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Spatial equilibrium analysis for Canadian apple production Gilmor, Gary 1970

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SPATIAL EQUILIBRIUM ANALYSIS FOR CANADIAN APPLE PRODUCTION by GARY GILMOR .S . A., University of British Columbia, 1968 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE i n the Department of Agricultural Economics We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA July, 1970 In present ing t h i s thes i s in p a r t i a l f u l f i l m e n t o f the requirements fo an advanced degree at the Un i ve r s i t y of B r i t i s h Columbia, I agree that the L i b r a r y sha l l make i t f r e e l y a v a i l a b l e for reference and study. I f u r the r agree that permission for extens ive copying o f th i s thes i s f o r s c h o l a r l y purposes may be granted by the Head of my Department or by h i s representa t i ves . It i s understood that copying or pub l i c a t i on o f t h i s thes i s f o r f i n a n c i a l gain sha l l not be allowed without my wr i t ten permiss ion. Department of Cc^yict • / ^ g W ^ t ^ The Un iver s i t y o f B r i t i s h Columbia Vancouver 8, Canada Date //1/U£*t*JX ABSTRACT The ma i n pu rpo se o f t h i s s t u d y was t o examine a s p e c t s o f i n t e r r e g i o n a l c o m p e t i t i o n i n f r e s h a p p l e p r o d u c t i o n i n Canada . Two s p a t i a l e q u i l i b r i u m m o d e l s , namely t h e t r a n s p o r t a t i o n mode l and t h e s u p p l y - d i s t r i b u t i o n mode l were u sed i n e s t a b l i s h i n g i n t e r r e g i o n a l t r a d e p a t t e r n s f o r f r e s h a p p l e s unde r g i v e n e f f i c i e n c y c r i t e r i a , w i t h m a j o r r e f e r e n c e t o t h e p e r i o d J u l y 1 s t . 1965 t o June 3 0 t h 1966. The a r e a s t u d i e d i n c l u d e d a l l o f Canada w h i c h was d i s a g g r e g a t e d i n t o s u p p l y and demand r e g i o n s each h a v i n g a r e p r e s e n t a t i v e p o i n t o f o r i g i n . The t r a n s p o r t a t i o n mode l c o m p r i s e d 9 d o m e s t i c s u p p l y p o i n t s , a l l o w i n g f o r i m p o r t p o i n t s o f e n t r y , and 10 d o m e s t i c demand p o i n t s . The s u p p l y - d i s t r i b u t i o n mode l u t i l i z e d t h e f o u r m a j o r a p p l e p r o d u c i n g r e g i o n s i n Canada t o g e t h e r w i t h t h r e e U n i t e d S t a t e s s u p p l y p o i n t s , w h i l e m a i n t a i n i n g t h e same 10 d o m e s t i c demand p o i n t s . The r e s u l t s o f t h e s t u d y i n d i c a t e t h a t t h e C a n a d i a n f r e s h a p p l e i n d u s t r y t end s t o be o r i e n t e d a round two d i s t i n c t d o m e s t i c ma r ke t a r e a s , one composed o f t he w e s t e r n p r o v i n c e s and t h e o t h e r t h e e a s t e r n p r o v i n c e s . Hence , B r i t i s h C o l u m b i a as a p r o d u c i n g r e g i o n f o r f r e s h a p p l e s can be i d e n t i f i e d m a i n l y w i t h a l l demand r e g i o n s i n t h e we s t as f a r as W i n n i p e g . I n t h e e a s t , t h e t h r e e m a j o r a p p l e p r o d u c i n g a r e a s : Nova S c o t i a , Quebec and O n t a r i o c an be i d e n t i f i e d m a i n l y w i t h t h e i r own r e g i o n a l demand c e n t r e s . W i t h t h e i n c l u s i o n o f t h e t h r e e U n i t e d S t a t e s s u p p l y p o i n t s i n t h e a n a l y s i s , t h e o v e r a l l t r a d i n g p a t t e r n d i d n o t undergo any s i g n i f i c a n t change . Under two s i t u a t i o n s t e s t e d , no r e commenda t i on was made f o r s h i pmen t o f f r e s h a p p l e s f r o m a U n i t e d S t a t e s s u p p l y p o i n t t o a C a n a d i a n demand p o i n t . Under t h e c o n d i t i o n s a s sumed, t h e r e f o r e , p r o d u c t i o n o f f r e s h a p p l e s i n t he U n i t e d S t a t e s was n o t shown as m e e t i n g t h e c o m p e t i t i o n i n Canada f r o m d o m e s t i c p r o d u c e r s . W h i l e t h e mode l i n c o r p o r a t e s s e v e r a l s i m p l i f y i n g a s s u m p t i o n s , t h e s t u d y p r o d u c e s new i n f o r m a t i o n on t h e c o m p e t i t i v e s t r u c t u r e o f Canad i an f r e s h a p p l e p r o d u c t i o n . F u r t h e r m o r e , i t w o u l d a p p e a r t o e x h i b i t m e t h o d o l o g i c a l v a l u e i n t h e s e n s e t h a t a d d i t i o n a l d a t a a c c u m u l a t i o n and r e f i n e m e n t w o u l d p e r m i t an even more . p e n e t r a t i n g a n a l y s i s o f i n t e r r e g i o n a l c o m p e t i t i o n u s i n g t h e t y p e o f mode l s a l r e a d y a p p l i e d . ACKNOWLEDGEMENT The w r i t e r w i s h e s t o e x p r e s s g r a t i t u d e t o D r . M. J . D o r l i n g , A s s i s t a n t P r o f e s s o r i n t h e A g r i c u l t u r a l Economic s Depar tment o f t h e U n i v e r s i t y o f B r i t i s h C o l u m b i a , f o r h i s h e l p and g u i d a n c e i n t h e r e s e a r c h p r o j e c t . The a u t h o r a l s o w i s h e s t o a cknow ledge t h e f i n a n c i a l a s s i s t a n c e f o r t h e s t u d y w h i c h was p r o v i d e d , by t h e C a n a d i a n A g r i c u l t u r a l E conomic s R e s e a r c h C o u n c i l . F u r t h e r m o r e , a p p r e c i a t i o n i s a l s o e x p r e s s e d f o r t h e h e l p g i v e n by t he f o l l o w i n g p e o p l e i n c o l l e c t i n g e s s e n t i a l d a t a : M r . R. A . F i n l a y s o n , F r e i g h t R a t e A d v i s o r o f Sm i t h T r a n s p o r t , T o r o n t o O n t a r i o ; M r . W. P. C o u g h l i n , O f f i c e o f Manage r , F r e i g h t R a t e s , C a n a d i a n N a t i o n a l R a i l w a y s , M o n t r e a l , Quebec ; M r . A . M i l l e r and Mr . D. West o f t h e F r e i g h t R a t e s Depa r tment o f C .N.R. i n V a n c o u v e r ; M r . B. P r a v i t z , O f f i c e Manage r , G r e a t N o r t h e r n R a i l w a y s , V a n c o u v e r , B . C . ; M r . D. W. Legge , A s s i s t a n t Manager o f F r e i g h t R a t e s and M r . A r t H u s e n a , C a n a d i a n P a c i f i c R a i l w a y s ; M r . A . M. K i r k , Manage r , T r a f f i c and C l a i m s D e p a r t m e n t , B .C . T r e e F r u i t s , K e l o w n a , B .C . M r . D. J . S u t h e r l a n d , P r o d u c t i o n C o - o r d i n a t o r , B .C . T r e e F r u i t s L t d . K e l o w n a , B . C . ; M r . K. Teng o f t h e Comput i ng C e n t r e a t t he U n i v e r s i t y o f B r i t i s h C o l u m b i a ; s t a f f o f t h e Government P u b l i c a t i o n D i v i s i o n a t t h e L i b r a r y o f t h e U n i v e r s i t y o f B r i t i s h C o l u m b i a . / • " . TABLE OF CONTENTS CHAPTER ' Page I . INTRODUCTION . 1 Purpose of the Study 4 Time Period Used i n the Study : •••• 5 I I . LITERATURE REVIEW OF SPATIAL EQUILIBRIUM AND INTERREGIONAL COMPETITION STUDIES 6 General Background 6 T h e o r e t i c a l Development of S p a t i a l E q u i l i b r i u m Models 8 E m p i r i c a l Studies of I n t e r r e g i o n a l Competition ..... 11 I I I . ANALYTICAL FRAMEWORK AND INPUT DATA FOR SPATIAL . EQUILIBRIUM ANALYSIS OF CANADIAN APPLE PRODUCTION y. .......... .. . 14 Geographic O r i e n t a t i o n and Regional Demarcation .... 14 Producing Regions .... .. 17 Consuming Regions 18 A n a l y t i c a l Models 19 Model I 19 Model I I . 22 Regional Demand Estimates -24 Demand Adjustment Computations .. 29 Regional Supply Estimates f o r Model I 32 Production 33 CHAPTER Page Sales to Processors 34 Imports 34 Exports 35 Waste . . . 37 Reconciliation of Supply and Demand 41 Computational Procedure to Reconcile Supply with Demand 42 1 Revised Supply Estimating Model for the 1965-66 Crop Year According to 1961-67 Average Production Contribution Data 44 Regional Supply Constraints for Model II 46 Summary of Regional Supply and Demand Estimates ' 47 Transportation Costs 49 Costs of Production, Storage and Packing 55 Import Procurement Costs 59 F.O.B. Prices . . '. . . . 60 Tariffs 62 Summary of Supply-Distribution Costs 62 IV. RESULTS OF SPATIAL EQUILIBRIUM ANALYSIS . 68 Analytical Results for Model I 69 Optimum Trade Patterns 69 Equilibrium Price Differentials 83 Analytical Results for Model II 86 Optimum Production and Trade Patterns for Analyses 1, 2 and 3 > 87 CHAPTER Page Optimum Production and Trade Patterns f o r Analyses 4 and 5 ••• ^7 Summary and Conclusions . 97 BIBLIOGRAPHY ........... 104 APPENDIX A: Data and Computations R e l a t i n g to Apple Production, Sales to Processors, and U t i l i z a t i o n for Canada and Provinces; Acres and Trees i n Apple Production; Y i e l d Estimates ' ; 108 APPENDIX B: Data R e l a t i n g to Canadian Imports and Exports of Apples 116 APPENDIX C: Po p u l a t i o n Estimates f o r Canada, Provinces and Consuming Regions . . . 133 APPENDIX D: Quoted T r a n s p o r t a t i o n Rates, Estimated Charges f o r P r o t e c t i v e S e r v i c e s , Adjusted T r a n s p o r t a t i o n Rates 138 APPENDIX E: Data and Computations R e l a t i n g to Costs of Production, Packing and Storage Costs; F.O.B. P r i c e s , and T a r i f f s . .'. 154 LIST OF TABLES TABLE Page I. Selected Apple Producing and Consuming Regions and Representative City Points 16 II. Estimated Regional Per Capita Consumption of Apples for 1962 based on Average Price per Lb. and per Capita Expenditure .- 28 III. Adjusted Regional Demand Estimates for Fresh Apples in Canada Relating to the 1965-66 Crop Year 31 IV. Import Estimates of Fresh Apples for the 1965-66 Crop Year by Mode of Transport and Representative Points of Entry into Each Region . 36 V. Estimated Exports of Fresh Apples from Canadian Producing Regions for the 1965-66 Crop Year 38 VI. Supply-Estimating Model of Fresh Apples in Canada for the 1965-66 Crop Year .. 40 VII. Final Reconciled Net Supply Estimates of Fresh Apples in Canada, 1965-66 Crop Year 43 VIII. a. Supply Constraints for Model II Based on Crop Year Average of 1961-67 Period 48 b. Supply Constraints for Model II Based on 1965-66 Crop Year 48 IX. Summary of Regional Supply Quantities of Fresh Apples Used in Conjunction with Analytical Models I and LL .... 50 X. Summary of Regional Demand Quantities of Fresh Apples Relating to the 1965-66 Crop Year 52 XI. Estimated Average Transportation Rates for Fresh Apples Including Protective Service Charges, Rates Expressed in Cents per One Hundred Pounds (Canadian Funds) and Relate to the 1969-70 Period'.., 56 XII. Average Yield per Acre of Apples in Each of the Commercial Producing Regions of Canada for the 1961-66 Crops and Related Average Cost of Producing 100 lbs. of Apples ... 58 TABLE Page X I I I . Average S u p p l y - D i s t r i b u t i o n Cost of 100 Lbs. Fresh Apples from Designated Points of Supply to Designated Points of Demand 66 XIV. Optimum Trade P a t t e r n of Fresh Apples f o r A n a l y s i s 1, Model I 71 XV. Optimum Trade P a t t e r n of Fresh Apples f o r A n a l y s i s 2, Model I ;. 72 XVI. Optimum Trade P a t t e r n of Fresh Apples f o r A n a l y s i s . 3 , Model I 73 XVII. Optimum Trade P a t t e r n of Fresh Apples f o r A n a l y s i s 4, Model I 74 X V I I I . Percentage D i s t r i b u t i o n of Domestic Fresh Apple Unloads i n 12 Canadian Demand Centres f o r the ! Periods 1965-66 and 1961-67 78 XIX. Supply and Demand Centres P r i c e D i f f e r e n t i a l s f o r Canadian Fresh Apples 1965-66 Crop Year Based on Tr a n s p o r t a t i o n Cost and Optimum Trade P a t t e r n of Analyses .1, 2, 3 and 4 85 XX. Optimum Production and Trade P a t t e r n • of Fresh Apples f o r A n a l y s i s 1, Model I I 88 XXI. Optimum Production and Trade P a t t e r n ' of Fresh Apples f o r A n a l y s i s 2, Model I I 89 XXII. Optimum Production and Trade P a t t e r n of Fresh Apples f o r A n a l y s i s 4, Model I I •••• ••• .93 X X I I I . Optimum Production and Trade P a t t e r n of Fresh Apples f o r A n a l y s i s 5, Model I I 94 CHAPTER I INTRODUCTION . Commercially important quantities of apples in Canada are grown in the provinces of British Columbia, Ontario, Quebec, Nova Scotia, and to a smaller extent in New Brunswick. In terms of farm values and export earnings, apple production in these provinces is the most important fruit growing enterprise, and the average annual farm value of apple production during the period 1963-66 accounted for about 44 percent of the average total farm value of a l l fruits.''" According to 1961 census figures, apples were grown for commercial purposes on 118,064 acres in Canada, whereas in 1966 this acreage had declined by approximately 12 percent to 97,064 acres (Table A-7, Appen-dix A) . In contrast to this, total production tends to have increased over the same period. Moreover, in a recent article it has been stated that during the 1956-66 period, Canadian apple production increased 2.4 2 percent per year. Although the total number of trees declined from 4,743,000 trees to 4,617,000 trees from 1961 to 1966 (Table A-7, Appen-dix A) the average number of trees per acre has increased for a l l ^Al. H. Hashimi, Trends in the Production and Marketing of Apples  in Canada with Special Reference to Ontario, Farm Economics, Cooperatives and Statistics Branch, Ontario Department of Agriculture and Food, Parliament Bldg., Toronto 5, Ontario, 1969. (Introduction) 2j. R. Burns,'The Canadian Apple Industry," Canadian Farm Economics, Vol. 4, No. 5, December 1969, p. 8-9. 2 . p r o v i n c e s , w i t h Nova S c o t i a and B r i t i s h Columbia showing s u b s t a n t i a l i n c r e a s e s . The 1961-66 average percentage of apple trees per acre i n production shows considerable v a r i a t i o n among the four major producing areas, w i t h approximately 50 percent and 67 percent i n production f o r B r i t i s h Columbia and Ontario r e s p e c t i v e l y , and about 80 percent f o r both Quebec and Nova S c o t i a (Table A-8, Appendix A). This i n d i c a t e s that production p o t e n t i a l per acre v a r i e s among the producing areas . The estimated average y i e l d per apple t r e e as computed from Tables A-7 and A-9 i n Appendix A f o r the period 1961-66 f o r Nova S c o t i a , Quebec, • Ontario and B r i t i s h Columbia was 252 l b s . , 234 l b s . , 293 l b s . , and 400 l b s . r e s p e c t i v e l y . These estimates suggest that the production p o t e n t i a l f o r Ontario and B r i t i s h Columbia appears to be more favourable compared w i t h Nova S c o t i a and Quebec, because a l a r g e r p o r t i o n of p r e s e n t l y non-bearing trees could come i n t o f u l l p r o d u c t i o n . I t would be of economic i n t e r e s t to determine the proportions of bearing and non-bearing trees per acre, which would r e s u l t i n p o t e n t i a l optimum production on a c o n s i s t e n t b a s i s and consequently e l i m i n a t e unusual c y c l e s i n r e g i o n a l production. This may, however, prove to be an insurmountable task i f one considers the trend i n s i z e of apple t r e e s . As Hashimi a p t l y s t a t e s : A l l attempt to r e l a t e the s i z e of the bearing stand i n the Census years to the number of young trees i n e a r l i e r years f a i l e d to provide a c o n s i s t e n t l y s i g n i f i c a n t r e l a t i o n s h i p . 3 ' Nevertheless attempts have been made by i n d i v i d u a l producing areas to A l . H. Hashimi, 0p_. C i t . , p. 9. 3. e s t i m a t e a n t i c i p a t e d vo l umes o f f u t u r e a p p l e c r o p s . The r e l a t i v e i m p o r t a n c e o f t h e f o u r a r e a s o f a p p l e p r o d u c t i o n i n Canada does n o t seem t o have changed t o any s i g n i f i c a n t e x t e n t o v e r t he 1961-67 p e r i o d a c c o r d i n g t o t h e d a t a g i v e n i n T a b l e s A - l and A -5 o f A p p e n d i x A. B r i t i s h C o l u m b i a w i t h a s i x y e a r a v e r a g e a n n u a l p r o d u c t i o n o f a p p r o x i m a t e l y 290 ,000 ,000 l b s . was t h e l a r g e s t p r o d u c e r w i t h O n t a r i o , Quebec , and Nova S c o t i a f o l - o w i n g i n o r d e r o f i m p o r t a n c e . However , Quebec a p p e a r s t o have been t h e l e a d i n g s u p p l i e r o f f r e s h a p p l e s on t h e d o m e s t i c m a r k e t w i t h a s i x y e a r a v e r a g e a n n u a l c o n t r i b u t i o n o f 37 p e r c e n t f o l l o w e d by O n t a r i o w h i c h s u p p l i e d 28 p e r c e n t , B r i t i s h C o l u m b i a 25 p e r c e n t , and Nova S c o t i a 9 p e r c e n t . I n c o n t r a s t B r i t i s h C o l u m b i a a c c o u n t e d f o r abou t 69 p e r c e n t o f C a n a d a ' s f r e s h a p p l e e x p o r t s o v e r t h e same p e r i o d on an a v e r a g e a n n u a l b a s i s . A l t h o u g h i t i s d i f f i c u l t t o d i s c l o s e p r e c i s e p a t t e r n s f o r t he C a n a d i a n a p p l e i n d u s t r y f r o m h i s t o r i c a l o b s e r v a t i o n s , r e g i o n a l v a r i a t i o n s i n t o t a l number o f t r e e s and y i e l d s do s u g g e s t t r e n d s t owa rd s r e g i o n a l s p e c i a l i z a t i o n . The g r a d u a l i n c r e a s e i n a p p l e p r o d u c t i o n has r e s u l t e d f r o m changes i n t h e c h a r a c t e r i s t i c s o f demand and s u p p l y . On t h e demand s i d e , g r owth i n p o p u l a t i o n has been t h e most i m p o r t a n t c o n t r i b u t i n g f a c t o r . On t he s u p p l y s i d e , t e c h n o l o g i c a l advance s i n f a r m p r o d u c t i o n s u c h as c l o n a l r o o t s t o c k s , e f f i c i e n t p l a n t i n g d e n s i t y , and good s p r a y i n g p r a c t i c e s have c o n t r i b u t e d s i g n i f i c a n t l y t o t h e i n c r e a s e i n p r o d u c t i o n . The i n c r e a s e s i n a p p l e p r o d u c t i o n appea r t o have t a k e n p l a c e i n a l l a r e a s a t v a r y i n g r a t e s . From t h e t a b l e s i n A p p e n d i x A i t becomes e v i d e n t t h a t B r i t i s h C o l u m b i a showed a much more p r o n o u n c e d r a t e o f i n c r e a s e i n 4. production than Nova S c o t i a , and i t would be of i n t e r e s t to pursue the reasons why such r a t e s of increase were higher i n some areas than i n o t h e r s . With regard to f r e s h apples i n Canada the l e v e l of produ c t i o n , d i s t r i b u t i o n , and consumption a c t i v i t i e s vary s p a t i a l l y . Consequently, r e g i o n a l imbalances are generated, which make product flows necessary between geographical areas. W i t h i n t h i s s e t t i n g , the study i n v o l v e s an i n t e r r e g i o n a l a n a l y s i s of the f r e s h apple s e c t o r of the Canadian economy and attempts to provide u s e f u l i n f o r m a t i o n i n e x p l a i n i n g c e r t a i n l o c a -t i o n a l ' advantages of producing regions . ,' . PURPOSE OF THE STUDY S p e c i f i c a l l y , the study i s concerned w i t h e x p l a i n i n g some aspects of i n t e r r e g i o n a l competition i n f r e s h apple production i n Canada. As such i t w i l l (a) analyze the i n t e r r e g i o n a l trade p a t t e r n f o r f r e s h apples over the period J u l y 1st 1 9 6 5 t o June 30th 1966; (b) develop a l t e r n a t i v e s p a t i a l e q u i l i b r i u m models and apply them i n determining r e g i o n a l consumption, pro d u c t i o n , and shipment patterns f o r f r e s h apples under v a r y i n g c o n d i t i o n s and time p e r i o d s . W i t h i n t h i s frame-work answers w i l l be sought to the f o l l o w i n g questions: (1) What are the l e v e l s of r e g i o n a l supply and demand f o r f r e s h apples? (2) What are the l e v e l s of r e g i o n a l exports and imports f o r f r e s h apples ? (3) What are the optimum patterns of distribution and supply among regions for fresh apples? (4) What are the total transport costs for aggregate trade in fresh • apples ? (5) What are the price differentials for producing and consuming regions? TIME PERIODS USED IN THE STUDY A crop year running from July 1st to June 30th, consistent with 4 • ' unload statistics, is taken as the basic period of analysis in the study. Certain data with regard to production, consumption, imports, exports, waste, sales to processors, and cost of production relate to the 1965-66 crop year. However, net regional supply quantities have also been related to average annual production over the six year period from 1961 to 1967, thereby, reflecting a more normal regional produc-tion pattern than that exhibited for the 1965-66 crop year. Crop and Seasonal Price Summaries, Fresh and Processed Fruits and Vegetables, Part II, Canada Department of Agriculture, Production and Marketing Branch, Ottawa. CHAPTER I I . LITERATURE REVIEW OF SPATIAL EQUILIBRIUM , AND INTERREGIONAL COMPETITION STUDIES GENERAL BACKGROUND ' I n t e r r e g i o n a l competition and l o c a t i o n of production have long been subjects of i n t e r e s t to economists. Examples of e a r l y w r i t i n g s which have important t h e o r e t i c a l i m p l i c a t i o n s are: Adam Smith's " P r i n c i p l e of S p e c i a l i z a t i o n " " ' and David Ricardo's " P r i n c i p l e of 6 Comparative Costs." These two p r i n c i p l e s led to yet another, namely "The P r i n c i p l e of Comparative Advantage" which s t a t e s : each area tends to produce those products for which i t s r a t i o of advantage i s g r e a t e s t as compared w i t h other areas, or i t s r a t i o of disadvantage i s the l e a s t . I l l u s t r a t e d i n terms of two regions and two products i t means that i n each r e g i o n , the cost of producing good A and the cost of producing good B can be expressed as two r a t i o s . Good A w i l l then be produced i n that r e g i o n where the r a t i o s are the more favourable; f o r example: • ' Adam Smith, The Wealth of Nations, e d i t e d by Edwin Connan, The Modern L i b r a r y , (New York: Sandown House, Inc., 1937):, Book I , Chapter I I , pp. 13-16. 6 David Ricardo, On the P r i n c i p l e s of P o l i t i c a l Economy and  T a x a t i o n , e d i t e d by P i e r o S c r a f f a (Cambridge: Cambridge U n i v e r s i t y P r e s s , 1951), Chapter 7. Region 1 2 Good i t costs 1 u n i t to produce one u n i t Cost per u n i t of A i n Region 1; 1/2 u n i t to produce one u n i t of B i n r e g i o n 1, ... e t c . . . A 1 1 2 B 1 2 1 3 Region Good 1 2 Therefore, the higher r a t i o of A Comp. Cost per u n i t i n r e g i o n 2 i n d i c a t e s that r e g i o n 2 should produce A. S i m i l a r l y , A I < 2 2 3 re g i o n 1 should produce B. B 2 > 3 2 The e a r l y E n g l i s h economists abstracted i n part from the r e a l s i t u a t i o n and d i d not deal e x p l i c i t l y w i t h the e f f e c t s of t r a n s p o r t a t i o n costs on i n t e r n a t i o n a l t r a d e . The emergence of the l o c a t i o n of economic a c t i v i t y as a s p e c i a l f i e l d of i n q u i r y may be traced to 1826, when von Thu'nen'' wrote of the l o c a t i o n of a g r i c u l t u r a l a c t i v i t i e s around a po p u l a t i o n c e n t r e . L i t t l e f u r t h e r work i n t h i s f i e l d seems to have 8 emerged u n t i l 1909 when A l f r e d Weber, a German Geographer, followed II von Thunen's ideas by i n q u i r i n g i n t o the problems of f i n d i n g the best l o c a t i o n s f o r i n d u s t r i e s ( i . e . raw m a t e r i a l s o r i e n t e d or market o r i e n t e d ) . His concept assumed that the l o c a t i o n of an i n d u s t r y would / II J . H. von Thunen, Der I s o l i e r t e Staat i n Beziehung auf Landwirt-s c h a f t und Nationalokonomie, Hamburg, 1826. 8 A. Weber, Theory of the Location of Industry, T r a n s l a t e d by C. F r i e d r i c h , Chicago: U n i v e r s i t y of Chicago Press, 1929. 8. be determined by the weight, of raw material and product that has to be transported, as well as, by the l o c a t i o n of materials and the a v a i l -a b i l i t y of s k i l l e d workers. Again the f i e l d received r e l a t i v e l y l i t t l e 9 attention u n t i l the 1930's, 1940's and 1950's when Hoover (1937), Losch'*'^ (1944), Mighell and Black''"''" (1951) wrote on the l o c a t i o n of economic a c t i v i t y , but i t was not u n t i l the 1950's that s p a t i a l economics became a major area for economic research. THEORETICAL DEVELOPMENT OF SPATIAL EQUILIBRIUM MODELS More recent contributions of s p a t i a l e q u i l i b r i u m models dealing with l o c a t i o n of economic a c t i v i t i e s , have been directed towards the development of a methodological framework for empirical research. Koopmans, ^  Samuelson, ^  Enke^^ and Beckman'''"' have suggested new E. M. Hoover J r . , Location Theory and the Shoe and Leather  Industry, Cambridge: . Harvard U n i v e r s i t y Press, 1937. 