AN ANALYSIS OF PRICING AND _ MARKETING PRACTICES CF A - MICHIGAN CELERY PRODUCERA;_ ORGANIZATION I 1 THESIS FOR THE DEGREE OF Ph.D * - - THOMAS ' SCOTT CLEVENGER ' 1968. LIB R A R Y MiChlgau Ate University This is to certify that the thesis entitled AN ANALYSIS OF PRICING AND MARKETING PRACTICES OF A MICHIGAN CELERY PRODUCER ORGANIZATION presented by Thomas Scott Clevenger has been accepted towards fulfillment of the requirements for Ph.D. d , Agricultural Economics _—_ egree II] tar/:7 , ,. " /%1vcz m flq 1? 1a Major professor ’ 3,. Date F815). 2]., 1968 0-169 M IIIIIIIIIIIIIIIIIIIIIIIIIIIII W ”W ”/2 ll/I/lfl/IWIl/Will/WIlll/II/Ulll/Illll , 3 1 93 10539 8220 RETURNING MATERIALS: )VIESI_J Place in book drop to LlakARJES remove this checkout from your record. FINES wi11 be charged If book is returned after the date stamped below. fit. I) is“ f '15:” 85 i W ABSTRACT AN ANALYSIS OF PRICING.AND MARKETING PRACTICES OF A MICHIGAN CELERY PRODUCER ORGANIZATION by Thomas Scott Clevenger The purpose of this study was to analyze the marketing and pricing practices of a relatively new marketing institution, the Nfichigan Celery Promotion CCOperative. The analysis provides infor- nmtion that is directly useful to the COOperative in planning a more effective marketing program. Other commodity groups may also benefit from the case study of group action, including this organiza- tion's growth, experiences, and marketing practices. The organization has overcome many of the problems that led to its formation in 1963. By 1967, the CCCperative was confronted with a.problem of maintaining its market position. Possible alternative organizational and marketing techniques for the firm‘s growth were analyzed, including an analysis of their pricing activities. This Cooperative has signed production contracts with its members and administratively determines its product prices. It markets its celery through non-member shippers (brokers) with whom it has signed exclusive supply contracts. weekly celery price relationships (1963-1966) were analyzed with single equation, least squares multiple regression methods. The dependent variable was the Cooperative‘s f.o.b. shipping point price. Independent variables selected for inclusion in the price estimating equations included celery f.o.b. shipping point prices at competing-pro- duction areas in California and.New York,and a CCCperative supply variable. Thomas Scott Clevenger Due to within-season changes in celery supply originating outside thhigan, the Michigan celery season was divided between the seventh and eighth weeks. Equations developed for each portion of the season were used during the 1967 marketing season to determine their predic— tive power. Except for the third and fourth weeks, in which there respectively occurred a national railroad strike and a riot which closed the Detroit terminal market, the equations predicted well. The direc- tion of price change was predicted more accurately than the actual weekly average price. The regression equations were updated, including 1967 data, exclud- ing the third and fourth weeks. The updated equation for the first portion of the season had a multiple correlation coefficient of .9A and a.standard error of estimate of .2A, while the equation for the last portion of the season had a multiple correlation coefficient of .80 and a standard error of estimate of .26. The prices estimated were weekly average prices. Industry practice is to change f.o.b. shipping point price by a minimum of $.25. The low standard errors of estimate rela- tive to the minimum price change indicate that these equations are useful to the Cooperative in their administrative pricing process. The results of an open-end attitude survey of Michigan celery shippers, processors, and field buyers and of previous attitude surveys of Michigan celery growers conducted'by the COCperative Extension Service were presented to indicate the likelihood of the industry accepting alternative marketing organizations and practices. A Michigan state celery marketing order was suggested as a means of improving the Michigan celery marketing activities. Through an order, all the Michigan celery producers could work to improve the Thomas Scott Clevenger marketing and merchandising of their products, deSpite the adverse attitudes of Michigan celery shippers, processors, and field buyers toward a rigorous state celery marketing order. Central packing was suggested to the CCOperative as a possible means of improving quality, meeting labor requirements for packing in.a more efficient manner, and improving coordination of celery and possibly other vegetable marketing efforts by the C00perative. Shippers, in general, would.be opposed.to the CCOperative expanding its market control through a central packing facility, even though they would recognize and value the more uniform and higher quality products that could result. AN ANALYSIS OF PRICING AND MARKETING PRACTICES OF A ‘MICHIGAN CELERY PRODUCER ORGANIZATION By Thomas Scott Clevenger A THESIS submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics 1968 ACKNOWLEDGMENTS The writer wishes to express sincere appreciation to Dr. Harold M. Riley for his helpful attitude and guidance throughout the writer's Doctoral program. Thanks are also extended to Dr. Donald J. Ricks and to Dr. Lester V. Manderschied for their comments on an earlier draft of the manuscript. This study would not have been possible without the cooperation received from the Michigan Celery Promotion Cooperative and Michigan celery shippers, processors, and field buyers. COCperation of Mr. John K. Trocke of the CooperatiVe Extension Service, Michigan State University, is also acknowledged and appreciated. Funds for this study were made available through the Agricultural EXperiment Station, Michigan State University. ii TABLE OF CONTENTS Chapter Page I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . l The Problem The Objectives Plan of Thesis II. THE UNITED STATES CELERY INDUSTRY . . . . . . . . . . . 6 Introduction Ecological Characteristics of Celery Regional Patterns of Production and Distribution Celery Consumption Market Organization and Practices III. THE MICHIGAN CELERY PROMOTION COOPERATIVE . . . . . . . 22 Introduction Conditions Which Motivated Group Action The Organizational Efforts The Organization and Operations of the Michigan Celery Promotion Cooperative Problems Confronting the Cooperative IV. PRICE PREDICTTON EQUATIONS FOR MICHIGAN COOPERATIVE CELERY . . . . . . . . . . . . 51 Introduction AnalYSis of Annual United States Celery Prices Analysis of Michigan Celery Prices Price Prediction Results Variables Included and Excluded in Selected Equations Predicting Michigan Cooperative Celery Prices V- ALTERNATIVE MARKETING ORGANIZATIONS AND PRACTICES 8 FOR THE MICHIGAN CELERY INDUSTRY . . . . . . 9 Alternative Marketing Organizations Merge Cooperatively with Other Market Areas A Multi-Vegetable Marketing Organization Marketing Orders Alternative Marketing Practices Pricing Coordination and Control Market Expansion TABLE OF CONTENTS (Continued) Chapter Page VI. ATTITUDES OF CELERY GROWERS, SHIRPERS, PROCESSORS AND FIELD BUYERS TOWARD ALTERNATIVE MARKETING ORGANIZATIONS AND PRACTICES , , , , , , , , , , , . , 117 Attitudes of Grower Members waard the CCOperative, Present Marketing and Alternative Marketing Practices Grower Attitudes Toward the COCperative Grower Attitudes Toward Present CCCperative Marketing Activities Grower Attitudes Toward.A1ternative Marketing Organizations and Practices Attitudes of Shippers, Processors and Field Buyers of Michigan Celery Toward Existing and Alternative Marketing Organizations and Practices Attitudes State Marketing Order Summary of Grower, Shipper, Processor and Field Buyer Attitudes Toward Alternative Marketing Organiza— tions and Practices Quality Central Packing Multi4Vegetable Shipping Merchandising Pricing Quantity VII. SUMMARY AND CONCLUSIONS . . . . . . . . . . . . . . . . 166 The Cooperative--Recommended Action Short Run Long Run LIST OF REFERENCES . . . . ... . . . . . . . . . . . . . . . . . 181 APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 APPENDIX C . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 APPENDIX D . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 APPENDIX E . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 iv Table 10. ll. 12. 13. LIST OF TABLES Rail shipments of California celery by week and month of the Michigan marketing season, average of 1963-1966. Average monthly availability of celery as a percent- age of annual supply. Annual per capita disappearance of United States marketed celery production in farm weight, 19117-1966. Ekpenditures and purchases for fresh celery from a sample of Lansing, Michigan families for yearly four-week period averages, 195A-l958. Michigan celery: acreage, yield, production and price, 19h7—1966. Quantity of Michigan Celery Promotion Cooperative fresh and processing market celery sales, 1963-1967. Actual and computed United States annual average celery prices and related variables, 19u7-1966. Deflated actual and computed United States annual average celery prices and related variables, 19u7-1966. General results of the two United States annual average price relationships for each of the data forms. Percentage civilian consumption of Vegetables in fresh and processed form for selected years. Michigan Celery Promotion CCCperative actual and estimated crate receipts of 2% dozen size celery, 1967. A comparison of actual, predicted, and.predicted using actual receipts rather than estimated receipts Nfichigan Celery Promotion Cooperative average f.o.b. price per crate of 2% size celery, 1967. Reaponses of Michigan Celery Promotion Cooperative members to the question: "Overall, do you feel the Michigan Celery Promotion CCOperative program was: Successful, An Improvement or A Failure?", 1963—1965. Page ll 12 1A .17 23 AA 56 57 58 59 82 83 122 LIST OF TABLES (Continued) Table Page lAu Responses of Michigan Celery Promotion COCperative members to the question: "Do you feel that the General Manager has done a (Good Jdb, Fair Job, Poor Job)?", 1963-1965. 124 15. ReSponses of Michigan Celery Promotion COOperative members to the question: "Do you feel that the fieldman did a (Good JGb, Fair Job, Poor Job)?", 1963-1965. 121+ 16. Response of Michigan Celery Promotion Cooperative members to the question: "Should the Cooperative concentrate more on cultural practices or market- ing problems?", 1963-1965. 126 17. ReSponses oijichigan Celery Promotion COOperative members to the question: "Do you think the price program this year was (Effective, Fairly Effective, USeless)?", 1963-1965. 129 18. Factors shippers, processors and field buyers believe determine the prices of Michigan ' celery, by frequency mentioned. 138 19. Attitudes of shippers, processors and field buyers toward two questions: 1) From the point of view of the celery industry, do you favor the operation of a producer marketing cooperative? 2) From the point of View of your business, do you favor the operation of a producer marketing cooperative? 148 20. Attitudes of shippers, processors and field.buyers toward a producer marketing CCCperative attempting to establish pricing guides for its products 1A9 21. Attitudes of shippers, processors and field buyers toward a producer marketing cooperative Operating a central packing facility. 150 22. Attitudes of shippers, processors and field buyers toward a producer cooperative nerketing several vegetable crOps. 152 23. Shipper, processor and field buyer responses to the question: "Do you know what a state marketing order is?" 154 vi LIST OF TABLES (Continued) Table Page 24. Attitudes of Shippers, processors and field'buyers toward a state marketing order for Michigan celery including a provision that would.permit developing and dissemination of industry economic information. 156 25. Attitudes of Shippers, processors and field buyers toward a state marketing order for Michigan celery including a provision that would permit quality control in order to establish uniform grades and standards. 156 26. Attitudes of Shippers, processors and field buyers toward a state marketing order for Michigan celery including a provision that would permit collection and use of advertising and.promotion funds. 157 27. Responses of shippers, processors and field buyers to the question: "Does Michigan need a new or improved.package or product to be competitive with other areas?" 159 vii LIST OF FIGURES Figure Page 1. Michigan fresh celery truck Shipments as reported by the Michigan Celery Promotion Cooperative, average for 1963-1966. 10 2. Organization table for the Michigan Celery Promotion Cooperative. 32 3. Sources of information for the Michigan Celery Promotion Cooperative's Price Committee. A1 A. Michigan Celery Promotion Cooperative average weekly f.o.b. prices per crate of 2% dozen Size celery, 1963-1967. 1+5 5. Major relationships in the demand and price structure for celery in a given year. 5A 6. United States annual celery production: actual and estimated dollars (deflated) per crate and.per capita production. 60 7. Michigan Celery Promotion Cooperative actual and estimated average weekly f.o.b. shipping point price per crate of 2% dozen size celery, 1963 marketing season. 67 8. Michigan Celery Promotion Cooperative actual and estimated average weekly f.o.b. shipping point price per crate of 2% dozen size celery, 196A marketing season. 68 9. Michigan Celery Promotion Cooperative actual and estimated average weekly f.o.b. shipping point price per crate of 2% dozen Size celery, 1965 marketing season. 69 10. Michigan Celery Promotion Cooperative actual and estimated average weekly f.o.b. shipping point price per crate of 2% dozen size celery, 1966 marketing season. 70 11. Michigan Celery Promotion Cooperative actual and estimated average weekly f.o.b. shipping point price per crate of 2% dozen size celery, 1967 marketing season. 79 viii LIST OF APPENDICES APPENDIX.A Table Page 1. United States, California, Michigan, and New York celery production during the Michigan marketing season, average of 1963-1966. 188 2. Celery unloads in A1 cities by months, averaged over 1963-1966. 189 3. Annual United States celery production, 19u7-1966. 190 A» Nfichigan Celery Promotion Cooperative actual and estimated average f.o.b. shipping point price per crate of 2% size celery by week of their market- ing season, 1963-1967. 191 5. Carlot rail shipments of Santa Maria and Salinas, California celery by week of the Michigan Celery Promotion Cooperative marketing season, 1963-1966. 192 6. Data series for variables Qm and met for the first seven weeks of the Michigan Celery Promotion CCOperative marketing seasons, 1963-1967. 193 7. Data series for varieties Qm, va, Psft and Poft for the eighth week of the Michigan Celery Promotion Cooperative marketing season to its completion, 1963-1967. 19E 8. Michigan Celery Promotion CCOperative f.o.b. price per crate of 2% size celery for each day and the average price per crate of 2% size celery for each week, 1963-1967. 195 9. .Reoponses of Michigan Celery Promotion COCperative members to the question: "Overall, do you feel the Michigan Celery Promotion Cooperative program was: Successful, An Improvement or A Failure?", 1963- 1965. 198 10. Responses oijichigan Celery Promotion Cooperative members to the question: "Do you feel that you were kept (we11 Informed, Fairly we11 Informed, Poorly Informed) of developments within the (Cooperative's) program?", 1963-1965- 198 31” Beeponses of Michigan Celery Promotion Cooperative members to the question: "Do you feel that the General Manager has done a (Good JCb, Fair Job, Poor Job)?", 1963-1965. 199 ix IIST OF APPENDICES (Continued) Table Page 12. Responses of Michigan Celery Promotion Cooperative members to the question: "Do you feel that the fieldman did a (Good Job, Fair Job, Poor Job)?", 1963-1965. 199 13. Responses of Michigan Celery Promotion Cooperative ' members to the question: "Have you cooperated with the celery COCperative in filling out question- naires, packing good quality pack, attending meetings, informing committees and manager of any information helpful to the CCCperative, supporting the program at all times and encouraging others to cooperate (100% COCperation, Fairly Good Support, Whenever Convenient)?", 1963-1965. 200 1A. ReSponses of Michigan Celery Promotion Cooperative members to the question: "Do you feel that the Cooperative is charging too much for the good you are (could) get(ting) from it?", 1963-1965. 200 15. Responses of Michigan Celery Promotion Cooperative members to the question: "Should the Cooperative concentrate more on cultural practices or market- ing problems?", 1963-1965. 201 16. Responses of Michigan Celery Promotion CCCperative members to the question: "Has the Cooperative's. quality control program.been (Too Loose, Just Right, Too Tight) in its enforcement?", 1963-1965. 201 17. ReSponses of.Michigan Celery Promotion Cooperative members to the question: "was the (Federal-State) InSpection Service fair in method of inSpection?", 1963-1965. 202 18. Responses of.Michigan Celery Promotion Cooperative members to the question: "Did the Federal-State InSpection Service perform (well, Fair, Poorly)?", 1963-1965. 202 19. Responses of Michigan Celery Promotion Cooperative members to the question: "Should the Cooperative's quality standards be (Raised, Remain Same, Lowered)?", 1963-1965. 203 20. ReSponses of thhigan Celery Promotion Cooperative members to the question: "was the cutting holiday helpful in keeping the celery price up?", 1963~l965. 