Farm price margins constructed under alternative price calculation
Hyunok Lee*, Daniel Sumner**, and Jessica Vergati*** 1
June 2012
*********************************************
This research was funded by California Department of Food and Agriculture, Specialty Crop
Block Grant Program (SCBGP) Grant CFDA #10.170: “Measuring and Understanding the
Pattern of Margins between Farm and Retail Prices for California Specialty Crops to Increase
Growers Returns”
**********************************************
Issues and background
In the past decades, the increase in retail fruit price has been much higher than the increase in
other retail food prices. At the same time, the price received by fruit growers has either
remained constant or risen only slightly. This price divergence between retail and grower prices
has been widely accepted and there has been some concern about this widening price margin
among farm policy analysts.
Agricultural products are linked from farms to consumers through food marketing systems such
as food manufacturing, wholesaling, and retailing. At each level of marketing system, the cost of
marketing services are added, such as transportation, processing, and distribution of farm
products, and they constitute a substantial portion of food prices.
We present two figures which describe the historical movement of aggregate price indices. The
first figure presents annual Consumer Price Indexes (CPI) for urban consumers for general food
and two different food bundles, fresh fruit and fresh vegetables, for the period of 1950-2009 with
the index values based on the prices of 1982-84. All three CPIs increased together at a relatively
low rate until the early 1980s. However, since then, all three indexes have increased at
considerably different rates, showing that fresh produce prices rose far more than general food
prices. Compared to 1982 prices, the CPIs for fresh fruit and vegetables rose 3.5 times and 3.1
times in 2008, respectively, while the general food index rose 2.3 times.
The second figure presents the producer price index (PPI) and the consumer price index (CPI)
for fresh fruit, representing the general producer price and retail price levels for fresh fruit. The
1
*Department of Agricultural and Resource Economics, University of California, Davis; **Department
of Agricultural and Resource Economics, University of California, Davis and University of California
Agricultural Issues Center;*** University of California Agricultural Issues Center.
1
diversion between these two price indices can be consistent with the widening spread between
retail price and farm price. Up to the early 1980s, the producer price index (PPI) (representing
farmgate prices) is slightly higher than the consumer price index (CPI). However, after this
period, the CPI rose very rapidly while there was little change in the PPI. As a result, the gap
between the CPI and PPI widened. These two graphs show the central point of our project—for
the past two decades, fresh fruit retail prices have risen more than any other food groups. On the
other hand, producer-received prices have either decreased or changed little.
Figure 1.
Historical Consumer Price Index for Urban Consumers
350
300
General food
Fresh fruit
Fresh vegetables
250
200
150
100
50
0
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Figure 2.
350
Historical Consumer Price Index and Producer Price Index
for Fresh Fruit
300
CPI for fresh fruit
250
PPI for fresh fruit
200
150
100
50
0
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Source: BLS http://data.bls.gov/PDQ/servlet/SurveyOutputServlet
2
Table 1 below presents the retail farm price margins for fresh fruit since 1997. Table 2 presents
farm shares in retail prices for various commodity categories. Compared to the overall market
basket, fresh fruit tends to generate a relatively low farm share, whereas animal (meat and
products) tend to generate a relatively high farm share. However, the lowest farm share was
generated by the cereal and bakery products, which in general are processed and contain high
