A STUB‘Y OF A CWPER EVE TURKEY MARKETMG PROJECT EN OHEO Thai; fa: «2m Dag!» c§ M. S... MECHIGAN S?ATE UNWERSYE‘Y Daria D. Meyer 1958 If!) . .rt‘i'i" A STUDY OF A COOPERATIVE TURKEY MARKETING PROJECT IN OHIO By DARIS D. MOYER AN ABSTRACT Submitted to the College of Agriculture Michigan State University of Agriculture and Applied Science in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Agricultural Economics Year 1958 Approved fig 19% Abstract Daris D. Moyer 1. In this study, an analysis was made of the operation of the Ohio Turkey Growers Marketing Association for the 1954 marketing season involving 34 Ohio turkey producers. No significant correlation was found between the volume of sales made to buyers and the net prices received in any of the weight classes. Producers marketing hens up to 14 pounds in weight during December received the highest price. Under similar marketing conditions, this would necessitate starting poults in June to have the desired weight hens by December. Hens weighing 14 pounds and up brought the highest price when marketed in November. This would necessitate starting poults in April or early May to have the desired weights ' by November. This study showed that producers who marketed toms under 20 pounds during December received 1.2 cents per pound more than those in the same weight range but marketed in November. To produce this desired weight by December would require starting the poults in June. Toms in the weight range of 20 to 24 pounds brought more favorable prices than did the lighter weight toms during November and December. Toms that weighed over 24 pounds could have been marketed at any time from the standpoint of prices received during the period of this study. However, it was suggested that the additional cost of producing toms over 24 pounds in weight may more than offset higher prices received. Abstract ‘ Daris D. Moyer 2. There were no statistically significant differences between prices received for ready~to—cook Grade A turkeys of the various sizes and the average quoted live prices for Ohio. However, the 311,888 pounds of hens marketed through the association in 1954 netted $ 916.98 more (.029 cents per pound more) than they would have received if the turkeys had been marketed at the average quoted live prices (ready- to—cook equivalent).. 0n the same basis, the 718,381 pounds of toms marketed through the association netted $ 15,951.76 more (2.2 cents per pound more). The 89,473 pounds of fry- ers marketed through the association netted 3 2,690.97 or 3.0 cents per pound less during the period of study. Over—all, the prices received by producers who marketed Grade A hens and toms were higher than the prices they would have received through alternative methods of marketing based upon the average quoted live prices. However, in the case of fryers, producers would have received more by marketing them alive at the average quoted live prices. The importance of processing at maturity, reduction of risk, payment on the basis of quality, and a storage program to provide for more orderly marketing, are important factors in making comparisons between alternative methods of marketing. The primary reason for the failure of the program to obtain greater support from the turkey producers was because of the delay in payment between the time of proces- sing and the time of selling. Abstract Daris D. Moyer A postal survey in 1958 of former active members indicated that due to increased production and few live buyers and processing plants operating, there is greater need for the marketing program now than in 1954, the last year of operation. A STUDY OF A COOPERATIVE TURKEY MARKETING PROJECT IN OHIO By DARIS D. MOYER A THESIS Submitted to the College of Agriculture Michigan State University of Agriculture and Applied Science in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Agricultural Economics Year 1958 ‘1; -- /..’ ’9‘ v ‘ .2) G-7ZLQ3 ACKNOWLEDGEMENT The author wishes to express his appreciation to Dr. H. E. Larzelere, of the Agricultural Economics Department, for his guidance and suggestions for the scope of the study and his valuable assistance in the preparation of this thesis. Sincere appreciation is also extended to Dr. L. R. Champion, of the Department of Poultry Science, for his excellent suggestions and assistance in the statistical analysis of the data used in this study. I An expression of thanks is also extended to Dr. William Baten, Statistician for the Agricultural Experiment Station, Michigan State University, for his suggestions as to the statistical methods that would be most practical in analyzing and presenting data used in this study. Sincere appreciation is also expressed to Dr. H. C. Zindel, Head of the Department of Poultry Science. for his encouragement, assistance, and suggestions in the preparation of this thesis. TABLE OF CONTENTS INTRODUCTION REVIEW OF LITERATURE PROCEDURE CONCLUSIONS SUMMARY BIBLIOGRAPHY APPENDIX ii Page 28 59 62 65 66 TABLE 6a. 6b. LIST OF TABLES PRODUCTION OF TURKEYS IN THE UNITED STATES AND OHIO, 1929 — 1954 NUMBER, POUNDS, READY-TO-COOK AVERAGE WEIGHT, GRADE, AND AVERAGE READY—TO-COOK PRICE RECEIVED Page 11 FOR TURKEYS MARKETED THROUGH OHIO TURKEY GROWERS ASSOCIATION DURING THE 1954 MARKETING SEASON AVERAGE PRICES FOR LIVE TURKEYS QUOTED IN CLEVELAND, COLUMBUS, AND CINCINNATI MARKETS DURING OCTOBER, NOVEMBER, AND DECEMBER 1953 AND 1954 ' LIVE WEIGHT, READY-TO-COOK WEIGHT, AND DRESSING PERCENTAGES ON SELECTED LOTS OF TURKEYS DIFFERENCE IN AVERAGE QUOTED LIVE PRICES AND READY—TO-COOK PRICES CONVERTED TO LIVE PRICE EQUIVALENT FOR THE 1954.MARKETING SEASON TOTAL SALES BY MARKET PERIODS 0F GRADE A TURKEYS, AVERAGE READY-TO—COOK PRICE RECEIVED COMPARED TO BREAK—EVEN PRICE (BASED ON A QUOTED LIVE PRICE CONVERTED TO READY—TO—COOK PRICE EQUIVALENT) DURING THE 1954 MARKETING SEASON, NOVEMBER TOTAL SALES BY MARKET PERIODS 0F GRADE A TURKEYS, AVERAGE READY-TO—COOK PRICE RECEIVED COMPARED TO BREAK—EVEN PRICE (BASED ON QUOTED LIVE PRICE CONVERTED T0 READY—TO—COOK PRICE EQUIVALENT) DURING THE 1954'MARKETING SEASON, DECEMBER TOTAL SALES BY MARKET PERIODS 0F GRADE A TURKEYS, AVERAGE READY-TO—COOK PRICE RECEIVED COMPARED TO BREAKAEVEN PRICE (BASED ON QUOTED LIVE PRICE CONVERTED TO READY-TO-COOK PRICE EQUIVALENT) DURING THE 1954 MARKETING SEASON, JANUARY 1955 SHOWING DISTRIBUTION OF SALES, AVERAGE READY— TO-COOK PRICE RECEIVED AND AVERAGE LIVE BREAK- EVEN PRICE (READY-TO—COOK EQUIVALENT), GRADE A TURKEYS, SOLD NOVEMBER AND DECEMBER, 1954, JANUARY AND LATER, 1955 iii 25 3O 32 43 43a 43b 46 TABLE 'Page 8. COEFFICIENT OF CORRELATION OF VOLUME OF SALES vs. PRICE, NOVEMBER AND DECEMBER SALE PERIODS, HENS AND TOMS BY WEIGHT CLASSES FOR TURKEYS MARKETED DURING THE 1954 MARKETING SEASON 53 iv FIGURE LIST OF FIGURES Page LOCATION OF PROCESSING PLANTS AND ACTIVE MEMBERS - 1954 23 AVERAGE QUOTED LIVE TURKEY PRICES FOR CLEVELAND, COLUMBUS, AND CINCINNATI MARKETS, OCTOBER, NOVEMBER, AND DECEMBER, 1953 — 1954 31 COMPARISON OF AVERAGE QUOTED LIVE PRICES AND READY-TO-COOK PRICES (CONVERTED TO LIVE EQUIVALENT) FOR TURKEYS MARKETED IN 1954 33 COMPARISON OF READY—TO-COOK PRICES RECEIVED AND THE AVERAGE LIVE PRICE (READY—TO—COOK EQUIVALENT) FOR HENS CALCULATED FROM AVERAGE LIVE PRICE FOR 1954 MARKETING SEASON 39 COMPARISON OF READY—TO-COOK PRICES RECEIVED AND THE AVERAGE LIVE PRICE (READY-TO—COOK EQUIVALENT) RECEIVED FOR TOMS DURING THE 1954 MARKETING SEASON 44 COMPARISON OF READY-TO-COOK PRICES AND AVERAGE QUOTED LIVE PRICES (READY-TO—COOK EQUIVALENT) RECEIVED FOR FRYERS DURING THE 1954 MARKETING SEASON 45 TABLE ‘ LIST OF APPENDIX TABLES DISTRIBUTION OF FRYERS 4 — 8 POUNDS BY DATE OF PROCESSING AND TIME OF SALE AND PERCENTAGE SOLD DURING THE RESPECTIVE SALES PERIODS DISTRIBUTION OF HENS 8 POUNDS - 9 POUNDS 15 OUNCES WEIGHT CLASS ACCORDING TO DATE OF PROCESSING AND TIME OF SALE AND PERCENTAGE SOLD