203 TEST OF APPENDICES (Continued) Table' 21. Responses of Michigan Celery Promotion Cooperative members to the question: "Do you think the price program this year was (Effective, Fairly Effective, Useless)?", 1963-1965. APPENDIX B Contract Between Producer and Cooperative Contract Between COOperative and Shipper APPENDIX C Variables Considered but not Included in the Equations APPENDIX D Federal Marketing 0rders--Institution and Administration APPENDIX E Field Buyer Interview Processorclnterview Shipper Interview xi Page 20A 206 210 215 217 222 226 230 CHAPTER I INTRODUCTION The focus in this study was a relatively new marketing institu- tion, the Michigan Celery Promotion Cooperative. In seeking ways to further improve the effectiveness of their marketing efforts,the Cooperative requested assistance from.the Department of Agricultural Ebonomics at Michigan State University. Thus, the immediate goal of this study was to provide infOrmation that will be directly useful to the Cooperative in developing a more effective marketing program. An attempt has'been made to determine feasible alternatives in the (Huerly movement of product and activities to expand demand and reduce handling costs. Other commodity groups may also benefit from a description and analysis of the organization's growth, experience, and.marketing practices. Consumers may benefit from.improved marketing practices rela- tive to quality and.packaging suggested as a result of this analysis. Wholesalers and retailers may also benefit from.possib1e reduced procurement and marketing costs. The Problem The Michigan Celery Promotion COOperative was organized in late 1962 for the purpose of increasing returns to celery growers through programs to expand demand and to develop more effective handling and.merchandising methods. By 1966 the CCOperative had made sub— stantial progress in controlling their product quality, pricing, and distribution. During 1966 the organization marketed 75 percent of 1 2 the fresh and 60 percent of the processed celery harvested in thhigan. This was a decline, however, from.the 90 percent of all thhigan celery handled'by the Cooperative in 1963. The Michigan Celery Promotion CCOperative is in a position to influence quality, price and market allocation of celery produced by Cooperative members, and has done so to some extent during past marketing seasons. In conjunction with a quality control program, pricing has been the center of attention for this producer organiza- tion. Daily prices for sales of members' celery are determined throughout each season by the COOperative's Price Committee. The Michigan Celery Promotion CCCperative has reached a cross- roads in its service to the Michigan celery industry. The organization has reduced many of the problems that led to the COCperative's initial deveIOpment. The position of Michigan celery has gained greater recognition in the market through improved quality. However, the membership and acreage in the organization have declined. This is partly because as long as the CCCperative continues, the benefits of it are at least as great for nonmembers as for members, and the costs for nonmembers are much less. The economics of possible alternatives as the Cooperative and the industry seek to improve their marketing effort merit analysis. The Cooperative and the Michigan celery industry may be tempted to merely refine their existing marketing programs, which is a Common tendency for producer organizations once initial problems have been resolved. This approach could not be continued long, however, without the Cooperative experiencing a marked decline in its impor— tance in celery marketing, for the effectiveness of this organization 3 is first attributable to the volume of celery it controls. The declining membership of this organization is an indication of a need for it to initiate organizational and marketing changes if the group is to remain viable. Celery may be marketed along with many services such as quality control, assembly of sufficient quantity to meet the needs, and packaging, to name a few. Celery is marketed through marketing firms that handle other vegetables and fruits in addition to celery. The nmrketing of celery requires achieving a meshing of marketing effort (coordination) within this structure. The goal of the Cooperative's Price Committee has been to deter- mine appropriate prices to move the available supply of CCCperative celery to market in an orderly manner during the season. This is a difficult task in the complex celery market, and there is a need for quantification of price relationships. Pricing is interrelated to quality, market allocation, tranSportation and numerous means of nonprice competition. Indeed, the problem is not one of "just selling celery," but one which encompasses a total marketing program. Thus, there is a need for a comprehensive celery price analysis. The Objectives There are four primary objectives of this study. These are: 1. To describe the history and development of the Michigan Celery Promotion C00perative. 2. To develop a price analysis which may be used to pre- dict price of CCCperative celery and indicate the relationships between selected variables and price. 3. To analyze possible organizational and marketing h practice alternatives for COOperative growth. A. To recommend a course of action for the Michigan Celery Promotion COOperative. Plan of Thesis The general environment of the celery industry will be briefly described. Important characteristics and nature of the crop are delineated. This is followed by a description of the industry structure, including the regional and seasonal production, distribu- tion and consumption patterns and marketing organizations. An examination of the CCOperative’s historical develOpment is included. thhigan's position in relation to the total United States celery industry is also described. An economic model of the demand and price structure faced by the Michigan Celery Promotion Cooperative was formulated. This model provides a basis for the development of statistical price predictive equations which include relevant supply and demand factors. These equations were tested during the 1967 marketing season, and their performance was analyzed. Then the regression equations were updated by including 1967 data. The possible use of these price predictive equations for weekly pricing decisions by the Cooperative is discussed. Utilizing the current status of the Michigan Celery Promotion Cooperative as a starting point, alternative growth-oriented market- ing organizations and practices available to the Cooperative and Nflchigan celery industry are Specified. The economic rational for Considering these alternatives is also presented. The results of an attitude survey of Michigan celery Shippers, processors and field buyers and of previous attitude surveys of -;~-‘.,.— .- 5 thhigan celery growers conducted'by the Cooperative Extension Service are presented in order to suggest which alternatives have greatest likelihood of industry acceptance. These attitude surveys also provide additional information on how the celery marketing system operates and attitudes toward existing marketing organizations and.practices. These attitudes are then considered as facilitating or inhibiting certain alternatives for the Michigan Celery Promotion 000perative. Based upon the foregoing analysis, recommended actions are out- lined for the Cooperative as a part of their total marketing program. Implications of these actions for the thhigan celery industry are evaluated. CHAPTER II THE UNITED STATES CELERY INDUSTRY Introduction The description of the United States celery industry in this chapter establishes the broader setting within which the Michigan Celery Promotion Cooperative group marketing activities have been conducted. But first it is useful to mention the relative posi- tion celery holds in United States fresh vegetable value and produc- tion. In recent years (1963-1966) celery has ranked about sixth in farm value ($50.3 to $70. 3 million) among United States fresh Vegetables, coming after potatoes, tomatoes, lettuce, onions, and Sweetpotatoes. Celery, on a tonnage harvested for market basis, ranks about eighth (70A to 729 thousand tons) among United States fresh vegetables, coming after potatoes, lettuce, cabbage, onions.(59) ECOlOSical Characteristics of Celery Celery production is limited to those regions with a growing season in whiCh the monthly mean temperatures are between 60 and 70 degrees Fahrenheit for 65 to 90 days after transplanting. There is Some field seeding in California, which lengthens the growing season one to two months. As the celery matures, stalk size increases, but Quality begins to deteriorate approximately ten days after the stalk has attained full growth. Long exposure to cool temperatures (40 to 50 degrees Fahrenheit) causes most varieties to bolt; that is, produce seedstalks. (h2;2, 11-12) Celery is a very shallow-rooted plant, has high requirements for 6 7 water, nutrients, and good but not excessive drainage. Celery is produced on the following soils which, in conjunction with nutrient applications and control of a water table or irrigation, meet these requirements: muck, loamy sands, sandy loams, loams, and to some extent silt loams. Commercial celery production is limited to 50113 that range from slightly acid to neutral, that is, pH 5.8 to 7.0.1 So called high lime muck soils, pH 6.0 to 7.0, are ideal (112:2) Celery production requires rather intensive grower care to be certain that the cr0p has adequate water and that the many diseases and insects to which celery is susceptible remain under control. labor requirements for harvesting and packing operations are rather high relative to those requirements for alternative crops that may be produced on the same land but harvested mechanically. Up to 300 Ben-hours are required to harvest an acre of celery. (53:7) Celery production has not been fully mechanized as has production of many alternative crops that may be grown on the same land, such as carrots, beets, onions and potatoes.2 The degree of mechanization varies among producing areas. California and Florida celery growers, with relatively larger acreages, tend to be more mechanized. However, to the writer’s knowledge, the technology for a fully mechanized harvest of fresh celery is not available. Regional Patterns of Production and Distribution FpH is a symbol of the hydrogen ion concentration which determines acidity. 2The importance and possible implications of mechanizing celery harvesting are considered in Chapter 5. Production Patterns Celery is produced year around in the United States. Imports of celery into the United.States are negligible. Florida and the southern areas of California comprise the bulk of fall-to—summer production. California also produces celery during the summer months along with Michigan, New York, New Jersey, Ohio, with small commer- cial amounts grown in Colorado, Massachusetts, Oregon, Pennsylvania, Utah and washington. On an annual basis, California produces an average of 55 percent of the commercial crop, Florida 25 percent, thhigan 5 to 6 percent, and New York almost A percent, with the other areas making up the remainder. (A2:5) The Michigan celery marketing season generally lasts from the first of July through the first week or two of October. During this season, Michigan and New York celery compete principally with Cali- fornia celery in eastern United States markets. For the years 1963 through 1966 California was the tOp celery producer during the summer marketing seasonl(approximately July through September) with an average of approximately A5 percent of United States production. [bring that same period, Nuchigan produced an average of 21 percent and New York an average of approximately 20 percent of the United States summer celery crop. The remainder was produced by the other states mentioned above, with the exception of Florida who produces no celery during the summer season.1 (59) Michigan's summer season production builds up through the first two weeks of July to approximately 87 carlots per week, peaking in August lSee Appendix A, Table 1 for additional detail. 9 at 95 carlots per week, and declining to 66 carlots the last week of September with the season's end around the second or third week in October. This is shown graphically in Figure 1 below in terms of volume shipped by weeks. New York production is harvested in August and September. The Santa.Maria and Salinas—watsonville areas of California are the largest competing suppliers during the summer season. Rail shipments from.these California areas are usually from.llO to 250 carlots the first three to four weeks of the Michigan season. They decline during August to approximately 80 carlots per week and increase again through September to 100 to l2O carlots per week, increasing to over 160 carlots per week at the end of the Michigan season. Table 1 provides a quantitative indication of these weekly fluctuations in competing California supply. The principal reason for the decline in California carlot rail shipments during August is a lack of earlier plantings that can be harvested at that time. This happens each year apparently in anticipation of eastern summer season celery production and California's freight disadvantage in shipping to eastern markets. Many eastern retail buyers rely upon purchases of Michigan and New Ybrk celery in.August as it coincides with the maximum availability of celery from those areas and generally their lowest prices. Distribution Patterns Fresh market celery produced in the United States is available to consumers the year around. There are no large seasonal peaks or valleys in supply. Only very limited quantities of fresh celery are stored as its keeping qualities are poor. Table 2 shows availability of celery by months eXpressed as a percentage of total 10 mo poanmo < A m>Hpmsmmooo eoflpoeosm mamamo qmmHSOfiz map an popsomma .aomm meadow om .gomm meadog ow hampmaflxohmmm mo mmpmho ANNV “mohzom szPmSHMOMQQM Mo wmpoho mmdaa msfimpqoo hhoamo Paton Mona manoom mnflmpnoo hhmamo nmmhm mo poahmo m mm mpamamwgm Moshe haoamo ammhm qmwflflofiZIu.H mmDUHm .uuo .uoo .uoo .amm .dom .aom .dmm .ms< .w:< .w:< .w5< .msfi xash mane >a3h zflsh mesh .02 m a a e m N a m e m N a e m N a a .a3 _ _ a _ a q a q .a a 41. all a .1 _ 0 ma om mq ow 1E,slrxlzl'lvlerltst LOTYVD mm om moH 11 TABLE l.--Rail shipments of California celery by week and month of the Michigan marketing season, average of 1963-1966.a —— k Approximate week of Rail Shipments anth of Michigan 1963-1966 Average Season Season (Carlots) June-July l 227 July 2 250 July 3 151+ July-August A 113 July-August 5 95 August 6 87 August 7 97 August 8 81 August-September 9 78 September 10 103 September 11 1011 September 12 123 September-October 13 110 September-October 1A 118 October 15 162 aA carlot of celery contains 600-16 inch crates of at least 60 pounds each. Source: (25) annual supply. The largest quantity usually is available in November and.the least in August and September. During the Michigan marketing season, celery availability reaches its lowest level of the year. This nmy'be due in part to the production of other salad vegetables, often produced locally at that time. The relative delivered.prices of celery from the two areas might be expected to determine the market areas of each. However, in the markets of the eastern United States, shipments of California celery Compete directly with Florida celery. (23:1) The California celery Commands a price premium over the Florida celery. This California Price premium is apparently due to superior quality and the "California" 12 TABLE 2.--Average monthly availability of celery as a percentage of annual supply . Jan. Feb. .Mar. Apr. May June Ju1y Aug. Sept. Oct. Nov. Dec. 9%8% 9% 9% 9%8% 8% 7% 7% 8%lo% 9% aPercentages based on unloads at Al cities and United States nmrket celery production for an average of years 1963-1966. See Appendix.A, Table 2 for celery unload detail. Average annual market production of 39,200 carlots (23,519,583 cratescocouacncpcn—q Oioin3010\els's-N>0M~Io+e\o\OtJChoin>Q3 bIncludes Alaska and Hawaii, beginning 1960. it is possible to obtain some additional insights into the charac- teristics of consumers of fresh celery. Although fresh celery consump- tion patterns may have changed since 1955, these data are the most recent comprehensive data available on celery consumption in the United States. households were defined as those in which at least one member had 10 or mere meals from home food supplies during the week preceding the inter- view. Institutions and.persons living on military reservations were not represented," (19:1) Information was Obtained on the percent of housaholds using fresh.celery, quantity used.per household, and money value spent per household on the commodity for the seven days preceding the interview. Additional classifications were by income groups, degree of urbanization, and region of the United States. The United States was divided into four regions-—West, North Central, South, and Northeast. F_—_— 15 In this survey the percentages of all households using fresh celery by degree of urbanization were as follows: all urbanizations—- A2 percent, urban and rural nonfarm--AA percent, urban-—A6 percent, rural nonfarmr-38 percent, and rural farmr-29 percent. This indicates that a greater degree of urbanization is associated with a larger percentage of households using fresh celery. Higher celery use in more urbanized households also prevailed when the data were broken into one-person households and households of two or more persons. However, households of two or more persons used at least one-third more celery than one-person households. (19:113, 115, 117, 120, 123) This consumption pattern may be related to the form in which celery is typically_marketed at the retail leve1--that is, in stalks. A stalk of celery is a considerable amount of celery for an individual to consume in view of the limited keeping quality of fresh celery. Thus, there may be a need for a smaller retail package of celery. Based upon data compiled in the 1955 household food consumption survey, over 50 percent of the households other than rural farm having gross annual incomes over $5,000 used fresh celery. These house- holds consumed more than one-half pound per week. Sixty-three percent of all urban households in the survey with gross annual incomes over $10,000 used fresh celery. (19:117) The quantity of fresh celery consumption per household for all urbanizations in a given week by region1 of the Uhited States were as follows: west——.56 pounds, North Centra1--.A7 pounds, Northeast—-.A3 Pounds, and South—-.2A pounds. (20:111; 16:113, 17:112; 18:113) The previously noted patterns of increased consumption with greater k 1 See footnote 2, pages 13 and 1A. 16 urbanization and with higher income were consistent in every region of the country. A 1952 to 1958 consumer expenditure study of approximately 275 families in Lansing, Michigan by Shaffer provides additional informa- tion on consumer purchase patterns of fresh celery for a given market area.