value added. Table 2 confirms our usual expectation that product perishability lowers the farm
share (such as for fresh fruit or vegetables) and that more processed products are associated with
lower farm shares.
Table 1. Farm share (%) in retail price for fresh fruit
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
17.7 17.3 16.5 15.7 15.8 16.4 16.7 19.3 16.6 17.6 16.6 15.8 14.9 15.9
Table 2. Farm share in retail price for major commodity groups
2008
2009
2010
19.8
22.5
28.8
31.6
25.3
31.9
38.4
42.3
38.0
40.0
6.9
7.1
14.9
15.9
19.0
21.1
15.3
15.6
1
Market basket
Farm value-retail cost (%)
22.9
Meat products
Farm value-retail cost (%)
31.2
Dairy products
Farm value-retail cost (%)
33.2
Poultry
Farm value-retail cost (%)
41.4
Eggs
Farm value-retail cost (%)
46.3
Cereal and bakery products
Farm value-retail cost (%)
9.6
Fresh fruit
Farm value-retail cost (%)
15.8
Fresh vegetables
Farm value-retail cost (%)
18.7
Processed fruits and vegetables
Farm value-retail cost (%)
17.0
Source: Agricultural Outlook: Statistical Indicators, January 2011
http://www.ers.usda.gov/publications/agoutlook/aotables/
3
Previous studies
Stewart (2006)2 investigated the farm share of consumer food expenditures using the updated
market basket data for fresh fruits and fresh vegetables. His study found that the farm share of
consumer food expenditures has been shrinking and the farm share for these two commodity
groups has decreased less than previously believed. The updated estimates show a larger farm
share than the current, unadjusted data series. The unadjusted data series estimates the 2004 farm
share at 19 percent for fresh vegetables and 20 percent for fresh fruit; the updated consumer
baskets yield farm shares of 23.5 percent for fresh vegetables and 26.6 percent for fresh fruit.
His study indicates that the existing (unadjusted) series has overstated the decrease in farm share.
Leibtag (2006, 2010)3 investigated the relationship between the emergence of large discount
food stores and retail food price. Nontraditional stores, such as mass merchandisers,
supercenters, club warehouse and dollar stores have increased their presence over the past
decades and often present lower-priced alternatives to conventional supermarkets. According to
Martinez (2007)4, the U.S. food system has the increasing presence of nontraditional grocery
retailers, and these developments have contributed to sharp increases in concentration in the
grocery retail sector, changing conventional relationships among retailers, wholesalers, and
manufacturers. The share of food retail by type of outlet indicates that nontraditional retail has
increased its 17 percent share in consumer food retail purchase in 1994 to 32 percent in 2005.
He pointed out that the current CPI for food does not fully take into account the lower price
option of nontraditional retailers and thus a gap exists between price changes as measured using
scanner data versus the CPI estimate. Comparisons of identical items, at the Universal Product
Code (UPC) level, show an expenditure-weighted average price discount of 7.5 percent (with
differences ranging from 3 to 28 percent) lower in nontraditional stores than in traditional stores.
Hayden Stewart, “How Low Has the Farm Share of Retail Food Prices Really Fallen?” Economic
Research Report No. (ERR-24) 23 pp, August 2006
3
Ephraim Leibtag, The Impact of Big-Box Stores on Retail Food Prices and the Consumer Price Index,
Economic Research Report No. (ERR-33) 41 pp, December 2006
Ephraim Leibtag, Catherine Barker, and Paula Dutko How Much Lower Are Prices at Discount Stores?
An Examination of Retail Food Prices, Economic Research Report No. (ERR-105) 51 pp, October 2010
2
4
Steve Martinez, 2007. The U.S. Food Marketing System: Recent Developments, 1997-2006, Economic
Research Report No. (ERR-42) 57 pp, May 2007 http://www.ers.usda.gov/Publications/ERR42/
4
Possible causes for farm share for fresh fruits
Among the possible explanations for the relatively low farm share for fresh fruits, a few
stand out.

