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FRUITS AND VEGETABLES

Marketing margins for fruits and vegetables, like those for other food products, have continued to increase, but at a slower rate than for all farm products in the market basket. The farm-to-retail spread for all fruits and vegetables in the market basket increased 2 percent in 1957 over 1956 (fig. 6).

The increase in the farm-to-retail price spread since 1947 amounts to 31 percent for fruits and vegetables and 37 percent for all foods in the market basket (table 2). During this same period, the retail cost for fruits and vegetables increased 21 percent compared to 11 percent for all commodities in the market basket. Further examination of market-basket data shows that the farm value for all foods has decreased 14 percent since 1947 and increased 2 percent for fruits and vegetables.

TABLE 2. Change in retail cost, farm value, farm-to-retail spread, and farmer's share of the retail cost of the market basket and of fruits and vegetables, 1957 compared to 1956 and 1947

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The farmer's share of the retail cost for fruits and vegetables in the market basket was 28 percent in 1957. This was a decline of 2 percentage points from 1956. The trend in the farmer's share, both for fruits and vegetables and for the market basket, has been downward since World War II.

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FOR AV. QUANTITY PURCHASED PER URBAN WAGE-EARNER AND CLERICAL-WORKER FAMILY, 1952
OPAYMENT TO FARMERS FOR FRESH AND PROCESSED FRUITS AND VEGETABLES

L. 1. DEPARTMENT OF AGRICULTURE

AGRICULTURAL MARKETING SERVICE

In 1957, compared to 1956, the retail cost of all fruits and vegetables in the market basket increased less than 1 percent while the net farm value decreased 7 percent. This resulted in an increase of 2 percent in the farm-to-retail spread and a decrease of 2 percentage points in the farmer's share for fruits and vegetables.

Washington Delicious apples.-Marketing margins for Washington Delicious apples marketed in New York City, Chicago, and Los Angeles during the 1956-57 season averaged $5.26, $5.25, and $5.20 per box, respectively. These represented increased margins of 6, 11, and 4 percent over 1955-56 season averages. Transportation charges comprised 12 percent and the wholesale-retail margin ac counted for 38 percent of the retail price of Washington Delicious apples sold in New York City. Total marketing charges from the packinghouse door to the retail store during the 1956-57 season comprised 54 percent of the retail price. Although actual marketing costs increased, the percentage decline from the 1955-56 season, when marketing charges accounted for 61 percent of the retail price, was due to a 19-percent increase in retail prices with only a 6-percent increase in overall marketing charges. Marketing margins, costs, and returns for Washington Delicious apples marketed in the 3 cities during the 1955-56 and 1956-57 seasons are shown in table 3.

California Long White potatoes.-During the 1956 season, marketing charges for U. S. No. 1A California Long White potatoes averaged $5.31 per 100 pounds on sales in Los Angeles, $6.71 on sales in Chicago, and $7.66 on sales in New York-54, 65, and 67 percent of the average retail price, respectively (fig. 7). Transportation charges from Bakersfield to Los Angeles were approximately 30 cents per 100-pound bag. Rail transportation charges from Bakersfield to Chicago were $1.83; to New York City, $2.28.

TABLE 3.-Prices, margins, and returns per box for Washington Delicious apples marketed in New York City, Chicago, and Los Angeles, 1955-57

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1 Auction or wholesale price less selling charges and transportation costs. 2 Auction prices for New York City and Chicago are average prices for all sizes of apples for the week which includes the 8th of the month. Wholesale price for Los Angeles is the Tuesday price for the week which includes the 8th of the month.

3 Retail price: Average price for the 1st 3 days of the week containing the 15th of each month for a quantity equivalent to the wholesale package less spoilage at retail.

Rail freight from Wenatchee, Wash., to Chicago and New York plus carrier's protective service and 3 percent Federal tax. To Los Angeles, truck transportation costs were approximately 60 cents per box in November-December 1957. Over half of Washington Delicious apples marketed in Los Angeles go by

truck.

