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Title: Marketing Florida prepackaged sweet corn
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
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Permanent Link: http://ufdc.ufl.edu/UF00090246/00001
 Material Information
Title: Marketing Florida prepackaged sweet corn
Physical Description: 27 p. : ill. ; 28 cm.
Language: English
Creator: Spurlock, A. H.
Stokes, Donald R ( Donald Ray ), 1915-
Publisher: Florida Agricultural Experiment Station
Place of Publication: Gainesville, Fla.
Publication Date: April, 1949
Copyright Date: 1949
 Subjects
Subject: Corn -- Marketing -- Florida   ( lcsh )
Corn -- Packaging -- Florida   ( lcsh )
Genre: non-fiction   ( marcgt )
 Notes
Statement of Responsibility: by A.H. Spurlock and Donald R. Stokes.
General Note: Cover title.
General Note: "April, 1949."
General Note: At head of title: Florida Agricultural Experiment Station and Production and Marketing Administration, United States Department of Agriculture.
 Record Information
Bibliographic ID: UF00090246
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 04881033

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    Introduction
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Full Text


-- /.)
'"h^Li~


Florida Agricultural Experiment Station


and

Production and marketing Administration
United States Ddpartment of Agriculture






MARKETING FLORIDA PREPACKAGED SWEET CORN


A 3-Ear Package of Sweet Cornm. Overwrapped with Cellophane;
and a 5-Ear Package Before Wrapping


A. H. Spurlock, Associate Agricultural Economist
Florida Agricultural Experiment Station

and

Donald R. Stokes, Marketing Research Analyst
Production and Marketing Administration, U. S. Department of Agriculture


Gainesville, Florida
April, 1949












This project was carried out under the provisions of the Research and Marketing Act of 1946
and was undertaken cooperatively by the

Florida Vegetable Prepackaging Council
Paul B. Dickman, President
LaMonte Graw, Secretary
Orlando, Fla;,


Florida Agricultural Experiment Station
Gainesville, Fla.


and the


Marketing Research Branch, Production and Marketing Administration
United States Department of Agriculture
Washington, D.C.












Credit is given to the following firms for their
cooperation and assistance in carrying out this
research project:

Paul B. Dickman Fanas
Ruskin Vegetable Distributors
Margaret Ann Stores
Winn and Lovett Grocery Company
Great Atlantic and Pacific Tea
Company
The Kroger Company
Gristede Brothers Grocery Company
River Terrace Super Market
Wagners Stores
Calvert Market
Cheverly Super Market
Brook-Harry Stores
Martin Produce Company
Collins Market
Lee Slayton Greenhouses
E. L. Duvall & Company
F. L. Frankel Company











CONTENTS





Page

Introduction ................... ...............5

Summary . .. . . . . . . . .. . . . . . . 5

Consumer Acceptance of Prepackaged Sweet Corn . . . . . . . 6

Consumer Opinion Surveys . . . . . . . . ... . .. 6

Retail Store Sales ........................... 13

Summary of Consumer Acceptance ... . . . . . . . . 16

Costs of Marketing Bulk and Prepackaged Sweet Corn . . . . ... 16

Harvesting and Packaging Costs . . . . . . . . ... .. 16

Distribution Costs ....... .................... 21

Retailing Costs ................... ......... 22

Gross Return to Grower for Prepackaged and Bulk
Sweet Corn ................... ........... 25










MARKETING FLORIDA PREPACKAGED SWEET CORN

INTRODUCTION


During the last few years several studies or experiments have been undertaken to explore the feasibility
of prepackaging certain fresh fruits and vegetables at terminal markets by grocery chain store organiza-
tions. The prepackaging of tomatoes, spinach, kale, celery, and various types of salad mixes by special-
ized repackers at terminal markets also has developed rapidly into a sizable industry. Except for potatoes
and oranges, however, the packaging of fruits and vegetables in consumer sized units at point of produc-
tion or shipping has been done only on a relatively small scale.


A study to determine the feasibility of prepackaging certain fresh vegetables in consumer units at
the point of production is now being made by the Florida Vegetable Prepackaging Council, the Florida
Agricultural Experiment Station, and the Production and Marketing Administration of the U.S. Department
of Agriculture. This report is a preliminary appraisal of the economic feasibility of prepackaging husked
fresh sweet corn at point of shipment, based upon one year's experimentation and study. The over-all
study is planned to cover a four year period; therefore, only very tentative conclusions should be drawn
from these data, since future findings may be different as a result of changes in costs or selling prices.


The experiment reported herein was carried out in the spring of 1948, on the Paul B. Dickman Farms,
Ruskin, Florida. A total of 818,184 consumer sized packages of husked fresh sweet corn was prepackaged
in the modern packaging plant located on the Dickman Farms. Approximately 300 acres of sweet corn,
mostly loana, Golden Cross Bantam and Golden Security varieties, were harvested.


The corn was husked by mechanical husking machines, trimmed to 5- or 3-inch lengths, hydrocooled, and
packaged in food trays overwrapped with Du Pont MSAT-86 cellophane, and precooled in refrigerated
storage rooms. It was then distributed to 28 terminal markets, and retailed in about 200 cities east of
the Mississippi River. The average ear of edible corn was from five to six inches in length. Ears six
inches or over were cut into two 3-inch servings, and ears less than five inches in length were trimmed
to 3-inch ears. Ears between five and six inches were trimmed to 5-inch ears. This method enabled the
marketing of all ears over three inches in length and promoted maximum efficiency in the packaging opera-
tion since only one size of consumer package and one size of shipping carton were necessary, and since
packages containing three 5-inch ears or five 3-inch ears could be packed simultaneously on the same
packing line. The 5-inch ears were packed lengthwise of the tray, two ears on the bottom and one on the
top, and the 3-inch ears were packed crosswise, three ears on the bottom and two on the top as.shown
on the cover page. Each package contained 15 inches of edible corn.

SUMMARY
The net return to the grower for marketing the prepackaged husked fresh sweet corn approximated that
which he would have realized had he marketed his entire crop in the usual bulk manner. The estimated
gross return (that is, before harvesting and growing costs were deducted) to the grower for the prepackaged
sweet corn amounted to $2.36 per equivalent crate of five dozen ears in comparison with an estimated
$2.40 which would have been realized had it been marketed in bulk. However, these estimates do not
take into consideration the by-product value of husks and trimmings from the ears nor of defective ears
culled out which were used for cattle feed. Future studies will appraise the value of these by-products.


Prepackaged fresh sweet corn retailed at a slightly higher price than comparable quality bulk corn,
the averages being $5.40 and $5.04, respectively, per 5-dozen crate equivalent. Sales of prepackaged
sweet corn were found to average less than sales of bulk corn in retail stores carrying both items, thus
indicating that slightly more than half of the sweet corn buyers preferred buying the bulk corn at the
above price differential.






Approximately 95 percent of 2,092 consumers who returned the post-card questionnaires which were
placed inside the packages, mentioned certain features about the prepackaged corn that they especially
liked, although 323 of these respondents complained about the quality or condition of the corn. Consider-
able improvements in quality were made during the course of the marketing season, and the number of
respondents reporting dissatisfaction as to the quality or condition of the corn decreased materially
toward the end of the season.

,The costs of packaging materials, including transparent film, trays, and shipping containers, averaged
29 cents per dozen packages or 2.4 cents per consumer package. Labor costs for packaging amounted to
1.3 cents per package. Costs of selling and advertising were 1.2 cents and transportation expense from
the farm to terminal markets was less than 3 cents per package.

The retailer's margin was lower for the prepackaged corn than for bulk corn and averaged approximately
23 and 27 percent, respectively, per sales dollar. Waste and spoilage losses and retailing labor costs
were substantially lower for the prepackaged corn than for bulk corn, thus making prepackaged corn rela-
tively more profitable for the retailer to handle.