Existence of retailers’ market power: There are many studies examining this possibility
and past research indicates the existence of retailers’ market power. Nevertheless, this is not
fully convincing given the high level of competition among grocery retail chains. However,
this hypothesis would be consistent with falling farm income.

Increasing marketing costs: The increase in marketing cost can be due to two sources.
1) Increase in regulatory compliance (or institutional) costs: These regulations may
be associated with public health and exotic pest outbreaks. The increasing levels
of regulations are placed in response to higher awareness of potential losses from
pest outbreaks or other food contaminations. Firms incur costs from regulation
and these costs are passed down to consumers in the form of higher retail prices.
2) Implicit quality improvement: There has been inexplicit quality improvement of
products, and this improvement is reflected in the retail price but not in product
counting. For example, consumers demand better and fresher quality of products
along with improvement in post-harvest technology. Thus, a higher share of cost
is allocated to this process. Quality improvement incurs costs and these costs are
reflected in higher retail prices, which subsequently increase the margin between
retail and producers’ prices.

Price accounting: In price accounting, there are three layers of issues.
 Retailers’ constant pricing behavior: Fruits are available throughout the year
due to the expanded global market. There is an incentive for retailers to
maintain the same price during the off-season as during the season. Keeping
the retailers’ profit constant and the presumption that off-season producer
prices are higher than in-season producer prices, such pricing behavior leads
to higher in-season retail prices and lower off-season retail prices. As such
behavior intensifies (and accordingly, prices become more uniform
throughout the in-season and off-season), the gap between retail price and
producer in-season price widens.
 Overestimated retail prices due to the expanding share of nontraditional
stores: BLS data do not accurately reflect the expanding share of
nontraditional retailers, e.g., big-box stores, which tend to offer lower prices
than traditional retailers (Leibtag, 2006 and 2010)5.
 Longer season in retail markets: Even in the absence of constant pricing,
falling farm shares can be realized as fresh produce is increasingly available to
consumers (because of the increase in off-season imports). Retail price data
5
Ephraim Leibtag, The Impact of Big-Box Stores on Retail Food Prices and the Consumer Price Index,
Economic Research Report No. (ERR-33) 41 pp, December 2006
Ephraim Leibtag, Catherine Barker, and Paula Dutko How Much Lower Are Prices at Discount Stores?
An Examination of Retail Food Prices, Economic Research Report No. (ERR-105) 51 pp, October 2010
5
include non-season prices which may be relatively high compared to the
season price. However, producer prices include values only during the
season.
Due to the BLS’s retail pricing calculation, retail prices are overestimated, which results in
widening marketing margins over time. The possibility of retail prices being overestimated is
based on the following facts. Retail prices are mostly collected from BLS. Grower-received
prices are collected from USDA. Increased imports during the off-season and the wider
availability of early and late fruit varieties expand the availability of fruits at the retail level
beyond the period that is considered traditionally as a season for each fruit. Thus, retail prices are
collected over the span that expands beyond the season.
Impact on farm income
Farm share in retail price has decreased over time. Retail prices increased more rapidly than
farm prices or general food prices, and the farm share in retail value has decreased over time.
Given rising retail value, the falling farm share does not necessarily mean a reduction in
producers’ net profit. Producers’ net profit may be either unchanging or falling.
Issues regarding BLS commodity prices and indexes
The primary issue regarding price data in the context of grower margins concerns aggregation
issues surrounding retail prices.
Commodity level prices and price indexes are available at the grower as well as retail levels
mostly from USDA and BLS. USDA collects and provides market level price data for many
major agricultural products. Even though USDA provides data at all marketing levels, their data
effort especially focuses on the grower level. For the retail level, USDA does not provide a
