Price Spreads and Cost Analyses for Finfish and 

 Shellfish Products at Different Marketing Levels 



ERWIN S. PENN' 



ABSTRACT 



The rapid increase offish prices has recently caused public concern. To find the cause of the difference 

 between the price the fisherman receives for his product and the ultimate price paid bj the consumer, the 

 report analyzes the distribution of the consumer's dollar paid to the retailer as well as to the wholesaler, 

 processor, and fisherman. 



Selected for this study are seven finfish, two canned fish, and four shellfish products. The difference or 

 margin between selling and purchasing prices of each level and the share of the consumer's dollar by each 

 level and each cost component are calculated for each fish product. The report also analyzes the costs and 

 profits incurred by each marketing function and describes the major infiuence on margin differences. 



The objective of the study is to give individual firms in the fishery a systematic guide to examine their 

 margins, costs, and profits for each fish product: compare them w ith the data presented in this study, as 

 national averages for the same product: and determine whether there is room for improvement for their 

 performance and services. 



INTRODUCTION 



Although fish is not a dominant item in the food 

 budgeting of the average American, yet the fact that 

 it is diverse in nutritive contents mai<es it important 

 in the menu planning for a balanced diet. 



Consumers watch the prices offish with the same 

 concern as prices of other food items. During the 

 period 1969-71. fish prices have increased more 

 rapidly than most other food products ( Fig. 1 ). Gov- 

 ernment action to restrain prices and wages in every 

 sector of the economy started with moral suasion in 

 1969 and culminated in a mandatory freeze in August 

 1971. General price increases were arrested or 

 minimized to some extent for the rest of 1971. 

 Nonetheless, both consumers and consumer protec- 

 tion advocates remain concerned over the continued 

 high prices for fish products. A close examination of 

 fish pricing by each marketing level seems neces- 

 sarv. 



' Economic Research Division. National Marine Fisheries 

 Service. NOAA, Washington, DC. 20235. 



NOTE: In this study the woni flshernuiii is defined as a person 

 u ho is engaged or employed in fishing as an occupation. 

 Fi\licniuui's shciri' refers to the return to the one who either owns, 

 manages, or operates the vessel and gear used to catch tlsh. 



Selected for this study are four groundfish fillets 

 (haddock, flounder, cod, and ocean perch), salmon 

 and halibut in steak and dressed forms, canned tuna 

 and salmon, and four shellfish products (shrimp, 

 blue crabs, American lobsters, and sea scallops). 

 Their production accounts for 36% of total fish har- 

 vested in the United States in 1 97 1 on a round-weight 

 basis. 



Meaning of Price Spread 



The differences between the prices charged by the 

 producer and those paid by the consumer can be 

 explained by price spreads. For a fish product, the 

 price spread is the margin between the price paid for 

 the final product by the consumer and the dockside 

 value of an equivalent weight of the product. This 

 difference is also called the marketing charge, most 

 of which includes the payments received by all 

 agents performing services in moving fish products 

 from fishermen to consumers. These services in- 

 clude handling (landing), processing, storage, trans- 

 portation, wholesaling, and retailing. 



Computation of the ex-vessel/retail spread pro- 

 vides the measurement for the fisherman's share of 

 the dollar the consumers spend for the product. The 



