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AMERICAN CHEESE m y COTTAGE CHEESE H couosusso MILK mT-‘TM nmuzuin; PowwR ‘ "M ~ {q " EVAPORATED MILK _ HIOALGO +P>OIEIO I cmcnon I 3g- Loccrtion of milk products manufacturing plants in Texas, by types of product summer 1957 DECEMBER I957 TEXAS AGRICULTURAL EXPERIMENT STATION R. D. LEWIS. DIRECTOR, COLLEGE STATION TEXAS Summary The 12,800 Texas farmers selling milk during 1957 marketed an estimated 260 million gallons of ,4 milk having a farm value of 115 million dollars and a retail value of more than 230 million dollars. The» average Texas dairy producer sold about seven times more milk in 1957 than in 1944 and almost five, times more than in 1949. - f» Almost half of the Texas farm families now purchase the milk they consume, as compared with less i than 10 percent during 1940. The trend among dairy farmers in Texas has been toward greater specialization in producing for the; wholesale fluid milk market. Farm production and sale of butter, cream and other milk products have been replaced by the sale of fluid- milk to milk handlers and processors. - Data on production of manufactured products for 1957 represent estimates of plant managers and- are based on actual output up to the time of interview (summer 1957) and anticipated production for the remainder of the year. Twenty-one of the 34 plants surveyed are under corporate ownership, 5 are owned by milk pro- ducers’ cooperatives, 4 are under individual ownership and 4 are partnerships. Twenty-one plants enga in other activities besides handling and processing milk and milk products. Nine of these are subsi-, diaries of large corporations engaged in multiple processing and distribution operations and 3 are cor porations, engaged in handling and processing other-products. Twenty-two plants processed only on of the six manufactured dairy products sold during 1957; 7 plants manufactured two products; fill 5 plants processed three or more. i ' ' Although the average age of the basic plant buildings is 21 years, and ranges from 1 to 48, eve plant except 1 has received major repairs or replacements of equipment. In general, plants are in a fair _ ly good state of repair and are equipped with modern facilities. ' Nineteen of the 34 plants made butter during 1956-57; 14 made cottage cheese; 9 made condens j milk, 6 made American cheese and 4 made powder. These plants manufactured 4.4 million pounds o butter, 2.8 million pounds of American cheese, 5.6 million pounds of cottage cheese, 7.7 million pounds u, condensed milk and 3.8 million pounds of powder during 1956. The estimate for 1957 was 5.1 millio pounds of butter, 3.9 million pounds of American cheese, 7.1 million pounds of cottage cheese, 8.6 m1, lion pounds of condensed milk and 4.4 million pounds of powder. This represents 227 million poun of fluid milk utilized during 1956, and more than 270 million pounds estimated for 1957. T’ Fifty-four percent of the milk utilized by the 34 plants was received directly from producers ing near the plant. Other sources include producers’ associations, receiving stations and other plants an milk handlers. Most processed products are sold to consumers or distributors located in centers of pop lation or rural areas adjacent to the plant. A - The manufacturing capacity of Texas processing plants appears adequate to handle all the surpl milk produced in the State. This capacity represents 31 percent of the 9.9 million pounds of milk ff duced daily by Texas commercial dairy farmers. f Although the plants operated an average of 51 hours per week, they processed only 1.6 milli pounds of fluid milk into manufactured dairy products per day during the summer of 1957. Tvlf volume represents 49 percent of the plants’ capacity based on 48 hours of operation. . L: In 23 of the 34 plants, the processing and sale of dairy products are incidental to fluid milk o, tribution. This partly explainswhy only 24 percent 0f these plants’ daily milk receipts are proces‘ into milk products and why many plants operate at fractional capacity. Use of processing facilities‘ a year-round basis could be improved by’ greater uniformity and less seasonal variation in manufacturi milk supplies. is '” The increased use of a bulk transportation system makes possible the rapid movement of fluid m, from surplus to deficit areas of the State. - Some interested state-Wide organization possibly would render great benefits if it could obtain,',' ordinate, and release daily information on which areas in the State have surplus milk and which pla or handlers are in short supply. E 1954 CENSUS OF AGRICULTURE SHOWS THAT 1 mercial dairying was established in 248 of as’ 254 counties. ‘In 1944 there Were 42,000 p mercial dairies reported in Texas, in 1949 e were 22,000 and in 1954 there were 14,000. the fall of 1957 approximately 12,800 Texas i ers were selling milk. This estimate is based county agricultural agents’ reports of Grade ” dairies in Texas and on the fact that in 113 nties, for which accurate data are available, number of farmers selling Grade “A” milk I ing the summer of 1957 was only 83 percent the number during 1954. While the number of , s classified as dairy farms decreased 33 per- f- during 1944-54, the amount of milk sold by L as dairy farmers increased from 168.3 to 204.4 ' lion gallons during that same period. According to census definition, a farm is sified as a dairy farm if the value of the sales dairy products represents 50 percent or more gthe total value of the farm products sold or if j) milk and milk products account for 30 percent I more of the total value of products sold, and ' ' milk cows represent 50 percent or more of all is and (3) the sale of milk and milk products i s the sale of cattle represent 50 percent or more ..the total value of farm products sold. i It is estimated that the 12,800 Texas farmers _, ing milk marketed over 260 million gallons of ‘id milk during 1957 with a farm value of 115 lion dollars. This includes the sales by some " 00 ungraded producers who were selling milk to ' products processing plants. The retail value athis milk amounted to about 225 million dollars. e average Texas dairy producer selling milk p ing 1957 marketed about seven times more 1 than the average producer during 1944 and ost five times more than in 1949. Daily sales roducers averaged 95 pounds during 1944 and _ pounds during 1949. Daily sales per producer ‘504 pounds during 1954 increased to about 714 l nds during 1957. This indicates a trend in two ‘i: smaller than average producers are going n of the dairy business for the most part and g remaining in production are increasing the ume of mill§frrarketed on; the average. cent Changes in Dairying in Texas l Despite the series- of dry years over most the State, the development of dairying has e great strides. This development resulted Economics of Milk Products Processing Plants in Texas RANDALL STELLY, Assistant Professor Department of Agricultural Economics and Sociology partly from the response of dairymen to supply the fluid milk needs of an increased urb-an popu- lation and from the tendency of most milk pro- ducers to specialize in dairying instead of using it as a sideline to cotton or other cash crops. Some of the more pronounced changes in the Texas dairying industry since 1940 are presented in Tables 1 and 2. The number of milk cows on farms declined from 1.3 million in 1940 to 729,000 at present. Annual production per cow increased from 3,200 pounds of milk during 1940 to 4,320 pounds during 1957 while total production of milk in Texas decreased from 4.2 billion pounds to 3.1 billion pounds during this period. The 35 percent increase in milk production per cow was more than offset by the 45 percent decrease in the num- ber of milk cows on Texas farms. During 1940 milk cows were found on 93 per- cent of the farms, but in 1954 only 55 percent Contents Summary ................................................................... .- 2 Introduction ............................................................. .. 3 Recent Changes in Dairying in Texas .............. .. 3 Purposes of the Study .......................................... .. 5 Method of Study .................................................... -. 5 Location and Number of Plants and Products Manufactured .................................... -. 5 Type of Ownership ................................................. .. 6 Age of Plants, Major Repairs and General Conditions ............................................ .. 6 Volumes and Products Manufactured ................ _. 6 Sources, Volume and Price of Milk Supplies..- 7 Transportation .................................................... .. 8 , Bulk and Can Shipments .................................. .- 8 Prices Paid ........................................................... -. 8 Milk for Manufacturing ....................................... .. 8 Distribution of Manufactured Products ............ -. 9 Production by Type of Product .......................... .. 9 Butter .................................................................... .. 9 American Cheese ............................................... .. 10 Cottage Cheese.-. ............................................... _. 10 Condensed Milk ................................................... .. 10 Milk Powder ........................................................ ._ 10 Future Production Plans ...................................... .. 10 Processing and Equipment .................................. -- 11 Butter . . . . . . . . . _ . . . . . . . . . _ . . . . . . . . . . .. ._ 11 Cheese ................................................................... -. 11 Condensed, Dried and Evaporated Milk ........ .. 11 Acknowledgments ................................................... .. 12 TABLE 1. CHARACTERISTICS OF THE DAIRYINDUSTRY IN TEXAS. 1940-57‘ Item 1940 1944 1949 1954 1957 Estimated Farms reporting milk cows 338.081 320.107 229.870 161.296 Number oi dairy farms 10.421 11.867 9.593 8.378 8.300 Number milk cows on farms. 1.000 1.310 1.392 1.010 812 729 Yearly milk production per cow. pounds 3.200 . 3.030 3.270 3.750 4.320 Total milk production on iarms. million pounds 4.192 4.218 3.303 3.045 3.140 Milk consumed on farms. million pounds 1.007 966 669 *': l; 446 365 ' Butter churned on farms. 1.000 pounds 41.000 33.000 23.500 11.000 9.500 i Milk retailed by farmers. million pounds 310 300 220 150 " 118 Cream sold to plants and dealers by farmers. million pounds 1.010 733 238 88 55 No. farmers selling cream ' 71.877 55.618 24.041 9.278 4.500 Value of cream sold. $1.000 10.840 14.602 3.433 1.388 86. Whole milk sold to plants and dealers by farmers. million pounds 1.084 1.448 1.372 1.758 2.25 No. farmers selling milk ' 36.230 42.219 22.235 14.128 12.80? Farm value of whole milk sold, $1.000 34.425 66.121 79.718 89.932 115.113 " Daily average sales per producer. pounds 82 95 172 504 714 Value oi milk sales per farm. dollars 950 1.574 3.623 6.420 9.000 Farm value of sales oi milk and" milk products. $1.000 48.445 89.810 122.659 130.849 138.000 ' Value of products consumed on farms. $1.000 31.835 50.193 57.713 37.092 31.600 1 ‘ Gross iarm income from dairy products. $1.000 80.280 140.003 180.372 167.941 169.600 ' Deilated values oi’ V Cream sold by farmers. $1.000 10.948 10.070 2.738 815 Whole milk sold by farmers. $1.000 34.753 45.601 39.859 40.148 50.488, Milk sales per iarmer. dollars 960 1.086 1.812 2.866 4.047 Farm sales of milk and milk products. $1.000 48.929 61.938 61.333 58.411 . Products consumed on farms. $1.000 32.153 34.616 28.856 16.558 Gross farm income from dairy products. $1.000 81.083 96.554 90.186 74.969 ‘Sources: Washington. D. C. ’Deflated by index of prices paid by farmers. 