CONSUMER ACCEPTANCE OF PREPACKAGED SWEET CORN

One of the first, and perhaps most important, problems to solve in developing a market for any new
product-is to determine its relative acceptance by consumers. It is important to find out as quickly as
possible what the consumer likes or dislikes about the new product so that either the package or the
form of the product itself can be changed. The consumer acceptance of this prepackaged sweet corn was
measured by consumer opinion surveys and by records of sales in selected stores.

Consumer Opinion Surveys

Method Used and Area of Distribution. In order to measure scientifically the consumer acceptance of
a given product, it is desirable to obtain this information from a representative sample of both buyers and
nonbuyers. Such surveys are time-consuming and expensive. For these reasons, 3- by 5-inch post-card
questionnaires were placed within various packages of corn so that the consumer could conveniently ex-
press an opinion about the product.

The following 10 questions were asked on the post-card questionnaires:

1. Date purchased.
2. Price paid.
3. Number of persons in household.
4' City and state.
5. Have you previously purchased Ruskin prepackaged corn?
6. Did you find this corn in good condition? If "No," what was wrong?
7. Would you prefer smaller, larger, or same size package?
8 What do you particularly like about this prepackaged corn?
9. What do you especially dislike about this prepackaged corn?
10. Name of store where purchased.


Approximately 50,000 of these post cards were inserted in the packages of corn. Many consumers bought
more than one package of corn at a time or made repeat purchases, and probably for these reasons a large
number of cards were not returned. The cost of obtaining the 2,092 questionnaires was comparatively
small, and pertinent information was immediately available for use. From 5,000 to 10,000 questionnaires
were inserted in a shipment destined for a particular market and the cards were coded to show the variety
of corn packaged, date harvested, and the various methods of treatment or handling. Information available
from these returned questionnaires was used to make "on the spot" decisions as to whether a particular
marketing practice was desirable. For example, different lots of sweet corn were treated with various
antiseptic solutions and marketed under varying temperatures, and information received from the consumers,
especially in regard to quality, served to measure the success of each practice.






The length of time the corn was in the marketing system was also shown by the post-card question-
naires. One indication of the value of improvements such as better temperature controls made during the
experiment is provided by the fact that, in the case of the first five shipments in which questionnaires
were included, 22 percent of the respondents complained of unsatisfactory quality or condition of the corn,
but only 9 percent of the respondents returning questionnaires that were placed in the last four shipments
complained of poor quality or unsatisfactory condition.

Direct distribution of the corn in trucks owned and operated by the grower was made to the following
28 cities:

Atlanta, Ga. Ft. Wayne, Ind. Patterson, N.J.
Baltimore, Md. Grand Rapids, Mich. Philadelphia, Pa.
Boston, Mass. Hartford, Conn. Providence, R.I.
Bradenton, Fla. Jacksonville, Fla. Sarasota, Fla.
Chicago, Ill. Louisville, Ky. St. Louis, Mo.
Cincinnati, Ohio Memphis, Tenn. St. Petersburg, Fla.
Clearwater, Fla. Miami, Fla. Tampa, Fla.
Cleveland, Ohio New York, N.Y. Thomasville, Ga.
Columbus, Ohio Newark, N.J. Toledo, Ohio
Detroit, Mich.

Approximately 43 percent of the corn was delivered to the Southern market (mainly Florida and Georgia
cities); 28 percent to the Eastern market (Philadelphia, New York, Boston); 20 percent to the Midwest-
ern market (Ohio, Illinois and Indiana cities); and 9 percent to the Southeastern market (Baltimore, Wash-
ington). Replies from purchasers of prepackaged corn were geographically distributed as follows: Southern
market, 34 percent; Eastern market, 26 percent; Midwestern market, 30 percent;. and Southeastern market
9 percent.



Of the 50,000 cards inserted in packages of corn 2,092 cards were filled out and returned, making ap-
proximately a 4 percent response. Of the returned questionnaires, 1,366 were received from purchasers
of sweet corn who had not previously purchased it and 726 respondents, or about a third of the total,
advised that they had previously purchased the Ruskin prepackaged sweet corn, thus indicating that
they were satisfied with their original purchases. A higher percentage response was received from the
early shipments than from later shipments, indicating that perhaps many of the questionnaires were not
returned by "repeat purchasers".

What Consumers Liked. Most of the respondents mentioned certain features about the prepackaged
sweet corn which they especially liked. These features were classified under the headings of "flavor",
"easy preparation", "convenience", "visibility", "no waste", "cleanliness", and "out-of-season
treat". A total of 551 respondents stated that they particularly liked the "flavor" of the corn. This
response indicates the importance that most purchasers attach to acceptable quality. The second most
frequently mentioned factor which respondents liked was "easy preparation". A total of 397 respond-
ents mentioned this factor. It is quite evident that consumers place a high value upon additional market-
ing services that help to eliminate their household and kitchen chores. A total of 168 respondents par-
ticularly appreciated the conveniences offered them in purchasing the prepackaged sweet corn. It is
apparent that many respondents were impressed by the convenience and work-saving factors which the
prepackaged "kitchen serviced" sweet corn provided. Three hundred respondents mentioned visibility
as the chief item which they liked about the corn. Undoubtedly, many a housewife who emphasized her
appreciation of the visibility factor which the cellophane overwrapped prepackaged corn offered her, had
previously found a worm upon husking some corn bought in the conventional manner; or she may have
bought what she thought were good ears only to find a high proportion of "nubbins". This idea may
have been in the minds of 278 housewives who reported that they especially liked the fact that "no
waste" was involved in using the prepackaged sweet corn. Two hundred and seventy respondents also
mentioned the feature of cleanliness, and the assurance that soiled hands had not touched the corn was
probably uppermost in their minds. The 25 housewives who mentioned the item "out-of-season treat"
were probably surprised to find fresh corn of top quality in their home stores so early in the season.
7






Typical comments on what housewives particularly liked about the prepackaged sweet corn are as
follows:

1. It was young, tender, sweet and so perfectly cleaned and wrapped.
2. Very tender and can be had prior to season.
3. It is just like getting it out of a garden.
4. Ten times better than the frozen varieties.
5. Convenient, no waste, and cheap enough for out-of-season product.
6. Exceptionally good-bought it April 29-used it May 4 and was in perfect condition.
7. It saves storage space in refrigerator and does not dry out.
8. Nothing to criticize-represents progress in merchandising.
9. It is ready to cook-I would like to know how long it should boil.
10. Convenience of readiness, but four ears would be more satisfactory.
11. Don't need to worry about worms.
12. It is all good-no surprise worms and it is ready to cook.
13. Please fix more vegetables like this.
14. It retained its freshness and sweetness even after four days.
15. Clean, ready prepared, and cello pack allows no "pig-in-poke" buying.
16. Perfect shaped-no silks-good tasting-keeps good in cellophane.
17. It is very convenient and have found it keeps very well in hydrator, in original
package.
18. Since there are four of us, we all want the fifth piece of torn.
19. De luxe-no trouble to serve. Best corn in the South!
20. It was delicious, just like we had in August when we lived in the country.
21., I liked escaping the messy task of husking the ears most.
22. Sanitary package and cellophane package permits view of contents.
23. It's a great time saver and we housewives need time.
24. All good kernels-no waste-tender and sweet-free of ear worms.
25. We wish more fresh vegetables were packed this way.
26. Fresh, tender, marvelous flavor, clean, free of worms and silks.
27. It's the best we have found since living in the South nine years.
28. It is ready to use-I eat a package every day.
29. I can't understand how you get it up from Ruskin in such good condition.
30. Ruskin Golden'Bantam corn is the first corn worth eating purchased by me
in Florida.
31. It is all ready for the kettle-being employed every day, minutes saved
mean much to me in preparing our dinner.
32. Chances of what is underneath the husks are gone-perfectness of the product.

