What Farmers Say About Marketing Eastern Shore Potatoes and What Farmers Suggest for Better Marketing, Part 1
By T. B. Manny, Senior Agricultural Economist, Division Of Farm Population And Rural Life, Bureau Of Agricultural Economics
Introduction: During the spring and summer of 1928, the Bureau of Agricultural Economics of the United States Department of Agriculture with the cooperation of the University of Maryland and the Virginia State Agricultural Experiment Station, made an intensive survey of the farmers' experiences with, and opinions of, the present marketing machinery for handling the potato crops of Accomack and Northampton Counties, Virginia, and Somerset and Worcester Counties, Maryland. In February and March, 898 farmers who had control over marketing a part of all of the crops which they grew were interviewed. One or more officials in all but two of the local banks and a considerable number of the more prominent merchants, fertilizer agents and implement dealers were likewise questioned in substantially the same way. During the heaviest part of the 1928 shipping season, a field worker was on duty in the area observing the marketing of the crop, going to various loading platforms to question local agents of the marketing agencies, talking with many of the farmers, conferring with bankers and business men, and spending considerable time in the offices of the Quotation Committee of the Eastern Shore Farmers' Association. Farmers, marketing agencies, and business men all rendered valuable help in the preparation of this report by their practically unanimous willingness to answer the queries put to them.
This preliminary statement deals chiefly with the difficulties reported by the people interviewed, which difficulties have been brought about largely by the farmers on the Shore, or have been caused by changes in agricultural production outside the area. A later report will deal with the present status of the marketing agencies of the Shore as reported by the farmers and other persons who contributed information.
These 898 farmers, although they constitute but a tenth of the total number of farmers in the 1925 agricultural census for the four counties, reported acreages in potatoes totalling just a fraction less than one-third of the entire potato acreage in 1924, the crop year covered by this census. Of the total number, 583 person are owners and 315 are tenants who control the marketing of at least their own share of the crop. Five hundred and eighty four of the farmers interviewed are members of the Eastern Shore Farmers' Association for 1928, 483 are stockholders of the Eastern Shore of Virginia Produce Exchange, 60 more hold "shippers' certificates" in the same organization and 59 are stockholders in the Peninsula Produce Exchange. A farmer may be a member of the Farmers' Association, and at the same time be a member of one or rarely of both Exchanges. Many farmers who have been elected to serve as officials of these organizations are included among the persons furnishing information.
The four major problems in the potato marketing situation are plainly shown in the replies of a great many of the farmers who answered the questions.
I. The Farmer Reported Problems
1. Acreage and volume of Production Increasing: The most frequent statement made by the interviewed farmers is that other producing areas whose potatoes are marketed just ahead of, or at the same time as, those from Eastern Shore, are greatly increasing their acreages and therefore crowding the markets at the same time when the Shore formerly enjoyed relative freedom from competition. Just what are the facts in the case? An analysis of the daily shipping point data of cars billed out during the past nine years, (1920 to date) from June 1 to August 10, reveals the fact that Eastern Shore counties contributed an average of these two months of 42.2 per cent of all cars reported in the United States. The minimum occurred in 1926 with 33.9 per cent, and the maximum in 1928 with 49.0 per cent. Furthermore, in July and the fore part of August, the period in which the heaviest average daily movement on the Shore has normally occurred, the percentages of car billings from this area in terms of totals for the United States have been actually increasing rather than diminishing.
During this large portion of its usual marketing season, therefore, the Eastern Shore marketing agencies now have proportionally at least as good an opportunity to move their part of the total crop as they have had at any time since 1920 and probably for several years previous. Any increased shipments from other areas have been fully met by increased shipments from the Shore. The acreage figures given by the Division of Crop and Livestock Estimates for the areas (Norfolk, Va., Arkansas, Kentucky, Kansas, Missouri, Nebraska and Oklahoma) whose major shipping period closely coincides with that of Eastern Shore have not increased much, if any, faster than have Eastern Shore counties. The Shore farmers who believe that recent market demoralizations have been caused by increased acreage in this competing territory have failed to realize the significance of changing yields per acre locally. Better seed stock, larger applications of fertilizer, and other production improvements on the Shore, combined with several very favorable growing seasons have jointly brought about a larger increase in the quantity of marketable potatoes from these Maryland and Virginia counties than has resulted from the increased acreages in the above named territory whose shipments to market most nearly coincide with those from the Shore.
