meats and sausage than they do with fresh meats.-'
It is therefore evident that freezer food plans have had difficulty in securing a tie-in with a large packer whose reputa-
Statement by Mr. M. T. Taylor, Swift and Company, personal interview.
2Statement by Mr. William Cronquist, Cudahy Packing Com pany, personal interview,
^Letter from Mr, E, L. Hecker, Public Relations Department, Armour and Company, June 29, 1953. 162 tion would have been a contributing factor in the promotion stage.
Not only were the large packers and processors hesitant to tie in with freezer plans for fear of repercussions from freezer buyers, but they were also considering the reaction of retailers.
In the final analysis, it can safely be said that these freezer food plans are insignificant in the wholesale meat picture in the Omaha area. Whatever status they may have had in the recent past years, is fading daily. The concluding evidence is that dur ing the writing of this treatise, a new telephone city directory was published and three of the five firms mentioned earlier in this section, did not even list their names under the special classifica tion "Frozen Food Plans" as had been their practice, even though they were still in business.
Home Freezers
The frozen food plans and appliance dealers have had some slight and indirect effect on the wholesaling of meat products in
Omaha, but only insofar as the ownership of home freezers influences the wholesale distribution of meat. As of December 1, 1953* there were 11,181 home freezer owners in Omaha and within a fifty-mile 1 radius of the city. In 1954* in metropolitan Omaha, according to
■^Interview with Mr. Frank IColfe, executive, Omaha Public Power District. These figures were compiled as a result of an actual house-to-house count by sales representatives of the company. 163 the results of a recent survey which is recorded in Table 48, there
■were 8,323 families owning freezers, an increase of 194 per cent since 1950.
TABLE 48
FAMILIES OWNING HOME FOOD FREEZERS IN THE OMAHA METROPOLITAN AREA 1950 - 1954
Per cent of Number of Families Year Total Families* Owning Freezers
1954 9.2 8,323
1953 7.9 6,651
1952 6.1 5,172
1951 4.0 3,544
1950 3.0 2,830
*Total number of families— 90,464 in 1954*
Source: Consumer Analysis of the Greater Omaha Market, compiled and published by the Omaha World-Herald, 1954, p. 83.
The total effect of freezer ownership on the wholesaling of meat is problematical. Following are the only local evidences of special techniques or provisions for home freezer owners: (l) promo tion on the part of frozen food locker firms regarding the fact that they handle frozen food items for home freezers, and that they also will sell meat by the quarter or half carcass, cut and wrapped, ready for storage in the home freezer, (2) periodic sales by the chain markets— Safeway Stores and Hinky Dinky Stores--of meat by wholesale cuts, cut and wrapped for freezers or frozen food lockers,
(3) there is one small wholesale firm that advertises and does some promotional work in an effort to supply home freezer owners with quantities of meat, but the total effect of his efforts are negli gible .
In summary, it can be stated that freezer food plans and home freezer ownership have had little effect on the wholesale dis tribution of meat and meat products in the Omaha area. VJhile the number of freezers in homes is increasing, there is no concrete evidence that all owners are buying meat in large quantities, but even if they did, they probably would make their purchases princi pally from retail organizations. This is indicated by the fact that those freezer owners who are now making quantity purchases of meat, are buying mainly in the retail stores. CHAPTER VIII
SPECIAL PROBLEMS INCIDENT TO GRADING AND INSPECTION
The grading and inspection services provided by Federal and
State agencies are designed to aid in the marketing of livestock
and meat products and to prevent diseased and harmful meat from
being sold to consumers. This chapter will discuss problems and
practices incident to the performance of these important functions.
Grading
The adoption and general use of uniform grade standards is
highly important in the marketing of livestock and meats. Without
these standards, buyers and sellers of livestock have no basis for price and market information. Buyers and sellers of meat are also
greatly handicapped in the absence of specific grade standards.
Therefore, it is of utmost importance to the industry and to the public not only to develop uniform standards but also to secure their
adoption at all levels of production and distribution.
Government and industry have recognized the benefits and
also the problems of grade standards. The United States Department
of Agriculture began work in this area in 1951> and the first official standards for grades of beef animals became effective
165 166
July 1, 1924.^" Grade standards for other types of animals were de vised and adopted in the next few years, and an effort was made to secure the cooperation of the industry and market reporting agencies to adjust their practices to the new standards. Because these grade 2 standards are permissive and optional rather than compulsory, their adoption has been slow; however,there is some evidence that great progress has been made in the use of official grade standards for marketing livestock and somewhat greater progress in using uni form grade standards for meat.
It should be understood at this point that: (l) only part of meat and none of livestock is graded by the Department of Agri culture ; (2) meat grading is not to be confused with the inspection for sanitation and freedom from disease, also carried on by employ ees of the Department of Agriculture; (3) only meat that has been
Federally inspected or inspected by some government agency, whose inspection service has been approved by the Department, will be graded; and (4) Federal grading of meat is available on a voluntary basis to slaughterers and others, and is self-supporting through
■^"Official United States Standards for Grades of Carcass Beef," U. S. Bureau of Agricultural Economics Service and Regula tory Announcement 99 > P» 1* June 1926, as quoted in Livestock Marketing, op. cit., p. 295*
^Federal grading of meat was mandatory during the period the Office of Price Stabilization was controlling prices. When this office was abolished, grading again became permissive and optional. fees charged to users of the service. These costs are only a small fraction of a cent per pound.^
Grading of Beef.— In determining grades of meat, three fac tors are taken into consideration— conformation, finish, and qual ity. Conformation is the general shape or contour of the carcass or -wholesale cut. Finish is the degree of fatness on the outside and interior of the carcass. Quality is determined by texture, col or, firmness of the flesh and degree of marbling which is the fat intermingled throughout the lean.
The original standards, which provided for grading each class of beef, (steer, heifer, cow, stag, and bull) on a separate standard, and which provided the basis for grading when voluntary beef grading and stamping service was begun in May 1927, were 2 amended in July 1939 so as to provide a single standard for the grading and labeling of steer, heifer, and cow beef according to similar inherent quality characteristics. The amendment changed certain grade terms for steer, heifer, and cow beef from "Medium,"
"Common,™ and "Low Cutter" to "Commercial," "Utility," and "Canner," respectively.
^"Charges are at the rate of $3*60 per hour for each inspec tor. An inspector can grade approximately 1,000 cattle in a ten- hour day. o Amendment No. 1 to Service and Regulatory Announcement No. 99, originally issued June 1926, United States Department of Agri culture, Agricultural Marketing Administration. 168
A second amendment"^ issued in November 1941, made similar
changes in grade terms for bull and stag beef and established the
following grade terminology for all beef: Prime, Choice, Good,
Commercial, Utility, Cutter and Canner.
Effective December 29, 1950, Federal beef grades were changed
again to conform more nearly with the demands of the consuming pub
lic for the identification of a certain kind of meat which was not
adequately identified by the previous grade standards. Accordingly, the following changes were made:
1. Prime and Choice grades were combined under the name
Prime.
2. Former Good grade was renamed Choice.
3. A new grade was set up— Good— for the better quality,
young animals now included in the Commercial grade.
4. The remainder of the Commercial grade, consisting
mainly of beef from older animals, was left in the
Commercial grade.
Consumers who purchase by Federal grade standards, have had to make certain adaptions as a result of these changes. First, those consumers who preferred the former Good grade, have been call ing for Choice grades. Second, the new Good grade now identifies a grade of meat that is from young animals, comes in smaller cuts
^Amendment No. 2 to Service and Regulatory Announcement No. 99, United States Department of Agriculture, Agricultural Marketing Administration* than most other grades, and has a high ratio of lean meat to fat.
This meat was formerly included in the Commercial grade— lumped
in with beef from older animals. Third, some consumers have been
able to secure Prime beef now and then. Formerly Prime beef went
only to specialty shops, deluxe hotels and restaurants. By combin
ing Choice and Prime, more top-quality meat has been available to
supply the demand of the outlets mentioned above, and a few retail
outlets, catering to the more discerning buyers, have been able to
stock Prime beef. 1 The following explains the changes graphically:
Present Grade New Grade Description
Excellent quality beef, with a wide selection of cuts suitable Choice' for broiling and roasting.
Most popular grade now. High quality beef, usually leaner than Good Choice new Prime. Cuts are juicy and tender with a desirable flavor.
From higher quality young ani mals now graded Commercial. Rel Good atively tender and cuts will be smaller in size than in other grades. Commercial! Mostly from older animals. Has a beefy flavor. Will provide Commercial economical dishes. Cuts will require different cooking methods because of less natural tender Lower Unchanged ness.
Fred J. Beard, "Look for the Change in Beef Grades," Marketing Activities. U. S. Dept, of Agriculture, Production and Marketing Administration, Vol. 13, No. 12, December 1950, pp. 3-S, 170
The amount of Prime beef on the local market is far below that which is evidently available in other parts of the country.
One recent survey indicated that approximately 23 per cent of the markets questioned handled Prime; 87 per cent handled Choice;
51 per cent, Good; and 23 per cent, Commercial. The same survey revealed that five per cent of the respondents mentioned Prime beef as their best seller, 65 per cent mentioned Choice, 22 per cent, 1 Good, and eight per cent Commercial.
