raising and grain farming, though the actual returns to dairy producers have declined since 1929. In 1934-35 the value of the output of milk and dairy products in England and Wales amounted to £56,560,000 (approximately $275,000,000), or 28 percent of the total value of all agricultural products. It was exceeded only by the value of the output of livestock."

6

On December 4, 1935, there were 3,080,390 cows and heifers (in milk or calf) in England and Wales, the largest number on record. This was equivalent to 76 head per 1,000 of the population of the country."

The production of milk per cow in England and Wales in 1930–31, the last year for which data are available, was reported at 462 imperial gallons (4,772 pounds).10 This compares with an average production per cow in the United States in 1931 of 4,461 pounds.

The aggregate production of milk in England and Wales in 193031 (year ended June 4, 1931) was reported as 1,263 million gallons (13,044,000,000 pounds). Of this quantity, 75.1 percent was sold off farms and utilized as fluid milk, 1.3 percent was sold as cream, 11.1 percent as butter, and 4.8 percent as cheese. The remainder (exclusive of milk fed to cattle), 7.7 percent, was variously consumed on farms.11 The total production of milk in the year ended May 1935 has been estimated at 1,399 million gallons.

12

The seasonal variation in production in England and Wales is somewhat similar to that in the United States. The month of lowest output is November while the month of heaviest production is May, though the rate of output during June is only slightly lower than during May.18

SANITATION CONTROL

Regulations regarding sanitary requirements to be met in the production of milk in England and Wales are issued by the national government, although their enforcement is left to local authorities.14 An important fact about these regulations is that, except for special grades of milk for which there are additional requirements, they apply uniformly to milk intended for use in the manufacture of dairy products and to milk intended for fluid consumption. The cost in iny locality of producing milk for fluid purposes is, therefore, no greater than the cost of producing milk for manufacturing purposes.

All conversions to American currency in this study are at the pre-depression par rate of exchange, i. e., £1 equals $4.8665. The rate of exchange during November 1937 averged $4.9961. United Kingdom Ministry of Agriculture and Fisheries, Agricultural Statistics: 1935, Part I, p. 51, 1936.

8 Ibid., p. 39.

The population of England and Wales in 1935 was 40,645,000.

The number of cows

and heifers per 1,000 persons in 1935 in the United States was 202. 10 One imperial gallon is equivalent to approximately 1.2 United States gallons, or, in the case of milk, to 10.328 pounds. All references to gallons in this study are to imperial gallons.

11 United Kingdom Ministry of Agriculture and Fisheries, Report of the Reorganisation Commission for Milk (England and Wales), Economic Series No. 38, p. 33, 1933. This report will be referred to hereafter as Economic Series No. 38.

12 Agricultural Statistics: 1935, Part I, p. 47.

18 Based on average daily sales through the Milk Marketing Board from October 1934 to September 1935. See Economic Series No. 44, p. 308.

14 In the United States sanitation control regarding the production and sale of fluid milk and dairy products is exercised principally by municipal and State authorities. Federal regulations are limited to the enforcement of minimum standards with respect to butterfat, solids-not-fat, and the like, of milk and dairy products moving in interstate

commerce.

The supply of milk normally utilized for manufacturing uses is available, consequently, for shipment to fluid markets under favorable price conditions, especially in view of the proximity of even distant producing areas to the large consuming centers.

The Milk and Dairies Order, issued in 1926, provides "for the registration of all persons carrying on the trade of cowkeeper or dairyman, and of all farms or other premises used as dairies." 15 It also contains "provisions intended to secure the cleanliness of dairies, cowsheds, cows, and the persons milking or handling milk, as well as the provisions for preventing the milk itself from becoming contaminated or infected. Wide powers are also given to the medical officers of health of the registering authorities to prevent the spread of infectious disease; they may, for instance, prohibit the sale of milk from suspected premises, or prohibit a suspected individual from taking part in the production, distribution, or storage of milk." 16 The Tuberculosis Order, issued in 1925, "enables a local authority, on the report of a veterinary inspector, to order the slaughter of cows giving tuberculous milk or which on examination show definite clinical signs of tuberculosis or appear to be suffering from tuberculosis of the udder, and provides for a sliding scale of compensation to the

owner." 17

The Milk (Special Designations) Order, issued in April 1936, provides for the control of the sale, and the designation, of special grades of milk and supersedes previous regulations of a similar character. Provision is made in the 1936 Order for the use of three designations "tuberculin tested," "accredited," and "pasteurized." "Tuberculin tested" milk must come from herds in which all the animals are tested at specified intervals for tuberculosis and from which those reacting to the test are removed or segregated. The designation “accredited" is applied to milk from herds in which the animals are periodically examined, though not necessarily tested, and from which those showing evidence of disease are removed. No requirements beyond pasteurizing are to be met in the case of milk designated as "pasteurized." "Tuberculin tested" and "accredited" milk must be transported, bottled, and labeled in accordance with specified regulations. Producers and dealers meeting the specifications prescribed for the production and processing of the special grades of milk and desiring to use the corresponding descriptions must obtain a license from the Government.

