Vol. IV

No. 2

EFORE taking up specifically the question of

B just how far the farmer can take his pro

duce, it may be worth while to look over the list of middlemen we ordinarily find and to get a mental picture of the relationships most usually existing between those in the different classes. The question is often asked, "Why are there so many middlemen selling successively one to another before the product covers the span from producer to consumer?" To the average man of the street the present marketing system presents a picture of utmost confusion. often speaks of dealers selling one to another, each adding his profit, without realizing that goods naturally tend to go by the shortest or most economic route, and that "sidewise movements" are exceptional and are to be found only under exceptional conditions.

Few Trace Channels

He

Few people have carefully traced any given product through the various channels of the trade so as to be able to answer the question of how it happens that when the housewife in a little town in Minnesota, New York, or Illinois, or in a little community center in New York City, Chicago, or Cleveland, sends a boy to the corner grocery at ten minutes before meal time for a half dozen eggs, a head of lettuce, and half a dozen oranges, she can depend upon his finding there just what she wants.

This picture of confusion might be likened to the picture one would see if he placed over each other a number of outline maps of various states showing on perfectly transparent material the railroad system of each. The picture would be one of a mass of transportation lines running criss-cross with apparently no order whatever. On our markets are hundreds, even thousands of different commodities. Each of these must seek marketing channels of its own. Jack-knives, gasoline, tobacco, wool, cotton, milk, ice cream, butter, eggs, wheat, oranges, raisins, each move from producer to consumer through sets of trade channels of their own. In moving forward toward the consumer a given product may for a time join another product, then branch off and travel by itself or may join a third product for a time. Thus the farmer may bring a case of eggs to a country store where for a time it keeps the company of a miscellaneous assortment of goods. Then it may go to a carlot shipper at some country shipping point where for a few days it may be in the same warehouse with live or dressed poultry or with butter or cream. Then it may move in a solid carlot of eggs to a central market where it may be purchased by the operator of a chain store and move to the retail trade along with all sorts of staple groceries, or it may be purchased by one of the large packers to be distributed through a branch house along

with meats, dressed poultry and similar products to retail dealers, from whence it goes to the con

sumer.

The Orange Route

So too, a box of oranges may start in an orange packing house, from which it goes to a refrigerator car where it may join some lemons. Later it reaches an auction floor along with a dozen other varieties of fruits. Then it may go to a jobber who carries 20 to 40 varieties of fruits, vegetables, nuts, etc, and finally reach the general store with its miscellaneous assortment of goods.

Problem of Distribution Complex

The problem of distributing farm products in these days of specialization is exceedingly complex. Dozens and even hundreds of producing sections are in constant competition with each other. The several orange producing sections in the country are represented in practically every market by skilled salesmen in constant telegraphic connection with the producing section, each eagerly pushing the product of his respective section, anxiously taking advantage of every increase in demand. The poultry producers of Kansas, through the dealers who purchase their products are similarly in telegraphic communication with large buyers in New York, in Chicago, in St. Louis, in San Francisco and in Los Angeles, ever on the alert to find an outlet for their product, with even a fraction of a cent per pound or per dozen over what some competing markets will bid.

Seasonal Production

The problem is the more complex because of the fact that most of our farm products are seasonal and that the consumer has come to expect to have the local grocer carry seasonal perishables during most of the year. Head lettuce, for example, is in demand for most of the year and fresh peaches throughout the summer months. But no part of the country produces a constant supply. This means that these products must come from constantly changing sections. Thus, the peaches come at one time from Georgia, and at another time from Arkansas, California, Illinois, Michigan or Wisconsin.

Trade Avenues Developed

To meet this situation there have developed for the various commodities rather definite tracz channels through which these products flow from producer to consumer, and for the major portion of any given product the successive steps taken as the product journeys toward consumer have come to be rather definite. These trade channels and the methods of doing business as the product moves through them are the result of centuries of evolution of gradual development. Our great manufacturing and commercial cities with their great crowds of wage earning consumers have grown up within the last 150 years. Two hundred years ago the farmers brought their produce to the market places in the towns and the consumer went there and bought directly from the farmers. Today, however, farmers and consumers are too far apart to make direct buying economical, or even possible, and elaborate machinery is necessary to bridge the gap between them.

Efficient Market Mechanism Important The importance of a market mechanism which functions efficiently cannot be over-emphasized. In the simple days of one hundred years ago 84 per cent of the gainfully employed in the United States were engaged in agriculture. By 1920 the situation had almost reversed itself. In that year 29 per cent of those gainfully employed were engaged in agriculture and the rest in industry and trade. Of the total population the census of 1920 classifies 51.4 per cent as urban, that is, living in incorporated places of 2500 and over. The population in our large cities must be fed if our very government itself is to survive because failure to supply food will quickly produce anarchy. I am not implying that farmers are under any obligation to feed the world if it does not pay them to do so. The point which I wish to stress is that our economic system has become so complex that every part of it must continue to function efficiently if there is not at times to be suffering at one stage or another, and that one-half of our population is so situated that it would be driven to desperation if our distributive machinery were to cease functioning.

Channels Anaylzed

Let us turn now to a chart which is drawn to represent in a relatively simple way the trade channels followed by most of such California products as fruits and vegetables which require no processing on the way from producer to consumer. It represents the relative position in our marketing scheme of seven main groups of marketing agencies. The solid lines indicate the actual movement of the product, the dotted lines the avenues of communication.

The first group of middlemen represented is that of the country assemblers. These vary from the local independent buyers to the local houses of large shipping organizations. Whatever their nature, however, their principal functions consist in assembling products into carlot quantities, and in packing and loading them for distribution to one or another of the wholesale or jobbing markets.

Position of Distributor

The distributor, private or cooperative, represents any organization which has fruit assembled at numerous local packing houses and which maintains brokerage connections or salaried representatives in the various consuming markets. These distributors are exactly what their names imply. Their function is to bring about the widest possible distribution of the products they are selling. Such a distributor will have a representative in every market large enough to take carlots of produce. Through the contacts indicated by dotted lines he directs the movement of a particular car from local shipping point to one of the agencies further on in the system but located at some one of the hundreds of carlot markets.

Functions of the Broker

The broker is perhaps as frequently denounced as an unnecessary middleman as any in the whole group. No organization engaged in national distribution has been able to eliminate him except by putting a salaried man in his place. This can be done only where the volume of business in any one market is at least large enough to occupy the entire time of a capable man.

The function of the broker is that of con