10 II V A. Losch, The Economics of Location, New Haven, Conn.: Yale U n i v e r s i t y Press, 1954. -^R. L. Mig h e l l , and J . D. Black, Interregional Competition i n  Agriculture--With Special Reference to Dairy Farming i n the Lake States  and New England, Cambridge: Harvard U n i v e r s i t y Press, 1951. ^ T . C. Koopmans, "Optimum U t i l i z a t i o n of the Transportation System," Econometrica, Vol. 17, Suppl. July 1949, pp. 136-46. 13 P. A. Samuelson, " S p a t i a l Price E q u i l i b r i u m and Linear Program-ming," American Economic Review, Vol. 42, No. 3, June 1952, pp. 282-303.. 14 S.'Enke, "Equilibrium Among S p a t i a l l y Separated Markets," Econometrica, Vol. 19, 1951, pp. 40-48. ^M. Beckman, "A Continuous Model of Transportation," Econometrica, V o l . 20, 1952, pp. 643-660. -approaches to the problem of- geographical p r i c e equilibrium and commodity flow. They have applied l i n e a r programming techniques f o r obtaining optimizing solutions of transportation type problems. The l i n e a r 16 programming formulation of the transportation problem is one of the more simple forms of s p a t i a l e quilibrium models and has been discussed i n d e t a i l by Dorfman, Samuelson, and Solow.''''' It includes one homo-geneous commodity, quantities of which are to be transported at minimum t o t a l cost from points of o r i g i n to d e s t i n a t i o n points. The quantities a v a i l a b l e at the o r i g i n s and the quantities delivered at the d e s t i n a t i o n points must add up to the same t o t a l . The transportation from a point of o r i g i n to a d e s t i n a t i o n point i s defined as a process, and the costs per u n i t involved are given as constants for each o r i g i n and destina-t i o n combination. The unknowns to be determined are the quantities shipped from each o r i g i n to each d e s t i n a t i o n . The model s p e c i f i e s a shipping problem which minimizes t o t a l t r ansportation costs and s a t i s f i e s a l l r e g i o n a l surpluses and d e f i c i t s . Given t h i s optimum shipping pattern, regional p r i c e d i f f e r e n t i a l s can be derived assuming a p e r f e c t l y competitive market s t r u c t u r e . That i s , the p r i c e d i f f e r e n t i a l between two areas engaging i n trade under e q u i l i -brium conditions w i l l be equal to the transportation cost a f f e c t i n g them. ^The mathematician Hitchcock was the f i r s t to formally define t h i s model but his i n t e r e s t lay in solving i t rather than developing i t s economic i m p l i c a t i o n . His a r t i c l e " D i s t r i b u t i o n of a Product from Several Sources to Numerous L o c a l i t i e s , " can be found in the Journal of  Mathematics and Physics 20:224-30. 1949. •^Dorfman, Samuelson, and Solow, Linear Programming and Economic  An a l y s i s , The Rand Series, McGraw-Hill Book Company, Inc., 1958, Chapter 5. . ' 10. This model w i l l be applied to the Canadian fresh apple industry for the 1955-66 crop year. The transportation problem described above, tends to be of a very short run nature, because quantities offered and taken are fixed and p e r f e c t l y i n e l a s t i c with respect to p r i c e . This model can be modified, however, and instead of only minimizing transportation costs i t can minimize the t o t a l costs of transportation, production, storage, s e l l i n g and import procurements ( i f any). Under such a model, regional production i s not held f i x e d . I f there are no resource l i m i t s , p o t e n t i a l production in each region is considered to be p e r f e c t l y e l a s t i c i n r e l a t i o n to a constant supply p r i c e . The i n t e r p r e t a t i o n of the consuming regions remains the same as i n the o r i g i n a l transportation problem except that one more region w i l l be introduced (a dummy region) to absorb excess supply. In terms of economic theory i t means that the above s u p p l y - d i s t r i b u t i o n model is based on the assumptions of p e r f e c t l y e l a s t i c supply and p e r f e c t l y i n e l a s t i c demand. A more general e q u i l i -brium model has been developed by E n k e ^ and Samuelson. ^  This model considers f u n c t i o n a l r e l a t i o n s h i p s between price and production on the one hand and p r i c e and consumption on the other i n the various regions. 20 As Enke states: There are three or more regions trading a homogeneous good. Each region constitutes a si n g l e and d i s t i n c t market. The regions of each possible pair of regions are separated but not i s o l a t e d 18 S. Enke, "Equilibrium Among S p a t i a l l y Separated Markets," Econometrica, Vol. 19, Jan. 1951. 19 Samuelson, 0p_. C i t . 2 0Enke, 0p_. C i t . 11. by a transportation cost per p h y s i c a l u n i t which is independent of volume. There are no l e g a l r e s t r i c t i o n s to l i m i t the actions of p r o f i t seeking traders in each-region. For each region, the functions which r e l a t e l o c a l production and land use to l o c a l p r i c e are known, and consequently the magnitude of the d i f f e r e n c e which w i l l be exported or imported at each l o c a l price is also . known. Given these trade functions and transportation costs, we wish to ascertain: l--the net p r i c e i n each region, 2--the quan-t i t y of exports or imports for each region, 3--which region exports, imports or does neither, 4--the aggregate trade in the commodity, 5--the" volume and d i r e c t i o n of trade between each .possible pair of regions. Enke then showed that t h i s problem would be solved by a ' r e l a t i v e l y 21 simple" e l e c t r i c c i r c u i t . ' Samuelson traced the same problem on a s t r i c t l y mathematical basis and demonstrated how i t could be converted into a maximizing problem. EMPIRICAL STUDIES OF INTERREGIONAL COMPETITION Empirical studies, patterned a f t e r the t h e o r e t i c a l models as discussed above, have found considerable a p p l i c a t i o n i n the f i e l d of a g r i c u l t u r e . Some of these studies have assumed both, regional supplies (production) and r e g i o n a l demand (consumption) as given or predeter-• 22 mined. For example, Bowden, Carter, and Dean, studied the United 23 States Turkey Industry. Padgett, Aaron, and F r a z i e r set out to deter-mine an optimum flow pattern of feed grains i n Georgia under the 21p. A. Samuelson, 0p_. C i t . 22 D. L. Bowden, H. D. Carter, G. W. Dean, "Interregional Competition i n the United States Turkey Industry," H i l g a r d i a Vol. 37, Dec. 1965 to 1967, pp. 437-531. 23 J . H . Padgett, T. D. Aaron, T. L. F r a z i e r , "An Optimum Flow Pattern of Feed Grains i n Georgia and the E f f e c t s of Proposed Navigable Waterways on t h i s Flow-Pattern," Georgia A g r i c u l t u r a l Experimental  Stations, U n i v e r s i t y of Georgia College of A g r i c . Tech. B u l l . 38, September 1964. . . assumption of predetermined supply and demand. Others have begun with predetermined production but have u t i l i z e d an estimated demand function. Good examples of this type of study were those done by M j i t Kumar Roy on Interregional Trade and Market Analysis of Fowl and Chicken i n 24 25 Canada, and Fox on the Livestock Feed Economy i n the United States. The objective in both of these i n q u i r i e s was to derive the pattern of shipments which would minimize t o t a l transportation costs. Yet another group of studies has assumed predetermined quantities for regional consumption and u t i l i z e d some type of supply function to solve for the minimum cost pattern of production which would supply the predetermined quantities of consumption. These studies have estimated si n g l e value supply prices and assumed p e r f e c t l y e l a s t i c supply functions, and in so doing made use of the s u p p l y - d i s t r i b u t i o n model. 2 6 Noteworthy examples of s u p p l y - d i s t r i b u t i o n studies are: Judge's "Competitive P o s i t i o n of the Connecticut Poultry Industry," and Egbert, 27 Heady, and Brokken's "Regional Changes i n Grain Production." 24 Interregional Trade and Market Analysis of Fowl and Chicken  i n Canada, Department of A g r i c u l t u r a l Economics, Ontario A g r i c u l t u r a l College, U n i v e r s i t y of Guelph, Canada, Pu b l i c a t i o n No. AE/65-66/3 July 1965. 25 K. A. Fox, "A S p a t i a l Equilibrium Model of the Livestock Feed Economy i n the U.S.," Econometfica, Vol. 21, 1957, pp. 547-566. 2 6 G. G. Judge, Competitive P o s i t i o n of the Connecticut Poultry  Industry, (No. 7 a S p a t i a l Equilibrium Model for Eggs), S t o r r s , A g r i c u l t u r a l Experiment Station, B u l l e t i n 318, Jan. 1956. 27 A. C. Egbert, E. 0. Heady, and R. F. Brokken, Regional Changes  i n Grain Production, Research B u l l e t i n 521 of the A g r i c u l t u r e and Home Economics Experiment St a t i o n , Ames, Iowa: Iowa State U n i v e r s i t y , Jan. 1964. 13. In order to overcome the l i m i t a t i o n s of a p e r f e c t l y e l a s t i c supply function, r e g i o n a l production r e s t r i c t i o n s have been used by some research workers. Related accounts have been given in the studies 28 by Dennis and Sammet on the C a l i f o r n i a Frozen Strawberry Industry, 29 and Dorling on S p a t i a l Equilibrium Conditions for the Canadian Corn Economy. 28 Dennis and Sammot, "Study of Interregional Competition of the Frozen Strawberry Industry," H i l g a r d i a , Vol. 31, 1961, pp. 499-611. 29 M. J . Dorling, S p a t i a l E q u i l i b r i u m Condition for Canadian Corn  Economy, Ph. D. Thesis, M c G i l l , 1965. CHAPTER I I I ANALYTICAL FRAMEWORK AND INPUT DATA FOR SPATIAL EQUILIBRIUM ANALYSIS OF CANADIAN APPLE PRODUCTION GEOGRAPHIC ORIENTATION AND REGIONAL DEMARCATION Generally i t has been the p r a c t i c e i n empirical studies of s p a t i a l e q uilibrium problems to divide a country representing an economic system into a number of producing and consuming regions for a given commodity. The s e l e c t i o n of regions and the l e v e l of aggregation has usually been, within l i m i t s , an a r b i t r a r y choice, dictated to some extent by the a v a i l a b i l i t y of production and consumption data. Regions can be defined as surplus and d e f i c i t regions. The present study followed a s i m i l a r approach i n i t s attempt to define producing and consuming region's . . The general c r i t e r i o n for del i n e a t i n g regions was primarily based on production data of the four major commercial apple producing regions i n Canada, and on regional population" and per capita consumption e s t i -mates . The following map and Table I summarize the selected producing and consuming regions. Arabic numerals indicate representative points of consumption (demand), c a p i t a l l e t t e r s denote representative points of production (supply) and small l e t t e r s r e f e r to representative points of intermediate supply. Thus, the o v e r a l l study was concerned with 12 30 supply points and 10 demand points . 30 S p e c i f i c points used i n the a n a l y t i c a l models w i l l become evident when discussing the r e s u l t s of the analyses. 16. TABLE I Selected Apple Producing and Consuming Regions and Representative Ci t y Points PRODUCTION (SUPPLY) CONSUMPTION (DEMAND) Letter Region A Maritimes B Quebec C Ontario B r i t i s h Columb ia Ontario Representat ive City Point Windsor (N.S.) Montreal Toronto Kelowna Niagara F a l l s Manitoba Emmerson Saskatchewan Northgate Alberta Br i t ish Columbia New York State Michigan State Washington State Coutes Vancouver Rochester Lans ing Yak ima No. Region 1 Maritimes 2 Quebec (North) 3 Quebec (South) 4 Ontario (East) 5 Ontario (West) 6 •' Manitoba 7 Saskat-• chewan 8 Albe r t a (North) 9 Alberta (South) 10 .  B r i t i s h -Columbia Representat ive City Point Windsor Quebec City Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver (1) Population estimates for Alberta are usually stated with population of the North West T e r r i t o r i e s included. Therefore, demand quan-t i t i e s of the North West T e r r i t o r i e s are included i n the Edmonton and Calgary demand centres. (2) For the same reason as given i n footnote (1) demand quantities of the Yukon are included i n the Vancouver demand centre. 17. Producing Regions With regard to production four regions in Canada produce a l l the commercial fresh apple crop. These four producing regions are B r i t i s h Columbia, Ontario, Quebec, and the Maritimes (Nova Scotia and New Brunswick). Aggregation of Nova Scotia and New Brunswick into one producing region was performed for two reasons, f i r s t l y the close proximity of the producing areas in the two provinces and secondly the r e l a t i v e l y small amount of production i n New Brunswick. The supply estimates for regions were centred on c i t y points. For Nova Scotia and New Brunswick (Maritime region), Windsor was chosen as the representative point due to i t s c e n t r a l l y located p o s i t i o n i n Nova Sc o t i a . For the Province of Quebec, Montreal has been selected as the supply centre. This choice was based on the close proximity at this point of three of the four major apple producing areas i n the province. Furthermore, overseas imports into the Province of Quebec were unloaded at Montreal, thus, from t h i s standpoint as well i t was meaningful to have Montreal represent the supply centre. Toronto was chosen as the production centre for Ontario and Kelowna, being the centre of the Okanagan f r u i t growing area, was selected to represent B r i t i s h Columbia as the centre of supply. One may question the reasoning in choosing Montreal and Toronto as points of supply, but there tends to be l i t t l e d i f f e r e n c e in transportation costs quoted from major c i t i e s such as Toronto and Montreal and those quoted from smaller places close to these larger centres. Niagara F a l l s , Emmerson, Northgate, Coutes, and Vancouver have been considered as points of 18 entry for predetermined import quantities and as stated previously w i l l 31 be considered as intermediate supply points. Three supply points have also been defined to represent United States production. These w i l l be used i n connection with the s u p p l y - d i s t r i b u t i o n model. Consumption Regions . Consumption regions have been selected on the basis of a v a i l -a b i l i t y of data concerning consumption and population. Within each consuming region, a c i t y c e n t r a l l y located with respect to the region's population d i s t r i b u t i o n has been chosen as the centre of demand for fresh apples. Consequently, the major population centres i n each province were selected as demand centres, and since approximately 94 32 percent of fresh apples are considered to be unloaded at these centres i t seems reasonable to choose these points. It is recognized'that many points of demand ex i s t i n each consuming region, but, to consider each point would be beyond the scope of this study. The assumption of a s i n g l e point representing a consuming region i s therefore a p r a c t i c a l s i m p l i f i c a t i o n . Nevertheless, the following reasons may be given for regarding a l i m i t a t i o n of th i s nature to.be of l i t t l e consequence in the study. .1. The r e s t r i c t e d a v a i l a b i l i t y of data d i r e c t s a ttention towards a more general a n a l y s i s . 31 Import quantities at intermediate supply points are a v a i l a b l e f o r s a t i s f y i n g demand. In those cases where no demand is shown at the actual intermediate supply points, the quantities concerned constitute surpluses for d i s t r i b u t i o n . -^Annual Unload Report, Fresh F r u i t s and Vegetables on 12 Canadian ,Markets, 1965-66, Canada Department of A g r i c u l t u r e , Production and Marketing Branch, Markets Information Section, Ottawa: p. 4. 19. 2. Under the present marketing structure, fresh apples are shipped frequently from producing regions to c e n t r a l l y located storage f a c i l i t i e s and from there are d i s t r i b u t e d to r e t a i l outlets i n the surrounding areas. i .3. When shipping fresh apples over long distances, as is frequently the case i n Canada, transportation costs to a main regional consumption centre tend to d i f f e r s l i g h t l y from those to re l a t e d sub-centres. Hence, transportation rates i n 1969 were • found to be the same from Kelowna, B.C., to Toronto, Ottawa, Montreal, and Quebec C i t y . . ANALYTICAL MODELS Two a n a l y t i c a l models were used i n the analysis of fresh apple production. Both models u t i l i z e predetermined demand q u a n t i t i e s , but with regard to supply, the models d i f f e r p r i n c i p a l l y i n the assumption made concerning producing a c t i v i t i e s and the time dimension involved. However, both models assume l - - a si n g l e homogeneous product i n the form of fresh apples; 2--no carryover at the end of the s p e c i f i e d time period; 3 - - s p a t i a l l y separated markets; 4--given unit transportation costs independent of volume. Model I Model I, the simplest of s p a t i a l e quilibrium models, i s of short-run nature and generally c a l l e d the 'transportation model.' It formulates the problem of d i s t r i b u t i n g a homogeneous good from s p a t i a l l y 20. separated supply regions to s p a t i a l l y separated demand regions i n such a way as to minimize t o t a l transportation costs. In algebraic form the transportation model can be stated as follows: Objective Function Minimize 1 - £ . £ . T..X.. i J i j i j m ' Where: Subject to 2 - E X.. = D. i=l 1 J J 3 - E X.. = S. m 4 - E D = E ' S . j=l J 1=1 1 5 - X . . > 0 T . . > 0 i = supply region ( i = 1,2, m) j = demand region (j = 1,2,.....n) S. = the amount of apples a v a i l a b l e for supply from the i region. = the amount of apples required at the j'"' 1 region. i j th T^ . . = the unit transport cost of shipping apples from the i * " * 1 •• . , .th , , . supply region to the j demand region. t i l X.. = the amount of apples that i s shipped from the i supply region to the j 1 " * 1 demand region. If there are n demand regions and m supply regions the requirements matrix can be shown as follows: Producing Regions Consuming Regions (demand) To t a l Regional (Supply) 1 2 3-. n Supply 1 X l l X12 X13 X l n E n X l n 2 X21 X22 X 2 3 " " " " X2n 1 n X2n 3 X31 . X32 X33 X3n Z n X3n m X ml X m2 Xm3 X mn £ X n mn Total Regional Demand £ X £ X m ml m m2 £ X --m m3 £ X m mn £ £ X m n mn Supply and demand quantities u t i l i z e d i n t h i s model are pre-determined and not considered to be a function of p r i c e . Furthermore, transportation costs are assumed to be independent of volume. Thus, from both these aspects the transportation model as described here would appear to be l i m i t e d i n i t s range of usefulness, e s p e c i a l l y i f considered from an economic theory point of view. Nevertheless, for c l o s e l y defined time periods where supply and demand quantities are known h i s t o r i c a l l y or estimated in the future, such an a n a l y t i c a l formulation permits a n - e f f i c i e n t d i s t r i b u t i o n pattern to be determined. Under the assumptions of the model i t i s possible to compute a set of p r i c e d i f f e r e n t i a l s from the optimum trade pattern. A p e r f e c t l y competitive market structure requires that e q u i l i b r i u m prices of a 22. homogeneous good can not vary between one region of the market and another region by more than the corresponding transportation cost• Therefore, to determine the r e l a t e d p r i c e d i f f e r e n t i a l s i t i s neces-sary to formulate the dual of the transportation model, which involves two new v a r i a b l e s : th U = the shadow pri c e i n the i supply region (i=l,2...m) V = the shadow p r i c e i n the demand region (j=l,2,...n) The dual problem i s to maximize: n m 1 - E D.V. + X - S.U. . , j j . , 1 1 j=l J J i = l Subject to: 2 - V - U ' < T 1 = 1>2>---m> j i _ l j j = l , 2 , . . . n ) 3 - And T. . > 0: V. and U . > 0 i j - j i -In the context of the study the IL 's can be interpreted as the prices of apples at the supply points i , and Vj's are the prices at the demand points j . In value terms equation 2 expresses the require-ment that the value d i f f e r e n t i a l between o r i g i n and de s t i n a t i o n can not exceed the transportation cost involved i n making the shipment from producers to consumers. It is the usual condition of ' s p a t i a l p r i c e e q u i l i b r i u m ' i n a p e r f e c t l y competitive market. Model II With c e r t a i n changes the transportation model lends i t s e l f to a wider range of a p p l i c a t i o n . Instead of minimizing t o t a l transportation 23 . costs, i t can be modified to minimize a composite cost t o t a l made up of production, transport, s e l l i n g , and import procurement costs. A model formulation of t h i s type would then have as i t s objective the determination of an optimum trade pattern implying an e f f i c i e n t supply d i s t r i b u t i o n under a minimum cost c r i t e r i o n . This w i l l be c a l l e d the su p p l y - d i s t r i b u t i o n model. It requires that the equality n m . . . 4 >J D. = E S. . J=l J i=l 1 i n the transportation model be replaced by an inequal i t y n m ' • ' • 6 Z D <L £ S. j = l J i = l 1 With t o t a l supply exceeding t o t a l demand an a d d i t i o n a l demand region, c a l l e d a dummy requirement n+1, can be created to transform the i n e q u a l i t y back to an equ a l i t y . For the purpose of problem so l v i n g the dummy demand region can absorb a l l excess supply from supplying regions. The p r a c t i c a l i n t e r p r e t a t i o n of the s u p p l y - d i s t r i b u t i o n model i s , therefore, quite d i f f e r e n t from that of the transportation model. In Model I i t was assumed that predetermined supply in each supplying region was on a p e r f e c t l y i n e l a s t i c supply function. With the changes described above for Model I I , p o t e n t i a l supply i n each region is con-sidered i n the context of a p e r f e c t l y e l a s t i c supply function. Hence, under the condition of p e r f e c t l y e l a s t i c supply, one supply region could possibly meet a l l demand requirements, but in the case of apple production i n Canada i t was considered r e a l i s t i c to define upper l i m i t s 24. for regional production. In the study these upper l i m i t s were set by an a d d i t i o n a l 25 percent of estimated regional net supplies, for the crop years studied. Only c e r t a i n types of land can be used for commercial apple growing in each domestic producing region, and consequently the r e s t r i c t e d a v a i l a b i l i t y has been given some approxi-mation under the.regional production constraints imposed. REGIONAL DEMAND ESTIMATES Demand estimates for each of the consuming regions included in the study were developed from actual per capita consumption f i g u r e s , r e g ional population estimates, per capita expenditure estimates, and the quoted average p r i c e for fresh apples. F i r s t , r e g i onal t o t a l demand quantities were computed from regional population estimates and actual average national' per capita consumption figures for fresh apples, 33 . obtained from data published by D.B.S. Since this computational procedure is s t r i c t l y based on a national average, which did not allow for possible differences i n regional per capita consumption, a second procedure was used to estimate demand quantities on a r e g i o n a l b a s i s . The l a t t e r was thought to r e f l e c t adequately the s u b s t i t u t i o n e f f e c t s among fresh f r u i t s which can normally be expected to give r i s e to regional differences i n apple consumption. For example, per capita consumption of fresh apples i n Winnipeg may be conceivably higher than D.B.S. Apparent Domestic Per Capita Disappearance, Cat. No. 32-226 (Annual), 1965 and 1966. 