comprehensive data base, and often relies on BLS sources. For example, grower margins
provided by USDA are based on BLS retail price data. Thus, in understanding and interpreting
these values, it is very important to understand how these BLS price data are generated.
All prices or indexes published by BLS (as well as other places) are the products resulting from
some type of aggregation process. Publicly accessible data are usually generated from initially
disaggregated information. That is, monthly prices can be created by aggregating weekly or
daily prices, or in the case of spatial aggregation, urban prices in a region, for example, can be
created by aggregating prices collected from designated urban locations in that region. In
general, the data collection agency initially collects data on a daily, weekly or monthly basis
(depending on the transaction of commodity) at many locations of the country for a given
commodity. In general, this initially very detailed data information is further summarized (or
aggregated) over time and locations, which then is published as monthly or annual data for a
region or the nation as a whole.
BLS usually uses the simple average method to construct annual data, rather than the quantityweighted method. USDA uses both weighted average and simple average methods in the
construction of annual grower-received prices. (Shipment quantities are supplied by USDA’s
Agricultural Marketing Service.) During the peak season, market quantities tend to be high and
6
prices tend to be low, and during the early or late season, market quantities tend to be small and
prices are usually high. A similar situation extends even to off-seasons. In the past decades,
imports of fresh fruit have continued to increase and fresh fruits have been more readily
available during the off-season. Naturally, off-season products consist mostly of imports, and
off-season prices are typically higher than the season price. This implies that the annual
consumer prices generated using in-season as well as off-season prices are expected to be higher
than the typical price that would prevail during the season. The consequence of the simple
average (say, a simple average of monthly prices) method used in generating annual retail prices
is the upward bias of the price compared to say, the weighted average.
USDA relies on BLS for retail price information in their analysis of price, including marketing
margins. For instance, the Economic Research Service obtains retail data on national average
prices (U.S. city-average price data) from the BLS and uses them in their calculation of grower
margins (published in the USDA yearbook for fruits and nuts). (For documentation of data
collection descriptions, refer to the website:
http://www.ers.usda.gov/Data/FarmToConsumer/pricespreadsdoc.htm) The implication of these
higher retail prices in farm share calculation may lead to a consistently biased number, in this
case, a lower farm share.
Construction of weighted prices
We have selected five representative fruits as our focus commodities: oranges, apples, grapes,
peaches and strawberries. These five fruits represent between 60–70 percent of cash receipts for
all fruits received by U.S. fruit farmers.
7
Value share for selected fruits in total cash receipt from all fruits
Year
Orange
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0.23
0.22
0.22
0.24
0.23
0.22
0.19
0.19
0.22
0.22
0.20
0.17
0.16
0.17
0.18
0.18
0.17
0.16
0.21
0.14
0.16
0.15
0.15
0.14
0.12
0.14
0.14
0.12
0.13
0.12
0.12
Apples Grapes
0.12
0.13
0.14
0.13
0.16
0.14
0.14
0.15
0.12
0.12
0.13
0.18
0.18
0.16
0.15
0.16
0.18
0.13
0.13
0.13
0.13
0.12
0.13
0.15
0.14
0.13
0.14
0.14
0.17
0.13
0.13
0.23
0.22
0.23
0.19
0.16
0.15
0.18
0.19
0.20
0.22
0.20
0.20
0.21
0.23
0.21
0.21
0.23
0.28
0.24
0.28
0.28
0.28
0.26
0.23
0.25
0.26
0.23
0.23
0.21
0.23
0.21
Peaches Strawberries
0.06
0.07
0.04
0.05
0.05
0.05
0.05
0.04
0.05
0.04
0.05
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.05
0.04
0.04
0.04
0.04
0.04
0.03
0.03
0.04
0.04
0.04
0.05
0.07
0.07
0.07
0.07
0.08
0.08
0.07
0.07
0.07
0.07
0.08
0.08
0.09
0.09
0.07
0.08
0.09
0.11
0.09
0.10
0.11
0.12
0.11
0.10
0.11
0.12
0.12
0.14
0.13
Sum of
Shares
0.69
0.70
0.70
0.69
0.67
0.64
0.64
0.66
0.65
0.67
0.65
0.67
0.67
0.68
0.68
0.68
0.69
0.69
0.72
0.70
0.70
0.69
0.68
0.68
0.66
0.66
0.66
0.64
0.66
0.66
0.63
8
Value share of selected fruits in total fruit
receipt
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0.00
Oranges
Apples
Grapes
Peaches
Strawberries
Source: Fruit and tree nut yearbook 2011 Economic Research Service, USDA
9
Comparison of weighted and unweighted retail and grower prices
Description of weighted and unweighted prices