1935-39=100. of farmers reported owning milk cows. One-half of Texas farm families now are purchasing the milk they consume. While the total number of farms in the State decreased 30 percent, the num- ber of farm families having milk cows decreased 52 percent during that period. As dairy farmers have moved toward more specialization in production of fluid milk for sale to commercial milk handlers, they have dropped many of their previous retail fluid milk sale and milk product processing and sale functions. For example. in 1940 the yearly farm production of butter, decreased from 41 million pounds, utilizing 800 million pounds of fluid milk, to 11 million pounds in 1954 utilizing 227 million pounds of milk. Sale of fluid milk at retail by farmers de- creased from 310 million pounds during 1940 and TABLE 2. CHANGES IN MILK PRODUCTION AND SALES BY TEXAS FARMERS. 1940 AND 1957 “Milk. Farm Production. Disposition and Income" U. S. Department of Agriculture. Agricultural Marketing Servic Crop Reporting Board. Washington. D.C..' U. S.‘Department of Commerce. Bureau of the Census. U. S. Census of Agricultur 150 million pounds during 1954; the sale of mi equivalent in the form of cream and butter d clined from 1,676 million pounds to 88 milli pounds during that period. During this same I year period total consumption of fluid milk t‘ Texas farms decreased from 1,7 00' million poun to 717 million. The sale of fluid milk at wholesale by farms increased from 1,006 million pounds in 1940 l an estimated 2,250 million pounds during 19 ‘ but the total sales of milk and equivalent remain about the same from 1940 (2,492 million poun to 1954 (2,328 million pounds), Figure 1. ~ During 1940 only 24 percent of the total m _ produced on farms was sold by farmers as fl 5 milk; this figure has increased to 71 percent. , Item 1940 1957 Total production of fluid milk. million pounds 4.192 3.140 Sales of milk and equivalent to dealers. million pounds 1.006 2.382 Percent oi total sales 40 93 Sales of milk and equivalent at retail by farmers. million pounds 1.486 ' 173 Percent oi total sales 50 7 Total sales. million pounds 2.492 2.555 Percent of production 59 , 81 Consumption on farms. million pounds 1.700 ' 585 Percent of production 41 19 Daily sales o1 fluid milk per tarm. pounds 82 714 4 rue Sold a A l ‘ TH‘ mi YI-‘igure 1. Disposition of milk produced by Texas farmers, o-57. Source: “Milk. Farm Production, Disposition and me." USDA. AMS. Crop Reporting Board, Washington, Purposes of the Study This study was undertaken to furnish the ' y industry information considered essential iestablishing economically located and efficient- l» operated dairy products processing plants in i" as. Farm production and sale of butter, cream fr other milk products has been replaced by the e of milk to milk dealers for processing. Dairy ers have become increasingly dependent on g essing plants and milk handlers for disposi- of their output. In most areas of the State q ers produce more milk than is utilized as 'd, or Class I milk. In some areas 3O percent of . _ milk is utilized as Class II, or put to manufac- _i ing‘ use. This indicates that the total consump- of fluid milk in Texas has not kept up with ,1 eases in total sales by Texas dairy farmers. hough seasonal fluctuation in production has ,n decreasing recently, it has not been elimi- completely. The problem of excess produc- (fluid milk production in excess of the quanti- consumed as fresh or fluid milk) continues to acute during periods of flush production. o, The depressing effect of production in excess consumption requirements on the price pro- p rs receive for milk is probably greater with qect to milk than most other farm products; k that is not consumed as fluid milk is pro- ied into various milk products. In markets er Federal Marketing Orders, regulations stip- minimum prices for milk used in Class I i Class II. In Texas markets during 1956, the I price averaged $5.90 per hundred pounds the Class II price averaged $3.30, or only 56 Pent of Class I price. Prices received by farm- therefore, are affected vitally by the percent- of total producer milk used in processing milk ucts. From the standpoint of quality there is no perence in that part of a Grade “A” producer’s used in, and priced as, Class I and Class II. “eof the milk may have come from the same udder. Thiswide difference in price causes dairy farmers to strive for Class I use of as large a part of their total sales as possible. This price dif- ference is the main cause of reduction in the num- ber of Grade “B” and ungraded dairy farmers and volume of ungraded milk sales. It is the force be- hind every farmer’s attempt to obtain Grade “A” rating and qualify for sale of Grader “A” milk at Class I prices. Milk sales by Texas farmers probably will continue to exceed consumption of fluid milk in the State. If this trend continues it will become more important to the dairy industry that milk products processing plants be capable of efficient- ly using the ‘5excess” milk. Method 0/ study This information was obtained through per- sonal interviews with the management personnel of 34 dairy products processing plants operating in Texas during the summer of 1957. Personnel of these plants were the most reli- able source of information needed in this study since they utilize in their processing the excess milk produced in Texas. .- Production data for 1957 represent estimates of plant managers, and are based upon actual out- put up to the time of interview and anticipated production for the remainder of the year. Location and Number of Plants and Products Manufactured The 34 manufacturing plants surveyed are located in 28 counties in the State (see map on cover). Most of the newer plants were built in connection with facilities for handling raw milk receiving and packaged milk distribution and were adjacent to areas of concentrated Grade “A” milk production and centers of consuming population. Processing equipment was installed subsequently in those plants to utilize excess milk as producer deliveries of Grade “A” milk increased. As a rule the older plants were built adjacent to areas of ungraded milk production and, as orig- inally designed, most were erected primarily for processing raw milk into milk products. However, as the volume of ungraded milk marketed solely for processing decreased, managers of these older plants have placed more emphasis on handling