Eagle River review. [volume] (Eagle River, Wis.) 1890-1927, 1923-09-27
Wide Variations
in Selling Hogs
Analysis Made by Depart
n1ent of Agriculture
of Shipments.


central corn belt show extremely wide
variations in both home and terminal
markets. An analysis has been made
by the United States Department of
Agriculture of shipments by 200 CO
! operative associations in 1921. 1t dis
closes such extreme differences in unit
costs that averages appear of little
value as representations of marketing
expense. In discussing marketing
costs, evidently the first requirement
is to know whose cost you are talk
ing about.
The departments study indicates,
for example, that between the local
expense of the association with the
lowest cost and that of the association
/ with the highest there was spread
Of nearly 1000 per cent Cost per
/ 1000 pounds shipped was about so.
cents for the association with the low
est cost. For the association with
the highest cost it was about So. It
is said however, that the local costs
of the different associations covered
such diversity of functions that
management was practically the
only item common to them all.
Units of Marketing Expense.
In a general way local marketing
expense is held to include the local
managers commission, assessments
for sinking fund, car preparation
costs, and miscellaneous expenses.
Losses arising from the crippling and
killing of stock in transit are usually
included. Shrinkage in weight is not
included, and represents loss which
falls upon the original shipper. Ex-
Guiding freight, the department finds
that hog marketing by cooperative as
sociations in the corn belt through
commission agents in the central mar
kets during 1921 cost about $3.50 per
| thousand pounds.
About third Of this amount was
home expense, and the rest terminal
market expense. 1t is remarked that
average costs at the different terminal
markets are as apt to be misleading,
though in a lesser degree, as average
home costs for the different shipping
associations. Average terminal cost
for all associations and all markets,
4 for example, was $190 per 1000
pounds. But the variation between.
/ terminal markets was from $1.59 to
i 1923. The association with the low
est average terminal costs paid $1.32
per /, 900 pounds, while the association
with the highest paid $2.62. These
i figures are averages of associations
shipping to the various markets,
weighted en- the volume Of business.
The low and high figures are there
fore low and high cost associations
and not shipments. AS the services
performed at the terminals varied con-
siderably, the spreads do not meas
ure proportionate differences in unit
costs.
Commission Costs Vary.
Thus commission costs varied from
So cents to .$1.19 cents per 1000
pounds. But commission Is usually
charged on a per car basis. Varia-
i tions in commission costs are prob
ably due principally to differences in
car load weights, rather than to vari-
i ations In commission charges. An
association whose commission costs
are high probably has been unable for
various reasons to ship full car loads.
Similarly, variations in yardage costs
may result from variations in the size
Of the animals. Variations in feed
i costs may be due to variations in
animal weights and to some extent,
in the price of feed Nevertheless,
when all due allowance is made for
such causes of cost variation, the diff
ference between association costs is
still marked
Further investigations are being
made by the department into the
causes Of this variation in shipping
costs. 1t is indicated, by the prog
ress so far made, that the real diff
ferences in home station expense are
considerably less than the apparent
/ differences. Diversity in account
1 ing methods furnishes the explana-
tion of a considerable part of the
spread. Some shipping associations
do not handle live stock exclusively,
but are interested in numerous side
lines, and elements of cost ,entering
into the handling of the side lines
have often been included in state
ments on the live stock end of the
business Then, too, there are cases
in which expenditures for good will,
such as dinners, and what might be
termed development outlay, have en-
larged the total. Investigators for
the department are attempting COM
parison of shipping costs from strict
ly comparable items of expense re
ported by the different associations.
1t is believed this comparison will
show that variations in actual ship
ping efficiency, and in general busi-
ness management are not very great.
Heavier Loading Recommended.
In view of the wide differences in
commission costs reported by the as
sociations, department officials think
| important savings could be effected
by heavier car loading. The high cost
association in 1921 had an outlay for
commission charges amounting to
more than twice that of the low cost
association. Probably great part of
this variation was due to q difference
in car load weights, rather than to
differences in rates or in services per-
formed at the various markets. 1t is
suggested that economies effected by
! fulI loading might more than compen-