require even more handling before they reach the form in which they are offered for sale. Thus two main steps of distribution enter into the marketing of peanuts: (1) Movement from the farm to the cleaning, shelling, or crushing plant, and the milling operations necessary to place the product in condition to ship. (2) Movement from the mill to the ultimate consumer.

METHODS OF MARKETING FARMERS' STOCK PEANUTS

The bulk of the peanut crop is sold by the growers within a few months after the stock has been harvested and picked or threshedsometimes within a few weeks. In the Southeast and the Southwest only a comparatively small portion of the crop is to be found in the hands of the growers by the middle of December. The crop of Runners in the Southeast, however, often remains unsold later than the Spanish crop, as it is harvested later. By the first of the year the bulk of the peanuts has usually left the farms in Virginia and North Carolina and has found its way either to commercial storages or to cleaning plants.

Farmers who are under obligation to country merchants for credit advances during the growing season, usually sell to the merchants a large portion of their crop, or all of it, soon after it has been threshed or picked, in order to pay the indebtedness. The usual result is that more peanuts are offered than the market can readily absorb, and the price declines. When the decline takes place there are usually a number of speculators, often country merchants or cleaners, ready to buy peanuts at the lower prices and hold them in storage. Later, when prices have again advanced, profit-taking occurs, and peanuts bought for speculation reappear on the market, exerting a depressing influence on the prevailing market price. Thus a peanut grower who has held a portion of his crop for several months may find that his later offerings are in direct competition with his own peanuts bought months earlier by speculators. The fluctuation in market prices is a natural consequence of rushing the crop to market so early in the season, and may be expected to continue until the growers as a whole are able to market their crop in a steady, even flow throughout the year.

Special features of marketing in the three leading peanut sections are discussed separately.

VIRGINIA AND NORTH CAROLINA

On sales made through the supply merchant, a commission of 21⁄2 per cent is usually charged. The dealer can obtain the peanuts as soon as they are harvested, but an option is sometimes given the grower to store the nuts at a charge of around 5 cents per bag for the first month and 4 cents per month thereafter, and sell them later in the season. If the peanuts are stored the dealer will lend the grower 60 to 75 per cent of their market value, charging the current rate of interest on the advance. Most local merchants store or hold their goods for later marketing, whether full title to the peanuts has passed to them or not. Where the merchant's storage space is limited, the peanuts are sent to a central commercial warehouse.

Farmers who are not obligated to sell to the country merchant often dispose of their peanuts for cash to representatives of the cleaners, who may be traveling buyers or local merchants, and who

purchase the stock in the field after it has been stacked. A commission, usually 7 cents per bag, has been paid their buyers by the cleaners during recent seasons. Occasionally a grower ships his peanuts direct to a warehouseman, to be stored and sold on his order.

Members of the local growers' cooperative association deliver their goods to the mill that cleans for the association. Upon delivery they are graded, an amount equal to about half the market price is advanced, and final payment is made after full settlement of the season's pool.

GEORGIA AND ALABAMA

In the neighborhood of most towns in which there is a shelling or crushing mill the bulk of the crop of independent farmers is sold for cash direct to that plant. Producers under obligations to local merchants usually sell their entire crop to these merchants, since as a rule the latter will pay a cash price equal to that offered by the nearest sheller for all peanuts in excess of those required to settle the accounts, or will allow as much as $5 per ton more if the grower is willing to have the returns apply on future trade.

Many small country merchants are equipped with storage space and make a business of buying for cash the peanuts grown in their vicinities. They may do this as a matter of private speculation or in the capacity of agent for a shelling or crushing mill or for a broker at some other point. A commission of $2 to $3 per ton is paid local agents for assembling carlots and shipping them from outlying points. When the buyer takes care of all storing, loading, and handling charges, the commission is usually $2.75 to $3 per ton. If the sale is for goods which the merchant has purchased for his own account the price is usually arranged by telephone or telegraph, and the merchant is allowed to draw on sight draft attached to bill of lading for not over 80 per cent of the selling price, immediately upon shipment. The buyer remits the balance of the price by check when the shipment has been received and the weights confirmed. This system of marketing peanuts differs in no essential respect from the method employed in marketing cotton in the same area.

