Trends in Number and Volume

WHOLESALE MARKETING OF FRESH VEGETABLES

By Sidney R. Jumper

PROBLEMS IN VEGETABLE MARKETING

Many of the problems in marketing fresh vegetables are of physical origin, but others result from inertia in the marketing process and from instability of supply sources. In addition, variations in vegetable out­put create major obstacles to the establish­ment of orderly linkages between producers, or producing areas, and the principal points of consumption.

Most fresh vegetables are highly perishable, and must be marketed within a few hours or days after harvest. The lack of federal price controls permits immense short-term changes in price. whieh create high risks for buyers and sellers alike. Problems and costs have been accentuated by a shift in consumer preferencs from such hardy commodities as potatoes and onions toward more perishable items such as tomatoes, lettuce, and other salad vegetables.

An added problem for the fresh vegetable industry is the replacement of fresh by processed vegetables. Besides the greater convenience of processed products in home preparation, their competitive position has benefitted from a steadily narrowing price differential.

MARKET TYPES AND TRENDS

Markets handling fresh vegetables are classified as producer-oriented, consumer-oriented, and redistribution markets, but many producer-­oriented markets provide some consumer-ori­ented services, some consumer-oriented mar­kets provide direct outlets for local producers, and redislribution markets serve local as well as distant producers and consumers.

During the last three decades most types of produce markets have declined in number because of the growth of chain store organizations. The chains benefit from large volume purchases, and their precise knowledge about and control over their retail outlets. Chain organizations have increasingly bought directly from produc­ing areas, bypassing consumer-oriented mar­kets, and often producer-oriented markets as well. The independent marketing structure has been seriously jeoprdized, yet, some elements must be maintained because major outlets for fresh vegetables are not being supplied through chain groups.

Price and variety

Changes in buying practices of chain stores and wholesalers have shifted the point of price determination from consumer-oriented markets toward producing areas. The shift in point of price determination, along with the increasing importance of large chains and the consequent reduction in number of buyers, has markedly improved price stability for fruits and vegetables. The larger the buyer_, the greater his impact upon price. The variety of products handled by shipping point markets has declined. Growers have tended to specialize in crops that yield the greatest profits. Costs can often he reduced substantially when the variety of crops is min­imized.

Trends in Number and Volume

Most types of producer-oriented markets have declined in number since World War II, but there has been an increasing trend for large producers to form bargaining associations which function as agents in contract negotiations be­tween producers and buyers. The need for bar­gaining has been accentuated by a major in­crease in large volume purchases, a decline in the number and competitiveness of buyers, and the influence of individual growers and small-volume markets in price determina­tion.

Privetly organized producer-oriented mar­kets appear to have suffered the greatest de­cline in numbers and volume of sales. The decline in number of producer-oriented markets has resulted chiefly from the following factors: 1) mergers or consolidations among co­operative organizations; 2) the tendency for farms to increase in size and output and for growers to form their own marketing organizations; 3) reduced need for market in areas where output is low or where the marketing sea­son is short; 4) improvements in roads and hauling equipment, allowing markets to service larger areas than formely; 5) a reduction in number of buyers as the number of consumer-oriented wholesolle outlets has declined; 6) the improved economies of scale and in­creased competition for produce among buyers when markets are fewer but larger.

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