Although approximately 11 per cent of the beef slaughtered 2 is Prime grade and 35 per cent Choice, local packers tend to ship the top grade to other markets where it brings a higher price.
In identifying the proper grade on the carcass, the Federal grader is providing consumers with an expert evaluation of meat quality. The discerning buyer, by observing the identifying grade mark on the meat, is able to purchase the quality meat that he de sires. This identifying mark, up until February 1953, was a stamp with the grade name and the letters “USDA" placed at intervals on the carcass or wholesale cut. New Federal grade stamps came out in
February 1953 to be used on all Federally-graded beef, veal, calf, lamb, and mutton. The grade name and the letters USDA are still
^Super Market Industry Speaks-1954. Sixth Annual Report of the Supermarket Institute (Chicago:Supermarket Institute, Inc., 1954)j p. 16. 2 Interview with Mr. H. H. Hundley, U. S. Department of Agriculture, Standardization and Grading Branch, Omaha. 171 used, but they are now enclosed in a shield. This new grade stamp, unlike the old one, has been registered at the U. S. Patent office
and unauthorized use of it is prohibited by law."*" Stamped on meat
with a harmless purple vegetable preparation that usually disappears
in cooking, the new grade stamp continues to aid consumers, meat
retailers, wholesalers, and others to buy and sell meats on the basis of uniform quality standard which is recognized throughout
the country.
Grading of Hogs.— Unlike beef animals, which are sold on the basis of grade and weight, hogs are sold only on a weight range
basis. This method of sale compensates the hog raiser on the basis
of weight only, and offers no incentive to the farmer who brings the best hogs to market. The best hogs would be determined by viewing two factors: (l) preferences of the consuming public, and (2) price
of fats. At the present time, the preference of the public is for high lean-to-fat type pork, and the price of fats is low. Conse
quently, the type of hog that is desirable is a hog that will have
a high ratio of lean to fat cuts.
Suggestions have been made in past years in an attempt to motivate the farmer to raise the type of hog that would be most
"4j. S. Department of Agriculture, Production and Marketing Administration, "New Meat Grade Stamps," Marketing Activities. Vol. 16, No. 2 (Washington: Government Printing Office, February 1953), p. 16. 172
profitable for packer as well as farmer. One plan was attempted by-
cooperative shipping associations in the Eastern corn belt in 1923,
■whereby producers were paid for their hogs in accordance with the
amount of carcass. The plan reached its peak about 1930, and there
after declined, not because the idea lacked merit, but because of
the lack of control in administering it,\
While other suggestions for the orderly marketing of hogs, 2 3 based either on "carcass weight" or a "cut-out weight"'' have been made, regulations or practices have not changed up to the present
time. One of the latest recommendations would place hog marketing
on a merit basis— assuring the producers of high-value hogs a
higher price per hundred pounds. Premiums for high-value hogs
would be subtracted from prices paid for lower-value hogs, which,
in the final analysis, would result in the aggregate amount paid for
hogs remaining constant.^
^For a complete description of this method of marketing, see Chapter 19, "Selling Livestock on the Basis of Guaranteed Yield," Livestock Marketing, op. cit., pp. 414-427.
^Carcass weight" has reference to the weight of the animal after slaughter. Animals graded on this basis would be paid for on the basis of weight only, with no reference to quality of the meat.
^"Cut-out weight" refers to the amounts of various cuts that are provided by a certain carcass. A carcass providing a high ratio of desirable cuts to less desirable cuts would bring a high price,
%)ata regarding this recommendation from H. E. Reed, "Streamlined Hog Marketing," Marketing Activities, U. S. Dept, of Agricult lire, Production and Marketing Administration, Vol. 15, No. 1, January 1952, pp. 3-6# 173
The method of grading would be as follows:
1. Choice No, 1 would have a relatively high ratio of lean
to fat, and about fifty per cent of their carcass weight
would be in the four lean cuts of hams, loins, picnics,
and Boston butts,
2. Choice No, 2 would produce high quality cuts, but because
of the slightly over-fatness, these cuts would require
somewhat heavier trimming than the No, 1, Carcasses
would normally yield 45 to 4& per cent of their car
cass weight in the four lean cuts,
3. Choice No, 3 would include hogs that are decidedly over
fat, High quality cuts, but considerably lower propor
tion of lean cuts and high amount of fat and fat cuts.
These carcasses would normally yield less than 45 per
cent of their weight in the four lean cuts.
4. Fourth Grade is Medium, which is a slightly undernour
ished animal and as a result would produce flabby and
slightly soft pork cuts.
5. Cull would indicate the fifth grade, which would not
be suitable for marketing. Meat from this animal would
be used only in processed meats,
A grading system such as outlined above has great merit for it would differentiate sufficiently between hogs that produce a high proportion of lean to fat, and hogs that produce the opposite— 174 more fat and less lean. Hogs with more lean, would satisfy the heavy demand for lean cuts— ham, picnics, and pork chops, while furnish ing less of the products that consumers tend to shy away from— bacon, salt pork, fat back, and lard.
The general acceptance and use of a grading system such as that mentioned above, would have the following effects;
1. There would be a tendency on the part of farmers to
raise hogs that would produce the type of meat demanded
by the public.
2. Excess amounts of fat would not flow into the market,
depressing prices as at present.
3. A lean product would be available to compete with the
lean, canned hams being imported from Europe.
4. A diet-conscious American public would be better sat
isfied with leaner cuts of pork.
5. Prices of pork would be slightly higher, to absorb the
added expense of grading.
Grading in the Packinghouses.— The practices of the packing houses in the Omaha area, with regard to the amount of government grading of beef in any particular plant, will vary according to whether or not the company has well-established private brands, or, according to the demands of its clientele for government graded meat.
Approximately 75 per cent of the beef slaughtered locally is 175
Federally graded, according to the best available source
All of the Prime and Choice beef is graded, but only part of the Good and Commercial grades finally reaches the market with the government stamp affixed. More of the Good quality is graded than is stamped, the packinghouses preferring the Federal graders to indicate the grades and the packers then stamp the carcasses -with their own private brands.
Small packers lean more toward 100 per cent government grading than do larger packers who have well-established grades and private brands. In some cases, the larger packer will resort to company grading and branding of a share of its output to satisfy a particular clientele. In one case, a large packer, even though it has well-established private brands, has government and company graders grade all beef carcasses, although it is evident that there 2 is a duplication of effort.
Packers' private brands designate grades, and some of these coincide quite closely with government grades, while others do not.
Example is grading of Cudahy Packing Company. Company grades of beef, from highest to lowest are Puritan, Fancy, Hex, and Rival.
Government grades are, from highest down: Prime, Choice, Good, and
■'■Statement by Mr. Henry H. Hundley, U. S. Dept, of Agricul ture, Standardization and Grading Branch, Omaha, personal interview. 2 Interview vdth Mr. E. G. Derrick, General Operating Department, Cudahy Packing Company, September 3, 1954* 176
Commercial. The Puritan grade, however, includes the Choice grade
and the top part of the Good grade; while Fancy includes the bot tom part of the Good grade and the top part of Commercial.
Some products, particularly those that are cured and pro
cessed, are sold under the packers' own registered brands, and
often more than one brand of a particular product may be put on the market by a particular packer. For example, a packer may have more than one grade of ham which will be marketed under different brands, one designating the top grade and others the lower grades. These grades may designate quality in different ways, as for example, grades in hams are now determined by weight, whereas they were for merly based on method of cure. In other words, the highest grade ham is a medium weight ham, while the second grade is a heavy ham.^
Inspection
Federal Meat Inspection.— The Federal meat-inspection serv ice is designed to prevent diseased and harmful meat from being
sold to consumers. This service, available to and applying only to plants from which some products are distributed in interstate com merce, is being conducted under the Meat Inspection Act of June 30,
1906. The Act provided for, among other things:
1. Ante-mortem examination and inspection of animals.
1L Cudahy Puritan brand, indicating its first-grade product, is reserved for hams in the 8- to 18-pound category. Heavier hams bear the brand Gold Coin, which is the company's second-grade brand. 2. Inspection of preparation, canning, salting, and render
ing of meats and meat products*
3. Inspection of the premises -where slaughtering and pro
cessing operations are carried out.
4* Post-mortem inspection of carcasses. If healthy, car
casses are stamped "inspected and passed;11 if the prod
uct is not suited for human food, it is condemned,
being stamped "inspected and condemned."
The average volume of slaughter in plants under Federal inspection is larger than in plants that do not have Federal inspec tion. In 1953, approximately 72.5 per cent of the total slaughter in the United States was in Federally inspected plants,^ most of these being large slaughtering plants that distribute their products widely. Many small operators, rather than go to the expense of pro viding the equipment and plant arrangement necessary to meet the requirements for obtaining Federal inspection service, confine their operations to intrastate marketing.
A much higher percentage of the animals that are slaughtered in Omaha plants are slaughtered under Federal inspection than is indicated by the national average. Only five of the small local packers do not have Federal inspection (See Table 21) and their share of the local slaughtering is only 2.2 per cent (see Table 22).
•''Computed from data in Livestock Market News Statistics. 1954. op. cit., Table 16, pp. 18-19. 1 7 8
Omaha City Inspection.— Ordinance No. 18098, called the
Omaha Meat Inspection and Grading Ordinance, was passed August 17,
1954 to amend a previous ordinance having to do with inspection and grading of meat in packinghouses not coming Tinder Federal inspection.
