Prairie Farmer, Vol. 56: No. 1, January 5, 1884. / A Weekly Journal for the Farm, Orchard and Fireside

by Various

Dairymen, Write for Your Paper.

Lessons in Finance for the Creamery Patron.[A]

Any business to be permanent must make reasonable returns for the capital employed and give fair compensation for the labor bestowed upon it, otherwise it will be abandoned, or if continued at all it will be done under the protest of economic law. In addition to the ordinary circumstances attaching to business enterprise, the creamery business is essentially and peculiarly co-operative. It thrives with the thrift of all concerned—owner and patrons. It fails only with loss to all. The conditions of success, therefore, to the patrons are included in the conditions of success to the creamery, and vice versa.

The object of this paper is to suggest some of these conditions and some of the instances of violation of them.

It is hardly necessary to discuss the case in which peculiarity of soil or climate, the greater profitableness of some other kind of industry, or other reason, would so restrict the size and number of dairy herds as to make the locality a barren dairy region. Notwithstanding the splendid achievements of the dairy industry it is safe to say that it may not be profitable in any and every locality. Given the soil, the climate, the water, the people intelligent and disposed toward the exacting duties of this business, there are still many questions to be considered and many mistakes to be avoided.

It has been a pet idea in this country that competition is the corrective of all industrial evils. Competition without doubt holds an important place among the industrial forces, but may be carried so far as to defeat the very objects it is adapted to subserve, when intelligently encouraged. Carried to the extent of employing two persons or more to do the work of one, of absorbing capital without the full employment of it, it becomes destructive and expensive. We find, for instance, in many towns, a large number of commercial establishments doing business at an immense profit on single transactions, but the transactions are so few and so divided up among struggling competitors, that neither secures a profitable, nor even a respectable, business. With choice cuts of meat from twelve to eighteen cents a pound and butcher's stock at three and four cents, we often see butcher shops multiply, but the price of meat usually remains the same. Indeed, the very increase of middle man establishments beyond the employment of these to their full capacity, and the consequent full utilization of the capital and labor employed, is a sure loss to somebody, and if it does not all go to the producer it is almost always shared by him.

One of the greatest burdens which the creamery business has to carry to-day is the excessive number of its creameries beyond legitimate demands. The co-operative idea, so far as it enters into this business, implies the most profitable use possible of the resources employed in it both of patron and creamery owner, and a fair and equitable distribution of the profits. Said a large creamery owner to me recently, "I find the comparative value of my butter steadily decreasing from year to year. I have the same territory, the same butter-makers, the same patrons, substantially, but my butter is not up in quality and price as it used to be. I ascribe it to the excessive competition prevailing in it, i.e., it is one of its results. I have lost my influence over patrons in securing the best quality of cream. If I make any criticism of their modes or practices they say to me, 'Mr. ——, if you do not want my cream I will let the other creamery have it. Do just as you like about it; take it or leave it.'" But the loss of one or two cents a pound on the net proceeds of a season means five or ten per cent of its value, or of the entire season's results enough difference to make any community in a few years rich or poor, thrifty or unthrifty, according to the circumstances in the case.

Further: the idea of co-operation implies the doing of equal and exact justice to all included within the co-operative limits. This, an excessive and unprincipled competition greatly interferes with. It can properly be demanded by every fair and honest patron of a creamery that every other patron should be as fair and honest as himself. Indeed, this is an essential part of the implied contract. But in the case of excessive competition no restraints can be imposed and no penalties can be made to follow attempts to violate the principles of equity, except the possible inconvenience of changing from one creamery to another. The straight and honorable patron is powerless; the owner of the creamery is powerless; and the co-operative element is rendered a nullity.

Further: the co-operative element, in the relations of creamery and patrons, requires that the price of milk or cream shall vary with the market price of the finished product. Contracts for the future are mere speculation, as a rule. If the transaction is large and the turn of the market unfavorable to the creamery, ruin is liable to come to the business, and loss and disaster follow to all concerned. If the turn of the market should be the other way, among the numerous patrons there is sure to be more or less dissatisfaction and a more or less breaking up of the condition of friendly reciprocity which should exist between creamery and patron. Patrons may damage their own interest by exacting too much from the creamery as well as by accepting too little, and a greedy grasping after an unreasonable share of the profit on the part of the creamery owner is sure to bring retaliation, disturb cordiality of feeling, and bring loss to all concerned.