25. that in Toronto, because peaches, a p r i c o t s , and other types of fresh f r u i t s may represent better substitutes for apples i n Toronto than in Winnipeg, owing to factors such as cost of transportation and keeping q u a l i t y . Since consumption data'ought i f possible to r e f l e c t differences in population, incomes, tastes and other factors that are basic demand determinants, estimates on a regional basis would appear to be d e s i r a b l e . Attention i s now turned to s p e c i f i c computational procedures according to the methods previously mentioned. With reference to the f i r s t method, regional population estimates as presented in Table C-2 Appendix C, were used in conjunction with average natio n a l per capita 34 consumption f i g u r e s . Unfortunately per capita consumption data could only be obtained on a calendar year basis , so in order to a r r i v e at regional t o t a l demand quantities which would correspond to the 1965-66 crop year, the following equation was used: a. w... + a ' w. • ' X = z - 1 ^ 2- ^ (1) where X = Total fresh apple consumption i n Canada r e l a t i n g to the 1965-66 crop year. • a = Average per c a p i t a consumption of fresh apples for a l l of Canada r e l a t i n g to the 1965.calendar year; t h i s average was 27.4 l b s . of fresh apples per person. a^ = Average per capita consumption of fresh apples for a l l of Canada r e l a t i n g to the 1966 calendar year; this average was 24 .3 l b s . of fresh apples per person. w. = Regional population estimates from July 1965 to January 1966 (i=1...10) Table C-2, Appendix C. w = Regional population estimates from January 1966 to June 1966 1 2 1966 (i=1...10), Table C-2, Appendix C. 34 D.B.S. Apparent Domestic Per Capita Disappearance, 0£. C i t , 26. For example, i n computing f i n a l demand estimates of fresh apples for the Winnipeg demand centre, the 1965 calendar year per capita consumption figure of fresh apples was m u l t i p l i e d by the July 1965 to January 1966 Manitoba population estimate. This procedure was repeated for the 1966 calendar year per capita consumption and the January 1966 to June 1966 population estimate. In order to a r r i v e at an estimate for the 1965-66 crop year the sum t o t a l was simply divided by two. The numerical procedure to obtain the t o t a l estimated demand quantity of fresh apples for the Winnipeg demand centre is i l l u s t r a t e d below: .SL = 27.4 lbs . 3 5 a 2 = 24.3 lbs . 3 5 W i l = 9 6 0 ' 5 0 0 w ' = 961,000 i2 therefore, (27.4) (960,500) + (24.3) (961,000) , 2 . ' . • = . 24,835,000 l b s . of fresh apples. This f i g u r e represents the estimated demand for Winnipeg during the 1965-66 crop year. In a s i m i l a r manner estimates were obtained for each demand centre and the r e s u l t s are summarized i n Table X. Accordingly the t o t a l Canadian consumption of fresh apples for the crop year 1965-66 was computed to be 511,550,925 l b s . Since t h i s estimate constitutes an aggregate demand quantity for a l l of Canada, not allowing for possible differences i n regional per capita consumption, an a l t e r n a t i v e method for D.B.S., Apparent Domestic Per Capita Disappearance, Cat. No. 32-226 (Annual), 1965 and 1966, p. 3. . . . . . . 27 . computing t o t a l regional demand estimates w i l l now be pursued. With lack of p r o v i n c i a l and regional consumption data r e l a t i n g to the 1965-66 crop year, regional demand estimates were computed from per capita expenditure on apples for the year 1962 and i t seemed reasonable to assume that t h i s per capita expenditure estimate would 36 • approximate 1965-66 conditions. In a study by Tomek in the U.S. i t was estimated that the income v a r i a b l e i n the demand r e l a t i o n s h i p for fresh apples showed a negative c o e f f i c i e n t and was not s i g n i f i c a n t l y d i f f e r e n t from zero. If i t i s assumed that Canadian conditions correspond with those studied i n the U.S. then the method applied here would be v a l i d i n so far as a change in r e a l income from 1962 to 1965-66 would not be expected to a f f e c t per capita expenditure for fresh apples. The 1962 expenditures for fresh apples were used to estimate demand quantities on a regional per capita consumption basis and the computational procedure i s i l l u s t r a t e d below. Average regional weekly d o l l a r expenditures per person for 37 fresh apples derived by D.B.S. were m u l t i p l i e d by 52 to obtain d o l l a r expenditures on a yearly b a s i s . The following figures f or regional per c a p i t a expenditures for fresh apples were obtained: $4.10, $3.64, $3:20, $4.05 $4.90, and $4.05 per year f o r the Maritimes, Quebec, 38 Ontario, Manitoba and Saskatchewan, Alberta, and B r i t i s h Columbia 36 W.. G. Tomek, Apples in the United States: Farm Prices and Uses, 1947-1975, Corn e l l U n i v e r s i t y A g r i c . Experiment Station, New York State College of A g r i c u l t u r e , I t h i c a , New York: B u l l e t i n 1022, July 1968, p. 18. 37 D.B.S. Urban Family Food Expenditures, Cat. No. 62-524, pp. 52-53, Table 1. -*^ No weekly expenditure figures were a v a i l a b l e for Saskatchewan, therefore, Manitoba estimates were assumed to p r e v a i l i n Saskatchewan. 28. r e s p e c t i v e l y . The average r e t a i l p r i c e of apples i n Canada for'the 39 calendar year 1962 was C-16.2 per l b . This p r i c e was divided into the 1962 regional per capita expenditure estimates to obtain regional per capita consumption f i g u r e s . The r e s u l t s obtained are summarized in Table I I . ';;'TABLE II Estimated Regional per Capita Consumption of Apples 'in Canada for 1962 Based on Average Price per l b . and per Capita Expenditure Region Maritimes Quebec Ontario Saskatchewan and Manitoba Albe r t a Br i t ish Columb i a $ Expenditure i n 1962 $ Price per l b . i n 1962 4.1 .162 3-64 .162 3.2 .162 4.05 .162 4.90 "".162 4.05 .162 Estimated Regional per Capita Consumption of Fresh Apples i n 1962 Lbs . 25.3 22.5 19.75 25.0 30.25 25.0 D.B.S., Prices and Price Indexes, Cat. No. 62-002, March 1968, p. 34, Table 10. In order to derive a t o t a l consumption estimate of fresh apples for the 1965-66 crop year, the equation given below has been used: Y = + (2) 2 where Y = Assumed t o t a l fresh apple consumption in Canada for the crop year 1965-66 . b. = 1962 regional per capita consumption of fresh apples 1 (Table'II). ( i = l 10) w., and w.„ = same as i n equation (1) l l i2 '(. Tot a l Canadian consumption derived from equation (2) amounted to: 453, 105, 538 l b s . of fresh apples This estimate of t o t a l fresh apple consumption f a l l s short of the previously derived estimate of 511,550,925 l b s . by 58,445,387 l b s . In order to obtain regional demand estimates, that add up to a t o t a l consumption of 511,550,925 lbs ., an adjustment equation was developed to allow regional apportionment of the di f f e r e n c e between the two t o t a l consumption estimates. The computational procedure, for appor-t i o n i n g the 58,445,387 l b s . of fresh apples i s i l l u s t r a t e d i n the following s e c t i o n . Demand Adjustment Computations The demand adjustment equation is written: y i (x-Y) + y. = x (3) 30. where X and Y are defined for equations (1) and (2) r e s p e c t i v e l y . y. denotes the quantity consumed in region i (i=1...10) based on the r e g i o n a l per c a p i t a consumption estimates presented i n Table I I . • V . .th . . , ^ i denotes the l region's consumption expressed as a Y proportion of t o t a l consumption. For example, the regional demand for the Maritimes represented at Windsor, N.S., was computed as follows: b^ = 25.3 l b s . estimated per capita consumption (Table II) 40 = 1,984,500 11 J12 40 W, 0 = 1,992,500 therefore, 7 l = (25.3) (1,984,500) + (25.3) (1,992,500) = 5 0 j 3 0 9 , 0 5 0 l b s of fresh apples, and ^1 = 50,309,050 + 453,105,538 = .111031. Hence, Y the Maritime demand centre takes approximately 11 percent of Canada's t o t a l quantity of fresh apples a v a i l a b l e for consumption. In order to obtain the adjusted t o t a l for the Windsor demand centre, which would r e l a t e to the 1965-66 crop year, 11 percent of (X-Y) = 58,445,387 l b s . was computed and the product added to the estimated t o t a l demand of 50,309,050 l b s . Table III summarizes the computed components of the demand adjustment equation and also the f i n a l adjusted regional demand quan t i t i e s for the 1965-66 crop year. 40 Population estimates taken from Table C-2, Appendix C. 31. TABLE I I I Adjusted Regional Demand Estimates for Fresh Apples in Canada Relating to the 1965-66 Crop Year^'^ „ • (2) Region Ii Y y i : ~ (X-Y) y . Unadjusted Regional Demand Estimate y i + y i •y (X-Y) Adjusted Regional Demand Estimates 1 .111031 6,489,250 50,309,050 56,798,300 2 .0426 2,489,773 19,299,094 21,788,867 i 3 .241356 14,106,145 109,359,750 123,465,895 4 .04474 2,614,847 20,271,647 22,886,494 5 .253523 14,817,250 114,872,685 129,689,935 6 .05301 3,098,190 24,018,750 27,116,940 •7 .0526 3,074,227 23,831,250 26,905,477 8 .04951 2,893,631 22,434,156 25,327,787 9 .04951 2,893,631 -22,434,156 . 25,327,787 10 .10212 5,968,443 46,275,000 52,243,443 Totals 1.00 58,445,387 453,105,538 511,550,925 Zy.=Y= (1) Calculations for y. and Y are based on 1962 average regional per . ca p i t a expenditures for fresh apples and 1965-66 regional population estimates (2) Regional code explanation i s given i n Table I. 32. It is recognized that there are a l t e r n a t i v e methods of deriving regional demand estimates. However, the types of data a v a i l a b l e for the study r e s t r i c t e d a t t e n t i o n to the two methods described. While the demand estimates obtained are approximative, they are thought to be s u f f i c i e n t l y representative to permit u s e f u l conclusions to be drawn from the ensuing a n a l y s i s . REGIONAL SUPPLY ESTIMATES FOR MODEL I A n a l y t i c a l Model I of the analyses assume predetermined supply corresponding to the 1965-66 crop year. Hence, a supply-estimating model has been used for t h i s period. However, from production data (Table A - l , Appendix A) i t becomes evident that during the 1965-66 crop year, B r i t i s h Columbia showed a r e l a t i v e l y low production estimate, whereas the province of Quebec showed an unusually high production estimate. With reference to t h i s , i t was f e l t that an average pro-41 duction period of 6 years (1961-1967) should also be u t i l i z e d to estimate predetermined supply quantities." Consequently, supply inputs to the transportation model assume predetermined q u a n t i t i e s , one based on the 1965-66 crop year estimates, and another based on an average production period f o r the crop years from 1961-67. A d e t a i l e d supply-estimating model for the transportation problem r e l a t i n g to the 1965-66 crop year has been pursued according to the following method: av a i l a b l e for this period, also and 1966 census data. 41 Data were most conveniently average y i e l d has been based on 1961 33. To t a l production estimates of apples i n each producing region were disaggregated into processed and fresh sales quantities . It was assumed that processing takes place at the respective producing regions and, hence, the quantities involved were subtracted from relevant regional t o t a l s . Imports were aggregated for v e s s e l , truck, and r a i l movement into regions i n order to make allowance for possible changes i n trade. The estimated import quantities of apples were considered to represent supply inputs at the points of entry as selected for each relevant region. Thus, although no apples are commercially produced i n Manitoba, a supply point (Emmerson) is shown for t h i s region, because apples shipped into Manitoba from the U.S. mainly o r i g i n a t e i n Michigan State and were assumed to be hauled v i a Emmerson. A s p e c i f i e d production percentage to estimate waste was also considered i n the study and consequently, waste quantities of apples were estimated and then subtracted from predetermined supply at each supply point. The regional supply model has the following equation: NS = DP SP + I E - W (net supply) (domestic (sales to (imports) (exports) (waste) production) processors) Estimates of each component of the supply model were obtained as follows: Production Regional production quantities of apples were r e a d i l y a v a i l a b l e from published information by the Government of Canada and relevant data have been taken d i r e c t l y from apple production estimates made by 34. the Canada Department of A g r i c u l t u r e . Tabulated estimates and s p e c i f i c sources of information are recorded in Table A - l , Appendix.A. Sales to Processors Data on regional sales of apples to processors have been derived d i r e c t l y from t o t a l acquirement estimates by the Dominion Bureau of S t a t i s t i c s . Unfortunately, t o t a l acquirements of apples by processors were only a v a i l a b l e on a natio n a l aggregate b a s i s , whereas net amounts of apples used for processing were a v a i l a b l e on a regional b a s i s . The d i f f e r e n c e between t o t a l acquirements and net amounts used for processing is defined as 'resold', and i n the analyses i t was assumed that resold quantities c o n s t i t u t e d u p l i c a t i o n . Therefore, i n order to avoid double counting, estimated resold quantities have been propor-t i o n a l l y subtracted from each producing region. Tables A-3 and A-4 i n Appendix A explain the computational method applied to obtain t o t a l regional acquirements' estimates of apples by processors. Imports ' , ~ -Imports of fresh apples may be viewed as predetermined supply. In the study, import quantities of apples corresponding to the 1965-66 crop year were considered to be supply t o t a l s at the selected points 42 of entry such as Emmerson, Northgate, Coutes, e t c . Owing to the lack of comprehensive data on the movement of apple imports into the 42 Points of entry are presented in Table I, with an explanation given under "Geographic Orientation and Regional Demarcation" i n the thesis . Maritime region, i t was impossible to se l e c t a representative point of entry for such q u a n t i t i e s . Preliminary study of the Maritime region's demand for fresh apples suggests that imports would not be l i k e l y to move out of the region. Therefore, estimated imports of fresh apples into t h i s consumption region were held to constitute part of predeter-mined supply at Windsor. Estimated apple imports into the Province of Quebec were added on to supply quantities at Montreal; Niagara F a l l s i n Ontario, Emmerson i n Manitoba, Northgate i n Saskatchewan, and Coutes i n A l b e r t a were selected as representative points of entry for apple imports from the U.S. into the respective provinces. Consequently, these points of entry function as supply centres in the analyses. In the case of B r i t i s h . Columbia, supply was centred at Kelowna and Vancouver. Since,the study assumed that a l l imports of apples were destined for the Vancouver demand centre, Vancouver i n ad d i t i o n to being a representative point for regional demand, was also assumed to act as the centre of supply for predetermined imports. / Table IV summarizes estimated import quantities for fresh apples, r e l a t i n g to the 1965-66 crop year, by region and mode of transportation. The d e t a i l e d disaggregation procedure applied to each region i s presented in Appendix B. . . Exports Exports of fresh apples from Canada's four major producing regions were treated as predetermined supply quantities destined for i n t e r n a t i o n a l markets. Such estimates were subtracted from relevant 36. TABLE IV Import Estimates of Fresh Apples for the 1965-66 Crop Year By Mode of Transport and Representative Point of Entry into Each ('000 lbs Region • ) Region Representat ive Point • Mode Vessel (' 2" ) ot Transport R a i l ( 3 ) T r u c k ( 4 ) Total Adjust-ments (6, Maritimes Windsor 3,526 ( 5 ) 3,526 ( 5 ) 97 Quebec Montreal 1,544 49 5,120 6,713 Ontario Niagara F a l l s . 15,944 4,040 19,984 Manitoba Emmers.on 99 10,000 10,099 Saskatchewan Northgate 920 920 Al b e r t a Coutes 1,200 1,200 B r i t i s h Vancouver 2,193 644 11,376 14,213 1,521 Columb i a Totals 56,655 1,618 (1) (2) (3) (4) (5) (6) Includes a l l imports into Newfoundland, Nova Sco t i a , Prince Edward Island, and New Brunswick. Table B-3, Appendix B. _ . Table B-4, Appendix B . . ,„ : • Table B-6, Appendix B. It was impossible to determine any mode of transportation into the Maritimes. Therefore, imports destined f o r t h i s region were averaged for the 1965 and 1966 calendar years as recorded i n Table B-2, Appendix B. Import estimates into the Maritimes were e x c l u s i v e l y based on an averaging method for the 1965, 1966 calendar years. For B r i t i s h Columbia, imports by truck (Table B-6, Appendix B) could not accurately be v e r i f i e d . In l i g h t of th i s i t seemed reasonable to apportion the remainder of t o t a l imports for the 1965-66 crop year to the Windsor and Vancouver supply centres. The adjusted estimates were computed as i l l u s t r a t e d below: 3,526 56,655 = .06 (unadjusted Maritime Imports) (unadjusted t o t a l Canadian Imports) Therefore, 6 percent of the remaining quantity of 1,618,000 l b s . were added to the t o t a l for Windsor, with the re s t a l l o c a t e d to the t o t a l for Vancouver. t o t a l r e g i onal production f i g u r e s . Data on fresh apple exports were r e a d i l y a v a i l a b l e from a number of sources ( i . e . D.B.S., CD.A., B.C. Tree F r u i t s Ltd.), but the nature of the a v a i l a b l e s t a t i s t i c s i n t r o -duced a s l i g h t complication, owing to discrepancies of estimates as given by the various sources of information. For example, according t CD.A., t o t a l fresh apple exports from Canada for the 1965-66 crop year were estimated at 123,795,435 l b s . (Table B-7, Appendix B). On the other hand, D.B.S.'s estimate accounted f o r only 115,720,136 lb of fresh apple exports from Canada for the same time period. Con-sequently, i n order to overcome the inconsistency i n data estimates, i t was thought that an appropriate adjustment ought to be made. The method of adjusting fresh apple export estimates from Nova Sco t i a , Quebec, Ontario, and B r i t i s h Columbia i s one of apportionment. Its computational procedure i s pursued i n Appendix B. In Table V regional export estimates are summarized for the 1965-66 crop year from the above mentioned producing regions. , Was te In estimating waste quantities of apples a s i m i l a r method has 44 been used to that of the Dominion Bureau of S t a t i s t i c s . Waste estimates derived by D.B.S. are based on a calendar year, whereas estimates i n the study were based on a crop year. On a calendar year 43 D.B.S., Domestic Exports by Commodity and Countries, Cat. No. 65-004, D i v i s i o n of External Trade, 1965-66, Table 4. 44 D.B.S., Apple Supply D i s p o s i t i o n Sheets for 1965 and 1966, Unpublished Information. 38 TABLE V Estimated Exports of- Fresh Apples from Canadian Producing Regions for the 1965-66 Crop Year ('000 lbs .) To From U.S . Others (1) Total (2) Adjusted T o t a l O ) Nova Scotia and . 28 New Brunswick Quebec , 5,470 Ontario 3,401 B r i t i s h 14,155 Columbia 16,138 25,406 5,075 54,121 16,166 30,876 8,476 68,276 15,196 29,023 7,967 64,181 Tot a l for A l l Four Regions 23,054 100,740 123,795 116,367 (4) (1) (2) (3) (4) Comprises a l l countries other than U.S. Quantities Corresponding to Crop and Seasonal Price Summaries Estimates (Table B-7, Appendix B). Adjustment was made by mu l t i p l y i n g r e g i o n a l t o t a l s with a co r r e c t i o n factor of .94. An explanation on the c o r r e c t i o n factor i s given i n Appendix B. It should be noted that the adjusted t o t a l was s l i g h t l y over-estimated of the D.B.S. t o t a l by 647,000 l b s . This discrepancy arose from rounding to the nearest one thousand and also c a l c u l a -tions were based on two decimal points instead of f i v e or s i x . Source: Crop and Seasonal Price Summaries, Fresh and Processed F r u i t s and Vegetables, Vol. 21, 1967-68, Part I I , p. 11 39 . basis one u s u a l l y has to consider a change in stock which ei t h e r needs to be added on to the following years production, or subtracted from i t , depending on whether the change i n inventory i s negative or posi-t i v e . On a crop year basis (July 1st to June 30th) t h i s change for fresh apples i s n e g l i g i b l e . Hence the actual production figures may be used to c a l c u l a t e waste. D.B.S. i n estimating waste proceeds as follows: 1. Total production + change in stock + change i n trade = Total Supply 45 2. Total supply - d u p l i c a t i o n + change i n stock (fresh) + change i n trade (fresh) = Fresh Market Supply 3. Four percent of fresh market supply ' = . Waste The method applied in the study to obtain waste estimates for the 1965-66 crop year is outlined below: 1. Sum of regional production + sum of regional change in trade .'• • = T o t a l Supply ,. 46 2. T o t a l supply - (sum of net amounts used for processing +17 . percent of t o t a l acquirements).= Fresh Supply -3. Four percent of fresh supply = Waste 45 It was found that d u p l i c a t i o n corresponds to the t o t a l acquirements of apples by processors. 46 For d e t a i l e d explanation of t h i s percentage see Tables A-3 and A -4, Appendix A. TABLE VI Supply-Estimating Model of Fresh Apples i n Canada for the 1965-66 Crop Year ('000 lbs.) 1 2 3 4=1+2-3 5 6-=4-5 7 8=6-7 Region Representat ive Points Reg.(1> Production Reg. ( 2 ) Imports Reg.<3> Exports Reg. Supply Reg. T o t a l Acquirements by Processors Reg. ( 6 ) Fresh Supply 4% of 6 Equals Was te Supply A v a i l a b l e for Con-sumption (Net Supply) Maritimes Windsor 159,750 3,623 15,196 148,177 127,710 20,467 818 19,649 Quebec Montreal 347,985 6,713 29,023 325,675 63,614 262,061 10,483 251,578 Ontario Toronto Niagara F a l l s 242,235 1,000 ( 5 ) 19,984 7,967 233,268 19,984 124,819 108,449 19,984 4,338 799 104,111 19,185 Manitoba Emmerson 10,099 10,099 10,099 402 9,637 Saskat-chewan Northgate 920 920 920 37 883 Al b e r t a Coutes 1,200 1,200 1,200 48 1,152 B r i t i s h Columbia Kelowna Vancouver 254,250 3,300 ( 5 ) 12,434 .64,181 193,369 12,434 96,265 93,804 12,434 3,752 497 90,052 11,937 (1) (2) (3) (4) (5) (6) Table A - l , Appendix A. . Table IV. Table V. Tables A-3 and A-4, Appendix A. Since no processing was assumed at the Vancouver demand centre, imports used f or processing were al l o c a t e d to the Kelowna supply centre where processing a c t i v i t i e s are performed. For the same reason, imports used for processing i n Ontario were all o c a t e d to the Toronto supply centre. Regional fresh supply denotes apples a v a i l a b l e for consumption a f t e r accounting for a l l processing but before f i n a l l y allowing for waste. 41. RECONCILIATION OF SUPPLY AND DEMAND In order to conform to the conceptual framework of the analy-t i c a l models i t is v i t a l that t o t a l aggregate demand equals t o t a l aggregate supply. In empirical studies of this nature, where supply and demand estimates are usually derived from actual data, and then modified into r e g ional supply and demand q u a n t i t i e s , a discrepancy in estimates seems almost impossible to avoid. This study was no exception, as can be seen by cursory inspection of the method u t i l i z e d in estimating supply and demand q u a n t i t i e s . Because demand estimates for the study would appear to be more accurate than supply estimates, supply has been adjusted to equal demand. Two reasons support the procedure for adjusting supply estimates to conform more r e a d i l y with actual data. a. To t a l amounts. 47 supplied by B r i t i s h Columbia to the various demand regions were obtained and according to these data the supply quantities for B r i t i s h Columbia as computed i n the study were s l i g h t l y underestimated, b. Total acquirements of apples by processors and net amounts used for processing, could not be f u l l y explained i n the l i g h t of a v a i l a b l e information. According to the method used to subtract quantities of 47 A d i s p o s i t i o n sheet of the t o t a l 1965 crop was obtained from J. MacKay of B.C. Tree F r u i t s Ltd., Kelowna, B.C. and according to this information, approximately 95 m i l l . l b s . as compared with a derived estimate of about 91 m i l l . l b s . of fresh apples were shipped to the various domestic demand centres. The discrepancy i n figures may a r i s e in part from the fac t that B.C. Tree F r u i t s measure approximately 42.5 lbs . of apples per bushel, whereas the o f f i c i a l conversion figure for Canada as given i n the Canada Year Book i s based on 45 l b s . of apples per bushel. . 