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Market Organization and Competition in the Creamery Industry in Wright County, Minnesota

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REPORT NO. 525 JUNE 1963 Market Organization and Competition -:-=~~~~- - - in the Creamerv Industrv In Wright Countv,. Minnesota WILLIS L. PETERSON E. FRED KOLLER .' ,.~:'-. L ..... • 4 .. r ..... _ :=--~ DEPARTMENT OF AGRICULTURAL ECONOMICS UNIVERSITY OF MINNESOTA ST. PAUL, MINNESOTA MARKET ORGANIZATION AND COMPETITION IN THE CREA1lERY INDUSTRY IN WRIGHT COUNTY, MINNESOTA TABLE OF CONTENTS Page INTRODUCTION • • • • 1 MARKET ORGANIZATION. • • • • • 3 Description of the Buyers. 3 Number and Size of Creameries • 3 Growth Methods •••••••••• 6 Type of Ownership • • • • • . . . . 7 Products Purchased and Sold • . . . 7 Financial Characteristics • . . . 8 Seasonality of Milk Receipts. 12 Marketing Channel Utilized. • • • 13 Description of the Sellers (Farmers) 14 Description of Procurement Areas • • 1, Overlapping of Procurement Areas •••••• 1, Differences in Overlapping. • • • • • • • • 17 Collection Routes • • • • • • • • • • • • 18 Density of Routes • • • • • • . . . 19 Milk Hauling Rates. • • • • • •• 20 Creamery Assistance to Haulers. • 22 MILK PIlOCUREMENT -- COMPETITIVE PRACTICES AND POLICIES 23 · .Price Competition. • • • • • • • • • • 23 · .Price Determination • • • • • • • • • 23 Methods of Price Quotation. • • • • • • • • . . . 2, Prices Paid • • • • • • • • 2, Nonprice Competition • • • • • • • • • • • • • • • • • • 28 Nonprice Practices. • • • • • • • • • • 30 Cost of Services. • • • • • • • • • • • • 3, The Role of the Hauler • • • • • • • • • • • • • • • 36 The Role of the Heldman • • 38 SUIOlAR! AND CONCLUSIONS•• . . . . . . . .. . · . 39 MARKET ORGANIZATION AND COMPETITION IN THE CREAMERY INDUSTRY IN WRIGHT COUNTY, MINNESOTA by Willis L. Peterson and E. Fred Koller.!! INTRODUCTION During recent years the dairy manufacturing industry in Minnesota has undergone significant changes. Among these changes has been the trend towards fewer and larger

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