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Milk Marketing Before and After Or

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Milk Marketing Before and After Or _ Z7,4 UNIVERSITY OF OXFORD AGRICULTURAL ECONOMICS RESEARCH INSTITUTE MILK MARKETING BEFORE AND AFTER OR A STUDY IN CENTRAL SOMERSET BY B. L. SMITH AND H. WHITBY PRICE 2S. NET OXFORD issued by the AGRICULTURAL ECONOMICS RESEARCH INSTITUTE 1937 UNIVERSITY OF OXFORD AGRICULTURAL ECONOMICS RESEARCH INSTITUTE MILK MARKETING BEFORE AND AFTER ORGANIZATION A STUDY IN CENTRAL SOMERSET BY B. L. SMITH AND H. WHITBY , OXFORD Issued by the AGRICULTURAL ECONOMICS RESEARCH INSTITUTE 1937 PRINTED IN GREAT BRITAIN IN THE CITY OF OXFORD. AT THE ALDEN PRESS , FOREWORD THE central plain of Somerset has for long been a home of the cattle industry. Its rich, alluvial pastures fattened bullocks, and a great dairying industry was maintained mostly for summer milk production for the manufacture of Cheddar cheese. The county contains large districts of moorland and rough grazings, the Quantock and Brendon Hills and Exmoor Forest, but even including these its cattle population is one of the densest of all the English counties. In the agriculture of central Somerset great changes have been made during the last generation. Not only has there been a steady decline in the importance of the beef industry and an increase in the numbers of dairy cattle, but the nature of the dairying industry also has changed, cheese production steadily giving place to the sale of liquid milk. It has been a question of economics; the dairyman's returns came to exceed those of the grazier, and the growth of population and improvements in transport made the liquid milk market more remunerative, to those who could supply it, than the market for cheese. This transition in the county had reached an interesting stage by 1930. By contrast with 1900, the numbers of cattle two years of age and over, mostly for beef, had fallen by 46 per cent., and those of dairy cattle had risen by 27 per cent., and it was common knowledge that the sales of milk to buyers in. the towns were displacing farm-house cheese manufacture. In- deed, the improvements in methods of handling and transport- ing milk had brought many cheese-producing farms within reach of the London and other distant milk markets. There was a scramble to reach them, and farmers were encouraged in this by milk dealers who were looking, naturally enough, for opportunities to promote competition amongst producers. However, there was no precise information available about the utilization of milk from this great dairying district, nor about the changes which were going on. And so, in 1931, the Agri- cultural Economics Research Institute decided to make a survey of a large sample of the area. A region including about 2,000 milk producers, large and small, was selected, and everyone of 4 FOREWORD them was visited for the purpose of getting information about their total milk production and its disposal, whether sold liquid direct to distributors or to creameries, or whether manufactured on the farm into cheese or butter. Figures were collected for the months of June and December, to represent the periods of summer and winter production. As a result very complete information about the quantity of milk production and its dis- posal for various purposes was obtained. Almost immediately afterwards, the Milk Marketing Scheme was introduced and the Milk Marketing Board was set up. The new organization changed so completely the methods of marketing that no useful purpose would have been served by publishing the results of the Central Somerset survey at that time. In 1935, however, it was felt that a comparison between the organization of marketing before and after the inception of the Scheme would be timely, and the collaboration of the Board was secured, so that information was made available as to pro- duction and sale in the same area at that date. The returns of registered producers filed at the Milk Marketing Board made a complete re-survey ofthe region unnecessary, but where changes in tenancy had occurred in the interval local inquiry was made. The results of the two surveys, 1931-2 and 1934-5, and the comparisons between them are embodied in the report which follows here. It is shown that the effects of the pooling system have been to raise farmers' prices, and thus to stimulate an increase of production; that the guaranteed market for all milk at these higher prices has rendered milk selling more profitable than any form of farm-house manufacture, except of cream, so that Caerphilly cheese has become entirely a factory product, and farm-house Cheddar cheese has survived only by the aid of subsidies which have maintained the prices of milk sold in this form at levels as high as or higher than those of liquid