Mitchell, Glen H.

Sharp, John W.

Sherman, Ralph W.

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Interim Report PREPACXii.GING OF OHIO APPLES ON THE FARM AND THEIR MARKETING by Ralph w. Sherman John w. Sho.rp and Glen H. Mi to hell Department of Agricultural Economics o.nd Ruro.l Sociology :Mimeograph Bulletin No. 230 Ohio State University and Ohio Agricultural Experiment Station Columbus, Ohio November 1951 PREPACKAGING OF OHIO APPLES ON TEE FARM AND THEIR MARKETING Introduction At the request of a group of Ohio apple growers, the Department of Agricultural Economics of the Ohio Agricultural Experiment Station initiated a study of the prepackaging of apples at producers' farms. The principal inquiry was divided into two parts: (l) the costs and methods of prepackaging and (2) the consumer and store manager's experience and preferences in regard to prepackaged apples. This report is primarily an interim report of the first year of study in the field of methods, costs, marketing, and consumer acc,ptance of farm prepackaged Ohio apples. Prepackaging or consumer packaging can be defined as entailing the preweighing, prepackaging and, often, prepricing a product in units ready for purchase by the ultimate consumer. Twelve growers with complete records were included in the farm study. A few other producers prepackaged some apples, but not on a very large scale. Twenty-four retail stores and 371 apple purchasers were contacted to ascertain marketing practices and consumer acceptance. Prepackaging Ohio Apples ~ ~ ~ There is wide variation in all parts of the prepackaging operation on the farm. No standardized methods were found. It was a hand operation in all instances. Packages Eleven producers were using pliofilm bags. Five of these growers used the four pound~ four used the five pound, and two used the three pound pliofilm bags. Four quart baskets were the second most popular with four users. Polyethylene bags and mesh bags were used by one grower each at the time the reports were taken. Later in the season several others used the Polyethylene and expressed preference for them due to their strength and ease of handling. Pliofilm bags stuok together and were difficult for the packers to separate. Eight producers used only one type of paokage 1 three used two types of packages, and one grower used three types. - 2 -Various methods of closing the bags were used. The three most common were the use of wire~ metal clamps, and rubber bands. The price range per thousand packages extended from ~16~00 to $73.20. PolyeGhylene five pound size ba&s had the +~west average at $27.30 pe}' thousand; pliofilm four pound at ~28.31 lJ, three pound at ~28.50 ~ and five pound at t35.60 per thousand. Five pound mesh bags averaged ~;42.50. Baskets were the highest with four quart size at $57~76 per thousand average. These averages are of prices paid by the users. Table 1. Type, Size, Average Costs, and Price Range of Packages Used by Twelve Ohio Apple Prepackagers~ 1950 _____ _.. __ Type of Number Average Price Price Range Package Using per Thousand per Thousand -----Plio film Five pound 4 :,35.,60 $33.50 to $38.90 Four pound 5 28.31 16.00 to 34.00 Three pound 2 23.50 27 .oo to 30.00 Polyethylene Five Pound 1 27.30 27.30 Baskets Four Quart 4 57.76 48.50 to 73.20 Mesh Bag Five Pound 1 42.50 42.50 The average loss from breakage during the prepackaging operation was six bags per thousand or less than one percent. Almost one-half of the prepackagers reported no loss at all. Prepackar>ed apples were taken to stores or wareho"ses in InD.ster con-tainers which usually were cardboard boxes. Other types of :rooster con-tainers were e~g crates~ wooden bushel boxes, and used lettuce crabes. The cost of l"l.aster containers to the producers ranged from zero to 44 cents eaoh. l~ny growers were obtaining these containers second hand from various wholesalers, retailers~ and grocery chain companies. 