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Bulk Milk Hauling Microcomputer Software Available from Cornell University

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Abstract

The era of double-digit inflation in the late 1970's was a particularly difficult time for the independent milk hauler. These frequently small entrepreneurs working on contract for proprietary and cooperative milk handlers are a vital part of the nation's $20 billion dairy sector. Rapid inflation affected this group in two important ways. First, many operators worked on the basis of historical equipment costs. When trucks need replacing there was frequently insufficient equity to purchase the sharply higher-priced vehicles. As a result numerous good operators had to leave the industry, creating problems for themselves and the dairymen they serve. Second, when rate increases were requested, in response to fuel or other input price increases, they were typically granted across-the-board to all haulers working for a cooperative or private handler. In an environment of widely divergent route conditions, such general rate increases were excessive in some cases while being inadequate in others over an entire milk-shed the result was an inefficient and inequitable system for haulers and farmers alike. Both problems had the common base of inadequate cost information. With timely and appropriate cost data the replacement cost of a vehicle could be factored into the rate base. Moreover, costs could be computed on a route-by-route basis so that greater equity could be brought into the system. In response to the apparent need for better information a cost-computation program was developed at Cornell University for use on the TI-59 programmable calculator, then a state-of-the-art processor. The program found wide acceptance by both handlers and haulers. The computed costs were as intended used as a common basis for negotiating actual rates. 'The TI-59 version of the program was however cumbersome to operate and limited by the capacity and operating speed of the equipment. Additionally, both handlers and haulers shifted increased attention to route cost record keeping and developed expanded demands for cost information. At the same time powerful, inexpensive microcomputers, most notably the IBM PC (and compatibles), gained widespread acceptance. Milk hauling analysis is an ideal application for microcomputers. This bulletin describes two application programs developed at Cornell University with financial support from the Agricultural Cooperative Service of the USDA.

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A.E. Ext. 85-18

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1985-07

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Charles H. Dyson School of Applied Economics and Management, Cornell University

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