The present ordinance provides for the regulation of meat slaughter— ing houses, regulation of sale of meat and meat products in the City of Omaha, the designation of meat grades, permits for slaughtering houses, fees for inspection and grading, and requirements as to sanitation and methods of operation.
Requirements of the ordinance as to sanitation and methods of operation are nearly so but not as stringent as those of the Fed eral Act. Plants must be partitioned off; adequate drainage and sewage disposal must be maintained; ventilation must be sufficient to insure complete exhaustion of obnoxious odors; ample supplies of hot an d cold water must be provided; premises must be free from flies, rodents, and other vermin; equipment and utensils must be made of such material as to be thoroughly cleaned; and barnyards, runs, and loading docks must be kept clean.
Inspection service is furnished those plants that comply with the above requirements and receive a certificate of compliance.
Qualified inspectors perform an ante-mortem and post-mortem inspec tion, segregating all diseased animals and unfit carcasses for con demnation. All carcasses that are approved are marked "Inspected 179 and passed Gmaha-Douglas County Health Department" and an identi fying number assigned to the plant by the Qmaha-Douglas County
Health Department.
A grading service is also provided by the city to those slaughtering houses which comply with the provisions of the city ordinance. Grades are as follows:
1. "Omaha Prime" shall be equivalent to the "grade of
prime" as specified by the United States Department
of Agriculture.
2. "Omaha Choice" shall be equivalent to the grade of
"Choice" as specified by the United States Department
of Agriculture.
3. "Omaha Good" shall be equivalent to the grade of "good"
as specified by the United States Department of Agri
culture .
4. Any other grade shall be equivalent to the comparable
United States Department of Agriculture grade.
The cost of this service is met by a charge to the user of
#0.20 per animal for inspection only., and $0.30 per animal for in spection and grading. These charges are collected monthly.
This new city ordinance, as was stated above, is as demand ing of the slaughtering plant as the Federal ordinance, both as to sanitary requirements and fees. The purpose of this particular move on the part of the City of Omaha, is to make the city require 180 ments so nearly like those of the Federal government that all local packers will choose to comply vnth the Federal regulations, thereby relieving the city of further responsibility. This could have the effect of widening the local competitive area, for if the five packers who do not now ship in interstate commerce chose to abide by the Federal regulation, they could then furnish competition to other packers in the surrounding cities in Iowa. Retail stores in
Council Bluffs, Iowa, just across the Missouri River from Omaha, could be solicited by these packers, thereby intensifying the com petition in that area. CHAPTER IX
ORGANIZATION FOR DISTRIBUTION
the packing industry, its welfare and efficiency of opera tion, is vital to the nation on the basis that it supplies to the public the most important item in the food budget. To be able to supply this important item, however, packers have had to solve the distribution problems of this highly-perishable product. That they have been successful is evidenced by the well-developed meat whole sale and retail system in this country.
Meat packing is a fast-moving industry, in the sense that its products must be constantly moving from the time animals are killed until the meat reaches consumers' tables, Being perishable, these products in all forms, except canned and smoked, axe changing constantly, that is, are deteriorating and shrinking each hour dur ing the days or weeks required for their distribution. This means that time is of the essence, and cooperation between various heads and functionaries of sales and production must be of the highest order if output is to be sold at a profit.
A large packer, with many plants throughout the country, has many advantages not enjoyed by smaller institutions, but there must be extreme efficiency in not only buying livestock in the right amounts and at the right price, but also in distributing the meat
181 162 and meat products to those areas where most profitable returns will be made. The problem is made more difficult by the fact that many
of the products are consumed in localities widely separated from
areas where slaughtering takes place.
Profits, of course, are of great importance to the meat packers as well as to other concerns, but the service objective is
also recognized in distribution policies and functions. In other words, at any one time, beef may be bringing a higher price in New
York than in Philadelphia, but all available supplies of beef will not be shipped to New York and the wants of Philadelphia, consumers
completely ignored. Beef must be shipped to Philadelphia to satis fy the minimum requirements at least, and what surplus can be accum ulated will then be diverted to New York and to those areas where higher prices will be received.
A discussion of the wholesale distribution of meat and meat products would not be complete without some mention of the organiza tion responsible for this distribution. Complete coverage would include all types and sizes of firms operating in the Omaha area— an undertaking beyond the scope of this treatise. Consequently, the coverage here will be limited to a discussion of the distribu tion function of large packing firms, because (l) most meat is dis tributed by these firms, (2) their organizations, due to their size, lend themselves more readily to analysis and description, and
(3) there is more of an organization pattern; that is, the functions 133
are departmentized and lines of authority and responsibility are
more clearly drawn than in small* five-to-ten-employee firms.
One of the firms to be discussed in this chapter decen
tralizes the authority and responsibility for executing the various
organic functions to be performed. Heads of sales* purchasing*
traffic and other functions report directly to the manager of the
plant in which they are employed— this plant manager being solely
responsible for the successful operation of the unit he controls.
Home office executives still play a vital part in the success of
company-wide operations* but their efforts on the local level are
in a staff capacity— advisory and coordinative.
The other firm has a centralized type of operation. By
this is meant that responsibility for major functions is central
ized in top, home-office executives* and all sub-executives in the
same general functions* whether in the home office or in a branch
plant, report directly to the appropriate home-office executive and
indirectly to the manager of that plant where they are physically
located.
Decentralized Sales Organization
Main offices of the firm to be described are not located in
Omaha. Therefore* general sales executives are physically separated from the local sales group. While they have direct responsibility for some government* export* and other large-account sales* general
sales executives’ relationship with local executives is merely advisory and coordinative.
Plant Sales»— Charts II A and II B portray the relation
ship existing between the various functionaries in the Plant Sales
organization of the Omaha plant. All salesmen report to the Plant
Sales manager, through their district managers and the assistant plant sales manager, and the Plant Sales manager in turn reports directly to the Plant Manager. Salesmen live in cities centrally located in the territories to which they are assigned, sending their orders in by mail or telephone, and are personally responsible for credits and collections among their accounts.
Heads of the product departments, consisting of Table-ready
Meats, Beef and Lamb, Pork, Canned Foods, Soaps, and Dairy and
Poultry, are staff personnel, responsible for coordinating produc tion and sales. These department heads keep the various producing departments in touch -with demand for the particular product and they keep the sales personnel informed regarding available inventories.
It is their responsibility to advise plant and city Sales of amounts of particular products on hand and to push certain items that are in plentiful supply.
The Traffic Coordinator works between Plant Sales and the
Traffic division. It is his task to provide transportation for the volume of sales as required. He supervises the filling of cars and trucks with products for certain localities, informing Sales when CHART II A
ORGANIZATION CHART OF MEAT PACKING COMPANY, DECENTRALIZED OPERATION
PUNT MANAGER
Traffic Beef Purchasing City Sales Dept.* Buyer* Agent* Manager
Assistant Plant Traffic Sales Manager Coordinator
District District District Sales Manager Sales Manager Sales Manager
50 Salesmen Dog Food Retail Salesmen Salesmen
Table-Ready Canned Baby Food Wholesale Meats Foods Salesmen Salesmen
Beef and Soaps Canned Meats Institutional Lamb Salesmen Salesmen
Pork Dairy and Poultry
*Organization shown on following chart.
Source: Interview with packinghouse executives. ^
i CHART II B
ORGANIZATION CHART OF MEAT PACKING COMPANY, DECENTRALIZED OPERATION
PLANT MANAGER
Traffic Plant Beef Purchasing Department Superintendent Buyer Agent
Credit Credit Kan No. 1 Man No. 2 Division Hog Buyer No. 1 City Sales Plant Sales Superintend ent Buyer in Superin tendent rs Sheep Office_____ Assistant Foreman and Traffic of Lamb Manager Automotive Buyer Buyer No. 2 from local Suppliers Five Dispatcher Rate Ken Buyer No. 3, from Suppliers Local Over-the- through Drivers Road Drivers Home Office
Source: Interview with packinghouse executives. 187
cars are partially filled so that an attempt can be made to secure more immediate orders from this territory so that cars can be filled and lower rates can be secured.
City Sales.— City Sales Manager also reports directly to the Omaha Plant Manager, as shown in Chart II A. He is responsible for sales of all fresh meat and packinghouse products in the metro politan Omaha area. Each man in the sales force is assigned a def inite responsibility, either as a specialty salesman, institutional
salesman, retail or wholesale salesman. Specialty salesmen promote the sale of their particular line— dog food, baby food, or canned meats— handling all promotional responsibilities, such as point- of-purchase material, in addition to sales.
Institutional salesmen call on hotels, restaurants, hospi tals, and government institutions— any establishment where meals are served. This one firm concentrates quite heavily on institution al trade, and is different from the other local packers, large or small, in this respect.
Retail salesmen are general salesmen who sell the company1s full line of fresh meats and provisions. They call personally on local retailers on an average of once or twice a week, depending on the volume of the account. Telephone calls are also made frequently to secure fill-in orders and to keep customers aware of special deals as they occur*
Wholesale salesmen have comparatively the same duties as the IBS retail men, with the exception that the accounts on which they call are wholesalers.