While the regulations in regard to sanitation appear to be comprehensive, there is no guarantee that ungraded milk sold to consumers "is of recognized hygienic quality," 18 especially since a large part of the supply is not pasteurized. As indicated above, enforcement of sanitation regulations is left to local authorities, who in many instances are extremely lax in their duties. While in some localities inspections of dairy herds are made at regular intervals, in other districts "the majority of the farmers remain in blissful ignorance that any inspection can take place." 19 The apprehension of the general

public concerning the safety of milk has been cited as one reason for the relatively low consumption of fresh milk in England and Wales. Related to the provisions for the sanitary production of milk is the prohibition against the sale of adulterated milk, this being a quasicriminal offense. Milk containing less than three percent fat, or less than 8.5 percent solids-not-fat, is presumed to be adulterated. It should be pointed out in this connection that milk is generally purchased in England and Wales on a gallon basis without regard to the butterfat test. The contracts used by producers and distributors in the sale and purchase of milk from 1922 to 1933 under the collective agreements then in operation merely provided that milk sold under the contract shall be "pure new milk, sweet, clean and marketable, with all its cream and without the addition of any preservative." 20 This language has been retained in the contracts prescribed by the Milk Marketing Board for the sale of milk by producers to distributors under the provisions of the scheme. The purchase of milk without reference to its butterfat content also prevails in the case of milk purchased by creameries and cheese factories.

CONSUMPTION

The consumption of fresh milk in England and Wales has been estimated at about 212 British pints per capita per week,21 and has varied but slightly in recent years. The direct relationship between the amount of milk consumed and the income of families, noted in the United States by various investigators, appears to be true to a still greater extent in England and Wales. Some English surveys have shown that, while the per capita consumption of milk in the higherncome groups is slightly more than 5 pints per week, this quantity lwindles to negligible proportions in families at the low-income levels. It has been found that among the poorest 10 percent of the popilation the consumption of fresh milk is less than 1 pint per capita per week, and that among the poorest 3 percent of the population it is less than two-fifths of a pint per week, notwithstanding the fact hat the poorest sections of the population include a relatively large proportion of families with young children.22

Two types of cream are consumed in England and Wales-fresh ream and canned cream. A large proportion of the latter is supplied y imports. Estimated direct per capita consumption of fresh cream n England and Wales does not exceed 1 pint per year.23 The reaon for this low rate of consumption would appear to be the lower tandard of living, relative to the United States, prevailing in Engand and Wales. An official report states that the regular purchase of cream in that country "is mainly confined to the more well-to-do." 24 The use of cream in coffee, an important outlet for this commodity in he United States, is very limited in England and Wales, while at the same time the consumption of coffee is itself less important than in. his country, tea being a more popular beverage. A factor contribut

20 Economic Series No. 38, p. 193.

21 Economic Series No. 44, p. 193.

One British pint is equivalent to approximately 1.2 United States pints.

22 Ibid., p. 194.

23 Economic Series No. 38, p. 41.

24 United Kingdom Ministry of Agriculture and Fisheries, Report on the Marketing of Dairy Produce in England and Wales, Part II, Butter and Cream, Economic Series No. 30, 1. 109. 1932.

ing, however, to the low rate of consumption has been the high retail prices for cream. While the prices paid to producers, prior to the inauguration of the Milk Marketing Scheme, for milk utilized for cream were lower than fluid-milk prices, the retail prices for cream on the basis of butterfat content, were about the same as for milk.25 While not directly related to the subject of this study, data regard ing the per capita consumption of butter and cheese are of some in terest. The consumption of butter per person in the United King dom in 1936 has been estimated at 24.8 pounds. This was higher than in any previous year except 1934 and 1935, when it was estimated a 25.2 pounds per capita. The consumption of cheese in 1936 has beer estimated at 8.8 pounds per capita, and compares with a consump tion of 9.1 pounds in 1935 and 9.4 pounds in 1934.26

