AVERAGE FOR TEN MAJOR U. S. CITIES, (EXCEPT FOR WASHINGTON, D. C. IN 1957 AND 1958.)

U. S. DEPARTMENT OF AGRICULTURE

NEG. ERS 1713-63 (1) ECONOMIC RESEARCH SERVICE

Eggs.-Though farm-retail spreads averaged lower last year for eggs retailed in all urban areas in the United States, those for grade A large eggs marketed in 10 major cities increased slightly in 1962, averaging 24.2 cents a dozen, up 0.2 cent from 1961 (fig. 10).

Retail store spreads widened in 6 of the 10 cities from 1961 to 1962, and narrowed in the other 4. The average for the 10 cities was 10.3 cents in 19620.5 cent wider than in 1961.

Spreads between prices paid by retailers and prices received by farmers, however, narrowed in 8 of the 10 cities in 1962 from the previous year. In Atlanta, farm-retailer spreads have narrowed more than 5 cents a dozen since 1956. This decline took place during a period of expansion of the commercial egg industry that shifted egg production in Georgia from a deficit to a surplus position. This industry development was accompanied by increased integration of production and marketing, reduced costs of production, and improved marketing technology. Retail store spreads widened in most of the 10 cities from 1961 to 1962 and averaged 10.2 cents a pound in 1962-0.3 cent wider than in the previous year. In San Francisco, however, this spread narrowed to 12.3 cents a pound in 1962. This was 2.3 cents smaller than the 1961 spread, and nearly 11 cents less than the retail store spread recorded in 1956.

The spread between prices paid by retailers and those received by farmers averaged 9 cents a pound in the 10 cities in 1962. The average was within the narrow range of annual averages-8.7 to 9.2 cents-reported since 1957. The biggest change in this spread among the 10 cities occurred in Los Angeles, where it averaged 3.7 cents a pound. This decrease probably was due to structural changes in the marketing system for fryers in that area. These changes included more direct marketing on a specification basis to large volume retailers, more plentiful supplies of local fryers as a result of recent expansion of the commercial broiler industry in California, and improvements in production and marketing technology.

AVERAGE FOR TEN MAJOR U. S. CITIES, (EXCEPT FOR WASHINGTON, D. C. IN 1957 AND 1958.)

U. S. DEPARTMENT OF AGRICULTURE

NEG. ERS 171463 (1) ECONOMIC RESEARCH SERVICE

Frying chickens.-Farm-retail spreads for grade A ready-to-cook frying chickens averaged 19.2 cents a pound in the 10 major cities in 1962, about the same as in 1961.

Dairy products

Retail prices and farm values of all major dairy products declined from 1961 to 1962, the first general decrease in 7 years. Decreases in the Federal Government's support prices for butter, American Cheddar cheese, and nonfat dry milk accounted for the reductions in the farm values of manufactured dairy products. Changes in farm-retail spreads for most of these products were negligible, so retail prices of most products decreased about as much as their farm values. The farmer's share of the dollar consumers spent for dairy products was 44 cents in 1962, 1 cent less than in 1961. The 1962 farmer's share was the smallest since 1933.

Fluid milk.-Retail prices of fluid milk averaged 25.3 cents in 1962, down 0.1 cent from 1961. Farmers received 10.7 cents per quart of milk sold at retail in 1962, 0.2 cent less than in 1961. The farm-retail spread was 14.6 cents, 0.1 cent wider than in 1961.

Last year was the first year in 8 that the annual average retail price did not rise (fig. 12). The retail price was 2.1 cents higher in 1962 than in 1952; the farm value was down 1.2 cents, and the spread was 3.3 cents wider.

Sales of milk having a lower fat and higher nonfat content than ordinary milk have increased in recent years. This product is commonly called 2-10 milk, because it usually contains 2 percent butterfat and 10-percent nonfat solids. It was introduced in some markets in this country in the early 1950's. The rate at which the product was introduced in new markets increased in the second half of the 1950's, indicating a broadening consumer interest in the product. Low-fat milk was sold in most of the Federal order milk market areas in 1962 In a few areas sales of low-fat milk accounted for as much as one-sixth of the

*WEIGHTED AVERAGE OF PRICES OF MILK SOLD IN RETAIL STORES AND DELIVERED TO HOMES
RECEIVED BY FARMERS FOR 2.18 LB. OF CLASS I MILK

U. S. DEPARTMENT OF AGRICULTURE

NEG. ERS 1751-63 (1) ECONOMIC RESEARCH SERVICE

total fluid milk sales. But these sales were a substantially smaller proportion of the total in a majority of the Federal markets.

Since fat solids in milk are more valuable than nonfat solids, the low-fat milk has a lower farm value than ordinary milk, even though the low-fat milk has a higher nonfat solids content.

Butter. The retail price of butter averaged 75.2 cents per pound in 1962, down 1.1 cents from the 1961 average. The farm value was 54.4 cents, 1.2 cents less than in 1961, and the farm-retail spread averaged 20.8 cents, up 0.1 cent.

During the 10 years, 1953-62, the quarterly average farm-retail spread for butter varied between 23.9 cents in the first quarter of 1954 and 20.2 cents in the final quarter of 1961. The farm value varied between 57.7 cents in the first quarter of 1953 and 48.3 cents in the second quarter of 1954. In the short run the spread often varied inversely with the farm-value, so the retail price did not change as much as the farm value.