What Consumers Disliked. As previously stated, a number of consumers indicated on their question-
naire cards that they were not completely satisfied with the condition, quality, or flavor of the corn, or
with some particular aspect of the package itself. One of the chief purposes of inserting the cards in
the package was to obtain as much information as possible about the condition of the corn at time of pur-
chase by the consumer. The quality and condition of the corn were known at the time of shipment, but
it was difficult to gather much accurate information on its condition during its remaining journey through
the marketing system. Although representatives of the U.S. Department of Agriculture and the Florida
Agricultural Experiment Station followed a few shipments from the shipping point all the way through the
retail stores, it was impracticable to follow very many shipments. Many of these personal observations
revealed that the corn was improperly handled or refrigerated in the terminal market.. Instructions were
placed within each carton indicating that the corn should be kept under continuous refrigeration at about
400 F., but this advice was often not heeded.


Although some of the complaints received from consumers as to the quality and condition of the corn
could be traced back to the point of packaging, it is probable that a number of quality complaints arose
from unsatisfactory handling conditions during transportation and terminal market distribution. Of the
2,092 replies received, 323 respondents mentioned some type of complaint relative to the quality or condi-
tion of the corn. There was a definite relationship between the number of complaints received on the

8






quality or condition of the corn and the number of days required to distribute the corn through the market-
ing system. In analyzing this relationship, the replies received from one shipment were excluded. A
total of 13,000 post-card questionnaires was inserted in one shipment of corn destined for Baltimore, Md.
and Washington, D.C. This shipment was not adequately refrigerated prior to loading on the truck and the
purpose of this experiment was to discover whether it was possible to move unrefrigerated prepackaged
corn direct from the packaging plant into the refrigerated trucks. Temperature studies on this shipment
showed that the corn was not adequately refrigerated in transit and most of this shipment was unsalable.
However, 178 replies were received from consumers who had purchased corn from this shipment and 79
of these respondents, or 44 percent, complained about the quality or condition of the corn. Excluding
these 178 replies from the 2,092 received, a significant correlation between the length of time taken to
distribute the corn and the number of complaints received was obtained. Complaints averaged approxi-
mately 5 percent from consumers who purchased corn which had been in the distribution channels only
two days. This percentage increased, however, to about 10 to 12 percent for the corn which had been
in distribution channels three to four days, and then further increased to. about 15 percent for corn re-
quiring five to 10 days to reach the consumer. On that corn which had remained in the distribution sys-
tem more than 10 days, over 21 percent of the respondents mentioned that they had found the product
unsatisfactory. The relationship of the number of complaints received and the days required to distribute
the corn is shown in Table 1.
Table 1.-Relationship of Percentage of Quality Complaints to
Length of Time Required to Distribute the Corn

Days Corn Was in Respondents' Respondents' Percentage of
Distribution Replies to. Complaints on Complaints to
Channels Questionnaires Quality of Corn Total Replies

Number Number Percent

10 and over ...... 122 26 21.3
9 ............ 189 20 10.6
8 .......... 251 31 12.4
7 ............ 250 41 16.4
6 ............ 223 31 13.9
5 ............ 293 43 14.7
4 ............ 231 26 11.3
3 ............ 119 13 10.9
2 and under ..... 200 11 5.5
Not specified .... 36 2 5.6

Total or average 1,914 244 12.7

STable 2 shows the relationship of the number of quality complaints to the geographical area of dis-
tribution:
Table 2.-Relationship Between the Percentage of Quality Complaints
and the Average Number of Days the Corn Was in Marketing Channels,
by Specified Distribution Areas

Percentage of Corn Quality Average Number of
Distribution Area Complaints to Total Days Corn Was in
Replies to Questionnaires Distribution Channels

Percent Number

Southern market ......... 9.4 4.2
Eastern market .......... 11.6 7.2
Midwestern market ........ 17.2 6.2
Southeastern market ...... 14.3 4.5

Average 12.7 5.6






Most of the corn was delivered direct to retail stores in the Southern market, which probably accounts
for the lower than average quality complaints from this market. The average age of the corn distributed
in this market, as measured from the returned questionnaires at the time of purchase, was only 4.2 days.
Most of the corn delivered to the Midwestern and Eastern markets was delivered directly to chain store
warehouses and it was generally distributed under rather favorable conditions, at least on the wholesale
level. The average age of the corn, however, was quite high, amounting to 7.2 days in the Eastern market
and 6.2 in the Midwestern market, according to replies received from consumers in these areas. Quality
complaints were higher from the Midwestern market than from the Eastern market although the corn was in
the marketing system a shorter period of time. One explanation offered for this puzzling relationship is
that the Eastern market was developed later in the season after experiences in developing the Midwestern
market had enabled means of delivering the corn under more adequate refrigeration.

The relationship between the number of days required to distribute the corn and the number of complaints
received relative to quality and condition leads to the obvious conclusion that all possible measures
should be taken to distribute the prepackaged corn as rapidly as possible. If more retailers and whole-
salers had adequate refrigeration facilities, the time factor would not be so important. However, until
this necessary refrigeration is provided, it would seem desirable that producers of highly perishable pre-
packaged commodities such as sweet corn, should utilize a system which provides exceptionally rapid
distribution of the product through marketing channels.

The benefit of experience gained in conducting various experiments, especially in the use of adequate
refrigeration in transit, is dearly shown by the number of consumers complaining about quality or con-
dition of the corn they had purchased. The proportion of respondents returning cards placed in various
shipments who complained of an unsatisfactory product is shown in Table 3.

Table 3.-Relationship Between the Percentage of Corn Quality Complaints
and Replies to Cards Placed in Various Shipments of Sweet Corn
Prepackaged on Specified Dates, Spring of 1948
Shipment
Number Prepackaged Corn Replies to Cards Quality Complaints

Date Number Percent

1 April 21-22 581 15.3
2 April 30-May 1 199 13.6
3 May 18 178 44.4
4 May 19 120 17.5
5 May 24 174 19.0
6 May 27 104 7.7
7 June 10 473 8.7
8 June 16 99 13.1
9 June 17 164 7.3

Total or average 2,092 15.4


The trend of percentages of quality complaints definitely indicates that the quality of the corn distribu-
ted to the trade was materially improved during the latter part of the season. There is no reason to be-
lieve that consumers would be more or less interested in returning the questionnaires during the latter
half of the season. No information is available to indicate the average percentage of quality complaints
of all purchasers of the prepackaged sweet' corn since the experience of those customers not returning
questionnaires is not measured. Probably persons finding that they purchased an unsatisfactory product
were more inclined to return the questionnaire than those satisfied with their purchase.

Some typical comments of dissatisfied users are listed below:

1. Corn had sourish smell-is this an odor familiar to corn?
2. Before cooking, corn had a strange odor; after cooking it had a peculiar taste.






3. Lacked sweetness, otherwise completely sitisfactory.
4. Bought two packages-secondone soured after 4 days' refrigeration.
5. I was disappointed with it-the corn was soggy when cooked the usual way.
6. It should be dated-the one I bought seemed old.
7. I like the idea all right because it's ready to cook, but it tastes like field corn.
8. Believe cooking instructions should be included as I overcooked it.
9. It was dry and I don't think it was too fresh-the store kept it too long.
10. Looked perfect but sticks to your teeth-it has absolutely no taste.
11. Has a peculiar chemical taste.
12. Some dealers need information on handling and refrigerating product.
13. Doesn't keep on ice in ice boxes-must be used immediately.
14. The first package tasted more like peanuts than corn.

Size of Package Preference. Since there were approximately only 15 inches of edible corn in each
package, there was some question as to whether the size of the package was adequate for the average
consumer. In order to gather information on this point, consumers were asked whether the size of the
package was satisfactory or whether they would prefer a smaller or larger sized package. A summary
of these results is shown in Table 4:

Table 4.-Summary of Consumer Replies to Questionnaires Relative to
Preferences in Sizes of Consumer Packages of Prepackaged Florida
Sweet Corn, by Number of Persons in Household, Spring of 1948


Persons Consumer Preferences Regarding Pack ;e Size
in Household Larger Smaller O.K. No Comment Total
(Number) Package Package
Number Numbe Number Number, Number Percent

1 6 2 39 47 2.2
2 183 26 627 836 40.0
3 198 9 414 621 29.7
4 157 10 190 -357 17.1
5 45 1 53 99 4.7
6 17 16 33 1.6
7 5 1 6 .3
8 3 3 .1
10 1 1/
Not specified 1 -3 85 89 4.3

Total 615 48 1,344 85 2,092 100.0
1/ Less than 0.05 percent.