A different situation is encountered in the localities in which most of the new potatoes are shipped to market prior to the first of July. In these areas, but particularly in North Carolina, Louisiana, Alabama and Texas, there have been heavy increases in acreage during the past few years. The season of 1928 marks the climax thus far in this trend. In this year, with a delayed season in the South intensifying the trouble, the potato markets were badly overloaded with new stock before the first barrel left the Shore. In the past, although the earliest movement of new potatoes has had to compete in a measure with old stock the relative scarcity of the new crop put it in at least a semi-luxury class for consumer trade. Hence most of this early new stock commanded much higher prices than the levels prevailing after the first of July when new potatoes are ordinarily moving marketward in sufficient quantities to cause price reductions to the level where the great mass of the population will buy new potatoes in preference to old. Eastern Shore, especially Northampton County, Virginia, has had the advantage of the latter part of the "luxury class" period for many years. Now, however, if present production trends are maintained and the acreage planted in the areas shipping just ahead of the Shore continues near the existing high level, the date at which these early potatoes arrive in consuming centers in such large quantities as to drive prices down to a popular level will be set ahead by two or three weeks. No amount of control can keep prices at a "luxury level" in the face of a huge movement to market which must compete with a hold-over of old potatoes also seeking the consumers' dollar.
Although this may mean somewhat lower returns to the Shore producers at the beginning of the shipping season, it does not necessarily mean an annual demoralization of the market just when the Eastern Shore is shipping its heaviest, provided the local farmers and marketing agencies see the situation clearly and are willing to take steps to protect their major industry from financial ruin.
2. Cooperative Spirit Still a Feeble Force on Eastern Shore: The second fundamental problem, which the farmers on the Shore indicated clearly in their replies, is the rather restricted development of that real spirit of cooperation so vital in any attempts at organized marketing. Only a few of the farmers spoke of the marketing organizations to which they belong as "my association." In a much larger number of cases, the answers were given in such a way as to make it plain that these members do not feel they are active participators but that they have simply entered into a more or less definite contract with another party to handle the crop, or have "bought a right" to ship through what appears to them to be the most reliable selling agency.
In response to a definite question as to whether the present members feel themselves to be "insiders," 71 per cent of those who replied stated that they do feel themselves to be parts of the organizations to which they belong. However, when asked to state why they feel this way, almost one-half of these members said that it is simply because they went through the formalities of joining and hence are now "members" of the organization. Less than one-seventh of the present members gave as a reason any vital interest or activity in the affairs of the organizations. When speaking of the organization officials, few of the members took the attitude that these men are supposed to follow out the policies of the farmer-elect directors. Instead, the prevailing attitude was more akin to that of a person who feels his independence of action and freedom of choice is being imposed upon by men over which the organization or at least the bulk of its members has no effective control. The replies of so large a proportion of the members indicate such a high degree of indifference and lack of personal interest in the real welfare of their own association's affairs as to warrant the conclusion that the members, by and large, are not now viewing their organizations in the proper light.
The number of members who live up to the rules of the organization is some indication of the willingness to cooperate. During the 1927 marketing season, covered by interviews, only one-tenth of the members of the Eastern Shore Farmers' Association violated their contracts. This in itself is a fairly good record considering the fact that it was the first year under the new plan, and that conditions were chaotic. The disappointing fact is that the violations occurred most frequently and on a decidedly greater scale among the owner-operators of the larger farms. The tenants and the owners of small farms stood by their obligations better, though financially many of the latter had relatively more at stake than did the larger farmers. Had all the farmers of the area followed the example of disloyalty set them by an undue proportion of these large-scale producers, the organization would have been rendered powerless to cope with the situation.
An interesting side-light upon this matter of loyalty is that farmers who are members of ethical institutions went back on their promises just as frequently as did the persons who did not belong to such institutions. On the surface at least, the traditional morals taught by these institutions have not been of great help in causing people to live up to pledges. However, the farmers who are members of ethical institutions have aligned themselves on the side of all constructive attempts at more systematic marketing on the shore to a decidedly greater degree than have those farmers who are not members. Thus as an influence in getting the farmers to join in collective action, these institutions have apparently made a contribution; but in getting their own farmer-members to put into daily practice the traditional moral of faithfully living up to one's promises, such institutions still have some room for improvement.