42. * sales to processors (Tables A-3 and A-4, Appendix A) from production estimates, one can not assess i f any portion of the t o t a l processing acquirements were a c t u a l l y resold as fresh apples. Therefore, this may also have resulted i n a possible underestimate of regional supply q u a n t i t i e s . Computational Procedure to Reconcile Supply with Demand Total supply and demand estimates of fresh apples obtained from the supply- and demand-estimating models for the 1965-66 crop year were computed to be: Tot a l estimated supply = ZS± = 508,184,000 l b s . Total estimated demand = ^D. = 511,550,925 l b s . J The model requires that '^S. = X D . , therefore X ( D . - S.) =0. The l J j l above estimates show that X ( D . - S.) > 0, hence, the di f f e r e n c e between J l ' • • D^  and S_^  needs to be allocated in order to obtain the required equality condition between supply and demand. -Let X(D^. - s±) = d then d = 3,366,925 l b s . Since there are only four producing regions i n Canada, the t o t a l amount of d has been apportioned to each of these regions i n the manner outlined below: 1. Regional estimated net supply quantities for four supply centres t o t a l l e d 465,390,000 l b s . 4 8 Net supply quantities were t o t a l l e d for Windsor, Montreal, Toronto, and Kelowna. See Table VI. 43. Each supply centre's net supply estimate was then used to compute proportional supply of the 465»390,000 l b s . For example, net supply estimated for Windsor amounted to 19,649,000 l b s . of fresh apples. Therefore, i t s proportional contribution to t o t a l net supply of the four producing regions was computed to be .0422 ( i . e . 19,649,000 ~ 465,390,000) for the 1965-66 crop • year. For Montreal, Toronto, and Kelowna the proportions were .5406, .2237, and .1935 r e s p e c t i v e l y . Each of the proportional estimates was m u l t i p l i e d by 3,366,925. The r e s u l t i n g apportionment t o t a l s were then added to each centre's net supply estimate. The f i n a l adjusted net supply estimates for the four centres are summarized in Table VII along with predetermined import quantities at the remaining regional centres. The quantity at a l l centres constitutes the t o t a l net supply of fresh apples a v a i l a b l e i n Canada during the 1965-66 crop year. TABLE VII F i n a l Reconciled Net Supply Estimates of Fresh Apples In Canada - 1965-66 Crop Year Region Representat ive Supply Centre F i n a l Reconciled Net Supply (lbs.) Maritimes Windsor 19,791,067 Quebec Montreal 253,398,527 104,864,023 Ontario Toronto B r i t i s h Columbia Kelowna 90,703,308 Tot a l 468,756,925 44. Revised Supply-Estimating Model for the 1965-66 Crop Year  According to 1961-67 Average Production Contribution Data In order to obtain production estimates which were not biased by the fact that one region experienced abnormal v a r i a t i o n r e l a t i v e to " other regions for a given crop year, an averaging method has also been used to estimate regional supply q u a n t i t i e s . It i s r e a l i z e d that this averaging method is somewhat approximative, however, regional supply estimates derived from i t are an i n d i c a t i o n of more normal annual production patterns i n Canada than that exemplified in 1965. For instance in 1965 Quebec produced 35 percent of Canada's t o t a l apple crop as compared with about 24 percent over the 1961-67 period (Table A-5, Appendix A). It is c l e a r , therefore, why an averaging method for determining regional supply quantities can have a u s e f u l generalized a p p l i c a t i o n . The revised supply-estimating model i s e s s e n t i a l l y the same as the one developed in the previous section for the 1965-66 crop year. Average annual net supply figures for the four domestic regions were calculated over the 1961-67 period as follows: Average Annual _ Average A n n u a l 4 ^ Average A n n u a l 4 ^ Average A n n u a l 4 ^ 0 Net Supply Domestic Pro- Sales to Export Quan-duction Processors t i t i e s 4 ^ a T a b l e A - l , Appendix A. . 49b Table A-2, Appendix A. 49c Computed from crop and seasonal price summaries, 0p_. C i t . p. 10. 45. Making use of the regional percentage contributions to t o t a l average annual net supply (Tables A-5, A-6, Appendix A), i t was assumed that the Maritime region, Quebec, Ontario, and B r i t i s h Columbia would supply 9, 37, 28, and 26 percent r e s p e c t i v e l y of t o t a l fresh apples consumed i n Canada. These percentage contributions were applied to the t o t a l net supply of fresh apples for Canada's four producing regions estimated e a r l i e r for the 1965-66 crop year at 468,756,925 l b s . ~ ^ Consequently the producing region's average annual net supply quantities for the 1961-67 period were estimated to be 42,118,123 l b s . , 173,440,062 lbs ., 131,251,939 l b s . , and 121,876,800 l b s . of fresh apples for the Maritimes, Quebec, Ontario, and B r i t i s h Columbia in the order stated. It follows that these figures i n d i r e c t l y take into consideration wastage by v i r t u e of a l l o c a t i n g the t o t a l net supply estimate for the 1965-66 crop year. Moreover, the a l l o c a t i o n of the 468,756,925 l b s . among the four producing regions i n the manner des-cribed, has achieved r e c o n c i l i a t i o n of t o t a l supply and t o t a l demand. . This i s made possible by the fact that the apportioned t o t a l had already taken i t into consideration. The revised supply estimates along with import quantities as estimated for the 1965-66 crop year constitute the t o t a l revised supply d i s p o s i t i o n and the r e s u l t s are recorded in Table IX. See supply-estimating model based on 1965-66 crop year, Table VI This figure automatically achieves r e c o n c i l i a t i o n of t o t a l supply with t o t a l demand. • ^ B r i t i s h Columbia w i l l serve to i l l u s t r a t e the computational procedure i n a r r i v i n g at revised supply estimates. 25% (Table A-5, Appendix A) of 468,756,925 l b s . (Footnote 47) = 121,876,800 l b s . of fresh apples. This f i g u r e represents the revised net supply estimate for B r i t i s h Columbia. 46 REGIONAL SUPPLY CONSTRAINTS FOR MODEL II To s i m p l i f y computational procedures without loss of g e n e r a l i t y , analyses 1, 2 and 3 of Model II consider a closed Canadian economy with a l l imports and exports assumed away. The four commercial producing regions i n Canada were given supply constraints, consistent with the conceptual framework of the a n a l y t i c a l Model II . Regional supply constraints were obtained by increasing net regional supply le v e l s by 25 percent as based on the 1965-66, and 1961-67 production estimates. It should be r e a l i z e d that regional supplies could be increased i n f i n i t e l y , but for the purpose of the study i t was assumed that an increase of 25 percent on regional supply l e v e l s would r e f l e c t a r e a l i s t i c approximation of actual conditions. From regional production estimates the quantities of sales to processors have been subtracted to obtain regional supply quantities and these quantities were then increased by 25 percent. . Since the objective of the a n a l y t i c a l Model II i s aimed at determining l o c a t i o n a l advantage, this s i m p l i f i e d method of obtaining regional supply estimates would appear to be adequate. Had a more detai l e d method been applied to obtain approximate increased regional supply q u a n t i t i e s , the general trade pattern, under the stated assumption, would s t i l l indicate which region enjoys a l o c a t i o n a l advantage r e l a t i v e to other regions. Furthermore, had supply been assumed to be p e r f e c t l y e l a s t i c then the l e v e l of each regional supply would be such, whereby a supplying region could possibly s a t i s f y a l l demand centres compared with other supply regions. The 25 percent r e g i o n a l increase on the approximate net supply l e v e l was based on the 47 assumption that each region has only a li m i t e d acreage at i t s disposal which can be u t i l i z e d for commercial apple growing. In f a c t , t h i s would tend to make the analyses even more r e a l i s t i c . In analyses 4 and 5 of Model II a li m i t e d open economy .has been considered. Limited to the extent that U.S. supply regions (New York, Michigan, and Washington State) (see Table I ) , were also included i n the analyses. The same supply estimates as computed for analyses 1, 2 and 3 have been used, but i n addit i o n the three chosen U.S. points were given supply constraints which were obtained by estimating the t o t a l amount of apples which was exported to Canada from the United States . The imports of fresh apples into Canada from the U.S. for the 1965-66 crop year amounted to 54,536,000 l b s . with the major portion o r i g i n a t i n g i n the three states included i n the study. The t o t a l predetermined amount of 54,536,000 l b s . , was then a l l o c a t e d to each of the U.S.'s selected supply centres. The reason for s e t t i n g these import.restraints at the three U.S. points, was to allow any one of these points to supply the t o t a l predetermined import quantities into Canada, or any portion thereof. Data on two types of supply constraints used i n conjunction with Model II are presented i n Table VIII. . . . I SUMMARY OF REGIONAL SUPPLY AND DEMAND ESTIMATES Regional supply and demand estimates developed i n the demand and supply-estimating models have been combined and summarized in 48. TABLE VIII Region Maritimes Quebec Ontario B r i t i s h Columbia Supply Constraints for Model II Based on Crop Year Average of 1961-67 Period ('000 lbs.) (1) Domestic Regional Production 1 150,840 224,505 254,250 293,400 (2) Sales to Processors 2 88,875 29,880 107,865 78,525 257, of Net Supply Net Supply 4 3=1-2 61,965 194,625 146,385 214,875 15,491 48,656 36,596 53,719 Supply Constraint Est imate 5=3+4 77,456 243,281 182,981 268,594 Region Maritimes Quebec Ontario B r i t i s h Columb i a b. Supply Constraints for Model II Based on 1965-66 Crop Year ('000 lbs.) (3) Domestic Regional Production 1 159,750 347,985 242,235 254,250 (4) Sales to Processors 2 100,440 53,055 106,245 76,860 25% of Net Supply Net Supply 4 3=1-2 59,310 294,930 135,990 177,390 14,827 73,732 33,997 44,347 New York State Michigan State Washington State Supply Constraint. Est imate '5=3+4 74,137 368,662 169,987 221,737 54,536 54,536 54,536 (5) (5) (5) (1) Data represents the 1961-67 averages from Table A - l , Appendix A. (2) Data represents the 1961-67 averages from Table A-2, Appendix A. (3) Table A - l , Appendix A. (4) Table A-2, Appendix A. . (5) Corresponds to 1965-66 t o t a l predetermined imports from the United States (see Table B-l , Appendix B). 49, Tables IX and X. The reg iona l supply estimates may be viewed as reg iona l c a p a c i t i e s , whereas reg iona l demand estimates represent reg i ona l requirements for f re sh apples. A l l quant i t i e s were rounded o f f to the nearest 100,000 l b s . f o r computational purposes. The sum to t a l s of the reg iona l supply and demand estimates represent quant i t i e s which are cons i s tent with const ra ints of the t h e o r e t i c a l models, and permit optimum trade patterns to be determined. 50. TABLE IX Summary of Regional Supply Quantities of Fresh Apples Used i n Conjunction with A n a l y t i c a l Models I and II ('000 lbs.) Supply Quantity Inputs for Supply Quantity Inputs for A n a l y t i c a l Model I A n a l y t i c a l Model II Region 1965-66 ( 3 ) 1961-67 ( 3 ) 1965-66 ( 3 ) 1961-67 ( 3 ) Crop Year Average Crop Year Crop Year Average Crop Year A 19,800 (2) 42,200 v ' 74,137 77,500 B 253,400 173,500 ( 2 ) 368,662 243,200 C 104,900 131,200 ( 2 ) 169,987 183,000 a 19,200 19,200 n.c. n.c. b 9,600 9,600 n.c. n.c. c 900 900 n.c. n.c. d 1,100 1,100 n.c. n.c. D 90,700 121,900 ( 2 ) 221,737 268,600 e 12,000 12,000 n.c. n.c. E n.c. n.c. n.c. 54,500 F n.c. n.c. n.c. 54,500 G n.c. n.c. n.c. 54,500 Totals 511,600 511,600 834,523 935,800 n.c. stands for "not considered" and implies that for s p e c i f i c types of an a l y s i s j u s i n g the crop year data shown , no supply quantities were considered at the designated regions. The reasons for omitting c e r t a i n supply centres i n the analyses w i l l become evident i n dealing with r e s u l t s . (1) A code explanation on Regions i s given i n Table I. (2) Only a cropyear average over the 1961-67 period for the four producing regions has been computed. The intermediate supply quantities (inputs) have been held constant at the 1965-66 l e v e l . (3) Regional supply quantities have been estimated on the basis of procedures explained i n ChapterHI dealing with regional supply estimates for Model I and Model I I . 51. TABLE X Summary of Regional Demand Quantities of Fresh Apples Relating to the 1965-66 Crop Year Demand Estimated Based on Average National Per Capita Consumption of Fresh Apples  Demand Estimates Based on 1962 Regional Per Capita Consumption Estimates of Fresh Apples and 1965-66 Population Data Region (1) 1965 1966 T o t a l Per Capita Per Capita Regional Estimated Regional Total Per Capita Regional Consumption Consumption Consumption Consumption Consumption "(2 lb I S . lbs . ('000 lbs.)(2) lbs . ('000 lbs i 27 . 4 24. 3 51,300 25, ,3 56,800 2 27. 4 24. 3 22,200 22. .5 21,800 . 3 27. 4 24. 3 125,500 22. .5 123,500 4 27. 4 24. 3 26,500 19. .75 22,900 5 27. 4 24. ,3 150,500 19 .75 129,600 6 27. 4 24. ,3 24,800 25 .0 27,100 7 27. 4 24. 3 24,600 25 .0 26,900 8 27 . ,4 24. .3 19,200 30 •25 25,400 9 27. .4 24. .3 19,100 30 .25 25,300 10 27 . 4 24.3 47,900 25 .0 52,300 Totals 511,600 511,600 (1) See Table I for regional codings. (2) Regional t o t a l s were computed by mu l t i p l y i n g regional per capita consumption figures with r e g i o n a l population estimates. (Table C-2, Appendix C) according to procedures explains i n Chapter III dealing with regional demand estimates. TRANSPORTATION COSTS In order to introduce transportation costs into the a n a l y s i s , transportation rates were estimated between each po s s i b l e p a i r of points of the supplying and consuming regions. The structure of transportation rates i s basic to the f i n a l s o l u t i o n i n t h i s type of a n a l y s i s , therefore, i t was e s s e n t i a l to obtain estimates of such rate between the points of supply and demand. Transportation costs u t i l i z e d i n t h i s study have been based on quoted 1969-70 rates of r a i l and commercial truck c a r r i e r s and include the cost of pro t e c t i v e s e r v i c e s . The reason f o r the lack of comparability i n the time periods involved ( i . e . 1969-70 trans-port rates and 1965-66 demand and supply estimates) may be j u s t i f i e d as follows: 1. Transportation rates f o r the 1965-66 period have been superceded at the time of research and were d i f f i c u l t to obtain, whereas current rates were more r e a d i l y a v a i l a b l e . 53. 2. The use of current rates should not s e r i o u s l y a f f e c t the optimal trade patterns for 1965-66,,because such rates have tended to increase by uniform percentages. However, quoted transportation rates introduced an inconsistency in the assumptions of the a n a l y t i c a l models. These models assume that rates are independent of volume shipped. The quoted rates obtained, were always stated on a minimum quantity basis such as 1.00$/100 l b s . minimum weight 20,000 l b s . On the other hand, i n the l i g h t of r e a l world conditions i t seems reasonable to assume that i n t e r -r e g i onal shipments are l i k e l y to be of s i m i l a r s i z e , because i t 1 is u s u a l l y wholesalers or marketing agents that do the shipping and not i n d i v i d u a l producers. Consequently, transportation rates were selected according to what was considered an appropriate minimum weight b a s i s . Once chosen such rates were then considered to be independent of volume . Two types of transportation rates, namely: agreed charges and open rat e s , were c o l l e c t e d . The agreed charge can be defined as a contract, between a supplier and a transportation firm. The supplier u s u a l l y agrees to ship a s p e c i f i e d percentage of a l l the a v a i l a b l e product with the given transportation firm. Such an agreed charge of shipping fresh apples e x i s t s between the Canadian Freight Association and B.C. Tree F r u i t s Ltd. Under t h i s contract B.C. Tree F r u i t s Ltd. 52 assures the c a r r i e r of 65 percent of the t o t a l fresh apples sold in 52 This f i g u r e was obtained from Mr. A. H. Kirk, Manager, of the T r a f f i c and Claims Department, B.C. Tree F r u i t s Ltd. during a v i s i t to Kelowna in July of 1969. 54. the area delineated by the B.C.-Alberta border.and the western points of the Lakeheads ( i . e . Fort William). To the writer's knowledge no such agreed charge existed between suppliers and shipping firms during the 1965-70 period studied, except the one stated above. Agreed charges do include protection against damage of f r o s t and heat. Open rates normally consist of two components. One i s a f l a t rate charged for shipping a good from point A to point B. The other i s a charge levied for protection against damage. In the case of apples, damage i s mainly caused by heat and/or f r o s t , hence, a buyer i n addition to paying the f l a t rate transportation cost may also wish to protect or insure his commodity against physical damage. In the case of fresh apples, shipping firms o f f e r various types of protection such as standard r e f r i g e r a t i o n , l i m i t e d r e f r i g e r a t i o n , mechanical r e f r i g e r a -t i o n , standard heat etc. Since these types of protection vary in p r i c e , i t seems reasonable to assume that a buyer would want to spend as l i t t l e money as possible for protection, with the assurance of r e c e i v i n g the best possible coverage against damage of the commodity. With the existence of differences i n charges for protective s e r v i c e s , deter-mination of open transportation rates becomes somewhat complicated. With regard to domestic movement, the charges l e v i e d for protection against f r o s t and heat damage could r e a d i l y be disaggregated into two s i x month periods. Protection could be assumed to run from A p r i l 15th to October 15th against heat and from October 16th to A p r i l 14th 55. 53 against f r o s t s . This would appear to suggest a r e l a t i v e l y easy method, but a more complex s i t u a t i o n arises with regard to quantities 54 moved i n each of the two periods. From a v a i l a b l e s t a t i s t i c s i t becomes evident that by far the larger portion of fresh apples i s shipped between October 16th and A p r i l 14th. Moreover, i t was generally confirmed"that r e f r i g e r a t i o n charges for shipment of apples are higher than heating charges. Therefore, in order to handle the complexity of the f r e i g h t rate structure s a t i s f a c t o r i l y , i t was f e l t that, a transportation cost matrix for the study could most conveniently be obtained by considering each supply region separately. Detailed computations for d e r i v i n g f i n a l transportation rates for each possible pair of supply and demand points are given i n Appendix D and the f i n a l estimates have been entered i n Table XI. As such, these estimates were judged to represent the most appropriate transportation cost data for the purposes of the study. COSTS OF PRODUCTION, STORAGE AND PACKING Per acre production cost estimates for the 1965-66 crop year were mainly based upon a previous study on the cost of pest-control for apple growing in Canada"*"* and augmented with a d d i t i o n a l ^^Since recommended storage temperature for apples is about 30 to 32( F) the disaggreation into two s i x month periods tends to be reasonable. (Information on recommended storage temperature can be obtained from "Handbook on the Storage of F r u i t s and Vegetables," for Farm and Com-mercial use. P u b l i c a t i o n No. 1260, Canada Department of A g r i c u l t u r e ) . 54 S ee Crop and Seasonal p r i c e summaries for monthly unloading i n 12 Canadian markets. 0p_. C i t . 55An es say written i n p a r t i a l f u l f i l l m e n t of the B.Sc. degree in A g r i c u l t u r e , submitted to the Department of A g r i c u l t u r a l Economics, U n i v e r s i t y of B r i t i s h Columbia (June 1968). TABLE XI Estimated Average Transportation Rates for Apples Including Protective Service Charges Rates Expressed in Cents per One Hundred Pounds (Canadian funds) and Relate . to the 1969-7C > Period To From Windsor N.S . Quebec Montreal City Ottawa Toronto Winnipe, g Regina Edmonton Calgary Vancouver Windsor (N.S.) - 108 118 118 128 251 321 . 382- 382 500 Montreal 139 93 . - • • 81 82 29 7 362 446 446 464 Toronto 196 159 77 • 83 - 254 . 319 403 403 415 Niagara F a l l s 254 159 101 83 - 254 319 403 403 415 Kelowna 402 278 278 278 278 199 200 126 107 75 Emmerson n .c. n.c. n . c . n.c. n.c. 40 114 n.c. n.c. n.c.. Northgate n.c. n.c. n.c. n.c. n.c. 201 89 134 124 n.c. Coutes n.c. n.c. n.c. n.c. n.c. 225 156 • 97- 91 n.c. Lansing> . (Mich.) u ; 408 221 194 194 135 . 376 n .a. n. a. n. a. n .a. Rochester ( N . Y j d ) 328 163 132 142 103 354 n .a. n. a. n. a. n .a. Yakima . . (Wash.) U ; 441 297 297 297 297. 236 219 236 217 60 n.c. Routes not considered because of p r o h i b i t i v e l y high transportation r a t e s , n.a. No rates were a v a i l a b l e for these routes. (1) Rates from the U.S. are stated in Canadian funds (4% surcharge was added to the U.S. r a t e ) . information. The f a c t that production costs were estimated for t o t a l apple production may very l i k e l y have introduced a regional b i a s . For instance, t o t a l average production costs per acre i n Nova Scotia was estimated at 217.00$, whereas for Quebec this estimate amounted to 325.00$ per acre. However, over 60 percent (Table A-5, Appendix A) of Nova Scotia's apple production are u s u a l l y sent for processing, while only about 15 percent of the crop in the Province of Quebec go into processing. It seems reasonable to suggest that i f production costs were estimated separately for processing and fresh use, the cost of growing apples for processing would l i k e l y be lower than the cost for fresh apples. Therefore, estimating the cost of production f o r fresh apples alone would require a complete cost analysis in each of the producing regions. Such an analysis would be a separate project i n i t s e l f and was beyond the scope of t h i s study. In s p i t e of t h i s d i f f i c u l t y the average production costs obtained were applied under the assumption that they would adequately r e f l e c t the r e l a t i v e cost differences . To provide data for a n a l y t i c a l Model II per acre apple cost estimates had to be converted into costs per 100 l b s . In order to compute such estimates i t was necessary to obtain data on y i e l d s for relevant producing regions . It was f e l t that production costs based An attempt to obtain a l t e r n a t i v e comprehensive costs proved unsuccessful because of the general lack of information in t h i s area. 58. on y i e l d would r e f l e c t more normal conditions i f y i e l d were averaged over a number of years instead of r e l a t i n g just to the 1965 crop. Therefore, regional production cost estimates were, computed by d i v i d i n g average 1961-66 regional y i e l d s per acre into 1965-66 regional produc-t i o n costs per acre. Regional y i e l d estimates and regional costs of producing 100 l b s . of apples are shown i n Table XII. Detailed computa-t i o n a l procedures for d e r i v i n g summarized r e s u l t s are given in Table A-8, Appendix A for y i e l d and Table E - l , Appendix E for costs of production. • ,.