Determination of the optimum location of grading and packaging of Manitoba potatoes

Abstract

The main objective of this study was to estimate the grading and packaging costs both at the farm and the wholesale levels and to determine, on the basis of these costs, the optimum location of the grading process. In addition. an attempt was made to evaluate the economics of hand grading versus machine grading at the farm level and, in the light of this comparison, to determine the size of the potato crop necessary to justify the purchase of a grading and packing machine. First, some major aspects of the production and marketing of potatoes, such as acreage, yield, varieties, harvesting, handling, utilization, method of sale and shipment, were described. Grading and packaging costs were then estimated, followed by conclusions, and some policy implications of the conclusions. Finally, some important related issues were discussed and suggestions were made for further research... On the basis of the information collected, the simple average grading cost by hand for a volume group up to 6,000 hundredweights was 26.5 cents per hundredweight as against 13.6 cents by machine for the same volume range. The difference of 12.9 cents per hundredweight between these two methods of grading was tested and found significant at both 5% level and at 1% level. It was also estimated that about 1,967 hundredweights of potatoes (approximately 24 acres) were necessary to justify the purchase of a grading and packaging machine, costing $1,650. ... On the basis of this analysis and in view of the fact that opportunities to use culls are better on the farm than at the wholesale level, it was concluded that the optimum location of grading potatoes is at the farm level rather than at the wholesale level. ... The grading cost at the farm level was found lower than the grading costs for any of these three alternative situations. The studies suggested for further research with a view to either testing and improving the validity of the conclusions reached here, or to examine some related cost and profit determining factors in regard to potato cultivation...