The Marketing and transportation situation


Material Information

The Marketing and transportation situation
Portion of title:
Marketing & transportation situation
Physical Description:
v. : ill. ; 26 cm.
United States -- Bureau of Agricultural Economics
United States -- Agricultural Marketing Service
United States -- Dept. of Agriculture. -- Economic Research Service
Bureau of Agricultural Economics
Place of Publication:
Washington, D.C


Subjects / Keywords:
Produce trade -- Periodicals -- United States   ( lcsh )
Produce trade -- Statistics -- Periodicals -- United States   ( lcsh )
federal government publication   ( marcgt )
statistics   ( marcgt )
periodical   ( marcgt )


Dates or Sequential Designation:
Began in 1942; ceased in 1975.
Issuing Body:
Issued 1954-Jan. 1961 by: Agricultural Marketing Service; Apr. 1961-Aug. 1975 by: Economic Research Service.
General Note:
Some issues have title: Marketing & transportation situation.
General Note:
Description based on: Jan. 1956; title from caption.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 023266859
oclc - 08981941
lccn - 46034602
lcc - HD9004 .A317
ddc - 338.14 U464m
System ID:

Related Items

Succeeded by:
Farm income situation
Succeeded by:
Demand and price situation
Succeeded by:
Agricultural outlook digest
Succeeded by:
Agricultural outlook (Washington, D.C. : 1975)

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Full Text





JULY 26, A.M.

t-ot --o -

i ^ ---.-,

Motortrucks have hauled an increas-
ing share of the Nation's expanding in-
tercity freight traffic, including traffic
from farms to cities and cities to farms
as well as between cities. Railroads
have hauled a decreasing share, but the
number of ton-miles of freight moving
by rail has continued to increase. Rail-
roads accounted for 339 billion ton-
miles in 1939; for 614 in 1953. Ton-

miles of freight hauled by motortrucks
(for-hire and private) increased from
an estimated 44 billion to 207 billion.
In an expanding economy, all modes of
transport gained business, but at dif-
ferent rates. Most of the freight moved
by "other carriers" was oil pumped
through pipelines. Traffic shown here
does not include natural gas moved by






I Chit or a 1954 I 1955
Its base rineods Tear Ayr.-Junes Ot.-Dec.s Jan.-Mar., Apr.-JIMe
Fam-to-retail price soreads a 2

Farm-food market basket 1/
Retail cost ....................................
Farm value ....................................
Marketing margin ...............................
Farmer's share of retail cost ..................

Cotton: 2/
Retail cost ........................ .........
Farm value ....................................
Marketing margin ...............................
Farmer's share of retail cost .................

Tobacco: 3/
Retail cost ....................................
Farm value .....................................
Federal and State excise taxes .................
Marketing margin excluding excise taxes .......:
Farmer's share of retail cost .................

fs...l a~no., 4n.,Atrrea

Consumers' per capital income and expenditures/ I
Disposable personal income ....................
Expenditures for goods and services ............
Expenditures for food .........................
Expenditures for food as percentage of
disposable income ............................

Hourly earnings per employed factory worker ...:
Hourly earnings of food marketing employees ..

Retail sales: V/ 3
Food stores ....................................
Apparel stores ................................

Manufacturers' inventories 7/
Food and beverage .............................
Textile ....... .............................. ...:
Tobacco ......................................a
T~~~~beECO~~~~~ ~ .



Dol. a
Dol. i
Dol. a
Pet. a


Dal. a

Dol. a

Mil. dol. :

Nil. dol.
Mil. dol.
Nil. dol. :
Ni. *e.

Indexes of industrial production: / :
Food and beverage manufactures ............ ... .:1947-49=100i
Textiles and apparel ........................... do.
Tobacco manufactures ............................ do. a

Index of physical volume of farm marketing ......:1935-39=100i
8 3








Year 2 Nay























3,602 3,525 3,636
867 889 905








130 2/134

Price indexes :

Consumer price index .5/ .........................:I1947-49=100 115 115 114 114 114
Wholesale prices of food ......................s do. s 104 105 101 102 102
bWolesale prices of cotton gods 5/ .....0........ do. 89 88 91 90 90
Wholesale prices of woolen and worted goods 5/ ..: do. 109 110 106 106 106
Prices received by farmers / .................. do. a 92 94 90 91 90
Prices paid by farmers / ............ ...... s do. a 110 111 110 110 110

SAverage quantities of famn food products purchased per wage-earner and clerical-worker family In 1952.
3/ 42 cotton articles of clothing and housefurnishings, weighted by average annual quantities bought by wage earners
and clerical workers as reported in 1934-36 sury. Data are for last month of quarter. 1/ 4 tobacco products from
1 pound of leaf tobacco (fam-sales vight), weighted by leaf equivalent of tax-paid withdrawals. Data are for the
fical year eded June 30, 1955. k/ Seasonally adjusted annual rates, oalulated from Dept. of Commerce data. 5/ Dept.
of Labor. A/ Veighted composite earnings in food processing, wholesale trade, retail food stores, and steam railways,
qaluolated from data of Dept. of Labor and Interstate Conuerce Commission. 2/ Seasonally adjusted, Dept. of Comnrce.
Annual data for 1953 are on an average monthly basis. I/ Seasonally adjusted, Board of Governors of Federal Reserve
System. 9/ Preliminary. 12/ Converted from 1910-1A base.

ener& eco & gJ d hobJ b l w


T 1" -



Approved by the Outlook and Situation Board July 19, 1955

: Summary ............... ... .......... ..... ...... 3 :
: Farm-Retail Price Spreads for Farm Foods ......... 4 :
: Marketing Bill for Farm Food Products ............ 7 :
: American Farmers and the St. Lawrence Seaway ..... 9 :
: Proposals for Basic Change in Transport Policy ... 17 :
: Selected New Publications ....................... 29 :
: Tables of Quarterly Data for Farm-Food
: Market Basket ....... ............. ....... .. 31 :


Charges for marketing farm-produced food products were 3 percent
higher in the April-June quarter of this year than during the same period
of last year. (See table on inside of cover page.) Prices farmers
received fur food products declined about 6 percent, but because of the
increase in marketing charges, retail food prices were down only 1 percent.
The decline in prices received by fanners resulted mainly from a sharp
decrease in the price of hogs.

Farmers received 42 cents of the dollar consumers spent for farm
food products in the second quarter of 1955, 2 cents less than in the
same period of 1954. The farmer's share did not change significantly
from the first to the second quarter of this year.

The bill for marketing domestic farm food products bought by civilian
consumers in the United States is estimated at 26.4 billion dollars in
1954, 3 percent more than in the previous year. The volume of products
handled was somewhat larger than in 1953 and unit costs of marketing many
products were higher.

Special Features in This Issue

Opening of the St. Lawrence Seaway in 1959 will provide a new route
for farm products slipped from the North Central and Northeastern States
to overseas destinations. Some reduction in transportation costs seems
likely. To take advantage of the now route, large investments in market-
ing facilities will be necessary. Efficient planning of these facilities
and adjustment to changed trade channel will require extensive marketing
research (pp. 9-16).

Basic revisions of Federal legis] on transport proposed in
a recent report of the Preidential Advisory Coammittee on Transport Polic-
and Organization. The Committee favors ". increased reliance on com-
petitive forces of transportation in rate making ." (Pp. 17-29.)


Marketing Charges Advance

Charges for marketing the foods in the family "market basket" were
3 percent higher in the second quarter of this year than in the same
period of 1954. V/ (See table 7, p. 33.) The total marketing margin
for these foods in the second quarter this year was at an annual rate of
$570 compared with $553 in 1954. 2/ More than half this increase
resulted from a 10-percent increase for the meat products group. The
marketing margin for pork products was 17 percent wider than a year
earlier. Marketing margins were wider for all other major commodity
groups except dairy products and poultry and eggs. Increases ranged
from 1 percent for the miscellaneous products group to 5 percent for the
fats and oils group. A smaller margin for eggs accounted for the 3-per-
cent decrease in the marketing margin of the poultry and eggs group.

The total marketing margin for the foods in the market basket
increased about 1 percent from the first to the second quarter of this
year. Margins of the major commodity groups varied from a 2-percent
decrease for the fats and oils group to a 3-percent increase for fruits
and vegetables.

Costs of many marketing firms may have been somewhat higher in the
second quarter of 1955 than a year earlier. Average hourly earnings of
employees in food marketing firms were about 4 percent higher in May 1955,
the latest month for which data are available, than in the same month of
1954. Prices of other purchased materials and services may have averaged
slightly higher than a year earlier.

l/ The "market basket" contains the average quantities of farm-produced
food products purchased for consumption at home by urban wage-earner and
clerical-worker families in 1952. The retail cost of all foods bought
per family is more than the retail cost of the "market basket" of farm
foods, which does not include imported foods, fishery products, or other
foods of nonfarm origin, and does not include costs of meals purchased
in eating places. Additional information concerning the contents of the
market basket and methods of estimating the market-basket data were given
in the Supplement to the July-Sept. 1953 issue of this Situation.
2/ The marketing margin is the difference between the retail price paid
by the consumer and the payment to the farmer for equivalent products.
It is an estimate of the charges made by marketing agencies for assembling,
processing, transporting, and distributing the farm products.

- 5 -

Table 1.- The farm food market basket: Petail cost, farm value,
marketing margin, and farmer's share of retail cost, 1946-55
Year and month : Retail cost : Falm value : Marketing : Farmer's
: /!. : 2L/ margin : share
S Dollars Dollars Dollars Percent

1935-39 average ....:
1946 ............... :
1947 ...............:
1948 ............... :
1949 ... .. ...
1947-49 average ....:


sec... e.* egg.
U *e*6*ee ~g...
eg...... gee....


gggggg egge g
eee....... gee.
eg.. g eg....

Jan. .......... ....
Feb. ............. :
Mar. .............:
Apr. ... .... ... .
May ........... .. :












j/ Retail cost for each year is based on average quantities of farm foods
purchased per urban wage-earner and clerical-worker family in 1952, calculated
from retail prices collected by the Bur. of Labor Statistics.
2/ Payment to farmers for equivalent quantities of farm products minus
imputed value of byproducts obtained in processing.
,/ Comparable dollar figures not available. The farmer's share and index
numbers of the retail cost, farm value, and marketing margin for the years
1913-52 were published in the Oct.-Dec. 1953 issue of this Situation.
A/ The farm value including Government payments to producers in 1946 was
$405, the marketing margin plus Government payments to processors was $383,
and the farmer's share adjusted for Government payments to producers was
53 percent.
/ Revised.

: Current data are given in the Statistical Summary, t
:a monthly publication of the Agriculturnl Marketing Service.:
._ __......... .._ ... .......... .___... C

- 6 -

Farm Value Down 6 Percent
From Year Ago

The farm products equivalent to the foods in the market basket had
a farm value of $406 in the second quarter compared with $433 in the same
quarter last year (table 6, p. 32). Most of this decrease resulted from
sharply lower prices for hogs, which caused a 20-percent decrease in the
farm value of the meat products group. The fats and oils group and
miscellaneous products group also contributed to the decrease. The farm
value of the poultry and eggs group was 8 percent higher than a year
earlier, mainly because of higher prices for frying chickens. Sharply
higher prices for potatoes, cabbage, onions, antd several of the other
fresh vegetables were responsible for a 7-percent increase for the fruits
and vegetables group,

The farm value of the foods in the market basket was slightly lower
in the second quarter of this year than in the previous quarter. Higher
prices for several of the fresh vegetables caused a rise in the farm value
of the fruits and vegetables group, but other commodity groups all were
slightly lower.

Little Change in Retail Cost
of Farm Foods

Retail cost of the market basket of farm foods declined from an
average annual rate of $987 in the second quarter of 1954 to $976 in
April-June of this year, a decrease of about 1 percent. This reduction
was caused mainly by lower prices for pork. Retail cost of the meat
products group was down 9 percent. The fats and oils group and the
miscellaneous products group also were lower. These decreases were
partially offset by increases for other commodity groups.