The lack of cooperative spirit is further evidenced by the failure of many members to recognize any positive responsibilities towards their organizations. The prevailing attitude shown in replies to the question, "when you joined this organization, (farmers' marketing organization) what did you believe your membership responsibility would be?" is one of passively obeying the rules laid down by the organization. A considerable number reported that, in joining, they assumed no new responsibilities. If members are going to view their associations as "policemen" trying to make people do something bordering on the unpleasant and taking away a former sense of freedom (mostly imaginary considering the results of such "freedom" of action in the past) the associations will have a continual struggle to hold their members in line. The most iron-clad contract will not insure success under this condition. When more members show positive attitudes of cooperation, as are indicated by the replies of a few person who use such phases as "help in every possible way," take an active part in association affairs," "cooperate fully with any organization's plans," "100 per cent loyal and try to get others to join," there is more hope of a permanently successful marketing program. Among the different farmers' marketing agencies on the Shore, as high as one-third of the interviewed members reported that their ideas of membership responsibility had changed since joining: the discouraging side of these replies is that most of the members, in reporting changed ideas, indicated a lessened sense of responsibility. Among replies of this type "no responsibility now as organization hasn't played fair," "can now sell for the high dollar wherever offered," "patronize my organization only when I want to," "not forced to be loyal any more." Only a few members, here and there, reported that their ideas of responsibility have increased with growth of experience in cooperative marketing. This latter will be the normal reply if both members and organizations are really united in purpose and striving to do their best for the good of the section.
The Eastern Shore counties are not welded together in their purpose to achieve better marketing -- the farmers appear to lack a regional viewpoint of their problems. Every year, inter-county jealousies are basis of much complaining and of accusations of favoritism and partiality. Going to loading points in each of the counties during the course of a single day, it was found that groups of farmers were accusing one or more of their marketing organizations with favoring the other counties (never their own) in the operations of that day. There appears to be far too little confidence in the integrity of the management in these matters. Yet in 1928, the only case observed by the field workers came about when a group of farmers at one loading point violated the rules by commanding freight cars and loading them on an embargo day. All reasonable measures were used to prevent this but to no avail. The farmers decided to load notwithstanding all orders to the contrary, and load they did. Some of them seemed to have the conviction that this sort of "revolt" was under way all over the area when in fact it was confined to one point. The trouble was due entirely to the members; the management was doing all it possibly could to play fair with everyone. This difficulty seems to arise out of distrust and suspicions which, for lack of local evidence, are now directed to a more remote area. They serve as a safety valve for venting some dissatisfaction, but at the same time constitute a dangerous factor in undermining loyalty and sowing seeds of dissension.
3. Lack of Accurate Knowledge on Cooperation and its Problems: The common report of all five representatives who questioned the farmers is that lack of adequate and accurate information on cooperative marketing and the membership prerequisites for success is one of the chief barriers to more united action. Far too many members know little or nothing concerning their organizations. What they do know is frequently founded upon neighborhood gossip, reflecting the local suspicions and prejudices. Only a small minority could give replies based upon first-hand personal acquaintanceship with the facts. Among the non-members, the need for reliable information is even more apparent. On several occasions, in group gathering about loading platforms, local employees of farmers' marketing agencies were heard to give out information which was either inaccurate or so carelessly stated as to be capable of wrong interpretation by the hearers. With the exception of some meetings during the past year and a half in connection with membership drives put on by one of the marketing agencies, a series of education advertisements, and a few news releases through the local press, little is being done by the organizations to meet this need.
Until a great many more farmers are willing to take the initiative in finding out the facts concerning marketing methods and problems, however, all education efforts by the organizations themselves will be practically wasted. The responsibility rests equally upon the farmers and their organizations.
4. Old Habits of Marketing a Hindrance to Successful Cooperation: The farmers of Eastern Shore have only partially realized that successful cooperative marketing often involves giving up a number of long-established marketing practices. Some of these may appear highly desirable from the viewpoint of the individual farmer but at the same time they may be injurious to farmers as a whole. Of all present members of the one organization that required exclusive delivery in 1927 answering the question, over two-thirds replied that the traditional freedom to seek the high dollar and to seek when and where they please are real advantages employed by the non-members which the loyal members do not have. A considerable majority of the members of this organization appeared to view the non-members position with jealousy and apparently would like to exchange places with non-members, provided the marketing organization continue to operate for their protection but without their support. This difficulty will be considered in further detail under the remedial measures.