Real prices are calculated using the CPI
Unweighted annual prices are annual prices which are published by USDA. USDA
calculated these prices by simply averaging monthly prices.
A weighted annual price, calculated by Lee, is a weighted average of monthly prices with
weights equal to monthly shipments.
The months used in calculation include only the months during the domestic season for
the fruit in question. In general, grower prices are available only for the domestic season.
However, often times retail prices are reported during the off season for the imported
products. Thus, we used the prices only for the months corresponding to the domestic
season to develop compatible retail prices in the comparison of retail and grower prices.
ERS figures are used (below ERS numbers are labeled as unweighted prices) as a
benchmark.
To obtain representative monthly shipments during the season, for table grapes, oranges,
and fresh peaches, we use the three-year average (2007, 2008, 2009) of U.S. monthly
shipments (data source: AMS/USDA). For fresh strawberries and apples, we use
historical monthly shipment data published by ERS.




Apples
1.2
Weighted and unweighted retail and grower prices of apples in real value:
weights=monthly shipments of domestic production
1.0
0.8
0.6
weighted retail $/lb
weighted grower $/lb
unweighted retail $/lb
unweighted grower $/lb
0.4
0.2
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0.0
10
Grower percentage share in retail price of apples calculated
using weighted and unweighted prices: weights=monthly
shipments of domestic production
35
30
25
20
15
10
Share using weighted price
5
Share using unweighted price
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0
500
7,000
Annual supply of apples 1980-2009
450
6,000
400
Imports, Million pounds
300
4,000
250
3,000
200
Imports
150
Production, Million pounds
5,000
350
2,000
Utilized Production
100
1,000
50
0
0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998 2000
2002 2004
2006 2008
11
Data source:
Monthly retail fresh apple prices: BLS, Average price data, area=west urban, item=apples, red delicious, per lb.
Monthly grower fresh apple prices and U.S. monthly shipments of domestically produced apples: USDA,
Economics, Statistics and Market Information System, U.S. Apple Statistics, 2010,
http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1825
Points of observation on apple prices
 Both real retail and grower prices of apples tend to be steady with little fluctuation
over the last 30 years.
 Real retail prices range between 80 cents to a dollar and real grower prices fluctuate
near 20 cents.
 Weighted retail prices are in general higher than unweighted prices, but for grower
prices, these two pricing schemes make little difference.
 The share of imported apples in the US market is small; over the decades, the import
share fluctuates at around 5–6 percent.
 The grower share over the decades tends to be steady at around 25 percent. However,
the level of fluctuation increased after the early 1990s. Grower shares, which ranged
between 20–25 percent until the early 1990s, began to fluctuate in a wide range
between 20–30 percent in the recent two decades.
Fresh Peaches
1.6
Weighted and unweighted retail and grower prices of
peaches in real value: weights=monthly shipments of
domestic production
1.4
1.2
1.0
0.8
0.6
weighted retail $/lb
unweighted retail $/lb
weighted grower $/lb
unweighted grower $/lb
0.4
0.2
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0.0
12
Grower percentage share in retail price of peaches calculated
using weighted and unweighted prices: weights=monthly
shipments of domestic production
35
30
25
20
15
10
Share using weighted price
Share using unweighted price
5
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0
Data source:
Monthly retail price: BLS, U.S average, $/lb
Monthly grower received price: Fruit and Tree Nut Yearbook Spread Sheet, 2010, USDA/Economics, statistics and
market information system, http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1377
Monthly shipments: AMS/USDA, the season includes June through September, and their respective monthly
shipment shares are 24.4%, 31.2%, 28.1%, and 16.3%.
Annual peach supply (utilized production and imports), 1980-2009
Peach supply, 1980-2009
1,800
160
1,600
140
1,400
120
1,200
100
1,000
80
800
60
Imports
Utilized production
40
20
600
Production, million lbs
Imports, million lbs
180
400
200
0
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Source: USDA, ERS. Supply and utilization
13
Points of observation
 In real value, retail prices of fresh peaches have steadily gone up, while the grower prices
have been steady with little change. In real term, the retail price has gone up more than
50 percent over the last three decades.
 This implies that the grower share in retail price has been steadily falling. Roughly, the
grower share has fallen more than 40% percent since 1980.
 When prices are weighted by shipments, retail prices tend to be slightly lower than
unweighted prices while grower prices change little between these two sets of prices.
 In terms of grower share, weighted grower shares are in fact slightly lower than
unweighted shares.
Strawberries
3.0
Weighted and unweighted retail and grower prices of
strawberries in real value: weights=monthly shipments of
domestic production
2.5
2.0
1.5
1.0
0.5
weighted grower $/lb
unweighted retail $/lb
unweighted grower $/lb
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0.0
weighted retail $/lb
14
Grower percentage in retail price of strawberries calculated
using weighted and unweighted prices: weights=monthly
shipments of domestic production
60
50
40
30
20
Share using weighted price
Share using unweighted price
10
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0
Data source:
Monthly retail price: BLS, Monthly U.S. average
Monthly grower price: USDA/ERS/Economics, Statistics, Market Information System/U.S. Strawberry Industry
(95003)
Monthly U.S. fresh strawberry shipments (domestic production): USDA/ERS/Economics, Statistics, Market
Information System/U.S. Strawberry Industry (95003)
http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1381
Annual strawberry supply (utilized production and imports), 1980-2009
2,500
Annual strawberry supply, 1980-2009
200
180
1,500
160
Utilized production
140
Imports
120
100
1,000
80
60
500
Imports, million pounds
Production, million pounds
2,000
40
20
0
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
15
Source: USDA, ERS. Supply and utilization.