Members of the growers' cooperative association deliver their peanuts when directed by the association to a warehouse or to the cars for shipment elsewhere. Preliminary advances of one-half to two-thirds the value of the peanuts are made upon delivery; final payments are concluded after the season's pool has been settled.

In a few counties in the Southeast, farmers' stock peanuts have at times been marketed through the medium of a "sales day," a scheme copied from the hog-sales day. The local banker, the county agricultural agent, or large merchants, are chiefly responsible for the gathering. All the peanut farmers in the county at least are notified that a peanut-sales day is to be held at some central point, usually the county seat. They are urged to bring their peanuts to town on that day, with the assurance that a number of responsible buyers will be present. The bringing together of a considerable quantity of peanuts makes it worth while for near-by shelling plants, brokers, and independent buyers to be represented, and the presence of a number of buyers should create a competitive market. This auction method of sale, however, is seldom utílized.

TEXAS

Peanuts in Texas and adjoining States normally leave the farms more rapidly than in the other two leading sections. Most of the crop which is not hauled direct to a mill is bought from the farmers. by a local merchant who may definitely represent a sheller or may be an independent dealer, selling wherever he can make the most profit. The farmer is paid cash for his peanuts.

Peanuts are practically never stored in commercial warehouses in Texas, nor are they stored to any extent in the farmers' own buildings. The farmer begins to haul as soon as a few peanuts are picked, and the local merchant ships as rapidly as he can get carlots together. The shellers store in their own plants so far as possible, but during the heavy buying season considerable quantities of peanuts are held in temporary storage at shipping points until space becomes available for them at the buyers' plants.

Unlike those in other sections, peanut buyers in Texas do not usually work on a commission basis. Buyers for shelling plants ordinarily work for salaries; others buy as cheaply as possible, and sell for what they can get. Less speculation is noticeable than in the Eastern States as the merchant usually sells to a mill as soon as he has a carload bought or in sight. Crops of peanuts are not usually contracted for in advance.

WAREHOUSING

When the harvested peanuts are hauled from the field, they may be stored temporarily in any available space so long as it is dry and well-ventilated. Sheds and lofts of barns are commonly used, and the large independent growers may have frame warehouses. If the peanuts are to be kept on the farm for any length of time, however, protection from rats and mice should be afforded. Some growers attempt to keep out the rats by building the floors of the storage houses above the ground. Others find that the only way the sheds can be made rat-proof is by lining them with quarter-inch mesh galvanized wire.

Many growers prefer to store their peanuts in commercial warehouses (fig. 3) so that they can obtain loans on them from the warehouseman or from a banker. Numerous storage warehouses have accordingly been erected in the peanut belt of Virginia and North Carolina, notably at Suffolk, Petersburg, Norfolk, and Franklin, Va., and at Edenton, Scotland Neck, and Plymouth, N. C., for the convenience of growers, merchants, and cleaners. The southeastern and southwestern sections are not yet so well equipped with commercial storages as is the Virginia area, although their number is increasing in Georgia. These warehouses exert a steadying influence upon the farmers' market, and tend to promote a more intelligent and rational distribution of the crop from the grower to the factory.

At present most of the peanuts stored in commercial warehouses are shipped from country points by the local merchants or growers in solid carlots, but some goods are hauled from near-by points in smaller quantities. In Virginia, North Carolina, and Texas, most peanuts are stored in sacks; in the Southeast, usually in bulk. In either case, a shrinkage loss of 3 to 5 per cent in weight during the average storage period is considered normal.