The total retail cost of the foods in the market basket did not
change significantly between the first and second quarters of this year.
Changes for the various commodity groups were small, the largest was a
4-percent increase for the fruits and vegetables group.

Farmer's Share 2 Cents Smaller
Than a Year Earlier

Farmers received 42 cents of the dollar consumers spent for farm
foods in the second quarter of 1955, the same as in the previous quarter
but 2 cents smaller than that received in April-June 1954. 3/ Since
World War II the farmer's share by quarters has varied from 42 to 52

2/ Estimates of the division of the retail cost between farmers and
marketing agencies are based on concurrent prices at the farm and retail
levels, except for processed fruits and vegetables and sugar. During a
period of rising prices, the farmer's share calculated on this basis is
somewhat larger than the share which would be obtained by comparing
prices received by farmers for particular lots of products with prices
paid by consumers for the same lots after they have moved through the
marketing system. The reverse is true in periods of declining prices.



The estimated bill for marketing the domestic farm-produced food
products bought by civilian consumers in the United States was 26.4 bil-
lion dollars in 1954, 3 percent more than in 1953 (table 2). 1/ This
was the smallest year-to-year increase since 1950. It reflects some
increase in the volume of products marketed and higher unit costs of
marketing many products. Charges for local assembly, transportation,
processing, wholesaling, and retailing are included in the marketing
bill but not the additional service charges for food sold in the form
of meals in restaurants and other eating places. The marketing bill
includes both costs and profits of firms marketing farm products.

The total retail-store value of these foods in 1954 is estimated at
45.1 billion dollars, about the same as for the previous year. 2/ The
effect on the retail cost of the increase in the volume of products sold
to consumers was offset by reductions in the retail prices of some prod-
ucts. Farmers received 18.7 billion dollars for the equivalent farm
products or 41 percent of the retail cost of these foods. This compared
with 19.3 billion in 1953 which was 43 percent of retail cost in that

The marketing bill has increased steadily since 1939. In 1954 it
was more than three times the 1935-39 average. The farm value and retail
cost had increased by somewhat larger percentages than the marketing bill.
Between 1947, the first post-World War II year in which price controls
were not in effect, and 1954, the marketing bill increased about 8.5 bil-
lion dollars. During this period the farm value varied from 17.1 billion
dollars in 1949 to 20.3 billion in 1951. By 1954 it had declined from
the 1951 peak to the 1947 level of 18.7 billion dollars. Expansion in
the volume of food marketed, an increase in marketing services per unit
of product, and rising costs of performing marketing services accounted
for the increase in the marketing bill.

/ Revisions in basic data and changes in methods of deriving the
estimates have necessitated revising some of the data for 1940 and later
2/ The retail cost is the cost at retail-store prices. Food sold in
the form of meals is valued at what it would have cost in retail stores.
These estimates do not include the value of food products that are not
produced on farms in this country nor the value of foods consumed in
households of farms where produced. For a comparison of these estimates
with other published series, see the Sept. 1950 issue of this Situation.


Table 2.- Marketing bill fr fa fbod products purchased by domestic civilian consumers, retail cost and faen value,
all farm ods and five major oaamdity groups, averge 1935-39, annual 1913-54 1/
a Bakery and cereal. FrPit mad
All far food g Meat products : Dairy products Poultry and eggs a proydea a vergt blea
S s' ; Mar-: Fam I t Kar-s t a HI-s a Mar-: a Ma'-s i HaIr-
Y" a ia s s ket- e-. ket-s Re- ket-,s O a o- ket-s sa ket-s a a keOt-
SvaluetVa tails ng a valulu ts Lng int tails Ing : values tails ng : value tail ing awalue, .i lIn
S cost Aco wt.o Ml co t, b/ cost M /oat costs M11,; V cost
aol. m1. dl. mia. dml. ido. ol. dLl. daL. dl. hil. hl Bdl. hdi. dil. ial. pi. dli.
a a. a L a 1 &a M. L. _2 A A. aP a9 atl a2 aa a L.

1913 ...... 3.53 7.41 3.88 1.35 2.26 0.91 0.62 1.23 0.61 0.45 0.66 0.21 0.44 1.42 0.98 0.55 1.44 0.89
1914 ...... 3.64 7.91 4.27 1.35 2.26 .91 .64 1.28 .64 .47 .67 .20 .49 1.62 1.13 .58 1.69 1.11

1915 ...... 3.63 7.99 4.36 1.21 2.16 .95 .66 1.33 .67 .48 .68 .20 .99 1.74 1.15 .56 1.61 1.05
1916 ...... 4.35 9.47 5.12 1.50 2.49 .99 .74 1.44 .70 .53 .75 .22 .68 1.99 1.31 .71 2.17 1.46
1917 ...... 6.0512.40 6.35 2.03 3.03 1.00 .94 1.68 .74 .68 .94 .26 1.15 2.78 1.63 .97 3.10 2.13
1918 ...... 6.8713.19 6.32 2.51 3.96 1.45 1.09 1.88 .79 .83 1.19 .36 1.05 2.45 1.40 1.04 2.72 1.68
1919 ...... 7.55 15.22 7.67 2.50 4.14 1.64 1.34 2.38 1.04 1.03 1.45 .42 1.21 2.90 1.69 1.13 3.33 2.20

1920 ...... 7.3616.52 9.16 2.15 4.12 1.97 1.40 2.53 1.13 1.10 1.58 .48 1.17 3.16 1.99 1.30 4.21 2.91
1921 ...... 5.05 12.57 7.52 1.40 3.45 2.05 1.15 2.34 1.19 .77 1.16 .39 .62 2.42 1.80 .95 2.64 1.69
1922 ...... 5.19 12.88 7.69 1.56 3.49 1.93 1.14 2.31 1.17 .75 1.12 .37 .59 2.36 1.77 .99 2.97 1.98
1923 ...... 5.62 14.00 8.38 1.58 3.77 2.19 1.39 2.65 1.26 .83 1.24 .41 .59 2.43 1.84 1.03 3.15 2.12
1924 ...... 5.87 14.51 8.64 1.73 4.07 2.34 1.34 2.59 1.25 .86 1.31 .45 .67 2.52 1.85 1.06 3.31 2.25

1925 ...... 6.77 15.73 8.96 2.10 4.28 2.18 1.47 2.83 1.36 .96 1.41 .45 .87 2.81 1.94 1.15 3.60 2.45
1926 ...... 6.95 16.38 9.43 2.18 4.35 2.17 1.53 2.93 1.40 1.03 1.49 .46 .80 2.87 2.07 1.22 3.96 2.74
1927 ...... 6.72 16.23 9.51 2.04 4.25 2.21 1.62 3.09 1.47 .96 1.40 .44 .74 2.90 2.16 1.14 3.75 2.61
1928 ...... 6.9416.27 9.33 2.11 4.28 2.17 1.69 3.19 1.50 1.05 1.53 .48 .74 2.98 2.24 1.13 3.47 2.34
1929 ...... 7.22 17.08 9.86 2.23 4.45 2.22 1.76 3.33 1.57 1.12 1.70 .58 .68 2.86 2.18 1.21 3.89 2.68

1930 ...... 6.33 16.15 9.82 1.94 4.25 2.31 1.57 3.13 1.56 .93 1.51 .58 .56 2.78 2.22 1.13 3.68 2.55
1931 ...... 4.6613.06 8.40 1.37 3.58 2.21 1.25 2.66 1.41 .71 1.20 .49 .35 2.24 1.89 .86 2.84 1.98
1932 ...... 3.40 10.61 7.21 .91 2.67 1.76 .97 2.21 1.24 .54 .88 .34 .26 1.91 1.65 .61 2.29 1.68
1933 ..... 3.5610.93 7.30 .92 2.61 1.68 .96 2.17 1.21 .48 .80 .32 .34 2.00 1.60 .73 2.99 1.86
1934 ..... 4.27 12.52 7.92 1.13 3.26 1.90 1.12 2.36 1.24 .58 .98 .40 .47 2.38 1.81 .80 2.83 2.03

1935 ...... 5.02 12.94 7.58 1.49 3.39 1.70 1.29 2.58 1.29 .75 1.09 .34 .52 2.41 1.75 .79 2.81 2.02
1936 ...... 5.78 14.29 8.51 1.79 3.79 2.00 1.42 2.81 1.39 .77 1.16 .39 .58 2.51 1.93 1.00 3.22 2.22
1937 ..... 5.98 14.18 8.20 1.90 3.95 2.05 1.49 2.90 1.41 .81 1.24 .43 .61 2.53 1.92 .95 2.76 1.81
1938 ...... 5.20 13.39 8.18 1.71 3.57 1.86 1.32 2.72 1.40 .77 1.16 .39 .41 2.42 2.01 .78 2.56 1.78
1939 ..... 5.17 13.37 8.19 1.69 3.54 1.85 1.32 2.76 1.44 .72 1.10 .38 .39 2.26 1.87 .86 2.79 1.93

1935-39 av.a 5.43 13.63 8.13 1.72 3.65 1.89 1.37 2.76 1.39 .76 1.15 .39 .50 2..2 1.89 .88 2.83 1.95

1940 ...... 5.6 14.1 8.5 1.8 3.7 1.9 1.5 3.0 1.5 .8 1.2 .4 .4 2.3 1.9 .9 2.9 2.0
1941 .... .s 7.1 16.3 9.2 2.5 4.3 1.8 1.7 3.4 1.7 1.0 1.4 .4 .5 2.5 2.0 1.1 3.3 2.2
1942 ...... 9.3 19.8 10.5 3.2 4.9 1.7 2.1 4.1 2.0 1.4 2.0 .6 .7 2.9 2.2 1.5 4.1 2.6
1943 ...... 11.4 22.3 11.1 3.6 5.2 1.8 2.3 4.3 2.0 2.0 2.7 .7 .9 3.3 2.4 2.1 5.0 2.4
1944 ...... 11.6 22.5 11.4 3.7 5.3 1.9 2.5 4.5 2.0 1.8 2.5 .7 .9 -.1 2.3 2.3 5.3 3.1

1945 ...... 12.6 24.4 12.5 3.7 5.0 1.7 2.6 4.8 2.2 2.3 3.1 .8 1.0 3.5 2.6 2.5 6.4 4.(
1946 ...... 15.7 30.8 15.6 5.2 7.3 2.4 3.5 6.3 2.8 2.4 3.4 1.0 1.3 4.2 3.0 2.6 7.2 4.7
1947 ...... 18.7 36.4 17.7 7.4 10.9 3.5 3.7 6.6 2.9 2.6 3.8 1.2 1.5 4.8 3.3 2.6 7.5 4.9
1948 ...... 19.2 38.9 19.7 7.6 11.5 3.9 4.1 7.4 3.3 3.0 4.3 1.3 1.4 5.3 3.9 2.4 7.6 5.2
1949 ...... 17.1 37.8 20.7 6.7 10.7 4.0 3.5 6.8 3.3 2.8 41 1.3 1.2 5.5 4.3 2.3 7.9 5.6

1950 ...... 17.7 38.7 21.0 7.3 11.3 4.0 3.5 6.9 3.4 2.5 3.9 1.4 1.3 5.5 4.2 2.3 8.0 5.7
1951 ...... 20.3 43.0 22.7 8.1 12.2 4.1 4.0 7.7 3.7 3.4 5.0 1.6 1.4 6.1 4.7 2.6 8.7 6.1
1952 ...... 20.2 4.3 24.1 7.8 12.4 4.6 4.2 8.0 3.8 3.2 4.8 1.6 1.4 6.2 .8 2.9 9.6 6.7
1953 ...... 19.3 44.9 25.6 7.4 12.3 4.9 3.9 8.0 4.1 3.4 5.0 1.6 1.4 6.4 5.0 2.5 9.5 7.0
1954 / ... 18.7 45.1 26.4 7.4 12.5 5.1 3.8 8.1 4.3 2.9 4.6 1.7 1.4 6.5 5.1 2.4 9.6 7.2

/ The retail-cost estimate represent the cost at retail-tore prices of all domestic far foods that were both sold by
farmers ad bought by civilian oeasumers in this country. harn food products sold in the orm of meals are included but are
valued at uhat the food would have cost in retail stores. Farm value is adjusted to eliminate imputed value of nonfood by-
product. The marketing bill, or total marketing margin, is equal to the difference between the farm value and retail cost
sept for the ya 1933-35 and 1943-46 ia which the marketing bill for soe groups is adjusted for processor takes or
government parents to processors.
'/ Includes vegetable-oil products, sugar, and other miscellaneous fod products in addition to the five commodity groups
given i this table.
/ The estimated fm va lues of milk, eggs, ruit, lard, and vegetable shortening used in bakery produote other than flour
ere deducted rim the fa value of other comodity groups ad added to the fa value of the bakery ad cereal promdaot

PreliumnaI estimates. kta for 1940 and later years revised Jne 1955.


