15. Certain factors that enter into the production of food add so much
to the cost that they must be taken into consideration when food is
purchased. The housewife who disregards these factors fails in the
purchase of food, for she does not know so well what foods to buy nor
how to buy them in a way to keep down the cost as the woman who is
familiar with these matters. It is possible that the cost of a food may
be out of all proportion to its value because of the profits that must
necessarily be paid to each person through whose hands the food passes.
In the first place, the overhead expenses of the food dealer must be
paid by the housewife, who is regarded as the _consumer_. These expenses
include his rent, light, and heat, his hired help, such as clerks,
bookkeepers, delivery men, and the cost of delivery. In addition, the
cost of transportation figures in prominently if the foods have to be
shipped any distance, the manufacturer's profit must often be counted
in, and the cost of advertising must not be overlooked. With all such
matters, the housewife must acquaint herself if she would buy in the
most economical way.
[Illustration: FIG. 6]
16. CHART OF FOOD PROBLEM.--To assist the housewife in her mastery of
the purchasing side of the food problem, a chart, Fig. 6, is presented.
This chart shows the various routes through which foods travel before
they reach the housewife, or consumer. The lines used to connect all
dealers from the producer to the consumer represent transportation or
delivery, and the increase in cost due to overhead expense and profit is
indicated by the black spaces, which increase in size as the number of
dealers increase. The _producer_ may be the manufacturer, but in most
cases he is the farmer, the stockman, the dairyman, or the fruit
grower. The dealers handling the food between the producer and the
consumer are known as _middlemen_. They include the wholesaler, the
jobber, and the retailer. The retailer is the grocer, the butcher, or
the green grocer.
17. So that this chart may be clearly understood, several concrete
examples are given. Thus, the farmer who delivers vegetables directly to
the consumer is an example of plan No. 1. He has very little overhead
expense and consequently can sell cheaper than dealers who have a large
overhead expense. However, when the farmer delivers his vegetables to
the grocer and the grocer sells them to the consumer, an example of plan
No. 2 is afforded. Food bought in this way costs more than that bought
directly from the farmer. In plan No. 3, the farmer, for instance, sells
his vegetables to a wholesaler, who perhaps buys from other farmers and
then sells small quantities of them to the grocer for sale to the
consumer. This plan, as will readily be seen, is more involved than
either No. 1 or No. 2, but a still more roundabout route is that of plan
No. 4. In this case, for instance, the farmer sells his vegetables to a
canning factory, where they are canned and then sold to the grocer, who
sells them in this form to the consumer. Often two wholesalers, the
second one being known as a jobber, are involved in the transaction, as
in plan No. 5. In such an event, the farmer sells to the wholesaler, who
sells to the jobber, who, in turn, sells to the grocer, from whom the
consumer secures the goods. The most complicated route is that shown in
plan No. 6. This illustrates the case of the farmer who sells his cereal
products to a manufacturer, who makes them up into breakfast foods. He
then sells them in large quantities to the wholesaler, who sells them in
50- or 100-case lots to the jobber. From the jobber they go to the
grocer, who delivers them to the consumer.
From a study of this chart, it can be readily seen that the cost of food
may be reduced if the middlemen can be eliminated. For instance, the
housewife will be able to get fruits and vegetables cheaper if she buys
them from a farmer instead of a grocer, for she will not be called on to
pay any of the grocer's overhead expense or profit. Again, if she buys
her staple groceries in a store that is able to eliminate the wholesaler
or the jobber, she will get them at a lower price than if she deals
where these agencies must receive their share of the profits.
18. NATIONALLY ADVERTISED GOODS.--Much is said about the fact that the
consumer, in buying package foods that are nationally advertised, must
pay for the package and the advertising. This statement is absolutely
true; but it must be remembered that where large quantities of foods are
handled, the materials can be bought by the manufacturer or the
wholesaler at a lower price than by one who purchases only a small
amount. Then, too, if great quantities are sold, and this condition is
made possible only through advertising, the profit on each package sold
can be much smaller than that which would have to be made when less is
sold. Often, therefore, in spite of the advertising cost, a widely
advertised food can be sold for less than one that is not advertised at
all because a much greater quantity is sold.
19. CHAIN STORES.--The principle of selling great quantities of food at
a comparatively small profit on each item is put into practice in chain
stores, which are operated by different companies throughout the United
States. Such stores are a boon to the housewife who must practice
economy, for they eliminate a middleman by acting both as wholesaler and
as retailer. Because of this fact, foods that are purchased in large
quantities from the producer or manufacturer can be offered to the
consumer at a lower price than in a retail store not a part of a chain.
Therefore, if foods of the same quality are not lower in price in chain
stores, it must be because the buying is not well done or a greater
profit is made in selling them. In addition, chain stores generally
require cash for all purchases made in them and they do not usually
deliver goods. Consequently, their overhead expense is materially
reduced and they do not need to make such a large profit.