CHAPTER XX. _marketing_

MARKETING

Marketing is related to cheese in two ways: First, the purchase of the raw material, the milk; and secondly the sale of the finished product, the cheese.

+321. Buying milk.+--The method of paying for the milk differs in the various cheese sections and factories. At some factories a stated price is paid for the milk or the fat. This is usually in terms of 100 pounds of milk or for each pound of fat. This is the practice with concerns possessing large capital. Other factories make the milk into cheese and after each sale, the expenses necessary for operating the factory are deducted and the remainder of the money divided among the patrons. This money is divided either on the basis of the number of pounds of milk or of fat delivered. The question arises as to which is the better method to buy milk for cheese-making, or the fairest way to divide the money received from a sale of cheese.

+322. Cheese yield basis of buying milk.+--Let us suppose that at a cheese factory there were five patrons: (A) delivered 100 pounds of milk testing 3 per cent fat; (B) 100 pounds of milk testing 3.5 per cent fat; (C) 100 pounds of milk testing 4.0 per cent fat; (D) 100 pounds of milk testing 4.5 per cent fat; and (E) 100 pounds of milk testing 5.0 per cent fat. Table XXVI shows the actual number of pounds of cheese containing 37 per cent moisture which 100 pounds of milk containing different percentages of fat will produce. The cheese sold net for 20 cents a pound.

TABLE XXVI

SHOWING PAYMENTS FOR MILK BASED ON THE ACTUAL YIELD OF CHEESE

===================================================================== PATRON | POUNDS | PER CENT | YIELD OF CHEESE | PRICE A | AMOUNT | OF MILK | OF FAT IN | CONTAINING | POUND | DUE EACH | DELIVERED | MILK | 37% MOISTURE | | PATRON -------+-----------+-----------+-----------------+---------+--------- A | 100 | 3.0 | 8.30 | $.20 | $1.66 B | 100 | 3.5 | 9.45 | .20 | 1.89 C | 100 | 4.0 | 10.60 | .20 | 2.12 D | 100 | 4.5 | 11.74 | .20 | 2.348 E | 100 | 5.0 | 12.90 | .20 | 2.58 -------+-----------+-----------+-----------------+---------+--------- Total | 500 | 20 | 52.99 | .20 | 10.598 =====================================================================

This table shows the amount of money each patron should receive if the money were divided on the basis of the actual yield of cheese.

+323. Fat basis for payment of milk.+--Let us suppose that the same five patrons delivered the same quantity of milk testing the same percentages of fat and that the cheese sold for the same price. A total of 20 pounds of fat was delivered and the cheese sold for $10.598; by dividing this amount by the pounds of fat delivered, the price or value of one pound of fat is found to be $.5299. Multiplying the pounds of fat each patron delivered by the price a pound would give the amount of money due each patron.

TABLE XXVII

SHOWING PAYMENTS FOR MILK BASED ON FAT-CONTENT OF MILK

=================================================================== | POUNDS | PER CENT | POUNDS OF | VALUE OF | PATRON | OF MILK | OF FAT IN | FAT | POUND OF | AMOUNT DUE | DELIVERED | MILK | DELIVERED | FAT | EACH PATRON -------+-----------+-----------+-----------+----------+------------ A | 100 | 3.0 | 3.0 | $.5299 | $1.58 B | 100 | 3.5 | 3.5 | .5299 | 1.85 C | 100 | 4.0 | 4.0 | .5299 | 2.12 D | 100 | 4.5 | 4.5 | .5299 | 2.38 E | 100 | 5.0 | 5.0 | .5299 | 2.65 ===================================================================

+324. Weight basis or pooling method for payment of milk.+--By this system, each patron would receive an equal price for 100 pounds of milk. If the same supposition is taken as before, there would be 500 pounds of milk delivered and the cheese sold for $10.59; each 100 pounds of milk would be worth $2.12. As each patron delivered an equal weight of milk, each would receive an equal amount of money, or $2.12.