- • ' - ' • • TABLE XII " Average Y i e l d per acre of Apples in Each of the Commercial Producing Regions of Canada For the 1961-66 Crops and Related Average . Cost of Producing 100 l b s . of apples Based on Bearing Region Acreage Lbs . YIELD per A c r e ^ Based oh Total Acreage Lbs COST per 100 l b s . (2) Bearing Acreage To t a l Basis Acreage $/100 l b s . Basis $/100 lbs. Nova Scotia and New Brunswick Quebec Ontario B r i t i s h Columbia 10,035 10,485 9,990 25,560 7,920 8,280 6,705 12,510 2.17 3.07 4.59 1.84 (1) Data on y i e l d estimates are shown in Table A-8, Appendix A. (2) Production cost estimates are given in d e t a i l i n Table E - l , Appendix E. 2.75 3.90 6.80 3.77 59. Storage and Packing Costs Apple storage and packing give r i s e to important d i s t r i b u t i o n costs. Furthermore, they were found to d i f f e r among producing regions. The average estimated cost of storage and packing of 100 lb s . fresh apples corresponding to the 1965-66 crop year for Nova Scotia and New Brunswick, Quebec, Ontario, and B r i t i s h Columbia were found to be $2.33, $1.80, $2.93, $3.28 respectively.. These costs were included i n the study by adding them to regional production costs. The computa-t i o n a l procedure for assessing storage and packing costs is explained in Appendix K. IMPORT PROCUREMENT COSTS ; • Procurement cost is defined as r e l a t i n g to imports from the three United States supply regions which were included in the a n a l y t i c a l Model I I . It consists of a transportation charge, an adjustment for the exchange ra t e , t a r i f f l e v i e s , ( i f any) and average market pr i c e (F.O.B.) at the point of supply, for each pair of supply and demand points. Transportation costs from Michigan State and New York State to Canadian demand centres were based on trucking rates only and were furnished by Smith's Transport Ltd., Toronto, Ontario. According to unloading s t a t i s t i c s , apples o r i g i n a t i n g i n these two States were mainly shipped by truck. Hence, i f was assumed that trucking rates would r e f l e c t the most economic mode of transportation. Furthermore, 60. such rates.with protective charges included were r e a d i l y obtainable. On the other hand, rates from Washington State were based on r a i l movement, because such charges were more r e a d i l y obtainable from r a i l r o a d companies. Investigation showed that most of the shipping from Washington State into the P r a i r i e and Eastern Provinces tended to be by r a i l , while apples shipped in to B r i t i s h Columbia were mostly shipped by truck. In the l a t t e r case i t was assumed that r a i l rates would be s t r i c t l y competitive ,with trucking rates.. Therefore,, under . t h i s assumption the use of r a i l rates would permit the determination of optimum trade patterns. Detailed computations of transportation rates from points in the U.S. to points i n Canada are presented in Appendix D. F.O.B. Prices (Average market p r i c e at supply point) F.O.B. prices for the three selected U.S. supply centres were based on tabulated monthly F.O.B. quotations"''' (Table E-3, Appendix E) . Since a l l inputs for the a n a l y t i c a l model II were computed on a yearly b a s i s , i t was necessary to derive an average F.O.B. pri c e applicable for the e n t i r e time period in question. In order to obtain an average F.O.B. p r i c e for each of the representative United States supply centres, the following method was adopted. Monthly observations of F.O.B. prices were tested for possible time trends under the postulate that they would be lower in September U.S.D.A. S t a t i s t i c a l B u l l e t i n No. 347 "Fresh F r u i t s and Vegetable Prices 1963 to 1964," A g r i c u l t u r e Marketing Service, F r u i t s and Vegetable D i v i s i o n , Washington, D.C. June 1964, Table 3. 61. and October than i n February and March. A l i n e a r trend equation was f i t t e d with the form: Y. = a + bX. x x where Y. = estimated F.O.B. p r i c e 1 X. = time expressed i n terms of number of months from the beginning of September 1963 as o r i g i n ( i . e . September = 1) and terminating i n May 1964 ( i . e . May = 9). Therefore i = 1,2,...9. An estimating equation for each region was obtained as follows: Rochester (New York State) Lansing (Michigan State) Yakima (Washington State) F.O.B.. prices were then computed for each month i n each region by applying the above equations. These prices were then considered to represent monthly averages based on the assumption of normal d i s t r i -bution of prices around a l i n e of regression with regard to s p e c i f i c months. The geometric mean of the estimated monthly F.O.B. prices for a region was determined to represent the 1965-66 crop year p r i c e . In using geometric means r e c o g n i t i o n was given to the modal frequencies i n the d i s t r i b u t i o n s . Accordingly, the 1965-66 F.O.B. prices obtained for the three U.S. regions were treated as relevant constituents of import-procurement costs. These F.O.B. prices were calculated as $8.18, $7.92, $8.67 per 100 l b s . of fresh apples for Rochester, New York, Lansing, Michigan, and Yakima, Washington r e s p e c t i v e l y . The Y. = 6.05 + .49X. R = .3 i I Y. = 6.4 + .38X. R = .3 Y. = 6.4 + .5X. R = .5 x x 62. d e t a i l e d computational procedure is explained i n Appendix E. Customs T a r i f f The t a r i f f charge can be an important component of import procurement costs for a commodity. Depending on the amount of t a r i f f imposed, i t could s e r i o u s l y a f f e c t a supply point's r e l a t i v e advantage or disadvantage i n trade. For t h i s reason the customs t a r i f f on imports of fresh apples into Canada from the United States ought to be included in import-procurement costs. Relevant t a r i f f charges on fresh apple imports from the U.S. into Canada corresponding to the 1965-66 crop year are recorded i n Table E-5, Appendix E. SUMMARY OF SUPPLY-DISTRIBUTION COSTS , Owing to the nature of the analyses pursued, two sets of supply-d i s t r i b u t i o n costs for each of the designated pairs of points were computed from estimated costs of the previous sections. The f i r s t set 58 r e l a t e s to import procurement costs, i n c l u s i v e of customs t a r i f f , from selected points in the United States, and s u p p l y - d i s t r i b u t i o n costs composed of average production, storage and packing, and trans-p o r t a t i o n charges from supply points o r i g i n a t i n g i n Canada. The For the purpose of the study, s u p p l y - d i s t r i b u t i o n costs from the selected United States supply centres are r e f e r r e d to as 'import procurement c o s t s . 1 63. second set consists of import procurement costs from the United States, exclusive of customs t a r i f f , together with s u p p l y - d i s t r i b u t i o n costs from points within Canada which are the sum t o t a l s of estimated F.O.B. prices plus transportation charges. The relevant data are summarized in Table XIII and a discussion pertaining to the r e s u l t s follows: Imports from the United States into Canada were assumed to o r i g i n a t e from Rochester, (New York State), Lansing, (Michigan State) and Yakima, (Washington State) . This permitted 1965-66 crop year assessment of procurement costs per 100 l b s . at Canadian demand points, composed of Rochester, Lansing, and Yakima F.O.B. p r i c e s , customs 59 t a r i f f and transportation charges; a l l stated in Canadian funds. In t h i s connection i t w i l l be noted that apple imports into Canada from the U.S. are to be free of customs t a r i f f , beginning i n 1970, (Table D-5, Appendix D). Therefore, import procurement costs from the U.S. points, exclusive of customs t a r i f f , w i l l also be used i n the analyses to investigate the a f f e c t of t a r i f f removal. For designated points within Canada, t o t a l r e g i onal s u p p l y - d i s t r i b u t i o n costs are composed of per 100 l b s . production cost, storage plus packing charges, and trans-60 port a t i o n r a t e s . Regional domestic s u p p l y - d i s t r i b u t i o n costs of t h i s type were mainly used i n conjunction with analyses 1, 2, and 3 of the a n a l y t i c a l model I I . For reasons explained i n a l a t e r part of the t h e s i s , estimated F.O.B. prices at domestic supply points and relevant -^Transportation rates presented in Table XI. r e l a t e to the 1969-70 period (see discussion i n thesis under Transportation Rates). A l l other costs are assumed to represent relevant 1965-66 estimates. 6 0 S e e footnote 59. 64. transportation rates for pairs of supply and demand centres, were also used in conjunction with requisite import procurement costs from United States supply points. The following examples describe the procedure for calculating supply-distribution costs. 1. Supply-distribution costs for Canadian points = Average cost of production + storage and packing costs + cost of transportation The average total cost of delivering 100 lbs. of fresh apples from Windsor, Nova, Scotia, to Montreal, Quebec, amounted to: $2.75 + $2.33 + $1.18 = $6.27 Cost of Prod. Storage and Transportation Supply-Distribution Table XII Packing Cost Cost Table XI Cost Append ix E. Similar estimates were determined for a l l designated pairs of supply and demand points. 2. Supply-distribution costs from selected United States supply centres are defined as import procurement costs. In order to determine import procurement costs for designated pairs of points the following equation was used: [ (F.O.B. price + exchange rate) + transportation + customs t a r i f f ] = cost Import procurement cost. 65. / •Import procurement cost of 100 l b s . fresh apples from Rochester, New York to Toronto, Ontario was computed to be: [$8.18 + $.41) ( 1' ) + $1.03 + $.25] = $9.87 (Canadian funds) F.O.B. p r i c e plus Transportation cost Customs T a r i f f exchange rate Table D-9, App. D Table E-5 App. E. (1) Five percent on F.O.B. price was considered to represent an adequate exchange r a t e . As stated previously, s i m i l a r estimates were determined f o r a l l designated pairs of points. TABLE XIII Average Supply-Distribution Cost of 100 l b s . Fresh Apples From Designated Points of Supply to Designated Points of Demand ($/100 l b s . i n Canadian Funds) A l l Figures are Rounded o f f to the Nearest Ten Cents From Windsor ' Montreal Toronto Kelowna Rochester Lansing Yakima N.S. Que. ' Ont. B.C. N.Y. Mich. Wash. To (1) (2) (1) (2) (1) (2) (1) (2) (3) (4) (3) (4) (3) (4) Windsor, N.S. 5 .30 8 .00 7 .10 9 .20 10, .70 10 .60 11 .00 12. .00 12 .10 11 .80 12. .60 12, .20 13. .80 13 .40 Quebec Cit y 6 .20 9, .10 6 .60 9 .00 10, .40 9 .70 9 .80 10, .80 10. .50 10. .20 10 .80 10. .40 12. .30 11 .90 Montreal 6 .30 9 . 20 5 .70 7, .80 9 .50 8 .90 9 .80 10 .80 10 .20 9 .90 10 .50 10 .20 12, .30 11, .90 Ottawa 6 .30 9 .20 6 .50 8 .60 9 .60 .: 8 .90 9 .80 10 .80 10 .30 10 .00 10 .50 10, .20 12 .30 11 .90 Toronto 6 .40 9, .30 6, .50 8 .60 8 .70 -8 .10 9 .80 10 .80 9, .90 9 .60 9 .90 9, .60 12 .30 11 .90 Winnipeg 7. .70 10 .50 8 .80 10 .80 • 11 .30 10 .60 9 .00 10 .00 12 .40 12 .00 12 .30 11 .90 11 .70 11 .30 Regina 8 .30 11 .20 9 .20 11 .40 12 .00 11 .30 9 .00 10 .00 n . a. n .a. n .a. n .a. 11 .50 11 .10 Edmonton 8 .90 11 .80 10, .20 12 .30 12 .80 12 .10 8 .30 9 .30 n, . a. . n .a.. n .a. n' . a. 11 .70 11 .30 Calgary 8 .90 11 .80 10. .20 12 .30 12 .80 12 .10 8 .10 9 .10 n .a. • n . a. •'.n .a. n, . a. 11 .50 11 .10 Vancouver n .a. n .a. 10, .30 .12 .40 13 .00 12 .20 7 .80 8 .80 n . a. n .a. n .a. n .a. ' 9 .90 9 .50 n.a. = not a v a i l a b l e . Movement of apples to the designated pairs of points is in a l l l i k e l i h o o d excluded because actual cost would be p r o h i b i t i v e l y high. (1) S u p p l y - d i s t r i b u t i o n cost composed of: Average 1965-66 production cost estimates, 1965-66 storage and packing cost estimate and 1969-70 transportation rates • • (2) S u p p l y - d i s t r i b u t i o n costs composed of: Average F.O.B. price (see following explanation) plus 1969-70 transportation r a t e s . F.O.B. prices for the four Canadian producing centres were obtained as follows: Nova Scotia: The quoted 1965 (Nov.) F.O.B. price was used as given i n Appendix E to compute packing and storage costs . Ontario and Quebec: The same method as given i n Appendix E was used to obtain F.O.B. p r i c e s , but owing to the r e l a t i v e l y low wholesale quotations for 1965 at the Montreal market the 1964 and 1966 average wholesale quotations were assumed to be the applicable F.O.B. p r i c e s . B r i t i s h Columbia: F.O.B. prices as computed i n Appendix E were taken for the same period as for Ontario and Quebec. 67 Import procurement costs composed of: 1963-64 F.O.B. prices plus 5 percent exchange rate, 1965 customs t a r i f f , and 1969-70 transportation rates . Import procurement costs composed of: the same components as given i n footnote 3 above, but exclusive o 1965 customs t a r i f f . CHAPTER IV RESULTS OF SPATIAL EQUILIBRIUM ANALYSIS This section brings together a l l of the material developed i n e a r l i e r phases of the study and analyzes i t i n terms of projected patterns of regional supply and consumption of fresh apples under c e r t a i n assumed conditions. The- r e s u l t s have been achieved by the use of cost minimizing models--minimum t o t a l transportation costs of a n a l y t i c a l model I and minimum t o t a l s u p p l y - d i s t r i b u t i o n costs of a n a l y t i c a l model I I . Calculations were made on the IBM/360 model 67 whose associated terminal devices are operated under control of the Michigan Terminal System (MTS). In obtaining r e s u l t s c e r t a i n assumptions have been made in order to f a c i l i t a t e the analyses. The assumptions were: 1. No v a r i e t a l e f f e c t s of fresh apples existed and consumers were i n d i f f e r e n t as to source of supply. Hence, product homogeneity was exhibited i n supply and demand. 2. A l l fresh apples were marketed under i d e n t i c a l conditions, therefore, regional patterns of packing were considered to be i d e n t i c a l . • 3. No carryover took place from one crop year to the next. 4. No seasonal e f f e c t s i n supply or demand influenced trade patterns. 69 . ANALYTICAL RESULTS FOR MODEL I This Model has been designed to minimize t o t a l transportation costs for the domestic d i s t r i b u t i o n of fresh apples. Measurements were made of each region's competitive p o s i t i o n as i t was affected by changes i n regional supply and regional per capita consumption. In analyses 1 and 2 predetermined regional supply conditions, based on 1965-66 production data, were used in conjunction with predetermined regional demand qu a n t i t i e s , based on regional per capita consumption and national per capita consumption data (Table X). The r e s u l t i n g optimum trade patterns for fresh apples are shown in Tables XIV and XV. Analyses 3 and 4 involved the same demand conditions as analyses 1 and 2 but regional supply quantities were based on revised 1965-66 estimates. The optimum trade patterns for analyses 3 and 4 are presented in Tables XVI and XVII. Optimum Trade Patterns Given the regional demand and supply d i s p o s i t i o n s of fresh apples, and the relevant transportation rates connecting supply and demand centres, optimum s p a t i a l flow patterns that would minimize t o t a l cost of transportation were derived for analyses 1, 2, 3 and 4. In studying the r e s u l t s of the analyses several points should be borne i n mind. F i r s t , the import quantities shown at points of entry i n the p r a i r i e regions were, i n a l l l i k e l i h o o d , consumed at the same regions without crossing regional boundaries. Nevertheless, for the sake of 70. completeness of the model actual transportation rates were used from intermediate supply points, ( i . e . Emmerson, Northgate and Coutes) to demand points in other regions . For example, i t was found p r i o r to the analyses that apples imported from the United States into Manitoba^ went v i a Emmerson to Winnipeg. Thus p r o h i b i t i v e l y high transportation rates from Emmerson to other demand centres would have eliminated any other route. Likewise, the model did a l l o c a t e the import quantity as determined for Manitoba from Emmerson to Winnipeg. Even so the i n c l u s i o n of other r e a l transportation rates permitted the a l l o c a t i o n of predeter-mined import quantities to other demand centres, i f the optimum so l u t i o n c a l l e d for i t . In analyses 1, 2, 3 and 4 (Tables XIV, XV, XVI and' XVII) the import quantity established at Coutes (Alberta) was allocated to Regina, when in a l l p r o b a b i l i t y i t would have gone to Alberta demand centres in the normal course of trade. Second, the estimated import quantity of 3,623,000 l b s . to the Maritime region was a l l o c a t e d to the Windsor, N.S. supply centre, because no point of entry for the above quantity could be determined. Therefore, subsequent movements from points of customs clearance anywhere'in the Maritimes to the Windsor demand centre were not considered in the a n a l y s i s . Third, i t should be emphasized that current 1969-70 transportation rates were used in conjunction with 1965-66 actual and revised supply estimates and 1965-66 consumption estimates. This, however, should not a f f e c t the optimum trade pattern for the 1965-66 crop year, because 61 These imports according to unloading s t a t i s t i c s o r i g i n a t e mainly in Michigan State and were unloaded at Winnipeg, the demand centre for Manitoba. TABLE XIV Optimum Trade Pattern of Fresh Apples f o r Analysis 1, Model I ('000 lbs.) To From Windsor Quebec N.S. Cit y Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver T o t a l 1 Supply Windsor N.S. 19,800 19,800 Montreal 37,000 21,800 123,500 22,900 5,500 17,500 25,200 253,400 Toronto 104,900 104,900 Niagara F a l l s 19,200 19,200 Emmerson 9,600 9,600 Northgate 900 900 Coutes 800 300 1,100 Kelowna 25,100 25,300 40,300 90,700 Vancouver 12,000 12,000 T o t a l Demand2 56,800 21,800 123,500 22,900 129,600 27,100 26,900 25,400 25,300 52,300 511,600 1965-66 predetermined regional supply estimates; see Table IX 1965-66 predetermined regional demand estimates; see Table X TABLE XV Optimum Trade Pattern of Fresh Apples for Analysis 2, Model I ('000 lbs.) To Windsor Quebec Total 1 From N.S. City Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver Supply Windsor N.S. 19,800 19 .800 Montreal 31,500 22,200 125,500 26,500 26,400 15,200 6,100 253,400 Toronto 104,900 104,900 Niagara Falls 19,200 19,200 Emmerson 9,600 9,600 Northgate 900 900. Coutes 1,100 1,100 Kelowna 16,500 19,200 19,100 35,900 90,700 Vancouver • 12,000 12,000 2 Total Demand 51,300 22,200 125,500 26,500 150,500 24,800 24,600 19,200 19,100 47,900 511,600 11965-66 predetermined regional supply estimates; see Table IX. 2 1965-66 predetermined average national demand estimates; see Table X. TABLE XVI Optimum Trade Pattern of Fresh Apples ('000 lbs.) for Analysis 3, Model I To From Windsor Quebec N.S. Cit y Montreal Ottawa Toronto Winnipeg ; Regina Edmonton Calgary Vancouver T o t a l 1 Supply Windsor N.S. 42,200 42,200 Montreal 14,600 21,800 123,500 13,600 173,500 Toronto 1,600 129,600 131,200 Niagara F a l l s 7,700 11,500 19,200 Emmerson 9,600 9,600 Northgate • 900 900 Coutes 1,100 1,100 Kelowna 6,000 24,900 25,400 25,300 40,300 121,900 Vancouver 12,000 12,000 To t a l Demand 56,800 21,800 123,500 22,900 129,600 27,100 26,900 25,400 25,300 52,300 511,600 Revised 1965-66 predetermined regional average supply estimates; see Table IX. 1965-66 predetermined regional demand estimates; see Table X.: TABLE XVII Optimum Trade Pattern of Fresh Apples for Analysis 4, Model I ( '000 lbs.) To From Windsor N.S . Quebec City Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver T o t a l 1 Supply Windsor N.S . 42,200 42,200 Montreal 9,100 12,300 125,500 26,500 100 173,500 Toronto 131,200 131,200 Niagara F a l l s 19,200 19,200 Emmerson 9,600 9,600 Northgate , 9 0 0 900 Coutes 1,100 1, 100 Kelowna 99 15,200 22,600 19,200 19,100 35,900 121,900 Vancouver 12,000 12,000 Tot a l Demand2 51,300 22,200 125,500 26,500 150,500 24,800 24,600 19,200 19,100 47,900 511,600 Revised 1965-66 predetermined regional average supply estimates'; see Table IX. 1965-66 predetermined average national demand estimates; see Table X. 75. transportation rates from points of supply to points of demand tended to increase uniformly. In f a c t , since the optimum trade patterns shown in Tables XIV to XVII i n c l u s i v e l y are patterns which would be obtained under a p e r f e c t l y competitive market s t r u c t u r e , ^ 2 the r e s u l t s have relevance to contemporary conditions of transportation rate structures and supply and demand d i s p o s i t i o n s have not changed s i g -n i f i c a n t l y and this type of e f f i c i e n c y analysis is considered u s e f u l . Minimum t o t a l transportation costs of shipping fresh apples for a l l four analyses were: Analysis 1 $3,331,190.00 Analysis 2 $2,859,450.00 . Analysis 3 $2,459,100.00 Analysis 4 $2,265,180.00 It should be emphasized that the optimum trade patterns and corresponding minimum t o t a l transportation costs s o l e l y rest upon the assumptions and data estimates as used in the analyses. In p a r t i c u l a r , the assumption regarding seasonal e f f e c t s of fresh apples in supply and demand, places c e r t a i n l i m i t a t i o n s on the optimum trade patterns under stated e f f i c i e n c y conditions for the'1965-66 period. Import quantities from A u s t r a l i a and New Zealand were brought into the country during the o f f season of domestically grown apples. During t h i s period apples were shipped from ports of entry (Vancouver, Montreal) to 62 This t h e o r e t i c a l condition explains the optimum trade patterns from the standpoint of actual supply and demand d i s p o s i t i o n s used in the a n a l y s i s . It also implies a s p a t i a l e q u i l i b r i u m p r i c e system as discussed e a r l i e r for a n a l y t i c a l model I. 76. centres of demand i n the p r a i r i e s . In the analyses however, this has not been taken into consideration. Hence, part of B r i t i s h Columbia's demand at Vancouver was s a t i s f i e d by the import quantities brought in from New Zealand and A u s t r a l i a . This has also been the case i n Montreal, where import quantities from South A f r i c a and New Zealand have been allowed to meet demand at that point . An argument could be made for omitting import quantities altogether. But t h i s would c a l l for a r e v i s i o n of supply and demand quantities in regions with attendant d i f f i c u l t i e s of estimation on the demand's side. It is the writer's opinion, that seasonal e f f e c t s could be dealt with most adequately i f a study were conducted in two phases, one for the f i r s t h a l f of a given crop year and the other one for the second h a l f . Yet t h i s r aises the problem of obtaining disaggregated data of which there is a l l too l i t t l e in comprehensive form. The assumption regarding the homogeneous nature of apples i n supply and demand may also place l i m i t a t i o n s on the analyses. The attempt to create product d i f f e r e n t i a t i o n as made by advertising campaigns may influence the purchasing habits of customers, but i t would seem to be an insurmountable task to quantify any such e f f e c t s . On the other hand, i f such information were a v a i l a b l e i t could be allowed for i n applying the model. There is some evidence, 63 however, from a recent study by Solverson that the assumption of homogeneity of fresh apples i n supply and demand i s not a s e r i o u s l y l i m i t i n g f a c t o r . 63 Lyle Solverson, "Consumer Knowledge for Sovereignity: Apples" American Journal of A g r i c u l t u r a l Economics, Vol. 51, No. 5, Dec. 1965, pp. 1247-1250. 77. From the analyses i t can be seen that d e f i n i t e trade patterns have emerged for. the four major producing regions in Canada. Accordingly, Winnipeg and Regina demand centres represent boundary points for the shipment of fresh apples from eastern and western supply centres. It is of i n t e r e s t to compare the optimum trade patterns from the analyses with actual trade patterns. According to unloading s t a t i s t i c s , (see Table XVIII) Ontario apple shipments accounted for r e l a t i v e l y small shares of markets at western points. Quebec sent apples into the Ottawa and Toronto markets, whereas no apples moved into Quebec from Ontario. B r i t i s h Columbia apples were hauled as far as Nova Sc o t i a . No apples were unloaded at Quebec Cit y and only small quantities were unloaded at Montreal. Inspection of Table XVIII shows that B r i t i s h Columbia was the major supplier of fresh apples at the p r a i r i e demand centres . No movement occurred from the Maritime supply region to any of the designated demand centres outside the Maritimes. These actual movements are of considerable i n t e r e s t , because they are generally s i m i l a r to the optimum trade d i s t r i b u t i o n s for the analyses. Any divergence of the l a t t e r from actual trade patterns can occur e i t h e r through o v e r s i m p l i f i e d analysis or under the optimum conditions imposed. The former reason i s regretable', yet i t i s hoped to be of small influence. The l a t t e r reason is acceptable under the normative conditions of a n a l y s i s , and s p e c i a l i n t e r e s t from an e f f i c i e n c y standpoint i s attached to i t . Turning a t t e n t i o n to p a r t i c u l a r optimum trade patterns, movements from the designated supply centres to designated centres of demand w i l l -now be discussed. TABLE XVIII Percentage D i s t r i b u t i o n of Domestic Fresh Apple Unloads i n 12 Canadian Demand Centres for the Periods 1965-66 and 1961-67 (Percentages r e f e r to number of Carlots) To 1 (1) From Windsor (Halifax) Quebec % % (2) City Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver Maritimes 1965-66 (N.S.