(A5) During the period 1952-1958, average annual expenditure per capita on fresh celery for those in the study ranged from $1.02 to $1.11. During this same period the average percent of these families buying fresh celery in any given week was from 22 to 26 percent. These percentages are about one-half of those for the percentage of urban households using fresh celery in the North Central region of the United States Department of Agriculture's 1955 consumption survey. In Shaffer's study, for the five years 195A to 1958, each year was divided into 13 four—week periods. Per capita expenditures and the average percent of families buying fresh celery during each of the four-week periods of the study are shown in Table A. The late Summer decrease in fresh celery consumption, noted in Table 2 above, is again apparent in Table A. Both eXpenditure per capita and average percent of families buying fresh celery were less during periods 8 through 11 relative to the other four-week periods. (A5:3A) These periods correspond to the late summer months during which Michigan's celery production reaches its peak. ¥E§ket Organization and Practices General Characteristics Fresh market celery typically moves from the producer to a Shipper who acts as an initial broker. Some producers are also shippers. The 17 TABLE A.--Expenditures and purchases for fresh celery from a sample of Lansing, Michigan families for yearly four-week period averages, 195A-1958. Seasonal Averages Expenditure Average % of Period Per Capita Families Buying 1 $.083 23.5 2 .081 23.1 3 .090 2A.8 A .085 2A.2 5 .082 23.8 6 .090 24.3 7 .088 23.5 8 .076 22.2 9 .060 19.6 10 .062 19.8 11 .070 21.5 12 .089 25.9 13 .090 25.0 Source: (A5:3A) celery may be packed by the producer or shipper. Temporary storage facilities are typically available at this level. Buyers who purchase celery from shippers can be classified into the following five categories: 1. Brokers at terminal markets 2. Retail organizations 3. Wholesale-handlers A. Military 5. Food processors Processors also procure part of their requirements from.producers on a contractual basis. Others purchase celery at terminal markets as their needs arise. Celery grown under contract with a processor is generally delivered.unsized, in bulk boxes or tied in bundles. 18 Although the United States Department of Agriculture has grades and standards for celery (57), use of these grades and standards is volun- tary and they are not widely used in the industry. There are no federal grades or standards established Specifically for processing celery. Product differentiation of fresh celery is generally limited to producer or shipper brand or trademark promotion on shipping crates and in trade publications. Florida celery producers as a group have done some advertising and promotion of celery in general to consumers. The possibilities of celery product differentiation through prepack— aging are currently being eXplored by producers, shippers, repackers, and.retailers. Nfichigan producers have made the greatest strides in differentiating their fresh celery product from their processing celery. This has been accomplished by performing pre-processing Operations to the celery. Nhrket Organization by State Florida. Florida celery growers have achieved a substantial degree of market organization in recent years. Most celery growers and.shippers in Florida have been organized into a marketing cooperative?’ A state marketing order for celery was also adopted by Florida growers in 1961. This marketing order contained provisions for direct and indirect production controls in addition to provisions for quality control and promotion. The supply control provisions of this state order were declared.unconstitutional in 1965, and a federal order was adopted shortly thereafter, permitting acreage regulation of Florida celery. The voluntary marketing cooperative and compulsory marketing lSome celery growers are also celery shippers. 19 orders operate with interlocking directorships and committees. (8:5) Thus, coordination of these three means of market organization is greatly enhanced. The Florida celery industry is very concentrated, having only ffiiproducers in 1961. (8:3) Individually the producers grow from 20 to 2,200 acres of celery, and 8 to 10 producers grow 80 percent of Florida's 11,000 acres of celery. (56:3) This concentration has been beneficial to these producers as they have sought to improve their marketing efforts through group action. Through the use of marketing orders and a cooperative marketing organization, these celery producers have conducted programs in quantity and quality regulation, advertis- ing, and promotion. Through the Cooperative, daily prices for sales of its members' celery are determined throughout the marketing season. California. California growers do not have a celery marketing organization. There is, however, a trade association of vegetable growers and shippers that has been active since 1930 in the areas of labor relations, public relations, transportation,l legislative matters; and it arranges for settlements of rejections and allowance requests. This association does not handle sales. Sales are made only by individual shippers, although some of the larger growers are also shippers. (6) California celery is generally sold without the benefit of United States federal celery grades. Quality control of California celery is in the producers' hands. Celery from.California is available the year around in most major market areas of the United 1This refers to the association‘s negotiation with the railroads on freight rates, car availability and similar matters. (A) 20 States. The f.o.b. shipping point prices of California celery are available daily through the Market News Service. Numbers of buyers and sellers in the California celery industry were not available, but the market has been generally characterized as approximating the competitive mode1.(6) The number of sellers is generally less than would be the case in the competitive model. New York. Prior to 1967 there were no grower or shipper organi— zations marketing celery in New York. (6) In 1967, four vegetable producers in Orange County, New York formed a c00perative to market their produce. The principal vegetables produced and marketed by this organization were celery, lettuce and onions. These growers produced celery on 325 acres. They employed a quality inSpector and attempted to ship celery that graded United States Number 1 or better. This New York organization handled their own sales and.priced their products prior to offering them for sale. (28) Through this organiza- tion, these producers have decreased competition among themselves and increased their market power. Michigan. Most Michigan celery growers have been organized into a.marketing organization—-first under the Michigan Celery Promotion Association and later with the Michigan Celery Promotion COOperative-- since early 1962.1 It was first organized as a growers‘ association and by late 1962 had become a marketing cooperative. The Michigan organization is similar in many reapects to the Florida celery cooperative. Both organizations have signed contracts Withhtheir grower members which give complete marketing control and 1Details of this organization's development are discussed below under Development of the Michigan Celery Promotion Cooperative. 21 title of the grower's celery to their reapective organizations. Both organizations have also signed contracts with existing ship- pers, designating the shippers as exclusive sales agents for the cooperative. These shipper contracts bind the shippers to all rules, regulations, and.prices established by the grower marketing organiza— tion.1 (8:5) In connection with these contractual arrangements, Nflchigan's celery marketing cooperative has been actively involved in setting the price of its members' celery prior to sale. Without a marketing order, they have been able to control supply through harvesting moratoriums, quality regulation and market diversion to processing outlets. They have conducted a quality improvement pro— gram and have been active in advertising and promotion of their pro- duct. They have also signed contracts with food processors to supply them specified quantities of celery at Specified times and prices. 1Organizational and marketing possibilities afforded by the close similarity of these two cooperatives are discussed in Chapters 5 and 7. See Appendix B for c0pies of the Michigan Celery'Promotion COOperative's grower and shipper contracts. I: n CHAPTER III THE MICHIGAN CELERY PROMOTION COOPERATIVE Introduction This Chapter deals Specifically with Michigan's largest celery producer marketing organization-~the Nflchigan Celery Promotion Cooperative. Its environmental and organizational setting and develOpment are presented.here for the interest of other commodity marketing groups and to provide a framework for the analytical portions of the study. In Michigan, there are approximately 90 commercial celery growers who harvested a total of 2,000 acres of celery in 1966. Of the pre- sent 90 growers, 85 are located on the western side of Michigan's lower peninsula. In that area, within a 75 mile radius of Zeeland, approximately 1,850 acres are devoted to celery production. The remaining approximately 150 acres of celery are in Lapeer County, located in eastern Michigan. Michigan's celery growers produce an average of 22 acres of celery per grower with a range of l to 85 acres devoted to celery production. (53:A) Celery is the only field crop grown by more than half of these farmers, but some produce other truck crOps such as onions, carrots and potatoes. Some growers also have green houses which they use to produce celery tranSplants and annual flowering Plants. Most Michigan celery is grown on muck soil. 99nditions Which Motivated Group Action Michigan's celery acreage increased until 19A1 to a high of 22 23 7,200 acres. Celery acreage in Michigan has declined since that peak to approximately 2,000 acres in recent years (Table 5). Yield per acre has increased from.a l9A7—1951 average of 276 hundred weight to a 1962al966 average of 357 hundred weight. The net result has been a down trend in production over the 20-year period 19A7-l966. TABLE 5.—-Michigan celery: acreage, yield, production and.price, 19A7-1966. Yield Harvested Per.Acre Production Average Price Received.by Growers Year (Acres) (th.) (OOO th.) ($6Per th.) ($ Per 60 lb. Crate) 19A? A,900 231 1,133 3.A5 2.07 19A8 A,A00 278 1,221 2.57 1.5A 19A9 3,900 27A 1,069 3.05 1.83 1950 3,600 292 1,050 2.64 1.58 1951 3,Aoo 30A 1,032 3.A8 2.09 1952 3,300 271 893 A.93 2.96 1953 3,500 29A 1,028 2.5M 1.52 195A 3,100 270 838 3.22 1.93 1955 2,800 300 8A1 A.32 2.59 1956 2,500 329 822 2.80 1.68 1957 2,A00 2A3 58A 3.7A 2.2M 1958 2,Aoo 36o 86A 3.05 1.83 1959 2,000 3A0 680 3.51 2.11 1960 1.900 398 757 3.06 1 .8A 1961 2,A00 377 909 2.60 1-56 1962 2,600 A07 1,058 3.A2 2.05 1963 2,500 365 912 2.86 1.72 196A 2,200 360 792 3.76 2.23 1965 2,000 370 7A0 3.96 2-3 1966 2,000 281 562 5.70 3. 2 Source: (32) Average annual Michigan farm.price per 60-pound crate of celery does not appear to be consistently influenced by Michigan productlon. ' ° ' " ° s over a revious That 15: when M1ch1gan celery production increase p ' S in year, Prices may increase because of the large impact of change Competing areas. Years 1952-1953 and 195A—1955 in Table 5 are fl) 2A examples of the inconsistent price reSponse to changes in production. Since Michigan celery production is not a large part of national production, the inconsistency is not unexpected. The small celery acreages of individual growers are often the result of small, confined muck areas. There are few areas in Michigan in which larger single fields of celery might be grown. Muck areas are also scattered which tends to limit individual size of Michigan celery producers. This may prove to be a more limiting factor in Michigan and New York celery production than in Florida and California as increased mechanization of production and harvesting operations becomes possible. Available celery marketing data for most states notes that their "fresh" celery figures include some quantities for processing. Generally, no attempt is made to estimate the quantity for processing. However, Michigan has estimated that 25 to 30 percent of the Michigan Celery Crop is marketed directly to processors. (3:8) The proportion of Michigan celery that is processed is apparently higher than in Florida and California. (6,8) Fresh market celery may be divided into two categories"hearts and sized. Celery hearts are small stalks of celery from WhiCh the larger petioles have been stripped, leaving the smaller and presumably more tender inner petioles. These are washed, out to length, and frequently packaged two to three hearts to a ventilated sealed-end film bag. These are then packaged for movement to retail outlets, Either 12 or 2A bags to a crate. Celery heart production accounts for about 20 percent of total Michigan celery PTOduCtion' (53:8) - o l I! SiZEd stalks of celery make up 50 to 55 percent of Michlgan ce e y 25 production and are marketed in crates. In Michigan, "Howard," wire-bound crates are the standard.package for celery shipped.to fresh market. Into these standardized crates may be packed any one of the following number of dozens of celery stalks: 1%, 2, 2%, 3, A, and 6. The 2% dozen size comprises the largest volume of these shipments, approximately 33 percent. (11) Michigan also had limited eXperience Since 1963 with a.paper corrugated half crate and prepackaging of the larger fresh market sizes. The prepackaged pro- ducts were well accepted by the trade. (53:8-9) Celery hearts and sized celery are frequently diSplayed side by side in retail stores. The decline in Michigan celery production and the increase in California and Florida celery production during the 19A1-l959 period appears to have been due to a number of factors. Drost and Trocke have enumerated a number of these factors. (12:3) A partial listing of them.appears below: 1. California could ship fresh celery all year. 2. Large volume California grower-Shippers marketed a more uniform and higher quality product relative to Michigan's offering. 3. Increased winter production of celery in California and Florida reduced the market for Michigan celery marketed from storage supplies. A. The relatively small Michigan producers, pressed.by increasing producting costs, did not readily adopt new varieties, pack- ing techniques and handling methods. 5. Urbanization and industrialization near Michigan celery pro- ducing areas increased the attractiveness of nonfarm 26 employment as an alternative. 6. Michigan celery traditionally was sold by shippers whose primary interest was their sales commission of $.25 per crate sold. With no ownership interest, they frequently engaged in unnecessary price competition among themselves. 7. Nfichigan celery was frequently sold without inspection or grade. There are undoubtedly other reasons, but these appear to be the most important factors contributing to the decline of the Michigan celery industry during l9Al to 1959- The Organizational Efforts The decline in acreage, and in quality in the eyes of many buyers, prompted a number of Michigan's celery growers to seek assis- tance in solving their celery marketing problems. In 1957 a district marketing agent in the COOperative Extension Service began working with the Michigan celery industry to assist them in finding solutions to their problems. There were two celery grower organiza- tions in existence at that time. One group, the Muskegon Cooperative Celery Growers, had.hydrocooling and storage facilities and operated as a shipper. The other group was the Michigan Celery Promotion Association. This organization employed a fieldman to assist the producers with their cultural practices and was primarily production oriented. When the district marketing agent began working with the celery industry, all growers sold their celery through shippers. According to the district marketing agent, "The price for a crate of celery would start out relatively high at the first of the season and by the \k. \1.J .~\ It 27 middle of August the price would be at $1.25 or the bottom." The agent conducted a cost-of—production study over a two—year period 1957-1958 in an attempt to provide the Michigan celery industry with basic cost data. This study also provided a basis for analyzing Nfichigan's competitive position relative to other areas. Cost of harvesting and packing into crates were found to average about $1.25 per crate. They varied.from $1.18 to $1.9A per crate, depending primarily upon yield. (A6) In the fall of 1958, a celery price panel was organized. This group'became known as the Celery Price Information Committee. They formed a panel Which was to determine the price that shippers "should" charge for celery each day. The panel was composed of two growers from each shipping district for representation and.participation. The membership of this voluntary group produced approximately 75 percent of Michigan‘s celery. (A6) The Celery Price Information Committee's activities were financed by assessing themselves $1.50 per acre of celery produced. These funds were used primarily to cover the costs of accumulating and disseminating celery market information. Current market information was obtained by telephoning shippers or Market News reporters in principal producing areas and from a daily market news report from California. The price panel reviewed this market information and decided upon prices that Should be charged for various celery sizes each day. They would then prepare a recording to be played over the telephone, summarizing the daily market conditions and the prices that should be charged for the various sizes that day. Growers could then call a certain telephone number and receive the market report 28 and.prices that should be charged for the day. (A6) They were then able to compare prices among Shippers and could recommend a price to the shippers. It should be kept in mind that this was a voluntary effort. If the shippers did not sell for the prices the growers were asking, their recourse was to not deliver; celery to that shipper in the future. Producers found they could work together and that some shipper cooperation could be obtained. The lowest price in 1959 was $2.75 per crate of fresh celery compared to $1.25 per crate in August of previous years. (A6) The price increase may also have been due to a decline in Michigan celery production from 1958 to 1959 of 18A thousand hundred weight.1 The three groups representing the Michigan celery industry in early 1960 were the Michigan Celery Promotion Association, primarily a.grower group formed to improve production practices; the Celery Price Information Committee, a grower price information group; and the MuSkegon Cooperative Celery Growers, a grower—Shipping group. There was a definite lack of coordination and c00peration among these groups. Also, there were great variations in the quality of celery packed by individual growers. Several activities were carried out in the celery industry in 1960 with assistance from Michigan State University and the COOperative Emtension Service. These included an unofficial survey of middleman buyer reactions to the Michigan celery industry, continued meetings with growers and shippers to study the Michigan celery industry incLuding discussions of its problems and some possible solutions to ——___.l 1 See Table 5 abOVe. 