+325. Fat-plus-two method for payment of milk.+--Some workers have thought that by adding two to the fat test, the division of money would be more nearly the true cheese-producing value of the milk. The amount due each patron is figured as in the fat basis, except that two is added to the fat test and this is used as the basis of division. If the same suppositions were used as before, each patron would receive the amount shown in Table XXVIII.

+326. Comparison of methods.+--The best way to judge the different methods of paying for milk is to compare them with the true value based on the actual cheese yield as shown in Table XXIX.

TABLE XXVIII

SHOWING PAYMENTS FOR MILK BY FAT-PLUS-TWO METHODS

=========================================================================== PATRON | POUNDS | PER CENT | FAT PLUS | POUNDS | VALUE OF | AMOUNT | OF MILK | OF FAT IN | TWO | OF FAT | POUND OF | DUE EACH | DELIVERED | MILK | | DELIVERED | FAT | PATRON -------+-----------+-----------+----------+-----------+----------+--------- A | 100 | 3.0 | 5.0 | 5.0 | $.353 | $1.76 B | 100 | 3.5 | 5.5 | 5.5 | .353 | 1.94 C | 100 | 4.0 | 6.0 | 6.0 | .353 | 2.12 D | 100 | 4.5 | 6.5 | 6.5 | .353 | 2.29 E | 100 | 5.0 | 7.0 | 7.0 | .353 | 2.47 ===========================================================================

TABLE XXIX

SHOWING THE COMPARISON OF THE DIFFERENT METHODS OF PAYING FOR MILK AT CHEESE FACTORIES

================================================================ | | ERROR IN PAYMENT PER 100 POUNDS OF MILK BY PATRON | PERCENTAGE +----------------+-----------+-------------- | OF FAT IN | POOLING SYSTEM | FAT BASIS | FAT-PLUS-TWO | MILK | | | METHOD -------+------------+----------------+-----------+-------------- A | 3.0 | +$0.46 | -$0.08 | +$0.10 B | 3.5 | +0.23 | -0.04 | +0.05 C | 4.0 | 0.00 | 0.00 | 0.00 D | 4.5 | -0.23 | +0.04 | -0.05 E | 5.0 | -0.46 | +0.08 | -0.10 ================================================================

A careful study of the above table shows that the pooling system is in favor of the dairy-man with the poor milk, and that the fat basis favors the dairy-man with the rich milk. This is due, of course, to the fact that the casein does not increase in the milk quite in proportion to the fat. With the pooling system or fat basis of payment, no account is taken of the casein; but the fat-plus-two system is an attempt to recognize the casein, but considers the percentage of casein in all milk to be the same. This method is in favor of the dairy-man with milk low in fat, but not to the extent of the pooling system. The latter system considers the cheese-producing power of all milk to be the same. It favors the dairy-man with low-testing milk. The fat basis for payment recognizes only the fat and is an advantage to the dairy-man with the high-testing milk but not to the extent that the pooling system is in favor of the low-testing milk. The fat-plus-two method recognizes 2 per cent of casein in the milk. This favors the dairy-men with low-testing milk. Other methods of paying for milk have been devised. Because the actual yield of cheese from the milk of different herds cannot be easily determined at the cheese factory, this method of payment cannot be employed. In localities in which all the dairy-men have the same breed of cattle and there is not a wide variation in the fat percentage, the fat basis is usually found to be the most satisfactory way to pay for the milk.