1/ This see~i~ p~radox was probably the result of large purchase orders of the four pound than of the three pound bags. - 3 -Approximately two-thirds of the growers had their master containers returned from the store to them, The majority were returned free~ others at a nominal charge. The average trip life of the master container was 6.5. About half of the farm prepackagers delivered direct to the retail stores and the other half delivered to the warehouse. All verieties and sizes of apples lend themselves to prepackaging. Ten different varieties were prepackaged by the 12 Ohio apple farm pre-packagers furnishing records. Jonathan and Mcintosh were each packaged by four different growers. The 2 1/4 inch apple was the leading size prepackaged. From the standpoint of prepackaging operations none of the pro-ducers have volume enough to constitute a large scale operation. Aver-age packers employed numbered less than three, Mechanization probably would not increase efficiency materially because of this small volume and also from the fact that labor costs averaged only 1.8 cents per packae,e. Any savinLS made by mechanization would have to come by lower-ing the 1.8 cents per package cost. The sMall producer should be able to prepackage at about the same cost as large producers as long as the prepackaging is hand work. Number of packages packed per worker varied from 23 to 80 per hour with e.n avera~,o of 55.7 packages. The average hourly rate paid packers was $,7425 and the average hourly rnte paid helpers was $.805, On the average one helper was necessary for each three packers. Some helpers placed the prepackaged apples in the master container 1 but usually this was the duty of the packer. The duty of the helper was that of keeping apples to the packers and taking the filled master containers away. Returns ~ Prepackaged Apples The appearance of uniformly sized apples in an all visible package apparently stimulated sales greatly. This was especially noticeable for the 2 1/4 inch apple which was discounted in price only very slightly from similar quality of the larger sizes. W~st farm prepucka~ers agreed that prepackaging tends to move more apples in the same or shorter time 1 increases gross cash income 1 sig-nificantly raises the price received for 2 l/4 inch apples, and increases the net income. The percentage of increase varies greatly among growers. A natural question would be how much did growers receive by pre-packaging their apples over what they would hove received if the apples were marketed in the bulk. In some cases the percent of increase in total returns was nogligible 1 such as the 3,4 percent increase reported on similar 2 3/4 inch apples selling for t3.25 per bushel. On the other - 4 -hand~ increases svoh as the 144 percent on similar apples selling for ~1.00 per bushel appear to be tremendous. Any advantage from packaging where increased returns would no more than cover adoed cost would have to be in mov~ng zuore apples. No comparison was available on four growers as two of them prepack-ared all apples and no information was obtained from the other two. ~he averace increase in return for tho prepackaged over bulk apples vms ~ .986 per bushel. Th1s increase of prcpacka~ed apples over similar apples sold in tho bulk was 58.3 percent. Table 2. Reported Gross Cash Increase Per Bushel in Selling Apples Prepackaged Over Similar Apples Sold in Bulk by Eight Ohio Apple Prcpackn~ers~ 1950 Increase Percent Number of Per Bushel Increase Growers Size of' Apples .11 3.4 l 2 3/4 inch .44 17.0 l 2 1/4, 2 1/2 .. 