Farmers in the North Central States and in Pennsylvania and New York
have a considerable interest in changes in agricultural marketing that
will be brought about by the St. Lawrence Seaway. Construction of naviga-
tional improvements is under way that will permit large oceangoing vessels
to enter the Great Lakes in 1959. Products of agriculture produced in the
Midwest and transported to the eastern seaboard will then have an alterna-
tive route possessing distinct possibilities of lower overall transporta-
tion costs than the rail or combination rail-lake route now used.

A number of questions must be answered before an assessment can be
made of how extensive these savings may be. The boundaries of the
territory that will be tributary to the Seaway are indefinite. The number
of agricultural commodities which the Seaway may serve is not fully known
and the potential volume of traffic for each is unknown. Existing handling,
storage, processing, and transportation arrangements are interrelated. The
extent of change that is likely to take place within this framework is
yet to be ascertained. Another open question is whether the railroads will
establish rates that will compete with the Seaway should it appear that the
latter route will be cheaper for shippers.

Exports of Agricultural Products Over the Seaway

The territory to be served by the Seaway will include other States
beside those bordering the Great Lakes, At present grain is drawn to
the western lake ports from the Dakotas, Montana, Nebraska, and Iowa as
well as the lakeside States. Reduced transportation costs of the Seaway
route, should they be realized, will tend to widen the area from which
grain and other products will flow to the lakes. There are, of course,
other routes that will limit the attraction of the Seaway, including the
Illinois-Mississippi water route to the Gulf region and the railroad
routes to the Pacific coast from the Mountain States. Just where the
new lines will be drawn is a matter for study. Likewise, the effects of
these shifts on local marketing patterns in the fringe areas will require

The States to be served by the Seaway are among the most important
in the production of farm products. Grains, livestock, dairy products,
oilseeds, and fruit in original or processed form now move eastward in
large quantities from this territory for consumption or export. In
addition to these, there may be other products which, for one reason or
another, may be marketed over the new route. The traffic of all agri-
cultural products eastbound over the Seaway is likely to be largely
export rather than domestic, for reasons to be explained subsequently.
Estimation of the volume of agricultural exports expected to leave the
country over the Seaway is not easy, but some idea of its extent can be
gained by a study of past exports from certain customs districts. Those
districts situated on the North Atlantic seaboard, taking in the ports
of Boston, New York, Philadelphia, and Baltimore, are the principal
gateways at present for agricultural products originating in the Mid-
west. It is recognized that exports of some commodities departing

1/ Prepared by Stanley W. Phillips, Agricultural Economist, Agr. Market.

- 1L, -

through these ports also include quantities produced on the eastern
seaboard and elsewhere. Nevertheless, these data provide the best
available clues to potential agricultural components of Seaway traffic.

Wheat and Wheat Flour

Wheat and flour (in wheat equivalent) exported from the North
Atlantic seaboard of the United States in the 5-year period 1950-54
ranged from 53.6 million bushels in 1950 to 154.1 million in 1951. Less
variation took place during 1952-54 and future shipments may be closer
to the figures for those years (table 3). One private estimate based
on the exports of wheat alone for 1938-43 from the Atlantic ports gives
53.3 million bushels as the probable average annual shipment of United
States wheat over the Seaway in 1960-65. Estimates of United States
and Canadian grain of all kinds to be shipped on the Seaway during this
period range from 6.5 million to 12.1 million tons per year, or from 15
to 33 percent of the total in-and-out traffic. 2/ Since most of this
will be wheat, it is probably safe to say that it will be the most
important farm product to use the new waterway.

Table 3.- Wheat and wheat flour: Exports via North Atlantic seaboard,
United States, 1950-54

Exports as wheat Exports as flour
Year : : Percentage : : : Percentage
: : of : : Wheat of
Actual of Actual Wheat of
Ac :United States: : equivalent :United States
__ : total a : : total
3 1,000 1,000
bushels Percent Hundredweight bushels Percent

1950 .: 49,500 24 1,763,120 4,139 11
1951 : 144,352 34 4,176,981 9,805 20
1952 .: 76,838 21 2,720,765 6,387 15
1953 .: 65,746 28 3,387,533 7,952 22
1954 .: 84,478 44 2,714,483 6,372 17

Corn, Soybeans, Soybean Oil

Although smaller quantities of soybeans and corn are exported than
of wheat, commercial growing areas are closer to the Seaway so that larger
proportions may be shipped out over the new route (table 4). The IllinotB-
Mississippi waterway provides the only other low-cost transportation route
for these products.

A large part of the soybean oil, crude and refined, is produced within
a relatively short distance of the lakes. Substantial amounts go to the
east coast for overseas shipment.

2/ Estimates made by the U. S. Dept. of Commerce and by the St. Lawrence
Seaway Development Corp.

- 11 -

Table 4.- Corn and soybeans: Exports via North Atlantic seaboard,
United States, 1950-54

Exports of corn Exports of soybeans
Year: Percentage : Percentage
Actual of Actual of
: : United States : : United States
: total ; tota
: 1.000 bushels Percent 1,000 bushels Percent

1950 ......: 26,533 28 4,824 25
1951 ......: 41,902 42 2,336 9
1952 ......: 53,445 54 6,638 28
1953 ......: 59,694 46 11,447 28
1954 ......: 35,938 47 13,270 31

Other Commodities

Dried beans produced in Michigan and New York State presently move
into export channels via east coast ports. White varieties are exported
in sizable quantities from Baltimore and New York. Virtually all red
kidney beans are raised in New York State. A fourth to a third of the
crop presently is exported through the New York customs district.

Data relating to exports of dairy and livestock products by customs
district are not readily accessible but it is certain that east coast
ports serve as gateways for much of this traffic. Lard and certain other
packinghouse products have been major export items. Large meatpacking
plants are located at Cincinnati, Indianapolis, Chicago, Omaha, St. Paul,
and other points in the area to be served by the Seaway. Much of the
export traffic in these products may be diverted to the Seaway.

Michigan produces considerable quantities of fruit, some of which
enters overseas markets. Over the past 5 years about 13 percent of the
total United States exports of pears was shipped via New York. During
the same period, apple exports via United States North Atlantic ports
averaged 20 percent of United States exports, although this percentage
has been declining steadily.

Exports to Canada

In addition to providing passage for overseas exports, the St. Lawrence
Seaway will serve as a key route by which our midwestern farm products will
reach consumers in eastern Canada. Canada is our best export customer and
her imports of American agricultural products are continuing to increase.
Montreal, with a population of over a million, is located at the head of
the Seaway improvements. (See fig. 1.) It serves as a distribution center
for a large part of the agricultural imports from the United States that
is consumed in the populous Province of Quebec (1951 population, 4,055,681),
as well as eastern Ontario (1951 population, 4,597,342), and the Maritime

- 12 -

Prospective Changes in Trade Channels and Facility Requirements

A substantial volume of agricultural traffic on the Seaway will bring
marked changes in present export marketing channels. These channels from
country points to shipside are well established and integrated with those
that move these products into domestic consumption. Investment in handling,
storage, transportation, and processing facilities is considerable. Sub-
stantial savings will be necessary in order to offset the cost of abandoning
any of the present facilities and replacing them.

Some of the problems having to do with the threat to established
marketing channels may be illustrated by considering wheat and flour which
will make up a large part of the traffic on the Seaway. United States
export wheat moves away from our shores through three regional gateways.
During the period 1950-54, about 38 percent of the volume was shipped out
of Gulf coast ports, 32 percent out of the Pacific Northwest ports, and
30 percent out of the Atlantic seaboard ports, principally Boston, New
York, Philadelphia, and Baltimore. During the same interval, 56 percent
of the flour exports was from the Gulf region, 27 percent from Pacific
ports, and 17 percent from North Atlantic ports.

A major portion of the wheat and flour exported from northeastern
ports is produced in Montana, the Dakotas, and Minnesota. The grain is
loaded chiefly at Duluth-Superior and hauled over the lakes during the
season of navigation to Buffalo where a part is ground into flour and
moved by rail to the Atlantic ports. That which is not milled is shipped
by rail. An alternative routing for bulk wheat is provided by the New
York State Barge Canal system. Grain is loaded onto barges at either
Buffalo or Oswego on Lake Ontario and discharged at Albany or New York
City. Some of the soft wheat grown in Michigan, Illinois, Indiana, and
Ohio is exported. Part of this enters the eastbound lake movement at
Milwaukee, Chicago, and Toledo.

The Seaway will provide an additional route on which rates may be
lower than on those described above. Before the grain trade can gain
maximum savings through its use, much study, and perhaps a period of
experimentation, will be required before a definite pattern emerges.

A minimum of additional facilities will be required if lake carriers
continue to load grain at the western end of the lakes, using present
facilities there, and deliver it at Buffalo, Montreal, or other eastern
points along the route where it will be loaded aboard ocean vessels.
These various eastern transfer centers have their respective advantages
and disadvantages.

If ocean vessels load grain at the head of the lakes, moderate to
extensive changes will take place in the relocation of facilities. Every
shipment of wheat that moves overseas direct from the West, which other-
wise would be transferred at Buffalo, would tend to put a strain on
facilities in the West and to lessen the use of existing capacity in the
East. A point will be reached where additional storage capacity will be 4
needed at Duluth-Superior and serious overcapacity will appear at Buffalo. q
Needless to say, no one knows when, or at what volume of trade, this will


1955 Channels and St. Lawrence SEVEN ,9
Seaway Opportunities ISLANDS




'A*--- --%



TO NEW ORLEANS L-- ------- -


Seaway route



- 14 -

At the extreme -- with all overseas shipments originating at the
lakehead -- storage facilities abroad, as well as those in the West, would
have to be enlarged for it would mean that the entire export share of the
annual crop of United States and Canadian wheat moving eastbound would be
moved overseas during the 8 months the Seaway will be open. At present,
railroads haul grain 12 months a year from eastern lake ports to the sea-
ports. For the period 1950-54 total wheat exports departing from New York,
Philadelphia, and Baltimore in the months of December, January, February,
and March, amounted to nearly 40 percent of annual total. These are the
months when the Seaway will be closed.