Grade “A” milk and. less on processing ungraded milk. Thus, many of the older processing plants are no longer ideally located from the standpoint of sources of raw milk supplies and milk con- sumers. Improved transportation facilities and bulk handling, however, have decreased the impor- tance of having raw milk supplies produced near- by and of being located immediately adjacent to large population centers. Twenty-two of the 34 plants produced only one of the six manufactured dairy products dur- 5 ing 1956-57; 7 plants manufactured two products and 5 plants p-roduced three or more products. N0 p-lant manufactured all five products.) In addition to the 34 plants surveyed, 2 co- operatively owned plants under construction in Bexar and Hopkins counties, scheduled for com- pletion in 1957, will have a combined capacity of 88,000 pounds of condensed milk, 15,000 pounds of evaporated milk and 1,000 pounds of American cheese p-er 8-hour run. Nineteen plants manufacured butter, 14 plants made cottage cheese, 6 made American cheese, 9 made condensed milk and 4 manufact- ured powdered milk. Type of Ownership ‘Twenty-one plants are under a corporate type of ownership, 5 are owned by milk p-roducers’ co- operatives, 4 are under individual ownership and 4 are p-artnerships. Twenty-one of the 34 plants are engaged in other activities besides handling and processing fluid milk and milk products. Nine of these are subsidiary to large corporations engaged in mul- tiple processing and distribution operations and 3 are corporations engaged in handling and pro- cessing other products——such as egg handling, feed and fertilizer manufacturing and poultry pro- cessing. Five plants belonging to milk producers’ organizations engaged mainly in handling and pro- cessing milk and milk products, 1 engaged in chain grocery store operations, 1 in soft water service and a sheep ranch, 1 in orangeade and ice cream novelties and 1, under individual ownership, en- gaged in cattle ranching and general farming. “Age of Plants, Major Repairs and General Conditions The basic buildings of the oldest plant operat- ing in Texas were built about 1909, while the new- est plant was constructed in 1957. Although the average age of Texas plants is 21 years, milk pro- ducts manufacturing plants in Texas cannot be considered obsolete. Six plants were b-uilt less than 10 years ago. Those 6 plants have a combined capacity per 8-hour run of 5,900 pounds of cottage cheese, 33,000 pounds of condensed milk, 18,000 pounds of powder, 4,000 pounds of American cheese and 2,500 pounds of butter. Every plant except the one built during 1957 reported major repairs or replacements of equipment. Some of the major repairs, additions or re- placements of equipment made during the past 10 years were: Major Repairs or Replacement Plants Installed new pasteurizers and boilers ................................................ .. 11 Built new cold storage and equipment ........................................... .. 6 Installed new cheese vats .................... _. 5 Enlarged warehouse storage space .... -- 4 Made major repairs to plant I buildings .................. .. .......................... .- 3 - Installed new homogenizers ................ -. 3 I Installed new evaporating and con- densing equipment ................ .......... -. 3 Installed new refrigeration equlip- ment ..................................................... .. 3 ’ Installed complete American cheese .. equipment ............................................ .- 2 Installed complete butter equipment 2 Installed new receiving equipment .... -- 3 ~ Replaced all butter, cottage cheese and condensed milk equipment ........ -. 1 Volumes and Products Manufactur Nineteen of the 34 plants surveyed m,‘ factured creamery butter during 1956-57 ; 14 I . ufactured cottage cheese, 9 made condensed _ 6 made American cheese and 4 manufactu‘ powder, Table 3. Some plants made more than f product. The milk products manufactured those plants during 1956 represent 227 mi f pounds of fluid milk equivalent and about Y million pounds during 1957. This represents a overall increase in fluid milk utilization of 19 i cent between 1956 and 1957. The estima.’ volume and percentage increase is based on "'_ plants that gave information on-total output . 1956 and estimated output for 1957. r‘ The daily manufacturing capacity (based an 8-hour run) of the 34 plants of all p-rod manufactured is 3.2 million pounds of fluid or equivalent. However, the total milk equiv j represented by actual output of all the prod manufactured during the summer of 1957 y 1.6 million pounds per day. This indicates that" the average, plants during the summer of 1‘ were operating at 49 percent of capacity -. justed for an 8-hour day. “Capacity” refers to"; quantity of product that can be processed du f 8 hours of operation; “excess capacity” -' that plants are not producing all they are cap, of producing during a specific time; they 1 1 operating at a fraction of capacity. - Information concerning the number of h of operation per week was obtained from 3 the 34 plants surveyed. These 31 plants aver‘ 51 hours per week-ranging from 8 to 144 h, of operation per week during the summer of 1 One plant operated only 1 day of 8 hours. week while, at the other extreme, another I operated 24 hours per day, 6 days per week. though plant operation averaged 51 hours, week, actual daily output amounted to only percent of capacity—adjusted to an 8-hour i‘ For most Texas plants "the manufacture sale of manufactured milk products can be“ sidered supplemental to packaging and dist ing fluid milk. Twenty-three of the 34 plants’ TABLE 3. PRODUCTION CHARACTERISTICS OF TEXAS DAIRY PRODUCTS PROCESSING PLANTS. SUMMER 1957 Item Butter American cheese Cottage cheese Condensed milk Powder All products , -- er of plants processing‘ 19 6 14 9 4 i A No. No. No. No. No. All Quantity plants Quantity plants Quantity plants Quantity plants Quantity plants products acity per 8-hour ‘period, pounds 64,600 19 25,000 6 43.280 14 273,890 9 57.100 a1 daily output, pounds’ 13,504 17 31,428 6 33,956 14 159,091 9 24,154 . cent capacity operatedg 22.0 17 82.2 6 61.6 14 54.5 9 57.6 3 48.8 g milk equivalent represented by Y capacity, pounds 1,473,600 19 250,000 6 229,870 14 822,022 9 472,000 4 3,247,492 tal milk equivalent represented by actual "output, pounds 307,980 17 314,275 6 180,356 14 ' 5477.513 9 303,213 3 1,583,339 ' ge in capacity per 600 to 2,000 to 80 to 1,590 to 9,600 to l-hour period, pounds 15,000 19 5,000 6 18,000 14 132.000 9 19,500 4 Age‘ in actual daily 50 to 1,000 to 40 to 1,060 to 1.154 to “utput, pounds’ 2,690 17 8,300 6 11,000 14 88,000 9 18,000 3 i- ated output during __ 957, pounds 5,141,000 17 3.852.800 4 7,082,681 12 8,649,000 4 4.370.000 3 270,450,158‘ .