A total of 1,344 respondents advised that the size of the package was O.K.; 615 respondents advised
that they would prefer a larger sized package; and only 48 respondents preferred a smaller package.
Approximately twice as many consumers preferred the present size of package to a larger unit; therefore,
while consideration might be given to marketing a larger unit commanding proportionately higher price,
it would seem doubtful that the extra cost involved in marketing two different sized units would be
worthwhile. However, most merchandising experts agree that a serious problem is present. when one-
third of the customers are dissatisfied with a particular size of package. For this reason, it would seem
desirable to conduct further research on a trial basis to discover the relative advantages and disadvan-
tages of enlarging the. package and passing forward to the consumer a part of the savings in the form of
a less than proportionate increase in price.






Consumers were asked to report the number of members in their households. The most frequent size
of the family groups responding was only two members. In this group the ratio was more than three to one
in favor of the present sized package. The next largest sized group was families of three in which the
ratio was two to one in favor of the present sized package. Families of four were about evenly divided
in their preferences; 190 of the 357 families in this group thought the present sized package was satis-
factory and 157 expressed their preference for a larger package. One possible explanation of the lack
of interest of 4-member family groups for a larger sized package would be their reluctance to purchase a
higher priced package if, for example, they found the five 3-inch servings adequate. However, it is
understandable that families of four might find the package of corn containing the three 5-inch ears an
awkward unit for making four servings and undoubtedly many families in this group found it desirable to
purchase two packages. However, the numbers of families of four or more people who may have believed
that one package was inadequate, but who thought that two packages were too much and therefore failed
to purchase the corn at all, may have been considerable.

A surprisingly large number of respondents indicated their preference for an even number of ears in a
package; in fact, 80 respondents volunteered information that they would prefer an even number of ears.
Thirty-eight, or nearly half of this group, wanted four ears; 15 wanted either six or four ears; 14 wanted
six ears; seven wanted an even number of ears; three wanted two ears; two wanted "8 pieces"; and one
respondent wanted either six or nine ears.

Fifty-nine respondents expressed dissatisfaction with the short ears. Undoubtedly, many consumers
had never expected fresh sweet corn in anything but full sized ears and did not like the five 3-inch serv-
ings which many of the packages contained. About two-thirds of the corn was marketed this way. These
few complaints would not seem to constitute a serious objection, and there may have been a greater
number of consumers who preferred the five 3-inch servings as a method of "stretching" their food dollar.

Prices Paid by Respondents. The retail price generally charged for the 15 inches of corn, as reported
by respondents, was 29 to 30 cents as shown in Table 5:

Table 5.-Retail Prices of Prepackaged Florida Sweet Corn,
as Reported by Respondents, Spring of 1948

Price Per Package Respondents' Replies'
(Cents)
Number
24 and under ...... 107
25-28........... 184
29-30........... 1,401
31-33........... 180
34-39........... 133
40 and over ....... 1
Not specified ..... 86

Total 2,092


Although most of the respondents reported paying a price of 29-30 cents, 184 paid 25-28 cents; 180
paid 31-33 cents; 133 paid 34-39 cents, and 107 paid 24 cents or less. Prices above 29 cents were most
frequently reported in the Baltimore and Washington area, New England, and Atlanta, Ga. Earlier in the
season some experiments were carried on to determine consumer and trade reaction to a retail price above
29 cents, and a few shipments were retailed at 39 cents per package. The trade was reluctant, however,
to handle the corn at that price; consequently, it was. reduced to the 29-cent figure. In stores in which
U.S. Department of Agriculture representatives gathered retailing-cost and sales data, the average retail
price for the prepackaged corn was 30 cents per package in comparison with an average price of 24.8
cents for three ears of corn in the husk.






Some respondents thought the price was too high; 230 or 11 percent of the respondents indicated that,
in their opinion, the price was a little high for the quantity of corn received. Typical statements con-
cerning the price are listed below:


The high price paid for convenience.
Cleaned for cooking, price about same as for corn in husks.
Just a little high priced for ordinary working man.
Too high for quantity and quality received.
The price-no one but my 9-year old boy gets it.
Three small ears of corn at 29 cents is grossly overpriced in my opinion.
Should be packed four to package and price reduced.
Price to consumer too high.
Priced too high to buy often-as we all like corn.


Retail Store Sales

Retail Store Sales Local Market. The salability and cost of retailing prepackaged fresh sweet corn
were observed in retail stores in Tampa, Florida and in various Northern terminal markets. The local
market nearby Florida cities had handled the prepackaged sweet corn on a relatively small scale dur-
ing the 1947 season. This fact helped to create a more effective demand for the prepackaged sweet corn
in that area than was found in the Northern terminal markets in which the prepackaged corn was offered
for the first time during the 1948 season.

Although it would have been desirable to compare the relative salability of identical corn in prepack-
aged and bulk form, this was not possible since all of the prepackaged corn originated from one farm and
none of it was sold in the conventional bulk manner. Consequently, the influence of the difference be-
tween the quality and condition of the bulk corn which originated from various sources and the prepack-
aged corn could not be measured.


Fig. 2.-Prepackaged Sweet Corn on Display in a Refrigerated Case.
13






The relative salability of prepackaged sweet corn in comparison with bulk fresh corn and frozen con
was studied in the nearby city of Tampa, Florida, only 20 miles from the point of production of the corn.
The prepackaged sweet corn was delivered directly to the stores in Florida and retailed at approximately
the same price in these nearby markets as in the Northern markets. Sales and costs were obtained in
two retail self-service grocery stores in Tampa during the 1948 prepackaging season. The relative sales
of bulk and prepackaged fresh sweet corn and frozen corn are shown in Table 6:

Table 6.-Summary of Sales and Average Retail Prices Per Unit of Bulk and
Prepackaged Fresh Sweet Corn and Prepackaged Frozen Sweet Crn,
in Tampa, Florida, April-June 1948

Average Average TotalSales Percentage of
Sweet Corn Unit Retail Price Weekly Sales of Total Sales
Per Unit Per Store Sweet Corn of Sweet Corn
Cents Dollars Dollars Percent

Bulk, fresh ...... 3 ears 25.5 86.37 1,900.18 49.8
Prepackaged, fresh (5 ears (3")
(3 ears (5") 29.9 76.46 1,682.20 44.0
Frozen, cut ..... 12 oz. 27.1 -5.71 125.59 3.3
Frozen ears ..... 2 ears 26.4 5.25 110.15 2.9

Sales ot each item were calculated by subtracting price markdowns and spoilage losses from retail ex-
tension value of total amount handled. The sample includes two self-service grocery stores over a period
of 11 weeks. Data obtained in one store by R. J. Krueger were included in his thesis for a master's de-
gree at the University of Florida.
During this 3-month period the total sales of corn in fresh and frozen form amounted to approximately
$3,800, and nearly half (49.8 percent) of the total sales were bulk fresh corn. Although the price of the
husked fresh prepackaged corn was about 4 cents higher per unit of three ears, it accounted for 44 per


-r 1- ME .*t ..__ ip
.._I t!


Fig. 3.-Produce Department of a Self-Service Store, Showing Method of
Displaying Bulk or Unhusked Sweet Corn


at~ _v~i;


~-s~sS--






cent of the total sales or slightly less than the bulk corn in husks. Sales of frozen corn on the cob ac-
counted fdr only about 3 percent of the total, and sales of frozen cut corn in 12-ounce packages slightly
exceeded sales of frozen corn on the cob. The sales of frozen corn were relatively low during the height
of the fresh corn season, as would be expected. During the first three weeks in March 1948, just prior
to the fresh corn season, the average weekly sales'of frozen corn amounted to approximately $21 in com-
parison with the weekly average of $11 during the fresh corn season.