However, the chances are small that all outbound shipments of wheat
will use the Seaway. During the 4 winter months when the Seaway will be
closed, wheat and flour can be moved by rail to the seaboard from Buffalo
where newly harvested wheat will have been accumulated in the late autumn
months. The lake carriers can operate on the lakes later in the autumn
than can ocean vessels, because the latter must clear the Seaway before
ice forms at the mouth of the St. Lawrence. In the spring, lake carriers
can make one or more voyages before ships can reach the head of the lakes
from the distant ocean. Handling and milling equipment at Buffalo, used
largely for the domestic trade, will be available for use by the export

A smaller amount of wheat is exported as flour. Buffalo is the
country's largest milling center. Its mills grind wheat for domestic
consumption, foreign trade, and for Canadian account under arrangements
known as milling-in-bond. Flour milling capacity at the head of the
lakes may be increased to accommodate the export flour business and thus
avoid extra handling. However, costs of constructing new mills would be
high. If such a step brought about a transfer of milling from Buffalo
to upper lake points, the reduced volume of flour produced at Buffalo
would mean higher unit costs because mills there already operate at less
than full capacity. Instead of new milling capacity being erected at
Duluth-Superior, Minneapolis flour mills may be utilized more intensively
to compete with Buffalo for the export trade.

Before conclusions can be drawn as to how the maximum benefits of
the Seaway can be realized by the grain trade, thorough study will be
needed of the entire eastern grain export framework involving the lake-
rail freight rate structure, the costs of abandoning Buffalo facilities
or operating them at considerably less than full capacity, and of addi-
tional storage space and handling equipment at Duluth-Superior.

It seems probable that transportation charges on the Seaway route
to foreign ports will be somewhat lower than those on the lakes-rail-
ocean routes today. Total charges for moving a bushel of wheat from
Duluth to northern Europe via the lakes to Buffalo and thence by rail
to New York are approximately 50 cents per bushel. According to trade
opinion, owners of the few small 4,500-ton vessels currently moving
shiploads of grain direct from the lakehead to the same destinations
are charging about 25 cents per bushel. This disparity appears to be
an overwhelming argument for the all water route.

- 15 -

In the light of the lower charges for the all-water route, there is
. the question of what will be the response of lake-carrier owners, Buffalo
grain interests, and the eastern railroads. The carrier fleet, the mills
and storage space, and the rail connections serving the Buffalo grain mar-
ket represent a large investment. Much of it will be needed to serve the
domestic grain traffic. In order to avoid the entire loss of the export
trade, attempts may be made to adjust the charges for the services per-
formed. Unless such steps to retain some of the export trade are under-
taken, unit costs of handling the domestic trade are likely to rise.

When the Seaway proposal was under consideration, it was attacked
by various groups as discriminatory against other forms of transportation.
To overcome these charges, Public Law 358, which authorized the Seaway,
provided that the Seaway should be a self-sustaining operation. Tolls
will be charged toward this end but whether income will be sufficient to
amortize and maintain the facilities remains to be seen.

The Act does not provide for improvement of harbors or dockside
facilities. At present few if any of the lake harbors are deep enough
to accommodate vessels expected to visit the ports. What agency will
build these necessary improvements and how they will be financed have
not been settled. The Seaway will be considered a sound economic invest-
ment of resources if its traffic can bear the cost of the improvements
to the harbors and the Seaway itself and still provide lower cost trans-

Intercoastal Traffic

Voyages from the Midwest ports to the eastern seaboard via the
St. Lawrence have been part of the Seaway prospect. Farmers in the
Middle West have been told repeatedly that it will furnish a cheaper
means of shipping their products to the populous East. Such cargoes
may be moved but there are formidable obstacles in the way. Distance,
legal restrictions, and the depth of the Seaway may be limiting factors.

The sailing distance via the St. Lawrence from Chicago to New York
is more than 2,700 statute miles. The railroad mileage between the two
cities is approximately 900 miles. Time savings and avoidance of extra
dockside handling by using the rail routes might outweigh any advantage
the water route would have ratewise.

Legal restrictions may mean that transportation rates for inter-
coastal traffic would be higher than for overseas voyages of comparable
distance. Only American vessels are permitted by law to carry cargo
from one United States continental port to another. American ships,
because of high operating costs, are likely to charge higher rates than
foreign-flag ships. Moreover, American ships of the Liberty, Mariner,
and later types all draw more water when fully loaded than the 27-foot
limitation of the Seaway. If these ships are to traverse the beaway
they will have to operate at somewhat less than capacity, which means
higher costs per ton than when plying between deep sea ports fully loaded.
It should be added that the efficient lake steamers which are able to
carry enormous cargoes of grain, ore, and coal on the Great Lakes at a

- 16 -

low cost per ton because of their construction design, would be unable
to withstand the rigors of voyages on the North Atlantic. Until specially
designed American ships are built that will navigate the St. Lawrence at i
lower operating costs, the:interooastal trade is likely to remain unim-

Exceptions to this may be found in traffic between the lakes and
* South Atlantic ports such as Charleston and Jacksonville. Here the
advantages of railroads in time and rates will tend to diminish relative
to those of the Seaway. Gulf ports are unlikely to be visited by ships
from the Great Lakes-St. Lawrence River because of the advantages held
by the Illinois River-Mississippi barge system.

In addition to fulfilling a 100-year-old dream of a waterway between
midwestern producing areas and European markets, the Seaway promises the
opportunity to reduce costs of bringing into the midcontinent manufactured
goods used by farmers for production purposes. Phosphates from Florida
are cited as examples of possible inbound cargoes for which the Seaway may
provide savings to farmers.


- 17 -


The Thames Adjust Public Control to the Revclution in Technology

In April a proposal was made for one of the most basic revisions of
Federal legislation on transport which have been officially advocated since
the 1880's. A Presidential Advisory Committee on Transport Policy and
Organization was appointed by President Eisenhower on July 12, 1954. This
Cabinet-level Committee consisted of the Secretary of Commerce, as Chair-
man; the Secretary of Defenses and the Director of the Office of Defense
Mobilization. Additional Cabinet member served on an ad hoc basis. The -
task of the Committee was to reappraise the Federal Governments policies
regarding transport and the organizational scheme under which these are

The Committee's report, entitled "Revision of Federal Transportation
Policy," was released by the White House on'April 18, 1955, It dealt solely -
with Federal transport policy, as distinguished from Federal administrative
organization for effectuating such policy. -Moreover, the report was con-
cerned only with economic regulation, not with safety regulation. Economic -
regulation includes governmental control over such matters as whether a
carrier may operate and over which routes, what the carrier may haul, and
at what rates.

The Committee limited its recommendations to the modes of transpor-
tation which are regulated by the Interstate Commerce Commission: rail-
roads, oil pipelines, motor carriers (trucks"and buses), domestic water -
carriers, and freight forwarders. 2/ The bulk of the Nationas commercial,s '-
intercity transport services is provided by these facilities, The only
important facilities providing such services but not covered by the report
are airlines and natural-gas pipelines.

Identical bills, S, 1920, H.R. 61410 and H.R, 6142o have been introduced
to implement the Committee's report, chiefly through amending the Inter- :
state Commerce Act. Thus far no hearings on the bills have been scheduled,.

The theme of the Committee's report was summed up in three statements:

(1) "Within the short span of one generation this country has
witnessed a transportation revolution," '

(2) "In many respects, Government policy at present prevents, or
severely limits, the realization of the most economical use
of our transportation plant,"

1/ Analysis prepared by Clem C. Linnenberg, Jr,B Transportation Economist,
Transportation and Facilities Branch, Agricultural Marketing Service.
2/ A freight forwarder consolidates shipments of freii t, in order to
make lower rates available to shippers of small lots*

- 18 -

(3) "The public interest requires the maintenance of a sa hA and
vigorous common carrier transportation service by all of the
available means of transport, each operating within its .
respective capabilities and developing in accordance with the
indicated demand for its services," (Emph&sis supplied.)

The revolution to which the Committee refers has occurred since 1920,
At that date, as the Committee points out, intercity transport of goods,
and persons in America was almost solely by railroad, in those parts of.
America not served by water. Since then, a vast network of highways has
taken shape, oil and gas pipelines have grown tremendously in extent and
in traffic volume, further improvement of waterways has been made, and
transportation by air has expanded from the infinitesimal to a major mode
of commercials intercity passenger movement, with a rapidly developing cargo
service* The railroads now account for only about half of the Nation's
intercity freight traffic0 although the number of ton-miles of railroad
freight has continued to grow* (See cover charts)

The Committee notes that development of air, water, and highway trans-
port facilities has entailed extensive Federal financing, and the highway
system has been, even more largely, financed by the States. It can be
added that, during World War II, the Federal Government spent large sums
for the construction of pipelines.

SOn short hauls, the Committee points out, railroads and motor carriers
compete for the movement of nearly all commodities* On many, diverse
commodities the long-haul traffic is competitively divided among rail,
motor, and water carriers. For some commodities, pipelines also serve the
long-distance traffic.

The Committee characterizes this revolution as a shift from monopoly
to competition, Meanwhile, it declares, ". government has failed to
keep pace with this change and has, in fact, intensified its regulation
of transportation," The Committee concludes that the result of this
conflict between law and circumstances is dislocations which 'have borne
heavily on the common carrier segment of the transportation industry" and
have, in turn, cost shippers and consumers billions of dollars per year,

In arriving at its proposals for a reduction in the degree of Federal
regulation of transport, the Committee notes that it is not only direct
competition between carriers that affects rates favorably to shippers, but
also the shipper's ewn competitive relationship to other producers cf the
same product. That is, regardless of whether the carrier has competitors,
the carriers self-interest demands that it keep its rates low enough for
the shipper served by it to stay in business,

The Committee calls attention to the fact that the economic character-
istics of railroads and motor carriers are virtually opposite. The former
have heavy investment and a high proportion of indirect and fixed,
The latter entail oompeaatively low Investment (because the roadway is


- 19 -

not owned by the, carriers) and d high proportion of direct ,and variable
coste / 2/

As was indicated above, the Committee emphasizes the essentiality -
'' from a public-interest standpoint -- of transportation by common carrier;
'those transportation firms which are obliged to serve all who wish to use
:' their services. The Committee's focus of interest is further sharpened
to regulated common carriers. These are subject to economic regulation
by the Government on several counts. The Committee contrasts the role of
regulated common carriers to that of contract carriers, private carriers,
and exempt for-hire carriers, A contract carrier is a commercial hauler
who does not offer to serve the general public but, instead, has a limited
number of patrons, to whom he provides a specialized type of service on the
basis of contracts covering a series of shipments over a period of time,
A private carrier is one who hauls his own property. The economic regular.
tiln of contract carriers by Government is more limited than that applied
to common carriers. Private carriers are free of economic regulation.
Izempt for-hire carriers are common and contract carriers not put under
economic regulation by Government.

The Committee notes a continuing growth of exempt for-hire carriage
and of private carriage of commodities other than those produced by the
hauler or used by him as supplies. It takes the position that these
developments are detrimental to the maintenance of a strong common carrier
industry and hence harmful to shippers

The Committee believes that, under war conditione,regulated common
carriers would give a greater output of results from any given input of
scarce materials and equipment than could be gotten from the other carriers
(contract carriers, private carriers, and unregulated common carriers).
The Committee also takes the position that the railroads can take care of
a traffic increase by means of a less-than-proportionate increase in equip-
ment, whereas other modes of transport generally require a proportionate
increase in equipment, and hence the railroads are more useful in wartime
than the other modes are,

Of the major objectives stated by the Committee, the most pervasive
is "Increased reliance on competitive foaes of transportation in rate
making in order: ,

(a) to have transportation enterprises function under a
system of dynamic competition which will speed up technical
'-, innovation and foster the development of new rate and
service concepts; and

(b) to enable each form of transport to reflect its abilities
in the market by aggressive experimentation in rates and
service in order to demonstrate to the full its possibilities
for service to the shipping and traveling public ."

2/ It is generally recognized among economists that, in a price war
between two firms, it is the out-of-pooket cost per unit of output rather
than the total cost per unit of output that affects the firm's relative
ability to survive. A low out-of-pocket cost per unit of output is conducive
to survival. This fact is of key importance in anticipating the results of
any given policy as to governmental control over transportation rates.

- 20 -

A Revised; Declaration of Policy

Extensive amendment of the Interstate Commerce Act in 1940 included,
among other things, the insertion of a declaration of policy, entitled
"the national transportation policy of the Congress." All of the Act's
provisions were to be "administered .. with a view to carrying out the
declaration of policy."