- output during .1956, pounds 4,404,930 17 2,841,369 4 5,570,601 11 7,654,152 4 3,816,250 227,156,554‘ ‘cent increase estimated 20.5 16 35.6 4 22.5 11 8.0 3 14.5 3 19.1 ‘plants produced three or more. Wllrage oi more than 8 hours per day. - usted tor an 8-hour period. iunds of milk equivalent. yed are engaged in p-ackaging and distributing id milk. This explains why only 24 percent of i l daily milk receipts are utilized in the manu- ture of milk products. Many plants operate at _ fractional capacity during months of low re- 'ts and at full capacity during seasons of flush ‘_k production. Of the 5 plants under coop-erative type of A ership, 3 manufactured two or more products. ,_ree of the 5 plants manufactured powder, 2 >=de condensed milk, 3 manufactured American Tese and only 1 plant made butter. These plants ve a combined capacity of 55,500 pounds of con- sed milk, 14,000 pounds of American cheese, ,100 pounds of powder and 1,000 pounds of but- x . This represents a utilization capacity of 730,- , pounds of fluid milk equivalent under co- ‘Irative ownership. However, most cooperatively x ed plants also are utilized at only fractional icity with most of their operation occurring '4 ing periods of surplus producer milk receipts. hough these plants operated an average of 68 ’ s per week during the summer. of 1-957 they . ed out only 65 percent of the condensed milk, percent of the butter, 140 percent of the Ameri- cheese and =19 percent of the powder that they - capableiof producing during an average of hours p-er week. The high output of American lese relative to capacity per 8-hour period is unted for by the fact that 2 of the 3 plants _. ufacturing this product operated 12 hours day, 6 days per week during that period. i? 34 manuiacturing plants in the State were included in the survey. Twelve plants manuiactured two or more products, and and actual output per day may be higher than capacity per 8-hour period in cases where some plants operated an Sources, Volume and Price of Milk Supplies The 34 plants included in this study received a total of 6.7 million pounds of fluid milk per day during the summer of 1957. Of this amount, 3.6 million pounds were received from individual pro- ducers, 1.6 million pounds from milk producers’ associations and 1.5 million pounds from receiv- ing stations and other plants, Figure 2. Sources of milk SllpplleS were not obtained from 2 of the 34 plants interviewed. Houston, in Harris county, functions as a receiving point for producer milk obtained from about 2,000 pro- ducers in South and East Texas counties. One plant obtained fluid milk and 4 plants obtained powder from sources outside the State. Some milk producers’ associations are be- coming more active in controlling the marketable milk of their members. In some areas, producers’ associations assume the responsibility for market- ing almost all of their members’ output while in other areas associations are less active. In some parts of the State, deliveries by producers’ associa- tions account for almost 100 percent of the milk received by plants; in other areas deliveries by producers account for most of plant receipts. Interplant receipts, or transfers of milk, occur frequently when some plants are oversupplied with milk while others are in short supply. One plant 7 OUT OF STATE SOURCE _ / OUT OF STATE SOURCE OF STATE Figure 2. Source oi milk supplies utilized in milk products manufacturing in Texas plants. summer 1957. obtained part of its fluid milk supplies directly from producers residing in another state and 4 plants used in their manufacture of dairy products 13,770 pounds of milk powder per day which they obtained from two other states. Since there are 4 plants in Texas manufactur- ing 24,000 pounds. of milk powder per day, an at- tempt was made to determine why the plants using powder in their manufacture did not obtain it from Texas milk powder plants. The answer is that the powder manufactured in Texas generally lacks consistency in quality. This may be caused by improper cleaning of equipment during rush periods and excess of capacity utilization when ac- cumulation of large volumes of surplus milk re- sults in improper processing. This is true with other products also, especial- ly when returned Class I milk during surplus periods is sold or utilized for manufacturing pur- poses only after it cannot be moved in Grade “A” channels. Specific cases involve managers of American cheese plants who, when pressed for time, remove the cheese from the presses too soon. The equipment is not capable of handling the volume in process; the curd is turned too often and too fast; or the starter may be insufficient, re- sulting in an inferior product. TRANSPORTATION Fifteen plants transported part of their milk supplies in their own trucks, 19 plants received milk in trucks under contract, 3 received part of their milk by rail and producers transported their own milk to 23 plants. (Most plants received milk by two or more transportation methods.) Two plants used their own trucks to transport 100 percent of their milk supplies and 5 plants received all of their milk in trucks under contract 8 while 2- plants reported that producers delivered 100 percent of the milk received. t Fourteen plants received from 50 to 99 per- cent of their milk by trucks under contract, 7 in