The purposes of this study are: SUMMARY (1) to show the extent and nature of Washington Delicious apple price variations, and (2) to indicate the size of the total marketing margin for Washington Delicious apples and its allocation to the various marketing agencies. Retail prices, auction prices, and marketing margins are presented for Washington Delicious apples sold through auction in Chicago and New York City. Retail prices averaged higher in Chicago than New York City 4 of the 5 seasons studied, but auction prices were higher in New York City during 4 of the 5 seasons. Retail and auction price movements in the 2 markets were in the same direction but usually not in the same amounts. Seasonal prices were closely related (inversely) to the annual production of apples, particularly Washington Delicious. As a consequence of wide variations in production between seasons, prices between seasons varied considerably. Prices over a season, however, tended to be relatively stable at a level determined by the volume of production and other factors. Total marketing charges per 42-pound carton were lowest in 1956-57 -- $6.31 in Chicago, and $6.03 in New York City. The largest margin in Chicago was $7.06 in 1959-60. In New York City the largest margin -- $7.31 -- occurred in the 1960-61 season. The largest component of the total marketing margin was the wholesaleretail margin. This margin claimed from 37 to 54 percent of the retail dollar in Chicago and from 34 to 48 percent in New York City. In both cities the largest percentage wholesale-retail margin accompanied the lowest auction price and decreased as auction prices rose. Terminal, transportation, and shipping-point charges increased moderately over the 5-season period. These charges in contrast to prices and the wholesale-retail margin were influenced only to a limited extent by the supply of apples and, consequently, were more stable than prices and the wholesale-retail margin. Packinghouse charges were the largest of this group, followed by transportation. Terminal charges amounted to about 2 percent of the retail dollar, and storage charges were only slightly more. Returns to producers were characterized by wide variations over the 5 seasons. The smallest was 77 cents per carton, or 10 percent of the retail price, for apples sold in Chicago during 1957-58. The largest was $3.28, or 35 percent of the retail price, for apples sold in Chicago in 1956-57. The marketing margin is the spread between the farm value of a given amount of a commodity and its retail value adjusted for waste and loss incurred in the marketing channel. 1/ It is the total of charges made by all who contribute to the task of moving a commodity from the producer to the consumer. The term "margin" is also used in reference to the components of the total margin, for example, "retail margin" or "wholesale margin.' In this sense it is essentially the difference between the price paid and received by a specific marketing agency. The margin is not profit. It consists of all expenses connected with the commodity plus profit or loss. Margins are not constant through time. Changes in marketing methods result in redistribution of the consumer's dollar among the marketing agencies. The absolute and percentage margins and the changes they undergo are of interest to many marketing agencies, as well as to the producer and consumer. The Apple Industry Revenue from sales of commercial apples in the United States averaged approximately 6 percent of total cash farm sales during the period 1956-61. On a tonsproduced basis apples have consistently ranked either second or third among all fruit crops of the United States. Of the 6,636 varieties grown in the United States, about 20 are of significance commercially. Of these, the Delicious variety usually has ranked first in production. 2/ From 1956 to 1961 Delicious apples accounted for 22 percent of the total commercial apple crop (table 1). 1/ The adjustment for waste and loss is usually made at the farm or the retail level. In either case the amount of the commodity valued at the farm must exceed the amount valued at retail by the amount of waste and loss which occurred in the marketing channel. 2/ Includes both Standard and Red Delicious. The Crop Reporting Board does For a number of years, Congress has allocated funds to the U. S. Department Several studies have been conducted on marketing margins for fruits and veg- The author wishes to express appreciation to the Bureau of Labor Statistics, The purposes of this study are: SUMMARY (1) to show the extent and nature of Washington Delicious apple price variations, and (2) to indicate the size of the total marketing margin for Washington Delicious apples and its allocation to the various marketing agencies. Retail prices, auction prices, and marketing margins are presented for Washington Delicious apples sold through auction in Chicago and New York City. Retail prices averaged higher in Chicago than New York City 4 of the 5 seasons studied, but auction prices were higher in New York City during 4 of the 5 seasons. Retail and auction price movements in the 2 markets were in the same direction but usually not in the same amounts. Seasonal prices were closely related (inversely) to the annual production of apples, particularly Washington Delicious. As a consequence of wide variations in production between seasons, prices between seasons varied considerably. Prices over a season, however, tended to be relatively stable at a level determined by the volume of production and other factors. - Total marketing charges per 42-pound carton were lowest in 1956-57 -- $6.31 in Chicago, and $6.03 in New York City. The largest margin in Chicago was $7.06 in 1959-60. In New York City the largest margin -- $7.31 occurred in the 1960-61 season. The largest component of the total marketing margin was the wholesaleretail margin. This margin claimed from 37 to 54 percent of the retail dollar in Chicago and from 34 to 48 percent in New York City. In both cities the largest percentage wholesale-retail margin accompanied the lowest auction price and decreased as auction prices rose. Terminal, transportation, and shipping-point charges increased moderately over the 5-season period. These charges in contrast to prices and the wholesale-retail margin were influenced only to a limited extent by the supply of apples and, consequently, were more stable than prices and the wholesale-retail margin. Packinghouse charges were the largest of this group, followed by transportation. Terminal charges amounted to about 2 percent of the retail dollar, and storage charges were only slightly more. Returns to producers were characterized by wide variations over the 5 seasons. The smallest was 77 cents per carton, or 10 percent of the retail price, for apples sold in Chicago during 1957-58. The largest was $3.28, or 35 percent of the retail price, for apples sold in Chicago in 1956-57. |