The recent report of the Advisory Committee on Transport Policy and
organisation proposes a revision of this declaration of policy so as to
shift the accent from "fair and impartial regulation" to development "under
the free enterprise system of dynamic competition." The policy declaration's
existing ban on "unfair or destructive competitive practices" would be dropped

A new provision in the national transportation policy would oppose
"special restrictions, conditions, or limitations on individual modes of
transport." The report does not specify whether this provision would per-
mit a carrier to engage in another mode of transport a practice not
generally allowed at present. If such authorization is contemplated, this
would have far-reaching consequences e.g., acquisition of truck lines
by competing railways or vice versa.

Greater Reliance on Competitive Forces in Rate-Making

The Committee believes that "increased reliance on competitive forces
in rate making constitutes the corner-stone of a modernized regulatory
program." It recommends that the degree of regulation exercised by the
Interstate Commerce Commission over common carriers, and also apparently,
that over contract carriers, each be made less than at present. At the
same time, it proposes that some carriers now regulated as contract carriers
be moved into the common carrier group (a more closely regulated category)
and that some carriers now subject to no economic regulation at all be
shifted into a regulated category. That is, today's regulated common
carriers would be partly de-controlled, while some other carriers would
become more regulated than at present,

On the de-control side of this program, the Committee recommends basic
changes in four aspects of economic regulation.

Maximum or Minimum Rate Control

The first change is that the Interstate Commerce Commission's authority
regarding the level of common carrier rates be limited to the setting of
either the minimum rate or the maximum rate for providing a particular
service. At present, the Commission has the authority to fix either the
minimum rate, or the maximum rate, or both, or the precise rate. Further-
more, in rate-making, the ICC is required to take into account the effect
of the proposed rates "on the movement of traffic by the carrier for
which the rates are prescribed." It is the view of the Committee that the
weighing of such a consideration is the proper function solely of manage-
ment and not of Government. Hence, the Committee proposes that this
standard of Judgment be removed from the Interstate Commerce Act.

- 21 -

In setting a minimum rate for any given service, the COmmission would
be allowed authority to forbid the charging ef a rate which would be "less
than a just and reasonable ;minimum." By this the Sommittee means a rate
which fails to cover "the d.;rect ascertainable cost of producing the service"
to which the rate applies -. i.e., fails to cjver the out-of-pocket cost,

In setting a maximum rate for any given service, the Commission's
authority would be that of prohibiting a rata "in excess of a just and ,
reasonable maximum," In any event, the maximum thus set would be required
to be at least as high as "the full ccst" of performing the service to
which the rate applies "exclusive of losses in other services." Here the
Commission would be required to consider "the extent and effect of com-
petition to the end that carriers shall be prevented from charging
excessive or unreasonable rates on traffic which is non-competitive."
Apparently this means that, if the particular service is a non-competitive
one (, no adequate alternative carrier is available, between the same .
two points), the ICC should be especially careful in determining that the
actual rate is not excessive.

Presumably "the full cost" means the fully distributed cost -- an
amount which includes both direct and indirect ccetp and both fixed and
variable costs, One element of fixed costs is a return on the value of
property. In the allocation of Joint costs in an unregulated business
enterprise, the rates or prices that the customers are able and willing
to pay for the respective services or goods is a common guide. That is,
the respective rates help to determine the respective costs. Where, on
the contrary, the respective costs are to determine the respective lowest
maximum rates but the lowest maximum rate for each service must exclude r
the l'as on any other service, cost allocation is a thorny problem. The
Committee does not indicate how the cost allocation is to be accomplished.

The Committee recommends that the ICC "continue" to have regulatory
authority to determine rate relationships which would avoid unjust dis- Z0
crimination or undue preferences between persons, localities, or types
of traffic, or between interstate and intrastate commerce, As for this
last; the existing law permits the ICC to set aside intrastate rates
set by State regulatory bodies for railroads, oil pipelines, and freight 'r
forwarders, and apply its own rate-making procedure to intrastate traffic .
of these carriers, where such action by the ICC is necessary in order to
remove discrimination between inter- and intrastate commerce, Existing
law expressly forbids ICC control over intrastate rates of motor carriers
and water carriers,

It should be noted, however, that the rate-making power which the
Committee would vest in the ICC regarding intrastate traffic of railroads,
oil pipelines, and freight forwkrders is the same as the power it would
allow to the ICC regarding interstate traffic; vi.,, control over minimum
or maximum rates.

As regards the Committee's recommendation that the ICC's control
over interstate and Intrastate rates be limited to the setting of minimum
or maximum rates, one interr-otation given to this proposal is that the

- 22 -

power to set beth maximum and minimum reasonable rates, or a "sone of
reasonableness,n would still be vested in the Commission. Under this
interpretation of the Committee's report, the ICC would retain greater
rate-making power than a literal comparison of the existing Act and the
report would indicate, The analysis in this article is limited, In so
far as possible, to what the Committee report exressly etatese BewevOer
the out-of-pocket cost and the fully distributed cost of hauling a
particular commodity by rail may differ in the ratio of roughly li2,
Hence, the ICC"e setting of both minima and maxima, but no precise rate,
would allow to transpuration-company management a substantial range of

Suspension Powers

The second set of modifications which the Committee proposes in the
ICC0e regulatory authority concerns the Commission's suspension powers.
At present the ICC may suspend for 7 months an increase or decrease which
a common carrier proposes to make in its rates or a decrease which a con-
tract carrier proposes to make in its minimum rates, The suspension is
invoked pending the Commission's determination of the lawfulness of the
proposed change, The Committee desires to enable carriers to make quick
rate adjustments in either direction, It declares that ", c suspension
of new rates should be considered as a special and unusual remedy', More-
over, It recommends that suspension by the ICC be limited to 3 months,

Suspension at present may be on the ICC's own initiative or other-
wise.- e.g., at the behest of a shipper or a competing carrier. The
carrier proposing to change its rates or practices bears the burden of
proof that the change is lawful. "Currently," says the Committee, "nearly
all the protested changes in rates involve reductions and by far the greatest
number of complaints are filed by carriers," (I.e,, during the past 2 or
3 years, the rate changes proposed by carriers have mostly been down-
ward adjustments. Rival carriers complain against such adjustments. In
the early years after World War II, the rate changes proposed by carriers
were mostly increases, Against those changes, shippers were the complainants.

The Committee proposes that hereafter the IOC be allowed to suspend
a proposed change only after making a finding of fact (1) that the proposed
rate is probably unlawful, (2) that it would result in injury to the com-
plainant, and (3) that, in the absence of suspensioL, the complainant would
have no adequate remedy.

The Committee advocates that all three of these findings be made
prerequisite to any suspension, whether or not there is a complaint, The
second and third findings are not possible in the absence of a complainant --
i.e., if the 1CC were to want to act on its own initiative. If taken
literally, this means that the Committee contemplates that the ICC no
longer be allowed authority to take the initiative in the suspension ofla'
proposed rate change. In any event, when the United States Department of
Agriculture, in carrying cut its duties under the Agricultural Adjustment
Act and the Agricultural Marketing Act, seeks suspension of proposed changes
in transportation rates, it does so on behalf of the agricultural community A

- 23 -

as a whole,. It is usually'not in a position to establish injury to
particular persons or to demonstrate that ether remedies available to
such persons are inadequate. In suspension proceedings, both the ICC
and the USDA would have lesser roles than now*

At present, in any ICC hearing as to the lawfulness of a change which
a carrier proposes to make in its rates, the burden of proof as to lawful-
ness is on that carrier. The Committee proposes that, hereafter, any
other carrier which protests against the change bear the burden of proof,
although when such a protest comes from any non-carrier, the burden of
proof would remain with the carrier which proposes to change its rates.
SThis means that, in today's circumstances, the burden of proof would
generally be on the complainant.

The curtailment of the ICC's suspension powers and closely tied
in with it -- this shifting of the burden of proof are.advocated by the
Committee on the ground that these measures would enable carriers "to
give effect to their full economic capabilities" -- i.e., would to a large
degree unfetter competition on rates. The report does not specify whether
these changes are intended to apply to common carriers alone or to both
common and contract carriers.

In part, this particular set of the Committee's proposals would
accomplish the same purposes as were contemplated by S 1461, the "quick
rate-increase bill" or "time-lag bill," introduced in 1953. ./ The
approach, however, is different.

If rate competition is to be encouraged but rates are still to be
related to the costs of the respective services, extensive statistical
and accounting analysis is needed, Hence, the Committee asks for strength-
ening of the ICC's Bureau of Accounts, Cost Finding, and Valuation and
of the Commission's "means of developing current information covering
transport operations and the movement of traffic."

Leng-and-Short-Haul Clause

Under existing law, the railroads, oil pipelines, and water common
carriers are forbidden to charge a lower rate from A through B to C, than
for the haul from A to B, or B to C. They are also forbidden to charge
mare for the haul from A to C than the sum of the.rates from A to B and
from B to.C.- These'provisions are designed as restrictions on specific
forms .of discriminatory rate-making. For example, the first prohibition
prevents a railroad from charging rates considerably below full cost,
for the haul from A to C, a movement where there is competition with
another railroad or a barge line, and making up the deficit through high
charges on the traffic to and from B, where no competition exists.

Existing law permits the Interstate Commerce Commission to grant
exceptions to the first of the above two prohibitions, but only in certain
specified circumstances. Moreover, the carrier requesting the exception,'
must bear the burden of proof that the exception should be made.

4/ See The Marketing and Transportation Situation April 1953, p. 14;
an& October 1954, p. 46.

- 24 -

As the Ccmmittee points out, the Interstate Commerce Act contains
no 'long-and-short-haul provisions regarding motor carriers; nor does the
Committee propose to extend such provisions to motor carriers. .(Long-:.
and-short-haul discrimination is markedly easier, and financially much
more tempting, for a carrier having a high proportion of fixed costs
than for one with a low proportion of fixed costs.)

The Committee holds that, if A and C are served by a competing
carrier but B is not, the railroads running from A through B to C are
"entitled to make themselves competitive" (through offering lower rates
for the long haul than for the short haul) instead of leaving the traffic
between A and C to be handled exclusively by the other carrier. Hence
the Committee recommends some far-reaching changes in the long-and-short-
haul section of the Interstate Commerce Act,

The Committee proposes that the law be amended to give the carriers
the statutory right, without prior approval by the ICC, to charge more for
the short haul than for the long haul if the lower charge for the long haul
(a) is needed to meet actual competition and (b) "is not less than a
minimum reasonable rate." Both conditions would have to be met. The
Committee report proposes that, on the same basis, the carriers be given
the right to charge a higher rate for a long haul than the aggregate of
the charges for intermediate hauls (more for A to C than for A to B, plus
B to C),

Volume Freight Rates

"The prime economic benefit of rail, water, and pipeline transportation"
the Committee declares, "clearly lies in heavy long-distance and large-scale
transportation." The Committee advocates that carriers be allowed to offer
lower-than-ordinary rates in return for the shipper's meeting an "incentive"
minimum as to weight or volume per shipment -- if these rates (a) are
based on cost differences and (b) are established to meet competition.
Occasionally the ICC has approved volume freight rates under existing law,

Steps Toward Increasing the Common
Carrier's Share of the Traffic

:The Committee views with concern various recent developments which,
it-believes, have hindered "the maintenance of a financially strong system
of.common carrier transportation," Among such developments is the growth
of- privately operated fleets of trucks (trucks engaged in hauling freight
which belongs to .the firms which operate the-trucks), The Committee has
a series of recommendations designed to reverse these developments, These
are the recommendations which look toward.added rather than lessened

Private Motor Carriers
" As indicated above, "private carriers of property by motor vehicle"
are not subject to control by the Interstate Commerce Commission as to
whether or where they operate or what they haul. By definition, they are
haulers of their own freight; so there are no rates for the ICC to regulate.
At present the enterprises operating as private motor carriers include such
concerns as chain grocery stores with farflung systems of warehouses and

- 25 -

motortruck fleets; and they also-naulpde, substantial numbers of "gypsy
truckers" -- people who buy commodities, haul them to another place, where
they have no business establishment, and then sell them. Any profit the
so-called gypsy makes may be from transportation or from the marketing
function or from both.