company trucks and i5 reported that producers delivered from 50 to 99 percent of their milk sup- plies. Four plants received" up to 49 percent I their milk by trucks under contract, 6 used com“ pany trucks to transport 49 percent of their milk to the plant while 16 stated that producer brought in 49 percent of milk receipts. The» plants receiving milk by rail reported such r ceipts as less than 25 percent of the total. BULK AND CAN SHVIPMENTS Twenty plants received milk in bulk. h; these, 5 received 100 percent of their milk su plies in bulk and another 5 received between 5, and 99 percent. Four plants received between 5, and 49 percent of their milk in bulk while 6 r ceived less than 25 percent by that method. O'_ plant has been receiving milk in bulk for mo f than 10 years and 2 plants have been receivi . in bulk 5 to 9 years. Thirteen plants reported r ceiving bulk milk 1 to 4 years and 4 plants start receiving in bulk less than a year ago. l‘ Handling Grade “A” milk in bulk on Te -_ dairy farms began during 1953, when bulk ta were first installed by Grade “A” farmers. f graded milk has been transported in bulk to p' . cessing plants for more than 10 years. The p0 tion of producer milk handled in bulk ranges fro 55 percent of total deliveries in some areas of t State to less than 10 percent in others. Most -7 the intermarket or interplant transfers of fl milk and deliveries by producers’ associations r receiving stations are transported to the plan in bulk. Generally, milk that is transported" the plants in bulk originates from a greater d’ tance than milk delivered in cans. ' Of the milk received directly from produc by plants included in this study, 63 percent w received in cans and 37 percent in bulk. Receip ing stations and producers’ associations deliver 60 percent of their milk in bulk and 40 perce in cans to plants. < PRICES PAID The 15 plants that furnished information prices paid for Class I milk paid an average $5.66 per cwt. for this milk. Nineteen plants w an average of $3.14 per cwt. for Class II and I graded milk. The average price paid for but l} fat was 55 cents per pound by the 12 plants y gave this information while the 4 plants us" powder paid an average of $16.87 per cwt. Th are prices paid for products delivered at plant; Milk for Manufacturing It is difficult to determine accurately the I portion of milk produced by Texas dairymen is used for manufacturing because of the in TABLE 4. MILK USED IN MANUFACTURING DAIRY PRODUCTS-WHOLE MILK EQUIVALENT BASIS. 1946-56‘ Creamery Evaporated and Ice cream and Other 4 butter Cheese condensed milkf frozen products products“ Total _ _ _ — — — — — — — — Thousand pounds — — — — — — — — — — — 306.652 105.150 67.975 369.431 1.256 806.651 314.799 119.925 78.450 317.932 3.349 794.886 227.544 82.350 59.025 288.159 4.581 627.478 243.170 52.725 57.850 270.772 6.233 600.586 224.263 46.475 57.225 285.864 8.209 591.285 124.777 32.350 42.450 319.067 10.395 497,634 109.598 34.900 23.625 287.114 12.791 439.315 129.688 50.225 44.850 260.704 13.884 472.061 121.138 47.475 31.025 252.181 16.698 442.344 117.522 31.250 35.125 254.045 19.651 432.220 102.969 26.628 69.885 256.590“ 21.000 477.072 her special milk products. unt of iat removed in making ice cream. (“eludes mellorine type frozen desserts and mix. te movement of milk supplies. Estimates of f amount of milk used for manufacturing in as are shown in Table 4. These indicate that 1e total volume of such milk declined by 45 per- p t during the 11-year period of 1946 to 1956. dications also are that the proportion of the ,1 milk used in making dairy products was 35 1 cent during 1946 and 25 percent during 1950, f‘ dropped to 19 percent during 1955. The de- e in the volume of milk production from 4.2 ion pounds to 3.0 billion pounds that occurred ing that 11-year period partly explains this 1p, but probably a greater factor is the reduc- 'n of from 630 million pounds during 1946 to j million pounds during 1954 in the amount of p’! used to make farm-churned butter. §..The increase of 45 million pounds of whole ‘k used during 1956 went mainly into increased . put of unsweetened condensed milk and re- ; ts an increase in the volume of milk marketed ._producers in those areas of surplus producer verles. Distribution of Manufactured ’ Products i Most of the milk products manufactured by s processing plants are sold by processors to umers and distributors in Texas, with most p e primary sales areas located in the centers pulation and counties adjacent to the plant tion. Exceptions were found mainly among e plants operating as subsidiaries to large cor- tions engaged in distributing a multitude of ucts over wide areas and in several states. Qexample, one such plant shipped its butter parent distributors in four adjacent states e some ‘American cheese was moved from “s to Missouri and California. Some Ameri- i_ cheese went to the U. S. Department of Agri- , re. These purchases were through the De- ' ent’s Dallas office. A small amount of cot- i cheese was moved into New Mexico. puree: “Production oi Manufactured Dairy Products", USDA. AMS, Annual 1948-55. udes milk equivalent used in manufacturing unsweetened skimmed condensed and unskimmed evaporated milk. eludes milk equivalent of dry cream. malted milk powder, dry or concentrated ice-cream mix. creamed cottage cheese and vplication removed by making deductions for the amount of fat removed in whey cream and used for making butter and In the past, New York, Chicago, San Fran- cisco and Los Angeles were considered relatively important markets for dairy products produced in Texas, but at present out-of-state movements are insignificant. Most of the plants that also engaged local fluid milk distribution sold most of their manu- factured dairy products on their own fluid milk routes or to the stores which handle their fluid milk. Production by Type of Product BUTTER The 19 butter processing plants in Texas re- ported a combined daily manufacturing capacity of 64,600 pounds of butter. Actual production of 17 of those plants during 1956 