million, compared to $3.4 million in 1965 and $1.7 million in 1964. Disputes settled informally in 1966 numbered 988, compared to 956 in 1965 and 888

in 1964.

MILK MARKETING ORDERS

Federal milk marketing orders help stabilize markets for both dairy farmers and dealers, to assure enough fresh, wholesome milk for consumers. The orders set minimum prices to farmers at the first level of trade as milk enters the marketing system, and are flexible enough to meet changing marketing conditions which could endanger milk supplies for the public.

Significantly more consumers bought milk supplied through Federal milk order markets, as additional urban territory came under Federal regulation, but by slightly fewer orders. Population of the Federal milk marketing areas at the end of 1966, 1965, and 1964, was 114 million, 111 million, and 108 million, with the number of orders at 71, 73, and 77, respectively, for the

three years.

Other developments saw annual milk order marketings by producers decrease 1.3 billion pounds in 1966 to 53.1 billion pounds, compared to the 54.4 billion pounds marketed in each of the two previous years.

With milk production decreasing across the Nation, serious shortages of milk were threatened until the USDA acted to strengthen prices farmers receive for their milk, and thus encourage sufficient production to meet consumer demands.

The value of the milk to the farmers at minimum milk order prices increased to $2.7 billion in 1966—$.3 above the $2.4 they got for milk delivered to milk order areas in 1965, and in 1964.

At the same time there were fewer farmers in 1966-146,000-producing milk for Federal order markets, compared with the 158,000 farmers in 1965, and 167,500 in 1964.

SPECIALTY CROP PROGRAMS

At the end of 1966, 48 marketing agreement and order programs were in effect for fruits, vegetables, and related specialty crops. Twenty-five of those were on fresh citrus and deciduous fruits, 15 on vegetables and potatoes, and 8 on dried fruits, nuts, and hops. For these commodities, the law provides for several types of regulatory activity. Among the methods which may be used separately or in combination are regulation of quality and containers, establishment of reserve pools, surplus control, prohibitions of unfair trade practices, and marketing research and development. These regulations or activities, unlike those under milk-order programs, do not establish prices that must be paid producers. They are, however, intended to enhance or maintain prices received by producers.

Several new programs were added during 1964-66. In 1966, growers of California nectarines and Texas citrus became the first commodity groups to amend their Federal order programs to include paid advertising and sales promotion activities, which became authorized for 15 specified commodities as a result of legislation passed by Congress in 1965. The farm value of products covered by the fruit, vegetable, and specialty crop programs is now about $1.5 billion a year.

FEDERAL SEED ACT

Modernization of the Federal Seed Act in the form of amendments passed by Congress in 1966 means more informative seed labeling, better protection for the seed buyer, and assurance of fair competition in the seed trade. A truth-in-labeling law, the Federal Seed Act requires all the information needed for successful planting of agricultural and vegetable seed to be on the label.

It also prohibits false labeling and false advertising of seed moving in interstate commerce and prohibits the entry of any unfit seeds offered for importation.

RATE AND SERVICE ADJUSTMENTS

The USDA helps producers and consumers of farm products reduce marketing costs with efficient and economical transportation services and rates by participating in rate and service adjustments before carrier bureaus, regulatory agencies such as the Interstate Commerce Commission, and courts, and providing counsel and advice to agricultural interests in response to requests for

assistance.

WAREHOUSE SUPERVISION

Assurance of safe storage of farm products is provided by examination of warehouses which are Federally licensed under the U.S. Warehouse Act or which store commodities owned by the Commodity Credit Corporation. By the end of 1966, 1,907 warehouses were under license. Of these, 1,369 were licensed for grain storage, 519 for cotton and 19 for other agricultural commodities. Licensed capacity for the two principal commodities stored was at 1.456 billion bushels of grain and 16.140 million bales of cotton.

In addition the USDA was examining 6,001 non-licensed grain warehouses and 706 non-licensed cotton warehouses, storing CCC goods, by the end of 1966.

COTTON PROMOTION

The USDA helped cotton producers establish a self-help research and promotion order for upland cotton to improve its competitive position and expand its markets. Cotton growers are financing the program with voluntary $1 per bale assessments and administering it through a Cotton Board of representatives from each cotton-producing State.

MARKETING RESEARCH

RESEARCH ON PHYSICAL HANDLING AND DISTRIBUTION OF FARM PRODUCTS

Research on marketing facilities, handling methods, equipment, transportation techniques, and packaging has improved the physical efficiency of moving products from farms to consumers.