DURING THE RESPECTIVE SALES PERIODS DISTRIBUTION OF HENS lO POUNDS - 11 POUNDS 15 OUNCES WEIGHT CLASS ACCORDING TO DATE OF PROCESSING AND TIME OF SALE AND PERCENTAGE SOLD DURING RESPECTIVE SALES PERIODS DISTRIBUTION OF HENS l2 POUNDS - 13 POUNDS l5 OUNCES WEIGHT CLASS ACCORDING TO DATE OF PROCESSING AND TIME OF SALE AND PERCENTAGE SOLD DURING RESPECTIVE SALES PERIODS DISTRIBUTION OF HENS 14 POUNDS AND UP BY DATE OF PROCESSING AND TIME OF SALE AND PERCENTAGE SOLD DURING RESPECTIVE SALES PERIODS DISTRIBUTION OF TOMS TO 16 POUNDS BY DATE OF PROCESSING AND TIME OF SALE AND PERCENTAGE SOLD DURING RESPECTIVE SALES PERIODS DISTRIBUTION OF TOMS 16 POUNDS - 19 POUNDS 15 OUNCES WEIGHT CLASS BY DATE OF PROCESSING AND TIME OF SALE, AND PERCENTAGE SOLD DURING RESPECTIVE SALES PERIODS DISTRIBUTION OF TOMS 20 POUNDS — 23 POUNDS 15 OUNCES WEIGHT CLASS BY DATE OF PROCESSING AND TIME OF SALE AND PERCENTAGE SOLD DURING RESPECTIVE SALES PERIODS DISTRIBUTION OF TOMS 24 POUNDS AND UP BY DATE OF PROCESSING AND TIME OF SALE AND PERCENTAGE SOLD DURING RESPECTIVE SALES PERIODS Vi Page 66 67 68 69 7O 71 72 73 74 INTRODUCTION During the period of 1940 to 1950, turkey growers in Ohio were repeatedly confronted with the problem of locating dependable marketing facilities; especiallyhomoh wcfipmhoao uzsoa Mom “zoo mamaloao one .copozcmc who: mpmoo .cmuosumc wnflumom was .:ofiuoohonm:MH¢ .owMHOPm .wcfluoohw .wcwwaxomn hwawmmoOOAQ hopma muo0560hn ow mnthoh poz** enmaoz xooouoesmeoom* me.mm~.emm @ sme.mo~.~ mo~.mm H.mm mm.emm.m o.m He.» mmm.m Hem.fi m H.em Ha.mmm.mm o.Ho ma.» mee.om www.ma < mmmwme «.mm mo.mmm.o~ e.m ao.mfi mme.me msm.m m m.om mo.ooo.oam m.em oo.oH Hmm.m~e mmo.em < m:oe o.mm me.ome.e m.» eo.m~ ome.em emo.m m H.mm em.meo.mm~ m e.mm mv.HA mmm.-m cam.em < mzmm canon hon magma peso Hog mcazon mausoa mouse **nm>mmomm m a < enema: mw< q< *mz:ho> mmmzsz mn<¢w mmeqo Mooouoe sooonoe nanHmomm monm mooonoeuunemm mc< nz< .mn<.sooonoeswnfl~ owwho>w Scum copoafipmm .oHSO .mznasfioo .oow>Hom m .w wands EOHH monswww caowz owmao>w magma psoaw>flzvo mewhm obwa cu copho>aoo Deana acceloplmcmmmfi m.~l b.~l ¢.NI mvnmhom xoooIoe m.wm ©.mm m.mm macoo ooaohow ooflhm mooo cplzumom I'll-'|'l|'I'll.|l"""l"l'l"'ll'|l"l'l'l|"ll|5ll|ll ll |"||'|ll‘lllllll'5|l m.mm «.ms 8.8m mo.mm Shannen ©.mm m.~u . m.mm «.mm Lonsooon m.mm m.~\ m.~m 4.0m Ronao>oz m.vm . o.~m honoeoo mpcoo mewhm oososom qoofihm mooo ooHRm mezoz o>aq .uaan oenseoom o>Ah .zomdmm GZHBmMmHDGm WOHmfl W>HQ OB Dmsmm>zoo mmonm MCCOloelmndmm DZ< mmOHmm H>HA QHBODO mc< ZH mozmmmbmHQ .m mamde 36. During December and January, the ready—to—cook hen price (live price equivalent) was 1.9 and 2.4 cents less, respectively. The sharp rise in live hen prices was respon- sible for the live prices being more favorable than the ready— to—cook price. January hen prices declined due to reduced demand for hens after the holiday season. A high percentage of the hens were delivered to the processing plants by members prior to December as evidenced by the fact that the association handled only 1,950 hens during December, 1954, as compared to 6,461 hens in November. In the case of toms, the ready-to-cook prices (live price equivalent) exceeded the average quoted Ohio live price by 1.5, 2.0, and 2.4 cents per pound for November, December, and January, respectively. This indicated that holding toms until January or later netted 2.4 cents per pound more than the average quoted live price for January. The ready—to-cook price received for fryers failed to equal the average (live price equivalent) for any period they were marketed. Therefore, it is questionable whether the extra cost of packaging and freezing to sell fryers frozen rather than in fresh form was justified. It was hoped that a year-round fryer marketing program on a fresh basis could be developed. However, the price level was not favorable enough to encourage fryer production during the winter and early spring months. Even