Developments in Marketing Spreads for Agricultural Products in 1968

Report Highlights: 1. The retail cost of the market basket of farm foods averaged 3½ percent higher in 1968 than in 1967. Food costs rose through August and stabilized in the remainder of the year. The retail cost of the market basket averaged the same in the third and fourth quarters of 1968. 2. Farmers received about 5 percent more for food commodities in 1968 than in 1967. Higher farm values for meat products and fresh fruits and vegetables accounted for three-fourths of this increase. 3. The farmer's share of the dollar consumers spent for food averaged 39 cents in 1968--1 cent more than in 1967. 4. The spread between the retail cost and farm value of the market basket widened about 2½ percent in 1968, continuing a long-term upward trend. The increase in 1968 was double the annual average increase of the past decade. The farm-retail spread increased for all product groups in 1968, although the percentage increase for fresh fruits and vegetables was about 3 times greater than for other food groups. 5. Marketing costs continued to rise in 1968. Prices paid by food marketing firms for goods and services rose 3 to 4 percent in 1968, while hourly earnings of persons employed by food processors, wholesalers and retailers rose 6 percent. 6. Firms marketing farm products earned about the same profit in 1968 as in 1967. Profits after taxes of 15 leading retail food chains averaged 1 percent of sales in the first 9 months of 1968. This was the same as a year earlier, when it was the lowest since 1957. Profits of corporations manufacturing food products amounted to 2.4 percent of sales in the first 9 months of 1968, the same as a year earlier. 7. Per person expenditures for all food amounted to $503 in 1968--5½ percent above a year earlier. Although food expenditures rose, the percent of consumer disposable income spent for food declined slightly in 1968 to around 17.2 percent. 8. Labor productivity in food marketing rose substantially throughout the 1950's and early 1960's. Gains in labor productivity have been greater in food manufacturing than in food distribution, although productivity gains of both have been comparable to the total nonfarm sector of the economy. 9. Increased productivity partially offsets rising labor costs. From 1957-59 to 1967, food marketing labor costs per hour rose 47 percent while unit labor costs rose only about 18 percent.