Car Routes.— All orders handled by this department originate in Chicago, although the department manager reports to the local
Plant Manager. As orders are filled they are shipped to outlets in all parts of the East, such as St. Paxil, Milwaukee, New York, Buf falo, Georgia, New Orleans, and many other points. Orders for two or three customers along a particular rail route are combined, to secure carload rates. Orders are then unloaded as the rail car passes through the customers' respective towns.
Sales are billed on intercompany billing to branch houses nearest the customers. The branch house is then responsible for collections, charging the Omaha plant a commission, or service charge»
This handling of orders by car routes is eliminating many branch houses. Even more branch houses could be discontinued, but for the long-time practice of some buyers who desire to visit the branch houses for inspection and personal selection of each pur chase. When quality can be assured and guaranteed, making inspec tion unnecessary, these buyers will purchase and accept delivery by car route.
Credit Department.— Each account is classified according to one of the following credit ratings:
1. C.O.D. 189
2. 7-days
3. 30-days
Most accounts are on a seven-day basis for fresh meats.
Those with whom the company has had poor experience are on a C.O.D. rating. Soaps, canned goods and staple items are sold on a 10- to
30-day basis. These are standard practices in the industry.
Credit terms and collections are relatively strict in the meat industry because:
1. Livestock is paid for on a cash basis.
2. Meat and most meat products are highly perishable.
3. Meat products are purchased for current use.
4. Meat products have a short marketing period.
5* Many meat retailers and restaurants are poor credit
risks.
6. Margin of profit in meat industry is relatively 1 narrow.
It is therefore desirable to have accounts paid as close to the time of delivery of merchandise as possible. This firm's exper ience is that all collections are averaging less than a week.
The head of the Credit Departments, responsible to the Plant
Manager, handles some of the larger city sales accounts and other special accounts. One credit man handles city sales accounts and the other credit man handles plant sales accounts.
•'■Theodore N. Beckman and Robert Bartels, Credits and Coliec— tions in Theory and Practice (New York: McGraw-Hill Book Company, 19497, 'P. 311. ------190
Traffic.— In the Omaha plant, the Traffic Manager reports
directly to the local Plant Manager and indirectly to the head of
the traffic division in the home office. Specifically, the traffic
departments handles all rail and truck shipments made to points out
side Omaha when commercial or contract motor carriers are involved.
Local Delivery.— Deliveries in Omaha, Council Bluffs, Lin
coln, and other cities in Nebraska, Iowa, and even more distant
localities, are made in company-owned trucks. In fact, trucks make
the majority of deliveries in the entire plant sales territory (see
Chart I). Large, over-the-road deisel units are used for long hauls,
and smaller trucks are used for local deliveries. Drivers report to
a foreman who reports to the plant superintendent through a divi
sion head.
Order Handling.— It is of the utmost importance that orders
are processed in the shortest possible time to assure the product1s
being ready for loading into refrigerator cars or trucks that leave
the plant on devinite schedules. It is preferable that orders be
received one day previous to shipment, but often orders are handled
in less than four hours on the day of shipment. The handling of an order involves the following procedure:
1. Order is written by salesman.
2, It is referred to Credit Department for credit approval. 191
3. It is checked by order checker to assure items and
prices are correct.
4« The order is sent to the Order-Writing Department where
a varying number of copies are made, depending on the
number of departments from which items are needed to
fill it. Shipping labels, and loading tickets are
included in the order writing.
5. Handled by various departments in plant for selection
and packing.
6. Products are assembled and sent to loading dock,
either the truck dock or rail dock. Each order is
marked with the time when it must be on the appropriate
dock,
7. Goods are loaded in refrigerator car or truck for ship
ment. Orders are in "station order;" that is, products
for customers in the first town are placed nearest the
car or truck doors. Those in the next town come next,
and so on until the last order to be delivered is
placed farthest from the door,^
Selection and Training Salesmen.— Ho packing company in this area has a formalized method of selecting salesmen. Selection is generally made from among employees in operating departments, former butchers or grocery retailers. Formalized training is also non-
•^■Plant Sales Route Service. Informative Bulletin Wo. 3 (Chicago: Swift and Company), pp. 6-7. 192
existent with one exception, that is the firm being presently des
cribed. This concern has a three-week training session at its
St. Paul plant where discussions center around the background and
history of the company, products manufactured and distributed by
the company, display techniques, and sales techniques.
Buying Livestock.— Buying is divided into two distinct
areas, buying livestock, and buying supplies and operating equip
ment. These functions are the responsibility of two separate
departments. The local buying department for livestock is composed
of a buyer for each of hogs, beef, and sheep and lambs. Each buyer
reports directly to the Plant Manager as far as purchases for local
slaughter is concerned, and to the appropriate vice-president in
the home office regarding purchases for other plants.
All buying is coordinated in the home office, and various
buyers at numerous stockyards are contacted daily, and even hourly,
to facilitate (l) keeping supplies at the various plants up to pro
duction demands, and (2) taking advantage of price differentials in various parts of the country. As an example, the Omaha market may be long on hogs one day and the local hog buyer in Omaha will be
instructed by the home office to buy hogs not only for his local
plant, but for other plants belonging to the same company. This
practice has a tendency to stabilize the market and prices through
out the country. 193
Buying Supplies and Equipment.— The purchasing agent for materials and equipment is responsible to the Omaha Plant Manager,
Three buyers are accountable to the purchasing agent for specific duties. Buyer number one is physically located in the Plant Super intendents office, although he reports to the purchasing agent.
This buyer is concerned with purchases of supplies and equipment to i be used in the manufacturing process in the Omaha plant only*
Buyer number t wo buys supplies and equipment to be used in the manufacturing process for the Omaha plant and for dairy and poultry plants located in Iowa, Nebraska, and South Dakota. This buyer contacts local suppliers only in making purchases of items such as lubricating oils, belting, minor parts and machinery, pack aging materials, and ingredients of products like salt.
Similar duties to those of the second buyer are performed by buyer number three, with the exception that this buyer contacts sup pliers outside the Omaha area, through the home office.
The purchasing agent, in addition to buying large items like cars, major machinery, and other high-cost equipments, has the res ponsibility of the entire purchasing office and procedures.
Centralized Sales Organization
Prior to 1948, two of the national packers with plants in
Omaha operated with decentralised control and two with centralized control. In 1948, one of the latter firms named an Omaha plant man ager, a non-existent title and responsibility up to that time. 194
Local facilities were set up to operate as an autonomous unit. The
new local manager was given the entire responsibility of the Omaha
plant, each division head reporting directly to him and not to the
Chicago head office.
The attempted change was unsuccessful, however, due to sev
eral factors. First, the firm had been operating under centralized
control for many years and the change could not be made in a short
time, even though it appeared possible on paper. Second, the main
offices were moved from Chicago to Omaha in 1951, and the proximity
of top executives since that time has hindered decentralized control.
Consequently, this firm will be described, as its present method of
operation is typical of a firm functioning with strong, centralized
control.
Product Divisions.— In order to understand the sales and dis tribution function at the local level in this type of an organiza tion, it is necessary to become acquainted with the workings of a
product division. Product divisions came about with the growth of
the packing industry. In a small operation, the sales manager can
closely supervise sales, and at the same time work with operations
(production in the meat industry) on the supply side. As the plant becomes larger, specialists must be used to coordinate the activi ties of sales and production, thereby relieving the sales manager
of these duties.
In the general offices of the firm whose partial organiza- tion chart appears in Chart III, each product division is headed by a vice-president. This executive has a dual responsibility, he must coordinate procurement and sales of his product -with all plants and with all markets. He sets the price at which the product is to be sold and this price is not altered by local plants except in unusual situations. The head buyer, working under the direction of the vice president in charge of the product division, works with plant buyers, coordinating their activities so that adequate quan tities of the particular kind of livestock is available at all
company plants and at the most advantageous price. The home office executive, charged with coordinating product sales, works closely with the product heads in each plant. It is this executive’s res ponsibility to promote the sale of his particular product in all localities, matching inventories with demand and price factors. On an occasion when beef is in oversupply, for example, sales coordinat ing executive under the vice president in charge of the beef divi
sion, will contact branch houses, contract buyers, branch plants, and large customers in an effort to move the beef before losses from deterioration and shrinkage result.
Plant product managers are responsible for procurement and provision for sales at the plant level. They must keep the general office aware of amounts of each type of product sold or available to sell, in addition to acting as a buffer and coordinator between the producing and sales departments at the local level. Specifically, CJHART III
ORGANIZATION CHART OF MEAT PACKING COMPANY, CENTRALIZED OPERATION
PRESIDENT
X I 1 Canned Foods “f Vice President Vice President Vice President Vice President Sales Pork Dairy & Poul Sheep & Beef I Pharmaceutical si X.T------try General Plant Branch House Dry Sausage Sales Manager Sales Manager Head r Sales Buyer I Casings" District Sales PLAIT MANAGER Manager____ f Lard H ^ - XZL 1 | Contract Dept 7 Branch House Pork Man Beef Man Sheep and Manager Lambs Man
Table-Ready Plant Sales Credit Meats Manager Buyers Euyers Buyers T--- Salesmen I 1 Beef and Lamb H I City Sales Superintendent | Pork {- Manager Operations
Canned Foods n- City Sales Force | Soaps Plant Sales j Dairy and Poultry { Force Source: Interview with packinghouse executives, 197 the head of a product division at the plant level has the responsi bility for:
1. Procurement— seeing that proper amounts of livestock
are available for slaughtering and further processing.