The work of the USDA Transportation and Facilities Research Division begins in areas where products are prepared for market, and carries through all handling, packaging, storage, and transport in marketing channels to terminal markets, wholesale warehouses, retail stores, and food service institutions. At the beginning of the marketing cycle, recent studies have been concerned with faster processing of pork, identifying causes of damage in handling grain, increasing efficiency in hydrocooling fruits and vegetables, improving washing, grading, and packing of eggs, and reducing bruises on live poultry which subsequently cause downgrading of the processed product. Also, plans have been developed in 35 studies in 20 States for improved egg assembly plants, poultry and meat processing plants, dairy plants, and fruit and vegetable packing and storage houses.

Conventional processing of chilled pork carcasses requires 118 hours from killing floor to finished product. In laboratory studies, processing pork before chilling required only 15 hours from killing floor to finished product. Adoption of this method would reduce cooler requirements as well as processing time. A quick-chilling cabinet and other equipment are being developed for a pilotplant commercial processing line.

Conversion systems for trucks have been developed that enable truckers to

haul packaged freight in one direction and dry bulk cargo in the other, thus increasing round-trip payloads, and decreasing per-unit cost. Improved shipping containers or retail packages have been developed for apples, peaches, pears, lettuce, and frozen chicken.

Containerized shipments-the loading of products in van containers at shipping point and unloading only at receiving point—have reduced handling, damage, and pilferage of products; cut handling and transport costs; and expanded foreign markets for U.S. products. Containerized shipments have delivered products in better shape than break-bulk shipments, and some products have been shipped in less costly light-weight packages. Cherries, grapes, nectarines, and strawberries have been airshipped to Europe in lightweight plastic boxes.

Studies of wholesale food distribution facilities in cities have resulted in recent years in construction of modern, efficient food distribution centers in New York, New York; Boston, Massachusetts; and San Juan, Puerto Rico. Other centers in the process of development are in Springfield, Massachusetts; Pittsburgh, Pennsylvania; Baltimore, Maryland; Montgomery, Alabama; Milwaukee, Wisconsin; and Huntington, West Virginia. These studies evaluate existing facilities, handling methods, and cost; determine present and probably future needs of the market; recommend facility design, size, and location; and estimate investment requirements and operating costs, including possible savings. Studies have recently been completed in Chicago, Illinois; Dayton, Ohio; and Honolulu, Hawaii.

Receiving potatoes, citrus, apples, and onions in pallet-type containers at central warehouses and packaging these items at the warehouse instead of at retail stores has the potential of saving nearly 3 cents per retail package. A new method of pricing groceries in wholesale warehouses with adhesive labels— is less costly than other methods at the warehouse or retail store.

Proper sanitation, temperature control, and work methods can extend shelf life of packaged fresh red meat on display in retail stores from 2 or 3 days to 7 days.

Improved layouts and work methods have been developed for school lunch kitchens and serving lines, and studies of institutional wholesaling have resulted in pricing methods that should reduce costs for both the wholesaler and institutional buyer.

Mechanization and automation to upgrade labor, increase productivity, and reduce marketing costs have been studied for application throughout the marketing system. Automation is useful in dairy plants, egg processing plants and fruit and vegetable packing plants. An automatic device to drive livestock has been found feasible as have automatic gates for sales rings of livestock markets. Use of pallets and pallet boxes has increased mechanized handling of fruits and vegetables in storage, shipping, and warehousing. Semiautomatic or automatic wrapping machines for retail meat cuts are practical for retail stores at certain sales volumes.

Special emphasis needs to be given to work on a systems approach to improve marketing. Research has been concentrated on individual parts of the marketing system-producing area facilities and methods, transport, terminal market facilities and handling, and wholesaling and retailing. Research should be initiated to study the entire marketing system to determine if efficiency can be increased by developing new relationships among the various parts of the system, or by moving certain functions from one part to another and possibly eliminating functions.

In transportation and facilities research, studies are being made of thermal properties of citrus during cooling to determine optimum time-temperature relationships for cooling citrus before shipment; and of air circulation in

in refrigerated trailers to determine the most efficient air flow system to maintain zero temperature throughout loads of frozen food.

INTERNATIONAL AGRICULTURAL MARKETING DEVELOPMENT

Marketing specialists of the Transportation and Facilities Research Division are cooperating with government officials in Brazil in studying wholesale food distribution and retail marketing practices to assist in improving food marketing in Brazil, especially in the northeast. Help is also being given to develop improved facilities for storing grain.

As part of the overall program, a wholesale marketing center is under construction in Recife and modern centers are planned for Fortaleza, Salvador, and 10 smaller cities. Brazilian producers are being trained in use of improved shipping containers, handling methods, and grading to reduce waste and spoilage. A new wholesale food distribution center has been built in São Paulo, and one is in operation and another under construction in Rio de Janeiro. Assistance on a wholesale center and retail marketing practices is also being given in Belo Horizonte.

