WHERE CO-OPERATION PAYS OUT BIG
Macklin, Theo. & Nordman, Edward
Where Co-operation Pays Out Big Six Years Operation of the Wisconsin Cheese Federation Places It Near Head of List For Successful Cooperative Results; Example For Selling Other Farm Crops By THEO....
...Table 4. PROPORTION OF EACH DOLLAR TAKEN IN BY DIFFERENT FARMERS' COOPERATIVE COMPANIES WHICH IS EXPENDED TO MEET TOTAL COST OF DOING BUSINESS AND FOR PAYING THE MANAGER'S SALARY...
...The experience of the Federation indicates that Wisconsin farmers have a great opportunity before them in the building up of a strong unified cooperative cheese producers' selling organization...
...Secondly 1.4 cents for each dollar received for cheese was used to pay for the actual operating expenses of the Federation...
...IT is a notable fact that the Manager of the Wisconsin Cheese Producers' Federation receives proportionally the lowest salary of any manager in the companies shown in table 4. The Federation has been blessed with the gift of a loyal and inspiring manager as its leader, for no man with less real interest in the welfare of Wisconsin's cheese producers would work as successfully for such a pittance of an income...
...55,000,000 1.1 cents 1-2 of 1-10 cent Wisconsin Cheese Producers' Federation...
...Savings to Members IN the third place not all of the gross margin kept for paying operating expesnses was required for that purpose, consequently an undivided profit was made of 5 cents per dollar of sales...
...That the business of the Federation is making permanent growth at a rapid rate signifies the general satisfaction which this enterprise brings to its patrons, The size of the organization, the volume of its business, and above all the efficiency of this management are responsible for the fact that such an unusually high proportion of each dollar gained from the sale of cheese is paid to the local factories...
...Number of cents out of Dollars worth each dollar of taken in business done which is paid to meet all expenses Number of cents out of each dollar taken in, which is paid to meet the managers' salary only...
...The Federation has shown that it knows how to sell cheese and to keep the costs down...
...This amounted to .4 cents per dollar of sales...
...The remaining 2.8 cents on each dol-lar of sales was devoted to three uses all in the interest of and to the benefit of the patrons...
...35,366 8.3 cents 2 1-10 cents Wisconsin Swiss Cheese Factory—Usual...
...Todlay the Federation has an operating cost of only 1.4 cents on each dol-lar of cheese sales...
...It is, therefore, not only the logical nucleus for a state wide farmers' movement for the cooperative sale of cheese, but being al-ready in the field it can if supported by increasing numbers of Wisconsin farmers do even better for them...
...A comparison of its costs of doing business with those of other leading kinds of farmers' cooperative companies is made in table 4. Next to the California Fruit Growers' Exchange which is the largest single and most successful farmers' cooperative company in the United States, the Federation has the lowest operative costs...
...Further more it should be emphasized that as the volume of business grows larger a manager's full time is devoted to managerial work instead of sharing the time between a manager's duties and such performance duties as cheese making, butter making or grain handling as would be true of the last six concerns shown in table 4. Nevertheless the point which these figures bring out is that farmers who are not unsatisfied with the costs Involved in local cooperative concerns and tho salaries of such managers even though necessarily high should not let themselves become suspicious or dissatisfied with the much smaller proportional expense for managers' salaries in Federations such as are shown in Table 4. Meager Compensation of Manager...
...Recently Theodore Macklin of the department of agricultural economics at the University of Wisconsin, and Edward Nordman of the Wisconsin Division of Markets, have made a study of the records of the Wisconsin Cheese Producers' Federation...
...Certainly it can be depended upon to market cheese more efficiently and rap-Idly through further enlargement than could be done by the starting of similar smaller and competing federations in different parts of the state...
...A lower proportion of each dollar was expended for salaries than ever before in spite of the fact that the office force was necessarily enlarged to handle the rapidly growing business...
...California Fruit Growers Exchange...
...Of course a comparison of Federations doing a sales business only, such as the first two companies in table 4 cannot be made exactly with concerns which do a manufacturing or processing business...
...If Wisconsin farmers provide the volume of business this Federation, because of what it now does and will do for its patrons, is destined to rank in the class with the California and Canadian Fanners' Cooperative concerns...
...Year Number of factories Pounds of cheese received from factories Pounds of cheese received from factor...
...What it should have is more cheese...
...Krum-ray's devoted leadership and untiring efforts to make it possible for Wisconsin farmers to put independently their own cheese on the markets of the United States...
...Table 1. RAPID GROWTH OF WISCONSIN CHEESE PRODUCERS' FEDERATION AS SHOWN BY QUANTITY OF CHEESE HANDLED EACH YEAR...
...For example, the patrons voted in their annual meeting in February, 1919, to distribute $20,000 of these savings to the membership...
...This is indeed a most remarkable record for which the management deserves the highest commendation...