2. Sales— seeing that finished product in proper amounts
are available to the sales departments,
3. Product quality— supervision of proper quality of prod
uct to meet the demands of the sales department.
4. Product development— supervision of product to meet the
changing demands of the public.
The product manager is responsible for the performance and profit of his division. He must have the product available at the right time and in the right quantities to meet the needs of the sales department. He is obligated to see that operating divisions produce the quantities and qualities of products that are needed.
Responsibility for grading, dressing, and designating the products to be shipped to each outlet is also the plant product manager's* For instance, a man from the beef division will go to the large chill room -where many beef carcasses are hanging. He will mark which carcasses are to be shipped on each order and in which order they are to be loaded in the refrigerator car or truck.
These carcasses are then wrapped, tagged properly, and moved to the loading docks. 198 *
Sales Departments.-—Sales of all products of the Omaha plant are the responsibility of the Plant Sales manager who reports to the
General Plant Sales Manager. Responsibilities in the plant sales territory have been delegated on a geographical basis— a City Sales
Manager supervising sales within the metropolitan area, and a dis tinct plant sales force covering all areas outside metropolitan
Omaha. (See Chart I) Sales are handled in a similar fashion to that already described above in the case of the firm using decen tralized control. Traffic, credits, coordination by product men— all these are accomplished in a manner not significantly different.
The principal differences lie, as previously mentioned, in the relationships existing between the branch plant personnel, the branch plant manager, and the home office personnel. The fact that branch plant executives may be responsible, after a fashion, to the branch manager does not preclude the home office executive's exer cising authority and control over daily activities the buying, sell ing, or movement of livestock or meat products. This highly cen tralized control may be justified in this type of an industry which deals in perishable, standardized products. Central control facil itates transfer of excess stocks from one plant or branch house to another, better financial control, coordination of livestock purch asing, and advertising and sales promotion. In other types of firms, dealing in non-perishables, centralized control usually results in a lack of aggressiveness on the part of branch executives and inflex ibility in the entire organization. 199
Each firm described in this chapter is striving to reach the same objective, namely, the profitable distribution of meat and meat products, although the paths taken in reaching this objective are slightly different. The correct path is a matter of choice, although by weight of numbers, decentralized control is favored for the following reasons: (l) it leads to greater flexibility of operations; (2) it requires and trains higher type of personnel;
(3) it shortens lines of communications and decisions are reached more quickly; and (4) responsibility is more easily fixed. In the final analysis, however, a firm of this type is striving to reach what General Motors Corporation chooses to call '‘decentralized res ponsibility with coordinated control," so that any advantages of organization will point toward that all-important objective, which is to keep the product moving. CHAPTER X
SUMMARY AND CONCLUSIONS
For the past one hundred years, the meat industry has been of prime importance to the well-being of the people as well as to the economic health of the nation. It not only has supplied basic food for our diet, but it has also furnished many jobs and sources of income for those engaged directly in the industry and for those raising livestock for slaughter purposes.
While there has been a limited amount of study and writing on the meat packing industry, late developments in the general field of distribution have brought about many changes that require fur ther treatment. Technological changes that have had a direct impact on the meat industry and changes in buying habits that have either an indirect or a direct effect on meat distribution, have prompted this analysis of the wholesale distribution of meat.
Today, the meat industry is led by a half dozen firms that account for the largest amount of the livestock being slaughtered throughout the country. The main difference between this era and those in the past is that slaughtering is now largely geographically decentralized. Major packers own and operate not only large branch plants in various parts of the country, but they also have estab lished or purchased outright many small plants in the Corn Belt
200 201
states which are operated, in. some instances, under the name of the former owners.
It can be truthfully said that meat packing is furnishing more payrolls, is responsible for more dollar sales of merchandise,
and adds more value to the raw materials it uses, than most indus tries in the country. The meat industry also plays an important part in the economic well-being of the many states in which it is
concentrated. It contributes a greater share of the total incomes of some states than it does of others, however, and for this reason is most vital to these states. As an illustration, one out of every five persons in Nebraska manufacturing industries is employed in meat packing, while only one in forty persons employed in manufac turing in Illinois is in the meat industry. The evident conclusion is that meat packing is of more consequence to the economy of Nebras ka than it is to Illinois, even though Illinois leads Nebraska as a meat packing state.
Meat Industry in Omaha. Nebraska
Omaha was one of the localities used very early as a concen tration point and market place for livestock. Local interests, studying the general conditions relative to livestock movements and available rail facilities, determined to make Omaha a livestock cen ter of such a size that it could well service the entire West. A one million dollar corporation— The Union Stockyards Company, of
Omaha, (Ltd.)— was formed in 1883 for the purpose of founding a 202 stockyards.
Almost from the beginning, Omaha has been one of the country's leading livestock markets. As early as 1892, it claimed to be the third largest livestock market in the country, a position which it has maintained in nearly every year up to the present time.
Establishment of a packing industry in Omaha was a natural event to follow the successful founding and operation of the stock yards. Large numbers of livestock were being funneled through
Omaha to markets and slaughter houses in Chicago and other loca tions. The Union Stockyards Company reasoned that local packing houses would not only furnish payrolls and income for Omaha and
Nebraska, but they would also have a reciprocal effect upon the livestock market. Consequently, efforts were made to bring in large packing firms and these attempts were highly successful.
Four large packinghouses were built between 1885 and 1890, and a permanent, large-scale industry became a reality. By 1890, the following firms were operating in Omaha: G. H. Hammond and Company,
Fowler Brothers, Cudahy Packing Company, and Swift and Company,
Aggregate sales of these four large plants were $45,161,000 by 1892, which placed Omaha third largest packing center in the United States.
The importance of the Omaha packing industry has not waned from those early times up to the present. At present it ranks next to first-place Chicago in total livestock slaughtered and value added by manufacture, and is third in terms of persons employed and and total wages and salaries paid.
"While there are many packing plants in the state of Nebras ka, most are located in Douglas County, which includes Omaha. Ap proximately 8'S per cent of the total number of workers in the meat industry in the state are employed in Omaha plants. This local pay roll totals close to $45*000,000 for some 12,000 wage earners.
Seventeen packinghouses are in operation in Omaha at present
Four of these are large, national packers processing all types of animals; the remainder are beef packers only. Eight of these latter firms ship their entire output to Eastern markets, distributing none of their products locally; five are non-federally inspected, meaning that their products cannot be shipped in interstate commerce
This results in the following situation: (l) over 90 per cent of the beef and 100 per cent of the pork and lamb that is distributed in Omaha and the surrounding territory is distributed by the four large, national packers; (2) five small packers, with an aggregate output of less than ten per cent of the total beef of all packing houses, supply the remainder of the demands of consumers in this area. This means that by and large, a study of the distribution of meat and meat products in this area, is largely a study of the dis tribution policies and practices of the four large packers. The only qualification to this statement, is that the large packers dis tribute 50 per cent or less of their products in Omaha and within a
350-mile radius of the city. By comparing the output of the small 204 packers with the actual amounts that are sold by the major packers in the wholesale area, the importance of the small packers takes on a new meaning.
Meat Distribution
Meat is distributed in Omaha and the surrounding area by the packinghouses, merchant wholesalers, wholesaling retailers, specialty food manufacturers, and packers not located in Omaha but who cover this area by salesmen and trucks. There are only a few local merchant wholesalers of meat, as would be expected in an area that is so dominated by large packinghouses. There is a scattering of frozen food locker establishments and retailers that supply small merchants in their neighborhoods, and two large retailers with wholesale departments cater to the institutional trade. Packers outside Omaha, such as Morell Packing Company of Ottumwa, Iowa,
Roth and Company of Glenwood, Iowa, and George A. Hormel Company, send salesmen into this area to solicit business of local merchants.
Orders are filled by truck, which make deliveries approximately once a week.
Channels of Distribution
As can be surmised, the packer-to-retailer channel of dis tribution dominates the local scene. This is true generally where the product is a perishable or where there is a style factor involved.
Local packers supply approximately 90-95 per cent of the meat in this
\ 205 area that goes to retail stores; merchant -wholesalers provide the remainder.
Only three smaller packers made any attempt to distribute outside Omaha city limits, and these confine their activities to approximately a 100-mile radius. The rest of the small, local packers, other than the shippers, distribute only to local outlets.
Larger packers market 50 per cent or more of their output through branch houses located in distant states. The Plant Sales territories of the packinghouses average 100-200 miles to the west,
150-350 miles to the east, and 100 miles north and south of Omaha.
The limits are set more or less by competition, rail rates, and the location of other plants owned by the same company.
Competition is very keen among the packinghouses for the business in this area. This competition is largely on the basis of service, however, as prices are fairly constant in the industry.
Packers vie for local business mostly on the basis of the services which they offer. One -will specialize in personal attention by his sales staff; another uses the telephone to solicit business, and in this way contacting his customers more often. Another firm will make deliveries at more frequent intervals and in smaller amounts than will the other packers. Each institution has individual practices that are followed in light of their experience and the clientele served.