2 3/4 inch .r1 43.2 l 2 l/4 inch .86 34.4 1 2 1/2 inch 1.25 65.8 l 2 1/4 inch 1.44 144.0 l 2 l/4, 2 1/2 inch 1.49 79.2 2 2 l/4 inch Avo rage .986 58.3 --~ .2£ Prcpo.oke.g,ing The avoraeo cost of packaging a bushel of apples was 59.1 cents. These costs per bushel, including package, master container and labor expenses varied from a low of 45 cents to a high of 73.9 cents. Widest variation was in costs of' master container ~nd labor. Of' the avorngo cost of 59.1 cents for packaging a bushel of' apples, 32.9 cents was for individual packages, 8.7 oonts for tho master con-tainer, and 17.5 cents for labor. If' tho producers who packaged their applos had marketed their ap-ples in bulk they would have had container cost and labor expense for bulk packing. Those costs would have to be substraated from tha total oost of prepackaging to arrive at the net diff'~rence in the two methods. While oxnot cost of' bulk packing was not determin&d the estimate of several producers indicate that prepackaging costs about 20 cents more per bushel than bulk packing. - 5 -Ho.rkoting Practices Relating~~ Apples Prepo.cko.god at the Farm Store ~nugors o.nd their produce roo.nagers wore interviewed for their experience with prepaoka~ed and bulk apples~ their attitudes ond their opinions n bout the future and what should be done in the prepack-o.gGd apple field. Tho nttitude and cooperation of tho retail trade was excellent. Retailers expressed a desire to do anything within reason to aid the Ohio apple producers. A total of 24 ropresentntive stores were visited during November~ January and February in AkronJ Cleveland~ Columbus~ DaytonJ Youngstown~ Xenia and Yellow Springs in obtaining the do.to.. Prerequisite for a store to bo included in this study was that they were handling Ohio pro-paoko.ged apples and bulk apples and that o. sufficient volume vms done to warrant tho interviewer's time. Volume of produce sold per store ranged from (>300 to ( 9,000 o. week. Stores in the survey had been handling some prepackaged apples for an a voro.e;e of two years or more and usually pure hased prepo ckaged ap-ples from only ono grower. Displaying of prepackaged apples was fair to poor. Condition of the apples was good. Most growers had done a good job of trading and sizing before packaging. Tho avernco store handled only one size of' package with the five pound puck predominntinr. Most stores hnndlod only one size and two different vnri~tics in the prepackaged apples. In bulk apples~ tho stores avoro.~,od 2.36 varieties made up of 1.39 locnl vnrietios, nnd .87 western vo.rie~ies. Twenty of tho 24 stores hnndled Western apples which made up 67.1 percent of all bulk sales. The stores sold an uvoro.ge of 420.9 pounds of apples daily, ronde up of 238.5 pounds of bulk apples, and 182.4 pounds of farm prepackaged apples. Bulk, howover~ only outsold farm prepackaged Ohio apples in 52.2 porcon-b of tho stores; 4.4 percent of tho stores sold equal amounts of bulk and Ohio prepacked apples, while in tho remaining 43.5 percent of tho stores the Ohio prepooknged upplos outsold the bulk apples. Dur-ing the survey when prepackaged apples were o.vnilablo all the time, the farm propnckngod Ohio apple outsold all other apples by 753 pounds to 523 pounds or by 44 percent. Eighteen of the 24 stores prepackaged some apples themselves in varying sizo bugs. If store prcpc,ckar,od apple sales were combined with the fo.rm prcpo.cka[,cd apples~ the prepe.cko.ged apples outsold bulk apples in 19 of the 24 stores. Whore store prcpo.cka~ing was done~ 41.9 per-cent of' tho apples received in bulk wore po.ckagcd. - 6 -Tho nv~rn6o sale o~ farm prepackaged apples wos 4.33 pounds or 47.2 percent more them tho c.vorago bulk sale of 2.94 pounds. The nv-orogo murk-up for the prep::1.ckng;od apples was 31 percent and 52.6 for bulk upples. Spoilage Store reported losses show prepackaged farm apples spoiln~e to be one-~ifth thct. of all other apple spoilage. Spoilo.r;o losses ~or those reporting loss wore 2.2 percent for bulk o.pplos and .44 percent spoilage for pr opac l:agod ::~pplos. Six retailers reported absolutely no spoilage losses in prepackaged apples. Tho o~~endod shelf lifo~ bettor turnover. good grading end loss customer huncHing o.ll aid in lessening tho spoilf:go in prepackaged o.pplos. Retailer's Op~_nio~ .5:£. ~c Prcpacko.god Unit Of no little importance is tho attitude of tho retailer toward farm prepac~~god Ohio apples. Upon their buying and selling rest much of tho success or .L'o.iluro of fo.rm propaoko.god