&N.B.) 1061-67 Quebec Ontario 1965-66 1961-67 1965-66 1961-67 80 82 1 2.5 1 2 97 94 3 5.5 95 93 17 17 80 79 7 3.5 84 87 -11 9 26 20 12 26 15 13 B r i t i s h 1965-66 Columbia 1961-67 18 13.5 5 6 3 4 9 9.5 89 90 74 80 88 74 85 87 98 97 (1) Includes unloads at Saint John, New Brunswick. (2) Regina and Saskatoon combined. Source: Crop and Seasonal Price Summaries for Fresh and Processed F r u i t s , Part I I . 79. In analysis 1 and 2 (Tables XIV and XV) which assume 1965-66 conditions, the optimum trade patterns indicate d e f i n i t e east-west and west-east movements of apples. Regina represents the demand centre where the eastward and westward flows meet. In analj'sis 1-which considers per c a p i t a consumption based on regional d i f f e r e n c e s , B r i t i s h Columbia supplied a l l apples at the Calgary demand centre. Also, the demand at Edmonton was mainly covered by B r i t i s h Columbia, with only a small quantity of 300,000 l b s . being drawn from the Coutes supply centre. The Vancouver market absorbed the predetermined import quantity a l l o c a t e d to B r i t i s h Columbia11. The remaining demand at Vancouver was supplied from Kelowna, B.C. This general pattern for the western regions was also exhibited for analyses 3 and 4. There are s p e c i f i c reasons for thinking that these r e s u l t s r e f l e c t c l o s e l y the actual trade picture which prevailed i n the western regions. For example, subsequent movements of New Zealand and A u s t r a l i a n apples from Vancouver to demand centres i n the p r a i r i e s would, i n a l l l i k e l i h o o d , not a f f e c t the general trading patterns. Two reasons support t h i s opinion. F i r s t , the 3% m i l l i o n l b s . of fresh apple imports from New Zealand and A u s t r a l i a accounted for a rather small amount of Canada's t o t a l supply of 511 m i l l i o n l b s . Second, the a l l o c a t i o n of these off-season imports to the p r a i r i e demand centres would simply mean a s l i g h t decrease in predetermined supply at Vancouver. As a r e s u l t , Vancouver would require a d d i t i o n a l supply to meet i t s demand. It i s evident that Kelowna represents the most l o g i c a l centre from which to supply. Hence, the o v e r a l l e f f e c t would be a minor 80. readjustment in regional quantities with the general trade patterns remaining unaffected. Returning to analyses 1 and 2, imports of fresh apples from the United States into Alberta were represented by intermediate supply at Coutes, Alberta, and shown to be shipped mainly to Regina. Upon f i r s t sight the reason for this may not be obvious, but the economics of transportation were such, that B r i t i s h Columbia would s a t i s f y the Alberta demand centre's requirements under the s p e c i f i e d supply and demand d i s p o s i t i o n s . In the case of Northgate and Emmerson, the a l l o c a t i o n of predetermined import quan-t i t i e s at these points involved movements as expected. Imports established at Northgate were all o c a t e d to Regina and those at Emmerson went to Winnipeg. With respect to imports at Niagara F a l l s , no subsequent movement was indicated beyond the Toronto demand centre. This is a feature of the optimum trade patterns i n analyses 1 and 2 which should not be . overlooked. However, th i s a l l o c a t i o n was to be expected under the condition of d e f i c i t supply at Toronto. In the case of Quebec a rather unusually high net supply d i s -p o s i t i o n was shown for the 1965-66 period. It was estimated that during the 1965-66 crop year, Quebec provided approximately h a l f of Canada's t o t a l net supply of fresh apples (see Table VI). In view of t h i s , the r e l a t i v e l y large surplus shown at Montreal, Quebec's representative supply centre, was expected. Although no actual shipment (see Table XVIII) were shown from points i n the Province of Quebec to p r a i r i e demand centres, the t h e o r e t i c a l optimum trade patterns involved 81. movements of apples from Montreal as far west as Regina. In analysis 1 (Table XIV) which considers regional per capita consumption estimates, Quebec was shown to be the only domestic supplier to the Regina market. In analysis 2 (Table XV) where regional demand quantities were based on average national per capita consumption, Quebec shared the market with B r i t i s h Columbia at.Regina. But i n both analyses Quebec supplied the ent i r e demand requirements at Quebec C i t y , Montreal, Ottawa, and Winnipeg. In addition, i t also accounted for part of demand at Windsor, N.S. and Toronto. In the case of the Maritimes, a f a i r l y large d e f i c i t was shown at Windsor, N.S. But as implied above, the shortage a r i s i n g at Windsor, N.S. was met from Montreal, the representative supply centre for Quebec. In general, the o v e r a l l trade patterns do indicate two d e f i n i t e trading areas. However, owing to the nature of the 1965-66 supply d i s p o s i t i o n , some features r e f l e c t e d in the analyses ( i . e . Quebec supplying the e n t i r e Winnipeg market), would not l i k e l y occur under more normal supply conditions. This w i l l become evident in the ensuing analyses. Turning to analyses 3 and 4 (Tables XVI and XVII) which used a revised 1965-66 net supply d i s p o s i t i o n , the r e s u l t i n g optimum trade patterns were s i m i l a r to those i l l u s t r a t e d i n analyses 1 and 2. However, with Increases i n net supply shown for B r i t i s h Columbia, Ontario, Nova Scotia and a decrease shown for Quebec, the boundary point of the east-west and west-east flows was now represented by Winnipeg, the designated demand centre for Manitoba. 82. In analysis 3 (Table XVI) B r i t i s h Columbia was the sole domestic supplier of fresh apples at the Vancouver, Edmonton, Calgary and Regina demand centres, and also supplied part of Winnipeg's demand. In analysis 4 (Table XVII) B r i t i s h Columbia met Winnipeg's e n t i r e demand for domestic apples and also sent supplies to Quebec C i t y . The divergence of the optimum trade patterns i n analyses 3 and 4 as discussed above, arises from the fa c t that regional demand quantities d i f f e r . For analysis 3 a l l western demand centres including Winnipeg absorbed approximately 31 percent of Canada's t o t a l net supply. In analysis 4 these same demand centres required approximately 25 percent of Canada's t o t a l net supply of fresh apples. The general trade patterns east of Montreal i n analyses 3 and 4 were almost the same as i l l u s t r a t e d by the previous analyses. However, owing to the nature of the s p e c i f i e d supply d i s p o s i t i o n the amounts a l l o c a t e d were d i f f e r e n t The i n t e r e s t i n g features of analyses 3 and 4 involve apple movements o r i g i n a t i n g from designated points in the Provinces of Quebec and Ontario. Of the four analyses, only analysis 3 considered a surplus supply at Toronto. It was, therefore, the one case in which Toronto could meet i t s own demand. The surplus at Toronto led to shipments into Ottawa. The import quantity centred at Niagara F a l l s was in part sent to the Ottawa demand centre and in part allocated to Winnipeg. At f i r s t glance the novement of apples from Niagara F a l l s to Winnipeg may not seem sensible. But i t took place because the costs of shipping apples from Niagara F a l l s and Toronto to Winnipeg were the same. Montreal supplied the remaining demand i n Ottawa, the e n t i r e Quebec 83. C i t y demand, the remaining demand at Windsor and i t s own demand require-ment. Within l i m i t s these movements demonstrate close conformity to actual shipments. In analysis 4, with regional demand heavily concen-trated at Montreal and Toronto, s i m i l a r trade evolved in Quebec and Ontario, as i l l u s t r a t e d i n analyses 1 and 2. A l l other trade remained the same as in analysis 3. The t h e o r e t i c a l optimum trade patterns described, provide u s e f u l information for explaining i n t e r r e g i o n a l flows of fresh apples under the s p e c i f i e d conditions i n the 1965-66 crop year. Therefore, as long as the r e l a t i v e conditions i n any one analysis hold good i n the future, one can expect the r e l a t i v e d i s p o s i t i o n of trade to remain unchanged under the optimizing c r i t e r i o n used. Equilibrium Price D i f f e r e n t i a l s The primal form of the transportation problem model can also be expressed in a dual form. The l a t t e r s o l u t i o n involves ( m + n - 1) equations of the form: V. - U. < T. . J i - i j . • where V. i s the p r i c e at the j 1 " * 1 demand centre J U \ i s the p r i c e at the U supply centre T. . i s the transportation cost involved between the 1 J V.'s and U.'s. J i The optimum s o l u t i o n for the transportation model, which minimizes t o t a l transportation costs under the assumption of a p e r f e c t l y competi-t i v e market structure, can be used to c a l c u l a t e a set of p r i c e 84. / 64 j d i f f e r e n t i a l s for the designated points of supply and demand. The m + n - 1 set of V. - U. = T.. equations in m + n variables are defined J i i J with regard to the selected routes and corresponding transportation costs i n the optimum s o l u t i o n . This simultaneous set of equations can not be solved unless one v a r i a b l e , either a V or a u\, i s given a zero p r i c e . I f t h i s i s done then a set of pr i c e d i f f e r e n t i a l s can be determined in r e l a t i o n to the actual p r i c e e x i s t i n g at the point which was given zero p r i c e by way of s o l u t i o n . Therefore, taking the optimum trade pattern i n analyses 1, 2, 3 and 4 of a n a l y t i c a l model I, and using the procedure described above, sets of pr i c e d i f f e r e n t i a l s under s p a t i a l e q u i l i b r i u m conditions were computed and are shown in Table XIX. For a l l of the analyses the sets of p r i c e d i f f e r e n t i a l s always r e l a t e to the pr i c e at Kelowna, B r i t i s h Columbia's representative supply centre. Although p r i c e d i f f e r e n t i a l s are shown as r e l a t i n g to Kelowna, information on pr i c e differences for any pair of locations can r e a d i l y be obtained by subtraction. For instance, p r i c e d i f f e r e n t i a l s i n Table XIX for Montreal and Toronto (U^ and re s p e c t i v e l y ) of analysis 4 are $1.85 and $2.68 per one hundred pound of apples r e s p e c t i v e l y . Consequently, the p r i c e d i f f e r e n t i a l between these two supply centres i s $.83 per one hundred pounds. For a d e t a i l e d account of the procedure involved see, R. Dorfman, P.A. Samuelson, and R. M. Solow, Linear Programming and  Economic Analysis, Op. C i t . pp. 124-125. TABLE XIX Supply and Demand Centres Price D i f f e r e n t i a l s for Canadian Fresh Apples 1965-66 Crop Year Based on Transportation Cost and Optimum Trade Patterns of Analyses 1, 2 , 3 and 4 Supply Centres Price D i f f e r e n t i a l s Demand Centres Pric e D i f f e r e n t i a l s c /oo l b s . c'/oo lbs . u ; 1 ' i Analyses v . 2 J Analyses 1 2 3 4 9 2 3 4 u i -38 -23 86 324 V l -38 -23 86 324 U 2 - -177 -162 -53 185 V 2 -84 -69 40 278 U 3 -94 -79 : - 5 5 268 Y. -177 -162 -53 185 U 4 -94 -79 -55 268 • V 4 -96 -81 28 266 U 5 80 95 159 159 - V 5 - -94 - 79 -55 '. 268 U 6 29 111 111 111 V 6 120 135 199 199 U 7 . 0 44 44 44 Y 185 200 200 200 U8 75 o 0 0 • V 8 126 126 126 ' 126 U 9 . 75 75 75 V 9 V 10 107 75 107 75 107 • 75 107 75 U^'s represent supply centres as given i n Table I (For example corresponds to supply point A which is Windsor N.S.) A l l U ' s correspond to supply points as l i s t e d i n analyses 1 ,2 ,3 and 4. 2 V.'s represent demand centres as given i n Table I (For example corresponds to demand point 1 which is also Windsor, N.S.) 86. An i n t e r e s t i n g feature of p r i c e d i f f e r e n t i a l s is the f a c t that they e x h i b i t two types of economic data. With respect to "supply centres, corresponding p r i c e d i f f e r e n t i a l s indicate the comparative l o c a t i o n a l advantages of apples at such centres. In the case of demand centres, p r i c e d i f f e r e n t i a l s r e f e r to delivered p r i c e s . Therefore, the p r i c e d i f f e r e n t i a l ' s t r u c t u r e s derived from the' various analyses are of considerable i n t e r e s t . For supply centres they indicate c l e a r l y the e f f e c t s of the transportation costs on r e a l i z e d p r i c e s . For example, . in analysis 4 the r e a l i z e d value of apples at Montreal (U^) was $.83 per one hundred pounds less than that at Toronto (U^)> because of the differences in t h e i r comparative l o c a t i o n a l advantages. Such findings are not always obvious upon inspection of transportation cost data. S i m i l a r l y , demand l o c a t i o n a l advantages can also be shown. Derived p r i c e d i f f e r e n t i a l s should be viewed in the l i g h t of the r i g i d t h e o r e t i c a l framework and the nature of data used i n the analyses. They are l i k e l y to cause some differences between actual and t h e o r e t i c a l s i t u a t ions . ANALYTICAL RESULTS FOR MODEL II . • ' . This model has been, designed to minimize t o t a l s u p p l y - d i s t r i b u t i o n costs for the a l l o c a t i o n of fresh apples. Measurements were made of producing regions' competitive positions as affected by the c r i t e r i o n of minimum t o t a l s u p p l y - d i s t r i b u t i o n costs. In a l l ensuing analyses only regional per c a p i t a consumption estimates (Table X) were used in conjunction with regional supply constraints as presented in Table IX. Analyses 1, 2, and 3 (Tables XX and XXI) describe a completely closed Canadian economy. Specified supply and demand d i s p o s i t i o n s were used in conjunction with s u p p l y - d i s t r i b u t i o n costs composed of production, storage, packing, and transportation costs. By incorporating selected United States supply centres into t h i s a n a l y t i c a l model II, analyses 4 and 5 were allowed to describe a l i m i t e d open economy. Spec i f i e d supply and demand d i s p o s i t i o n s were used i n conjunction with supply-d i s t r i b u t i o n costs which on the domestic market consists of estimated F.O.B. prices and relevant transportation r a t e s . For imported apples an import procurement cost has been used i n estimating supply d i s t r i -bution costs . Optimum Production and Trade Patterns for Analyses 1, 2 and. 3 In analysis 1, which assumes 1965-66 conditions, the r e s u l t shows that the optimum a l l o c a t i o n of production'would' be heavily con-centrated in the province of Quebec (Table XX). According to this analysis Quebec should produce and ship approximately 60 percent of the nation's fresh apples. B r i t i s h Columbia would produce about 25 percent, and the Maritimes would produce the remaining 15 percent, with no production shown in Ontario. The shipment and consumption pattern for this analysis i l l u s -trates that i n order to minimize s u p p l y - d i s t r i b u t i o n costs, Quebec ships to consuming centres 2, 3, 4, 5 and 6. Since demand centres 3 and 5 (Montreal and Toronto r e s p e c t i v e l y ) represent approximately To From TABLE XX Optimum Production and Trade Pattern of Fresh Apples for Analysis 1, Model II ('000 lbs .) Windsor Quebec Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver Dummy Tot a l N.S. City Region Supply Windsor N.S. 56,800 17,300 Montreal 4,400 123,500 22,900 129,600 Toronto Kelowna 27,100 26,900 25,400 25,300 52,300 74,100 60,600 368,600 169,900 169,900 91,800 221,700 Tot a l Demand 56,800 21,800 123,500 22,900 129,600 27,100 26,900 25,400 25,300 52,300 "1965-66 supply constraint estimates; see Table IX '1965-66 regional per capita consumtpion estimates; see Table X oo oo TABLE XXI Optimum Production and Trade Pattern of Fresh Apples for Analysis 2, Model II ('000 lbs.) To 1 From Windsor Quebec Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver Dummy Total N.S. City Region Supply Windsor N.S. Montreal Toronto Kelowna 56,800 20,700 1,100 123,500 22,900 95,700 33,900 27,100 26,900. 25,400 25,300 77,500 243,200 149,100 183,000 52,300 111,600 268,600 To t a l Demand 56,800 21,800 123,500 22,900 129,600 27,100 26,900 25,400 25,300 52,300 '1961-67 Supply constraint estimates; see Table IX '1965-66 Regional pert capita consumption estimates; see Table X oo 90. 50 percent of Canada's t o t a l demand for fresh apples, i t is not so unusual that Quebec would provide about 60 percent of the nation's fresh apples . The Maritimes--Nova Scotia and New Bruriswick--would f u l l y supply i t s own market and a large portion of the demand require-ment at Quebec City (demand point 2). The remaining consuming centres, namely Regina, Edmonton, Calgary, and Vancouver would receive shipments from B r i t i s h Columbia e x c l u s i v e l y . Although t h i s analysis i l l u s t r a t e s the minimum cost pattern that would s a t i s f y the consumption requirements in each region.under the supply conditions s p e c i f i e d , i t seems doubtful whether t h i s could conform to actual production and trade patterns . Analysis 2 (Table XXI) exhibits a production and trade pattern" based on the same demand conditions as for analysis 1, but regional supply constraint d i s p o s i t i o n s were based on 1961-67 average annual t o t a l crop contributions (Tables A - l , .A-2, Appendix A). This was thought to r e f l e c t more normal projected regional supply constraints . Hence, this analysis describes a trade pattern somewhat d i f f e r e n t from analysis 1. Under the s p e c i f i e d r e g ional supply d i s p o s i t i o n the e n t i r e supply estimated for the Maritimes and the province of Quebec was exhausted . The Maritimes would s t i l l meet i t s own demand require-ment, and again supply a large portion of the demand at Quebec C i t y . The remaining demand at Quebec Ci t y was supplied from Montreal. Again, Quebec supplied consumption centres 3 and 4 e x c l u s i v e l y , and only part of demand at centre 5. With supply from Quebec exhausted, Toronto's (demand centre 5) remaining demand requirement was s a t i s f i e d from i t s own supply. In the west, B r i t i s h Columbia expanded i t s shipments to Winnipeg (demand centre 6). 91. In the case of analysis 3, the optimum production and trade pattern exhibited was found to be i d e n t i c a l with that of analysis 2. For t h i s reason no a d d i t i o n a l table was included . The purpose of analysis 3 was to i l l u s t r a t e whether a change in regional production costs would a l t e r the optimum production and trade pattern of analysis 2, under the same supply and demand d i s p o s i t i o n s . In a n a l y s i s 3 the cost of producing 100 lb s . of apples was based on a bearing average basis (see Table XII), while i n analysis 1 and 2 these costs were used on a t o t a l acreage b a s i s . It was thought that production costs based on bearing acres only, would a f f e c t the r e l a t i v e p o s i t i o n of each region's production costs, but the r e s u l t of analysis 3 demon-strates that this was not the case. The i n c l u s i o n of land rent i n regional production costs does afford a v a l i d i n t e r r e g i o n a l comparison to obtain o v e r a l l e f f i c i e n t production and trade patterns. This implies that i f factors of production such as land are drawn away from a l t e r n a t i v e uses, the factor p r i c e may increase for each a l t e r n a t i v e use. Therefore, the optimum production and trade patterns may be seen i n terms of comparative advantage r e l a t i o n s h i p s among the producing regions. Consequently, a region w i l l have a comparative advantage i f i t s cost of producing 100 lbs . of apples can be increased without a change i n the f i n a l pro-duction and shipment plan. One of the most l i m i t i n g assumptions i s that a l l producers within one region have the same cost of production. In r e a l i t y , however, some producers may have lower costs and others may have higher costs. Therefore,.in the case of Ontario, x-zhich was considered to have a comparative disadvantage over the other producing regions, actual conditions of production l o c a t i o n could be more r e a d i l y explained. For example, low cost producers in Ontario may have a comparative advantage over high cost producers in Quebec at the Toronto market. Consequently such producers could f e a s i b l y supply part or a l l of Toronto's demand. Optimum Production and Trade Patterns for Analyses 4 and 5 - Analyses 4 and 5 (Tables XXII and XXIII) describe optimum production and trade patterns which include the three chosen United States supply centres in conjunction with the four'designated Canadian supply centres as used i n the previous analyses. The reasons for including these centres were: a) To measure any possible divergence from the optimum production and trade patterns exhibited in analyses 2 and 3 of model I I . b) To show i f any one of the United States centres would a l l o c a t e a l l or any portion of i t s a v a i l a b l e supply at any one designated demand centre. Therefore, the ensuing analyses use the same supply and demand d i s p o s i t i o n s for domestic supply centres as applied in analyses 2 and 3. Also, each designated United States supply centre was allowed to supply the e n t i r e predetermined 1965-66 import quantity of fresh apples. The optimum production and trade pattern for analyses 4 and 5 i l l u s t r a t e that no movements of fresh apples from any one supply centre i n the United States to any one demand centre in Canada was involved. •TABLE XXII Optimum Production and Trade Pattern of Fresh Apples for Analyses 4, Model II ('000 lbs.) To From Windsor Quebec N.S. City Montreal Ottawa Toronto Winnipeg Regina Edmonton Dummy Calgary Vancouver Region T o t a l 1 Supply. Windsor, N.S. 56,800 20,700 77,500 Montreal 21,800 123,500 22,900 , 75,000 243,200 Toronto 129,600 53,400 183,000 Kelowna . 27,100 26,900 25,400 25,300 52,300 111,600 268,600 Rochester,N.Y. 54,500 54,500 3 Lans ing, Mich. 54,500 54,500 3 Yakima, Wash. 54,500 54,500 3 T o t a l Demand2 56,800 21,800 123,500 22,900 129,600 27,100 26,900 25,400 25,300 52,300 1961-67 supply constraint estimates, see Table IX 1965-66 Regional per capita consumption estimates, see Table X. This quantity represents the t o t a l predetermined 1965-66 fresh apple import into Canada from the United States. TABLE XXIII Optimum Production and Trade Pattern of Fresh Apples for Analyses 5, Model II ('000 lbs.) To From Windsor Quebec . . N.S. City Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver Dummy Region , 1 T o t a l Supply Windsor, N.S. 56,800 20,700 77,500 Montreal 21,800 123,500 22,900 75,000 243,200 Toronto 129,600 53,400 183,000 Kelowna 27,100 26,900 25,400 25,300 52,300 111,600 268,600 Rochester,N.Y. 54,500 54,500 Lans ing,Mich. 54,500 54,500 Yakima,Wash. 54,500 . 54,500' Tot a l Demand2 56,800 21,800 123,500 22,900 129,600 27,100 26,900 25,400 25,300 52,300 1961-67 supply constraint estimates, see Table IX. 1965-66 regional per capita consumption estimates, see Table X. This quantity represents ,:the t o t a l predetermined 1965-66 fresh apple import into Canada from the United States. 