MARKETING MARGINS FOR McINTOSH AND RED DELICIOUS APPLES 



Robert L. Christensen 

 Department of Food and Resource Economics 



A study recently published by agricultural economists at the 

 University of Connecticut focused on the, determination of wholesale 

 and retail marketing margins for apples. Producers interested in 

 performing this marketing function themselves through roadside 

 stand operations should find this study of interest in making such 

 a decision. 



Apple growers have at least three alternatives for selling 



their fresh apples: (1) through their own roadside outlet, (2) 



selling direct to a retail outlet or (3) selling to a wholesaler. 

 Many growers use a combination of all three, 



Mcintosh and Red Delicious were the two varieties selected 

 for the study. The package studied was 12-3's. The data consisted 

 of 238 observations of prices in 1969-70 for U.S. No. 1 or better 

 apples. Considerable variability of prices was observed both in 

 terms of variety and stage of marketing. 



yjholesale Markups 



Wholesalers of Mcintosh apples apparently applied a constant 

 markup which was then "adjusted" by the farm price. The constant 

 factor was found to be $2.10 (for the 12-3 package). The adjuster 

 operated in such a way as to reduce the margin when farm prices are 

 high and increase it when the farm price falls. The adjustment fac- 

 tor was 21 percent of the farm price. 



For example: 



Farm Price in Period 1 $4.00 



Constant Factor-Wholesale 2.10 



Adjuster (.21 x 4.00) -.84 



Wholesale Markup $1.26 



Farm Price in Period 2 $5.00 



Constant Factor Wholesale 2.10 



Adjuster (.21 x 5.00 - 1.05 



Wholesale Markup $1.05 



Wholesalers of Red Delicious used the same strategy in market- 

 ing. However, the constant factor was $2.06 and the adjuster was 

 18 percent. 



^Montero, Jose, and D.G. Stitts, "Marketing Margins for Mcintosh 

 and Red Delicious Apples in Connecticut." Journal of the North- 

 eastern Agricultural Economics Council , Vol. IV, No . 2 , October, 1975 