Retail Store Sales Terminal Markets. Arrangements were made to obtain sales and cost data in
retail stores in various terminal markets, which were to be supplied with both the prepackaged and bulk
sweet corn. In many instances, however, it was found that the store had not been supplied with both
types of corn because of some unforeseen development. Consequently, comparable sales and costs
records for prepackaged and bulk sweet corn were obtained for only eight days in four chain stores and
for only 15 days in seven independent stores, as shown in Table 7:

Table 7.-Sumnary of Sales and Average Retail Prices Per Unit of Bulk and
Prepackaged Fresh Sweet Corn, in Selected Stores at Various Terminal Markets,
May-June 19481/


Percentage of
Fresh Sweet Corn Average Retail Amount Handled / Amount Sold3L Total Dollar
Price Per Unit Sales
Cents UnitsL Dollars Units Dollars Percent

Prepackaged ... 30.1 587 176.70 582 174.85 39.6
Bulk ........ 24.8 1,242 307.66 1,080 267. 19 60.4


1/ Selected retail stores located in New York, Baltimore, Washington, and Atlanta, which handled both
Sbulk and prepackaged sweet corn each day. Observations include eight store days in four chain store
outlets and 15 store days in seven independent store outlets.
2/ Amount handled represents quantity available for sale.
3/ Amount sold determined by subtracting waste and spoilage losses from retail extension value of
amount available for sale.
4/ Unit of sale of prepackaged corn is either five 3-inch ears or three 5-inch ears and unit of sale for
bulk corn is three ears of varying lengths.


During these 23 days a total of 587 packages of prepackaged sweet corn was available for sale in these
stores in comparison with 1,242 three-ear units of bulk corn. One package is equivalent to about three
ears; consequently, it is apparent that about twice as much bulk com as prepackaged corn was available
for sale in these stores. Sales of the bulk corn, however, were not twice as large as the prepackaged
corn, since 582 of the 587 packages available for sale of the prepackaged corn were sold, whereas only
1,080 three-units of the 1,242 units of bulk corn were sold. However, equal supplies of prepackaged and
bulk corn were not always available throughout each store day. Since many retailers were rather cautious
in ordering this new type of packaged corn, sales as well as waste and spoilage losses may have been
lower than would be realized under more normal conditions. Sometimes the prepackaged corn, sometimes
the bulk corn would have the more advantageous display position, or would be displayed in larger quanti-
ties or more attractively. In some instances, supplies of both types of corn were not displayed throughout
the day. On the average, however, unit sales of bulk corn were about 85 percent greater than of prepack-
aged corn and about 50 percent greater in dollar sales.

The average retail price of sweet corn in terminal markets was approximately 25 cents per three ears
of bulk corn and 30 cents per unit for prepackaged corn. No comparisons were made of the relative sala-
bility of the prepackaged and bulk sweet corn at varying or identical price levels because of lack of time
and personnel.






About half (49.2 percent) of the weekly sales of prepackaged corn were made on Friday and Saturday,
although over two-thirds (68.9 percent) of the bulk corn sales were made on Friday and Saturday. It would
be expected that sales of the "kitchen serviced" prepackaged corn would be relatively greater than of
bulk corn during the early part of the week to meet the demands of "working housewives" who have limited
time to prepare the evening meal.

Summary of Consumer Acceptance

Most of the respondents returning questionnaires which were placed inside the consumer packages of
sweet corn indicated that they were pleased with the quality of the corn and particularly its flavor, and
that they especially liked buying the corn already husked and cleaned ready to cook a service which
eliminated the unpleasant household task of preparing the corn. A large number of respondents appre-
ciated the fact that they could see what they were buying and that there was no waste or unusable corn
in their purchases. On the other hand, about 15 percent of the respondents indicated that the quality or
condition of the prepackaged corn which they had purchased was in some way unsatisfactory. A sizable
number of consumers wanted a larger package and some preferred an even number of ears per package.

The importance of delivering a product of high quality and top condition has been demonstrated. Di-
rect marketing from the grower or prepackager to the retail store or to a wholesaler who has refrigeration
facilities and means of distributing the corn under optimum conditions to the retail stores, appears ad-
visable at this stage of the experiment. Further experiments are necessary to develop a package
of suitable design and size. Objections to segmented ears were not significantly large. Over a third
of the respondents indicated that they had previously purchased "Ruskin" prepackaged sweet corn,
thus indicating that these consumers were generally satisfied with their previous purchases.

Limited observations of retail store sales indicate that over one-third of the total sales of sweet corn
were prepackaged corn, sold at an average price premium of about 5 cents per equivalent unit of sale.
This indicates that a considerable number of the customers prefer the prepackaged product, even to the
extent that they were willing to pay a substantial premium.

This sample of data is so small that one cannot conclude that a similar relationship would exist for
a larger number of observations. Varying price levels of corn would also affect this relationship. Con-
sequently, it is necessary to conduct more extensive studies to ascertain the relative demand for pre-
packaged sweet corn as compared with that for bulk corn.



COSTS OF MARKETING BULK AND PREPACKAGED SWEET CORN

Harvesting and Packaging Costs


In studying comparative costs of harvesting, packaging, and selling prepackaged and bulk sweet corn,
the objective has been to concentrate attention on only those costs which are different in the two ways
of handling. However, since differences were not known in advance some costs, such as for harvesting,
which are about identical for the two methods are also shown here.

Costs for prepackaged produce have been studied at two places on the farm or point of packaging
and in the retail stores. On the farm, costs of harvesting and hauling to packing shed, packing and load-
ing, packaging materials, and overhead were obtained, as well as the wholesale selling and delivery
costs. In the retail stores, records were kept of waste and spoilage losses and direct labor costs.

Costs were first calculated on a per-carton basis for prepackaged corn, and on the basis of a 5-dozen-
ear crate for bulk corn. In order to facilitate cost comparisons between prepackaging and bulk packaging,
the per-carton costs have been converted to the same quantity basis as a 5-dozen crate by multiplying by
1.5. On the basis of tests made by hand husking and weighing, it appears that one bulk crate of 60 No. 1
ears would result in about 1.5 cartons of prepackaged corn. A carton of 12 packages, each holding three
ears, would contain 36 ears, or only 54 ears for 1.5 cartons. However, in husking, some unsuitable ears





are discovered and the husking and cutting machinery damages some ears, which results in some loss in
the prepackaging operation.

Costs for packaging and handling bulk sweet corn were not studied in detail in 1948 on a basis com-
parable with those for prepackaged corn. Studies were made by the Florida Agricultural Experiment Sta-
tion in 1947 on most items of cost, and adjustments have been made from these figures to obtain esti-
mated costs for 1948. Although not as accurate as the prepackaging costs, they are believed reliable
enough to give a reasonably close comparison.


Fig. 4.-Unloading Sweet Corn onto a Conveyor Belt for Husking.
The Tractor Carts Are Used to Bring It from the Field.


In Table 8 are shown the harvesting and packaging costs for sweet corn, both prepackaged and bulk.
Packaging materials cost 47 percent more for prepackaged corn than for corn packed in bulk crates.
Direct labor cost was the same for harvesting corn packaged either way, but direct labor for prepackaging
was about 2.4 times as much as for bulk packaging. Labor for loading prepackaged corn in trucks was
less than for loading corn packed in crates, but the cost of labor for this operation is small.

A prepackaging plant requires a much larger financial outlay for handling the same volume than does a
plant for packing a product in bulk or conventional containers. Machinery costs and requirements are
much larger, a better building is needed to help provide a sanitary place to work, and more expensive
precooling and refrigeration equipment are required. Thus a higher overhead cost results from higher
depreciation, repairs, insurance, taxes, and supervision.