95. Although no shipment from the United States to Canada was introduced into the optimum s o l u t i o n , the production and trade pattern among the Canadian regions has somewhat changed. In order to minimize t o t a l s u p p l y - d i s t r i b u t i o n costs, B r i t i s h Columbia would supply a l l fresh apple requirements at the Winnipeg, Regina, Edmonton, Calgary, and Vancouver demand centres. Quebec would supply a l l demand at Montreal, Quebec C i t y , and Ottawa. Demand at Toronto would be supplied e x c l u s i v e l y from Ontario, with Nova Scotia supplying the demand require-ments at Windsor, the Maritimes representative centre for demand. The divergence in the optimum production and trade patterns in analyses 4 and 5, from those shown in analyses 2 and 3, has arisen because domestic.total s u p p l y - d i s t r i b u t i o n costs d i f f e r e d for the two sets of analyses. As Tables XXII and XXIII i l l u s t r a t e , no change in the optimum production and trade patterns occurred in analysis 5 from that shown in analysis 4. Analysis 5 exemplifies a s i t u a t i o n in which customs t a r i f f s were excluded from import procurement costs. Con-sequently, supply prices from the designated U.S. supply centres to p o t e n t i a l domestic demand centres would be s l i g h t l y lower. In s p i t e of this,'however, no new shipping a c t i v i t y was introduced into the optimum s o l u t i o n . Therefore, analyses 4 and 5 i l l u s t r a t e that under the given Canadian production and d i s t r i b u t i o n conditions no fresh apples would be imported from the United States at a l l . Under these conditions, a l l domestic supply centres demonstrate l o c a t i o n a l advantages over U .S .. supply centres. Hence, estimated import procurement costs of U.S. apples to Canadian demand centres were shown as always being higher than s u p p l y - d i s t r i b u t i o n costs for domestic s u p p l i e r s . For instance, i t was found that B r i t i s h Columbia could supply a l l p r a i r i e and western demand centres at a lower p r i c e than Washington and Michigan States. This may suggest that, e i t h e r the import procurement costs were s l i g h t l y overestimated owing to estimation errors f o r some v a r i a b l e s and omission of other relevant v a r i a b l e s , hence eliminating a l l imports. A l t e r n a t i v e l y , though, the transpor-t a t i o n rate structure plus the exchange rate on the higher valued U.S d o l l a r may well r e s u l t i n r e l a t i v e l o c a t i o n a l advantages for a l l Canadian producing regions. Viewed i n the l i g h t of recent Federal Task Force's comments^ on the competitive p o s i t i o n of Canadian apple production with regard to the U.S. market the r e s u l t s obtained from analyses 4 and 5 would seem not to contradict t h i s thinking. However i n order to substantiate the Task Force's p o s i t i o n i t would be neces-sary, i n t h e context of a s u p p l y - d i s t r i b u t i o n model, to incorporate United States demand centres i n t o the a n a l y s i s . Regrettably, time and data requirements did not permit t h i s extension. Since, a much greater volume of apple exports occur usually from Canada to the Unit States than i n the reverse d i r e c t i o n , i t would be s u r p r i s i n g i f such an analysis would contradict the Task Force's f i n d i n g s . "Canadian A g r i c u l t u r e i n the Seventies," Federal Task Force on A g r i c u l t u r e , December 1969. Ottawa: p. 232. Report of the Queen's P r i n t e r , 97. SUMMARY AND CONCLUSIONS S p a t i a l equilibrium analysis of the type used i n the study makes i t possible to ind i c a t e the patterns of trade and production that would be most e f f i c i e n t under the stated c r i t e r i a . The p e r f e c t l y competitive market structure concept provides a norm for evaluating the e f f i c i e n c y of the p r i c i n g , d i s t r i b u t i o n , and production system for fresh apples. In many respects, however, the study has employed a s i m p l i f i e d approach to explain an extremely complex production and d i s t r i b u t i o n mechanism. Limited information with regard to supply and demand functions prevented the adoption of a more re f i n e d a n a l y s i s . The a n a l y t i c a l models used i n the study may be viewed as being u s e f u l i n providing approximate d e f i n i t i o n s of production and trade patterns which would r e s u l t under given e f f i c i e n c y cost conditions. Con-sequently, care should be exercised in the i n t e r p r e t a t i o n of the obtained r e s u l t s . The s p e c i f i c r e s u l t s of the various analyses should be viewed as the f i n d i n g of a s i n g l e study which might lead to modifi-cation with a d d i t i o n a l information and more comprehensive data. This study explored the r e l a t i v e l o c a t i o n a l advantages of the four commercial apple producing regions i n Canada, with regard to d i s t r i b u t i o n , ( i . e . proximity to demand regions) and projected amounts of regional net supply of fresh apples. In order to achieve t h i s , two a n a l y t i c a l models were used. The area studied included a l l of Canada which was disaggregated into supply and demand regions, each having a representative point of o r i g i n . The transportation model 98. ( a n a l y t i c a l model I) comprised nine representative domestic supply points and ten representative domestic demand points. The supply points concerned four major supply centres, which mostly represented domestic net suppl}', and given intermediate supply points, which allowed for import quantities at points of entry. The supply-d i s t r i b u t i o n model ( a n a l y t i c a l model II) employed designated representa-t i v e points of the four commercial apple producing regions in Canada together with three designated United States supply points. The same ten domestic demand points were maintained. The analysis has taken into account regional population, regional weekly family expenditures for fresh apples, and average per c a p i t a consumption data, to estimate demand quantities . In addition, r e g ional production, sales to processors, exports, and import estimates were used to obtain relevant supply quantities.' Two demand-estimating models were developed. One was based on the assumption that domestic per c a p i t a consumption of fresh apples was uniform in a l l demand regions. The other assumed that differences i n per capita consumption among the consuming regions did, in f a c t , e x i s t . The demand quantities of apples for each consuming region obtained from the demand-estimating models corresponding to the 1965-66 crop year, were treated as predetermined for each a n a l y s i s . Two supply-estimating models were also developed. The f i r s t supply-estimating model gave two sets of regional supply estimates. Supply estimates of the f i r s t set r e l a t e d e x c l u s i v e l y to the 1965-66 crop year. On the other hand, the supply estimates of the second set 99. — r e l a t e d to the 1965-66 crop year, but estimates were a r r i v e d at by apportionment according to 1961-67 average r e g i o n a l percentage con-t r i b u t i o n data f o r the t o t a l apple crop. Regional supply q u a n t i t i e s obtained from the f i r s t s u p p l y - e s t i m a t i n g model c o n s t i t u t e pre-determined amounts and were only employed i n the t r a n s p o r t a t i o n model. The second s u p p l y - e s t i m a t i n g model was designed f o r the supply-d i s t r i b u t i o n model. Supply c o n s t r a i n t s f o r each domestic designated centre of supply were computed from'regional production and s a l e s to processors data r e l a t i n g to the 1965-66 and 1961-67 crop years. S e l e c t e d United States supply centres were a l s o considered i n the second s u p p l y - e s t i m a t i n g model. These centres were given supply con-s t r a i n t s which i n each case c o n s i s t e d of the t o t a l predetermined import q u a n t i t y of f r e s h apples i n t o Canada from the United States f o r the 1965-66 p e r i o d . Estimated t r a n s p o r t a t i o n costs between each p a i r of designated p o i n t s of supply and demand, were based on a c t u a l rates r e l a t i n g to the 1969-70 p e r i o d . On the other hand, the cost of producing one hundred pounds of apples r e l a t e d to the 1965-66 crop year. Regional production cost estimates used i n the study were he l d to be i d e n t i c a l f o r a l l producers w i t h i n a given producing r e g i o n . The f a c t , that such costs may vary considerably among i n d i v i d u a l producers i n a region would probably r e s u l t i n a more d i v e r s i f i e d production and trade p a t t e r n than those e x e m p l i f i e d 'in the study. Storage and packing costs employed i n the study were only assumed to r e l a t e to 1965-66 p e r i o d , owing to the l a c k of comprehensive data i n t h i s area. Import procure-ment costs which are composed of average F.O.B. p r i c e s at the designated 100. United States supply centres, relevant transportation r a t e s , and customs 1 t a r i f f s were estimated for 1965-66.and 1969-70 periods. However, i n the case of the l a t t e r period no customs t a r i f f s were in force . The s p a t i a l e q uilibrium solutions for the transportation model r e l a t i n g to the 1965-66 period, were arrived at by the method of r e a c t i v e programming. Retrospective analyses 1 and 2 of a n a l y t i c a l model I were used to examine the e f f i c i e n c y of i n t e r r e g i o n a l trade patterns, which a c t u a l l y would e x i s t during the 1965-66 crop year. S i m i l a r l y , analyses 3 and 4 for a n a l y t i c a l model I were meant to examine trade patterns that would p r e v a i l during that same time period under revised regional supply d i s p o s i t i o n s . A p r e d i c t i v e model ( s u p p l y - d i s t r i b u t i o n model) was formulated under the postulates of r e g i o n a l supply c o n s t r a i n t s . The purpose of analyses 1, 2, and 3 of a n a l y t i c a l model I I , was to measure l i k e l y l o c a t i o n a l production advantages among the four commercial apple growing regions i n Canada. On the other hand, analyses 4 and 5 of a n a l y t i c a l model II were intended to show the e f f e c t s of possible imports of apples into Canada from the United States, upon production and trade. The r e s u l t s of the study indicate that the Canadian fresh apple industry tends to be oriented around two d e f i n i t e domestic market areas; one composed of the western provinces and the other the eastern provinces. B r i t i s h Columbia as a producing region for fresh apples, can be i d e n t i f i e d mainly with a l l demand regions in the west as far as Winnipeg. In the east, the three commercial producing regions: 101. Nova Scotia and New Brunswick, Quebec, and Ontario can'be i d e n t i f i e d mainly with t h e i r own regional demand centres. Upon comparing the optimum trade patterns for analyses 1, 2, 3 and 4 of a n a l y t i c a l model I wifh actual shipments, as they occurred during the 1965-66 period, differences i n trade patterns become evident. However, such'differences do not seem to be very pronounced. For example, actual unloads at the western demand centres originated mainly from B r i t i s h Columbia. There-fore, such findings of .actual apple shipments r e a d i l y conform to t h e o r e t i c a l optimum trade patterns. A comparison i n terms of p r i c e d i f f e r e n t i a l s between producing and consuming regions further supports the general conclusion, that the optimum trade patterns of fresh apples suggests two d e f i n i t e market areas. For instance, the p r i c e d i f f e r e n t i a l s at Montreal and Kelowna for analysis 2 of a n a l y t i c a l model I showed that the r e a l i z e d value per unit of fresh apples at Kelowna was higher than at Montreal. Analysis 4 i l l u s t r a t e d the opposite. In analysis 2, Montreal supplied a con-siderable portion of Regina's demand with B r i t i s h Columbia supplying a r e l a t i v e l y small portion. Conversely, i n analysis 4 i t was found that B r i t i s h Columbia supplied the e n t i r e demand at Regina. Moreover, i t also supplied part of the demand requirement at Quebec C i t y . Therefore, the r e a l i z e d values in both analyses also indicated that the optimum trade pattern tends to be oriented around d e f i n i t e east and west market areas. The purpose of a n a l y t i c a l model II was to measure l o c a t i o n a l advantages among producing regions, to indicate optimum production and 102. trade patterns. In analyses 2 and 3 (analysis 1 was thought to represent highly unusual c o n d i t i o n s ) , i t was found that Quebec would provide about 60 percent of Canada's t o t a l net supply of fresh apples, because of i t s r e l a t i v e s u p p l y - d i s t r i b u t i o n cost advantage over other producing regions, together with l o c a t i o n a l advantages in supplying large population centres. B r i t i s h Columbia was shown to supply the demand at the e n t i r e western market which i s composed of the Winnipeg, Regina, Edmonton, Calgary, and Vancouver demand centres. Owing to the nature of Ontario's cost of production, the analyses indicated that Quebec could supply apples to the Ontario demand centres at a lower p r i c e than Ontario i t s e l f . Furthermore, i t would seem that the Mari-times ought to become completely s e l f s u f f i c i e n t i n fresh apple supply. By incorporating selected United States supply centres into a n a l y t i c a l model II (analyses 4 and 5), u s e f u l information_regarding fresh apple imports into Canada from the United States was obtained. Under the c r i t e r i o n of minimizing t o t a l s u p p l y - d i s t r i b u t i o n costs, no fresh apple imports from the U.S. were recommended. These s p a t i a l e q uilibrium analyses provide u s e f u l information for d e c i s i o n making. In p a r t i c u l a r , the r e s u l t s from these analyses suggest how changes in r e g i o n a l supply and regional per capita consump-t i o n a l t e r r e g i onal trade patterns for fresh apples. From the stand-point of l o c a t i o n a l advantages, the information provided by the analyses should be h e l p f u l in assessing the consequences of increases of decreases i n regional net supplies. Moreover, the r e s u l t s of the study i l l u s t r a t e d how a s p a t i a l e q u i l i b r i u m analysis could measure probable 103. e f f e c t s of proposed p o l i c i e s . Therefore, under the s p e c i f i e d conditions, the r e s u l t s of the study provide one standard for judging the e f f i c i e n c y of trade patterns and l o c a t i o n of production for apples. BIBLIOGRAPHY A. Government Publications Canada, Department of A g r i c u l t u r e . Crop and Seasonal Price Summaries. Fresh and Processed F r u i t s and Vegetables Part I I . 1963-64; 1968-69 Production and Marketing Branch, Markets Information Section, . Ottawa. Canada, Department of A g r i c u l t u r e . Annual Unload Report Fresh F r u i t s  and Vegetables .on 12 Canadian Markets, 1965, 1966. Production and Marketing Branch, Markets Information Section, Ottawa. Dominion Bureau of S t a t i s t i c s . Canada Yearbook 1968, Ottawa: Queen's P r i n t e r . D.B.S. 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Stevens, B.'H. "An Interregional Linear Programming Model," Journal  of Regional Science. 1, (1958) 60-98. Tomek, W. E. Apples in the United States: Farm Prices and Uses, 1947-1975. Corn e l l U n i v e r s i t y A g r i c u l t u r a l Experiment Station, New York State College of A g r i c u l t u r e , Ithaca, New York: B u l l e t i n 1022, July 1968. Tyndall, D. J . "Welfare P r i c i n g and Transport Costs," Management Science. 5 (1955) 169-178. A P P E N D I C E S APPENDIX A DATA AND COMPUTATIONS RELATING TO APPLE PRODUCTION, SALES TO PROCESSORS AND UTILIZATION FOR ' CANADA AND PROVINCES; ACRES AND TREES IN APPLE PRODUCTION; YIELD ESTIMATES 109 . TABLE A - l Region Year Regional Production Nova Scotia and New Brunswick Quebec of Apples i n Ontar io Canada B r i t i s h Columbia (000) (000) (000) •. (000) 1961-62 l b s . 1 lbs J1- l b s . 1 " lbs - 1 1961-62 165,420 137,475 247,995 192,555 1962-63 133,245 269,325 229,410 272,295 1963-64 164,475 238,410 245,340 388,395 1964-65 128,475 169,425 293,490 310,950 1965-66 159,750 347,985 242,235 254,250 1966-67 153,540 184,500 266,985 341,865 Average 1961-67 150,840 224,505 254,250 293,400 Conversion based on 45 l b s . per bushel, consistent with d e f i n i t i o n of the Canada Year Book. • . Source: Canada Department of A g r i c u l t u r e , Crop and Seasonal Price Summaries, Fresh F r u i t s and Vegetables (1962 to 1968) Part I I . 110 TABLE A-2 • Sales to Processors ('000 of Apples by lbs .) Region Region Year Nova Scotia Quebec . Ontario B r i t i s h Columbia 1961 86,445 10,305 .101,565 34,650 1962 75,015 34,290' 89,550 66,015 1963 101,925 26,820 94,950 110,070 1964 75,105 28,260 127,620 74,565 1965 100,440 53,055 106,245 76,860 1966 94,275 26,505. 127,305 109,035 Average 1961-66 88,875 29,880 107,865 78,525 Source: Canada Department of A g r i c u l t u r e , Crop and Seasonal Price Summaries, Fresh F r u i t s and Vegetables, Part I I . I l l . • TABLE A -3 T o t a l Acquirements of Apples by Canadian Processors and Net Amount Used ('000 lbs.) Year Item To t a l Acquirements Resold Domestic Import Net Amount Used Domestic Import 1965 415,400 4,400 Not Stated 342,500 4,300 1, C o n f i d e n t i a l ' information omitted. Source: D.B.S. Total Acquirements of Fresh F r u i t s and Vegetables from  the 1965 Crop, D i v i s i o n of Industry, July 1966, 6507-530 TABLE A-4 Regional Net.Amounts of Apples Used by Canadian Processors From the 1965 Crop ('000.lbs.) Region Item Nova Scotia Quebec Ontario B r i t i s h Columbia Domestic Imports T o t a l 106,000 106,000 52,800 103,600 1,000 52,800 104,600 79 .900 3,300 83,200 Source: D.B.S. Tot a l Acquirements of Fresh F r u i t s and Vegetables From the 1965 Crop, D i v i s i o n of Industry, July 1966, 6507-530 112. According to Table A-3, approximately 83 percent of t o t a l apple acquirements by processors was used for processing. The remaining 17 percent, although defined as r e s o l d , was assumed to constitute du p l i c a t e s . Consequently, in order to avoid double counting, t o t a l acquirements of apples by processors were subtracted from regional supply estimates i n the supply estimating model. Since t o t a l acquire-ment data were a v a i l a b l e only on an aggregate basis (Table A-3), t o t a l regional acquirement quantities have been estimated through appropriate adjustments of aggregate t o t a l acquirement. For example: The net domestic amount of apples used f or processing i n B r i t i s h Columbia was 79,900,000 l b s . from the 1965 crop. It was assumed that t h i s constitutes 83 percent of t o t a l acquirements. Therefore, in order to obtain a t o t a l acquirement quantity for B r i t i s h Columbia, the net amount of apples used was adjusted upwards in the following manner: 79,900,000 -7- -8.3 = 96,265,000 The computed 96,265,000 l b s . was considered to be the t o t a l acquire-ment of apples by processors for B r i t i s h Columbia. Continuing i n this manner, t o t a l acquirement quantities were obtained for Nova Scotia, Quebec, and Ontario. 113. Item TABLE A-5 Percentage Production and U t i l i z a t i o n by Province of the To t a l Canadian Apple Crop for the Periods 1965-66 and 1961-67 ,1 2 1 Io ]_ % Sales to L Production Processors Fresh Exports 7o Fresh Supply Region 1965-66 1961-67 1965-66 1961-67 1965-6.6 1961-67 1965-66 1961-Nova Scotia and New Brunswick 16 16 30 29 13 13 8 9 Quebec 35 24 16 • 10 25 10 49 37 Ontario 24 27 31 •• 35 7 8 23 28 B r i t i s h 25 32 23 26 55 69 20 25 Percentages were computed from Tables A - l , A-2. "Export S t a t i s t i c s taken from Crop and Seasonal Price Summaries for  Fresh and Processed F r u i t and Vegetables, Part I I . Canada Department of A g r i c u l t u r e , Production and Marketing Branch. TABLE A-6 Percentage U t i l i z a t i o n i n Each Province of the Total Apple Crop Item Region For the Periods 1965-66 and 1961-67 7ol 7ol 7c1 Sales to Processors Exports Fresh Supply 1965-66 1961-67 1965-66 1961-67 1965-66 1961-67 Nova Sc o t i a and New Brunswick Quebec Ontario B r i t i s h Columbia 63 15 44 30 59 13 43 26 10 9 4 27 12 6 5 33 27 76 52 43 29 81 52 41 Percentages were computed from Tables A - l , A-2. "Export S t a t i s t i c s taken from Crop and Seasonal Price Summaries for  Fresh and Processed F r u i t and Vegetables, Part I I . Canada Department of A g r i c u l t u r e , Production and Marketing Branch. TABLE A-7 Acres and Trees i n Commercial Apple Production for 1961 arid 1966 (2) ' ( 1 \ Total Trees K ' Item Total'Acres (000) Average Trees per Acre Region 1961 1966 1961-1966 1961 1966 1961-66 1961 1966 1961-66 Average Average Average Nova Scotia and 22,906 15,139 19,023 702 742 722 31 49 '40 New Brunswick Quebec 29,460 24,707 27,084 1,252 1,160 1,206 43 47 45 Ontario 41,407 24,597 38,002 1,371 1,175 1,273 33 34 34 B r i t i s h 24,291 22,573 23,432 .1,418 .1,540 1,479 58 69 64 Columbia , ' ' ' (1) Census of Canada Ag r i c u l t u r e , D.B.S. Cat. No. 96-601, Vol. I l l (3-1) June 1968," Table (2) Canadian Farm Economics, Vol. 4, No. 5, December 1969, p. 9, Table 3. 115. TABLE A-8 Percentage of Apple Trees in Production and Total Bearing Acres For Producing Regions i n Canada Item Region 7c of Trees i n Production Per Acre 1961 (1) 1966 (1) 1961-67 Average Tot a l Bearing Acres (Total Average Acres (Table A-6) X Average % of Trees in Production) (1961-66 Average) Nova Scotia and • 83. ,25 75.6 79 15,028 New Brunswick Quebec 73. .7 84.0 79 21,396 Ontario 64. ,9 69.2 67 25,461 B r i t i s h 46, ,8 . 51.0 49 11,482 Columbia (1) Burns, J. R. 0p_, , C i t . , Table 4. TABLE A-9 Estimated Avera£ ;e Apple Y i e l d s on Bearing and Tot a l Acreage and Per Tree for Producing Regions i n Canada Item Region Average Y i e l d Per Average Y i e l d Per Average Y i e l d Bearing A c r e ( l ) Total Acres(2) Per Tree^ 3) l b s . l b s . l b s . Nova Scotia and New Brunswick Quebec Ontario B r i t i s h Columb i a 10,025 10,485 9,990 25,560 7,920 8,280 6,705 12,510 252 234 293 400 (1) .Average Production from 1961-66 (Table A - l , Appendix A) divided by bearing acres (Table A-7, Appendix A). (2) Average production from 1961-66 (Table A - l , Appendix A) divided by t o t a l acres (Table A-6, Appendix A) (3) Average production from 1961-66 (Table A - l , Appendix A) divided by t o t a l number of trees (Table A-6, Appendix A) APPENDIX B DATA RELATING TO CANADIAN.IMPORTS AND EXPORTS OF APPLES 117. T o t a l imports of fresh apples into Canada r e l a t i n g to the 1965-66 crop year amounted to 58,273,000 l b s . (Table B - l ) . Since the data of Table B - l r e f e r to t o t a l import quantities with respect to i time only, i t was necessary to obtain a d d i t i o n a l information i n order to disaggregate t o t a l imports into r e gional import q u a n t i t i e s . Table B-2 gives regional imports but only on a calendar year b a s i s . Therefore, the actual import quantity r e l a t i n g to the 1965-66 crop year was used i n the analysis with Table B-2 serving as a us e f u l guide i n estimating r e g i o n a l import q u a n t i t i e s . Consequently, regional import estimates by v e s s e l , r a i l , and truck as given i n Table IV f o r the period July 1st 1965 to June 30th 1966 should correspond to t o t a l imports of fresh apples as presented i n Table B - l . Imports" by Vessel Fresh apple imports from A u s t r a l i a , New Zealand, and South A f r i c a were shown mainly f o r the Provinces of Quebec and B r i t i s h Columbia (Table B-2), hence i t was assumed that Montreal and Vancouver respec-t i v e l y , would receive a l l apple imports from these countries f o r the calendar years 1965 and 1966. Table B-2 reveals that a l l fresh apple imports from A u s t r a l i a were destined for B r i t i s h Columbia, whereas most of the fresh apple imports from South A f r i c a were shipped into the Province of Quebec, with a small quantity unloaded i n New Brunswick for the 1966 calendar year. Consequently, i t was assumed that fresh apple imports from A u s t r a l i a and South A f r i c a for the 1965-66 crop year were unloaded at Vancouver, and Montreal r e s p e c t i v e l y . On the other hand, imports of fresh apples from New Zealand were shown f o r both 118. TABLE B - l Fresh Apple Imports into Canada by Country of O r i g i n for the 1965-66 Crop Year ('000 lbs.) From Time Period''' A u s t r a l i a South New • . , A f r i c a Zealand United States Totals July 1965 123 877 3,892 4,892 August 65 - 2,115 2,115 September 65 139 5,575 5,714 October 65 - 6,840 6,840 November 65 4,627 4,627 December 65 4,233 4,233 January to June 1966(2) 219 1,142 1,237 27,254 . 29,852 Totals 481 1,142 ' 2,114 54,536 58,273 (1) Time per iod r e f e r s to one calendar month. (2) Time period 1966. r e f e r s to s i x months, from January 1st 1966 'to June Source: D.B.S. External Trade D i v i s i o n , Imports by Commodities and Countries, Cat. No. 65-007, Table 3. 119. TABLE B-2 Tota l Imports of Fresh Apples By Countries of Orij and Province of Customs' Entry for the -Calendar Years 1965 and 1966 Province of Country of Import Quantity ( '000 lb; Customs 1 Entry O r i g i n 1965 1966 Newfoundland U.S.A. 2,594 1,477 Nova Scotia U.S.A. 834 330 Prince Edward U.S.A. 313 201 Island New Brunswick U.S .A. '470 431 ' South A f r i c a 403 Quebec U.S .A. 15,348 10,478 South A f r i c a 3,686 739 New Zealand 217 739 Ontario U.S.A. .14,668 12,059 Manitoba U.S.A. 10,026 9,315 Saskatchewan U.S.A. 820 1,124 Alber t a U.S.A. 1,593 1,162 B r i t i s h Columbia U.S.A. 10,387 13,654 A u s t r a l i a 490 220 New Zealand 2,229 2,358 Totals 63,675 54,690 Source: D.B.S. External Trade D i v i s i o n , Imports by Countries of Spe c i f i e d Commodities entered at Customs in Each Province, Commodity Class 71-03, Apples and Crab Apples. 