American processed cheese.-Farmers received an average of 28.8 cents for milk equivalent to 1 pound of American processed cheese in 1962, compared with 30.2 cents in 1961. Most of this decrease was offset by an increase in the farmretail spread to 35.2 from 34.2 cents in 1961. The retail price averaged 64 cents in 1962, down from 64.4 cents in the previous year. The annual average spread increased 6.4 cents from 1957 to 1962. Much of this rise occurred in the fourth quarter of 1960, when, under the stimulus of increased commercial demand, the retail price rose more than the farm value. The farm value dropped early in 1961 when production had increased more than enough to supply the expanded demand. The retail price soon followed the farm-value downward, but the spread remained wider than it was in mid-1960.

The farm-retail spread rose more for cheese than for most other dairy prodnets during the last decade. In 1962 the spread for American processed cheese was 43 percent larger than in 1952. Increases in the spreads for all dairy products averaged 24 percent.

Evaporated milk.-The retail price of evaporated milk averaged 15.6 cents per 14-ounce can in 1962, down 0.3 cent from the 1961 average. This was the first decrease in the annual average since 1955. The farm value also decreased #3 cent to 6.2 cents; so the farm-retail spread was 9.4 cents, the same as in 1961. Last year was the first since 1955 that the spread did not increase. From

FIGURE 14

CONSUMER'S CORN FLAKES PRICE

The Retail Price and Where It Goes

Consumers paid an average of 41.8 cents for a 12-ounce jar of peanut butter

during the 12 months beginning August 1, 1960. Changes in retail prices of this product were small in recent years (fig. 15). Changes in the farm-retail spread and in the grower's return also were small in cents per jar, but in percentage terms some were substantial. The farm-retail spread totaled 30 cents in 196061. and the farm value of peanuts required to produce a 12-ounce jar of peanut butter averaged 11.8 cents.

Shellers received an average of 13.9 cents for peanuts equivalent to 12 ounces of peanut butter in 1960-61. The sheller's spread was 2.1 cents-the difference between the value of shelled peanuts at the plant and the farm value of peanuts. The manufacturer's spread averaged 15 cents per jar in 1960-61-the difference between his selling price of 28.9 cents and the sheller's return. This spread included the cost of packaging materials and ingredients other than peanuts, costs of processing and distributing the finished product to wholesale and retail agencies, and profits.

The wholesale-retail spread for peanut butter averaged 12.9 cents per jar in 1960-61. Charges for wholesaling and retailing services were combined because wholesaling services were not always performed by distinct wholesaling agencies. Manufacturers sell much of their production directly to retail grocers.

Variations in retail prices.-Noticeable differences in retail prices and price spreads were associated with type of retail outlet, brand name, location of consuming area, and container size. Chainstore prices for peanut butter were lower than independent store prices. The most frequent price was 43 cents per 12ounce jar in chainstores and 45 cents in independent stores. Total farm-retail spreads for 1960-61 were 31.2 cents per jar for chains and 33.2 cents for independents.

4

Advertised, nationally distributed manufacturers' brands of peanut butter were generally higher priced than other brands. In 1960-61 the most frequent price was 45 cents per 12-ounce jar for a group of four such major brands compared with 37 cents for a group of minor brands. Prices of major brands commonly were 6 cents higher than for minor brands in 1959-60 and 4 cents higher in 1958-59.

The farm-retail price spread of major brands averaged 33.2 cents in 1960-61 compared with 25.2 cents for minor brands. Differences in prices between major and minor brands are indicative of the additional costs incurred in merchandising the highly advertised brands.

Retail prices in eight cities were compared. This comparison was limited to chainstore prices of the same four nationally distributed brands in order to provide a regional comparison indicative of differences in prices resulting from market location. Portland, the market farthest from the peanut producing areas, had prices as high or higher than those found in the other seven cities studies. Baltimore and Philadelphia prices consistently fell below the average price for the eight cities.

The foregoing comparisons were based on prices for peanut butter retailed in 12-ounce containers. Peanut butter, however, is sold in a variety of container sizes. Substantial variation in retail prices is related to differences in container size. The average per unit cost of peanut butter decreases substantially as container sizes increase up to about 25 ounces. In 1960, 12 ounces of peanut butter in 8-ounce jars cost consumers 46.9 cents compared with 35.1 cents in 18-ounce jars. This meant that the marketing charge for 12 ounces of peanut butter in S-ounce jars was about 11⁄2 times as much as in 18-ounce jars. However, for 30ounce containers or larger, reductions in marketing charges from increases in container size were relatively insignificant.

Margarine and advertising prices

Seven leading margarine manufacturers are among the 100 top advertisers in the United States. Their promotion and merchandising are of such a scope that 11 or more brands of margarine distributed by these companies are known throughout the United States.

a Data in this section are for a peanut crop year, which extends from August through July.

Prices reported were for the most popular brand sold in each store. Special and sale prices were excluded.

The price shown for minor brands is the simple average of bimodal prices of 35 and 39 cents per jar.

Chainstore sales comprise somewhat more than 40 percent of retail grocery sales.

7 Comparisons of retail prices by container sizes are based on prices in independent stores, reported to the Statistical Reporting Service, USDA.