Another problem of somewhat related origin is to be seen in the way "Shore" potato growers respond to changes in price. When the markets are weakening, they become obsessed with the idea of digging and shipping their potatoes at maximum speed -- "I must get rid of my potatoes today for if I wait, the price will be lower tomorrow." The result is an almost uncontrollable stampede to load. The limit is set by the capacity of railroad sidings and wharves. In former days with less control by the farmers' marketing organizations, many growers would consign ("dump" is in some respects a more accurate word) car after car of potatoes on the already tottering market. Prices are sure to continue downward as such a flood increases. The bottom limit of f. o. b. price of its equivalent is set only by the cost of getting the potatoes out of the ground and into the cars.
When prices start upward, the reverse situation arises. "Why should I hurry to dig today -- tomorrow the price will be higher and every additional day in the ground (early in the digging season at least) means I will have more potatoes to sell." On such days, the selling agencies frequently are not able to load enough cars to meet buyers' demands. But the day the market falters in its upward trend, the haste to load breaks out new. The plan tried for the last two marketing seasons, in which some control of loading was attempted during falling prices, has indicated its possibilities of helpfulness in spite of many obstacles thrown in its way by non-cooperating farmers and dealers.
Habits and attitudes reinforced by years of experience under the traditional marketing system are difficult to change. Changed they must be, however, if any effective cooperation in marketing is to be established.
II. Some Farmer-Suggested Remedies
The interviewed farmers offered a wide variety of remedies for helping to meet the problems which the Shore counties are facing. Many of these suggestions concern the policies and operating methods of the marketing agencies, and as such belong more appropriately after a discussion of the work of these agencies. Six of the total number, however, apply more particularly to the farmers of the section or to the agencies influencing the production side of the situation. These will briefly be discussed.
1. Curtailment of Acreage: By far the most frequently offered suggestion for bettering future prospects is that of curtailing production or acreage. In many cases, however, the Shore farmers who gave this answer made it equally clear that the reduction should come about in producing territory other than the Shore counties. What are the possibilities of realizing this suggestion? Acreage control without some plan of alternative uses for the land is always exceedingly difficult or maybe impossible of attainment. The largest single factor in acreage determination in sections where a particular crop can best be produced is the price of the product during the past years and indicated market conditions for the coming crop year is a general incentive to expand, and vice-versa. In the past the swings have been too extreme from a small to a large acreage as the farmers had but little reliable advance information on acreages in competing areas.
More frequently, however, the Bureau of Agricultural Economics in cooperation with state-maintained agricultural agencies, has been issuing outlook reports in advance of planting. These are proving to be more accurate than any information in the past. In the spring of 1928, prior to any planting on the Shore, ample warnings were issued predicting a severe over-production of early potatoes. Had the growers heeded this danger signal a different financial situation than the existing one might have come to pass. Instead, acreages were considerably increased throughout practically the entire area, including the Eastern Shore counties, whereas outlook reports showed the need of a change in the opposite direction. If the individual farmers cannot readjust their plantings more rationally in the light of the help now available, low prices themselves may force complete abandonment of acreage in some cases and in others bring about much hardship.
There are some opportunities in growing alternative crops on the Shore especially from the standpoint of raising a large acreage for forage and for green manuring purposes. Each farmer should ask himself whether it is better to grow a smaller acreage of high quality potatoes at a minimum cost for fertilizer to sell at reasonably profitable prices, using the remaining fields for other purposes, perhaps even letting them lie fallow or idle; or to plant every available acre to the one crop, incurring heavy expenditures for fertilizer and seed stock, and producing such a huge volume that low prices fail to return even the cash costs of production. If each Eastern Shore potato grower were to follow the advice of a few growers -- to plant only such acreage as he could handle in a four-day working week, using the rest of his time for recreation, self-development, or community improvement -- the chances for good prices would be more favorable than at present. These are some of the things involved in effectively carrying out the farmer's own recommendation for curtailment of acreage. It can be done but it will require a higher degree of cooperation than has been in evidence up to the present time.
2. Elimination of Barter Transactions in Fertilizer and Seed Stock: This suggestion involves virtually the complete abandonment of a system of production credit which has recently spread rapidly in the potato growing counties both on the Eastern Shore and farther South. The system is briefly this: The grower, as evidenced by a lien usually against his entire crop, pledges himself to deliver a stipulated number of barrels of market grade potatoes between certain dates in return for each ton of fertilizer or each sack of seed potatoes advanced by the dealer. One evil in the situation is the increased acreage which the plan is bound to cause. Many poor credit risks not acceptable to the banks are financed in this way. Other farmers, in using the plan, feel that as long as they get some potatoes to sell in excess of obligations to the dealer, they should expand their planting to the limit. Regardless of what the crop is worth they feel that they can pay off their fertilizer and seed bills and, with fair yields and prices make some profit.