Broker's commission, 4 percent; auction selling charge, 1.75 percent; and auction handling charge, 4 cents per box.

FIGURE 7

MARKETING MARGINS FOR CALIFORNIA
LONG WHITE POTATOES, 1956 SEASON

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Wholesale margins per 100-pound bag of long white potatoes averaged $0.25 in Los Angeles, $1.11 in Chicago, and $1.76 in New York during the 1956 season, while retail margins averaged $4.08, $3.11, and $2.96, respectively.

Retail prices for long white potatoes averaged $9.81 per 100 pounds in Los Angeles, $10.27 in Chicago, and $11.38 in New York City. Growers who marketed their potatoes in the 3 cities had average returns at the packinghouse receiving door of $1.50, $3.56, and $3.72, or 46, 35, and 33 percent of the retail price, respectively.

LIVESTOCK

Annual average farm-to-retail marketing margins for all livestock increased from 25.6 cents a retail pound in 1956 to 27.8 cents in 1957. This was the largest year-to-year increase recorded since 1947.

Beef and lamb.-Marketing margins for U. S. Choice grade beef were 28.2 cents a retail pound in 1957, compared with 26.2 cents in 1956. The farm-to-retail price spread for U. S. Choice grade lamb was 1.7 cents a pound higher in 1957 than in 1956.

Pork.-Farm-to-retail marketing margins for pork averaged substantially higher in 1957 than in 1956, widening 2.2 cents a retail pound. This is part of the longtime upward trend in marketing margins for pork (fig. 8).

FIGURE 8

Price Spreads for Hogs and Pork, Annual Data

FARM AND RETAIL VALUES AND MARKETING MARGIN

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VALUE OF 1.82 POUNDS OF LIVE HOG (EQUIVALENT TO 1 POUND OF PORK AT RETAIL) LESS LARD AND INEDIBLE BYPRODUCTS

U.S. DEPARTMENT OF AGRICULTURE

AGRICULTURAL MARKETING SERVICE

Marketing margins for pork were relatively stable during the period 1919 to the beginning of the depression of the 1930's. Margins narrowed sharply during the depression years, reaching an alltime low of 9.3 cents a retail pound of pork in 1933.

As prices recovered, marketing margins first widened and then tended to narrow gradually until World War II. When price ceilings were removed after World War II, retail pork prices, hog prices, and marketing margins all increased sharply. In 1 year, from 1946 to 1947, margins widened from 12.4 cents a pound retail weight to 17.9 cents, the greatest annual increase in pork marketing margins ever recorded.

The marketing margin for pork then tended to widen gradually to 25.6 cents a pound in 1955. Pork margins declined slightly in 1956 to 24.9 cents. In 1957, however, farm-to-retail margins resumed their upward trend and averaged 27.1 cents a retail pound, the highest on record. The substantial increase in farmto-retail price spreads from 1956 to 1957 resulted in part from increases in both packer and retailer margins.

POULTRY AND EGGS

Poultry and eggs are the only major group of farm foods on which farm-toretail price spreads have declined in recent years. Further decreases in these spreads are not unlikely, particularly on eggs. Poultry and eggs accounted for about 10 percent of the retail cost of the total market basket of farm foods in 1956, and for about 16 percent of the total farm value. The farm-to-retail spread was smaller for this group of products, relative to the retail cost, than for any other major product group.

Eggs.-Retail prices, farm values, and farm-to-retail price spreads on eggs generally have declined since 1949. Spreads, however, have decreased less than prices. As a result, the general trend in the farm share of the retail price of eggs also has been downward. The 1957 average farm-to-retail price spread of 18 cents a dozen was only slightly above the lowest annual average spread of 17.8 cents registered in 1953 and substantially below the high 1952 spread of 20.4 cents. But with 1957 retail prices and farm values at their lowest level since 1949, the farm share of the retail price was down to 67 percent from 71 percent in 1949 and 1951 and 73 percent in 1953.