Merchant wholesalers are fewer in number and are responsible 206 for a smaller proportion of the total meat s ales than would, be the case were Omaha not an important packing center. They are an impor tant factor, however, in supplying the institutional trade where frequent deliveries of small orders are so necessary. In estimated
65-75 per cent of the needs of restaurants, hotels, and institutions are supplied by these merchant wholesalers, the remainder is fur nished by the packers. Only one of the latter firms actively solic its institutional accounts, the others being content to supply the wholesalers, who, in turn, perform the services needed to supply this trade.
The one packer that chooses to solicit the institutional trade does so because of a conviction that these meal purveyors, the large ones in particular, are becoming increasingly cost con*- scious, to the point where they are demanding portion cutting, a service that can best be supplied by the packers. When meat is pur chased and delivered ready to cook and serve, in portion-size amounts, the meal purveyor can predetermine his costs, a factor which greatly simplifies his business.
Transportation of Livestock
Rails have always been of prime importance in moving agri cultural and manufactured products of the nation from point of their origin to points of use. This has likewise been true in the case of livestock; however, in recent years the t ruck has taken over much of the movement of livestock from farm to market, especially 207 in the short hauls. Truck transportation is faster for short hauls, more flexible, losses from bruising and handling are reduced, and over-all charges are relatively less for short hauls.
Transportation of Meat and Meat Products
As -with livestock, much of the movement of meat and meat products is shifting to motortrucks. This shift comes about as a result of many factors, among which could be mentioned: (l) trucks have improved technologically to the point where they are as fast or faster than rails up to a distance of approximately 500 miles, and in many cases, even farther; (2) refrigeration on trucks has become mechanized to the point that it can hold temperatures fairly constant for long periods, while rail cars are largely cooled with ice; (3) trucks are more flexible, that is, shippers are restricted neither by time schedules, nor by railroad tracks; trucks can travel at any time, to any city; (4) truck rates are lower in less-than- carload shipments; (5) trucks give truckload rates on smaller loads than do rails, in other words, it is possible to ship 20,000 pounds of meat by truck and secure truckload rates, when at the same time it would take 21,000 pounds of meat to secure carload rail rates;
(6) trucks are faster in door-to-door deliveries; (7) drivers of private, commercial, or contract motor trucks are more concerned with the welfare of the diipper than are draymen in distant cities who must handle the shipper's products if he ships by rail; and,
(S) less handling of the product is involved in truck transportation. 208
On the other hand, truck rates are often higher than rail rates- when moving carload lots. Again, many branch houses and wholesalers* warehouses are not equipped to receive shipments by truck. Finally, trucks must be unloaded immediately, while refrigerator cars can be used as a storage facility as long as the car is re-iced and demur rage charges are met.
Railroads are still handling considerable tonnage of fresh meat and packinghouse products. One local packer, for example, after having a negative experience with owning its own fleet of over-the-road trucks, returned to using rail cars for much of the movement of its merchandise in its Omaha plant sales territory. The reason given— operating expense of the over-the-road carriers are excessive if backhauls cannot be obtained to help defray the expense.
Rail rates are also lower than truck rates, in many cases, when con sidering carload shipments. This is enough of a factor, at least to one packer, to compensate for the additional time taken by the rails *
Self-Service
Retailing meats by the self-service method apparently has gained much favor in the entire country, the total number of self- service meat stores having increased from 178 in 1948 to 5*363 in
1952. Most of these self-service stores, approximately 77 per cent, are chain-operated. The experience in Omaha with self-service has been similar, in that a number of markets have been opened, most of 209 these in the past one to four years, approximately 78 per cent of which are chain operated. Twenty per cent of all retail meat outlets have either partial or 100 per cent self-service. Approximately 50 per cent of all retail meat sales are made by self-service markets.
Many housei\dves are not completely sold on self-service, however, and it may be sometime before they are content to give up the personal attention heretofore afforded by the butcher. There is also reticence on the part of many consumers, to purchase pre packaged meat for fear of buying inferior cuts and finding scraps folded in between layers of meat.
Despite this apathy on the pert of many consumers, chains are proceeding with plans to convert existing service stores to self-serve and to install self-serve in all new markets that are opened. Safeway adone plans to convert 80 stores outside Omaha and
22 stores in the city from service to self-service within the next year. It would appear that there are enough advantages to the mer chant in this type of operation, that self-service will move ahead regardless of the prejudices of mans'- consumers.
Precutting and Prepackaging
There is an upward trend in precutting and packaging meat and meat products in the Omaha area. One evidence is the increased activity in self-service merchandising of meat, which necessitates precutting and packaging. Not only are there more complete self- service meat stores today than ever before, but many service markets 210
are installing self-service cases to accommodate packer-packed
items.
Kost of the precutting and prepackaging at present is being done at the retail level. This is 100 per cent true in the case of fresh meats, although there is an increasing amount of the table- ready products that are packer-packaged. Small, partial-self- service stores stock packer-packaged specialty items entirely, as do the large, independent, full-self-service markets. One of the chain organizations that has self-service markets has taken on the full line of packer-packed luncheon meats in preference to perform ing the slicing and packaging operations itself. The other chain organization, prefers to slice and package all of its own luncheon meats because in this way it has closer control over quality, as well as over inventories, and prices to the consumer are lower.
While wholesalers are not at present performing any of the functions of precutting or packaging, there is a possibility that pressure may be exerted that might result in some activity in that direction. Trends in other parts of the country, and the likeli hood that Safeway will precut and package in their new distribution warehouse now under construction, may induce wholesalers also to perform these services for retailers and institutions.
Packers are also showing an increasing interest in precutting and packaging. This interest may not all be voluntary, some packers voicing the opinion that they are being forced into this situation 211
against their -wishes. Only one local packer, Armour and Company,
has gone extensively into prepackaged luncheon meats, having put a
full line on the market within the last year. Other major packers
are experimenting in the field, although these experiments are being
carried out at other plants.
There are some advantages and a few disadvantages of shift
ing the precutting and packaging functions back to the packers.
This would apply to fresh as well as table-ready meats. For exam
ple, the large packer is in a better position to make the necessary
investments as well as to utilize the trimmings and waste incident
to the operations. Further, advantages of scale would result, to the benefit of both retailer and consumer. Again, supply cycles
would tend to be smoothed out, in that packers could market meat in
a more orderly fashion. Should livestock offerings exceed the de mands for meat at a particular time, carcasses could be fabricated
into consumer cuts, and packaged. The excess could then be frozen
and later moved into the market as demand exceeded supply. This
would prevent the wide swings in price due to fluctuations in supply.
In addition, products would be more uniform, tend to be of higher quality should the packer place his own brand on them. Fin
ally, the retailer would benefit, in that work space would be convert
ed to sales area, labor cost and personnel problems would be reduced,
and congestion around service counters would be relieved.
On the other hand, there would be disadvantages in the 212 packers' taking over the functions of precutting and packaging. It would tend to shorten the shelf life of these perishable products, require large investments, add to the risk of the packers in an industry where profit margins are already low, and it would pose a tremendous problem of inventory control to prevent overstocking the merchants to the point where there would be a loss of quality in the product.
Frozen Food Lockers
Frozen food lockers are used mainly for storing meat, the amount of meat obtained from slaughter for storage in this manner amounting to about six per cent of all meat produced by commercial slaughter. The question is, do frozen food lockers have any impact on the wholesale distribution of meat? Would the volume of meat that goes into frozen food lockers have been produced by commercial slaughter? Surveys on a national basis answer both questions in the negative.
With regard to frozen food lockers in the Omaha area, the conclusions reached on the basis of government statistics, observa tion, and personal interviews are as follows:
1. Six locker plants are located in Omaha, while there are
504 plants in small farming communities in the state.
2. Seventy-five per cent of the patrons of the latter plants
live on farms and use the locker facilities so as to do
away with slaughtering and storing on the farm. 213
3# There is a negligible amount of slaughtering done at
plants in Omaha* Plants outstate send locker plant
employees to the customers' farms to perform the
slaughtering.
4. Use of locker plants in Omaha is static because of
increased purchase and use of home freezers, and
because m o d e m refrigerators have freezer sections
for limited storage.
5. Locker plant owners, aware of this situation, (4),
are taking on lines of frozen food items and promot
ing themselves as "home freezer suppliers." In this
capacity, they not only arrange for cutting and wrap
ping quantities of meat, but also supply frozen fruits
and vegetables in quantities.
6. The amount of meat being sold to consumers through
frozen food lockers is negligible, and has no influ
ence on meat wholesaling in this area.
Freezer Food Plans and Home Freezers
Freezer food plans have a,ll but died out in Omaha. While a number appeared immediately following the war, their popularity has waned here, even as it has in the rest of the country. Five Plans
are still in operation— two operating in connection with other busi
nesses, and three having processing plants in connection with appli
ance sales stores. 214
Packers and large wholesalers do not supply these freezer food plans; consequently, meat must be obtained from smaller pack ers. Larger packers are hesitant to become involved with such enterprises because of the unsavory reputation of many operators, and because of likely repercussions from retail customers.
From all available evidence, freezer food plans are of minor importance in the wholesale distribution of meat in the Omaha area.
