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. Why Prices Fluctuate PRICES for livestock are not controlled by packers, and only to a limited extent by the supply of cattle in the market. They go up or down in response to the price the consumer is willing to pay for meat. Note how closely the two lines in the chart, representing prices of cattle and dressed beef, follow each other through the two and a half years covered by the graph. America’s twenty million food shoppers determine the dressed beef price, by their willingness or refusal to accept beef at the price asked in competition with other food. And naturally dressed beef prices react directly and at once on cattle prices. 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. It is plain that the packer cannot determine retail meat prices, simply because he cannot say to the consumer at the butcher’s counter, “You must buy meat and you must pay such and such a price.” Because he cannot do this he cannot control the prices of livestock. [Illustration: WHAT MAKES THE PRICE OF CATTLE THIS CHART SHOWS THAT DEMAND BY CONSUMERS IS THE BIG FACTOR] 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. And this, in turn, brings us to the consideration of the packers’ salesmen in the hundreds of cities and towns throughout America, which as a whole make up the final market for the producer’s livestock. With the sale of his meat animals by the commission man at the primary market, the owner seems to witness the end of the transaction as far as he is concerned. But does he?