The Committee would limit the definition of "private carrier of
property by motor vehicle" to exclude from it any hauler of commodities
that were bought for the purpose 'of transporting them, The hauler's intent
would determine whether he was free of economic regulation or subject to it.

Contract Carriers

The statutory definitions of "contract carrier by motor vehicle" and
"contract carrier by water" would also be narrowed. The contracts would
have to be for specialized services (a requirement which the ICC already
applies, but which is not expressly provided by statute); the service
would hereafter have to be a substitute for "a feasible private carrier
operation"; and the contract carrier must "not perform common carrier ser-
vices which would ordinarily be undertaken by common carriers."

The Interstate Commerce Act now requires each contract carrier by
motor vehicle or by water to publish its actual minimum rates, which means
no precise rates charged by it other than the lowest rate which it actually
charges to any shipper for the particular service involved, The Committee
objects to this arrangement'on the ground that it keeps common carriers
from competing effectively with contract carriers, as the former do not know
the actual rates charged by the latter in any given instance* The Committee
recommends that contract carriers be required to publish all of their actual
rates "and regulations affecting transportation under their contracts" (the
business practices involved) or, at the carriers' option, that they publish
the contracts.

These various measures are advocated "to protect common carriers
against contract carriers."

Bulk Commodity Exemption

Both common and contract carriers by water are at.present exempt
from economic regulation so far as concerns any vessel or barge tow with
a cargo of three commodities or less, if each is in bulk. They are not
required to publish their rates; but, as the Committee points out, they
compete with fully regulated common carriers, both rail and water.

The Committee holds that this disparity of treatment is a handicap
to regulated common carriers by water in their competition for business.
Hence, it advocates repeal of the bulk commodity exemption described above.
At present, substantial amounts of grain, phosphate rock, and other farm
products and supplies move under this exemption.' Its repeal would bring
under ICC regulation a large number of domestic water carriers, both common
and contract, now engaged in the unregulated transportation of bulk
commodities on the inland waterways, the Great Lakes, coastal waters,
and deep sea routes.

- 26 -

Shifts of Carriers to More Regulated Categories

So far as concerns those private motor carriers, hitherto legal,
that would be excluded from the new definition of that category, the
Committee proposes that the ICC be authorized tc give them operating
rights as contract or common carriers, whichever is appropriate in the
individual case. So far as concerns those contract carriers by motor
vehicle or water, hitherto legal, that would be excluded from the new
definitions of those categories, the Committee proposes that the ICC
be authorized to grant them. certificates as common carriers. So far as
concerns water carriers which would lose the bulk-commodity exemption
hitherto utilized by them, the Committee recommends that "appropriate
operating authority" be granted to them -- presumably as either contract
or common carriers, according to circumstances, Each of the above con-
versions to a more regulated category would be available. If the carrier
did not apply for conversion, it would cease to have any right to operate
interstate on any basis at all.

Freight Forwarder Associations

The Interstate Commerce Act provides for economic regulation of
freight forwarders, on a common-carrier basis, but with exemption of some
types of freight forwarder from this control. One exemption is that of
shipper associations whose freight consolidating is done for their members
on a nonprofit basis. The Committee proposes that this exemption be
tightened, to the end that some of these associations be made subject to

The Passenger Deficit

A chronic problem of the railroads is that many passenger trains have
become steady sources of lose. The losses are made up out of freight
revenue and hence are a burden not only to the railroads but also to
shippers. Generally, discontinuance of a train is subject to approval by
a State regulatory body. These commissions have been reluctant to allow
such discontinuance.

The Committee urges that the Interstate Commerce Commission be
empowered to order the discontinuance of unprofitable rail services,
regardless of any State law or regulation. The ICC would be allowed to
do this on finding that such a service places an undue burden on inter-
state commerce and that "adequate service by other forms of transportation"
is available. Presumably this would mean that either for-hire or
private transportation facilities may constitute an adequate enough
alternative to warrant discontinuance of the common carrier's service.

The Committee advises that Congress consider the idea of also con-
ferring power on the ICC to discontinue unprofitable motor and water
carrier services, regardless of State law or regulation.

The Agricultural Exemption

In the Interstate Commerce Act as it now stands, some types of motor
transport, although subject to safety rueulatio by the ICC. are exempt

- 27 -

from ICC economic regulation, From the standpoint of agriculture, by
far the most important of these exemptions is that of the motor vehicle
transportation of "ordinary livestock, fish or agricultural ccm-
medities (not including manufactured products thereof) ." This
provision is commonly called the agricultural exemption. The interstate
transportation of the specified commodities in motor vehicles is free of
economic regulation regardless of. whether the haulage is by a trucker
who never hauls any ether kind of cargo or whether the haulage is by a
common or contract carrier of nonexempt commodities. In the latter case,
the carrier is forbidden to haul exempt and nonexempt commodities in the
same truck at the same time. However, he may haul the two at different
times on the same trip; or he may haul nonexempt commodities on the out-
bound trip and carry exempt commodities on the back haul, or vice versa,
and thus improve his load factor. The agricultural exemption does not
apply to modes of transport other than trUcking.

The exemption of the trucking of farm products from economic regulation
by the IC0 is of vast importance, In this haulage, there is lively com-
petition on rates and service; and the traffic involved is very large,
Thus in the shipment of fruits and vegetables out of Florida in the 1953-54
season, 53 percent of the volume moved by truck. In the unloads of live-
stock at 63 public markets in 1954, only 23 percent of the volume arrived
by rail. The remaining 77 percent was mainly accounted for by trucks.
The trucking of fruits, vegetables, and livestock comes under the agricul-
tural exemption.

The question ofa ..commodities fall within the agricultural exemption
has been the subject of considerable litigation, The Interstate Commerce
Commission has held that manure is not an agricultural commodity within the
meaning of the exemption. It has also held that dressed poultry, whether
fresh or frozen, is a manufactured product of an agricultural commodity
within the meaning of the exemption* but Federal District Courts in Iowa
and Texas reversed this decision* They held that dressed poultry, fresh
or frozen, is a nonmanufactured agricultural commodity, On the whole, the
Courts have taken a less restrictive view of the agricultural exemption
than the Commission has. In various cases, they have overruled interpreta-
tions by the ICC which would have resulted In regulation of the haulage
of particular commodities*

The Committee views with concern what it regards as the "growth" of
the agricultural exemption. A continued expansion of it, the Committee
declares, "could destroy the fundamental purpose of the Act." The Committee
proposes that Congress clarify the existing statutory provision. However,
the agricultural exemption is the one matter discussed by the Committee
on which it does not state what remedial legislation is needed.

Rates for Governments as Shippers

A different type of exemption from economic regulation is that now
provided by Section 22 of the Interstate Commerce Act. This exemption
concerns all common carriers, regardless of mode of transport, which are
subject to the Act. The carriers are authorized to transport property
free or at reduced rates for the Federal, State, and municipal govern-
ments; to transport persons for the Federal Government free or at reduced

- 28 -

rates; and to do likewise for various other shippers and. passengers -
eog,0 to grant free transportation or reduced rates for the movement of
either property or destitute and homeless persons by charitable societies,
Reduced rates or free service which the carriers thus give are not subject
to ICC approval and are not required to be made a matter of public record.

Rates below those in the tariff have been given to the Federal
Government by sundry carriers, in connection with the shipment of its
equipment and supplies and of its strategic and critical materials bought
for the national stockpile, and, on occasion, in the movement of its
surplus agricultural commodities, Frequeptly the Federal property to
be shipped is distinctive (e,g., munitions), or the commodity, even though,
it also has private users, does not customarily move between the particular
origin and destination involved. In either circumstance, the carrier's
tariff usually provides no applicable rate which a commercial shipper would
think acceptable for a shipment of the size and type involved. Hence, the
Government asks for a rate adjustment (regardless of whether this would
be provided through amending the tariff or via Section 22) and in reply
is more likely to be offered a reduced rate under Section 22 than a
change in the tariff,

The Committee proposes that Section 22 be amended so that as
regards the Federal, State, and municipal governments' purchase of trans- -- any rates limited to these shippers shall be subject
to "all provisions of the Act (including public filing)" but not including
the long-and-short-hau-l provision or the provision for suspension of pro-
posed rate changes. In "special instances," "special Government rates"
could be applied retroactively and on short notice, In any event, where
national security is involved the public-filing requirement could be waived,

The chief effects of these changes would be that the ICC could decide
whether a rate granted to a government was less than a "just and reasonable
minimum" or more than a "Just and reasonable maximum," but it would have
no power to suspend a proposed increase or reduction in such a rate; and
each carrier could learn what Government rates had been granted by any
other carrier and could thereupon file a complaint with the ICC, asking
the Commission to hold the rate to be unreasonably low. A Government rate
held by the MCC to be unreasonably low or high could not thereafter be used.

Significance for Agriculture

The brief section of the Committee's report which is devoted to
*the agricultural exemption is not the measure of this report's importance
to agriculture. If a reconsideration of the agricultural exemption results
in a substantial narrowing of it,.all of the legislative recommendations
in the report will have a heightened significance for farmers, as they
will then have, much more than now, to rely upon regulated carriers as
their source of adequate transport service at reasonable rates.

However, even if the agricultural exemption is neither amended nor
drastically reinterpreted, the whole report of the Committee is of great
significance to farmers -- in connection with their procurement of supplies
and equipment and even in connection with the marketing of many of their
-. i

- 29 -

products. Not only is the rail shipment of all commodities subject to
economic regulation; there also is a marketing trend which tends to reduce
the scope cf the agricultural exemption in trucking. For example, about
half of the Florida orange crop now moves from that State in the form of
frozen concentrate, a ccmcmdity which came on the market only a decade
ago. For-hire transport of it is subject to economic regulation by the
ICC even when the movement is by truck. Tho general upward trend in the
processing of foods in plants hundreds of miles from the kitchen has an
obvious bearing on the proportion of freight which can move under the
agricultural exemption.