amounted to 13,- 504 pounds per day. This indicates that they op- erated at about 22 percent of capacity, based on an 8-hour basis of operation per day, 6 days per week. The manufacturing capacity of butter plants ranged from 600 to 15,000 pounds While the actual daily output ranged from 50 to 2,690 pounds of butter. The total production of butter from 17 of the 19 plants amounted to slightly more than 4.4 mil- lion pounds during 1956. Estimated output of butter during 1957 was slightly more than 5.1 million pounds, an increase of 20 percent over 1956. Most plants producing butter in Texas con- sider the manufacture of that product as inci- dental to the manufacture of other dairy pro- ducts, such as American cheese and cottage cheese. Many plants obtain the cream that is manufac- tured into butter as a residual to powder, con- densed and evaporated milk, cottage cheese and American cheese manufacturing. In most plants greater value is placed on and realized from the solids not-fat in the milk than on the fat or cream. In other Words, the milk is handled primarily for 9 the solids not-fat in the milk rather than the but- terfat it contains. Managers of 12 of the 19 plants manufacturing butter reported. that they also manufactured other milk products. Five of these plants also produced condensed milk, ‘6 made cottage cheese, 2 manufactured powder and 1 each made American cheese, evaporated milk and concentrated whey. Five of these 19 plants man- ufactured 2 or more products besides butter and 9 were engaged in activities unrelated to the dairy _ industry. AMERICAN CHEESE The 6 American cheese manufacturing plants reported a combined capacity of 25,000 pounds of cheese per 8-hour run. These plants had a daily output of 31,428 pounds. However, when ad- justed to an 8-hour day these plants were oper- ating at only 82.2 percent of capacity. Plant ca- pacity ranged from 2,000 to 5,000 pounds but ac- tual daily output ranged from 1,000 to 8,300 pounds, indicating that some plants were oper- ating more than the usual 8 hours per day while others were operating at about 50 percent of ca- pacity. The total 1956 output of 4 of the 6 plants amounted to 2.8 million pounds and estimated pro- duction for 1957 was placed at 3.9 million pounds which indicates that plants from which this in- formation was obtained increased output of Amer- ican cheese during 1957 by about 36 percent com- pared with 1956 output. COTTAGE CHEESE The 14 plants manufacturing cottage cheese reported a daily capacity of 43,280 pounds. How- ever, these plants actually produced a total of about 34,000 pounds per day which means that they were operating their cottage cheese equip- ment at slightly more than 61 percent of capacity. Plant capacity ranged from 80 to 18,000 pounds while actual daily output per plant ranged from 40 to 11.000 pounds. Total output during 1956, for 11 plants reporting, amounted to 5.6 million pounds and estimated output for 1957 of 12 plants was 7.1 million pounds. This indicates that dur- ing 1957 the total production of cottage cheese by Texas plants was 22 percent more than the amount produced during 1956. CONDENSED MILK The 9 plants manufacturing condensed milk reported a combined daily capacity of 273,890 pounds, but the actual daily production of these 9 plants was 159,091 pounds. These plants op- erated at 55 percent of capacity. The range in plant capacity was from 1,590 to 132,000 pounds. However, the actual output ranged from 1,060 to 88,000 pounds. Total production of condensed milk for 1956 was 7.6 million pounds and estimated output for 1957 was 8.6 million pounds. Only 3 plants fur- nished information for both years and the man- 10 agement personnel indicated an over-all increase of 8 percent in condensed milk production during 1957. A MILK POWDER The 4 powder plants reported a total capacity , of 57,100 pounds of powder for an 8-hour period. Actual daily production of powder for 3 plants was 24,000 pounds per day. These figures indi- cate that these plants were operating at 58 per-L cent of capacity based on an 8-hour day. The manufacturing capacity of the powder plants ranged from 9,600 to 19,500 pounds. The rang in actual capacity of these plants was from 1,00 to 18,000 pounds of powder per day. The range, of output to capacity was from 12 to 100 percent for the three plants which supplied information in both categories. a Total production during 1956 from 3 of th- 4 plants manufacturing powder was 3.8 millio pounds. The estimated 1957 output of powde was 4.4 million pounds, an increase of half a mil’ lion pound-s, or 15 percent, over 1956. ’ Future Production Plans The managers of the manufacturing plan . included in this study were questioned about thei production plans for 1958 and for the next 5 yea A ' and the reasons for future plans. Fifteen managers reported that they plan i remain at the same level of output during 195 ' 14 plan to increase production, 2 indicated th they plan to decrease production in that peri and 3 managers did not supply this informatio During the next 5 years, 8 plan to remain at t * present level of output, 16 plan an increase in pr duction, 1 indicated a decrease in production a 9 managers did not supply this information. The reasons given for future production pla can be grouped into three categories: optimis uncertain and pessimistic. In the first catego were such statements as: increased number i sales outlets; population increases forecast; , tural desire of management to increase prod . tion; operate plant more efficiently and econo ically; natural increase in production and sal tight economic times coming with more farm getting into dairying, thus increasing availa supplies of manufacturing milk; plan to en another phase of milk processing (ice cream). _ In the uncertain category were such sta, ments as: depends on supply and demand; not be sure of present cream supplies; may han a greater volume of fluid milk but not manuf ture more milk products; labor uncertainty; pends upon producer receipts. f The pessimistic statements included