though ready-to-cook prices in the case of hens during December and January and fryers in November, December, 37. and January did not equal the average live price, the fact that the flocks were processed at maturity which reduced the cost of additional feed for carrying the birds to a later period was a distinct advantage. In addition, holding turkeys through more severe weather in December and January involved greater risk of losses, which likewise would have increased production costs. The results of analyzing the data on the basis of com- parison of the ready—to—cook price received for the turkeys marketed through the association and the quoted average price converted to the ready—to—cook price equivalent are summarized in Table 6. The live prices and the percentage yield were taken from Tables 3 and 4. For example, the average quoted live hen price for November was 30.4 cents, which divided by the percentage yield of 82.5 per cent for hens gives the calculated ready-to-cook equivalent price of 3634 cents. Converting the average quoted live prices to ready—to—cook equivalent prices gives a direct comparison between ready—to-cook prices received and the quoted live prices, which are referred to as break-even prices in this discussion. The sales were divided into the November, December, and January sales periods by weight classes. Some fluctuation was observed in the prices received for the various weight classes. In the case of the hens, the price pattern was relatively uniform for all weight classes except the 14 pound and up group that were marketed during November. This weight 38. class involved only 857 birds and all were sold to a buyer who was willing to pay a premium for heavy weight hens of excellent quality for a special order. The live price (ready—to—cook equivalent) reflected the sharp rise in the live hen price during December. Another interesting fact is that the price pattern for hens 12 pounds to 13 pounds 15 ounces was higher for all sales periods than the 10 pound to 11 pound 15 ounce weight class. Otherwise the price pattern for the different weight classes was ac— tually in the price relationship that would be expected, namely, that lighter weights are usually higher priced. Table 6 reveals that it was not profitable to hold hens processed in any of the processing periods into January or later, because the ready-to—cook prices received fell faster than the live price (ready—to—cook equivalent). However, practically all of the hens were from one producer who held them too long and failed to get them marketed alive for the Christmas season trade. They were then consigned to the association and processed after the Christmas holiday. In addition to the depressed price received, a storage charge of .8 cent per pound was assessed on the lots of hens sold during the sales period of January or later. Figure 4 shows graphically the price relationship of hens for the various weight classes (ready—to—cook prices received) and the average live price (ready—to-cook price equivalent). The live price converted to ready—to—cook equivalent is the average breakeven price. FIG 4 COMPARISON OF READY TO'COOK PRICES AND AVERAGE LIVE PRICES READY TO COOK EQUIVALENT RECEIVED FOR HENS DURING THE I954 MARKETING SEASON 43 42 a -\ \ ‘ s ’ v. 00 \‘ O Oo \\\\‘ o \ ‘\\AV. BREAK-EVEN PRICE 00 \ K HENS o ‘ AV. READY TO COOK 0° \ PRICE HENSIZLB-I3LB. o \ 1502. ° , ‘ , AV. READY TO COOK . \ PRICE HENS lOLB.-IILB.ISOZ. ° . AV READY TO COOK ° PRICE HENS I4LB. UP AV READY TO COOK PRICE HENS 8-9Ls. Isoz. 3| 30 29 28 27 26 25 0 NOV DEC JAN 39. 