29 the problems, distribution of a summary of the previously con- ducted cost of production work to all segments of the celery industry, a series of educational seminars on marketing, continued assistance in gathering and interpreting market and price information, and a consumer panel to determine consumer reaction to Nflchigan versus California celery.:(5A) By early Spring 1961, two alternative approaches to unifying the marketing effort for Michigan celery had developed. One was a federal market order and the other was a bargaining association. A review of the Michigan Celery Promotion Association's board meeting minutes during that period indicates that this group was the principal organization advancing both of these prOposals. (35) A number of celery industry meetings were held; and personnel from.the United States Department of Agriculture, among others, explained the various factors involved in a federal marketing order. A.federal marketing order for Michigan celery was written, and all preparations were made to hold hearings on the order. Concurrently, the Michigan Celery Promotion Association developed.plans for a bar- gaining association which could.perform.quantity and quality regula— tion, advertising and.product promotion. Ahmbership in this organization was to be voluntary. These two alternative programs were presented to Michigan celery growers and shippers. They reached a nearly unanimous agreement to try the bargaining association approach.(5A) Hearings on the federal marketing order were never held. In early 1962, the Michigan Celery Promotion Association was joined by the other two marketing groups, the Celery Price Information 30 Committee and the Muskegon Cooperative Celery Growers,in order to coordinate marketing activities. Growers belonging to this expanded aarciation signed contracts with it, making it the legal sales agency for their celery. Machinery was also set up for price bargaining between the association and the shippers. The association's objec- tive was to achieve a uniform price at any one time between shippers. The association contracted with shippers for them to act as brokers and to permit establishment of a quality control program with manda- tory enforcement by federal—state inSpectors. Approximately 85 per- cent of the Michigan celery acreage belonged to members of this organization in 1962. Celery growers on the eastern side of the state did not affiliate with the Michigan Celery Promotion Association partly because of different marketing channels being used. Most celery produced on the eastern side of the state is sold on the Detroit wholesale market or direct to local chainstores. They, along with other vegetable growers, formed a vegetable marketing corporation to handle their sales. This group continues to Operate independently of the celery organization on the western side of the state and is their competitor principally in the Detroit market area. Late in 1962 the Michigan Celery Promotion Association changed its organizational structure from an association to a c00perative. The principal reason for this change was cited at the annual meeting of this group as follows: "A cooperative composed of agricultural producers may band together to establish a uniform base price for their products." (35) This change was made to permit the organization to administratively price its products prior to offering them for sale. 31 The organization has remained a viable COOperative Since that time. Change and innovation are an integral part of this group's Operations. A.principal change relative to the marketing effort has been the con— tracts that shippers sign with the COOperativel which bind the shipper to sell only that celery produced by COOperative members at no less than the price dictated by the COOperative. The Cooperative was able to get shippers to agree to these contracts by indicating that they would not sell celery through them if they did not Sign. Continuing quality and promotion efforts by this organization have also been noteworthy. The Organization and Operations of the Michigan Celerprromotion Cooperative Structure of the COOperative An organization table for the Michigan Celery Promotion Coopera- tive is shown in Figure 2 below. The organization table indicates the hierarchy of authority and reSponsibility in the COOperative. Since becoming a producer COOperative in 1963, the Michigan Celery Promotion Cooperative has had two general managers. During the 1963 season, the manager of the Michigan Celery Promotion Association continued as general manager of the Cooperative. The board of directors hired a new general manager for the 196A season, and he has continued in that capacity. Membership participation in the Cooperative has been active. During 1966, over half the membership served the COOperative as elected or appointed members of committees and action groups. (A7) Celery producers must Sign at least a one-year marketing 1See Appendix B for COpies of the contracts. 32 AQMV "MUMDOW .o>wumoooooo ocu How mucomo modem o>Hm5Hoxo mo oomuucoo oops: uom mucomm ooodflnmo w.o>Humumdooo oowuoEoum momamo unmanagz ecu mom mflrou sowumuflsmquunnm mmDUHm mucow< Hommwzm _:.....,..... r. mwuuweeou . meanwEEoo *1 WOHuoEoum 7 onufiEEooalioizi!ll.. . mmuuMEEoo T ,1? mmuquEoo wmwasaosam -..saaflnosoa cease _ .Sfisao crustacean flauOuoudon“ . ;-t$!s«ooapaowm_ -uommom: nomad I grandma tI“...IIYI-O';AI.1II..£I" i‘lt 7",“ .. ill. IC I'll. ‘ l.’ command: Hmuocoo .oouofleeoo o>wusuoxm .moouoouem mo tuoom _ Fm>wumnmnooo mo mumAEOE_ “V H 33 agreement with the Cooperative to become members. The agreement designates the Cooperative as exclusive sales agent for celery grown or acquired by that producer during the year. In order to increase certainty in planning packing operations, the Cooperative initiated a long-term.(6 year) marketing agreement with its grower-members. A fourth of the grower membership had signed these long-term agreements in 1966. The COOperative has not required that all members sign these long-term agreements, because many members have said they would leave the organization rather than commit themselves that far in advance. Apart from assigning control over the amount harvested and over the marketing of his celery to the COOperative, the producer has the freedom to plant, Spray'and otherwise care for his crOp as he sees fit. The Cooperative's fieldman provides production assistance when requested and assists the grower in determining when to harvest his crOp. The COOperative has the right, under the marketing agreement, to regulate the volume and quality of celery of any size, pack, variety, and maturity that may be shipped. The Cooperative has declared some "cutting holidays" during which all grower-members stOp harvesting celery. Recently they have moved to regulate, as equitably as possible, the volume of celery harvested daily or weekly by grower—members. Although no grower—member's celery has ever been left unharvested in the field for other than quality reasons, quality may have declined due to harvest postponement. Shippers desiring to sell celery produced.by members of the Cooperative also must Sign a marketing agreement with that organiza- tion. The agreement designates the shipper as selling agent for the 'r 3A Cooperative and'binds him to sell only celery produced by that group's members. In addition, the agreement binds the shipper to sell this celery under conditions and terms, including minimum f.o.b. prices, designated by the Cooperative. The Michigan Celery Promotion Cooperative owns a plant with hydrocooling, storage and preprocessing facilities. They purchased this facility in 196A from the Muskegon Cooperative Celery Growers Association whose members had joined the Michigan Celery Promotion Cooperative in 1963. Growers designated by the Cooperative to deliver their crate celery to this plant are assessed $.18 per crate for hydrocooling, storage and handling. However, in this case, the Cooperative, not the shipper, receives the $.18 per crate assessment which is based upon average shipper costs. This celery is sold by one of the selling agents with whom the Cooperative has previously signed a marketing agreement. Celery for the processing market may be preprocessed at this plant. This is done by removing the butt of the stalk and cutting the individual petioles to a length designated by a processor. Celery not meeting quality standards for direct movement to either the fresh or processing market may be partially salvaged for sale to a.processor by stemming it. The Cooperative has contracted to deliver this stemmed celery to processors prior to the start of the Nfichigan season. They have also sold stemmed celery to processors during the Michigan celery season. Finance The COOperative finances its Operations by assessing its members $-05 per crate equivalent of celery sold. In 196A an additional 35 assessment of 1% percent of f.o.b. price was added to cover new services such as a full-time fieldman and operation of a fresh packing and preprocessing facility. Growers are also assessed $.18 per crate for precooling, handling, and storage and 8é-percent of f.o.b. price for the shipper's commission. The $.18 per crate goes to the shipper to whom.the grower is assigned to delivery his celery. Pre— cooling is done in the shipper's hydrocooler. If temporary storage is necessary prior to shipment, the celery is kept in the shipper's cold room. The shippers receive their commission for locating buyers and arranging tranSportation. Celery heart growers are assessed marketing and operating charges 1 in a manner different from.the way crate and bulk celery growers are assessed. Growers producing celery for the heart market deliver it to a shipper whijacks and sells it for $2.00 per crate. This includes the shipperfls sales commission and assessments by the Cooperative. This $2.00 per crate for celery hearts can be contrasted to the $.23 per crate equivalent plus 10 percent of f.o.b. price assessed crate and bulk celery for operating and marketing costs.1 The celery heart charge is higher because the shipper does the packing and furnishes the crates and wrapping materials, whereas the crate and.bu1k celery producers have generally done their own packing and furnished their own materials in the past. __ lThe $.23 per crate equivalent is the sum of the $.18 per crate precooling, handling and storage fee that goes to the Shipper plus the $-O5 per crate equivalent for COOperative operations. Ten percent of f.o;b. price is the sum_of the 8% percent sales commission the Shipper receives plus the 1%-percent assessment by the Cooperative. The Cooperative's move toward central packing of crate celery and.their preparation of processing celery are discussed in the section on quality efforts. 36 At the beginning of the 1967 season, the Michigan Celery Promo- tion COOperative became a stock cooperative. This change resulted from a need for additional funds. The organization was interested in building and operating a central packing plant, and as determined through a firm analysis, conversion to a stock COOperative provided an adequate financial base. The membership subscribed to a Special 1967 mandatory assessment for purchase of common stock in the amount of $50 for each acre of celery produced. Quality Improvement Program Quality improvement efforts of the Cooperative's Quality Committee have been effective and have provided a foundation upon which to build their marketing program, When the grower—member delivers celery to a.shipper, a sample is inSpected by a federal-state inSpector who is hired by the Michigan Celery Promotion Cooperative. The COOperative's quality standards for fresh crate celery exceed those for the federal celery grade, United States Number 1. However, they do not qualify the product for the next and highest federal celery grade, United States Extra.Number 1. Generally, the Cooperative uses its own quality stan- dards in marketing its fresh celery, not the United States grades. Celery meeting the thhigan Celery Promotion COOperative's Number 1 standards is marketed under the Cooperative's brand-—Emblem 0f Quality. This celery must meet the federal standards for United States Number 1 grade celery and exceed them in the following four areas: 1. The stalk must be "well formed" instead of "fairly well formed." 2. The stalk must have not less than an 8-inch average midrib 37 on 3-dozen and larger sizes instead of a 6-inch average minimum.midrib length on all Sizes. 3. On trim, only 15 percent tolerance is allowed for two or more thin, short or Spindly or coarse fibrous outer branches. The remainder is to have not more than one of this kind of branch. This is instead of the statement that the stalk be "well trimmed." A. The stalk must be clean and of good general appearance and bloom, and shall be practically free from foreign materials and yellow or discolored leaves. This standard is in addi— tion to those for United States Number 1 grade celery. (39) Celery that does not meet the Cooperative's Number 1 standards may be returned to the grower for repacking or diSposal, as the organi— zation's general manager directs. It is not to be shipped to the fresh market except with the general manager's expressed consent, and then it must be shipped in an unbranded crate. Most of the Cooperative's celery that is shipped to the fresh mar- ket has been hydrocooled and must be prOperly iced enroute if shipped out of the state. This is done as an additional effort toward quality control. The Quality Committee has also made an effort to improve the quality of processing celery. Since there were no United States standards written specifically for processing celery, the Quality Committee developed their own quality standards. The COOperative's preprocessed stemmed celery also must meet certain quality requirements. These quality improvement efforts have won Michigan celery, and 38 eSpecially the Cooperative's celery, a more reSpected name in the mar- keting channels among shippers, processors and field buyers. Some field buyers are willing to pay $.50 to $1.00 per crate for premium quality celery.l However, Michigan celery does not measure up to the usual quality of California celery. (30:A) This quality difference is very difficult to quantify. Even though celery from both areas may be United States Number.1 or better, buyers recognize that the California product generally is mare compact, has more weight, and presents a better appearance. Part of this difference is due to varietal differences and growing conditions between the two producing areas. California's transportation disadvantage in selling to eastern markets necessitates rather rigorous grading and standardization in order that the celery will compete favorably upon arrival. This is done voluntarily as California's celery quality control efforts are at the discretibn.of.individual growers and shippers, and the celery is not inSpected'by federal-state inSpectors as had been done with fresh market Cooperative celery in thhigan. Since this is a voluntary effort, there are exceptions at times to the usual "California quality." California appears to enjoy a reputational advantage in the fresh celery market. This has probably been strengthened by the considerable promotion efforts that have been conducted for other C California crops and for processed crops by national brand distributors located in California. Conceivably, the rather numerous individual promotional efforts of industry segments and of large firms have had a Cumulative effect in the minds of consumers even though California celery has not been heavily promoted. (22:13-1A) 1 See under Quality in the Attitudes section of Chapter 6. ‘:\5 \\ 39 Apart from.stemmed celery for processors and heart celery for fresh market, Michigan producers have traditionally packed their celery on their own farms. The celery is cut and moved from the field to a nearby building or "shed"l where it is trimmed, washed, sorted and.packed into crates according to size of stalk. With this occurring on each producer's farm, there is a tendency for diSparity in pack uniformity even with inSpection at the shipper receiving point. In the interest of alleviating this situation, the Michigan Celery Promotion COOperative has actively explored the possibilities of a central packing operation(s).2 During the 1967 season, the Cooperative contracted with one of the larger shippers to undertake central packing of celery produced near their packing facility. The COOperative has also moved ahead with plans to construct a central packing facility of their own in another area. The Cooperative's quality improvement efforts have provided a firm foundation for their involvement in other aSpects of marketing their celery. Their experiences in quality, pricing, advertising and.promotion efforts have been carried on simultaneously as part of a total marketing effort. Pricing Activities The Michigan Celery Promotion COOperative's Price Committee (five growers, the manager, and the COOperative Ektension Service agent as an ex—officio member) sets f.o.b. prices of its products daily during l . . u The celery industry refers to th1s method of pack1ng celery as shed packing." 