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U.S. Fresh Fruit and Vegetable Marketing: Emerging Trade Practices, Trends, and Issues

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Author Info

  • Calvin, Linda
  • Cook, Roberta L.
  • Denbaly, Mark
  • Dimitri, Carolyn
  • Glaser, Lewrene K.
  • Handy, Charles R.
  • Jekanowski, Mark D.
  • Kaufman, Phillip R.
  • Krissoff, Barry
  • Thompson, Gary D.
  • Thornsbury, Suzanne

Abstract

In the past year, trade practices between fresh produce shippers and food retailers gained national attention. Shippers are concerned that recent retail consolidation has led to market power and the growing incidence of fees and services. Retailers argue that these new trade practices reflect their costs of doing business and the demands of consumers. Trade practices include fees such as volume discounts and slotting fees, as well as services like automatic inventory replenishment, special packaging, and requirements for third-party food safety certification. Trade practices also refer to the overall structure of a transaction-for example, long-term relationships or contracts versus daily sales with no continuing commitment. This study compares trade practices in 1999 with those prevalent in 1994, placing them in the broader context of the evolving shipper/retailer relationship. Most shippers and retailers reported that the incidence and magnitude of fees and services associated with transactions has increased over the last 5 years. Fees paid to retailers are usually around 1-2 percent of sales for most of the commodities we examined, but 1-8 percent for bagged salads. Information on the incidence and magnitude of these new practices is scarce. To augment information that is publicly available, we interviewed a limited number of shippers, retailers, and wholesalers about their firms and trade practices. We received a high level of voluntary cooperation from the interviewed firms.

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Bibliographic Info

Paper provided by United States Department of Agriculture, Economic Research Service in its series Agricultural Economics Reports with number 33915.

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Date of creation: 2001
Date of revision:
Handle: RePEc:ags:uerser:33915

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Related research

Keywords: produce; fresh fruit and vegetables; fresh-cut produce; trade practices; fees and services; slotting fees; retail consolidation; produce shipper consolidation; Crop Production/Industries; Marketing;

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Cited by:
  1. David B. Eastwood & John R. Brooker & James D. Smith, 2005. "Developing marketing strategies for green grocers: An application of SERVQUAL," Agribusiness, John Wiley & Sons, Ltd., vol. 21(1), pages 81-96.
  2. David Conner, 2004. "Expressing values in agricultural markets: An economic policy perspective," Agriculture and Human Values, Springer, vol. 21(1), pages 27-35, March.
  3. Best, Sarah & Mamic, Ivanka, 2008. "Voluntary social initiatives in fresh fruit and vegetable value chains," ILO Working Papers 431257, International Labour Organization.
  4. Wilson, Paul N. & Thompson, Gary D., 2001. "Time Integration: Agribusiness Structure For Competitive Advantage," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36100, Western Agricultural Economics Association.
  5. Schaffner, David J., 2002. "United States Produce Markets In Transition- Today And Tomorrow," Journal of Food Distribution Research, Food Distribution Research Society, vol. 33(02), July.
  6. Padilla Bernal Luz Evelia & Reyes Rivas Eliver & Pérez Veyna Oscar, 2012. "Evaluación de un cluster bajo agricultura protegida en México," Contaduría y Administración:Revista Internacional, Accounting and Management: International Journal, vol. 57(3), pages 219-237, julio-sep.
  7. Best, Sarah & Mamic, Ivanka, 2008. "Global agri-food chains : employment and social issues in fresh fruit and vegetables," ILO Working Papers 429995, International Labour Organization.
  8. Éric Giraud-Héraud & Lamia Rouached & Louis-Georges Soler, 2006. "Private labels and public quality standards: How can consumer trust be restored after the mad cow crisis?," Quantitative Marketing and Economics, Springer, vol. 4(1), pages 31-55, March.
  9. Hinson, Roger A. & Sinoha, Ramona & Reaves, Dixie Watts, 2006. "Industry Concentration Impacts on Business Strategies Used by Small Produce Wholesalers," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35291, Southern Agricultural Economics Association.
  10. Volpe, Richard & Leibtag, Ephraim & Roeger, Edward, 2013. "How Transport Costs Affect Fresh Fruit and Vegetable Prices," Economic Research Report 161355, United States Department of Agriculture, Economic Research Service.
  11. Hoehn, John P. & Deaton, Brady J., Jr., 2004. "The Welfare Consequences Of Certified Labeling For Credence Attributes," Staff Papers 11758, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  12. Padilla-Bernal, Luz E. & Thilmany, Dawn D. & Loureiro, Maria L., 2001. "Tradability And Market Equilibrium For U.S.-Mexico Fresh Tomatoes," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36142, Western Agricultural Economics Association.
  13. Burroughs, Rick & Harper, Deborah, 2002. "An Analysis of Profits within the Canadian Food Processing Sector," Agriculture and Rural Working Paper Series 28018, Statistics Canada.
  14. Padilla-Bernal, Luz E. & Thilmany, Dawn D. & Loureiro, Maria L., 2003. "An Empirical Analysis of Market Integration and Efficiency for U.S. Fresh Tomato Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(03), December.
  15. Cervantes-Godoy, Dalila & Sparling, David & Avendano, Belem & Calvin, Linda, 2007. "North American Retailers and Their Impact on Food Chains," 2007 NAAMIC Workshop IV: Contemporary Drivers of Integration 163902, North American Agrifood Market Integration Consortium (NAAMIC).
  16. Hoehn, John P. & Deaton, Brady J., Jr., 2003. "Information As A Double-Edged Sword: The Economic And Welfare Consequences Of Certified Labeling For Credence Attributes," Staff Papers 11762, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  17. Li, Chenguang & Sexton, Richard J., 2013. "Grocery-Retailer Pricing Behavior with Implications for Farmer Welfare," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), August.
  18. Epperson, J.E., 2010. "An Examination of the Market Structure of the U.S. Produce Industry," Journal of Food Distribution Research, Food Distribution Research Society, vol. 41(1), March.
  19. Tondel, Fabien & Woods, Timothy A., 2006. "Supply Chain Management and the Changing Structure of U.S. Organic Produce," 2006 Annual meeting, July 23-26, Long Beach, CA 21435, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  20. Sparling, David & van Duren, Erna, 2002. "Putting Globalization and Concentration in the Agri-food Sector into Context," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 03.
  21. Hatanaka, Maki & Bain, Carmen & Busch, Lawrence, 2005. "Third-party certification in the global agrifood system," Food Policy, Elsevier, vol. 30(3), pages 354-369, June.
  22. Xia, Tian & Sexton, Richard J., 2009. "Retail Prices for Milk by Fat Content: A New Theory and Empirical Test of Retailer Pricing Behavior," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), August.
  23. Davis, Kathy J. & Thornsbury, Suzanne & Ward, Ronald W., 2002. "Consolidation In The Fresh Florida Grapefruit Packing Industry," 2002 Annual meeting, July 28-31, Long Beach, CA 19815, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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