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Published online by Cambridge University Press: 07 November 2014
No exhaustive consideration of whole milk marketing in its many aspects is possible within the limits of a single paper. We propose, therefore, to consider but three phases of the subject, and to treat each of these more or less separately. These three sections deal with the general nature of the price making arrangements, the sharing of the producer's market, and the possibilities of narrowing the spread between farm and retail prices.
The price received for milk which is consumed as whole milk has always been considerably more remunerative than that received for milk which reaches consumers in any of the several processed forms. This relatively higher price for whole milk can be attributed to a variety of factors which vary in importance from market to market and time to time. They include the peculiar characteristics of the whole milk demand, the fact that a number of outlets for milk other than the whole milk market exist, the fact that milk production exhibits pronounced seasonal variation, and the fact that supplies offered for sale as whole milk whether by farmers or distributors are capable of being specially restricted in amount. Of these the special nature of the whole milk demand is by far the most important; indeed, in its absence, the other factors would lose most of their special significance. The peculiar characteristics referred to are that the demand is extremely inelastic, that it is decidedly less elastic than the demand for any processed dairy product, and that it is well-nigh constant throughout the year. Because pronounced changes in price in either direction are necessary before any significant change in consumption ensues, any ordinary price appeal will be relatively valueless and will not be used. Since consumption remains substantially unaltered within a considerable price range, the natural aim of sellers will be to secure the highest price permitted by this price range. This will be possible only if the existing milk supply corresponds with the quantity which consumers are willing to take at the price indicated, or if there is a possibility of restricting the supply to that amount.
1 See Drummond, W. M., “Price Raising in the Dairy Industry” (Canadian Journal of Economics and Political Science, vol. I, 11, 1935, pp. 551–67).CrossRefGoogle Scholar
2 This refers to the average situation only. It is recognized that in the case of certain markets, e.g., that of Winnipeg, the width of the spread has been definitely and even substantially reduced.
3 See, e.g., Cassels, John M., A Study of Milk Prices (Harvard University Press, 1937), p. 61.Google Scholar
4 See Ontario Milk Producer, 10, 1935, p. 92 Google Scholar; Where the Milk Dollar Goes (New York, Sheffield Farms, 524 W. 57th St.)Google Scholar; “Economic Considerations in Marketing Fluid Milk” (Wisconsin Research Bulletin, no. 125, 1934, p. 22).Google Scholar
5 The National City Bank of New York, Monthly letter, 01, 1933.Google Scholar
6 Milk and Milk Products, Minutes of Proceedings and Evidence given before the Select Committee on Colonization and Agriculture (Ottawa, 1933).Google Scholar
7 See, e.g., “Economic Considerations in Marketing Fluid Milk”.
8 To obtain some idea of the margin narrowing and price making possibilities under public ownership and operation, read The Municipalization of Milk as Conducted in Wellington, N.Z. by Herron, R. E. general manager, Wellington City Corporation, Milk Department.Google Scholar