“ What Efficient Distribution Means LIVESTOCK producers are, of course, engaged in an absolutely indispensable industry. Of scarcely less importance is the packing business. For upon food production and preparation depend all other industries and activities.
But it is profitable and enlightening to ask, of what use would be production and preparation without means for delivering the food to the consumer? The mere asking brings realization of the prime importance of ample and uninterrupted transportation and distribution of packing house products to consumers through the retailers of the country. ”

“ Living is practically assured, which gives the farmer a distinct working advantage to begin with. He enjoys a cash market and is not called upon to suffer bad debt losses. He is in an industry that is absolutely essential, which cannot be destroyed by any shifting of circumstances.
The greatest need is doubtless for cost-accounting systems which will serve as a guide, not only to prevent unwise purchases, but to indicate wise expenditures in improvements that will bring a good return on investment, and to show definitely the amount of profit obtained on each transaction. ”

“ First, there must finally be a realignment of prices on all livestock and meats, to levels below the prevailing high war prices. A fair balance must be struck between the interests of the consumer and those of the producer. Prices for meat must be sufficiently attractive to consumers to insure an adequate volume of sales; on the other hand prices for livestock must be sufficiently high to encourage production. Only on this basis can the industry thrive.
Second, the utmost care must be taken in breeding and buying of feeding stock and the most exacting economy practiced in feeding methods. ”

“ This is to the interest of the feeder and the cattle industry as a whole. For if the business is ever to be placed on a cost-of-production basis for the reckoning of market prices, it must be done by an accumulation of thousands of actual tests in feeding practice. It is plain that each individual feeder could not set or ask a certain percentage of profit, since a poor judge of stock and a careless feeder would demand more for an inferior product than the more efficient feeder would ask for a better article. ”

“ It is often necessary for the packer to take a marginal loss on beef in order to stimulate demand, but he must at once hedge against this loss by buying cattle cheaper. He tries to fit the price he pays for cattle each day to the price he is obtaining for beef. Only by so doing can he maintain his business on present small margins. Large receipts of fish, poultry, game, eggs, vegetables or fruit at certain seasons also affect the price the public is willing to pay for beef, and this is reflected in the price the packer can afford to pay for the live animal. ”

“ The Livestock Situation RIGHT now is a good time to stick to the middle of the highway of common sense. As shown in earlier chapters, the conditions adverse to the business can be only temporary, and even the losses incurred may be turned to profit in the end, if the livestock men shall learn the lesson of economy and efficiency of production and more complete co-operation among themselves and with the packing industry. ”

“ An experienced buyer of keen judgment, constantly in touch with the market, should prove as valuable to producers as the expert buyer of fat cattle is to the packer.
Such expert selection of feeders would take the guesswork out of the first and most important step in feeding.
Generally speaking, the consumers’ demand is constantly for better meats from comparatively young animals. Taking the situation the country over with present prices of feed stuffs considered, it has been found that beef cattle make most money for the producer if not held past the age of two years. ”

“ America and the world will continue to demand more and more meat and other products from livestock. Agriculture will not successfully continue without the production of meat animals. So the future reveals no reason why Armour and Company should not continue the policy of re-investing their earnings in the business that gives the most direct and substantial support to the basic industry of animal husbandry. [8]
The packer must, with utmost carefulness, balance his daily purchases against his daily sales. ”

“ As co-operative activities are extended among producers, it may be found advisable for livestock associations to employ expert buyers at the various markets whose duty shall be the filling of orders for association members, for the choice of feeders cannot be safely based on personal fancy. The only true guide is unbiased judgment as to what the market demands in the finished product and what type of feeding cattle will yield the result. ”

“ Practical butchers, who are also feeders, have proved by test that they can ship their beef cattle hundreds of miles to the big packer, have them slaughtered, dressed and returned at less cost than they can do their own killing. This is possible because the utilization of every scrap of the animals in valuable by-products, and the saving in labor by wholesale slaughtering and handling, pay all expenses, including the freight both ways, and leave a margin for the butcher besides. ”

“ Financial Aspects of Livestock Industry ONE of the most significant and gratifying gains in the livestock business during the decade just past is the recognition of its financial soundness. This is reflected in the changed attitude of financiers and investors towards cattle paper. While a decade ago bankers in the great financial centers looked with suspicion upon such securities, now bankers and business men throughout the country purchase approximately $500,000,000 of cattle paper annually and regard it as among the safest investments. ”

“ The prevailing idea that, because of cold storage facilities at the packing centers, unlimited numbers of cattle of all grades and qualities can be absorbed and slaughtered, is wrong. For even though cold storage capacity were unlimited, beef cannot be held. Each day’s kill must find room in chill and storage rooms by the shipment of about an equal number of carcasses out of storage to Armour’s branch houses located in all parts of the country. ”

“ The local butcher or livestock producer can little better afford to kill and prepare his own beef than he can afford to tan the hide and make his own shoes. There was a time, even in America, when the farmer himself actually did these things. ”

“ There is still some difficulty in arranging loans in some sections of the country, where bankers have not yet realized the changed conditions of the business and farmers have not given the proper emphasis to the improvement of livestock production. But generally speaking the cattle feeder with good judgment in the breeding and selection of feeders meets with no obstacles in financing his operations.
Most country bankers freely accept cattle paper because it is readily rediscounted in the country’s financial centers. ”

