formed other federations to improve service for farmers by operating feed mills, fertilizer plants, seed plants, oil refineries, wells, and pipelines. These federations purchase or manufacture certain commodities which, for one reason or another, their regional members do not buy directly or manufacture themselves.

Marketing Groups Enter Field

Over the years marketing cooperatives have greatly diversified their operations by handling supplies as a sideline activity. Members requested that these cooperatives purchase one or more of the main supplies used in producing a specific product, and such service usually helped round out volume where marketing was on a seasonal basis.

The most common supplies distributed have been petroleum products, feed, seed, and fertilizer by grain mar

keting associations; feed by dairy and poultry marketing cooperatives; and containers, fertilizer, seed, and insecticides by cotton, fruit, and vegetable marketing organizations. The majority of marketing cooperatives handle varying amounts of miscellaneous farm equipment related to their farm products such as poultry or dairy equip

ment.

For many years there has been a tendency, also, for regional marketing cooperatives to purchase or manufacture certain farm supplies used in quantity by their members. Fertilizer, feed, and shipping containers are the principal ones handled.

For example, the Cotton Producers Association, Atlanta, Ga., operates three fertilizer plants to supply part of the requirements of its farmer-members. It also has an interest in a feed mill. Likewise, the Utah Poultry and Farmers Cooperative, Salt Lake City (primarily a cooperative egg and poul

try marketing association), manufactures a large part of the feed requirements of its farmer-members.

These supply operations have saved members of marketing cooperatives large sums of money. They also have permitted the associations to carry on their marketing activities more efficiently. This has been accomplished through more complete use of personnel and through spreading the overhead over a larger volume of business.

Figures for 1952-53 indicate the diversification that exists in the types of business handled by farmer cooperatives. In that year almost threefifths of all associations that marketed farm products as their major activity also handled farm supplies. Their net supply volume of $500 million represented over 25 percent of the net value of all supplies handled by cooperatives. Also, one-half of the service cooperatives handled farm supplies.

AS MENTIONED, cooperatives have

gradually integrated their operations to improve savings and service for members. The earlier mentioned manufacture of feed and fertilizer, refining of petroleum products, and processing of seeds have come to be the major services rendered by many regional farm supply handling associations. A number now manufacture or process, either individually or in cooperation with other regionals, most of the requirements of their member associations. The savings from manufacturing have generally exceeded the savings from wholesale distribution in most farm supply operations.

Examples of regional farm supply associations manufacturing considerable quantities of supplies in 1955 are: (1) Southern States Cooperative, Inc., Richmond, Va., with 3 feed mills and an interest in 2 others, 3 fertilizer mixing plants, 2 seed cleaning and processing plants, and an interest with other regionals in several other cooperative enterprises; and (2) the Missouri Farmers Association, Columbia, which operates its cooperative activities on a different basis than most farmer organizations. Missouri Farmers has over 250 local exchanges whose members are also members of the State association. Different groups of these exchanges have set up and operate various M. F. A. manufacturing and processing cooperatives. In 1955 they owned 2 feed mills, a soybean oil mill,

3 fertilizer plants, an oil refinery, a seed plant, and a wholesale grocery warehouse.

Before 1933, cooperatives often were limited in their manufacturing activities by lack of capital. It was difficult for them to borrow money in amounts sufficient to finance the construction and operation of such enterprises.

In 1933, capital became available to eligible farmer cooperatives from the banks for cooperatives supervised by the Farm Credit Administration. Since then many cooperatives have been assisted in providing processing services for farmer members.

In more recent years farmers have made substantial direct investments in both their local and their regional associations. Also, many have converted patronage refunds into member capital for use by their cooperatives under revolving capital programs.

A few regional cooperatives have moved into the field of basic supply sources by producing some of their requirements. Some contract with growers to produce seed stocks under specifications. A few own poultry breeding farms or contract with growers to produce hatching eggs for broilers. Several regionals have acquired oil wells to insure a supply of crude oil for their refineries. Recently two federations of regionals acquired western deposits from which phosphate rock will be mined.

farm supply items. They did a gross feed business of over $1.1 billion and after allowing for business done by 66 regional wholesale cooperatives with their local cooperatives, the net volume was $848 million. States leading in cooperative purchases of feed by farmers were New York, California, Pennsylvania, Missouri, and New Jersey. Forty-two percent of the supplies farmers purchased through their cooperatives were prepared feeds for livestock and poultry.

