Mrs. Ruth Morrison. Mrs. Morrison is a statistical clerk who has main- 

 tained the files of basic data from which fruit and vegetable margins 

 are calculated, since the files were started in 1955. 



basis of marketing services — packing, storing, trans- 

 porting, wholesaling, and retailing. Or, if sufficient data 

 are not available less detailed breakdowns may be used. 

 Margins should not be confused with profit. They 

 include marketing costs plus profit or less loss. 



Preparation and Use of Margin Reports 



Margin data maintained on a continuing basis pro- 

 vide an excellent description of trends and also are well 

 suited for more detailed economic analysis. Essential 

 to a continuing program are dependable sources of 

 accurate basic information from which margins can 

 be calculated. USDA Statistical Bulletin 340 will be 

 used to illustrate the types and sources of information 

 required. 



The basic data in this report are commodity prices 

 reported at three levels in the marketing channel — 

 retail, wholesale, and shipping point. Retail prices 

 are collected by the Bureau of Labor Statistics. For 

 the commodities in Bulletin 340, they are obtained in 

 a sample of retail food stores in selected metropolitan 

 areas by trained personnel who are supplied with de- 

 tailed commodity specifications as to grade, size, vari- 

 ety, pricing unit, and other characteristics. Prices are 

 collected on Tuesday, Wednesday, and Thursday of 

 a week in the first half of each month. Wholesale 

 prices are supplied by the Federal-State Fruit and Vege- 

 table Market News Service. These prices are collected 

 daily by Market News reporters stationed in major 

 markets. Prices are obtained from first wholesale han- 

 dlers on sales in less than carlot quantities and are 

 reported by grade, type of container, origin, and other 

 factors. Shipping point prices (f.o.b.) are also supplied 

 by the Federal-State Market News Service. These are 

 the average of daily prices received by a broad sample 

 of shippers in representative shipping districts. They 

 are reported by grade, size, variety, type of pack, and 

 other relevant information. Auction prices are used 

 for some commodities. These are an average weekly 

 price calculated by weighting average daily prices of 



all auction sales in a market by the daily volume of 

 sales in that market. 



Other information collected includes auction and 

 brokerage selling charges, rail and truck transportation 

 rates, and costs of picking, hauling, packing, and stor- 

 ing. These are obtained from various private and 

 public sources wherever available. Although coopera- 

 tion in this regard has been excellent, lack of some of 

 these data prevents a detailed breakdown of spreads 

 for all commodities. 



Method of Calculation 



Ideally, all data used to calculate margins should 

 be for a given lot of a commodity and be obtained as 

 that lot moves through the marketing channel. The 

 price at each point of sale should be determined as well 

 as the charge for each service performed. With this 

 information the allocation of the final selling price 

 among the marketing agents and the producers would 

 be known exactly and margins could be reported with- 

 out error. However, the monetary and other resources 

 required to apply this method to a large number of 

 commodities, markets, and production areas precludes 

 its use. 



Instead, a satisfactory alternative is to select a typi- 

 cal market channel and typical marketing services for 

 each commodity. Then a time lag between pricing 

 dates at each level of the market channel is used that 

 closely approximates actuality. In this report, the re- 

 tail price is an average for Tuesday, Wednesday, and 

 Thursday, the wholesale price is for Tuesday of the 

 same week and the shipping point price is an average 

 of the daily prices for the preceding week. All prices 

 for each commodity are matched as to grade, size, 

 variety, and origin. The retail price, which is obtained 

 in consumer units such as per pound, head, or dozen 

 is converted to a container basis and adjusted for the 

 amount of waste and loss that occurs in the marketing 

 process. 



Spreads were calculated from these prices. The re- 

 tail spread is the retail price less the wholesale price. 

 The shipping point-retailer spread is the wholesale 

 price less the shipping point price. This spread in- 

 cludes the amounts received by marketing agencies 

 between the shipping point and the retail outlet — in 

 most cases transportation and wholesaling. The ship- 

 ping point price is the amount received by marketing 

 agencies in the production area and the growers and 

 is termed grower-packer spread. Each spread is shown 

 also as a percentage of the retail price. 



Uses and Application 



The time required to collect basic information, make 

 calculations and publish the results causes margin data 

 to be historical when released. Their value is, there- 

 fore, dependent on the extent to which price and margin 

 behavior and relationships of the past can be interpreted 

 and applied to marketing situations of the present or 

 future. 



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