CHAPTER NINE

Local Dairy Marketing

When the farmer takes up the cooperative idea as a means to an end, he should not lose sight of the fact that he is entering business and will be subject to all of the problems and trials that come to those in business. It means that unless he can, through cooperation, more efficiently handle the particular product than it has ever been handled before, there is small reason for going into business at all.

The Hutchinson Creamery Company, à cooperative creamery at Hutchinson, Minnesota, has passed through all the varying experiences of a farmers' cooperative organization that has pioneered the way. It was organized 27 years ago with a capitalization of $5,000 divided into $25 shares. At the present time there are 90 stockholders and approximately 270 patrons.

The

The plan of organization is very similar to that found in the ordinary cooperative concern. stockholders are paid a dividend of 5 per cent and receive no other consideration than that given the patrons by the management. "We aim to pay very little in dividends," said A. Rasmussen, the

manager, “but give the benefit to all in monthly returns. That is more satisfactory to all concerned. Dividends are a small part of the benefits secured by cooperation.

"We have more patrons than stockholders. Many who are not stockholders are the real producers for the company. We do not deem it advisable to pay big dividends, as that would be a drawback to all who are not stockholders. Many of our patrons who are large producers would not be so loyal in aiding us in building up the company if they felt that all the profit they were producing was going into the pockets of someone else. For that reason, I feel that the cooperative which organizes for the sake of dividends, or which pays a large dividend, is really defeating its own larger interests."

The Hutchinson Creamery Company manufactures the highest quality butter made. The entire output of the plant is shipped to Philadelphia where it is retailed by a chain store company. And right here is the most important element in the success of the company, in the opinion of Mr. Ras

mussen.

Mr. Rasmussen is a master butter maker. He has taken prizes and won the highest honors at countless fairs and butter-making demonstrations. For years his butter scored highest at the Minne

sota State Fair and in the Waterloo Dairy Show and other competitions. "In starting a creamery," said Mr. Rasmussen, "the very first thing of importance is to set your stakes for a quality product. Make the best there is, if you seek the highest profit on the market. If you turn out ordinary butter, you are not taking advantage of your fullest opportunity to make your business the most profitable. The range between the best and the poorest butters on the market at the present time is as much as 15 cents per pound. The Hutchinson Creamery Company is now paying 10 cents per pound more for butterfat than the average creamery in the state. The line must be drawn close on your producers in order to make quality butter-making possible, but it is highly important to do it. When you establish a reputation for a superior product and are enabled to pay your producers a higher price for their fat, as we do, they soon learn the wisdom of your course and will cooperate with you to the fullest extent because they know that it pays them to do so."

Volume production on the part of the new creamery, or the old one for that matter, is of slight relative importance in comparison with quality. The city consumer demands a superior product when he comes to buy and he is willing to pay a premium for it to the producer who can

meet his needs. Those who are making the most profit from farm products of all kinds are they who are taking advantage of this tendency. The Hutchinson Creamery Company has recognized this point from the very beginning. It has made progress slowly, being content to make the very best product from the start and then looking to ways to increase volume as reputation of the Hutchinson butter has grown and the demand increased. In 1920, the creamery manufactured and sold 384,000 pounds of butter. In 1921 there was an increase in volume of 35 per cent over the previous year, the volume for that year being expected by Mr. Rasmussen to exceed 500,000 pounds. An indication of the value of turning out a superior product is found in the comparison of the average price paid by the Hutchinson Creamery Company last year for butterfat as with the average price received for butter manufactured by other creameries in Minnesota. The Hutchinson-concern paid an average price for butter fat of 67 cents in 1920, while the average price received for manufactured butter by all the other creameries in the state was only 59 cents per pound!

Of course, in the long experience of the Hutchinson Creamery Company it has had its hard knocks and its bitter experiences. There have been times when the future looked none too rosy; times

when private competitors were making a savage drive to accomplish its annihilation through every measure, legitimate and illegitimate, that could be called into use. But through it all it has emerged the better for the experience, largely because of the long-headed quality of its management.

Not so very long ago the company was threatened with ruin because a competitor offered to pay a few cents more per pound for butter fat than the cooperatives felt that they could pay. As a result, a large percentage of the patrons left the cooperative company and delivered their cream to the private concern.

"Not only that," continued Mr. Rasmussen, "but we found that it was impossible for us to increase our volume in order to hold our own because we were unable to take care of the skimmed milk for the producer. We are not located in a hog producing section, as you are down in Iowa, where the skimmed milk or by-product can be utilized to good advantage by the producer himself. We found that the farmers and the dairymen would refuse to add more cows unless they could sell us the whole milk. Our efforts to induce men around Hutchinson to increase their herds in order that we might increase our volume were fruitless. We had to be able to increase our produc