+327. Laws governing the production and sale of milk.+--Many states have laws regulating the sanitary conditions under which the milk may be produced. These laws relate principally to the condition of the stables, the health of the cow, the food given the cow, and the care of the milk. The following law of Wisconsin is a good example:

"Adulterated milk, what constitutes. Section 4607a. In all prosecutions under the preceding section, or any other section of these statutes, or laws amendatory thereof or supplementary thereto, relating to the sale of adulterated milk or adulterated cream, the term adulterated milk shall mean: milk containing less than three per centum of milk fat, or milk containing less than eight and one-half per centum of milk solids not fat, or milk drawn from cows within eight days before or four days after parturition, or milk from which any part of the cream has been removed, or milk which has been diluted with water or any other fluid, or milk to which has been added or into which has been introduced any coloring matter or chemical or preservative or deleterious or filthy substance or any foreign substance whatsoever, or milk drawn from cows kept in a filthy or unhealthy condition, or milk drawn from any sick or diseased cow or cow having ulcers or other running sores, or milk drawn from cows fed unwholesome food, or milk in any stage of putrefaction, or milk contaminated by being kept in stables containing cattle or other animals. The term adulterated cream shall mean cream containing less than eighteen per centum of milk fat, or cream taken from milk drawn from cows within eight days before or four days after parturition, or cream from milk to which has been added or introduced any coloring matter or chemical or preservative or deleterious or filthy substance or any foreign substance whatsoever, or cream from milk drawn from cows kept in a filthy or unhealthy condition, or cream from milk drawn from any sick or diseased cow or cow having ulcers or other running sores, or cream from milk drawn from cows fed unwholesome food, or cream contaminated by being kept in stables containing cattle or other animals, or cream to which has been added or into which has been introduced any coloring matter or chemical or preservative or deleterious or filthy substance or any foreign substance whatsoever, or cream in any stage of putrefaction, provided, that nothing in this act shall be construed to prohibit the sale of pasteurized milk or cream to which viscogen or sucrate of lime has been added solely for the purpose of restoring the viscosity, if the same be distinctly labeled in such manner as to advise the purchaser of its true character; and providing that nothing in this act shall be construed as prohibiting the sale of milk commonly known as 'skimmed milk,' when the same is sold as and for 'skimmed milk.' Milk drawn from cows within eight days before or four days after parturition, or milk to which has been added or into which has been introduced any coloring matter or chemical or preservative or deleterious or filthy substance, or milk drawn from cows kept in a filthy or unclean condition, or milk drawn from any sick or diseased cow or cow having ulcers or other running sores, or milk drawn from cows fed unwholesome food, or milk contaminated by being kept in stables containing cattle or other animals and cream from any such milk, or cream in any stage of putrefaction are hereby declared to be unclean and unsanitary milk or unclean and unsanitary cream, as the case may be."

Most states have laws which determine the legal standard of milk. Any one selling milk which does not meet this standard is liable to be fined. The laws of most states prohibit the taking of anything from the milk or the adding of anything to it. This prohibits the skimming and watering. Skimmed-milk must be sold as such.

+328. Marketing of cheese.+--There are many different methods of selling cheese. Each is adapted to certain conditions and each has its advantages and disadvantages. In cheese sections, the customary method of selling is on the board of trade, which is the meeting of the cheese-buyers and factory salesmen. They meet at a given place at a certain day and hour each week. Every board has its officers. There are different ways in which a board of trade may be operated. In some cases there is a large blackboard divided into columns. In the first column, the salesman writes the name of the factory and the number and kind of cheese offered for sale. At the top of the other columns are the names of the different cheese-buyers. The president usually opens the sale at a stated time and asks that all cheese be placed on the blackboard. When this is done he states that they are ready to receive bids on the cheese. The buyers then write the price a pound they wish to pay opposite each lot of cheese and in the column headed by their names. After all the bids have been received and placed on the board, the presiding officer states that a certain length of time, usually fifteen minutes, will be given the salesman to withdraw his cheese if he does not think a high enough price has been offered; this is indicated by the salesman stepping to the blackboard and erasing the factory name and number of boxes. At the close of the stated time, the presiding officer declares the cheese offered on the board sold to the highest bidder. The purchaser then gives the salesman directions for shipping.

Sometimes a board of trade has a committee of one member elected by the factory salesmen and one elected by the cheese-buyers. These two members elect a third and these three constitute the price committee. This committee meets each week and determines what the price shall be. This is known as the ruling. The factory salesmen and cheese-buyers then try to make private sales. By this method no one, except the persons concerned, knows exactly what price is paid for the cheese. Usually, a price above the ruling is paid.