The grower who is able to hold his crop may haul or ship his peanuts to the warehouse as the weather permits, and receive a warehouse receipt. As the modern warehouses are well-ventilated and practically fireproof and rat-proof, peanuts can be stored in them under conditions far superior to those obtainable on most farms. The value of the commercial storage located near a peanut factory or at track side is especially evident during periods of prolonged bad weather. At such times the condition of the roads renders it difficult for the farmer to haul his peanuts to market, and the mills may then be obliged to replenish their stocks by drawing on the warehouse. Further, it is only natural that mills should prefer to have goods delivered to them from a clean, dry storage than from the type of storage available on most farms.

The warehouse receipt may be either negotiable or nonnegotiable and may be pledged as collateral at almost any bank for a loan of

FIG. 3.-Farmers' stock peanuts in a commercial storage in Virginia. The use of tags assures the owner of having his own stock returned to him or sold for his account

usually not over 60 per cent of the market value of the peanuts. If the grower or merchant does not care to handle the loan through the bank, he may hypothecate or surrender his warehouse receipt to the warehouseman, who will usually advance as much as 60 to 75 per cent of the market value of the peanuts at the prevailing rate of interest. Proper loss clauses are attached to the insurance policies in favor of those making the loans. In the event that prices decline, or the bank deems itself insecure for any reason, it may demand additional collateral or a reduction in the loan. Usually however, peanuts having loans against them are sold through the warehousemen when and as directed by the grower or merchant storing them. The amount of the loan, interest, storage charges, and the commission charge of usually 22 per cent, are deducted when the sale is made, and the remainder remitted to the grower.

During the past two or three years the charge for storage in commercial warehouses in Virginia has been about 4 cents for a 4-bushel bag for the first month, and 4 cents for succeeding months, with a minimum charge of 9 cents per bag. As the storage charge includes the cost of unloading, handling, reloading, and insurance, it will be seen that the cost of storing peanuts is only nominal.

The warehousemen frequently obtain from the local banks the money needed to carry them. The usual arrangement is on a straight note up to a definite amount, after which the peanuts, as represented by warehouse receipts and insurance policies with proper loss clauses attached, are pledged as collateral for further loans. As some of the bankers and cleaners are stockholders in warehouses, and some of the cleaners and warehousemen are also stockholders in local banks, a close interest exists between them.

UNITED STATES WAREHOUSE ACT

In September, 1923, peanuts were named as a storable product within the meaning of the United States warehouse act, which is administered by the United States Department of Agriculture. The primary purpose of this act was to establish a form of warehouse receipt which would be acceptable generally as collateral for loans. Growers, merchants, cleaners, or shellers who store peanuts in warehouses under this act, are afforded security from loss, as the warehousemen are licensed by and bonded to the Government to preserve carefully and return the goods stored with them. Identical bags are returned if the peanuts are sacked; but if in bulk, any peanuts of the same grade and quantity can be delivered, unless definite arrangements were made to preserve the identity of a special lot. The licensed warehouses are subject to Federal inspection at least four times each year.

The warehouse receipts furnished by warehouses licensed under the warehouse act are accepted by banks generally, and in all cases by the Federal Intermediate Credit Bank, as collateral for loans.

Up to September, 1925, a number of warehouses had been licensed by the Department of Agriculture for the storing of peanuts in the States of Georgia and North Carolina. Complete information on the subject can be obtained upon request to the Warehouse Division, Bureau of Agricultural Economics, United States Department of Agriculture, Washington, D. C.

GRADES FOR FARMERS' STOCK PEANUTS

One chief obstacle to the marketing of peanuts has been that wellrecognized, definitely-established grades for farmers' peanuts have been lacking. For the Spanish type this condition has recently been corrected, by the offering of tentative grades by the United States Department of Agriculture. (See pp. 17 and 18.) Definite grades are also needed for peanuts of the other types.

GRADES IN VIRGINIA-NORTH CAROLINA SECTION

Peanuts of the Virginia type reach the consumer both in the shell and as shelled goods. When there is the customary price ratio between these two classes, it is more profitable for the cleaner to sell in the shell all peanuts that have the necessary size and appearance.