vailing size of sale. Variation in percentage margins is therefore the result of wrongly using the dollar's worth, with its variable service requirements, as the unit of distribution. When the individual retail sale is taken as a new distribution unit, the actual margin per sale is nearly uniform for all commodities, and no appreciable differences remain to be explained. LIMITATIONS OF PERCENTAGE DIFFERENTIALS FOR COMPARING PRICES Use of percentages for analyzing price differences incurs certain mathematical difficulties which may vitiate their meaning. This made it necessary to abandon the original plan of making detailed comparisons of margins as percentages of retail prices and to analyze the actual prices and price differences in their stead. The margin concept assumes a constant money expenditure by the consumer, representing a dollar's worth of goods under given price conditions. Any variation in retail price involves, therefore, a change in the quantity of goods secured for $1. The margin represents in cents of the consumer's dollar the spread between wholesale and retail prices for a variable quantity of goods, whose volume changes with any change in the selling price. Use of differentials between percentage margins to measure the relative efficiency of a given money outlay is therefore logically unsound. The difficulty in interpreting percentage differentials may be illustrated by making a comparison of percentage margins in two types of retail stores. The general margin in independent credit-delivery stores for the whole commodity series is 47 per cent of the mean retail price, while in cash-and-carry stores it is only 42 per cent of the retail price. This is equivalent to saying that of a dollar's outlay by the consumer in a credit-delivery store, 47 cents are required to cover handling expenses, leaving 53 cents to pay for the goods in the wholesale market; whereas of the dollar spent in a cash-and-carry store only 42 cents is required for handling and 58 cents is left to pay for goods in the wholesale market. Thus the apparent difference in handling cost of 5 cents on a dollar's worth of goods, actually turns out to be quite otherwise than a difference of 5 per cent of the retail price. Out of the dollar expended by the consumer, 58 cents of the cash-and-carry customer's money is used to buy goods in the wholesale market, whereas only 53 cents of the credit-delivery customer's money may be so used. Hence the cash-and-carry customer will obtain times the quantity of goods received by the credit-delivery customer. For an identical quantity of goods, therefore, the cash-and-carry customer would pay only of the other's outlay. The latter fraction, for the cash-and-carry store, is 91.4 per cent of the amount required for the same quantity of goods in the credit-delivery store. The actual differential between prices in the two store types is therefore 100-91.4, or 8.6 per cent, of the credit-delivery price, instead of the apparent 5 per cent. If it were desired to express the differential in terms of the cash-and-carry price, then the corresponding inverted fraction, , would be used, which is 109.4 per cent. This indicates that the selling price for a given quantity of goods in a credit-delivery store is 9.4 per cent higher than that for the same quantity in a cash-and-carry store. The difficulty here illustrated exists wherever comparisons of percentages derived from varying or noncomparable bases are attempted. Any effort to make accurate price comparisons by comparing percentage margins is therefore likely to be misleading and to confuse the real differences. ADDITIONAL COPIES OF THIS PUBLICATION MAY BE PROCURED FROM AT 10 CENTS PER COPY DEPARTMENT BULLETIN No. 1412 Washington, D. C. June, 1926 MARKETING LETTUCE By CHARLES W. HAUCK, Marketing Specialist, Division of Fruits and Vegetables, Bureau of Agricultural Economics Commercial production and distribution of lettuce in the United States during recent years has attained the dimensions of an important industry. Lettuce shipments in 1924 filled more than six times as many cars as in 1916. The greatest increase occurred during the five-year period, 1919-1923 inclusive. In 1923 the crop ranked third among all vegetables in point of car lots shipped, being exceeded only by potatoes and cabbage. The United States Department of Agriculture computed the farm value of lettuce in 1924 at $18,600,000. In that year lettuce ranked fourth in this respect among all vegetables, being exceeded by potatoes, sweet potatoes, and tomatoes. In the case of most of these leading crops a substantial portion is used for canning or in the manufacture of by-products, but this is not true of lettuce. Its entire value is made up of proceeds of sales for table consumption in the fresh form. Land devoted to commercial lettuce production increased from 16,870 acres in 1918 to 63,060 acres in 1924, an expansion of 274 per cent. The most notable increase took place in the West. Arizona reported 300 acres in 1918 and 4,800 acres in 1924; California, 7.140 acres in 1918 and 32,780 acres in 1924; Colorado, 140 acres in 1918 and 5,600 acres in 1924; and Idaho, practically no commercial acreage at all until 1920 when 80 acres were reported, and 1,420 86143-26- -1 |