The ultimate effect of this arrangement is bound to be disastrous for both growers and those who extend such credit. For the farmers it means very low prices for their share of the crop (unless the total crop happens to be abnormally small due to adverse weather.) Deliveries of potatoes on these fertilizer contracts are required early in the season when prices are usually best. Furthermore, these deliveries seem to be assuming such large proportions that each succeeding year they are exerting a more demoralizing influence upon the entire market at the most undesirable time.
For the fertilizer or seed potato dealers it means the injuring of their legitimate credit business because of inability of purchasers, paying by promissory notes, to meet maturing obligations from their low crop returns. More serious yet, is the fact that these dealers are becoming large speculators on a highly sensitive market where their chances of loss increase rapidly with every additional ton of fertilizer or sack of seed stock put out on a barter basis. According to many local growers and merchants its use should be rigidly confined to a small number of exceptional cases where, because of unfortunate circumstances, otherwise thoroughly reliable credit risks are unable to give acceptable notes for their seed and fertilizer requirements. Better yet for all concerned would seem to be the complete elimination of such barter transactions. The application of common business principles precludes the use of any such highly speculative and potentially means of extending production credit.
3. Members of Marketing Associations More Vitally Interested in the Work of Their Organizations: Farmer after farmer reported that one of the most needed reforms in the situation on the Shore is a change in the existing interest of the farmer-members in their own marketing organizations. When everything is running smoothly, it is easy for the members to lose interest. The leaders are taking care of all details in an adequate manner and apparently do not need any assistance. As time slips by, with members and management going their prospective ways, the close personal touch of acquaintanceship and direct contact is gradually lost. When difficulties do come to the organization (and no organization is immune) it is found that the common bond of mutual confidence has ceased to exist. Members are suspicious of the management and the management loses the viewpoint of the members. It is often difficult and a time-consuming process to get the two together again, but this must be done if the organization is to achieve the largest measure of success as a cooperative association.
The members have a right to complete information concerning their organizations and should take the initiative in demanding it at all times. No thoughtful member will circulate any destructive criticism of his organization. To do everything which tends to destroy confidence in the organization solely upon the basis of unproven rumors is unworthy of the privileges of membership. Members must be willing to view their organizations as more than market outlets to be used or not as their own judgments may dictate. They must be willing to accept their share of responsibility for the success (or failure) of the marketing associations to which they belong. They must contribute at least enough of their time and energy to keep in personal contact with the leadership and management of these agencies. This is the only sure basis of continued confidence and cooperation. It is one of the prices of success. Many Shore potato growers are fully aware of these requirements and expressed them in no uncertain terms to those who have made this survey
4. Education Service: Over ninety per cent of the interviewed farmers and a slightly greater percentage of the merchants and bankers reported that a farmers' marketing organization should have some definite means of disseminating accurate information among its members. These people suggested two chief ways. The first is by the publication of a bulletin or news letter to be seen at frequent intervals to the members, especially during the marketing season (a considerable number suggested a daily letter at this period). The second method is to hold frequent local meetings at which officials of the organization could be present to give accurate statements concerning the affairs of interest to the members and to answer any questions which might be asked of them. The demand for more information is so widespread it would certainly appear that something of the kind could be done to the advantage of all concerned.
There is, however, another phase of this situation, pointed out by the Agricultural Extension Services of Maryland and Virginia, which the foregoing suggestions would scarcely prove adequate to reach. In developing a more thorough and widespread knowledge of the fundamentals of production and marketing on the Shore, a somewhat broader educational influence is needed in addition to the great amount of good which the carrying out of the farmers' recommendations would accomplish. This need might be met by the establishment of local community clubs convening at least once every two months or oftener. All the farmers of the locality, regardless of their present methods of marketing, should be invited to attend. Here systems of marketing could be studied in an impartial and open-minded way. Experiments in new methods could be presented for discussion. Occasional social or recreational features might be advantageously included to arouse interest and develop group enthusiasm. County agricultural agents, state and federal forces, could be relied upon to lend much aid in this work. It might be possible in some cases to use organizations already in existence such as Community Leagues, Parent-Teachers Associations, Farm Bureau locals, or other clubs to which any considerable number of farm men belong. In many localities, a new farmers' club for the specific purpose of studying production and marketing problems in a thorough-going way might be even more to the point. The important thing is to quicken the popular conception of marketing problems and inspire increased interest in their solution.