Analysis of Apple Prices and Price Spreads 



Alfred J. Burns and Robert W. Bohall 



Economic Research Service 



Marketing Economics Division 



Abstract— "A nalysis of Apple Prices and Price Spreads ": Washington Red Delicious apple prices increased at 

 all marketing levels between 1960/61 and 1971/72. The shipping point-retail price spread; packing, storage, 

 and selling costs; and returns to Washington growers all increased. Washington growers maintained their 

 share of the consumers' dollars for fresh apples, although their returns were highly variable. Growers of 

 bagged Eastern Mcintosh and Midwestern Jonathan apples for the fresh market and of Eastern processing 

 apples for applesauce received less than 20 percent of the consumer 's dollar during the past few years. 



Key Words: Apples, prices, price spreads, costs, margins. 



In January 1972, the Secretary of Agriculture 

 appointed a special Apple Marketing Study Team to 

 examine the marketing problems of the apple industry. 

 1 The team met with industry leaders in a series of 

 regional meetings in the spring of 1972. Retail pricing of 

 apples and marketing margins from growers to retailers 

 were among the hottest issues brought up at each 

 meeting. Many growers believed their returns had not 

 been increasing and that other segment in the marketing 

 system had been taking an increasing proportion of the 

 consumer dollar. Growers felt that all others engaged in 

 marketing apples (shippers, packers, processors, 

 wholesalers, and retailers) were covering their costs of 

 operation, plus a profit. Shippers were equally 

 concerned over retail margins and the effect of markups 

 on sales of their product. Growers and shippers felt the 

 chain retailer was treating fresh apples unfairly by 

 putting higher margins and prices on apples than on 

 other fruits. Thus, the Apple Marketing Team asked the 

 Economic Research Service to do a special analysis of 

 apple prices and price spreads. Attention was focused on 

 'both fresh apples and applesauce. Data used were from 

 continuing research on prices and margins of fruits and 

 vegetables. The article - presents the results of the 

 analysis. 



The results indicate that Washington State growers 

 have maintained their share of the consumer dollar for 

 fresh apples at about 25 percent over the last 12 years, 

 although their returns have been highly variable, 

 depending on the size of the apple crop. Growers of 



'Recommendations of the Apple Marketing 

 summarized beginning on page 9 of this report. 



Team are 



bagged Eastern Mcintosh and Midwest Jonathans for the 

 fresh market and of Eastern processing apples for 

 applesauce received less than 20 percent of the 

 consumer's dollar during the past 2 or 3 seasons. Data on 

 varieties other than Washington Red Delicious were 

 insufficient to determine if their results represent a 

 longrun trend. 



Fresh Apples 



Retail prices of fresh apples have increased sharply 

 since 1960. The U.S. average retail price (BLS) of fresh 

 all-purpose apples was 40 percent higher in 1971 than 11 

 years earlier. Retail prices increased for most apple 

 varieties, and increases were sharper for the more 

 popular varieties. Red Delicious is probably the variety 

 most preferred for fresh use. The season average retail 

 price of Washington Red Delicious apples in New York 

 City was $4.55 per carton higher in 1971/72 than 11 

 seasons earlier (Table A). 



Both the retail price in New York City and the 

 supply of Washington Red Delicious apples trended 

 upward during the decade. Retail price changes were 

 responsive to seasonal supply changes in 10 of the 11 

 seasons (top portion, Figure A). Reduced supplies 

 resulted in higher apple prices in 7 seasons, and increased 

 supplies resulted in lower prices in 3 seasons. Increased 

 supplies in 1966/67 did not result in a lower retail price 

 mainly because of much smaller apple crops in other 

 producing areas. 



The retail value of a 42-pound tray-packed carton of 

 Washington Red Delicious apples in New York increased 

 48 percent between 1960/61 and 1971/72, shipping 

 point prices increased 57 percent, and grower returns 



TFS-185, NOVEMBER 1972 13 