For agriculture, any basic revision of transportation policy is
-potentially of vast significance in terms of marketing costs and efficiency.
This is partly for the same reasons as those which affect all the rest of
the Nation. It is partly, too, for reasons peculiar to those shippers
who -- if the plan goes awry and competition is ultimately reduced instead
of lastingly unfettered -- are the most likely to find themselves dependent
for access to market on a single carrier,


L. "Consumer Poultry Meat Studies in the Northeast," compiled by Richard F.
Saunders, Maine Agr. Expt. Sta. Bull. 536, Jan. 1955. Northeast Regional
Pub. 22. (Agr. Expt. Stas. of Del., Maine, Md., N. Y., R. I., and W. Va.,
and Agr. Market. Serv. cooperating.)
2. "Costs of Hauling Fresh Fruits and Vegetables in the Honolulu Market,"
by C. W. Peters, Hawaii Agr. Expt. Sta. Agr. Econ. Bull. 9, May 1955.
(Agr. Market. Serv. cooperating.) (RMA.)
3. "Costs of Operating Selected Feed Mills as Influenced by Volume, Ser-
vices, and Other Factors," by V. John Brensike and William R. Askew,
U. S. Dept. Agr. Market. Res. Rept. 79, Feb. 1955. (Agr. Expt. Stas.
of Iowa, Oreg., and Tenn. cooperating.) (Processed.)
4. "Factors Influencing the Method of Transportation Used in Marketing
Fresh Florida Citrus," by Marvin A. Brooker and Kenneth M. Gilbraith,
Fla. Agr. Expt. Sta. Bull. 549, Sept. 1954.
5. "Food Distribution Research, Educational, and Service Work of the
U. S. Department of Agriculture," Agr. Market. Serv., U. S. Dept. Agr.,
May 1955. (Processed.)
6. "Frozen Food Movement into Retail Outlets -- A Test of the Feasibility
of Measuring Frozen Food Movement at the Wholesale Level," by
Dehard Johnson, Agr. Market. Serv. Pub. 19, U. S. Dept. Agr., Mar. 1955

- 30 -

7. "Improving the Efficiency of Retail Grocery Clerks by Better Training,"
by Martin Kriesberg, U. S. Dept. Agr. Market. Res. Rept. 82, Mar. 1955.
(RMA.) (Processed.)
8. "Innovations in Apple Handling Methods and Equipment," by Earl W. Carlsen,
Raoul S. Duerden, D. Loyd Hunter, and Joseph F. Herrick, Jr., RMA Title II
contract report with the Washington State Apple Commission, U. S. Dept.
Agr, Market. Res. Rept. 68, Jan. 1955. (Processed.) :':
9. "Marketing Georgia Broilers Through Commercial Processing Plants," by..
John 0. Gerald and Humbert S. Kahle, U. S. Dept. Agr. Market. Res. Rept.
83, Mar. 1955. (Agr. Ext. Sta. of Ga. cooperating; RMA.) (Processed.)
10. "Opinions and Practices of Manufacturers Regarding Fibers Used in
Insulated Wire and Cable," RMA Title II contract report prepared by
SMarketing Services Company, Division of Dun & Bradstreet, Inc., U. S.
-Dept. Agr. Market. Res. Rept. 85, Apr. 1955. (Processed.)
11. "Packing and Shipping Lettuce in Fiberboard Cartons and Wooden Crates --
A Comparison," by Lawrence J. Voegeli, Edgar F. White, Bryce Masters,
and P. L. Breakiron, RMA Title II contract report with Western Growers
Association, U. S. Dept. Agr. Market. Res. Rept. 86, Apr. 1955.
12. "Potential Savings by Shipping Cauliflower in Double-Layer Packs,"
by B. i. Masters, J. C. Winter, and B. P. Rosanoff, RMA Title II contract
report with Western Growers Association, U. S. Dept. Agr. Market. Res.
Rept. 78, Mar. 1955. (Processed.)
13. "Prices and Other Payments for Milk by Manufacturers in Kansas, Missouri,
and Oklahoma Markets," by Alexander Swantz, U. S. Dept. Agr. Market. Res.
Rept. 81, Mar. 1955. (RiA.) (Processed.)
14. "Regulations Affecting the Movement and Merchandising of Milk -- A Study
of the Impact of Sanitary Requirements, Federal Orders, State Milk
Control Laws, and Truck Laws on Price, Supply, and Consumption," U. S.
Dept. Agr. Market. Res. Rept. 98, June 1955.
15. "Some Economic Considerations in Storing Seed Cotton at Gins," by
John E. Ross, Jr., U. S. Dept. Agr. Market. Res. Rept. 87, Apr. 1955.
16. "Space Allocation for Grocery Items in Food Stores -- Some Keys to
Faster Turnover," by V. L. Browner and Hans Pauli, U. S. Dept. Agr.
Market. Res. Rept. 80, Feb. 1955. (Processed.)
17. "The Market for Food in Selected Public and Private Institutions,"
by William S. Hoofnagle, Philip B. Dwoskin, and James A. Bayton
U.' S. Dept. Agr. Market. Res. Rept. 84, Mar. 1955. (Processed.)
18. "Transportation of Florida Frozen Orange Juice Concentrate -- A Case
Study of Carrier Competition Induced by Dynamic Industry Growth," by
Margaret R. Purcell, Agr. Market. Serv. Pub. 50, U. S. Dept. Agr.,
May 1955. (RMA.)
19. "Vegetable Market Structure Classes in the Southeast," by R. A. King
and A. D. Seale, Jr., N. C. State College A. E. Inform. Series 35,
Oct. 1954. (Agr. Market. Serv. cooperating; RMA.) (Processed.)
20. "Wholesale Produce Markets -- Management, Operating Expenses, Income,"
by J. Stanford Larson, U. S. Dept. Agr. Market. Res. Rept. 91,
Apr. 1955. (National Association of Produce Market Managers cooperating;
RMA.) (Processed.)

: Publications issued by State Agricultural Experiment :
: Stations may be obtained from the issuing Station.

31 -

Table 5.- Fhr food products: Retail cost, fam value of equivalat quantities id by producers, byproduct allowace,
marketing margin, and famer's share of retail cost, April-June 1955 1/

Product f Pam equivalnt

Market basket ..................

NMat products ................

Dalry products ...............

Poultry and eggs .............

Bakery and cereal products a Far produce equivalat
All Ingrediets ............ to products bought
Grain ................... ..: by urban families

All fruits and vegetables ....
Fresh fruits and vagetableJ :
Frebs vegetables ......... a
Processed fruits ad
vegetables ................:

Fats and oila ................:
a K
slcellaneous products .......

1 9

Beef (Choice grade) ............:2.16 lb. Choice grade cattle
Pork (ecluding lard) ..........:1.92 lb. bogs

Butter ..........................Crean and whole milk
Cheese, American processed ..... ilk for American cheese
Evaporated alkl ................ Milk for evaporating
Fluid milk .....................aUholesale fluid milk
Chickes, frying ................. Comerclal brollira
Eggs ........................... l03 doz.

Bread, white ...................: .912 lb. wheat
Crackers, oda ................. 1.'41 lb wheat
Cor flakes ....................1.57 lb. white corn
Corn eal ......................l.34 lb. bite comn
Flour, white ................... 7.0A lb. wheat
Rice ............................6 lb. rice
Rolled oats ....................:2.56 lb. oats

Apples ........................:1.08 lb. apples
Grapefruit .....................l1.04 grapefruit
Leaes lb. leme
Oranges .......................1.04 doz. oranges

Beens, green ...................a 1.09 lb. nap beanie
Cabbage ........................a 1.10 lb. cabbage
Carrots ........................ 1.11 lb. carrots
Lettuce ........................ 1.30 lb. lettuce
Onins .........................a 1.06 lb. onions
Potatoes .......................15.62 lb. potatoes
S estpotatoes / .............. 1.12 lb. svestpotatoe a
Tomatoes ....................... 1.18 lb. tomatoes

Peaches, caned ................:1.99 lb. Calif. cling
Orange Juice, caaed ........... 5.38 lb. Fla. oranges for
Scanning a
Com, arned ................... 2.49 lb. sweet nom
Peas, canned ................... .69 lb. pea for canning
Tomatoes, canned ............... 2.25 lb. tomatoes for
Beas with part, cared ........ .35 lb. Mich. pea beans

Orange Juice ocnentrate, froaeaj.05 lb. PFa. oranges for
i fmro ooemntrated Juice a
Strwberrie, fraoe ........... .61 lb. strawberries for
a processing
Beas green, frae ........... .79 lb. beans for
i processing
Peas, fms ..................I .84 lb. peas for freeing a

Dried pre ..................... .97 lb. dried prunes
ay bean ....................:1.00 lb. Mieh. pea bems I

Margarine, colored .............aSoyb s, cottonseed, and
a milk I
Peenut batter lb. peanuts
Sealed dresiang .................Cottanseed, soybeans, sugar,
Sand egge
Vegetable shorting ...........aBoybeaas and eottooseed I
I a
Cora a ...................... 1.9 lb. corm
Sugar .......................... 36.84 lb. sugar bests



Retail unit

per urban a
wage-earner a


Pund I
Pound S
Li ounce cln i
Quart a

Pound I
Dosen a


5 pounds
Pound a
20 ounces

Each I

Pound 19

15 pounds a


lo. 2-1/2 can

46 ounce can
No. 333 can
No. 303 can

Mo. 303 can a
16 ounce an

b ounce can

10 ounces

10 ounces I
10 munses I

Pound a



5 pounds :

alowance i

far :

lars Dollars Dollars

-- 406.31

.-- 139.69

-- -- 67.22


















































Cnte Percent

V Inforation ooaaemlng the op- rosC of price data ad eclouLatlon of not am values, marketing margins, and the fthries sare are give Ln the
Bupplast to the July-dept. 1953 Lssue of this Atuation. Product graps include more Its than those Listed In this table. For eu pLe, the meat
produces grap iaeludem lab, vwea and lower grades of beef i addition to pork and carase beef of Choito grade.
2 2 mouth avenge.
et sam malue adjusted tr Govemamt poyummt to pdu ers was 23.5 eats, aar a adjusted for uesmmt pnee r tau was 50.0 ets, famsr's
share of retail oet based a adJusted Em lue was 4 per at.

PrellIlTma estates.




-- 31.97
28.83 4.10 24.73

-- 66.35
-- 48.93



-- 7.06

Cents Cnts Cents

45.7 3.5 42.2
31.2 3.0 28.2

-- 27.4
-- 5.9
-- 9.8

-- -- 35.0
-- 35.5

3.2 .5 2.7
4.9 .7 4.2
3.9 1.1 2.8
3.3 .4 2.9
24.6 3.4 21.2
7.5 1.1 6.4
5.7 1.0 4.7


-- -- 9.8
-- 5.5
--- 3.2
-- 48.7
-- 6.4
-- -- 8.6


-- -- 8.4
-- 2.6
-- -- 3.2

--. 2.2
-- -- 3.4

--- 5.6

-- --- 8.0

-- 4.8

-- 9.7


-- 10.6

4.7 1.0 3.7
20.4 1.0 319.4




















Thbl 6.- im haod pmaiodtoIs taul oot ad thm nal, April-Jnam 1955, Jmuary-krb 1955
Aprl-ame 195 mad 194749 awmpe I/

S a Betail eat I I I ah A m4m
a a a a a eswmn4g am a palrsintac hmg.
Apr aAr.R-Jae 1955 pr. .- Apr.- A p -ut 1
Product a atatr alt a Jasm i as .17MP-9 fa a Jam i 3 Ja a19C1-9 ft-e -
S9195S a 1 w s Ja- 9 Apr.- a 19-

: n 1, 19a i aq a n I.a Jose a a l m a 'l95 f'- 19r 4,,
ZEI T"" WR2=nM3W

NuMket bkasIt .................) (
a) (.
NMat product ........ ...... ) ()
I) (a
Dairy products ..............)
:) Average
Poaltry ad gge ............ )qatiti
1) purchased
Bkry and ereaC l product I) pr artu (I:
A ll ingdlat ........ W ..,i) e-ea, z
Grain ..................... ) ad (a
) clerlal- (a
All tfait and vegetables ...i) workCer
Fresh fruit ad agetablosi) fly (
Fresh vegetables ........ ) I 1952 (
Proceemmd traits Md a) (
v etbles ...............) (
2) (3
Fatia d olu ..............) (
AL) (
m ellanou produta ......a) (a









150.05 /149.91




i/ 88.25

42.74 A 43.33

41.35 / 4.32

986.55 95.76

21.36 2a,

177.40 16AL*

a/ 1

-1 -9

- 2 1

97.83 II W

U16.83 .12. 94 /

+ 4

406.31 64.72 433.31 4U.91

U9.69 AP/U.66

80.50 8.29

173.64 1"4 3

'.35 90' 3

67.22 68.35 62.35 10 3

* 2 31.97 A/ 32.46 31.96 33.6
-- 24.73 25.20 23.53 24

207.11 195.26 4 4 66.35 6 61.39 62.14 L, .
118.76 103.57 7 6 48.93 / 44.05 44.09 41.8M
60.20 53.4 8 + 15 26.34 23.7 21.32 3 .

