on prices,, 7/ To demonstrate, assume a sloping industry demand curve as in figure 

 1. This shows that the price of strawberries will fall when the quantity sold increases. 

 Stated graphically, when the quantity of strawberries offered for sale is increased 

 from q^ to q^, price must decline along the industry demand curve from P. to P 9 if 

 supplies are to clear the market during a short- run market period. 



A percentage change in retail price in responseto a percentage change in quantity 

 of a commodity offered for sale, as demonstrated above, can be determined from its 

 price elasticity of demand coefficient, N. An estimate of demand elasticity is given 

 by the arc elasticity formula ^l - ^ P 1 _:P 2 For fresh strawberries, this co- 



N = qi + q 2 * P i + V 



efficient is estimated to be -2.0. 8/ Accordingly, the national retail price of straw- 

 berries would be expected to decline about 5 percent if radiation=pasteurizing should 

 be adopted by the entire strawberry industry causing consumable supplies to increase 

 10 percent from the same harvested quantity (10 percent f -2.0 = ~5 percent.) 9/ 

 This would be an extreme situation. It is analyzed here to establish a lower-limit 

 estimate of a narrow range of price declines that would be expected as radiation- 

 pasteurization was being adopted. 



Thus, an increase of It) percent in the U.S. supply of fresh strawberries would 

 cause an estimated market price decline of 2.3 cents per pound (-0.05 x the 1959-63 

 monthly average U.S. retail price of 45.2 cents =-2.3 cents). According to the above 

 analysis, the U«S retail price of strawberries would be expected to decline from 

 45.2 to not less than 42.9 cents per pound (45.2-2.3=42.9), depending on the degree 

 of industry adoption of radiation- pasteurization. Then, a 10-percent savings in spoilage 

 loss, or 1/10 of a pound valued at 42.9 cents per pound, would be worth 4.29 cents. 

 This is still substantially more than enough to pay for estimated radiation- pa s~ 

 teurizing costs (table 9). 



Because technical information from current research studies is not yet complete, 

 it would be more than difficult to estimate the potential savings that might be realized 

 from radiation-pasteurizing the other commodities in this study. For these com- 

 modities, recent spoilage losses in comparison with strawberries are: 10 / 



Commodity Cents per pound 10/ 



Strawberries 6.8 



Peaches 1. 5 



Tomatoes ij-,9 



Oranges 0.2 



Grapefruit. . 0.3 



7/ However, if irradiated and nonirradiated strawberries should be regarded 

 as different products by consumers then separate markets would develop, and the 

 price influence between these commodities would likely be that of closely competing 

 products. 



8/ A conservative estimate by the author based on farm-level strawberry mar- 

 keting experience reflected by an estimated coefficient range of -0.8 to -2.4, in 

 Strength of Demand for 120 Market Categories of Food, 1957-61 (2). One would 

 expect a higher price-elasticity of demand at the retail level than at the farm level 

 because value is added in the marketing channel. 



9/ A 10-percent increase in fresh market supply would amount to 22.6 million 

 pounds based on the U.S. average 1950-59 production reported in the 1962 issue of 

 Agricultural Statistics (16). 



10/ Computed by multiplying the spoilage loss percentages appearing in table 1, 

 column 2, by the corresponding 1959-63 monthly average U.S. retail prices per pound 

 in table 14. 



- 14 - 