o.pplos. Roto.ilcrs wore asked their opinion about farm prepo.cko.gcd Ohio ap-ples. Tho rotcilc.r was allowed to comtnont as he cared to. Very few commented on tho so.mc doto.ils and, in no case wore they asked specific questions which might influence their opinions. Sevcnty-oicht percent of tho roto.ilors stated that they liked tho prcpacl'-...o.god fo.rm apples. Only one retailer complo.incd of poor quality in tho po.cko.gcs. 1Tone stated any dislike for tho fnrm prepackaged ap-ples~ but they did state certain things they thought would mo.ko for improvement in tho prepackaged apples. Incroo.sos of apple sales from 50 percent to 300 percent wore reported with tho offering of the pre-po.ckogod units. Uniformity, good quality and loss spoilage in propacked o.pples wore mentioned by ronny retailers c,s advantages. Clerks' tirno so.ved o.nd oonvenionoc both for the retailer o.nd customer wero also claimed. Retailers o.lso mentioned sanitation and good o.ccopto.nce by consumers (especially for families with children) o.s advontagos of prepncko.ged apples. For improvements in the future, tho most frequent co~nt was a desire for two sizes of bags. The throe pound and five pound po.ckagcs were commonly requested among the 56.5 percent of retailers desiring two po.oko.go sizes. - 7 -Thirty percent of tho retailers wanted a more consistent supply. Five retailers stated they would like all o.pplos to be prop~:~cko.ged~ Four retailers wo.ntod more variety in the prepackaged apples. £_o~~ ~ptancc .!:!_ ~~ Propo.cknged ~Apples Throe hundred seventy-one apple purcho.scrs were inter~iewed for their op5nions concerning their purchase o£ apples. Those purchnserS 1 usually housewivesJ were asked why they purchased the apples they did. Reasons for purchasing prepackaged apples arc given in Table 3. Most of tho purchasers who so.id they purcho.sod the prepackaged apples regularly wont on to give some reasons why. The purchasers statement "buy reg;ulc.rly11 is loft in tho tabulation as o. significant figure. It shows that about one out of six become o. regular customer despite the short period during which apples ho.ve been offered in this way, To.ble 3. Reasons Given by 183 Customers in 23 Ohio Stores for Purcbosing Propo.ckaged Appies~ 1950-51 REJason Number 1/ ------~~------~--------------------------------------Buy regularly C onvonionce Bettor oatint quality Better quality Chco.por Bought for cooking o.nd baking Likes prepackage Uses bo.g over So.nito.ry Size of po.okago Likes for cooking and eating Appeo.runce Likes smo.ll size apples Buys for children Trying first time Prefers Ohio apples Well satisfied Apples koop bettor Rolin blo Uniformity Heo.rd they wore better Boue;ht first thing they saw 59 52 47 46 31 19 17 15 14 13 13 ll 11 10 9 9 7 6 4 4 1 1 ];/ Total number of rensons exceed number of oust omers o.s mo.ny customers go.ve more tho.n one reo.son. - 8 -Tho mnin reasons given for the purohuso of bulk apples ruther than puoknged were: l) that they had never triad prepncks, 2) tho packages offered wore too large, 3) liko to pick out own apples, 4) size of the bulk apples suited botter, and 5) variety desired was available only in bulk. Other answers given less frequently were that the apples in bulk wero cheaper, don't trust any kind of po.cko.ged produce and that they merely purchased tho first apples they saw. A large number of puroho.sors of bulk apples had purchased western apples but as far as possible thoir answers were eliminated because they pertained to preferences for western apples over Ohio apples, rather than for propo.ckagod over bulk o.pplos. Tho reasons given for purchasing bugged apples and for purchasing bulk apples provide good material from which merchandising of apples could be bettor fitted to consumer dosiro. 

Prepackaging of Ohio Apples on the Farm and their Marketing

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Prepackaging of Ohio Apples on the Farm and their Marketing

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