2 , In Chapter 5 the economic rational for central packing is con- Sidered. Industry attitudes toward central packing are described in the Prpducer Marketing COOperative section of Chapter 6. r__— A0 I its marketing season. Celery market information is gathered by 1 this committee from a wide number of sources (Figure 3). A tele- type service has been leased each season to provide prompt market information as supplied.by the United States Department of Agriculture from other producing areas and from terminal markets. The general manager summarizes the information received by teletype. He also contacts each of the Shippers daily to ascertain their inventory, sales and general feeling of the market and movement. Each of the grower—members of the Price Committee are also responsible for con- tacting a shipper to whom they have been assigned to ascertain his feeling of market conditions. The general manager gathers data each day on the organization's inventory, f.o.b. prices at competing producing areas, terminal market conditions, and other relevant factors. He then calls the chairman of the Price Committee and discusses the situation with him. Tbgether they decide on the advisability of convening the Price Committee. The members of the committee normally meet by means of a.telephone conference call. Price changes, if made, are generally for the following day. Members of the Price, Quality, Advertising and Promotion Committees and the Board of Directors, as well as all Shippers, are kept informed of relevant market factors through a "Daily Market Report” summary sheet. The Price Committee members, during the conference calls, are generally most concerned.with the Cooperative's inventory and expected receipts, f.o.b. prices in competing areas, shipments of California and.New York celery, and shippers' comments about the market situation. They evaluate these and other factors and attempt to price their r____— A1 ’ Promotion Committee I I I I f I I I I l I I I I I I I I I I I I I I ' M.C.P.C. - y Fieldmen ‘ Geperal Manager ,l_— ‘I1 i x / I x ’ V // ‘\ / . Personal \ \‘I L’ U.S.D.A. Telephone u”,__,._”_”,__ €> M.C.P.C. Oj,,,mn Teletype Contacts Price Committee Information I, j ‘ ' i \ ll \\ l \ . / District Marketing Shipper Agent fi_fi Agent I I I I I l I I I I I I I I I I I I I I I I I A Quality Committee FIGURE 3.--Sources of information for the Michigan Celery Promotion COOperative's Price Committee. ‘ - - - - — - - Informational Sources Source: (5532) 42 products and divert their supplies so that they can sell all of the celery produced that meets the quality standards for the market for which it is intended. The Price Committee administratively determines prices for each of the Cooperative‘s products: heart celery, each size of crate celery, bulk celery, stemmed celery, and different qualities. The ffio.b. price on fresh crate celery is almost always quoted to the nearest $.25. This practice is apparently a matter of custom among all the celery producing areas. When market conditions necessitate a change in an f.o.b. price, it is seldom changed more than $.25 in any one day. This practice, too, is common of all the producing areas but may be due to the magnitude and rapidity with which market factors change rather than due to custom. Shippers with whom.the COOperative has contracted are usually notified by telephone the morning of the day when the change is to be effective, of any price changes made'by the Price Committee.‘ Shippers quote the f.o.b. prices determined.by the Price Committee to prospective buyers. Each shipper also has available the usual tranSportation charges to various locations in order that he can tell the buyers what the product will cost delivered. Although the celery is sold for a set price, the Cooperative, through its shippers, offers what is known as "protection" or a guarantee that any downward price changes in the next two days will be retroactive. Protection might be viewed as a competitive technique except it is ”offered“ by practically all celery shippers. It is not representative of supply and demand Conditions, thus the market power of the buyers apparently permits them to seek protection as a condition of purchase. In addition, the 43 Cooperative takes the reSponsibility that the celery will be delivered in a marketable condition to the buyer. Under the Perishable Agricultural Commodities Act, the buyer, upon receiving an order, is entitled to have it inspected by a licensed inSpector and may reject it or arrange for a settlement if the product was misrepresented. (26:265, 273, 277) The dollar receipts from all crate and processing celery are pooled, after the Cooperative and shipper assessments have been deducted, in semi-weekly pools, Mbnday-Wednesday and.Thursday—Saturday. Different qualities of crate and processing celery are pooled separ- ately. Bulk celery sold at a contract price to processors prior to the season is pooled with uncontracted bulk celery and converted to crate equivalents. The difference between the COOperative's pooled bulk price and the crate pool price is also pooled. (48) The Cooperative's 1963 through 1967 fresh celery shipments and celery deliveries for processing are shown in Table 6. Celery movement by the Cooperative was greatest in 1963 when 1,452 carlot equivalents of celery were shipped to the fresh market and 5,730 tons of processing celery were delivered to processors. In 1966 the celery volume shipped by the Cooperative to the fresh market (840 carlot equivalents) was about two—thirds that shipped in each of the three preceding years. This decline in volume may be attributed to quality problems necessitating a higher grade out. Prices related to the Cooperative‘s annual celery movement may be shown within and between seasons by using weekly average f.o.b. prices of 16-inch crates of 2% dozen size Michigan Celery Promotion AA TABLE 6.--Quantity of Michigan Celery Promotion COOperative fresh and.processing market celery sales, 1963-1967. Fresh Market Processing Market Year (Carlotsa) (Tons) 1963 1,162 5,730 1961+ 1,333 3.220 1965 1,282 2,2LI7 1966 8&0 2,775 1967 1,270 2,662 a600 crates of 16-inch crate celery per carlot and l,h25 crates of heart celery per carlot. Source: (25) Cooperative Number 1 celery as a guide.1 Weeks of the COOperative's nmrketing season were numbered beginning with 1, when the organization quoted f.o.b. prices 3 consecutive days in the same calendar week. Each calendar week thereafter until f.o.b. price quotes by the organiza- tion ceased was considered a week of the marketing season. These average weekly f.o.b. prices for 1963 through 1967 are shown in Figure A. The general level of f.o.b. prices per crate of 2%‘s appears to be inversely related to the marketed.production each year. That is, in the year of lowest marketed production, 1966, f.o.b. prices on 2%‘s were at their highest level, with the exception of the first and eleventh weeks of the 1967 season. In turn, the year of highest mar— keted production, l963, saw f.o.b. prices per crate of 2%‘3 at their lowest level for the five years 1963-1967~ 1The weekly average f.o.b. prices were calculated'by weighting each price during the week by the number of days it held and dividing that total by the number of market days in the week. . "mounom .mmowua owmum>m Hmnuom How a manna .< xapcomd< mom .wu .n ”“0 “ma WVGUOQ 00 nhummumEvaOIHQQm NO «AUHHQSU H “@3852 0>HHUNH0AHOOU HHOflUOEOMHm WHQHQU CNMHSU-Em . - ea .seeaee ONHW GONOMu m. , m. NQQH MG . UHnH Hm mo oumuo pod mooflud .2 .o .m xfixows owmuo>m o>fiumuodooo coaooeoum aumamo ammfisoagTI a mMD 0w. ml». ..u- - f a a I - 203.3 mo Mum: - _ q _ mm 2 L E a a a. a m e m a a a. m . _ _ _ _ _ . _ _ OOOcOQOOOOOOOOOooucocoooooooooooooo JOO.N OO O OOOOOOOOWIIII X X XX 00 V ..ooOQDowVfi O 9)OOOO \\ IIII X x X 00 A I 100000000 I I . so 3 \ . I a \I I... a 9 \ \ I do 3 on we oo.m u 0 b . MW Ga om.m n1 W 1a “a w m. L 83. a 1Q m 32 III one m coma I .II. M. mom.” III: I. qoma XXX% OO.m momfl 00:00 L Omfi #6 Within the state of Michigan, during the Michigan celery mar- keting season the Michigan Celery Promotion Cooperative is the dominant firm.and is surrounded by firms that may be referred to in the aggregate as a competitive fringe. The dominant firm sets the price for Michigan celery, and the small firms sell all the celery of comparable quality they produce at that price. The remaining Michigan nmrket is available to the dominant firm” This is the case of price leadership by a dominant firm.as described by Leftwich. (29:2h5) The small firms, however, are not always able to supply the quantity and quality needed by the larger chainstore Operations. These orders are often filled'by the dominant firm.which is an advantage of Cooperative membership. The market structure for the United States celery industry during the Michigan celery season is characterized by California’s 'barometric" price leadership. California prices perform this function because California produces at least 50 percent of the avail— able supply,1 and there is a h to 7 day transportation lag before this produce reaches the eastern United States markets. In contrast to the.Michigan market structure, no California celery marketing firm sets price prior to sale. California celery prices, determined by the market assessments of a large number of buyers and a relatively smaller number of sellers, do perform.this "barometric" price leadership. As indicated earlier, the tranSportation costs for Michigan and California celery are approximately equal at the Mississippi River, h 1 See Chapter 2, page 8 for the percentages by state of United States celery production. 1+7 which acts as a western market boundary for thhigan celery, but not for California celery which must sell at a premium over thhigan celery east of the Mississippi River. Comparisons of hOW'the thhigan Celery Promotion COOperative has set its prices relative to the f.o.b. prices of other areas are detailed in Chapter A. Advertising and Promotion The Advertising and Promotion Committee of the Michigan Celery Promotion Cooperative has directed its activities principally to retailers and processors. This is the "push" approach to advertising and.promotion in which the product is "pushed" into market channels with little concern for consumer demand. When these activities are directed toward the consumer, it is referred to as "pulling" the pro- duct through. Until 1967, the committee itself actually conducted the advertising and promotion program. Advertisements were placed in selected trade publications prior to and during each marketing season. In addition, direct mail adver- tisements were distributed to chainstore buyers at timely dates. thbers of the Advertising and Promotion Committee or other Coopera- tive personnel, in a number of promotional trips in past years, called upon fresh market and processor buyers. This committee has also been actively seeking a container other than the wire-bound "Howard" crate in which celery might be shipped and eXploring the possibilities of marketing individually wrapped, prepackaged celery stalks. Cooperative advertising which appeared on the packages or containers was standard- ized at the request of the Advertising and Promotion Committee. However, a number of shippers under contract with the Cooperative are permitted to advertise their own brands on celery heart packages 1+8 and in trade publications and may or may not note their thhigan Celery Promotion COOperative affiliation. Shippers may also perform a.broker function for commodities other than celery. The shipper's brand and line of products are his means of differentiating himself from other shippers. For the 1967 season, the Advertising and Promotion Committee engaged a merchandising agency to conduct their advertising and.pro— motional program. This was done to achieve a more professional and effective program and to free the committee members from a time-consuming activity. The agency's program included advertising in trade publica: tions, promotional visits to produce merchandisers and.buyers in several major midwest cities, a direct mail program, and.publicity releases. This program for the most part remains directed at retailers and.pro- cessors, not the ultimate consumer. The Advertising and Promotion Committee continues with the package and prepackage efforts. Other Areas of Concern In 1965 the Michigan legislature passed and the Governor signed the.Agricultural Commodities Marketing Act, Public Act 232, that permits state agricultural commodity market orders. The Mishigan Celery Promotion Cooperative has investigated the possibilities of a state market order for Michigan celery and requested a'hearing in 1966 on an order which they prepared, but the'hearing was never held. ReIPorts as to why the hearing was not held were vague and contradic— tory. The Cooperative maintains a continuing interest in the potential for a state market order. Another area of considerable interest to the Cooperative is mechanical celery harvesting. There are a few mechanical celery A9 harvesting aids developed, but for the most part Michigan celery remains hand harvested. Producers are looking to potential labor savings arising from.a mechanized harvester. However, celery harvest mechanization may be related to celery marketing if the nature of the product1 or its quality are altered by harvest mechani- zation. Possible interrelationships between harvest mechanization and central packing have been acknowledged by Cooperative personnel. Nhrket orders and harvest mechanization as related to central packing are given detailed consideration in Chapter 5. Prdblems Confronting the COOperative The problem.as presented in the introductory chapter (Chapter I) describes the situation confronting the Michigan Celery Promotion COOperative and the Michigan celery industry. More specifically relative to the COOperative, the organization is faced with declining membership and acreage. Due to this situation, the membership is reluctant to make capital expenditures for new or improved.packing and grading facilities. The membership is also reluctant to pursue other expansionary tactics such as growth into a multi-vegetable organization, feeling that they must first have a successful celery organization. The above discussion again points out the need for an analysis of alternative organizational techniques and marketing practices that could.possibly be implemented. The declining membership and consequent decrease in celery 1For example, cutting the stalk above the butt so that the Petioles would no longer be held together. J-‘ 50 production controlled by the Cooperative places the possible effectiveness of their price program in jeopardy. If the group is to continue to be active in pricing its products there is a need for improved price information and a viable organization. CHAPTER IV PRICE PREDICTION EQUATIONS FOR MICHIGAN COOPERATIVE CELERY Introduction The Michigan Celery Promotion Cooperative's role in pricing its products denotes the need for quantitative information con- cerning the price relationships. An analysis of annual United States celery prices is presented to provide a setting for examining the Cooperative‘s celery prices. To provide quantitative information on the Cooperative‘s price relationships, price prediction equations for Cooperative celery were developed. These equations furnish improved decision-making information to the Cooperative and others in the industry. In Chapter 3 it was noted that the Michigan Celery Promotion Cooperative has priced its celery prior to offering it for sale since the COOperative's inception in 1963. This process of price determination is best described as administered.pricing, in which any price set by a firm.official is an administered price. The Cooperative is limited in its freedom of pricing action by the broad forces of supply and demand that affect its products. These market constraints were first examined in this study through an analysis of annual United States average f.o.b. shipping point celery prices. This provided a more comprehensive framework for analyzing the within- thhigan celery season price predicting equations that were deveIOped. The within4Michigan marketing season f.o.b. shipping point price predicting equations were developed to quantify factors bearing 51 52 on Michigan Celery Promotion COOperative prices. Statistical sig- nificance of factors believed to influence Michigan f.o.b. celery prices was determined to empirically evaluate hypotheses concerning the relationship of the factors to the prices. The within—season equations also were developed to quantify the change in price the thhigan Celery Promotion COOperative could.expect through controlling its celery supply. A principal consideration in formulating and developing these equations was that they be computationally usable to the COOperative's Price Committee. A single equation——multiple regression-—approach was selected for the within—season analysis because, in a behavioral sense, this technique approximates the procedure the Cooperative‘s Price Committee goes through in arriving at a price and would be computationally usable to the committee. The influence of both supply and demand factors was considered. The single equation approach was also utilized in analyzing annual United States celery prices to permit their comparison with the within—season analysis. Because the annual analysis was done after the within—season analysis, variables such as supply of other salad vegetables and weather for consuming areas, not significant within season, were not considered in the annual analysis. The objective of this analysis was to determine factors that could be used to estimate celery price on an annual basis and how these factors relate to those used to estimate Michigan Celery Promotion Cooperative price on a weekly basis. Another Objective of the analysis was to deter— mine with what accuracy annual United States f.o.b. celery prices could be estimated. A broader view of celery prices was provided by 53 this approach, and it permitted a longer-run (19171966) view of these prices. Analysis of Annual United States Celery Prices Economic aspects of the United States celery industry were presented in the second chapter. The demand and.price structure relationships for United States celery are diagrammatically illustrated in Figure 5 below. The arrows indicate the direction of the relationships. Celery production is determined by the acreage harvested and its yield per acre. weather may influence both the celery acreage planted and harvested. Rainfall, making it impossible to move equipment onto the fields, and freezing temperatures are the principal weather variables limiting celery acreage planted. These weather variables also restrict the acreage harvested. Temperature extremes, either hot or cold, and disease may decrease yields and quality. Data indicating the quantity of