Overhead costs were much higher for prepackaged corn, being $0.28 per equivalent crate, as compared
with $0.09 for corn packed in crates.

The total cost of harvesting and prepackaging corn was $1.04 per equivalent crate, and for 'harvesting
and packing ears in bulk crates was $0.58.






~.'


Pig. 5.-Packing Sweet Corn in Trays Before Wrapping with Cellophane.


From Table 8 it can be seen that in prepackaging sweet corn more money is invested in the final packed
product than in bulk packaging. Should selling prices fall drastically, it might be difficult for the pre-
packaging operator to bear these costs and make a profit. It thus becomes important to be alert for any
possible means of reducing handling costs.

Table 8.-Harvesting and Packaging Costs for Sweet Corn, Spring of 1948

Prepackaged Sweet Corn Bulk Sweet Corn
Equivalent of a Crate of
Items of Cost Carton of 5-Dozen Crate 5-Dozen Ears
12 Packages of Bulk1L


Packing materials:
Film ....................
Trays ...................
Cartons ..................
Crates ........

Total materials

Direct labor:
Harvesting ...............
Hauling ..................
Packing .................
Loading ..................

Total direct labor

Overhead (depreciation, repairs,
insurance, taxes, supervision)


Dollars


0.050
.098
.142


Dollars

0.075
.147
.213


Dollars


0.295
-


0.290 0.435 0.295



0.037 0.056 0.056
.016 .024 .024
.152 .228 .095
.005 .007 .015

0.210 0.315 0.190


0.190


0.285


0.090


Total harvesting and packing costs 0.690 1.035 0.575

I/ Converted at the rate of 1.5 cartons per crate of 5-dozen ears.





Beyond savings from large-volume buying and the taking of discounts, the packer cannot effect much
change in the cost of materials used. There was a rather heavy waste of some prepackaging materials
in 1948, perhaps due somewhat to inexperience, and in part to defective materials. The automatic ma-
chine which opened packages had an average breakage of packages, according to sample checks on 26
days, of 7.8 percent. On some days breakage was observed to run as high as 25 percent. The package
overwrapping machine had an average package breakage of 0.4 percent, and a film breakage of about 4
percent. The.breakage by this machine was lessenedtoward the latter part of the season, possibly indi-
cating better machine adjustment.


4cr


jEij


Fig. 6.-An Automatic Machine Setting up Packages for Sweet Corn. The Packages Move
by Gravity Down a Chute Within Reach of the Packers. See Fig. 5.


Fig. 7.-Sweet Corn Packages Moving on a Conveyor into the Machine for Overwrapping with
Cellophane. At the right, the Wrapped Packages Are Being Placed in Ventilated Cartons
for Cold Storage and Shipment.






To keep labor costs and overhead at a minimum, a large volume per worker employed and continuous
operation are needed. Field production schedules in 1948 did not permit continuous operation. Labor-
saving devices and plant arrangement also are very important in keeping labor costs low, and these re-
quirements have been met in greater measure in the plant observed than the first two requirements.

The relation of direct labor cost to daily volume in prepackaging sweet corn in 1948 is shown in Table
9. The labor cost per carton, when less than 500 cartons were packed per day was $0.309, whereas for a
volume of 1,500 cartons or more the labor cost was only $0.130 per carton. With each decrease in volume
packed there was some increase in packing cost, but it became very pronounced when the daily volume
fell below 500 cartons.

The average distribution of direct labor in prepackaging sweet corn by operations is shown in Table 10.
This is based on hours of labor required rather than on cost of labor. Preparation of the corn for prepack-
aging by husking, sorting, and cutting consumed 53.5 percent of the labor, and making containers, pack-
ing, wrapping, and storing in the cold room required 44.6 percent.




Table 9.-Relationship Between Direct Labor Costs for Prepackaging
Sweet Corn and the Average Daily Volume Packaged, 1948


Cartons Average Daily Direct Labor Range in Direct
(Containing Observations Volume Cost Per Labor Cost
12 Packages) Packaged Carton Per Carton
Number Cartons Dollars Dollars

Less than 500 ..... 10 307 0.309 0.242 to 0.439
500 to 999 . . 18 793 .168 .124 to .244
1,000 to 1,499 .... 20 1,275 .146 .098 to .202
1,500 to 2,056 .... 15 1,688 .130 .105 to .164

Total or average 63 1,082 0.152 0.098 to 0.439




Table 10.-Average Percentage Distribution of Direct Labor Costs
in Prepackaging Sweet Corn, by Operations, 1948

Operation Percentage of Direct
Labor Costs



Making cartons and packages (trays) . . . . .... . . .. 10.3
Unloading field carts ...... .... . . . . .... ... 4.3
Feeding husking machines . . .... . .. . . . 12.8
Sorting and cutting husked corn . . . . . . . ... . 36.4
Grading and packing in trays . . . .... . . . . .... 16.9
Transferring to wrapping machine . . . . .... . . .. 3.8
Packing trays in cartons . . . . . . . . . . 7.4
Operating wrapping machine . . . .. . . . . .. 3.1
Cold room man (storing packed cartons) .. . . . .... 3.1
Other labor .. .. .. . . . .. . . .. .. .. . 1.9

Total 100.0






Distribution Costs


Distribution costs for sweet corn include selling and delivery costs to the market or terminal warehouse.
These are shown for 1948 in Table 11:
Table 11.-Distribution Costs for Prepackaged and Bulk Sweet Corn,
Spring of 1948



Prepackaged Sweet Corn Bulk Sweet Corn
Equivalent of a
Distribution Costs Carton of 5-Dozen Crate Crate of
12 Packages of Bulkl/ 5-Dozen Ears

Dollars Dollars Dollars
Selling cost:
Selling . . . ... 0.11 0.165 0.21
Advertising ....... .03 .045 _
Total selling 0.14 0.210 0.21

Delivery cost: ...... 0.31 0.465 0.552/

Total distribution costs 0.45 0.6754/ 0.763/


I/ Converted at the rate of 1.5 cartons per crate of 5-dozen ears.
2/ 1947 average cost of freight, ice, cartage, and unloading.in all markets used by one organization. No
similar data were collected for 1948..
3/ Estimated by deducting F.O.B. price as reported by Bureau of Agricultural Economics plus delivery
cost from cost of corn to wholesaler.
4/ Allowances or refunds to distributors of $0.093 per carton or $0.140 per equivalent crate were made on
prepackaged corn in addition to this cost.

Selling cost includes the expense of the local sales agent, brokerage or commission paid special dis-
tributors in terminal markets, and advertising cost. The cost of sales salaries, and expenses, brokerage,
and commission on prepackaged sweet corn in 1948 averaged $0.165 per equivalent crate. Since prepack-
aged corn was a comparatively new product, it was rather extensively advertised, and this form of sales
promotion cost an additional $0.045 per equivalent bulk crate, thus making a total selling cost of $0.210
for the outlets used.

The selling cost per crate for bulk corn was not studied in 1948. From studies of the retail selling
price of bulk sweet corn, retail margin, and the average F.O.B. price of bulk the average selling cost
per crate for bulk corn has been determined by deduction to be about $0.21 or the same as for prepackaged
sweet corn. This is an average for all types of sales. Selling agencies usually charge $0.06 to $0.10 per
crate for handling bulk corn. Then there is a commission charge at the terminal market on consigned
sales of 10 percent in addition. Thus, the selling cost for some of the bulk corn could easily be twice
as much as the average of $0.21.