“ Aspects of Big Business Explained THE simple recital of an ordinary day’s doings of Armour and Company’s beef department will make plain a number of things that may appear mysterious to a casual observer. Each day, at the opening of the market, the manager of the beef department must carefully weigh the possibilities of his sales and shipments of beef carcasses against the receipts of cattle of the quality demanded by his trade. ”

“ It requires no argument to show the livestock producer that his interests and profits are inseparably associated with these properties, and it is quite as plain that the necessities and conveniences of the consuming public are dependent upon and served by them. ”

“ There is a type of beef carcass that is best and commands the best price, and it costs no more to produce than an inferior type. The same is true of mutton and pork. Any Armour branch manager will show you what these types are and the Armour Farm Bureau will furnish, without charge, information on improved methods of producing the sort of animals that are most in demand for meat purposes. ”

“ While nothing positive can be predicted, better conditions is a practical certainty. The domestic consumption of beef is increasing to a gratifying degree; the arranging of international credits and the opening of foreign markets is a matter of comparatively short time. European need for pork products will be urgent and excessive for a considerable time, and this will not only take care of our surplus hogs, but will react favorably upon the market for cattle and sheep. ”

“ These by-product industries are, in short, the insurance of the packers against crippling losses, and may be likened to the activities of the up-to-date livestock farmer, who diversifies his operations by feeding cattle and hogs and by keeping fowls, sheep and dairy cows, so that if he loses on cattle or hogs he may offset his losses by better prices for lambs, wool, butter, eggs, poultry, or a money crop. ”

“ Between the producer and the consumer, between the buying and the selling price, the packers operate upon a smaller margin of profit than any other large industry. On invested capital they have realized an average of about 9 per cent over a term of years, on volume of sales about 2 per cent, and on each pound of meat less than one-half of a cent. ”

“ In terms of permanent agriculture it would have been better to leave a greater share of this cash invested in a further development of livestock, but the war order against feeding wheat placed the situation in some western states beyond the control of the average stockman. As a general practice in production this incomplete utilization of livestock must be deplored, although one cannot criticize the tendency under the special market conditions of 1919 and early 1920. ”

“ How and Why Livestock Market Grew THERE was a time, within the memory of men still active in the cattle business, when the capacity and demand of the local butcher shop measured the demand for fat stock and fixed the price as well. ”

“ The efficiency of the Armour organization of today is the result of the accumulated efforts of thousands of trained scientific and business minds, applied through half a century to the solution of the problem of factoring and furnishing food supplies for the nation and the world by the most direct and efficient means. ”

“ Progress has made such methods absurd, unprofitable and impracticable.
But the great machinery of economical production and distribution was not built in a day, or a year, or a decade. Armour and Company’s activities began more than fifty years ago. At first the packing house was only a butcher shop on an enlarged scale, preparing and handling pork products almost exclusively. Cattle were killed for local consumption only, as there was no such thing as cold storage, refrigerator car lines or branch houses for the distribution of fresh meats. ”

“ Profits and losses in farming must be reckoned, as in all other businesses, on averages over a term of years. But the future offers better assurance than ever before to the man who is a good agriculturist and at the same time a skillful business manager. ”

“ But these restrictions of packer activities in no way affect the relations of mutual confidence and dependence between Armour and Company and the livestock producers.
The fundamental things remain, and they are these: The livestock industry must continue to exist and expand; producers must be rewarded with fair profits; livestock markets must be maintained and made more convenient; and the markets for meat products must be enlarged and extended. ”

“ To these basic facts Armour and Company have pinned their business faith, and upon them shaped their policy. Ninety per cent of the profits of the Company have been re-invested in the business and are represented today by great packing plants at sixteen market centers, and many branch houses throughout the country, together with refrigerator car lines connecting the livestock markets with the consuming centers of the nation. ”

“ A retail merchant, according to statistics, has from two to four chances in ten to conduct his business successfully for fifteen years; a manufacturer has from two to seven chances to do the same. Farming is conspicuous for its small percentage of out-and-out failures. ”

“ Recent experiences will impel some producers to curtail or discontinue their operations temporarily, but others will take their places and quantity of production will be maintained while quality will be increased. ”

“ While on this basis Armour and Company sustained heavy losses in their meat departments, the by-product industries showed profits, as they usually do, because their products are not so perishable and are not so much influenced by market fluctuations. ”

“ We Stand or Fall Together WITH some elements of the American public there seems to persist the conviction that the great packing concerns are seeking the injury of livestock producers to their own enrichment. How such an idea can be seriously harbored by thinking men is hard to understand. ”

“ The feasibility of any such scheme of regulating prices does not now appear, but it is clear in any case that each lot of cattle would have to be appraised at what their production ought to cost, considering quality, and not what it actually did cost. ”

“ High-priced land, grain and labor will compel stockmen to grade up their herds, to discriminate more closely in the purchase of feeding stock, to improve feeding methods and to keep exact records of costs. ”

“ Probably the fundamental factor in bringing about these conditions, which are distinctly unfavorable from a quality trade standpoint, is the feeder’s expectation of declining prices. This attitude has driven all the animals to market almost as soon as they were in merchantable form. ”