United States celery production moving into fresh and processing market uses respectively are not available. The United States Department of Agriculture Statistical Reporting Service classifies all United States celery production for fresh market use and notes that some is used as processing celery. The Market News Service in each state producing celery reports that state‘s harvested production and its value at f.o.b. shipping point to the Statistical Reporting Service, United States Department of Agri- culture. Value is for the crop year and does not correspond to Calendar year income. Per unit (60 pound crate) value is the quotient derived by dividing the total celery production value for all states by the total harvested.production for all states. As used in this HOQHS mo whoeom o o . m p oHonH moxop oonmmo out qmmHanOHHmHoa HumpsomsH osos one opmoHMMMmoM momentouopsomsH m OHHM bum mm .m .sooh so H m > m m GH haoaoo Mom oHSHoShpm olom out onmaoo one GH mmHflmQOHHoHoa HOnMS soumam II. I .m mmeHh mcHuoxumz_ acmmom onusale . soumam . MOHum .m.o.m wcauo . xuoz m #3. I I4 Annoum . oomnuooo msoooH noesmcoo ooHum HHmuoz manomOQmHa moHum HHmuom wooHu eswcoo A» floOHooEomcoo u a row: comma IIIIIIIIIIIIII LJHflL IIIIIIIIIIIIIIIII War are . r -chmoooum memo nonooMm. \\\\\4h IAMH “I mucosoa Eou.J . mchmoooum . - . I I I I 1') n “ mumoo conme , mo coHoospOHm ” . pom mcHomo>umm _ I'Iligl‘l memouo< oomuuoou AW . umm>umm mom mwmmuo<. .oum .ommomHQ .oum uHHHooHHm>< u on nonumoa .mumoo auHonuHOQQO Monummz 55 annual analysis, "price per crate" is not in general a "price" that occurred under market conditions for the related quantity. (59) The analyses of average annual United States f.o.b. shipping point prices were based on the years 19m through 1966. Earlier years were not utilized because of market changes during the 1930's depression and WOrld war II. Although there were shifts in production from.Michigan to Florida and California during this period and market structure changes in Michigan and Florida, these changes, for purposes of these analyses, are assumed to have had a negligible influence on annual United States celery prices. In analyzing annual United States celery prices, production per capita and diSposable income per capita were used as variables that influence price. Annual United States celery price as a function of these factors was analyzed with and without deflating the depen- dent and independent monetary variables by the Bureau of Labor Statistics Consumers' Price Index. Natural data and first differences of natural data were both employed to determine comparability of fit and results. From.the standpoint of variation in price "explained" by the independent variables, the analyses yielded poor results. The relationships Obtained, however, merit discussion because of their logical validity. Tables 7 and 8 reSpectively show the undeflated and deflated (by Consumers' Price Index) natural statistical series used, together with actual and computed United States annual average celery prices. The use of first differences of natural data increased the coefficient of multiple determination for both the deflated and undeflated relation— ships, although they remained less than .60 as shown in Table 9. 56 TABLE 7.—-Actual and computed United States annual average celery prices and related variables, 1947-1966. P Qp Yp Price Per Crate Production DiSposable Income Year Actuala_—Computedb Per CapitaC Per Capitad ($) ($) (Lbs) ($) 19117 3.11 2.75 7.9 1.173 19h8 2.13 2.4a 8.6 1,280 19u9 2.42 2.49 8.5 1,261 1950 2.21 2.3a 8.8 1,359 1951 2.29 2.18 9.1 1.A65 1952 2.uu 2.21 9.0 1,512 1953 2.17 2.19 9.0 1,568 1951+ 1.99 2.07 9.3 1.567 1.955 2.36 2.05 9.3 1.637 1956 1.97 1.86 9.7 1,7u1 1957 2.32 2.20 8.8 1,803 1958 2.66 2.uu 8.2 1,826 1959 1.9M 2.17 8.8 1,905 1960 1.97 2.32 s.u 1,9u7 1961 1.93 2.u3 8.1 1,98u 1962 2.80 2.61 7.6 2,06u 1963 2.13 2.59 7.6 2,136 196% 2.72 2.67 7.3 2.273 1965 2.67 2.63 7-3 2,All 1966 2.95 2.53 7.u 2,568 aCompiled from.sources numbers 2 and 59. bComputed from.the following equation whose coefficients were estimated by ordinary least squares: P-6.2871 - 0.0u03Qp - 0.0003Yp (1.2379) (.011u) (.0002) Numbers in parentheses under the coefficients are the respective standard errors. R2=.A5 Standard error of estimate=.28 CCompiled from sources numbers 2 and 59 with production divided by July 1 population including armed forces abroad. d'DiSposable income divided by July 1 population including armed forces abroad. 57 TABLE 8.--Deflated actual and computed United States annual average celery prices and related variables, 1947-1966. Pi Qp Ypi Disposable Income Per Capita Price Per Crate Deflated'by Deflated'by Consumers' Price Index___ Production Consumers' Price Year Actualafv ComputedU Per capitaC Indexd ($) ($) (Lbs .-) ; ($> 1947 4.00 3.29 7.9 1,508 1948 2.54 2.91 8.6 1,527 1949 2.92 2.98 8.5 1,519 1950 2.64 2.64 8.8 1,622 1951 2.53 2.49 9.1 1,619 1952 2.64 2.51 9.0 1,635 1953 2.33 2.43 9.0 1,682 1954 2.13 2.29 9.3 1,674 1955 2.53 2.1A 9.3 1,755 1956 2.08 1.79 9.7 1,838 1957 2.37 2.23 8.8 1,840 1958 2.64 2.58 8.2 1,813 1959 1.91 2.16 8.8 1,877 1960 1.91 2.34 8.4 1,888 1961 1-85 2.45 8.1 1,904 1962 2.66 2.60 7.6 1,958 1963 2.00 2.52 7.6 2,002 1964 2.52 2.48 7.3 2,103 1965 2.43 2.31 7.3 2,194 1966 2.61 2.11 7.4 2,271 aCompiled from sources numbers 2 and 59 and deflated by the Consumers‘ Price Index, l957-l959'base=l00. hComputed from.the following equation whose coefficients were estimated by ordinary least squares: Pi=l0.02l6 - 0.0494op - 0.0019rpi (1.8676) (0.0143) (0.0005) Numbers in parentheses under the coefficients are the reSpective standard errors. B2=.5O c . . . . . Compiled from.sources numbers 2 and 59 With production diVided'by JUly l pOpulation including armed.forces abroad. Standard error of estimate=.35 dDiSposable income divided.by July 1 pOpulation including armed forces abroad and deflated by the Consumers‘ Price Index, 1957-1959 base=lOO. 58 TABLE 9.——General results of the two United States annual average price relationships for each of the data forms.a Standard Significance Level, Price Data. Error of Independent Variables Relationshipb Form R2 Estimate Qp Ip P:Qp, rp Natural 0.45 0.28 0.003 0.177 First Differences 0.56 0.33 < 0.0005 0.374 Qp Ypi Qi:Qp, Ypi Natural 0.50 0.35 0.003 0.001 First Differences 0.59 0.35 < 0.0005 0.194 aCoefficients were calculated by ordinary least squares. bThe subscript "i" refers to deflation of the variable by the Bureau of Labor Statistics Consumers' Price Index, base l957-l959=100. The negative regression coefficients for disposable income per capita, both deflated and undeflated,l indicate that United States price per crate of celery has decreased with an increase in this factor. Nationally, civilian consumption of fresh vegetables has been declin- ing relative to consumption of processed vegetables (Table 10). The percentage of vegetables consumed in fresh form by civilians declined from 78 percent in 1945 to 69 percent in 1963. This substitution of processed for fresh forms of vegetables in consumption is attributed to changes in consumer incomes and living patterns. (38:15; 55) Celery is a vegetable primarily consumed.in fresh form.and.in processed form.such as juices or soups. Its processing uses are limited and, lSee Tables 7 and 8, footnote b. 59 TABLE 10.—-Percentage civilian consumption of vegetables in fresh and.processed form for selected years. Fresh Processed Year (%) (%) 1945 78 22 1950 75 25 1955 73 27 1960 71 29 1963 69 31 Source: (58:123—138) therefore, its fresh gn°capita consumption could decline if consumers were to substitute other processed vegetables for fresh celery. To determine if there may have been a shift in demand for celery during the period 1947-1966, United States annual average celery prices per crate deflated by the Consumers' Price Index were plotted with annual celery production per capita as shown in Figure 6.1 Simple least squares regression was used to "fit” straight lines to the data for the periods 1948-1957 and 1960-1966 (See Figure 6). The analysis indicates a decrease in demand for celery from the first to the second period and a decrease in slope of the demand curve from —0.53 to '0.3A. However, caution Should'be exercised in considering these results as the coefficient of determination for the first period is 0.57 and for the second 0.17. The variation in price "explained" by Per capita consumption is rather low for the 1960-1966 period relative to the 1948—1957 period. The analysis indicates that the general decline in fresh vegetable consumption noted in Table 10 has occurred 1For data series, see Table 8 above. .HHmuop Hm:OHuHoom now :muHooo nod COHuosooum: new Hoouom noumEHumo pom Hmouom o>Humuodooo GOHuoEoum mumHoU smecOHSTI.n MMDOHm ZOmm wmumEHumw wsm Hanuom w>wumuwa ZOm w umm magma . . n .o . A m . mama umawu mNHm cmwov AN mo mumuo . m axmwa mwmum>w wwumswumm cam HmSuom m>Humuwaooo cowuoeoum mumawo cmeLUHETu.m mMDUHm 0H mg : _ 20m¢mm mo Mmmz Ill. _ q” mM Na HH 0H m w n o m q m N H o _ _ _ A _ A ‘4‘ _ q. ‘4 A g\ HOO.N 140m.N ”a An A Go 85 D. mm 3 ..om.m «Lug mm Mu l a 0 00 q mm Tm 3 N cowumsvm ,vMumsflumm g soHumsvm nvmumEHumm Hm:u0< 7O ucwoa w . . awaawzw a o .w zaxmms wwmum>m UwquH .HHMumv Hmcowuwvvw how q magma .< xflvcwma< mmmm m.c0mmmm wawumxume coma .muoamo mNHm awnov MN mo mumuo umm muwnm umm vcm Hmsuom m>wumummooo coauoeoum mumamo cmwanowzru.o~ mMDOHm [a 2 S. S 2835 mo Mama . . I . . E. S 3 a w m o m q m N , H o _ _ _ _ d 4 4 1 J . 4 \_\ 1 cos. IAOm.N J v ”3 I900 m mmwa H 0.1 o m 1 om.m ma 0 .L qu N coaumsvm .wmumsfiumm n u a u H coflumsvm .cmumswumm .l.llll stuu< ..illll 71 in the selected equations, the predictive power of the selected equations during the 1967 Michigan Celery Promotion Cooperative's marketing season will be discussed. Variables Included and EXcluded in Selected Equations The price of each size of fresh celery at shipping point is quoted separately. For this reason, prices were estimated for only the most important size of fresh celery. Crates of 2% dozen size celery were selected because of their ready acceptance by chainstores and because they make up the largest proportion (approximately 33 percent) of the Cooperative's sized, fresh celery crate sales.l Prices f.o.b. shipping point of fresh crate celery are generally quoted to the nearest $.25, and the minimum.price change per crate is $.25. Both practices are apparently traditional customs in the celery trade. The Nflchigan Celery Promotion Cooperative frequently does not change its price per crate of 2% size celery during a week, seldom changes it more than $. 50 per crate, but has changed it as much as $1.25 during a week.2 The time periods selected for analysis within each season were weeks. Since the price per crate of 2%‘s may vary during a week, the dependent variable is a simple unweighted average of the COOpera- tive's 2% size prices per crate each week. In estimating these prices, no attempt was made to restrict to the nearest $.25 the estimates, dependent variable, or any of the independent celery price variables. lComputed from.source number ll. . 2See Appendix A, Table 8 for Michigan Celery Promotion Coopera- tive‘s f.o.b. price per crate of 2% dozen size celery each day of the 1963 through 1967 marketing seasons. 72 This permits an indication of trends or pressures on price relative to $.25 increments and yields estimates representative of the averaging process utilized. The relevant supply of the COOperative's 2%-size celery consis- tent with the selected dependent price variable consists of the number of Cooperative 2é-size crates on inventory Saturday evening of week t (Qmis) and the number of Cooperative 2% size crate receipts during week t+l (th+1). Significance and sign of these two variables were tested, and they were then added together for a single Michigan Celery Promotion Cooperative supply variable, the selected Qm. Use of Qmis as a variable to represent a portion of the Cooperative’s 2% crate supply did not yield statistically significant coefficients.1 The coefficients obtained for this variable were negative, indicating that the Cooperative's price per crate of 2% size celery in the coming week is depressed by the inventory carryover from the present week. The reason for lack of statistical significance was most likely the small quantity involved, less than h,000 crates per week and often less than 1,000 crates per week. The other quantity variable, th+l, making up the selected Cooperative SUpply variable Qm also had negative coeffi- cients as expected, but they were statistically significant. Data for this variable (th+l) were actual Michigan Celery Promotion Coopera- tive 2%-crate receipts for week t+l. The selected single Cooperative SUpply variable, Qm, yielded coefficients that were negative and statistically significant. California celery shipped east by rail is available in all Michi- gan Celery Promotion COOperative market areas four to seven days after __ 1Statistically significant is taken throughout this chapter to mean at the 5 percent level'inless noted otherwise. 73 shipment. The quantity of celery shipments from California was measured in terms of variable Qct-—California carlot rail shipments in week t.1 The regression coefficient for this variable was signi- ficant. However, the positive sign for this variable indicates that the Cooperative's price per crate of 2% size celery increases in the coming week as rail shipments of celery from California increase during the current week. A positive coefficient is not what was expected for this variable. Generally, without a shift in demand, an increase in quantity results in a lower price. The positive sign for this coefficient may be the result of multicollinearity between this variable and a demand shift variable such as stt (carlot ship- 'ments of salad vegetables excluding celery for week t). The simple correlation between Qct and stt was 0.43. Carlot rail shipments, except to processors, of United States salad vegetables for week t (stt)2 was tested as an independent variable to determine its relationship to the price per crate of Cooperative 2% size celery in the coming week. Negative coefficients for this variable were obtained'but were not statistically significant, possibly because particular salad vegetables included may have been substitutes and others complements. Carlot equivalents of combined rail, boat and truck unloads of celery in Al cities during week t (Uhlt)l was tested as an independent variable. This was done to quantify the relationship between the celery supply available on the retail market in week t and the M 1 Data for this variable compiled from source number 25. 2 Salad vegetables included cabbage, carrots, cucumbers, lettuce, romaine, green onions, peppers, tomatoes, radishes, escarole, endive, and greens. Data for this variable were compiled from source number 21. 7h Cooperative's price per crate of 2% size celery in week t+1. Regres- sion coefficients for this variable were not statistically significant, nor were they consistent in sign. The coefficients varied so little from zero that observations excluded from some of the equations and included in others may have been sufficient to produce sign changes in the coefficient. These observations that were excluded from some of the equations and included in others were due to missing data for variables other than Uhlt that were included in some of the equations. Celery quantity data for all individual production areas other than that in the COOperative were not available on a week-to-week basis. This was especially true for New York celery, a major compe- titor with.Michigan celery. For this reason f.o.b. prices per crate of 2% size celery from.the various celery producing areas (which were available) were tested to determine the extent to which they "explained" Michigan Celery Promotion Cooperative f.o.b. price-per— crate variation of 2% size celery. For specific California shipping points, an average of f.o.b. prices in dollars per crate of 2% size celery during week t and separately for Wednesday, Thursday and Friday of week t were tested to determine which gave the better fit. The mid- point of Santa Maria, California f.o.b. shipping point price range in dollars per crate of 2% size celery on Friday of week t (met)1 gave the best fit of these alternatives for the first seven weeks of the COOperative‘s marketing season. For this reason, this variable was piCked for inclusion in the selected equation (Equation 1).2 For the remaining weeks of the Cooperative's marketing season, the midpoint of _* 1 For data series see Appendix A, Table 6. 2 . See Pages 6% and 65 for Equation 1. 75 the Salinas, California f.o.b. price range in dollars per crate of % size celery on Friday of week t (Psft)l gave a slightly better fit than did Santa Maria prices in Equation 2.2 Regression coeffi- cients for both of these California price variables selected were less than one, highly significant3 and had.positive signs. The coefficients for these variables indicate that as f.o.b. price per crate of2% size celery from these two California areas changes, the Cooperative's 2%-f.o.b. price per crate for the coming week changes in the same direction but by less than the amount of the California price change. Historically, the Michigan Celery Promotion Cooperative Price Committee has used Salinas, California f.o.b. prices as a principal indicator of California f.o.b. celery prices throughout the Michigan season. Based upon carlot rail shipments of celery, starting one week prior to the COOperative‘s marketing season, the volume of Santa Maria shipments was larger than Salinas shipments 1 week in 1963, 3 weeks inl96h, 5 weeks in 1965 and 2 weeks in 1966.1‘L This shift in volume of shipments between the two areas may in part contribute to the better fit dbtained using Santa Maria prices the first seven weeks and Salinas prices the remainder of the COOperative‘s marketing season. However, it is also possible that at the first of the Cooperative's marketing season, Salinas shippers looked to Santa Maria for price leadership While the Cooperative‘s Price Committee was looking to Salinas for this 1 For data series see Appendix A, Table 7. 2 See pages 65 and 66 for Equation 2. 3Significant at less than 0.05 percent. h For detail see Appendix A, Table 5. 