MARKETS AND MARKETING
Having produced a good product, there remains the problem of making a
profitable and satisfactory disposition of it. In many ways marketing
is the measure of successful fruit growing. Of what use is it to prune
well, cultivate well, spray thoroughly, or even pack well the finest
kind of product, if after the expense of these operations is paid and
the railroad and commission agents have had their share, no profit
remains to the producer? Many growers find it easier to produce good
fruit than to market it at a good price, and this is especially true
of the general farmer. Failure to market well spells failure in the
business of fruit growing. Successful marketing presupposes a
knowledge of the requirements of different markets as to quality,
varieties, and supply demanded in those markets. Methods of
distribution are also one of the great factors in this problem of
marketing.
TYPES OF MARKETS.--There are two general types of markets, the local,
which is a special market and the general or wholesale market, both of
which have different but definite requirements. The local market
handles fruit in small quantities, but usually with a larger margin of
profit per unit to the producer. As a rule delivery is direct in a
local market, and thus commissions are saved. Competition is also more
or less limited to one's neighbors. More varieties, including less
well known ones, are called for. Appearance does not count for as much
as quality, which is of first importance. Fruit may be riper as it is
consumed more quickly and meets with less rough handling. Packages are
usually returned to the grower. Special markets are often willing to
pay extra for fruit out of season, and they always require special
study and adaptation to meet their needs.
The general or wholesale market handles fruit in larger quantities,
usually with a smaller margin of profit. A selling agent or commission
man is the means of disposing of fruit in such a market, where
competition is open to the whole country and sometimes to the world.
Only standard well-known varieties find a ready and profitable sale.
Great attention is paid to appearance and comparatively little to
quality. Fruit shipped to a wholesale market must be packed in a
standard package, which is not returned, but goes with the fruit, and
must be packed so as to endure rough treatment. Out of season fruit is
not in demand, but even the general market sometimes has special
preferences.
Almost every market has favorite varieties for which it is willing to
pay a larger price than other markets. Just as Boston wants a brown
egg and New York a white one, so these and other cities have their
favorite varieties of apples. Some markets prefer a red apple, others
a green one, although the former is most generally popular. In the
mining and manufacturing towns working people want smaller green
apples, or "seconds," because they are cheaper. Many second-class
hotels prefer small apples, if they are well colored, as they go
farther. The fashionable restaurant and the fruit stand are the
markets for large, perfect, and highly colored specimens. Housewives
demand cooking apples like Greenings, hotels want a good out-of-hand
apple like the McIntosh, while private families have their own
special favorites. As will readily be seen, the producer's problem is
to find the special market for what he grows.
It has been said that different markets have special varietal
preferences, paying a better price for these than do other markets for
the same quality. We can only take the space here to point out a few
of these preferences. The Baldwin is by all odds our best general
market and export variety. It is the workingman's apple and finds its
best sale in our largest cities, particularly in New York and Chicago.
The Rhode Island Greening is a better seller in the northern markets
than it is in the southern, finding its best sale in Boston and in New
York. The Northern Spy is highly regarded by all our large northern
and eastern markets, is fairly well liked by the middle latitude
markets, but not popular south of Baltimore and Pittsburgh or west of
Milwaukee.
Central western markets appear to prefer the Hubbardson, but this
apple is fairly good in all markets. King is well thought of nearly
everywhere. Ben Davis is a favorite in the South, New Orleans
especially preferring it on account of its keeping quality. Jonathan
has a good reputation everywhere. Dutchess of Oldenburg is regarded
as excellent in Buffalo and Chicago. Wealthy, although generally a
local market apple, is well known and liked in all markets. Twenty
Ounce is spoken well of nearly everywhere. The Fameuse is not well
liked in the South, but popular in the North, etc. These particular
facts as to varieties are best learned by experience and by
observation of the market quotations.
THE COMMISSION MAN.--The present system of marketing fruit products
makes the commission man almost a necessity in the general market.
Neither the grower nor the local dealer can ship directly to the
consumer or even to the retailer, except in a very limited way. It may
be impracticable to devise any other workable system, but it must be
remembered that every man who touches a barrel of apples on its
journey from producer to consumer must be paid for doing so, and this
pay must come either out of the seller's price or be added to the
buyer's price. But so long as present conditions of marketing and
distribution prevail, so long will a selling agent in the general
market be necessary, and the evil cannot be ameliorated by ranting
against it.
An unfortunate impression prevails that all commission men are
dishonest. This is not true, although undoubtedly there are many
scoundrels among them, as they have shippers almost completely at
their mercy. The best method under our present system is to choose an
honest commission man in the city where you sell, to get acquainted
with him, to let him know that your trade will be in his hands only so
long as he treats you fairly, and then supply him with as good quality
of stuff as you can produce. This plan has worked out well with many
successful growers and marketers.