40. Table 6 shows that the net price received for toms Of all weights during the three marketing periods was greater than the average live price (ready—to-cook equivalent). There were two distinct price patterns, the toms in the weight classes under 16 pounds and less than 20 pounds falling into one pattern and the 20 pound and up falling into the other pattern. Figure 5 shows the price relationship between the different weight classes of toms and the average live price (ready-to-cook equivalent). The price line was flattened, showing less change during the three marketing periods. One exception to this was that chain stores tended to bid higher for the toms in the weight classes under 20 pounds for re— tail trade at Christmas. Later the price of these lighter weights was depressed due to less demand for toms of the lighter weights. The cost of holding heavy toms 24 pounds and up into the January and later marketing period was 0.75 cents per pound, slightly below that for hens. The ready—to-cook fryer price was 2.6, 2.1, 2.1 cents below the average live price (ready—tO-cook equivalent) for the November, December, and January and later marketing periods. (See Figure 6.) By using the average ready-to-cook prices received for Grade A turkeys for the three marketing periods, in compari— son to the average live price (ready—to-cook equivalent) the net gain for 311,888 pounds of hens was $916.98 or .029 cent per pound. For the 718,381 pounds of toms, the net gain was $15,951.76 or 2.2 cents per pound. For the 89,473 pounds of 41. fryers, there was a loss of $2,690.97 or 3 cents per pound. Due to the fact that there was only a small percentage Of Grade B turkeys marketed, they were not included in the com— parison. Thus, on the total volume of 1,196,767 pounds of Grade A turkeys there was a margin of $14,167.77 or 1.2 cents per pound in favor of marketing through the association for the 1954 marketing season. For the producers who consigned fryers to be sold dur— ing any of the sales periods or consigned hens that were sold in the selling periods of December and January, the partici— pation in the program meant a lower price than they could have received if they had sold their turkeys at the quoted live prices. On the other hand, those who consigned toms that were sold during any of the marketing periods realized a greater price than the average live price. Statistical analysis, using Chi Square, was used to determine if there were significant differences in the ready— to-cook prices received for the various weight classes, as compared to the break-even prices which were calculated from the average quoted live prices converted to ready-to—cook price equivalent. There were not significant differences in any of the comparisons. Although statistically there were no significant dif- ferences in ready—tO—cook prices received and the quoted adjusted live prices, from a practical standpoint the average producer would have benefited if the net price received had been only 1/4 to 1/2 cent per pound above the price that 42. could have been secured through alternative methods of mar- keting. While the quality program was not in effect long enough to build a good reputation for the association brand of turkeys, the producer did receive a price in proportion to the quality of turkeys he delivered to the processing plant. The advantages of processing at the time of maturity and decrease of risk by not having to hold the turkeys longer before marketing are advantages difficult to measure from a marketing standpoint, but nevertheless important. Due to lack Of sufficient producer support and their unwillingness to provide adequate financing, it was decided to terminate the Operation of the marketing association after the close Of the 1954 marketing season. The associa— tion was then dissolved without loss of investment to members- e>wrm m. eoe>r m>rmm wfl z>wfime wmeOUm ow mw>um > eCWNMKm. >mm EE>UNI60IQOON wwmom mmom~NMU eo wwm>filmmmc oz DCOHMU FHdrmzev UCNHZQ 6mm Hemp Z>fifimenzm mm>moz. Zomm >mm wwmbfil wwHum mwrm mm. eoe>r m>bwm ww ZPmee wmwmouw ow QNPUM > adwfiwmm. >mm NH>UNIHOIOOON WNHOM wmomHWMU Go wwmpfilmmmc Oz ccoamc rHUNIeOIOOON fiwHom MDCH<>EEZHV ccwmzm 6mm Heme Z>Nmmenzm mm>mcz. 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