III. COMPETITION IN THE APPLE MARKET 



In our modern American economy the elements of imperfect competi- 

 tion are quite evident. One often hears, however, that "on the farm free 

 competition reigns (or rages)." Whether or not one agrees with this 

 assertion, it is apparent that no such hlanket statement could hold true 

 for the entire agricultural industry. It is the intent of the following an- 

 alysis to determine the nature of the economic competition prevailing 

 in the apple market. 



Nature of the Competition 



The fresh apple market prohahly comes quite near to meeting the 

 economists' conception of a "competitive market." In order to examine 

 this proposition, the conditions for a competitive market as indicated 

 hy Boulding will he applied to the fresh apple market, i- 



1. Large Number of Buyers and Sellers 



This condition, applied to sellers at the farm level, is undoubtedly 

 met as the 1959 Census of Agriculture lists 184,462 farms having com- 

 mercial orchards. Since most growers act independently, the volume 

 of sales of any one does not affect prices or sales of any other grower. 



As to buyers, it can be assumed that there is also a large number in 

 this segment of the market, for, historically, apples have moved from 

 individual farms to small wholesalers and thence to retail levels. The 

 large city fruit auctions also imply that many buyers are active. 



Although trends toward large-scale buying by cooperative wholesalers 

 and chain stores, which are being met by farmers' cooperative selling 

 agencies, may reduce the competitive nature of the apple market, its 

 structure is currently typified by many buyers and sellers. 



2. A Homogeneous Product 



One is tempted to dispose of this requirement by stating that "apples 

 are apples" and, therefore, the product is homogeneous. Any apple liuyer 

 would perforce dispute the claim because apples must be classified by 

 grade and variety. It can be averred, however, that within any grade 

 and varietal class, apples are a homogeneous product. The degree 

 to which this hypothesis is true is controlled by the accuracy with which 

 apples can be graded (assuming that varietal differences are easily de- 

 termined ) . In most cases, it is possible to grade apples to rather close 

 limits. There are isolated instances, of course, where a certain buyer 

 will prefer apples from a certain grower. Such situations are most likely 

 to occur in small local markets where wholesalers or retailers are close 

 to the producer. In large city markets and fruit auctions there is little 

 likelihood that buyers differentiate between various lots of "Macintosh 

 U. S. No. 1, 21/2 inches and up." 



In general, producers are required to stamp their names on wholesale 

 packages. This does not distinguish one lot of apples from another (with- 



1- Kenneth E. Boulding, Economic Analysis (rev. ed., New York: Harper & Bros., 

 1948), pp. 49-50. 



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