76 leadership. The end result was that the Price Committee's reactions to the reaction of Salinas to Santa Maria price changes brought Cooperative price.changes more nearly in line with Santa Maria's. New York celery prices were also tested as an independent variable in estimating the Cooperative's celery prices because data were not available on quantity of celery marketed each week by the two New York celery producing areas-~Orange County and western New York. Due to the proximity to Michigan of these two competing areas, only two price variables for each area were tested—-the midpoint of the f.o.b. price range in dollars per crate of 2% size celery on Friday of week t and an average of the f.o.b. shipping point prices in dollars per crate of 2% size celery during week t. Friday prices for week t yielded more statistically significant results than did average prices for all of week t. The midpoint of Orange County, New York f.o.b. shipping point price range in dollars per crate of 2% size celery on Friday of week t (Poft)2 was selected as an independent variable and included in the estimating equation for the latter part of the season (Equation 2). This variable was selected over the midpoint of western New York f.o.b. Shipping point price range in dollars per crate of 2% size celery on Friday of week t because western New York's marketing season often starts later than the eighth week of the Cooperative's marketing Season. By using Orange County, New York price per crate as a vari- able, the influence of New York celery on Michigan celery prices is accounted for much earlier in each season than if western New York 1Pricing in this imperfect market may involve some game strategy. 2 For data series see Appendix A, Table 7. 77 prices had been used. The second part of the Cooperative's marketing season (eighth week on), a simple average of Cooperative f.o:b. shipping-point price in dollars per crate of 2% size celery during the seventh week of the Cooperative's marketing season (Pm7)l was selected as an independent variable. This variable had a positive coefficient and was highly significant.2 It was included in the estimating equation for the latter part of the Cooperative's marketing season to provide an indica- tion of the Cooperative's price level. A number of other factors were tested to determine the extent to which they might "explain" the variation of COOperative prices. None of these other factors tested were included in the selected equations and were not deemed sufficiently important to merit discussion in the text. They are discussed in Appendix C. Predicting Michigan Cooperative Celery Prices Testing Equations The selected estimating equations presented on pages 6A, 65, and 66 above are evaluated in this section for their ability to correctly predict Michigan Celery Promotion COOperative administered.prices and the direction of change or no change in these prices beyond the period of fit. This can'be done since the regression coefficients were calcu- lated using data for the 1963-1966 COOperative marketing seasons, and data are available for the 1967 marketing season for testing the soundness of the relationships. These estimating equations were 1 . For data series see Appendix A, Table 7. 2Statistically significant at 0.h percent. 78 developed in anticipation of their ability to correctly predict the COOperative's weekly average 2% size celery f.o.b. price per crate for weeks in a season beyond the period of fit. The success with which this can be done will be an indication of the usefulness of these equations to NHchigan Celery Promotion COOperative's Price Committee. Actual and predicted Michigan Celery Promotion Cooperative average f.o.b. shipping prices per crate of 2% size celery by week of their 1967 marketing season are shown in Figure ll.l Predictions for weeks 3 and h of the marketing season were notably distant from the actual prices. For week 3 the predicted.price was $.63 below the actual price and for week A $.95 below the actual price. A possible reason for this in the third week may have been a nationwide railroad strike that occurred on the Saturday prior to week 3 and lasted through Sunday and Monday of that week. There were no rail shipments of California celery Sunday and Monday of week 3.2 Expectations of a railroad strike may have dampened Friday celery prices at Santa Maria, California, decreasing the magnitude of that variable (met). Santa Maria average f.o.b. price on 2% size celery was down $1.12 from its Friday level of week 2. In the event of a railroad strike, California celery prices could be expected, in the short run, to decline due to the increase in California celery supply that could not leave California by its usual method of tranSportation-—railroad. Actual Cooperative price per crate could.also be higher than the predicted price for the third week due to retailers making purchases to replace in the short l . . . Appendix A, Table A provides additional price detail. 2 See source number 9, 1967 for additional detail. 79. ucHoa mcwachw .n . 0H m _ H H .aommmw wcwuo use m AonmB wwmuw>m emuMEHme was stuomxw>wuwmwmo . t MN MO oumuo uma ooHHa Zomstraight volume discounts. Cumulative volume discounts would also be justi- fied on the basis of selling cost savings and assurance of stable volume for the Cooperative. A discount could also be granted to customers making purchases in an off—peak sales period, either weekly or seasonally. This dis- count would also be cost justified and could be of considerable assist— ance to the firm as it seeks to sell its perishable products during the marketing season. P312 buyers to large-size for celery retail stc the costs would be a or they ma already be New p tion if ch The Possib celery app t8Chuologi by Weight Stalks. “£5 indiCELted ' total demm ever Presei the best r< merits rem IleSs which It Was gene prOCeSSOrs advertising Costs) . 172 Prepackaged Products. The expressed willingness of field buyers to pay a premium ($.50 to $1.00 per crate) for prepackaged, large—sized stalks of fresh celery is an opportunity in waiting for celery marketing groups. A trend to prepackaged fresh produce in retail stores is very much in evidence. The COOperative has explored the costs associated with this product and has determined that it would be a worthwhile venture. However, they must take the initiative or they may find themselves attempting to capture a market that has already been taken by their competition. New prepackaged, fresh celery products merit continuing considera- tion if changing tastes and preferences of consumers are to be met. The possibilities of new technOlogies in harvesting and packaging celery appear to be nearing commercial feasibility. If adopted, these technologies may permit marketing of prepackaged fresh celery petioles by weight rather than the current practice of marketing celery as stalks. Advertise Michigan Celery. Shippers, field buyers and processors indicated that the most effective advertising approach to increase total demand for Michigan celery would be general advertising. How! ever present brand advertising by the Cooperative would likely have the best results. Advertising of individual brands by many shippers merits reconsideration in view of the attitudes toward their effective- ness which were eXpressed by shippers, field buyers and processors. It was generally recognized by these shippers, field buyers, and processors that celery would have to be "good quality" before an advertising program could be beneficial (returns greater than their costs). Th! organiz: of its ( carried E organize tered a be inst: ting ant germane program In buyers : Coopera: is begil Central irrprove Park. t field b1 j-"IP1"0Ver that ml The for Dre; its 918.1 Woum be \ lSe . Tl 1n the t 173 The COOperative's own label will be of assistance to that organization as it seeks to differentiate its products from those of its competitors. For this approach to be effective, it must be carried out in all product lines including celery hearts. Central Packing. Central packing is recommended as a logical organizational-administrative focal point around which may be cen- tered a number of activities. Many of theSe recommendations could be instituted without central packing, but it is viewed as necessita— ting and facilitating the recommendations which are particularly germane to increasing the effectiveness of the Cooperative's marketing program. In the aggregate, Michigan celery shippers, processors and field buyers interviewed were opposed to central packing by a producer cooperative.l Nevertheless, the Michigan Celery Promotion Cooperative is beginning to establish "central” packing facilities.2 Adopting central packing would permit a higher degree of quality control, improve supply control and, as a consequence, increase uniformity of pack. The attitudes of Michigan celery shippers, processors and field buyers toward celery quality indicate that continued quality improvement efforts would be recognized by the trade. It is assumed that improved quality would accordingly be recognized by consumers. The COOperative has had some experience in transporting celery for preprocessing from.most of the western Michigan celery area to its plant and is familiar with possible tranSportation costs that Would be associated with central packing. Additional consideration 1See Chapter 6, page 150 for additional detail. 2 . . . . They plan to establish packing faCilities at several locations In the Western Michigan celery producing area. should l advantai gral pa‘ tion of diversir compare current. sufficiv fresh CI tioned : divert 1 level 0: the org; Chapter effects To labor f. One-halt t0 cele; VeEetab COllld b. and pot; Organiz; indicatv in 111er marketii Michiga- exFarsi. 174 should be given by the Cooperative to the possible economies and advantages of a single central packing plant organized as an inte- gral part of the COOperative. This plant would improve coordina- tion of the firm‘s total marketing effort. It would facilitate diversion of product supply to crate, heart or processing uSes as compared with the diffuse manner in which these activities are currently conducted. An operation such as this could also provide sufficient volume from which to select and pack an extra high quality fresh celery that could be priced above the usual quality, as men- tioned in the Prepackaged Products section above. The capability to divert celery to a fresh or procesSing line and maintain a higher level of control over inventories would both reduce risk and increase the organization's flexibility. The pricing equations presented in Chapter A of this text would provide a quantitative estimate of price effects from controlling supply. To increase the utilization of central packing facilities and a labor force, other vegetable crops could be handled. Approximately one—half of Cooperative members produce other vegetables in addition to celery, and the organization could be expanded into a multi- vegetable organization. The length of season that the facilities could be used could be extended by a number of crops (carrots, onions and potatoes) that are produced in the vicinity. A multi-vegetable organization would permit offering mixed loads, and shippers have indicated that approximately 50 percent of their celery sales moved in mixed loads. Shipper attitudes toward a multi—vegetable producer marketing COOperative are not favorable and would inhibit the Michigan Celery Promotion Cooperative if it were to attempt such an expansion activity. Effie realized b at the tin can insure acreage or during the working wi tive in me limited st contracts achieve de Estab Parking fa fraction m activities their actu Sion of ma would part as the Coo “lie and a Salesmm t include pr Befor Should be the Econom State \ 175 Efficient operation of a central packing plant can best be realized by scheduling a product flow for deliVery to the operation at the time and in the amount desired. Contracts with the producers can insure that this coordination would be achieved by stipulating acreage or production for delivery or harvest at a specified period during the season and/or by giving fieldmen additional authority in working with producers. These contracts would also assist the Coopera— tive in meeting supply contract commitments that it may develop. The limited storage life of fresh celery makes it imperative that these contracts be rigorous enough to curtail supply if necessary to achieve desired net returns. Establishment of a multi—vegetable organization having central packing facilities would permit the organization to bring the shipping function more directly under its control. All related marketing activities would be fully under the organization's supervision, and their actual performance of the selling function is a logical exten- sion of marketing control. Shippers‘ attitudes indicate that they would particularly resist this expansion of Cooperative market control as the Cooperative would be performing what had previously been their role and a source of income--selling. The Cooperative could hire salesmen to sell directly for the organization; possible salesmen include present shippers who haVe existing market contacts. Before adopting a central packing operation, additional research should be conducted to determine the optimum location and quantify the economic feasibility of such an operation. State or Federal Marketing Order. A state or federal marketing order could be used as a technique to coordinate Michigan celery marketi the Coc of qual control opposed However funds i to Mick include 0r. little gram as celery beyond Under 5 lies wj markets Supply demand. I‘Elativ during tive pr ShOTt~r beyond (75 per \ 1E DOSsibl 176 marketing activities. This could increase the effectiveness of the COOperative's marketing activities by permitting the possibility of quality and quantity controls for all Michigan celery. Quantity control under a state marketing order would likely be vigorously opposed by Michigan celery shippers, processors, and field buyers.l However, a more completely coordinated collection and expenditure of funds for advertising, promotion, and research would be acceptable to Michigan celery shippers, processors and field buyers and could be included in either a state or federal marketing order. On the whole, a marketing order for Michigan celery would add little to the Michigan Celery Promotion Cooperative's marketing pro— gram as long as it controls a substantial proportion of Michigan's celery supply. The CooperatiVe‘s marketing program has developed well beyond what would be acceptable to all the Michigan celery industry under a state marketing order.1 The Cooperative's advantage currently lies with its ability to control harvest, grading, and quantities marketed. The organization controls sufficient volume that it can supply large lots of fresh and prOCessing celery which many buyers demand. Non—Cooperative Michigan celery producers individually have relatively small quantities, and these are generally available only during a portion of the Michigan marketing season. These non-Coopera- tive producers may be able to market to smaller outlets or fill short-run supply gaps but individually find it difficult to move beyond this. However, the COOperatiVe‘s present production control (75 percent of fresh celery and 60 percent of processed celery in 1Based upon shipper, processor and field buyer attitudes toward possible state market order provisions as noted in Chapter 6 1966) contro severe these fit fr activi‘ hgngLir g consid Side hi the no: gain a( member: throug] (inalit; new; and re( tion. B] astivii relatit Vesetai PTOduce 33 of Mic} be achj Could i 177 1966) has declined from the 90 percent of Michigan celery production controlled in 1963. The Cooperative‘s effectiveness could be severely hampered by loss of one or two of its larger members. For these reasons, the Michigan Celery Promotion Cooperative would bene— fit from a marketing order that would coordinate the marketing activities of the Michigan celery industry. Long Run Growth to Nearby States. The Cooperative in the long run could consider expanding its organization to include celery producers out— side Michigan. Nearby producing areas in Ohio and New York hold the most promise for this expansion activity. The Cooperative could gain additional control of the summer celery supply and could provide members two market outlets (fresh and processing), reduced risk through improved market information, an enlarged price pool, and quality improvement assistance. These smaller celery production areas might also appreciate an opportunity to broaden their market outlets and reduce their risk by affiliating with a larger marketing organiza- tion. Broadening the organization's membership and marketing activities to include other vegetable crops was recommended abOVe relative to central packing. Growth into this recommended multi— Vegetable marketing organization need not be limited to Michigan producers. Year—Around Marketing Organization. In the long run, a merger of Michigan and Florida cooperative celery marketing activities might * be achieved. Noamtempt will be made here to detail how this merger could be accomplished, but possibilities include formation of a new single 01 local co< through < activitie order cor ties for order wor operatior industry have at 1 without 5 education by the or Prin COOPerati a year-er adVertisi achieved bllyers ea aVailable aVailabil re‘EStELbl Vest Seas WOuld be . Salesmen ( \ 1 See between t] ”€68 91_( 178 single organization, organization of a super cooperative with present local cooperatives retaining considerable autonomy, or arrangement through contractual agreement concerning only celery marketing activities. It is also possible that a federal celery marketing order could be used to facilitate a merger of celery marketing activi— ties for these two COOperative organizations. The use of a federal order would not be necessary to an organizational merger or its operation. However, assuming attitudes of the Michigan celery industry toward a state marketing order, as presented in Chapter 6, have at least some transferability to a federal order, a merger without a federal order could likely be achieved most readily. The educational program to merge the two cooperatives would be facilitated by the organizational similarities between the two groups.1 Principal advantages of merging Michigan and Florida celery COOperative marketing activities would be those attainable through a year—around marketing program. Possible economies of scale in adVertising, promotion and actual