All prepackaged sweet corn was delivered by refrigerated truck to both local and distant markets. De-
livery cost averaged $0.465 per equivalent crate. Delivery costs for bulk were not studied in 1948, but
averaged $0.55 in 1947 to all markets used by one organization. This amount included freight or truck
expense, ice, cartage, and unloading, but can be considered only approximate. Delivery costs for bulk
or prepackaged produce, of course, vary with distance to markets used. Delivery costs for prepackaged
sweet corn were about 15 percent less than the estimated costs for the same quantity of bulk corn. When
prepackaged, sweet corn was found to weigh only 43.5 percent as much as the same original quantity of
corn in the husk packed in 4/5-bushel or 5-dozen-ear crates. However, the prepackaged volume was 56.1
percent of the bulk packed volume, and when loaded in trucks after allowing necessary air space, the pre-
packaged volume was 71.2 percent of the bulk volume, as shown in Table 12. No allowance has been made
for snow ice between the layers of bulk crates which would make them occupy somewhat greater volume.
21






The saving in packed weight by prepackaging sweet corn is significant, amounting to 56.5 percent; the
saving in volume as packed amounts to 43.9 percent; the saving in cargo space as loaded amounts to
28.8 percent, or more if an allowance is made for snow ice in bulk shipments.

Table 12.-Comparison of Weight and Volume of Sweet Corn in Crates,
Packed in Bulk, and in Prepackaged Cartons


Net weight of corn . . . .
Add: Packaging materials ..


I Bulk Corn


One 4/5-bu.
Crate


Pounds

38.2
4.3


Prepackaged Corn


One Equivalent
Crate
(1.5 Cartons)


Pounds

16.3
2.2


Percentage,
Prepackaged
of Bulk Weight

Percent

42.7


Total packed weight 42.5 18.5 43.5


Size of one package
(outside measurement) .....

Volume when packed ........
Volume as loaded in truck . .


9.5" x 11.25"
x 24"
2,565 cu. in.
2,565 cu.in./


I I


11.5" x 11.5"
x 7.25"
1,438 cu. in.
1,826 cu.in.2


56.1
71.2


1/ Allowance has not been made for snow ice between layers or rows.
2/ An air space of about 3.1 inches is left between rows of cartons to improve refrigeration, making car-
tons take up a space of 14.6" x 11.5" x 7.25".

Retailing Costs

Cost of Retailing Prepackaged and Bulk Corn Local Market. Two of the most important cost elements
in retailing fresh sweet corn are waste and spoilage losses and labor required to sell the corn. When a
particular marketing service, such as the function of packaging, is transferred from one point in the market-
ing system in this instance the retailer to another poiat in the marketing system in this case the ship-
per the complete cost of marketing the product each way must be examined. For this reason, accurate
records of waste and spoilage losses and costs of direct labor required to sell the bulk and prepackaged
corn were obtained in two self-service stores in Tampa, Florida over an 11-week period.



The relative cost of waste and spoilage losses, as observed in these two stores, is shown in Table 13:

Table 13.-Waste and Spoilage Losses in Retailing Bulk and Fresh Prepackaged
Sweet Corn, Tampa, Florida, April-June 1948


Waste and Spoilage Loss
Sweet Corn Average Price Realized Percentage of
(3 ears) from Sales Amount Sales

Cents Dollars Dollars Percent

Bulk, fresh . . ... 25.5 1,900.18 407.70 21.5
Prepackaged, fresh . 30.0 1,682.20 75.62 4.5


,


Bulk flora





The retail extension value of the bulk sweet corn handled in these two stores amounted to $2,307.88 and
waste and spoilage losses amounted to $407.70, leaving estimated realized sales of $1,900.18. The retail
extension value of the prepackaged sweet corn amounted to $1,757.82, and after subtracting $75.62 value
of waste and spoilage losses, estimated realized sales amounted to $1,682.20. The relative cost of waste
and spoilage losses is evident when shown as a ratio to net sales 21.5 percent for bulk and 4.6 percent
for the prepackaged corn. Obviously, then, on the basis of this cost factor alone, these retailers would
have needed to charge a larger percentage-wise sales margin on the bulk corn to realize a corresponding
net profit. Although the difference in the cost of waste and spoilage losses is tremendous, a less, al-
though sizable, saving in efficiency of retail labor also is realized in handling the prepackaged corn.
Accurate records of direct labor as measured by stop watches reveal that another 6.4 percentage sales
margin saving was realized on this cost factor. Of course, the savings resulting from increasing the ef-
ficiency of retail labor are not actually realized until the point is reached when one less man is needed
or until increases in sales volume are realized at no additional cost for required labor.

Table 14 shows the comparative efficiency in labor utilization in retailing bulk and prepackaged sweet
corn as measured in these two stores.

Table 14.-Cost of Direct Labor in Retailing Bulk and Fresh Prepackaged
Sweet Corn, Tampa, Florida, Spring of 1948

Labor Require- Sales Direct Labor Cost
Sweet Corn Days ments in Realized Per Amount Percentage
Observation Minutes Sales Man-Hour of Sales

Number Number Dollars Dollars Dollars Percent

Bulk ... 128 11,317 1,900 10 131.34 6.8
Prepackaged 123 575 1,680 175 7.42 0.4

Nearly 190 man-hours were required to sell $1,900 worth of bulk corn in comparison with less than 10
man-hours of labor required to sell $1,680 worth of prepackaged corn. Sales of bulk corn per man-hour
averaged $10 in comparison with $175 for prepackaged corn. The cost of labor required to sell the bulk
corn was $131.34.in comparison with $7.42 required to sell the prepackaged corn, thus making the "wage
percentage" average 6.8 for bulk and 0.4 for prepackaged corn. This sizable difference in labor effi-
ciency is due, of course, to the fact that the prepackaged corn required only the labor needed to display
it on the produce rack and to store reserve supplies in the refrigerated storage cooler, while the bulk
corn required these services plus the labor needed to prepare the corn for sale by cutting a "window"
in the husks.

Costs of Retailing Prepackaged and Bulk Gan Terminal Makets. The comparative costs of retailing
prepackaged and bulk fresh sweet corn, as observed in selected retail stores in various terminal markets,
are shown in Table 15. The average original gross margin (sometimes called markup) on the prepackaged
corn amounted to 2L1 percent of the retail extension value of the carn in comparison with 26.1 percent
on the bulk corn. Although the original gross mggin averaged about 5 percent greater on the bulk corn
than on the prepackaged corn, the final gross margin (realized gross profit before overhead) averaged about
5 percent greater on the prepackaged corn. Direct labor costs as a percentage of sales in these retail
stores averaged 1.2 percent on the prepackaged corn in comparison with 4.0 percent on the bulk corn,
indicating a saving of approximately 2.8 percent in the cost of labor required to merchandise the pre-
packaged corn. Average sales per man-hour of prepackaged corn amounted to $102.33 in comparison
with average sales of $16.18 for bulk corn.

Spoilage losses on the prepackaged corn were also materially less than they were on the bulk crn
and averaged 1.1 percent of net sales in comparison with 124 percent on the bulk corn.

The relative difference in retail. labor costs and waste and spoilage losses found in the two stores in
Tampa, Florida and in various stores located in terminal markets, cannot be attributed to any particular
factors other than that expected from sampling error. It was found, however, that the policy ofdistribut-






ing prepackaged crn on a "consignment basis" to the stores in Florida resulted in greater waste and
spoilage losses due to overstocking than was found after the "outright sale" policy was adopted.


Table 15.-Retail Margins and Costs for Prepackaged and Bulk Sweet Corn
Handled by Self-Service Grocery Stores in Terminal Markets, May-June, 1948Y-




Sweet Corn Unit Prepackaged Bulk

Average retail price . . . . .. Cents 30.1 24.8

Quantity handled and retail extension
value . . . . . . . .. units 587L 1,242--
dollars 176.70 307.66

Quantity sold and calculated realized
sales/ ................ units 582 1,080
dollars 174.85 267.19

Cost to retailers of corn handled . . .. dollars 139.38 227.41

Original gross markup margin- . . .. dollars 37.32 80.25
percent 21.1 26.1

Direct labor costZ/ .. . . .... dollars 2.10 10.82
percent 1.2 4.0

Sales per man-hour . . . . .... .dollars 102.33 16.18

Spoilage loss8/ . . . . .... .dollars 1.85 33.16
percent 1.1 12.4

Final gross margin . . . ... .dollars 33.37 36.27
percent 19.1 13.6

1/ Selected retail stores located in New York, Baltimore, Washington, and Atlanta, handling both types
of corn each day. Observations include eight days in four chain store outlets and 15 days in seven
independent store outlets.
./ Retail extension value determined by multiplying amount handled by retail selling price.
3I Consumer packages containing either three 5-inch ears or five 3-inch servings.
4/ Units of three ears roughly equivalent to one consumer package.
5/ Calculated realized sales equal retail extension value less the spoilage loss.
6/ Original gross margin (sometimes called markup) equals retail extension value less cost of corn to
retailer.
7/ Determined by time studies taken in retail stores.
8/ Spoilage losses recorded by USDA representatives in retail stores.
9/ Original gross margin less cost of direct labor and spoilage losses.