Home freezers, on the other hand, have only slightly more influence on the meat distribution picture. There would have to be a sizeable amount of meat diverted from regular channels, or a signi ficant impact on buying methods or policies of the owners before home freezers could be recognized as an important influencing factor in meat distribution. Such is not the case in Omaha. It is true that the number of home freezers has increased by 194 per cent since
1940 to a total of over 8,000 freezers in the metropolitan area, but their influence is hardly being felt in wholesale or retail channels.
"Wholesalers and packers are not making meat available to consumers in quantities and at reduced prices. Home freezer owners that are buying meat in quantities are obtaining it from retail outlets, in the main. These retail outlets, including two of the large chain organizations, advertise periodically to promote quantity sales, and executives admit that the amount of meat moving in this manner is increasing slowly, but as yet these sales are not of major signifi cance. 215
One conclusion reached as a result of this study is that home freezers could and should be a partial solution to some of the
long-pressing problems of the packers, namely: (l) since a particu lar type of meat in demand cannot be produced without also producing
a number of other types of meat, paokers obviously must dispose of all cuts of meat from each carcass; (2) packers have had no contact
■with consumers except through the meat market; in other -words, they have been dependent upon the recommendations of retail salesmen to promote the sales of their products.
Home freezers could help solve these problems in this way:
(l) quantities of meat that move slowly at particular times when other parts of the same animals are selling readily, could be fabri
cated into retail cuts, packaged, frozen, branded, and moved into the retail areas, to be sold to home freezer owners at quantity prices; (2) as the packer is dependent upon the fickleness of the livestock producer for his supplies, (in other words, he cannot order his raw materials— when he wants them or in specified quanti ties— as can other manufacturers, but must wait for the offerings of the farmers), and as he is only able to can and cure small quanti ties of some cuts of meat, a practice of offering quantities of cut and wrapped frozen meat, to owners of home freezers, would tend to smooth out the supply cycles and prevent gluts on the market at times when too many farmers decided to bring their livestock to mar ket at the same time; (3) precut and prepackaged meat could all be branded, thus carrying the packers' message direct to the consumer. 216
Grading and Inspection
Students of marketing are aware of the benefits to be de rived from the adoption and general use of uniform grade standards in production and distribution processes. The meat industry is no exception, for it is recognized that the use of standards is of vital importance to buyers and sellers of both livestock and its products. It is to the credit of consumer and industry members alike that the intelligent use of standards in marketing meat and meat products is becoming more prevalent. One evidence is that more consumers are buying by grade now than ever before, according to chain-store executives. Further, buyers for chains and other large retail outlets are making many purchases, by description, over the telephone. Finally, the local United States Grading and Stan dardization Service now employs twice the number of Graders used during the period following World War II.
Grading is a voluntary service offered by the United States
Department of Agriculture to those packinghouses that are Federally inspected or whose inspection service has been approved by the
Department. lihile all but five of the seventeen Omaha packinghouses are Federally inspected— and these five packinghouses have been approved for Federal grading— not all meat produced locally is graded.
The extent of grading in local plants is as follows:
1. Thirty-five per cent of the total output, including all grades.
2. Seventy-five per cent of the top-quality beef carcasses,
which includes Prime, Choice and Commercial grades.
3. One-half of the lamb and mutton.
4. Only that pork which is purchased on government con
tract .
In order that diseased and harmful meat will not be sold to consumers, the Federal Meat Inspection Act provides for inspection of slaughtering facilities and of animals before and after they are slaughtered. Any plant selling its output in interstate commerce must submit to such inspections. Plants operating only in intra state commerce are subject not to Federal inspection, but to city or state inspections, which, as a general rule, are not as rigid.
In Omaha, only five small plants, slaughtering a total of
2.2 per cent of the beef in this area, are not subject to Federal inspection. A new city ordinance has been passed, however, which provides for fees and regulations that are approximately identical with the Federal Act. The implications are that the plants that have been submitting only to the City inspection, will now conform to the Federal regulations so as to be able to ship their products in interstate commerce if they so desire. This will not only relieve the city of further responsibility in the inspection of packinghouses and slaughtering operations, but will also complicate the competitive picture in the nearby cities in Iowa that can be easily reached by the small packers. 218
Organization for Distribution
In order to accomplish predetermined objectives, those who
are primarily interested in an undertaking must set up an organiza tion so that structural relationships will be understood, responsi bilities will be clearly defined, and the various functions can be performed vath economy and effectiveness. This need for organiza tion is paramount in the meat packing industry, for its perishable products must be marketed vath the greatest amount of efficiency and speed. It calls for a maximum amount of cooperation among the
executives and employees, and peak coordination of effort.
In an attempt to reach the highest degree of efficiency in the distribution of meat and meat products, the large national firms with branch packing plants in Omaha have organized their dis tribution functions along two distinct patterns— centralized and decentralized. On the one hand— in the centralised type of organiza tion— sales personnel in the Omaha plant report directly to home office, top sales executives, and indirectly to the Omaha plant mana ger. In this way, it is hoped to gain the greatest degree of coor dination of sales effort. On the other hand— in the decentralized organization— responsibility for the successful operation of the
Omaha plant is placed on the plant manager, and all local sales personnel report directly to him. Sales activities of the entire company are coordinated by home office, top executives, and they feel that in this way the greatest degree of speed and efficiency is
I 219 reached in marketing the products of the company.
The difference in the two types of organizations is not apparent at the operative or at the lower management levels. Only in top management, where authorities and responsibilities are nor mally delegated for major functions to be performed, is the differ ence evident. For example, with minor exception, the routine for order handling is carried out in the same manner in the two types of firms. All the routine matters having to do with credits, collec tions, deliveries, promotions, etc., are also similar. The signi ficant difference lies in the delegation or lack of delegation of authority and responsibility for the sale and distribution of the output of the branch plant.
From the vantage point of the objective observer, the only logical conclusion that can be reached is that the decentralized organization is by far the more effective. The very fact that all major packers but one have decentralized their operations would in dicate that the industry members themselves have reached the same conclusion. The one remaining large packer has evidently followed the same line of reasoning, for outwardly it has decentralized, but for all practical purposes it is continuing to operate with central ized control.
Certain advantages accrue to the packing organization that decentralizes the responsibility for sales and distribution of its products. These that are most apparent are the following:
1. There is more flexibility in carrying out the sales 220
and distribution function. Decisions can be made
more quickly that will affect the local plant—
decisions based upon local problems and requirements
that are known best by local executives,
2. There is more opportunity for executive training and
development in a situation where decisions must be
reached on the local, level.
3. Morale and a feeling of worth-whileness tends to be
highest where executives feel that they are making a
maximum contribution.
It is well to further point out that these advantages, by bringing about closer cooperation and coordination of branch and general-office executives, overcome the one disadvantage that may be inherent in decentralization, namely— sluggishness in decision making that might well affect the movement on a national scale of the perishable products of the industry.
CONCLUSIONS
In Chapter I, the following objectives were set forth as guides to the research for, and the writing of, this dissertation:
(l) to investigate the relative importance of Omaha as a meat pack ing center; (2) to determine the wholesale trading area of the Omaha meat industry and the trends in its growth pattern; (3) to explore the impact of precutting and prepackaging on the wholesaling of meat in the Omaha area; (4) to evaluate the effects of freezer plans and 221 and frozen food lockers on the wholesaling of meat in this area; and
(5) to investigate the channels of distribution of meat products for any significant changes not included above.
General Conclusions
As a result of keeping the above objects clearly in mind, the following general conclusions have been reached:
1. As a meat packing center, Omaha varies between second
and third in the nation in terms of total slaughter;
it ranks next to first-place Chicago in Value Added by
Manufacture, and it is third in terms of persons em
ployed and total images and salaries paid. Three to
five per cent of all animals slaughtered in the United
States have consistently been slaughtered in Omaha
plants.
2. The wholesale trading area of the Omaha meat industry
covers relatively the same area today as it did when all
meat products moved by rail, despite the increased
speed and improvements in truck transportation. This
trading area averages 100-200 miles to the west, 150-
350 miles to the east and 100 miles north and south of
Omaha.
3. There is an upward trend in the volume of precutting and
packaging of meat in the Omaha area, but the impact has
been small at the wholesale level. All fresh meat that 222
is precut and packaged is processed at the retail level
in self-service stores. Some sausage items and processed
meats, but no fresh meats, are being precut and pack
aged by the packers.
4. Freezer food plans and frozen food lockers have had a
negligible effect on the wholesaling of meat in this
area. While there have been a number of freezer food
plans in operation since World War II, they have all
but disappeared, ' The use of frozen food lockers is
static because of the increased use of home freezers
and freezer sections of modern refrigerators.
5. Most meat marketed in this area finds its way to the
consumer through the packer-retailer-consumer channel
of distribution. Packinghouses supply 90-95 per cent
of the needs of retail stores and 25-35 per cent of the
requirements of restaurants, hotels, and institutions.
Merchant wholesalers are the principal suppliers of the
restaurants because they offer such services as fabri
cating and daily delivery in small amounts.
Specific Conclusions
The following are the specific findings and conclusions of the research conducted for this treatise:
1. Omaha ranks second to Chicago on the basis of total
livestock received in the livestock market, but it often outranks Chicago in terms of cattle receipts alone,
Omaha ranks next to first-place Chicago in total live
stock slaughtered and in value added by manufacture,
and is third in terms of persons employed and total
wages and salaries paid.