At Quebec, Canada, there is a cheese-selling organization with government assistance. On paying a certain fee, any cheese factory may join. All the factories belonging to the organization ship their cheese to a central cold storage where the cheeses are examined and graded by a government inspector. A cheese from each vat is tried. These cheeses are separated into white and colored lots, then graded according to quality. When the total number of cheeses in each lot is known, the lots are sold at auction. The purchaser must accept the cheese as graded. The better grades of cheese bring about the same price as on the market, but the advantage lies in the selling of the lower grades. Ordinarily, the purchaser takes advantage of the salesman when the cheeses are undergrade. The success of this plan depends on the accuracy of the person grading the cheese. This method seems to be growing in popularity, because the cheese-buyer can purchase large amounts of cheese at one time and be sure of the quality. A small fee, about one-twelfth of a cent a pound, is charged for handling the cheese. Similar organizations are in operation in Wisconsin. The boards of trade and selling organizations deal almost entirely in Cheddar cheese.

+329. Mercantile exchanges.+--In the larger cities are exchanges where cheese is bought and sold by jobbers. This cheese is mostly Cheddar. The prices paid these jobbers tend to fix the daily price of cheese. These prices are published daily, for example, in New York Price Current. Some factories ship their cheese directly to these jobbers. The following are the cheese rules of the New York Mercantile Exchange adopted May 4, 1915:

CHEESE RULES OF THE NEW YORK MERCANTILE EXCHANGE

Rule 1. At the first regular meeting of the Executive Committee in each year, the President shall appoint, subject to the approval of the Executive Committee, a Cheese Committee to consist of seven members of the Exchange, who are known as members of the cheese trade, to hold office until their successors are appointed. It shall be the duty of the Cheese Committee to formulate such rules and regulations as may be necessary for the government of transactions between members of the Exchange, and to revise the same as circumstances may require. Such rules and revisions shall be subject to the approval of the Executive Committee.

Rule 2. All transactions in cheese between members of the Exchange shall be governed by the following rules, but nothing therein shall be construed as interfering, in any way, with the rights of members to make such special contracts or conditions as they may desire.

Rule 3. If a sale is made from dock, or platform, or to arrive, the buyer shall assume the same relations toward the transportation line by which the cheese arrives, as the seller previously held as regards its removal from the place of delivery within the time granted by such lines for that purpose. Transactions between members of this Exchange shall be governed as follows: Any member negotiating for any lot of cheese belonging to another member, the price having been agreed upon, shall examine such lot of cheese within twenty-four (24) hours after such negotiation takes place. Failure to examine within said time releases the seller from any obligations to make delivery thereafter, if he so wishes.

Rule 4. In the absence of special agreement, all cheese purchased "in store" shall be understood as being ready and designed for immediate delivery, but the buyer shall have twenty-four hours in which to have the cheese inspected, and weight tested, and shall not be liable for the storage and insurance, if removed within two days.

Rule 5. When cheese are sold to arrive, or from depot or dock, the cheese must be accepted or rejected within six business hours after notice of actual arrival to buyer. Business hours shall be understood to be from 10 A.M. to 4 P.M. If buyer rejects the same, he shall state the reasons for rejection. Should the rejection be considered unfair, the seller shall at once notify the buyer that he declines to accept such rejection; and he may call for a Committee, which shall be composed of three members of the cheese trade; the seller choosing one, the buyer one, and the third selected from the cheese trade by these two, or, they failing to agree, the third shall be appointed by the Chairman of the Committee on Cheese. The Examining Committee shall at once inspect the lot of cheese in dispute, sampling not less than five (5) per cent of each mark or factory, and they shall immediately give their decision in writing to both parties. Either party failing to abide by the decision of the Committee may be summoned by the other party before the Complaint Committee under