The final gross sales margin as determined by the difference between the sales value of the corn and
the cost to the retailer of the corn sold, less direct labor cost and spoilage losses, amounted to 19.1
percent on.the prepackaged corn in comparison with 13.6 percent on the bulk corn. This indicates that
the prepackaged corn was relatively more profitable per equivalent unit of sale than was the bulk corn,
by approximately 512 percent per sales dollar.

In terms of dollars, the average final gross margin was nearly as great on the prepackaged corn as it
was on the bulk corn, even though nearly twice as much bulk corn was handled.





The calculated final gross margin to the retailer averaged approximately $33,00 for 582 packages of pre-
packaged corn in comparison with approximately $36.00 for 1,080 equivalent 3-ear units of bulk corn.

It is quite apparent, therefore, that these retailers found it relatively more profitable to handle prepack-
aged corn than bulk corn. However, since more customers apparently preferred purchasing the bulk corn
to the prepackaged corn, after taking into account the price and quality differentials, the average retailer
at this time would probably find it desirable to handle both types of corn in order to satisfy a maximum
number of customers. Whether the average total sales of corn by retailers handling both prepackaged and,
bulk corn were more or less than those of comparable retailers handling either type exclusively is not
known.

The size of the sample from which these observations were made on the cost of retailing prepackaged
and bulk corn is small and probably cannot be considered representative of the average retailer's experi-
ence in merchandising these products. However, it is apparent that in these sample observations the
average spoilage loss and the average cost of labor required to sell the prepackaged corn are considerably
lower than those in retailing bulk corn. The economic advantages that would be gained by such reduc-
tions in the cost of retailing prepackaged corn over bulk would be considerable. It is probable, however,
that these observations need verification or modification by additional data. On the other hand, there is
no basis for believing that a larger sized sample would materially alter these conclusions.

GROSS RETURN TO GROWER FOR PREPACKAGED AND BULK SWEET CORN

The grower's return from marketing sweet corn is the net result of many factors relative salability
and consumer acceptance of the product, selling price, and all marketing costs from the field to the con-
sumer. The estimated gross return to the grower for prepackaged and for bulk sweet corn in 1948 is
shown in Table 16. Average retail selling prices and retail margins were obtained from studies in re-
tail stores handling prepackaged sweet corn. The average cost of prepackaged sweet corn to the retailer
also was known from records of sales at the prepackaging plant. Wholesale margins and transportation
costs were obtained at the packaging plant for prepackaged corn; they were obtained for bulk corn by de-
ducting the F.O.B. packed price at the shipping point from the cost of the product to the retailer. Whole-
sale margins include wholesale selling charges, advertising, and allowances made for quality deteriora-
tion. Allowances are, of course, passed back to the grower in total. None are included in the bulk column,
and they may have been deducted from the F.O.LB shipping point price.

Table 16.-Gross Return to the Grower for Prepackaged and Bulk Sweet Corn

Item Per Carton Per Equivalent Crate
Prepackaged of 5-Dozen Ears
Prepackaged Bulk
Dollars Dollars Dollars

Retail selling price . . . . ... 3.60 5.40 5.04
Less retail margin ............ .85 1.27 L38
Cost to retailer . . . . . . 2.75 4.13 3.66
Less wholesale margin and
transportation ............. .54 .81 .76
F.O.B. shipping-point price . . . . 2.21 3.32 2.90
Less packaging cost . . . . .64 ,96 .50
Gross return to grower (before
allowing for costs of harvest-
ing and growing) 1.57 2.36 2.40

F.O.B. shipping point prices for prepackaged corn were obtained from sales records of the packing plant;
for bulk corn the price was reported by the Crop Reporting Service, Bureau of Agricultural Economics,
Orlando, Florida. Prepackaging costs for 1948 were obtained at the packing plant; bulk packaging costs
were obtained in 1947 and adjusted for 1948 by estimates and a small amount of data from one grower.





Prepackaged corn sold for a somewhat higher retail price for the same original quantity than did bulk
corn, the average price being $5.40 and $5.04, respectively, per equivalent crate of five dozen ears.

The retail margin was lower on prepackaged corn than on bulk, probably reflecting to some extent the
lower waste and spoilage, and lower labor requirements for handling. Estimated average retail margins
were 23.5 percent for prepackaged corn and 27.4 percent for bulk.

The wholesale margin and transportation costs were somewhat greater on prepackaged corn than on
bulk, but the $0.81 shown as the wholesale margin and transportation cost on prepackaged corn also in-
cludes allowances made for deterioration of quality amounting to $0.093 per carton or $0.140 perequiv-
alent.-crate prepackaged.

After deducting packaging costs from the F.O.B. price, the gross return to the producer for growing and
harvesting was close to the same for both methods of packaging. The difference of $0.04 per crate in
favor of bulk is considered within the range of errors in estimates.

It should be clearly understood that the tables which have been presented on costs and returns are
the result of one year's experience only. During the marketing season of 1948, bulk sweet corn enjoyed
an unusually favorable market. Prepackaged corn was a relatively new product ;thus, it is much more
difficult to evaluate how the sale of it would react to a stronger or weaker market for bulk corn.

In 1948, the consumer paid a slight premium for prepackaged corn. Had this not been true the grower
would not have done as well on the sale of prepackaged corn as on bulk. How long the consumer will be
willing to pay a premium, and how much he is willing to pay for extra services under different economic
conditions, remain to be seen.

However, the possibilities of lowering costs of prepackaging in the future are good. Prepackaging of
vegetables is much further from a standardized operation than bulk packaging. As a result of experience
and study it may be possible to lower some items of packing cost. Furthermore, lowering of retail mar*
gins on prepackaged produce may be possible in the future. Previous analyses have already shown that
waste and spoilage of sweet corn in retail stores were less on prepackaged than on bulk corn, and that
store labor required for handling was also less.

Thus, it may be that the additional costs of prepackaging sweet corn over bulk packaging can be largely
offset by lower transportation costs, less spoilage in the marketing system, and lower retail handling costs.

Another limitation to the comparisons which have been drawn between prepackaged and bulk sweet corn
is that conversions have been made from bulk to prepackaged by comparing pack-out ratios. Weighed and
counted samples of bulk corn have been husked by hand, machine-cut, graded, and recounted and weighed
to determine the ratio between bulk and prepackaged corn. This method is not wholly satisfactory, since
the yield may not be the same for each kind of packaging. In bulk packing of corn, some ears are inevi-
tably included which are wormy or which have unfilled sides, because such defects cannot be detected
with the husk on. When husked for prepackaging such ears must be graded out if after trimming for uni-
formity, the ear is still defective. There is a further loss of ears in husking and cutting by machine,
since some are unavoidably damaged. This loss in husking and trimming has not been measured.

Under some conditions shorter ears may be used in prepackaging sweet corn than in bulk packaging
if they are sound and of good quality.

Another factor not measured in prepackaging sweet corn is the value of the by-products husks and
trimmings from the ears, and defective ears culled out. Under some conditions this material might prove
very valuable for cattle feed, and bring in some return aside from prepackaged corn sales.





































Fig. 8.-Husks, Trimmings, and Defective Ears of Sweet Corn
Are Hauled off for Cattle Feed.







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