Further declines in egg marketing costs and margins are not unlikely. Several cost-reducing changes in marketing channels and practices are being adopted

rapidly by the egg trade. These include: (1) Reduction in numbers of egg handlers and frequency of handling individual eggs, through the bypassing of city wholesalers and associated distributors by large country assemblers and other integrated assembler-grader-distributors and retailers; (2) adoption of improved methods of grading and handling eggs in plants; (3) increases in number of specialized egg farms; (4) increases in buying of eggs from farms on the basis of U. S. consumer grades; and (5) increasing movement of grading and cartoning operations from city to country plants.

Two examples indicate the potential for reducing costs. The average farmto-retail price spread on eggs in New York in 1957 was 28.6 cents a dozen; in Los Angeles it was 16.8 cents. In Los Angeles, eggs move directly from farms to integrated assembler-grader-distributors and then to retailers. Modern, lowcost handling methods are used and eggs are bought from farms on the basis of U. S. grades. In contrast, adoption of such modern marketing practices is only beginning in New York, and large volumes of eggs still move through as many as five different marketing firms in going from farms to consumers. Again, a large midwestern assembler-grader-distributor of eggs is moving graded and cartoned eggs frim his country plant directly to retail stores in a large eastern city at a cost of only 11.5 cents a dozen. With an average store margin of 10 cents, the farm-to-retail spread in this case is 21.5 cents a dozen, substantially less than when less efficient practices are followed.

Chicken fryers.-Retail prices and farm values of chicken fryers have declined sharply since 1949, reflecting pronounced increases in production and marketing efficiency. Both retail prices and farm values reached new lows in 1957. Farm-to-retail price spreads, however, have decreased only slightly. Since 1949, spreads have varied on an annual basis within the narrow range of 21.1 cents and 23 cents a pound, ready-to-cook basis. The 1957 spread was 21.7 cents a pound. As a result, the farm share of the retail price of fryers declined to 55 percent in 1956 and 1957, compared with 64 percent in the years 1950-52.

Studies of processing and other marketing costs indicate that the efficiency of these operations has been increased markedly in the last decade by the adoption of improved machinery and better marketing methods. At the same time, marketing firms have increased the volume of services provided, including complete evisceration, and cutting, packaging, and freezing operations. These services and rising wages and prices of other production items appear almost to have offset economies from improved technology and distribution practices. Further improvements in both production and marketing efficiency are likely. but these may be offset by costs of additional marketing services which must be provided to meet consumer demands.

Turkeys. Available data on price spreads and marketing costs for turkeys are too limited to provide an accurate picture of their trends. However, it is known that the turkey industry has changed its production, processing, and distribution practices and technology in much the same way as the chicken-fryer industry has. In fact, many firms process and market both types of birds, using the same processing equipment and techniques and similar distribution practices. There are indications that the turkey industry is slowly moving toward making turkeys as much a part of American menus in all seasons as chicken fryers now are. The pronounced changes in production and marketing practices which necessarily must be a part of this development undoubtedly will have important impacts on production and marketing costs, prices at all market levels, and price spreads on turkeys.

MARGARINE AND SHORTENING

A much larger proportion of the consumer's dollar goes for marketing charges for oilseeds than for many other agricultural products because a great deal of processing is required to convert the oil contained in soybeans or cottonseed into the principal consumer products, margarine and shortening. Marketing charges took about 80 percent of the consumer's dollar in November 1940, 60 percent in 1947, and over 70 percent in November 1955. These charges cover many services which have been affected by increased costs and the rise in the general price level. The average retail value of soybean and cottonseed oil in margarine and shortening in Chicago increased about 75 percent between 1940-41 and 1955-56. But the average farm value of the oil contained in these 2 oilseeds increased by close to 90 percent.

Increases in farm values for oil occurred prior to 1947-48 (fig. 9). Since 1947-48, farm oil values have decreased by 40 percent for soybean oil and close

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