The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1924-10-17
STATES Mild
FAILS TO WIN
IN NEW MARTS
Unable to Break in Success
fully in Out-of-State Mar
ket After 2 Years
MEETING COMPETITION
Mills Loss Now Shown To Be
$635,O0O in Report of
Auditor

North Dakota's state owned, state
operated flour mill at Grand Forks,
after almost two years of operation,
has not been able to break into mar
kets outside the state of North Dako-
ia with sufficient force to put the
mill on its feet financially, it is
shown in the report of o. B. Lund,
accountant for the state board of
auditors, in report submitted to
the board, as required by law, on the
mills operation from January ! to
80, 1924. The total loss shown by
the auditor is $685., 5,157.5l, which cor
responds closely to the loss shown
in report of the board Of managers
as of the same date, made public.
The significant feature as seen in
the latest accountants report on the
mill, as seen in some quarters, is the
inability Of the mill to win its way
against competition of privately own
ed mills in other states. Apparently
the mill has succeeded fairly well in
establishing markets in North Dako-
ia, but the difficulties outside the
state more than offset the success
within the state.
Most of the big flour milling insti-
tutions of the country have grown
from small beginnings, enlarging as
their slowly built-up business made
possible. The North Dakota state
mill, a fairly large institution, how
ever has been confronted with the
difficulty of establishing market for
big output from the start. 1t had
been stated in the past by those con-
only hope for success was in a large
output, because of the investment in
volved.
Heroic measures have been used
by the mill management in seeking
to establish out-of-state- markets. it
il, indicated. The sales reports show
flour sold in many states in the
union and in foreign countries. The
output is so large that markets must
be found outside the state. In ap-
parently seeking to break into out
of-state markets, the mill manage
ment has priced its flour, said to be
of high quality, low enough to meet
all competition, but has not won it's
way to point where it can raise it's
prices to yield a profit.
Accountant Lund, in his report,
points out that flour is sold outside
the state at lower prices than within
the state, this, it is understood, be-
ing considered a necessity in estab-
fishing markets. Several compari-
sons are given by the accountant. He
shows that on June "a the mill sold
flour in Fargo, North Dakota, for
$50 a barrel while on June 10 it
sold flour at Fort Dodge, Iowa, at
4 $500 a barrel. On June 81 it sold
flour in Bismarck at $8.04 a barrel
and on June 16 it sold flour in Wa
terloo, Iowa, at $7.25 per barrel. 9th
er comparisons show lower price
obtained for flour outside Of North
Dakota than in North Dakota. Ac-
countant Lund questions the prac-
tice, saying: "In going over the
sale price of mill products, it is
found that they are sold at a lower
price outside of the state than in
North Dakota. This is a trade GUS
tom but it might be questioned why
North Dakota people are not per-
mitted to purchase their flour from
their mill as cheap as people in 9TH
er states"
The accountants report also shows
heavy operations on the part of the
mill in an endeavor to produce
enough flour to reduce it's overhead
expenses to a point where it will
snow a profit. The mill has failed
to do this, however, the loss from
January l, 1924 to June 80, 1924, be-
ing shown as $126,779.O1 in operating
expense, with a total loss for the six
months period, including deprecia-
ton and interest, of 5000, 1891.
Divides Operations
For convenient comparison Mr.. Lund
divided the operations and costs for
the three audit periods. During the
period October %, 1922, the begin
ming Of operations, to July 81, 1928,
the mill had an operating loss of 48
cents barrel. From August l, to
Dec. 81, 1928, an operating profit of
10 IL cents per barrel, while the per-
iod covered by the present report
Jan. l, 1928 to June 80, 1923Tshows
an operating loss of 20 CLIO cents per
barrel. The total loss, adding inter-
est, etc., for the respective periods
is shown: 86.7 cents per barre, 2O.3
cents per barrel and 72.4 cents per
barrel, or an average loss of SAG
cents per barrel since the operation
of the mill.
The establishment of the full loss
of $685., 5,157.51, is to some extent, ar
bitrary, the accountant setting up
amounts for depreciation, reserve for
bad debts, etc. One accountant, who
has seen the Lund report, holds that
the depreciation charges are too low.
The depreciation charged on mill ma
chinery is at the rate of s percent a
year, power house machinery a per-
cent year, while it is asserted by
another accountants that on the basis
Of 10 hour day operation the
machinery should be deprecated 6
CONTINUED on. page 81