PERFORMANCE OF THE FOOD MARKETING SYSTEM

The Economic Research Service of the U.S. Department of Agriculture devotes part of its resources to studying the performance of the marketing system for food products. One continuing project is measurement of efficiency in processing and distributing food products.

The bill for marketing domestic food products purchased by civilian consumers in this country increased to $55.0 billion in 1966 from $36.3 billion in 1956. (The marketing bill is an estimate of total charges for processing, transportation, wholesaling, and retailing foods originating on farms in this country, including foods sold in the form of meals in restaurants and other eating places.) Three developments mainly accounted for this 52 percent increase: (1) an increase of 21 percent in the volume of products marketed; (2) rises in prices of goods and services used by food marketing enterprises; and (3) growth in marketing services per unit of product, such as occurs when highly processed foods are substituted for less highly processed foods.

It is estimated that prices of goods and services, not including raw materials, direct labor, and plant and equipment, used by marketing firms increased about 18 percent during this period, the same rise as in the general level of all prices in the private sector of the economy. Prices of all types of plant and equipment increased by approximately a fourth. Prices of plant and equipment purchased by marketing firms probably went up by about the same percentage. Hourly labor costs of food marketing firms increased 43 percent, but improvements in output per man-hour limited the rise in labor costs per unit of product marketed to 18 percent.

Although the volume of these products marketed increased, employment in food marketing enterprises changed little over the last decade. In 1965, approximately 4.6 million persons (full-time equivalent basis) were engaged in marketing these products compared with 4.7 million in 1956. These workers made up about 6 percent of the U.S. civilian labor force in 1966 and 7 percent in 1956.

Improvement in productivity enabled the food marketing system to handle a growing volume of products without any increase in the number of workers. It is estimated that output per man-hour in food processing industries increased at an average annual rate of 3.5 percent from 1955 to 1965. In food distribution (wholesaling, retailing, and away-from-home eating establishments), the rate of improvement was 2.4 percent annually from 1948 to 1958. (Estimates are not yet available for a more recent period.)

Much of the gain in productivity has resulted from improvement in the

quality of labor and management. Quality has been improved by education, on-the-job training, experience, and other kinds of investment in human resources. However, improvements in marketing facilities and equipment probably contributed more to the growth in productivity than other factors. These improvements have been achieved by large expenditures for new plants, warehouses, stores, and other facilities.

Firms processing foods and kindred products have increased their expenditures for plant and equipment in recent years. These expenditures totaled $1.39 billion in 1966 compared to $.80 billion in 1956. Expenditures for new facilities by firms operating retail food stores amounted to $824 million in 1963 compared with $673 million in 1958. Those made by firms operating eating places totaled $475 million (no data available for 1958).

Growth in the volume of food marketed accounted for part of the increased investment in plant and equipment. Introduction of new products frequently required investment in new plant and equipment. However, much of this investment was in labor-saving equipment and in new plants designed to reduce handling costs. Annual depreciation charges rose as a result of increased investment in plant and equipment. Thus, the effect on costs of improvements in productivity was partly offset by increases in capital costs.

Changes in the structure of the food marketing industries were associated with improvements in labor productivity and increased investment in plant and equipment. Many large food processing plants, retail food stores, and other marketing facilities replaced a larger number of small facilities. In some instances, the urge to improve labor productivity led to changes in the structure of the industry that went beyond building large plants. Mergers and a decrease in the number of firms often were involved.

Since World War II the number of plants processing food has declined significantly in spite of continued growth in the volume of products marketed. Between 1948 and 1963 the number of retail food stores declined 31 percent, while the volume of sales per store increased 184 percent. The number of grocery stores in 1963 with annual sales of $1,000,000 or more was almost eight times the number in 1948. In 1963, these stores accounted for 53 percent of the total grocery stores sales compared with 12 percent in 1948. However, they still accounted for only 7 percent of the total number of grocery stores. NEW AND IMPROVED FOODS AND FIBERS

The Economic Research Service studies the market potentials for new and improved products that promise to strengthen markets for farm products and to better satisfy consumer wants.

In recent years, innovations in food generally have offered greater convenience. Whole dinners, entrees, and salads are tailored for home or institutional serving. Boil-in-the-bag foods, prepared potato products, soluble coffee and instant puddings, frozen baked goods, brown-and-serve rolls, and frozen ready-to-bake bread-these are all timesaving products. Dehydrated soups, with their ingredients dried by different processs and combined into one package, point to a trend in greater use of dried foods. Dried mixes and freeze-dried fruits and berries in breakfast cereals are other examples.

In the fiber area, extension of wash and wear and durable press technologies to cotton and wool fabrics may slow the trend toward loss of markets to synthetic fibers. Removing shrinkability from wool places wool on a more equal footing with synthetic fibers since it still retains its natural desirable characteristics. USDA's WURLAN process permits easy laundering of wool in the home.