Over 90 per cent of the beef and 100 per cent of the
pork and lamb that is distributed in Omaha and in the
surrounding territory are distributed by the four large
national packers having plants in Omaha.
The packer-to-retailer channel of distribution is the
most important in this area. Local packers supply
c*' approximately 90-95 per cent of the meat that goes to
local retail stores; merchant wholesalers supply the
remainder.
Competition is keen among the packinghouses, but this
competition is largely on the basis of service, prices being fairly constant in the industry.
The packer who is now actively servicing the institution
al trade will garner a larger share of this business as
long as he can perform the services of fabrication, delively, and credit as efficiently and more economically than can the wholesalers.
Wholesalers "will be forced by competition from the pack inghouses to perform the "portion-cutting" function or lose business. 8 . Packers supplying the wholesalers who serve the insti
tutions will undertake the fabricating function for the
wholesalers rather than see their outlets lose business.
This practice of fabricating for the idiolesale trade
may be a natural adjunct of precutting and prepackaging
for the retail trade, a service that wall sooner or
later have to be performed at the packer level.
9. Should all packers fabricate carcasses into retail cuts
for. retail stores and wholesalers, it would tend to
reduce the number of services that can be performed by
the wholesalers. The effect would be to minimize his
importance in the distribution of meat and meat products
in this area.
10. Meat packers are now able to deliver a better product to
dealers due to faster and technically improved methods
of transportation.
11. There is more hand-to-mouth buying of meats on the part
of dealers.
12. Over-all costs of transportation are less, resulting in
either lower consumer prices, higher margins to the
packers, or both.
13. Dealer inventories are lower, x\dth the attendant advan
tages which are: greater turnover, less shrinkage, less
storage space needed, and lower operating costs. 14. Because of a trend toward truck transportation, meat and
meat products are subject to less handling; conse
quently, there is less loss from damage and pilferage.
15. The trend toward precutting and prepackaging at the
packer level m i l be aided by the increased speed of
improved truck transportation facilities.
16. The self-service merchant is demanding a better quality
of meat. He realizes that prepackaged meat must sell
itself; therefore, meat must be of such high quality
that when cut, trimmed, and packaged properly it will
be appealing to the shopper.
17. Self-service merchants are demanding packer-branded
merchandise because of greater consumer acceptance.
Merchants know from experience that in a service market
the housewife can be pursuaded to take almost any brand,
but xvhen the choice rests with the consumer, as in a
self-service market, she picks the brand she knows best
and in which she has confidence. Further, the operator
knows that once the consumer has favorable experience
with branded items, there will tend to be more ready
acceptance of other non-branded products, including
fresh, prepackaged meats.
18. Self-service merchants tend to buy in smaller quantities.
There is some controversy in this regard, but enough evidence is present to conclude that at least there is
a tendency,
19, Self-service merchants tend to place their orders and
expect deliveries earlier in the week so that peak
work loads can be smoothed out. In order to be pre
pared for the heavy sales periods on the week end and
at the same time schedule work evenly throughout the
week, inventories of meat must be 011 hand Wednesdaj"
afternoon or Thursday morning so that fabricating and
packaging operations can proceed at a. normal pace.
20, There is an increased pressure on the packers to precut
and package as many items as are practical. This pres
sure is being exerted by self-service merchants in a
further attempt to cut their labor costs, and by serv
ice merchants who see some advantages in partial self-
service,
21, Activity in the marketing of frozen meat items is
increasing. The general acceptance by the consumer of
frozen foods has carried over into frozen meats, and a
few processors are marketing such products as f rozen
chip steaks, and beef and pork, tenderloins. There is a
reticence on the part of the wholesalers and packers to
offer regular steaks, chops, and roasts in the frozen
form, although they feel that competition and consumer demand will force the issue within a short time.
22. There is an increasing emphasis on advertising and
point-of-sale promotion to tie in with the increasing
number of products that are appearing under the pack
ers' brands. This promotion is necessary to replace
the sales effort of butchers in the service markets.
23. Branded products are in greater demand because, first,
the promotional activity of the packers make the
branded items more readily acceptable to the consumers;
and second, the merchant is realizing that in order to
offset increasing costs, fast-moving items with a higher
rate of turnover are emphasized.
24. It is more economical for the packer, than for any
other link in the channel of distribution, to assume
the functions of precutting and packaging.
25. The use of locker plants in the Omaha area is in a
static condition because of the increased purchase and
■use of home freezers and modern refrigerators with
freezer sections,
26. The amount of meat being sold to consumers through
frozen food locker establishments is negligible, and has
no influence on meat wholesaling in this area.
27. Freezer food plans are of minor importance in the whole
sale distribution of meat in the Omaha area. 28, Although the number of home freezers in Omaha has
increased from 2,800 to 8,300 since 1950, or 194 per
cent, their influence is negligible in wholesale or
retail .meat channels.
RECOMMENDATIONS
Based on the conclusions which grew out of this discussion, the recommendations set forth below are made to those business en terprises involved in the wholesale'distribution of meat and meat products in the Omaha area. It is believed that the suggestions made in this analysis would prove helpful in correcting some of the weaknesses prevalent in the industry and in designing a more effi cient distribution system to the benefit of both industry and con sumer .
Recommendations to Packers
1. A re-examination of plant sales territories as to areas
covered is recommended to determine if economies in
distribution costs could be realized or if faster serv
ice to customers could be provided,
2. An investigation should be made into the economics of
precutting and packaging all types of meat— •table-
ready meats, and fresh meats— at the packer level for
distribution direct to the retailer or institution.
3. Packers should consider the advisability of distributing oversupplies of carcasses or particular primal cuts by
precutting, packaging, and selling in large quantities
at quantity discounts through regular retail channels
to the home-freezer owners.
Recommendations to Wholesalers
1. Wholesalers should investigate the feasibility of fab
ricating carcasses into portion-size cuts as an addi
tional service to restaurants, hotels, and institutions
2. An experiment with precutting and packaging of fresh
and frozen meat not only for the institutional trade,
but for the retail stores as well should prove profit
able for the wholesaler. Small stores not having a
meat cutter on the premises would be fruitful prospects
for such service.
3. Wholesalers should investigate the possibility of pass
ing back to the packer this function of precutting and
packaging. The packer should be better able to make
the necessary investment in equipment, to realize the
benefits of mass-production techniques, and to make use
of the trimmings in by-products than can the wholesaler BIBLIOGRAPHY
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230 231
Malott, Dean W., and Martin, Boyce F, Agricultural Industries. Mei-r York: McGraw Hill Book Company, Inc., 1939* Reprint of Chapter III as The Livestock and Meat Packing Industry. Swift and Company.
Savage, James and Bell, John T. History of the City of Omaha. Nebraska. New York: Kunsel and Company, 1894.
Swift, Louis Franklin (in collaboration with Arthur Van Vlissingen, Jr.) The Yankee of the Yards. Chicago and New York: A. W. Shaw Company, 1927.
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Wendt, Basil S., and Hedges, Harold. Truck and Rail Transportation of Nebraska Livestock to the Omaha Market. Nebraska Agricul tural Experiment Station Bulletin 275, October 1932.
Public Documents
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Limmer, Ezekiel. "Transportation of Selected Agricultural Commodities to Leading Markets by Rail and Motortruck, 1939-50." (mimeographed) U. S. Department of Agriculture, Bureau of Agricultural Economics, June, 1951.
Mann, L. B., and Wilkins, Paul C. Frozen Food Locker Plants. I-'iscel- - laneous Report 146. U. S. Department of Agriculture, Farm Credit Administration. Washington: Government Printing Office, march, 1951.
Reed, H. E. "Streamlined Hog Marketing," Marketing Activities, Vol. 15, No. 1. U. 3. Department of Agriculture, Production and Marketing Administrstioii, January, 1952.
"A Survey of Frozen Food Cabinets and Prepackaged Fresh Meats in Retail Food Stores in 55 Large Cities." U. 3. Department of Labor, Bureau of Labor Statistics, January, 1952.
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Unpublished Material
Beckman, T. N. 31 The Value Added Concept as Applied to Marketing (Institutions) and its Implications." (Paper read before the American Marketing Association, Detroit, Michigan, December 27, 1954*
Kavey, Henry J., ’'Opportunities in Your Self-Service Meat Department," Address at 17th Annual SMI Convention, released May 24, 1954. AUTOBIOGRAPHY
I, Rex Vance Call, was born in El Paso, Texas, September 2,
1912. I received my secondary education in the public schools of
Everett, Washington. Ey undergraduate training was obtained at the University of Washington, from which I received the degree
Bachelor of Arts in 1949. From the University of Washington, I received the degree Piaster of Business Administration in 1950.
While in residence at the University of Washington, I acted in the capacity of assistant to Professor W. Dwaine Hichins during the years 194^-1949 and 1949-1950. In 1950 I received an appointment as an Instructor at The Ohio State University, where I specialized in the Department of Business Organization. I held this position for two years while completing the course requirements for the degree Doctor of Philosophy.
In 1952, I received an appointment as Assistant Professor at the University of Omaha, Omaha, Nebraska, which position I have held while performing the research for, and the writing of, this dissertation.
237