...Year $ paid factories for cheese $ paid factories each year for each $ in 1914 Net price per lb, for cheese paid to factories % increase in cheese price over 1914 855,328.64 1.00 14.302 1916 1,115,796.20 1.30 16.085 6.4 1916 1,300,520.24 1.53 17.567 22.8 1917 2,144,006.06 2.61 24.087 68.4 1918 2,258,103.78 2.64 27.062 89.1 1919 4,243,938.56 4.96 80.108 115.4 Expense of Marketing Extremely Small THE Federation markets cheese at an ex-pense which is extremely small...
...This was done...
...This is shown in the fact that over $10,-000,000 worth of cheese has been sold without the loss of a single cent through bad debts...
...These savings are eventually sent to the factories for payment to the members...
...The extremely low cost of operation for tho Federation has been made possible by two fortunate circumstances...
...NAME OF COOPERATIVE COMPANY...
...28,066 12.0 cents 5 cents...
...With a pro-bable average of 26 farmer patrons for each factory, there are 3,000 farmer members in the Federation...
...4,306,599 1.4 cents 2-5 of 1-10 cent Kansas Cooperative Elevator—Best ones...
...This shows a very remarkable growth for six years...
...First the management is unusually well informed and actively operating in the interests of the Federation and its members...
...Managing Editor's Note...
...ies each year for every 100 pounds received in 1914 1914 45 6,125,480 100.0 1915 43 7,558,796 123.4 1916 46 7,400,020 122.3 1917 56 8,981,308 146.6 1918 68 8,522,509 139.1 1019 120 14,098,021 230.1 Table 2. INCREASE IN THE VALUE OF THE FEDERATION'S BUSINESS AS SHOWN BY TOTAL ANNUAL PAYMENTS TO FACTORIES...
...The basis of sales at that time was the Ply mouth Board price...
...That they have been informed and inspired to support the Federation is at once a compliment and an appreciation of Mr...
...The advantages accruing to members of the California Fruit Growers' Exchange and to patrons of the Cooperative Grain Companies of Canada are the result of the size of these businesses and the efficiency of their management...
...The Wisconsin Cheese Producers' Federation is one of the most successful and commendable examples of farmers co-operation in the United States...
...MACKLIN and EDWARD NORDMAN The Wisconsin Cheese Producers' Federation is one of the most successful examples of farmers' cooperation in the United States...
...The Wisconsin Cheese Producers' Federation is the same sort of cooperative organization with just as much efficiency...
...These expenses are remarkably low and are shown in detailed figures in table 3 for each year since the organization started...
...In the first place the freight between the local factory and the Federation's warehouse had to be paid...
...During 1914 the first year of operation only 45 cheese factories belonged to the Federation and only 6,125,480 pounds of cheese were handled...
...During ,1919 the Federation paid direct to the local factories 97.7 cents for every dollar that it took in from the sale of cheese...
...In fact the salaries of the executives of the Federation are throughout exceptionally low for the service which they render...
...This federation was founded in 1914 under the direction of former State Senator Henry Krumrey of Plymouth, Sheboygan county, Wisconsin...
...The second fortunate circumstance is that the farmers have desired to market their cheese through the Federation in rapidly increasing quantities...
...All it lacks is the size of business...
...In spite of the fire which resulted in great inconvenience and which made expenses higher than they otherwise would have been, 1919 was the best year which the organization has experienced...
...34,379 7.1 cents 4 cents Wisconsin American Cheese Factory—Usual...
...In a joint statement these two educational leaders refer to this cooperative or-ganization as one of the "commendable examples of farmers' cooperation in the United States...
...In 1912 before the Federation was created by Sheboygan County farmers the private cheese dealers took a margin which amounted to from 4.7 cents to 9.3 cents on each dollar's worth of cheese that they marketed...
...125,581 4.0 cents 1 cent Wisconsin Cooperative Creamery—Average...
...A few comparisons will make plain how low the selling cost actually is...
...Frequently a further advantage is gained from the fact that the Federation sells much of its cheese at a higher price than the Board More important than the present money gains obtained are the benefits of future advantages which will come through continued improvement in the quality of the cheese handled by the Federation...
...The Federation therefore handled in 1919 two and three-tenths times as much cheese as it did in 1914...
...102,000 4.3 cents 11-10 cents Wisconsin Cooperative Creamery—Best ones...
...408,816 1.5 cents 2-5 cent Kansas Cooperative Elevator—Usual ones...
...THE Wisconsin Cheese Producers' Federation has a membership of 120 factories of which a little over three-fourths are in the region centering at Plymouth and one-fourth center about Spring Green...
...Tables 1 and 2 give the details for each year...
...The difference between the 4.7 cents for each dollar's worth of cheese and the 1.4 cents represents the money savings due to operating advantages which tho Federation is bringing to its patrons...
...They marketed 14,098,021 pounds of cheese through their organization during 1919...
...For each dollar's worth of business done in 1914 almost five dollars' worth was done in 1919...
...The basis of sales is still the Plymouth Board price...
Vol. 12 • March 1920 • No. 3