milk. On the other hand, the unorganized competition between milk producers in this remote district and the dairy farmers of the suburban counties for the London market, which would soon have led to the exploitation of both, has been eliminated, and the control of supplies under the Scheme has prevented much of the wasteful transport of milk over long distances. Somerset and similar areas are now serving a function as producers mainly of summer milk for manufacture, and as reserves for FOREWORD 5 equalizing supplies for liquid consumption in the areas of con- centrated population. The original survey made in 193 I -2 was carried out under the direction of Mr. F. J. Prewett, and Mr. B. L. Smith was re- sponsible for the field work. Later, Mr. Smith was appointed to the staff of the Milk Marketing Board, and he and Mr. H. Whitby, now Assistant to the Advisory Economist at the Department of Agriculture in the University of Leeds, under- took the assembly of the information supplied by the Milk Marketing Board for 1935 and the supplementary local investigations. The Institute desires gratefully to acknowledge the collabora- tion of the Milk Marketing Board and of farmers and others of Central Somerset in the work. C. S. 0RWIN Director AGRICULTURAL ECONOMICS RESEARCH INSTITUTE UNIVERSITY OF OXFORD October, '937 CONTENTS I. INTRODUCTION 7 (a) Sizes of Farms 9 (b) Number of Cows I0 II. PRODUCTION AND UTILIZATION 13 (a) The Wholesale Market 15 (1) Local Retailing 18 (2) Direct Consignment 18 (3) Sale to Creameries 20 (b) Producer-Retailing 25 (c) Farm-house Cheese-making 26 (I) Cheddar 29 (2) Caerphilly 31 (d) Farm-house Butter- and Cream-making 32 (e) Milk Consumed on the Farm 33 (I) In the Farm-house 33 (2) By Calves 34 III. THE PRODUCER'S NET RETURNS 35 (a) Wholesale Prices 35 (I) Local Retailing 35 (2) Direct Consignments 35 (3) Sale to Creameries 35 (4) Transport Deductions 39 (i) Transit Risk 39 (ii) Rail Charges 40 (iii) Collecting Charges 41 (5) Premiums and Bonuses 43 (i) Level Delivery 43 (ii) Butter-fat and Cleanliness 43 (b) Producer-Retail Prices 44 (c) Farm-house Cheese Prices 45 (1) Cheddar 45 (2) Caerphilly 47 (d) Farm-house Butter and Cream Prices 49 (e) Prices of Calves 49 IV. CONCLUSIONS 50 6 I. INTRODUCTION THIS study is a comparison between the production, price and utilization of milk in one of the most intensive dairying districts of England in 1931-2, when the milk industry was relatively unorganized though showing signs of the need for some kind of centralized control, and in 1934-5, when organization had been accomplished through the Milk Marketing Board. In June 1932, the Agricultural Economics Research Institute made a survey of milk production and marketing on 1,920 farms in Central Somerset. Information was obtained for a winter month, December 1931, representing a season of low produc- tion, and a summer month, June 1932, a month of high pro- duction, and for a few farms for the whole of the year 1931-2. It included the quantity of milk produced, its disposal by the producer, the prices received for it by him, and if sold to a factory, its ultimate utilization. The area surveyed comprised 64 parishes, and practically every dairy farm within it was included. By the summer of 1935 the Milk Marketing Board, which had started operations nearly two years earlier, was firmly established, and, for better or worse, was affecting all those engaged both on the productive and distributive sides of the industry. It was impossible, however, to assess the extent of the changes effected by the Board, owing to the lack of exact information from any considerable number of milk farms about conditions prior to the setting up of the Board. Thus, the data collected in Central Somerset in 1932, though necessarily limited in scope, took on a new value if comparable data from the same area could be obtained from the Board for December 1934 and June 1935, for a comparison would show, in quanti- tative terms, what had been the effect of organized marketing both on production and utilization of milk. The co-operation of the Board was obtained in 1936. It was not possible, of course, to trace in the Board's files all the farms surveyed in 1932. Farmers with four milch cows or under were not compelled to register with the Board, unless 7 8 INTRODUCTION they were producer-retailers,' and there had been a few changes of tenancy in the intervening period. Where for either of these reasons the Board's records were deficient; the information could still be got by local inquiry on the farms in question, and this was done for unmatched farms in i o parishes out of the 64, the selected parishes being picked at random and well scattered throughout the surveyed area. This work, which was done in the autumn of 1935, had a double value.
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