88.36 91.69 5 / / 17.42 / 17.33 18.06 19.4

4.32 52.25 1 -4 1.52 / 13.52

l4.50 38.8 & / 7.06 7.05

-2 + 8

- 2 V
-2 5

* 8 + 7

* 1 4

+ 1 A

16.39 18. 0 1

7.48 7.03 J/ 6

I 2~f atl .mU E Puat EnMt Ctnfa ama ts bil w lt Ilatmi

Beef (Choice grade ........... found
Pork (excluding lard) ......... Poud
2 2
Butter ........................ Pound
Cheese, aerlica proeesed .... Pound
Eapontod milk ............... lL oama cau
fluid llk .................... Quart

Chicks, trying .............. Poun
Egg .......................... ban a2

Bread, abit .................. Pound
Crackers, soda ................: Pound
Corn flake ................... 12 omaeeu
Corn ml ..................... : Pound
floor, white ..................: 5 pound
pples ........ ............ : Pound
Rolled oat ...................: 20 mce

LApms ..................... Pchrd a

Orange ....................... Da I

Bans, gren .................. Pound
ebbWo ...................... I Pound I
Crmote ....................... I Pound

ette .................m.... o ead
OnCbbon ........................ Pound a

Potato ......................: 15 pomds
Iftetpotaon i ................. I Poned
T2atone ...................... : Pound

each, se. ed ................ 1e. 2-12 om
Orug Juieo eusaed ........... 46 oune e o
Con, caned ................... o. 303 ga
Pem, canned .................. lo. 303 ca
matoes, mned .............. o. 303 am
Beans with pork, c eaed ....... 16 umea a

Ornage Juice emacntto, foMes 6 oaea a o
Strserries, fros ........... 10 oemes
Beans, pgro, frozn .......... 10 eam esa
Pau, trost .................. 0 oaes
2 a
Dried prmes .................. pad
Navy bami .................... I Foad

NargariL, ealored ............
Panut butter .................
Salad drss g ................
Vegetable dhortaing ..........



I 3
Cor lrup .....................a 24 oeas
Sur ......................... 5 pomda
t 3








6/69.7 68.1 68.5
/49.5 58.3 52.8

L/71.3 69.6 19.4
57.5 57.3 S2.7
13.7 13.9 13.7
A/22.5 21.8 19.9

A/1.4 48.7 -
j/55.6 52.3 66.7

17.7 17.0 33.5
27.1 27.1 -
22.0 21.9 17.0
12.6 12.5 11.8
564.1 53.7 48.4
/19.1 19.7 19.2
A/18.9 18.5 16.1


/ 7.6


- 3

- 1
- 2

- 6

* 1

+ 7
- 3
+ 12
- U
- 5
- 9
+ 9
- A

32.8 31.5
33.5 -
18.5 16.7
21.3 21.4
14.5 /14.3
14.5 -

18.0 17.9 18.2
30.7 30.7 30.7
24.2 24.2 24.5
19.6 /19.5 19.3

33.2 A/32.5 30.3
19.0 18.6 17.5

28.8 /29.3 29.8
5.4 A/52.4 49.1
35.3 A/35.5 35.8
34.6 35.3 34.8

23.7 23.6 -
52.3 52.6 48.4

- 15

* 1
+ 1
* 1



+ 1
+ I
- 3
+ 3

- 1
- 1

+ 5
* 33
- 4
* 12
+ 3T

* 2
- 1
- 8
+ 1
+ 3

42.2 /N47.2 43.6 4.5
28.2 /26.7 40.2 35.2

45.6 46.2 45.1 5.4
27.4 27.9 26.1 32.0
5.9 6.2 5.7 .7.1
9.8 10.2 9.8 10.6

* 1 -1 5.6 5.2
0 0 8.0 8.0
0 1 4.8 4.8
+ 1 2 3.1 3.1

-11 3
+ 6 -30

+ 5 + L1
- 7 2

- 5.2 -
1.4 1.6 6 2
5.5 5.7 2 7
8.5 12.6 +32 3

L.6 9.2 -12 + 4
1.7 1.9 +36 *76
5.6 4.2 +16 2
6.0 6.4 -26 8
2.6 3.7 52 2
0.8 38.5 *61 5'
5.4 4.7 5 *+ 9
8.3 2 4

5.2 5.3 0 0
9.4 5 -
29 2.7 0 -10
3.2 0 0 0
2.5 2.6 -12
3.1 3 +10

5.2 + + 8
8.3 0 -
4.9 0 -
3.3 6

2.1 2 +10 20.5 10.5 0.4 8.8 0 + 1
19.9 + 2 9 9.7 10.1 8.8 9.7 4 +10

- 2 3 8.9 8.9 10.4 124
* 4 + 1U 22.1 22.2 19.8 --
- 1 1 7.7 4 7.8 9.0 10.0
- 2 1 10.6 10.6 13.0 154

o JV 3.7 3.6 3.7 -
-/ 1 19.4 19.4 20.5 19.4

0 -14
- 1 -14
0 -21

0 -

y Intonrtioo acernina the sources of pries data and oalulations of art tam vlv s i aw rm aI the S ipL t to thi July-Sept. 1953 la ofr
atUlasti. Product grmpws aolade irn Ites the thos 1Usted la thi table. fer sampe, the mrt pedot gpoup lnaeldee lab, wwl, ad Ioaser Pal
of beef te addition to pork ad carem beef of Choie pgds.
/ tres n value adjusted ito m ade lmputed value of bpeodaets obtal d in preening.
Prellminary etiantes.
/ es. thm 0.5 percat.

33 -

Table 7.- Fhnm bod products. Marketing margin and famer's share of the retail ooat,
April-Jam 1955, Jimuary7Jrch 1955. April-Jma 1954, and 1947-49 avenro a /
Sa Na rketlnga aruia 2/ Faamer's share
Sa : a a Percentage change a a
I Apr.-Jun i I : Apr.-Jum. 1955 .-Jun
pRtdult u Rotoll unit i'n Jan.-Mar. a Apr.-Junez 1947-49 a froa 9 195" i Apr.-Jluma 1947-/9
a ~ 1955 1954 average Jan.-ar.' Aipr.Jm' 2/ 1955 1 1954 a average
S1955 "19 5
I I .. ._ .I_ I_ I .

a Dollars 1uoAm fl&ar Dolars Percenp Percan Percnal Psercent Percl Percat

HNafet baket .................

Meat products ............... )

Ddry product .............. )

.oultr and eggs ............ )

Bakery and cereal produate )
All inlgrdletn ........... )
Daa ..................... .

All ~ruits ad vegetables ...s1
Fresh fruits and vegetables)
Fresh vegetables ........ )
Processed fruits ad a)
vegetables ............... )

ats and oile ............... )
HLeellameou produota ...... )

Beet (Choice grade) ...........
Pork (mea.luding lard) .........
Butter ........................
Choose, AmeriLn processed ....
rvaporated mil ...............
nuid mlkt ...................I

Chiaekue, hying ...............
ggs ..........................I
Brad, white ..................
Crackers, nda ................
Com flak .....................
Con mewl .....................
Flour, wIite .................:
icd ..........................
Rolled oats ...................

Apples ........................
OGapiraLt .....................
Lmon .........................
OranOg .......................I

Deon, gram ..................s
Cabbage .......................
Carrota .......................
Lettuac .......................s
Oniaon ........................
Potatoes .......................
Sweetpotatoe .................
Toitoes ......................


tmernse (a
quantiLic (
purchased (a
per urban (a
and ai
clericel- a
worker Ia
family (
in 1952 (C




14 ounce cc


12 ounces
5 pounds
20 ounces



15 pounds

Pesabes, oaned ............... Ho. 2-1/2 oan
Orange Juie, banned .......... 46 ome mau
Con, omned ................. o. 303 cm
Pes, canned ..................a lo. 303 c
Tautos, canned .............. HNo. 303 oan
Beans with pork, canned ....... 16 ouanm an I

Orange Juie coneentrate, froA m 6 ounce cn
Btrawberries, trosm .......... 10 omsuO a
Bans, grem, rosn .......... 10 amo es
Pas, roam .................. 10 amoes

Dried prunes .................
Nay bens .....................

Hargarine, colored ............
Peanut butter .................
slad dressing ................
Vegetable shorting ..........

Su r ........................

Pond a

Pound I
Pint a

24 omnces
5 pounds

569.69 /564.05

107.32 A/106.15

98.06 / 98.25

34.35 / 33.73

118.08 /U17.45


/ 40.52

71.08 / 70.92

29.22 l 29.81

34.29 4/34.27

a CntB CEnts

25.5 4/22.5
21.2 4/22.8

25.0 A/25.1
a 30.3 29.6
: 7.8 7.5
12.2 4/12.3

S 19.4 4/18.0
S 16.7 4/17.3

15.0 1.9
22.9 22.8
19.2 19.1
9.7 9.6
32.8 32.5
12.8 2/12.7
4.4 4/13.9

8.6 8.0
12.7 /13.2
S 33.8 A/32.5

13.4 1A5.1
6.6 6.3
S 8.5 9.8
10.2 9.9
5.3 / 5.5
S 58.7 W50.4
S 9.2 / 8.2
21.5 19.7

28.4 28.0
24.6 4/25.4
14.3 /14.6
18.3 18.3
13.0 12.7
1U.5 11.3

12.4 12.7
22.7 22.7
19.4 19.4
16.5 /16.4

22.7 /22.0
9.3 / 8.5

19.9 20.4
32.3 &/30.2
27.6 27.7
24.0 24.7

20.0 20.1
32.7 32.9

553.24 486.85 + 1 3

97.72 85.09 + I + 10

42 42 4 49

f7 A/58

64 67

98.25 77.49 5/ J/ 45 46 45 54

35.48 36.34 + 2 3

114.87 .d.78 + 1


66 67 64 69

21 22 22 27
16 17 16 .-


70.30 72.26 / 1

27.93 33.33 2 + 5

34.02 31.84 / + I

20 20 20 21

32 31 37 36

17 17 18 18

Cain Coate Percent Percent Percent Percent Percent Percet

24.5 20.0 +13 + 4
18.1 17.6 7 + 17

24.5 22.0 5/ + 2
31.2 20.7 + 2 3
8.2 6.6 4 5
12.0 9.3 1 + 2

19.0 + 8 2
17.6 18.7 3 5

-- b.1 --
9.2 7.1 + 8 7
12.5 12.0 4 + 2
34.0 34.0 4 1

13.6 11.8 1
5.5 5.0 + 5 20
7.8 6.9 13 9 9
9.7 8.1 + 3 5
5.0 4.7 4 + 6
47.7 A/40.3 + 16 + 23
8.6 6.5 + 12 7
20.7 + 9 4* 4

27.6 26.2 + 1 3
24.1 3 + 2
15.4 14.0 2 7
18.1 1.4 0 + 1
12.0 41..7 + 2 + 8
11.4 + 2 + 1

13.0 2 5
22.4 -- 0 + 1
19.6 --- 0 1
16.0 --- 1 + 3

19.9 14.3 3 + 1
8.7 10.2 + 9 + 7

62 68
57 A/54

64 /65
68 69

32 32
51 /54

64 71
69 67

66 72

39 44
24 28
42 38
38 44
34 44
39 &/49
39 42
29 -

16 17
28 -
16 16
15 U
18 /18l
21 -

27 --
20 --
17 --

34 38
50 49

if ~hla m on omeerning the aloulation of the marketing mrga and fametr' sbare am given in the Supplmut to the July-Sept. 1953 le6u of
Bloatio. Produot groups Inolude mre items than those listed in this tabl. For smple, the aet products group oludues lamb, e, and lo
of bedt in addition to pork cad oaross besf of Chotoe grade.
The marketing margin is the diftereno betiem the retail cost and the not fam value, table 6.
PrelUnrLy Smuatems.
b tseda 0. p.oa t.
eei Them 0.5 per et.

U. S. Department of Agriculture
Washington 25, D. C.



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