The Eastern Shore of Virginia Produce Exchange, Virginia. In Cooperative Purchasing and Marketing Organizations Among Farmers in the United States

United States Department of Agriculture Bulletin No. 547

Cooperative Purchasing and Marketing Organizations Among Farmers in the United States by O.B. Jesness, Assistant in Cooperative Organization, and W. H. Kerr, Investigator in Market Business Practice

Washington

Government Printing Office

1917

EASTERN SHORE OF VIRGINIA PRODUCE EXCHANGE, VIRGINIA.

The Eastern Shore of Virginia Produce Exchange was organized in 1900 for the purpose of marketing the products of the farmers living in the two counties that form the Virginia part of the peninsula between Chesapeake Bay and the Atlantic Ocean. This is a truck-farming district; the leading crops are Irish and sweet potatoes, strawberries, cabbages, and onions. The exchange markets the products of approximately 3,000 farmers, or about two-thirds of the total output of the territory in which it operates. The annual business includes the sale of 8,000 to 10,000 carloads of Irish potatoes, 2,500 to 3,000 carloads of sweet potatoes, and from 100 to 300 cars each of strawberries, onions, and cabbages. The total annual volume of business is from 5 to 6 million dollars. The exchange deals with over 1,300 wholesale buyers, distributed among about 500 cities in about 40 States and Provinces.

The right to sell produce through the exchange can be secured by becoming a stockholder, by being a tenant of a stockholder, or by purchasing a "shipping privilege," which costs $1. The exchange has a central office, but there are a number of shipping points, as the territory is divided into 35 local divisions and each division has from one to four loading stations. Each local division elects a stockholder as a director for the general board of directors. The board of directors has supervision over the exchange, but in the main the work of management is left to the general manager and the secretary-treasurer. Each division elects a local agent to look after the work in that division. In addition, there are inspectors for each shipping point, but they are selected by the board of directors instead of by the local growers, in order to insure efficient and uniform inspection. The central office keeps in touch with the local agent to ascertain the probable amounts to be loaded at each shipping point day by day and later he is informed of the actual amount loaded. Thus the central office can see that the proper cars are provided and find markets for the products loaded. An effort is made to finish all the business each day. The local inspectors pass on the products as they are loaded; if they are up to standard they are permitted to carry the exchangetrade-mark; if not, they are loaded in a car of unbranded products. The central office takes care of the selling and forwards the proceeds to the local agents, who in turn make out the checks for the growers, payment being made within 24 hours after delivery of the goods. Under this system the growers do not have to wait for their returns. The association is able to do business on this basis, as a large surplus and good credit provide funds to cover payments to growers for all products delivered but unsold. Its present surplus is about $150,000, and this, together with a paid-up capital of $42,000, gives the exchange an ample working capital. Hereafter part of the net earnings will be returned to the growers in accordance with the amount of business transacted with the association.

The exchange makes an extensive use of the telegraph in selling products. Information with regard to the markets is secured daily from salesmen and representatives in the various market centers. In addition to the salesmen, brokers are also employed in effecting sales and in a large number of cities direct telegraphic communication with wholesalers is maintained. The fact that the exchange spends about $20,000 annually for telegraph service shows how important this form of communication is. The sales are for the most part made f.o.b. loading point; consequently the buyer assumes the risk of delay and normal deterioration in transit. Losses that are not included in this risk, and losses resulting from occasional bills that are impossible to collect, are borne by the association.

The expenses of the business are met by charging a 5 per cent commission on the produce sold by the exchange and a 3 per cent commission on a small quantity of produce that is turned over to selling agents, which consists principally of odd lots and off-grade goods sold in near-by markets. The amount sold in this way never exceeds one-tenth of the total.

This organization has brought about an intelligent distribution of the products of its members and has greatly expanded the territory serving as a market for the products of the region. The inspection service has resulted in standardization which insures good produce to the consumer and good prices to the producer.