A study of primary marketing costs for Manitoba potatoes

Abstract

This study is mainly concerned with marketing costs for potatoes between the farm and the wholesale in Manitoba for the 1958-59 crop season. First, the structure of the primary marketing system was briefly described. This was followed by a detailed study of the marketing services and costs. Items comprising primary marketing costs were grading, transportation, storage and sack charges. Cost estimates for these services were based on information collected from twenty-eight farms in the survey. The description of marketing services and costs was followed by a brief analysis of potato prices for the season. Total primary marketing costs were then compared with the potato prices for the season and for the last three years, 1956-1958. On the basis of evidence obtained, primary marketing costs formed about 41.1% of the average gross farm price of potatoes for the season. Wide dispersion was found in primary marketing costs between farms. It was also found that primary marketing costs formed a substantial proportion of the farm price for potatoes. This proportion was high when price was low and low when price was high. Total primary marketing costs were found to have a stronger influence than the wholesale margin on net returns to producers; and it was concluded that if producers could perform their marketing services more efficiently they might be able to modify the effect of the cost-price squeeze. There was also evidence to show that additional storage operations could be profitable. To test the feasibility of storing potatoes beyond a certain time limit would require further study of the storage mechanism.