DISTRIBUTION

The system of milk distribution in England and Wales differs i two important respects from that in the United States, and to tha extent will be discussed here. First, in this country the function o receiving milk from producers, processing it, and retailing it to con sumers, with the exception of the sale of milk through stores o peddlers, is generally integrated in a single enterprise. In Englan and Wales, on the other hand, a so-called wholesale distributor inter venes in many instances between the producers and the retail dis tributors. Operating in some cases in several markets at the sam time, the wholesale distributor purchases milk from producers an resells it to retail distributors who have no facilities for handlin surplus milk or, in some cases, even for conducting processing opera tions. Wholesalers also provide accommodation supplies to dis tributors whose regular supplies fall below their immediate require ments. In addition, they cater to peddlers, stores, and large cor sumers, and in some instances even distribute milk at retail. The conduct their operations from country stations, factories, or cit plants.27

Second, the consumers' cooperative societies, unimportant in th distribution of milk in the United States, constitute the largest reta distributors of milk in England and Wales. In 1934 they retaile 22.5 percent of the fluid milk in that country.28 These cooperative conduct their own wholesaling operations and have even entered int milk production. In negotiations with producers they have ofte differed with proprietary distributors, in that they have sought t secure low retail prices, while the proprietary distributors have en phasized the need of adequate distributive margins. (See part V.)

25 Economic Series No. 38, p. 42.

26 United Kingdom Imperial Economic Committee, Dairy Produce Supplies: 1936, pp. and 22, 1937.

27 Retail distributors who obtain their supplies directly from producers also opera from country stations and city plants, or from city plants only. In the latter case the facilities for handling surplus milk are generally limited, and in case of a shortage their supplies they resort to accommodation supplies from wholesalers. In the eve their surplus exceeds their manufacturing facilities, they may divert some of this surpl to creameries and factories or cut off their supplies for a brief time, if their contrac permit. Economic Series No. 38, pp. 26-29.

28 The Home Farmer, Official Organ of the Milk Marketing Board, 3(1): 10. January 193 29 Producer-distributors are also an important element in milk distribution in Engla and Wales. In the 12 months from October 1934 to September 1935 they accounted f 17 percent of the retail sales of milk. Economic Series No. 44, p. 19.

FOREIGN TRADE

The dairy industry in the United Kingdom 30 is predominantly on an import basis as regards manufactured dairy products. Fully 91 percent of the butter supplied in that country in 1936 was imported from overseas sources. Of the 1,191,000,000 pounds of butter supplied in that year, only about 106,400,000 pounds were produced at home. Similarly, external supplies constituted 71 percent of the cheese consumed in the United Kingdom in 1936. Only 121,856,000 pounds of an aggregate consumption of 418,880,000 pounds were domestically produced.31 Considerable quantities of evaporated, condensed, and dry milk are also imported, and in some years foreign cream has been sold in United Kingdom markets. Even the fluid milk supply has at times been supplemented by shipments from outside sources, principally the Irish Free State.32 These facts are significant because of the relationship between prices of domestically-manufactured and imported dairy products and the effect that the importedproducts prices have had in the past on prices of fluid milk and on the entire milk-marketing structure.

Under the conditions which have prevailed in the international trade in butter in recent years, the dairy industry in the United Kingdom has been exposed to unfavorable factors over which it had no control and which affected adversely its economic position. The world trade in butter has presented the peculiar anomaly of an increasingly larger volume of butter entering this trade in the face of increasing restrictions against the importation of butter by importing countries other than the United Kingdom. With the exception of the United States, which in the several years preceding 1935 has been practically on a domestic basis with reference to butter, the United Kingdom is the only important butter importer that has permitted the sale of foreign butter in its markets without quantitative limitations. The only restriction which it has imposed has been an import duty of 15 shillings per 112 pounds, equivalent to about 3.3 cents per pound, on foreign butter. Empire supplies are admitted free of duty. In contrast, the other historically important butter-importing countries-Germany, France, Belgium, and Italyhave imposed quantitative restrictions as well as tariffs or other imposts, in some instances limiting import allocations to negligible quantities. At the same time, without any important exception, the butter-exporting countries have adopted in recent years various measures to aid their dairy industries. In practically all instances these measures have been designed to encourage the exportation of dairy products.

These developments have resulted to an increasing extent in a concentration of world supplies of butter on the relatively unrestricted United Kingdom markets. The quantity of foreign butter marketed in the United Kingdom has consequently reached unprecedented proportions. Net shipments rose from 702,700,000 pounds in 1929 to 1,084,000,000 pounds in 1936, an increase of approximately 54 percent.

30 Since 1922 the United Kingdom has included Great Britain (England, Wales, and Scotland) and Northern Ireland; prior to that time it included all of Ireland.

31 Dairy Produce Supplies: 1936, pp. 13–23.

12 Economic Series No. 38, pp. 15, 49–50.