selling activities could be achieved by combining programs. It would not be necessary to remind buyers each season that celery from the respective areas would be available as the group's promotion could feature year—around product availability. Fresh and processing buyers would not need to re—establish contacts in Florida and Michigan producing areas as har- vest seasons shifted since this contact and associated negotiations would be with a single organization Selling celery from both areas. Salesmen could be hired by this firm to assist in selling celery the l .. . . . . . . . See Chapter 2, pages 18—21 for a discus51on OfISlmllarltleS ‘ between the Michigan and Florida celery COOperatives and Chapter 5, pages 9l—9h and 99 for additional detail concerning this recommendation. year 2 suppl: mgbi ance C market are a] Michig not f2 includ expane mixed demand T tive t activi differ Produc lacks may be north they. one-ha WOuld at tin Southe \ 1 detail 179 year around rather than seasonally for each area. Year-around supply contracts could be made by this firm with fresh and process- ing buyers which would reduce risk for purchasers and provide assur— ance of a market outlet for the producers. The possibilities for expanding a merged Florida—Michigan celery marketing cooperative into a multi-vegetable marketing organization are also recommended as a means of long—run growth. On the whole, Michigan celery shippers, processors and field buyers generally did not favor expansion of producer cooperative marketing efforts”to include a number of vegetables. However, an advantage of such an expansion to the organization includes the capability of offering mixed loads year around, for which there is an apparent market demand.1 There are a number of disadvantages or potential problems rela- tive to a merger of Florida and Michigan celery cooperative marketing activities that merit discussion. The principal problem is the difference in celery quantity produced by the two areas. Florida produces celery on 11,000 acres and Michigan on 2,000 acres. Michigan lacks an adequateisupply of summer celery to meet commitments that may be opened by the larger Florida celery market. However, if other north central and eastern celery producers joined the organization, they, together with Michigan, would produce celery on approximately one—half the acreage on which Florida growers produce celery, which Would increase the feasibility of the organization. The organization, at times, would also have problems of short supply as northern and southern harvest seasons have not historically had sufficient harvest 1See Chapter 2, page 17 and Chapter 6, page 139 for additional detail. overlap and stor these di Michigar. would jc Mic to form possible from Flo Michigan mutually develOpe Man long run tive to in these Packing. The iZed Com activiti. orient-lat: 180 overlap to meet probable supply commitments. Increased production and storage for short periods would be possible and could overcome these difficulties. However, whether celery producers outside Michigan and Florida, especially in New York, New Jersey and Ohio, would join this organization was not determined. Michigan and other northern celery producers might be reluctant to form a year-around marketing organization due to Florida‘s possible organizational dominance. This dominance could result from Florida's nine—month celery marketing SeaSOn as compared to Michigan‘s three-month marketing season. Techniques to arrive at a mutually satisfactory total marketing effort would need to be developed. Many of the recommendations presented above depend upon the long run outlook for Michigan celery production, particularly rela- tive to harvest mechanization. There is a need for additional research in these areas and into quantification of the economics of central packing. The third chapter is of particular relevance to other special— ized commodity groups as they seek to develop their marketing activities. The study also emphasizes the importance of a growth orientation for continuing success and Service. LIST OF REFERENCES (I: WEE-U 100 ll. 12. 13. lb. LIST OF REFERENCES Agricultural Markets in Change. Agricultural Economic Report Number 95, U. S. Department of Agriculture, Economic Research Service, 1966. Agricultural Statistics. U. S. Department of Agriculture, Washington, D. C.: U. S. Government Printing Office, 1953, 1965. Babb, E. M., and others. "Federal Market Orders: Present and Potential Uses." Mimeo EC—238, Cooperative Extension Service, Purdue University, Lafayette, Indiana, December, 1961. Backman, Jules. Price Practices and Price Policies. New York: The Ronald Press Company, 1953. Bain, Joe S. Price Theory. New York: Henery Holt and Company, 1952. Bias, Jack E., Executive Vice President, Grower-Shipper Vegetable Association of Central California. Personal correSpondence, September 30, 1965. Botts, Willard E. "How Florida Markets a $20 Million Celery Crop." American Vegetable Grower, Volume 13, Number 2, February, 1965, pp. 52-54. Brooke, D. L. and G. H. Jung. Market Organization and Operation of the Florida Celery Industry. Bulletin 709, Agricultural Experiment Stations, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, Florida, April, 1966. Central Coast Vegetable Report. Federal State Market News Service, U. S. Department of Agriculture, Agricultural Marketing Service, Fruit and Vegetable Division, 1963—1967. Cochrane, Willard W. "Advertising...Factory or Fancy?" Farm Policy Forum, Volume 8, Number 5, Iowa State College Press, Ames,Iowa, Summer, 1965, pp. 28-32. "Daily Market Reports." Published by the Michigan Celery Promo— tion COOperative, Inc., 190 Wood Street, Muskegon, Michigan, 1963, 1961+, 1965, 1966, 1967. DeLoach, D. B. "Adopting Market Organization to Changing Requirements," Journal of Farm Economics, Volume VI, Number 2, December, 1958, pp. 1525-1538. Drost, Albert, and John K. Trocke. "Michigan Celery Industry." Unpublished manuscript, no date. Eding, Ron. "Celery Marketing in Michigan." A term paper sub— mitted for Agricultural Economics A27, Michigan State University, East Lansing, Michigan, December 8, 196%. 182 15. 16. 17. 18. 19. 20. 21. 22. 23. 2A. 25. 26. 27. 183 Farris, Paul L. "Building Bargaining Power--Economic Considera- tions." American Cooperation, 1963, pp. 85—91. Food Consumption of Households in the North Central Region. Household Food Consumption Survey 1966, Report Number 3, U. S. Department of Agriculture, washington, D. C., Decemben 1955. Food Consumption of Hbuseholds in the Northeast. Household Food Consumption Survey 1955, Report Number 2, U. S. Department of Agriculture, washington, D. C., December, 1956. Food Commmmption of Households in the South. Household Food Con- sumption Survey 1955, Report Number A, U. S. Department of Agriculture, washington, D. C., December,l956. Food Consmmption of Households in the United States. Household Food Consumption Survey 1955, Report Number 1, U. S. Department of Agriculture, Washington, D. 0., December, 1956. Food Consumption of Households in the west. HouSehold Food Consumption Survey 1955, Report Number 5, U. S. Department of Agriculture, washington, D. C. December, 1956. Fruit and Vegetable Market News Weekly Summaryz Shipments—Unloads. Federal State Market News Service, U. S. Department of Agri- culture, Agricultural Marketing Service, Fruit and Vegetable Division, 1963-1966. Godwin, Marshall R., and William T. Manley. Customer Preference Appects of Competition Between Florida and California Celery. Bulletin 6h8, Agricultural Experiment Stations, University of Florida, Gainesville, Florida, June, 1962. Godwin, Marshall R. "Competitors in the Celery Market." Agricultural Economics Mimeo Report 59-6, Florida Agricultural Experiment Stations, February, 1959. Howard, John A. Marketing Theory. Boston: Allyn and Bacon, 1965. Keller, R. E. Marketing Michigan Celery. Annual Summary (l9A7- 1966), Market News Service on Fruit and Vegetables, U. S. Depart— ment of Agriculture, Consumer and Marketing Service, and the Michigan Department of Agriculture, Marketing Division, cooperating, Benton Harbor, Michigan, l9A7-l966. Korpela, Allan E. Federal Farm Law Manual. Oxford, New Hamp- shire: Equity Publishing Corporation, 1956. Lanzillotti, Robert F. "The Superior Market Power of Food Processing and Agricultural Supply Firms—-Its Relation to the Farm Problem." Journal of Farm Economics, December,l960, pp. 1228-12u7. 3h. 184 28. La Scala, Anthony J., member of Sleepy Hollow Produce Growers, Inc., Goshen, New York. Personal correSpondence, November 27, 1967. 29. Leftwich, Richard H. The Price System and Resource Allocation. Second edition revised, New York: Holt, Rinehart and Winston, 1961. 30. Lessiter, Frank. "Nfichigan Once Again Celery Leader." Michigan State University Information Services news release to Farmer Cooperatives, East lensing, Michigan, 1963. 31. "Marketing California Celery." U. S. Department of Agriculture, Fruit and Vegetable Division, Market News Branch, Sacramento, California, 1963-1966. 32. Michigan Agricultural Statistics. Michigan Department of Agriculture cooperating with the U. S. Department of Agriculture, Michigan CrOp Reporting Service, Lansing, Michigan, l9h7-l966. 33. Michigan celery field buyers. Personal interviews with selected field buyers of Michigan celery, 1965 and 1966. 3A. Michigan celery processors. Personal interviews with selected processors of Michigan celery, 1965 and 1966. 35. Michigan Celery Promotion Association. Minutes of Board meetings and annual reports, 1957-1962. 36. iMichigan celery shippers. Personal interviews with nine selected 'Michigan celery shippers, l965. 37. Ogren, Kenneth E. "Market Development for Farm Products." Paper presented at the l3th Conference of International Association of Agricultural Economists, Sydney, Australia, August 2l-30, 1967, distributed by the Economic Research Service, U. 3. Depart- ment of Agriculture, washington, D. C. 38. "Organization and Competition in the Fruit and Vegetable Industryl" National Commission on Food Marketing, Technical Study Number A, June,l966. 39. Policy—Organization Handbook. Prepared'by John K. Trocke, Michigan Celery Promotion Cooperative, COOperative Extension Service, Michigan State University, 196A, 9 unnumbered.pages. 80- "Quality Policies and Procedures." Michigan Celery Promotion Cooperative, Muskegon, Michigan, June I, 1965. Al. "Sales Drop: Vegetable Growers Face Competition from Cans." Michigan State News, East Lansing, Michigan, November 27, 1967, page 7. 115. L6. .’:‘ WFF’PICMD 3.1.? QUE—'9 A2. A3. AA. A5. A6. A7. A8. A9. 50. 51. 53- 5A. 55- 185 Seelig, R. A. Celery. United Fresh Fruit and Vegetable Asso— ciation, 777 lAth Street, N. W., Washington, D. 0., August, 1961. Seelig, R. A. Celery. United Fresh Fruit and Vegetable Asso- ciation, 777 lAth Street, N. W., washington, D. 0., January, 1953- Self-Help Stabilization Programs with Use of Marketing Agreements and Orders. Agricultural Stabilization and Conserva— tion Service, U. S. Department of Agriculture, U. S. Government Printing Office, November, 1961. Shaffer, James D. Consumer Purchase Patterns for Individual Fresmi Frozen and Canned Fruits and Vegetables. Michigan State University Consumer Panel Bulletin Number 8, Department of Agricultural Economics, Michigan State University, East Lansing, Michigan, 1962. Stachwick, George T. Personal interview, August 30, 1965. Stalk Talks. Volume III, Number 38, December 22, 1966. A newsletter published by Michigan Celery Promotion Cooperative, Inc., 190 WOOd Street, Muskegon, Michigan. Stalk Talks. Volume IV, Number A, June 9, 1967. A newsletter published by Michigan Celery Promotion Cooperative, Inc,, 190 Wood Street, Muskegon, Michigan. Thomas, A. L., local representative, Federal—State Market News Service, Rochester, New York. Personal correSpondence, September 28, 1965 . Trocke, John K. Celery Marketing Program 1963. Cooperative Extension Service, Michigan State University, November 15, 1963. Trocke, John K. Celery Marketing Program 196A. Cooperative Extension Service, Michigan State University, November 30, 196A. Trocke, John K. Celery Marketing Program 1965. Cooperative Extension Service, Michigan State University, December, 1965. Trocke, John K. Celery Production Costs and Returns in Michigan. Marketing Bulletin 33, Cooperative Extension Service, Michigan State University, East Lansing, Michigan, no date. Trocke, John K. "Celery Success Story." Unpublished manuscript, no date. Trocke, John K. "DISCOVering Price—~A Chance or Challenge." A paper presented at a marketing conference held at thhigan State University, East Lansing, Michigan, March 9; 1965- 56. 57. 58. 59- 186 Trocke, John K. "Report of Florida Trip to Investigate Organi- zation, Policies, Operation of the Florida Celery Industry." Mimeo, Michigan State University, East Lansing, Michigan, 196A. United States Standards for Celepy. U. S. Department of Agri— culture, Agricultural Marketing Service, Washington, D. 0., April 7. 1959. "U. S. Food Consumption, Sources of Data and Trends, l909-l963." 'U. s. Department of Agriculture, Statistical Bulletin Number 36A, June, 1965. ”Vegetables--Fresh Market." Annual Summary (196A and 1966), Crop Reporting Board, U. S. Department of Agriculture, 1965—1967. APPENDIX A 188 APPENDIX TABLE l.——Uhited States, California, Michigan and New York celery production during the Michigan marketing season,a average of 1963-1966. Within California Michigan New York United States Year Production Production Production Production Season (1,000 th.) (1,000 th.) (1,000 th.) (1,000 th.) Early Summer 1,238 A21 d 1,803 Late Summer c c 700 931 Early Fall c 333 c A77 Late Fall 368 c c 368 Total 1, 606 75A 700 3, 579 aThe within—season designations of Early Summer, Late Summer, Early Fall and one-eighth of Late Fall production are assumed to correSpond to the Michigan marketing season. California was the only producer listed in the Late Fall period and made shipments during the entire period—-October through January. Michigan's marketing season ends after the first two weeks of October, hence the inclusion of one- eighth of Late Fall production. The season designations and method of classifying production used by the U. S. Department of Agriculture ‘ gives the appearance of greater Seasonal variation than actually occurs as noted in Table 2 of the text. bIncludes production from states other than the three shown. These are Massachusetts, Ohio, New Jersey, Colorado, washington and Pennsylvania. CProduction begun in a period above carried into this period. dNo marketed production was listed in this period. Source: (59) 189 APPENDIX TABLE 2.-—Celery unloads in Al cities by months, averaged over 1963-1966. Rail and Truck Unloads of Celery Month (Cars and Carlot Equivalentsa‘) January 2,0A6 February 1,835 March 2,157 April 2,100 May 1 , 882 June 1. , 8A2 July 1,892 August 1:693 September 1,782 Octdber 1:827 November 2:352 December 2:281 aA carlot of celery is 600 16-inch crates of approximately 60 pounds each. Source: 190 APPENDIX TABLE 3.—-Annual United States celery production, 19A7- 1966. Unmarketed Marketed Production Production Production Year (1,000 th.) (1,000 th.) (1,000 th.) 19A7 11,332 0 11,332 19A8 12,5A2 557 11,985 19A9 12,678 231 12,AA7 1950 13,376 257 13,119 1951 1A,091 12A 13,967 1952 1A,118 68 1A,o5o 1953 1A,335 183 1A,152 195A 15,126 A05 1A,721 i955 15,301+ 66 15.238 1956 16,232 859 15,373 1957 15.137 0 15,137 1958 1A,26o O 1A,260 1959 15,613 825 1A.788 1960a 15,167 0 15,167 1961 1A,973 136 14.837 1962 lA,l29 O 14:129 1963 1A,Ao3 253 14:150 196A 1A,o73 183 13:890 1965 1A,265 13A 14,131 1966 1A,573 297 142276 éBeginning 1960, includes Hawaii. Source: (2) 191 APPENDIX TABLE A.--Michigan Celery Promotion Cooperative actual and estimated average f.o.b. shipping point price per crate of 2% size celery by week of their marketing season, 1963-1967.a week of M.C.P.C. 1963A 196Al~ 1965 A 1966 A 1967 Marketing P P P P P P P P P '19 Season ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) l 3.08 3.62 A 00 3.97 A.00 3.8A A.25 A.17 5.00 5.06 2 2.79 b A 00 3.70 A.00 3.57 A.A2 A.6A A.A2 A.5A 3 2.33 2.35 3 13 3.08 3.58 3.A2 A.50 A.67 A.00 3.37 A 2 00 2.15 2 A2 2.51 2.63 3.01 A.50 A.3A A.21 3.26 5 2 00 2.0A 2 25 2.22 2.50 2.Ao A.50 A.A3 A.25 3.95 6 2 00 2.03 2 25 2.17 2.58 2.33 A.50 A.A6 A.25 A.33 7 2 00 1.96 2 67 2.63 2.75 3.1A A.38 A.36 3.58 A.17 8 2 00 2.30 3 10 2.95 2.38 2.80 3.88 3.63 2.96 2.96 9 2 00 2.02 3 lo 2.01 2.25 2.33 3.75 3.A8 2.75 2.76 lo 2 25 2.30 3 10 3.0A 2.25 2.29 3.75 3.51 3.00 2.72 11 2 25 2.19 3 23 2.88 2.70 2.55 3.75 3 38 A.13 3.A8 12 2 A2 2.65 3 A2 3.35 3.00 3.13 3 63 3 A9 3.63 3.73 13 2.50 2.AA 3 03 3.20 2.75 2.93 3 17 3 37 3.0A 2.95 1A 2.50 2.11 2 58 2.A5 2.50 2.80 2.75 3 06 3.00 3.18 15 2.A5 2.1A 2 50 2.A7 2.50 2.70 2.75 3 3A 3.38 3.35 16 2.50 2.A3 c c c 3.83 3-79 aEstimated prices for weeks 1 through 7 were computed using the following regression equation, whose coefficients were computed using 1963-1966 data: let+1= 2.7915 - 0.0019Qm + 0.9680met EStimated prices for week 8 to the end of the marketing season were computed using the following regression equation, whose coefflCIents were computed using 1963—1966 data: P2mt+1=97 1591 — 0.0028Qm-t0.23l5Pm7‘+ 0.5216Psft + 0.123APoft For additional detail see Chapter A. bThe second week of the 1963 M. C. P. C. marketing season was drOpped due to missing M. C. P. C. combined inventory and receipt observation, Qm. CNo price quoted by the Cooperative. Source: Actual prices obtained from (11, 25). 192 APPENDIX TABLE 5.—-Carlot rail shipments of Santa Maria and Salinas, California celery by week of the Michigan Celery Promotion Cooperative marketing season, 1963—1966.a Year 1963 196A 1965 1966 Week of Santa Santa Santa Santa M.C.P.C. Maria Salinas Maria Salinas Maria Salinas Maria Salinas Season (Carlots) (Carlots)4_ (Carlots) (Carlots) 1 -1 95 7O 87 35 83 28 11A 90 1 87 137 88 58 90 A9 122 118 2 7A 1A2 110 77 87 51 12A 131 3 50 81 78 80 70 5A 59 73 A 39 50 5A 6A 60 A1 51 67 5 22 69 3A 31 26 37 A6 108 6 17 8A 26 A1 26 20 56 71 7 6 62 31 51 31 A9 82 69 8 20 68 16 50 10 A5 61 A5 9 22 A1 1A 39 6 A1 68 81 10 28 66 1A 62 1A A5 72 113 11 6 72 2A 75 22 A6 62 11A 12 11 10A 25 6A 23 78 62 150 13 1A 90 11 79 15 58 38 108 1A 19 112 32 7A 22 78 37 15A 15 25 126 35 127 A0 86 21 208 16 26 216 51 178 A3 107 A7 189 8‘Santa Maria includes that district plus other minor central California shipments. A carlot contains 600-16 inch crates per car. 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