the - lowing: production willnot pick up too mu some present cream producers will drop out; ~ heavy competition for supplies; competition f , oleomargarine is increasing while butter is d l t; marketing orders Work against the milk pro- s, ct manufacturers. v In general, industry-side sentiment appeared timistic about future plans. The pessimistic ‘tements for the most part came mainly from a. small manufacturer. Processing and Equipment In addition t0 the economic data previously cussed, information relative to processing of various products also was obtained from man- lament personnel. This information gives an ication of the processing equipment and the ;, eral condition of plant equipment found in xas milk product manufacturing plants. l The summary of processing information is ;esented in three phases: butter processing, ieese manufacturing and evaporated, condensed y» dried milk. a TTER f The managers for 14 of the 19 butter pro- sing plants reported that they graded produc- is cream used in their manufacture, 4 reported at they did not use graded producer’s cream lid 1 plant did not furnish this information. How- er, 17 stated that they made butter from ‘faded cream while 2 did not. Concerning the method of neutralizing cream, reported neutralizing by calculation, 2 used the tomatic process and 3 did not neutralize the Tam. Ten plants filter the cream before pas- q rization, 3 filter it after pasteurization, 3 filter efore and after while 3 plants do not filter it. iur plants use the stainless steel type of filter, iuse cloth and 4 use both stainless steel and th. it Eight plants pasteurize the cream in coil vats, utilize the flash method, 2 use the flash-and- l uum method and 1 each utilizes batch pasteur- ,r, holding method, holding and vacuum, short e and vat with steam circulating in the jacket. l ee plants cool the cream in coil vats, 12 in inless-steel surface coolers while 1 plant each w an aerator and coil vat, tinned surface cooler 7: coil vat, batch pasteurizer and sweet Water ‘ direct expansion. Eleven plants churn the a: in wooden roller churners, 2 use metal a ners, while 6 plants churn in wooden rolless vjrners. Managers of 8 plants reported that the jter they process is printed from Friday boxes 9 utilize the automatic printing process. .uC0ncerning disposition of buttermilk, man- _rs of 10 plants stated that they used it as hog other animal feed. 4 sold it as liquid butter- k. 1 used it in mellorine processing and 4 dis- “ed of it in the sewage disposal system. Lassa 1 Managers of 16 of the 21 cheese processing ‘its, including the one under construction, sta- ted they standardize the milk daily for fat, 4 standardize it daily for solids not-fat, 14 do not standardize it for not-fat and 4 do not standardize it for fat. Twelve utilize the high-temperature- short-time method of pasteurizing the milk, 3 em- ploy the flask method and 1 each makes use of the vat method, vat and holding system, batch and plate method. Twelve plants are equipped to cool the milk by the regeneration system, "7 have stainless-steel surface coolers and the other 2 plants use vat cooling. Stainless-steel vats are used to make cheese by 20 managers. The curd is cooked by circulat- ing hot Water in jackets in 11 plants, by use of low-pressure steam in 9 plants and by live steam into water in 1 plant. Nine plants mechanically agitate the curd during cooking, 8 stir it by hand, while 4 utilize both hand and mechanical agita- tion. Of the 6 American cheese plants, 3 use round-type hoops, 1 uses both round and rectang- ular hoops While 1 uses steel barrels and 1 did not furnish this information. Most cottage cheese processors pack this pro- duct in packages weighing less than 1 pound while a few market it in packages of 5 pounds or over. The 12-ounce package, utilized by 9 pro- cessors, was the size mentioned most frequently. Thirteen cheese plant managers store their product under high refrigeration, 4 store it under both temperature and humidity controlled condi- tions and 1 uses low refrigeration. Concerning disposal of the whey, 13 processors dispose it as sewage, 5 reported utilizing it as liquid animal feed and 2 stated they condensed or dried it be- fore selling it as animal feed. CONDENSED, DRIED AND EVAPORATED MILK Managers of 11 of the 1'6 plants processing condensed, dried or evaporated milk reported mak- ing intake tests of the milk for odor and flavor, 1O made sediment tests, 10 took "bacteriological tests, 3 took temperature tests and 2 took acidity tests of the milk before processing it. Four re- ported standardizing the milk when necessary by adding cream, 3 by removing cream, 4 by adding skim milk, 1 by removing skim milk and 6 stated that they never standardize the milk utilized in their processing. Milk is forewarmed in stainless-steel hot wells in 7 plants, in stainless-steel forewarmers in 3 plants, while in 2 plants it is forewarmed by the use of plates and in another by the high-temper- ature-short-time method. Eight plant managers reported that theyldid not homogenize their condensed milk but the 2 that did homogenize used stainless-steel block homogenizers. Five dried the condensed milk in spray-type dryers, ,1 utilized a vacuum-type drier and another plant manager reported using plate coolers. The finished products( powder and evap- ll orated milk) were stored under atmospheric con- ditions in the 4 plants which furnished informa- tion on storage. Acknowledgments Appreciation is expressed to the management personnel of the 34 dairy products processing plants for their cooperation in furnishing part of the information used in this study. Appreciation is expressed also to the Texas Milk Produce Federation and the several milk producers’ ass‘ ciations in Texas for their contribution of data. This study was made under the Texas A‘ cultural Experiment Station’s State Contributi it Project to the Southern Regional Dairy Marketi ' Project Number SM-10, “Adopting the Mark, Structure for Milk and Dairy Prodilcts to Chan‘ ing Supply and Demand Conditions in the South.