Special Margins and Costs Studies

Excerpts from the report Preface: The total food marketing bill rose from 9 billion dollars in 1940 to 34 billion dollars in 1956. This uninterrupted annual increase can be accounted for largely in terms of (1) the larger volume of food required to feed 38 million more people; (2) a persistent rise in the prices of all services and materials ; and (3) an increase in the built-in services sold with food. Although retail food prices have remained fairly stable during the last two years, there is a growing concern about the rise in marketing costs, the net effect of which is to lower prices to farmers. We find, therefore, that farmers and consumers are asking whether prevailing processing and marketing charges are a realistic reflection of the costs of performing the numerous services needed to move products from the farm to the consumer. Because of this deep-rooted interest in the cost of food, Congress in 1955 directed the Department of Agriculture to make a number of special studies of the margin or spread between prices farmers receive and consumers pay for food. A number of these special reports have been published and they have helped to explain the relationships of marketing services to marketing costs. The highlights of some of the published reports were submitted as a part of the testimony relating to the 1958 appropriation hearings of the Department of Agriculture, before the Subcommittee of the Committee on Appropriations, House of Representatives, Eighty-fifth Congress, First Session. This special report follows.