prices are relatively stable, it follows that some- 

 where in the channels of distribution, market mar- 

 gins must be reduced (raised) when ex-vessel prices 

 rise (decline). 



Prices at the wholesale level fluctuated more dis- 

 tinctly and moved upward for most fish products 

 except that wholesale prices of canned tuna and 

 ocean perch fillets declined slightly and those of 

 fresh flounder fillets and canned pink salmon re- 

 mained more or less constant. An increase in 

 wholesale price does not necessarily imply that the 

 wholesale margin over the processor's price has in- 

 creased. During 1969-71, wholesale markups (gross 

 earning rates) for packaged and canned fish products 

 are estimated around 15 to 23%, with the exception 

 of American lobsters (36%) and fresh king salmon 

 steaks (32%)" (Tables 4 and 5). 



Although wholesale prices increased, wholesale 

 margins remained relatively stable. A similar in- 

 crease in wholesaler's cost of sales, i.e., processor's 

 prices, equalized the margins at the wholesale level 

 over the period. 



Retail Margin and Markup 



Price margins at the retail level for some fish prod- 

 ucts are as large as at the ex-vessel level. For the 

 last two decades retail prices of most fish products 

 under our study, after adjustment to constant value, 

 fluctuated slightly with a mild upward trend. Prices 

 of halibut steaks and canned tuna, however, were 

 heading downward. Those that showed an abrupt 

 change in price movements, particularly during the 

 years 1969-71, were fresh flounder fillets and fresh 

 haddock fillets showing a sudden retail price upturn 

 and fresh sea scallops and blue crab meat experienc- 

 ing a sudden drop in retail prices (Figures 2, 3, 12, 

 and 13). 



While most retail prices, after they are deflated, 

 were moving upward, the gross earning rates offish 

 retailers increased slightly only in four products 

 — fresh flounder fillets, frozen ocean perch fillets, 

 canned pink salmon, and fresh blue crab meat. Mark- 

 ups for halibut steaks and fresh sea scallops de- 

 clined drastically while those for the remainder 

 dropped slightly during the period covered in our 

 study (Table 6). 



Table 5. — Annual average markups (gross earning rates) 

 of shellfish by product at three functional levels, 1969-71. 



" Wholesale margin of .■\merican lobsters is larger than other 

 fish products because they are sold live and heavy transportation 

 costs are assumed by the wholesalers. Part of fresh salmon is 

 shipped b\ airfreight, the costs of which are paid by the wholesal- 

 ers. 



' Retail prices of American lobsters were not available for 

 1969-71; 1965-67 prices were used. The product is sold live; no 

 processing is required. More costs are incurred by the wholesal- 

 ers in packing and transportation. 



The rigidity of the pricing practice of each retail 

 store causes the retail price of each item to be less 

 responsive to the cost of sales. As a result, the retail 

 margin narrows as wholesale prices advance. 



The average rate of markups at the retail level is 

 somewhere between those at the processing and 

 wholesale levels. During 1969-71 retail markups 

 were relatively high for most groundfish (30 to 

 37%) except fresh haddock fillets (18%) (Table 4). 

 Markups for blue crab meat and canned fish prod- 

 ucts ranked next between 28% and 24%; while 

 those for fish steaks, sea scallops, lobsters, and 

 peeled shrimp were under 20% (Table 5). 



The overall average of retail markups of different 

 fish products were about 28% higher than wholesale 

 markups during 1969-71. In some instances they rose 

 to double the rate of the latter. The following reasons 

 account for the higher markup rate at the retail level: 



1 . Fish products are sold at retailers by quantities 

 of less than 10 pounds in each transaction while they 



12 