The U. S. Department of Commerce ranks "prepared animal feeds" as the tenth largest of all industries in this country. 32 Out of a total estimated production of 35 million tons in 1952, the cooperatives probably handled somewhere between 20 and 25 percent, or over 8 million tons.

The mixed feed industry had a sketchy beginning in the 1880's. Not until after the turn of the century did it begin to assume importance. Rapid growth then set in. As is usual with new and expanding industries many abuses developed. Formulas were jealously guarded, extravagant claims were made as to the virtues of the product, margins were wide, and quality uncertain.

During and following World War I, farmer cooperatives were formed which at first merely bought feed at

"Concentration of Industry Report, Business Information Series, U. S. Department of Commerce, December 1949.

wholesale. The next step was to have feed mixed for them under contract. When this proved unsatisfactory it became evident that it would be necessary to control the operations. Cooperatives purchased feed mills and began producing feeds under the open formula or public formula idea promulgated by a member of Cornell University's staff. The Cooperative G. L. F. Exchange and its predecessor organizations and Eastern States Farmers Exchange went through evolution.

In the Middle West, organizations sponsored by the Farm Bureau in Indiana, Ohio, Michigan, and Wisconsin formed the Farm Bureau Milling Co., Hammond, Ind., and had feed mixed under contract. When the Illinois Farm Supply Co., Chicago, started to handle feed, it also joined this milling company. ing company. A representative was maintained at the mill to check constantly on ingredient prices, quality, and mixing operations and to protect the interests of the Farm Bureau Milling Co. generally. Nevertheless member cooperatives finally decided that the only real answer was for the Farm Bureau Milling Co. to own and operate a mill.

The M. F. A. Milling Co., Springfield, Mo., formed by local exchanges of the Missouri Farmers Association, began mixing feed with scoop shovels in 1923. In 1929 it purchased a mill that soon had to be enlarged to keep up with the demand.

In the Far West, several poultry and egg marketing cooperatives and some dairy cooperatives decided in their early days that providing feed for their members would be a worthwhile service. Their original purpose was to combine sufficient volume so that they could ship eggs or poultry to the eastern markets advantageously. As population on the West Coast increased, the egg market changed from an export to an import basis. Many members then developed premium local markets for their eggs. Under these conditions several associations soon found that the dollar volume of their feed business far exceeded the volume of poultry and eggs. Most of them added other production supplies. Some that started out as marketing cooperatives became predominantly farm supply associa

tions.

During World War II many cooperatives depending upon outside sources for their feed supply found quality deteriorating or had their contracts canceled. They were forced to provide their own milling facilities before they were really ready. Many mod

Automatic controls in a modern cooperative feed mill dump feed onto 100-pound packing scales that weigh up to 6 bags a minute. A conveyor belt carries the bags to warehouse, truck, or rail car.

ern mills were built, however, with the net result that cooperatives were in a much better position to serve farmers by supplying quality feed at reasonable prices.

The mill of Eastern States Farmers Exchange at Buffalo, N. Y., is recognized as the largest single feed milling unit in the world. This mill turns out around 800,000 tons of feed a year. It is supplemented by a similar mill at Huron, Ohio. Cooperatives own several of the other larger and more modern feed mills in the United States. Cooperatives are also well represented among the medium and small mills which provide efficient service to limited areas.

Twenty-four of the 25 major regional purchasing cooperatives handled $451 million worth of feed on a wholesale basis in 1953. Nearly all this volume was manufactured in the regionals' own mills. This represented 48.5 percent of the total business of these associations.

The science of animal nutrition has made great advances in recent years. Cooperatives have kept in close touch with research findings and have endeavored to provide their members with the best feeds possible. Proof that their service has been recognized by farmers lies in the record these organizations have made in the feed industry.

Petroleum Products

Petroleum products rank second in dollar volume of supplies handled by farmer cooperatives. During the 1952-53 marketing year 2,654 cooperatives handled approximately $675 million worth of petroleum products. After allowing for business done by 47 regional cooperatives with other associations, the net volume was $436 million. Leading States in cooperative purchases by farmers were Illinois, Minnesota, Iowa, Indiana, and Wisconsin.

With the shift to mechanized agriculture during the past quarter of a century, farmers found it to their ad