Perhaps the greatest difficulty to be overcome in successfully finding
good markets is that of proper distribution. As has been pointed out
in the previous chapter, there has been a great increase in the
production of apples and hence in competition, accompanied by
speculation and more intensive methods in all phases of the business.
A necessity has arisen for the production of the best at a minimum
cost, as well as for finding the best market for that product. In the
rush for the best market every seller is apt to be guided only by his
own immediate interest without due regard for the fact that others are
acting in the same way or that there is a future. The result is the
piling up of fruit in a market of high quotations, and a subsequent
drop in the price. Then all turn from such a market to a better one
with the result that a famine often results where but a few weeks or
even days before there had been a feast.
Thus it often happens that one market may have more fruit than it can
possibly dispose of at the time, while another, perhaps equally good,
goes begging. Such conditions are ruinous to trade. Growers are
disappointed and ascribe the cause to the commission man. Consumers
are unable many times to profit by a glut in the market but promptly
blame the middleman or the grower when the supply is small and the
price high.
Other difficulties with our system of marketing are non-uniformity of
the grades, the packages, or the fruit itself. There should be a clear
definition of just what "firsts" and "seconds" are and this definition
rigidly adhered to. Transportation is too frequently insufficient, not
rapid enough, especially when perishable fruit is shipped in small
lots, and usually at a too high rate. There are undoubtedly too many
middlemen between producer and consumer. Growers sell to local dealers
who sell to wholesalers at the receiving end. These sell to
wholesalers at the consuming end, who may sell to jobbers, who sell to
retailers. Each man must have his profits, all of which greatly
increases costs.
CO-OPERATION.--Individuals have practically no power to remedy such a
state of affairs. So long as producers act independently they will
have little power either to bring about favorable legislation or to
better such market conditions. Acting together as a unit growers have
accomplished great things which can be repeated. The co-operative
principle has been well tried out in California, where it was first
put into operation with citrous fruits, in several other Western
States with apples, and in Michigan and the Province of Ontario.
Co-operative associations study carefully the law of supply and demand
and take steps to adapt their shipments to it. They standardize the
grade, the package, and the fruit, and govern their shipments to given
markets by the needs and the demands of those markets. Their unity of
effort enables them to make great savings in the purchase of supplies,
such as packages, spraying material, fertilizers, etc., and in
obtaining and distributing frequently knowledge of markets and market
conditions. They also advertise their products, making them better
known, creating a demand for them, and by means of correspondence or
traveling agents seek out the best markets.
There are now several large fruit exchanges operating over wide
sections of country. But the local associations are the vital units in
any co-operative movement. Such associations should be incorporated
under State laws so that they can do all sorts of business when
necessary. Six simple objects should be kept in mind, namely, (1) to
prevent unnecessary competition, and to supervise and control
distribution of products; (2) to provide for uniformity in the grade,
package, and fruit; (3) to build up a high standard of excellence and
to create a demand for it; (4) to economize in buying supplies and
selling products; (5) to promote education regarding all phases of the
fruit business; and (6) when necessary to act as a buying and selling
agent for the community.
Such an association requires a board of directors, a treasurer, and an
active and well-paid manager. The latter is most important, as upon
his honesty, ability, and energy will largely depend the success or
failure of the organization. Sometimes where fruit is packed in a
central packing house or under an association brand or guarantee, a
foreman packer is also necessary. The capitalization required for such
an enterprise is not necessarily large, unless warehouses or packing
houses are built. These are usually better rented until the
organization becomes well established.
The shares should be small so that every member may be financially
well represented, and members should be prohibited from holding more
than a small percentage of the total shares, in order to prevent
possible monopoly. Dividends on stock held should only be expected
from business done outside the association membership, interest on
money invested being obtained in the handling of members' products at
cost. Receipts should be given growers for just what they bring in,
and they should then be paid according to the grade of fruit which
they contribute, prices for the same grade being pooled. The charge to
growers for handling should be actual cost, but outsiders' products
should be handled at a small profit in order to induce them to come
into the association. The same method should be followed in purchasing
supplies.
The general result of such co-operation is that the consumer gets a
better product for his money and the grower receives a better price
for his product. It is very essential to the success of the
organization that growers stick together, even through low prices and
discouragement which so often come, until they are firmly established.
Substantial reduction in the cost of the product to consumers can only
come by similar co-operation among them at the buying end and by the
co-operation of both consumers and producers for distribution and
handling in market.
If a neighborhood does not feel yet ready to attack this problem in
this thorough and businesslike way, it will be advantageous and a step
in the right direction if they simply agree on certain standards of
quality and packing and then pool their product for marketing. This
method has also been followed with success.