In real terms, grower prices have been steady while retail prices have risen considerably
(about 60 percent), even though they showed a slightly decreasing trend in recent years.
This implies that the grower share in retail price has been falling. The grower share has
fallen from more than 50 percent to about 30 percent over the three decades.
For fresh strawberries, between the weighted and unweighted prices, we found little
deviation for retail prices but large deviation for grower prices. Weighted grower prices
tend to deviate considerably from unweighted prices. Unweighted grower prices are
consistently about 15 percent higher than weighted grower prices, which causes about
a15–20% difference in grower share.
Table grapes
Weighted and unweighted retail and grower prices of grapes
in real value: weights=monthly shipments of domestic
production
2.0
1.5
1.0
weighted retail $/lb
weighted grower $/lb
0.5
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
0.0
16
Grower percentage in retail price of grapes calculated using
weighted and unweighted prices: weights=monthly
shipments of domestic production
35
30
25
20
15
10
Share using weighted price
Share using unweighted price
5
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
0
Data source:
Monthly retail price: BLS, U.S. city average, Thompson seedless
Monthly grower price: Fruit and Tree Nut Yearbook Spread Sheet, 2010, USDA/Economics, statistics and market
information system, http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1377
Monthly U.S. grape shipments (domestic production): AMS/USDA,
http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDc5075607
Movement of all grapes (except for organic) from California, season includes July though Novemenber and their
monthly respective shares are 17%, 25%, 23%, 20% and 15%.
Fresh grape supply (utilized production and imports), 1980-2009
2,500
Grape supply, 1980-2009
Million pounds
2,000
1,500
1,000
Utilized production
Imports
500
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Source: USDA, ERS. Supply and utilization.
17
 In real terms, grower prices have been steady while retail prices have gone up until 2006
(over 40 percent) and then begun to decrease, which also implies that the grower share in
retail price has fallen and then rebounded.
 For table grapes, in terms of deviation between the weighted and unweighted prices, we
found no consistent pattern for retail prices but a considerable deviation for grower
prices. Unweighted grower prices are consistently over 10 percent higher than weighted
grower prices.
 This also implies that the grower shares are higher under the unweighted price scheme.
Under the weighted price scheme, the grower share fell from 22 percent to about 15
percent (using weighted prices) by 2005, but since then has fluctuated between 13–22
percent.
Oranges
1.20
Weighted and unweighted retail and grower prices of
oranges in real value: weights=monthly shipments of
domestic production
weighted retail $/lb
weighted grower $/lb
1.00
0.80
0.60
0.40
0.20
1980/81
1981/82
1982/83
1983/84
1984/85
1985/86
1986/87
1987/88
1988/89
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
0.00
18
Grower percentage share in retail price of orange calculated
using weighted and unweighted prices: weights=monthly
shipments of domestic production
45
40
35
30
25
20
15
10
5
Share using weighted price
Share using unweighted price
1980/81
1981/82
1982/83
1983/84
1984/85
1985/86
1986/87
1987/88
1988/89
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
0
Data source:
Monthly retail price: BLS, U.S. city average,
Monthly grower price: Monthly equivalent on-tree returns received by growers, California, Fruit and Tree Nut
Yearbook Spread Sheet, 2010, USDA/Economics, statistics and market information system,
http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1377
Monthly orange shipments (domestic production): AMS/USDA,
http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDc5075607
Movement of California navel oranges by month, season includes Novembers though June next year and their
monthly respective shares starting from November are 10%, 9.8%, 13.2%, 12.8%, 16.1%, 18.1%, 12.4%, and 7.6%.
Annual navel orange supply (utilized production and imports), 1980–2009
Navel orange supply, 1980-2009
300
5,000
250
4,000
200
3,000
150
2,000
100
Utilized production
1,000
Imports, million lbs
Production, million lbs
6,000
50
Imports
0
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0
Source: USDA, ERS. Supply and utilization
19
 In real terms, grower prices have been steady while retail prices have gone up slightly.
 The comparison of weighted and unweighted prices shows that unweighted prices have
been slightly higher than weighted prices for both retail and grower prices.
 Unweighted grower shares are consistently higher than weighted grower shares. The
weighted grower share fluctuated around 15 percent until about 1999, but since then it
shows a slight downturn and fluctuates between 10–15 percent.
 Unweighted grower shares, showing a similar trend, fluctuated at around 20 percent
before the downturn and between 15–20 percent after the downturn.
Conclusions

Among the fruits we examined, real retail prices have gone up all except for apples.

On the other hand, real grower prices have been relatively steady or declining over the
time we examined.

With an exclusion of apples, grower shares have been also declining under both
weighted and unweighted schemes.

With the exception of apples, weighted real prices are lower for both retail and grower
prices. However, the divergence between weighted and unweighted real prices was
more pronounced for grower prices.

Among all fruits considered, the widest divergence between these two price
calculations was found with the grower prices for strawberries.

Our results show that grower shares were in general lower under the weighted price
scheme, suggesting that the ERS calculation may overestimate farm marketing margins.
20