120. provinces, Quebec and B r i t i s h Columbia. In order to obtain import quantities from New Zealand for Montreal and Vancouver on a 1965-66 crop year b a s i s , adjustments with reference to information given i n Table B-2 were made. It was estimated that approximately 81 percent of t o t a l fresh apple imports from New Zealand were destined f o r B r i t i s h Columbia on the basis of the 1965 and 1966 calendar years ' average. The remaining 19 percent were apportioned to the Province of Quebec. F i n a l adjusted import quantities by vessel r e l a t i n g to the 1965-66 crop year are summarized i n Table B-3. , TABLE B-3 Fresh Apple Imports by Vessel into the Provinces of Quebec and B r i t i s h Columbia f or the Period July 1st to June 30th 1956 ('000 lbs.) From To A u s t r a l i a South A f r i c a New Z e a l a n d T o t a l s B r i t i s h Columbia (Vancouver)(2) Quebec ( M o n t r e a l ) ^ 481 1,142 1,712 402 2,193 1,544 Totals 481 1,142 2,114 3,737 Source: Table B - l . (1) Estimates of fresh apple imports from New Zealand into the Provinces of Quebec and B r i t i s h Columbia were computed as follows: Apple imports from New Zealand into B r i t i s h Columbia (Table B-2) for the calendar years 1965 and 1966 were 2,228,500 l b s . and 121 Imports by R a i l Fresh apple imports by r a i l from the United States on a calendar year basis (Table B-4) were only shown for the provinces of Quebec, Ontario, Manitoba, and B r i t i s h Columbia. Table B-5 l i s t s the various r a i l r o a d s that c a r r i e d the fresh apple cargo. This table provided a u s e f u l guide i n determining most . l i k e l y points of entry.for fresh apples shipped from the United States into Canada. A breakdown by province to e s t a b l i s h respective points of entry for fresh apples run as follows: ' ; B r i t i s h Columbia For the calendar year 1965, 926,000 l b s . of fresh apples were brought into B r i t i s h Columbia from the UvS. v i a r a i l (Table B-4). Since the B.C. Hydro-Power railway mainly operates i n B r i t i s h Columbia i t seems reasonable to deduce that the 850,000 l b s . of fresh apples as handled by t h i s company were shipped into B r i t i s h Columbia. The quantity (40,000 lbs.) c a r r i e d by G.N. was also assumed to have been brought into B r i t i s h Columbia. The remaining 18,000 l b s . were considered to have been hauled by eit h e r C.P.R. or C.N.R. Since f r e i g h t rates tend to be the same for these two companies i t would seem to make l i t t l e 2,358,140 l b s . r e s p e c t i v e l y . The average for 1965-66 was computed to be 2,293,320 l b s . T o t a l apple imports from New Zealand into Canada accounted for 2,771,355 l b s . for the same averaged time period. There-f o r e , 2,293,320 l b s . out of a t o t a l of 2,771,355 l b s . constitutes approximately 81 percent. Consequently, 81 percent of 2,114,000 l b s . (Table B-l) as based on the 1965-66 crop year was apportioned to B r i t i s h Columbia, and the remaining 19 percent of 2,114,000 l b s . were al l o c a t e d to the Province of Quebec. (2) Fresh apple imports into the provinces of Quebec and B r i t i s h Columbia were assumed to be unloaded at Montreal and Vancouver respec-t i v e l y . 122. TABLE B-4 Apple Imports by R a i l from the United States for the Calendar Years 1965 and 1966 ('000 lbs.) Received From United Assumed Points Province States and Destined Calendar 1965-66 of Entry into To Canadian Points Year Average Canada Quebec • . 42 1965 . 49 M o n t r e a l ^ 56 1966 Ontario 17,332 14,556 1965 1966 15,944 Niagara F a l l s Manitoba 82 116 1965 1966 U>, 99 Emmerson B r i t i s h Columbia 926 362 1965 1966 644 Vancouver (.1) Montreal and Vancouver were chosen as points of entry due to r e l a t i v e closeness to the U.S. border. Source: D.B.S. D i v i s i o n of Transport, Cat. No. 52-205 (Annual), 1965 and 1966. 123. TABLE B-5 Quantities of Fresh Apple Imports Hauled by Railroad C a r r i e r s into Canada from the United States for the Calendar Years 1965 and 1966 ('000 lbs.) Received from the United States, Destined to Canadian Points(1) Average of Name of Railroad 1965 1966 1965-1966 B r i t . Columbia Hydro-Power Auth . (2) (3) Canadian National Railway (3) Canadian P a c i f i c Railway (3) Great Northern Railway Midland Railway of Manitoba(4) Norfolk and Western Railway (5) "850 11,100 6,310 40 82 74 10,100 4,634 122 78 82 462 10,600 5,472 81 80 41 (1) . Computed from: D.B.S.,"Railway.Transport," Cat. No. 52-211, Table 2, 1965 and 1966. (2) Connecting points with the United States only i n B r i t i s h Columbia. (3) Connecting points with the United States mainly i n P r a i r i e and western Provinces. (4) Connecting points with the United States mainly i n Manitoba. 124. d i f f e r e n c e which company c a r r i e d the cargo. The point of entry into B r i t i s h Columbia could not d e f i n i t e l y be determined but i t was assumed that imports were destined for the Vancouver market. This assumption may not depart to any s i g n i f i c a n t degree from r e a l world conditions i f one considers that no apples from Washington State were shipped into the B r i t i s h Columbia i n t e r i o r . 1 The same thinking was adopted for the 1966 calendar year and the 1965 and 1966 estimates were then averaged. This average was held to represent the appropriate quantity of fresh apple imports into B r i t i s h Columbia by r a i l for the period July 1st, 1965 to June 30th 1966. Manitoba In order to assess fresh apple imports by r a i l into Manitoba, the same reasoning has been pursued as applied for B r i t i s h Columbia. In 1965, 82,000 l b s . of apples were shipped into the province from the United States v i a r a i l . This quantity was c a r r i e d by the Midland Railway of Manitoba (Table B-5) and the representative point of entry was taken to be Emmerson. In 1966, 116,000 l b s . came into the province v i a r a i l from the U.S., but, upon inspection of Table B-5, i t w i l l be noticed that the Midland Railway of Manitoba c a r r i e d only 78,000 l b s . of the t o t a l . Consequently, i t was assumed that the remainder of the 116,000 l b s . , namely 38,000 l b s . was c a r r i e d by eit h e r C.P.R. or C.N.R. The average for both years was then considered to constitute the import ''"Based on private communication with Mr. Kirk, Freight and Claims Manager, B.C. Tree F r u i t s Ltd. July 1969. This thesis contains no page 125. 126. quantity into Manitoba ca r r i e d by r a i l . Quebec Tot a l r a i l imports from the United States into the Province of Quebec was r e l a t i v e l y i n s i g n i f i c a n t for both years, 42,000 l b s . in 1965 and 56,000 l b s . i n 1966. This suggests that only these amounts entered the province from the U.S. at custom points in Quebec. Upon confirmation by Mr. M i l l e r 1 the most l i k e l y point of entry would be Rouses Point, but since t h i s place l i e s , within close proximity of Montreal, i t was held that Montreal would represent as r e a l i s t i c a point of entry as Rouses Point. To obtain the f i n a l import estimate into Quebec by r a i l , the same computational method as applied for B r i t i s h Columbia and Manitoba was pursued. Although the seasonal p r i c e summaries s t a t i s t i c s show a r e l a t i v e l y large quantity of unloadings at the Montreal demand centre by r a i l , the point of entry into Canada for such quantities was in a l l l i k e l i h o o d somewhere in Ontario (Table B-4). The major portion of these imports o r i g i n a t e at Washington State which may further support the assumption that fresh apples shipped from Washington State to Montreal would enter Canada anywhere west of the Province of Quebec, with the most l i k e l y point of entry somewhere i n Ontario. Freight Rate Advisor, .C.N.R. Vancouver o f f i c e . 127 Ontario By far the largest quantities of apple imports by r a i l enter. Canada at points in Ontario. It does not mean, however, that a l l fresh apple imports remain in th i s Province. For the model, t h i s c a r r i e s , however, no importance, since the point of in t e r e s t is simply to e s t a b l i s h a point of entry because the model w i l l determine i f such quantities should be shipped on to more distant demand points or remain within Ontario. Niagara F a l l s was selected to represent the point of entry for a l l fresh apple imports from the U.S., going into Ontario by r a i l . This was based on the following arguement: C.N.R. and C.P.R. have c a r r i e d by far the largest quantities of a l l apple imports from the United States into Canada (Table B-5). Since B r i t M i Columbia and Manitoba's quantities have already been apportioned, i t suggests that almost a l l of the fresh apples entering Ontario by r a i l were moved by e i t h e r , C.P.R. or C.N.R. The possible points of entry for both of these r a i l roads i s shown below: Connecting Point with ; C.N.R.^ C.P.R.^ U.S. in Ontario 1. Niagara F a l l s Yes Yes 2. Windsor Yes 3. Sarnia Yes -4. Sault Ste. Marie - Yes 5. Fort Francis Yes -Source of information: C.N.R. Freight Rate O f f i c e , Vancouver ;Branch. 1 128. It is i n t e r e s t i n g to observe that a l l these points of entry are zoned. For example, Niagara F a l l s and Windsor both are grouped in zone B. Consequently, f r e i g h t rates from points in the U.S., would be the same to both places. Therefore, i f apples were shipped from Yakima to Toronto there would be a composite cost of transportation: one applying from Yakima to either Windsor or Niagara F a l l s and one applying from Windsor or Niagara F a l l s to Toronto. The cost of shipping from Yakima to Niagara F a l l s or Windsor would be the same with rates from ei t h e r of these two places to Toronto added on. In f a c t , apples may be shipped into Toronto v i a Windsor with rates quoted v i a Niagara F a l l s . 1 Since, however, both r a i l r o a d s show connecting points with the U.S. at Niagara F a l l s i t seems reasonable and p r a c t i c a l to choose Niagara F a l l s as the point of entry because i t eliminated the problem of e s t a b l i s h i n g two points of entry into Ontario. Imports by Truck Owing to lack of adequate data, fresh apple imports into the respective provinces by truck were based on the Crop and Seasonal Price Summaries S t a t i s t i c s . It was assumed that trucking takes place over the shortest possible route and apples imported into the respective provinces from the U.S. were not cross hauled into other provinces. However, since no points of entry for the Maritimes was considered i n the model the estimated quantities unloaded at places i n the Maritimes ^This fact was revealed upon conversation with Mr. M i l l e r , f r e i g h t rate advisor at C.N.R. Vancouver o f f i c e . 129. were added on to the Windsor supply centre. The conversion figure (see footnote (2) in Table B-6) as obtained from Mr. Fisher does not tend to be a very r e l i a b l e estimate^, but upon averaging the import quantities into the p r a i r i e s from the United States for the 1965 and 1966 calendar years, i t was found that there was no s i g n i f i c a n t d i f f e r e n c e between the estimates obtained on a crop year b a s i s , and the computed averages as based on a calendar year. Differences i n the s i z e of 2 c a r l o t may possibly be more pronounced between eastern and western provinces, but unfortunately there was no way to confirm t h i s . Since, however, the quantities that could not accurately be assessed to s p e c i f i c regions, i t was not considered of importance to the study. Exports . - . -3 According to D.B.S. fresh apple exports from Canada for the period July 1, 1965 to June 30, 1966 amounted to 115,720,136 lbs . and 4 to 123,795,435 l b s . according to CD.A. s t a t i s t i c s . Since D.B.S. does not give a breakdown of exports by province as compared with CD.A. s t a t i s t i c s which do provide a p r o v i n c i a l disaggregation, i t would seem p r a c t i c a l to u t i l i z e CD.A. estimates for the study. ^25,000 l b s . were assumed to be an average i n a study of "Trends i n the Production and Marketing of Apples in Canada with Special Reference to Ontario," by M. A l Hashimi, 0p_. C i t . p. 39. 2 According to Hashimi 0p_. C i t . , the average c a r l o t contains approximately 25,000 l b s . 3 D.B.S. Domestic Exports by Commodity and Countries, Cat. No. 65-004, D i v i s i o n of External Trade, Table 4. 4Table B-6. 130. TABLE B-6 Truck Imports of Fresh Apples to Canadian Points From the United States for the 1965-66 Crop Year ^ ('000 lbs.) Total •' Most L i k e l y Point of Origin Imports Quebec Quan<2 ) Quanf 2 ) Quan. Quebec Montreal D e l . V a . I l l . 1,440 New York 3,680 5,120 Ontario Niagara F a l l s Windsor New York Mich. I l l 1,960 . 2,080 1,960 2,080 Manitoba Emmerson Mich. 9,840 Wash. 1,600 10,000 Saskatchewan Northgate Mich . 680 Wash. 240 960 Albe r t a Coutes Mich. 120 Wash. 1,080 1,200 B r i t i s h Columb i a ' Vancouver Oreg. 720 Wash . 5,920 6,640 (2) (1) From Crop and Seasonal Price Summaries, Fresh, Processed F r u i t s and Vegetables, Vol. 19, 1965-66, Part I I . Representative Region Points (2) Carlots converted into l b s . on a 40,000 l b s . / c a r l o t b a s i s . Given by Mr. Fisher of the F r u i t s and Vegetable D i v i s i o n CD.A. 131. But upon further research and a d d i t i o n a l information from B r i t i s h Columbia Tree F r u i t s L t d . 1 a discrepancy between the estimates obtained from these sources of information becomes evident. Such discrepancies may ar i s e from the f a c t , that CD.A. data are based on 45 l b s . per bushel, 2 whereas D.B.S. data and also B.C. Tree F r u i t s Ltd. data are s t r i c t l y based on the pound as a un i t of measure. In many instances the conver-sion from bushels into l b s . may probably r e s u l t i n s l i g h t l y overestimated or underestimated q u a n t i t i e s . Therefore, the per pound measure would tend to be more accurate. Consequently, D.B.S. data were used i n the study with C.D.A. figures providing a us e f u l guide to make appropriate adjustments for a l l exporting provinces. A co r r e c t i o n f a c t o r to apportion p r o v i n c i a l exports has been obtained in a manner outlined below: 115,720,136 — 123,795,435 .94 (1965-66 exports (1965-66 exports according'to D.B.S. according to C.D.A. / estimates) estimates) •' Therefore, a l l p r o v i n c i a l export t o t a l s (Table,B-7) were multi-p l i e d by .94 to obtain the f i n a l export estimates as applicable for each province, and the computed r e s u l t s were entered in Table V. B.C. Tree F r u i t s Ltd., Kelowna, B r i t i s h Columbia, information r e l a t i n g to B.C. exports as obtained from Mr. Sutherland. 2 64,000,000 l b s . were exported according to B.C. Tree F r u i t s estimates, whereas C.D.A. estimates accounted for approximately 68,000,000 l b s . of export from B r i t i s h Columbia r e l a t i n g to the same time period. 132. TABLE B-7 Apple Exports by Month and Province of O r i g i n for the 1965-66 Crop Year (Bushels converted into pounds on 1 bushel - 45 l b s . b a s i s ^ ^ O r i g i n Maritimes Time l b s . (2) Quebec Ontario B r i t i s h Columbia l b s . lbs . l b s . Sept. 1965 147,510 2,798,145 394,065 1,800,495 Oct. 1,408,725. 4,809,240 1,078,875 6,104,790 Nov. 2,148,705 4,302,225 766,545 10,571,985 Dec . 4,585,095 6,748,335 1,122,075 19,177,065 Jan. 1966 6,210,540 4,314,960 1,581,525, 17,639,730 Feb. 1,358,235 1,837,125 841,450 7,326,630 March 307,260 2,037,285 269,595 4,422,060 A p r i l ' • - 1,851,885 1,158,930 1,155,645 May . - 513,000 286,875 64,800 June - 1,644,370 945,720 13,500 Tot a l 16,166,070 30,876,510 8,476,155 68,276,700 Ove r a l l T o t a l - 123,795,435 lbs-. (1) Conversion f i g u r e as given i n the Canada Year Book (2) Maritimes composed of Nova Scotia, , and New Brunswick. Source: Crop and Seasonal Price Summaries, Fresh F r u i t s and Vegetables Vol. 21, 1967-68 Part I I , p. 12. Canada Department of Agr i c u l -ture . APPENDIX C POPULATION ESTIMATES FOR CANADA, PROVINCES AND CONSUMING REGIONS 134. Regional Population Estimates Population estimates r e l a t i n g to the 1965-66 crop year are given i n Table C - l . These estimates were used to compute the average populations i n the various regions for the second h a l f of 1965 and for the f i r s t h a l f of 1966. In order to obtain population estimates r e l a t i n g to the regions as delineated for t h i s study, i t was necessary to disaggregate the p r o v i n c i a l population estimates of Quebec, Ontario, and Alberta, due to the fact that Quebec C i t y , Montreal, Toronto, Ottawa, Calgary, and Edmonton were chosen as representative points for demand. For the other' regions only one c i t y point had been chosen as the representative point for demand, therefore, the e n t i r e regional population was assumed to be represented at t h i s point. Population estimates for the Quebec C i t y , Montreal, Ottawa, Toronto, Calgary, and Edmonton demand centres were derived as outlined below: 1. Quebec: North - Quebec c i t y designated as the demand centre South - Montreal designated as the demand centre Since approximately 85 percent^ of the population i n Quebec, as given i n the 1966 Census, clustered r e l a t i v e l y close to the U.S. border and where Montreal i t s e l f r e f l e c t e d a f a i r l y large proportion of Quebec's t o t a l population, 85 percent of t h i s t o t a l population was apportioned to the Montreal demand centre. The remaining 15 percent of '''This percentage was derived by summing the populations of the major metropolitan areas south of Quebec c i t y . The r e s u l t i n g t o t a l was used to compute the percentage of the t o t a l population of Quebec. Metropolitan population estimates were taken from the Canada  Year Book, 1968. 135. TABLE C- l Population' Estimates for Canada by Region Population Estimates ('000's) •Region July 1965 January 1966 June 1966 Maritimes 1,991 1,994 1,975 Quebec 5,667 5,712 5,781 Ontario 6,746 6,832 6,961 Manitoba 962 , 959 963 Saskatchewan 952 953 955 (2) A l b e r t a v . 1,477 1,482 1,492 (3) B r i t i s h Columbia^ 1,809 1,853 1,889 To t a l 19,604 19,785 20,016 (1) Comprises population of Newfoundland, Prince Edward Island Scotia and New Brunswick. (2) Includes population of the North West T e r r i t o r i e s (3) Includes population of the Yukon Source: Canadian S t a t i s t i c a l Review, D.B.S. Vol. 42, No. 7, July 1967 Table 1,^Population by Provinces. 136. the t o t a l population, of Quebec was apportioned to the Quebec c i t y demand centre. 2. Ontario: North - Ottawa designated as the demand centre South - Toronto designated as the demand centre The same approximate 85:1,5 r a t i o (south: north) was obtained by the method indicated under footnote^ for the 1966 census. 3. Alberta: North - Edmonton designated as the demand centre South - Calgary designated as the demand centre The metropolitan population of Edmonton according to the 1966 census was estimated at 401,299 people, whereas for metropolitan Calgary 2 the population from the same census accounted for 330,575 people. Since, however, a r e l a t i v e l y large number of smaller c i t i e s and towns tend to be clustered f a i r l y close to the U.S. border, the apportionment was a r b i t r a r i l y based on a 50 to 50 d i v i s i o n . It was assumed that the larger population of Greater Edmonton was o f f s e t by the larger number of smaller places clustered i n the southern part of A l b e r t a . Table C-2 gives the population estimates r e l a t i n g to each relevant demand centre, using in the case of Quebec, Ontario and Alber t a the r a t i o s mentioned above. 2 Canada Year Book, 1968, population census of 1966, p. 197. 137. TABLE C-2 Estimated Population D i s t r i b u t i o n by Region of Demand Region No. Representative Average of July 1965 Average of Jan. 1966 Point and Jan. 1966 Figures and June 1966 Figures 1 Windosr 1,992,500 1,984,500 Quebec: 5,689,500 5,746,500 2 Quebec Cit y 853,425 861,475 3 Montreal 4,836,075 4,884,525 Ontario: 6,789,000 .6,896,500 4 Ottawa 1,018,350 1,034,475 5 Toronto 5,770,650 5,862,025 6 Winnipeg 960,500 961,000 7 1 Regina 952,500 954,000 Alberta: 1,479,500 1,487,000 8 Edmonton 739,750 .. 743,500 9 Calgary 739,750 743,500 10 Vancouver 1,831,000 1,871,000 To t a l 19,690,500 19,900,500 APPENDIX D QUOTED TRANSPORTATION RATES; ESTIMATED CHARGES FOR PROTECTIVE SERVICES; ADJUSTED TRANSPORTATION RATES RELATING TO THE 1969-70 PERIOD 139. Transportation Rates and Computations by Region B r i t i s h Columbia With Kelowna representing the centre of supply for B r i t i s h Columbia, transportation rates were c o l l e c t e d from Kelowna to a l l demand centres in Canada as designated for the study. Two types of r a t e s , agreed charges and open rates, were c o l l e c t e d . The agreed charges applicable for the area delineated (Table D-l) were furnished by the Canadian Freight Association,''' and are given below: TABLE D-l Transportation Rates and Protective Service Charges Between Kelowna B.C. and Places States Thereof as Given by C.F.A.^ Rates Expressed i n Cents/100 l b s . 1 2 3 Apples when i n Applies only in A l l Packages Other Handi-packs Handi-packs for Than Straight Car-Also Applies the Period Oct. Loads Oct. 16, to i n Other 16, to May 3 l . May 15 = 40,000 Packages for l b s . MW, March 16, (2) Class From the Period . to May 31 = 35,000 Adjusted Kelowna to June 1, to l b s . MW Rates Oct . 15 • ; Minimum Weight Minimum Weight 30,000 l b s . 30,000 l b s . Calgary c 101 c 106 c 97 107 Edmonton 119 124 113 126 Regina c 188 c ,195 c 183 200 Winnipeg c 187 c 193 c 182 199 c = competitive rate w i l l not apply as a maximum to intermediate points. 140. As of July 14th 1969 on, these rates have been subject to a 6 percent increase, therefore, the computed rate of C187.33/00 l b s . was adjusted upward by t h i s percentage to obtain a f i n a l estimate for the cost of shipping 100 l b s . of fresh apples from Kelowna to Winnipeg. This procedure was repeated for a l l p r a i r i e demand points and the computed f i n a l estimates were then entered as adjusted rates in Table D-1 and Table XI. Rates to points of demand other than those delineated in the agreed charges have been furnished by B.C. Tree F r u i t s Ltd., and are given in Table D-2. Since fresh apples to eastern provinces were mainly shipped by r a i l only, rates r e l a t i n g to r a i l r o a d s were considered i n the study. R a i l rates as presented in Table D-2 include protective charged against f r o s t from the period October 15, to A p r i l 15, but do not include r e f r i g e r a t i o n charges. In order to obtain a f i n a l trans-portation rate estimate, an adjustment r e l a t i n g to r e f r i g e r a t i o n charges has been considered. The method adopted to make adjustments for r e f r i g e r a t i o n charges o f f s e t s the lack of information on quantities shipped under s p e c i f i c types of r e f r i g e r a t i o n . From Table D-2 i t can Canadian Freight Association, Agreed Charge Between Railroads  and B.C. Tree F r u i t s Ltd., Marketing Agency. Issued under the authority of the Transport Act, W. P. Coughlin, Agent, C.F.A. 1162 St. Antoine St., Montreal 3, Quebec. 2 Upon confirmation by Mr, Kirk, Freight Rate Manager, B.C. Tree F r u i t s Ltd., there tends to be no d e f i n i t e pattern r e l a t i n g to s p e c i f i c q u antities shipped under the three classes stated i n Table D-1. Con-sequently, i t seemed reasonable to have the f i n a l cost estimates of shipping on a simple average of the given transportation r a t e s . For example, the cost of shipping 100 l b s . of fresh apples from Kelowna to Winnipeg was computed to be £187.33 (i . e . ) Class 1 + Class 2 + Class 3 187 + 193 + 182 ... _ _ . 141. TABLE D-2 R a i l Rates and Protective Service Charges - Domestic ($/100 lbs.) Apples & Pears - Rates From Okanagan Okanagan To Rate Vancouver .57+ Montreal 2 .42 2 , .57* Ottawa 2 .42 2, .57* Toronto 2 .42 2, .57* Quebec 2 .42 2, .57* St. John, N.B .2 .68 2, .84* St. John,NfId .3 .57 3. . 73* Ha l i f a x 3 .57 3, .73* Min. Weight 40M 40M - Apples 36M - Pears +Rate includes Protective Service *Rate includes Protection against f r o s t only during period, Oct. 15/April 15, Apples & Pears - Protective Service ( E f f e c t i v e A p r i l 1, 1969) From To Okanagan Ontario & Quebec New Brunswick N.S. & P.E.I. From To Okanagan Ontario & Quebec New Brunswick N.S. & P.E.I. N f l d . Std. Ref. 170.74 188.70 197 .70 Ltd. Ref. 108.03 113.24 116.82 Mech. Ref. Std. Heat 80.56 93.28 106.00 A p r i l 16/0ct. 14 Oct.15/April 15 128.78 (stn) 1 143.10 ( l g e ) 2 100.70 (lge&sm) 143.10 (sm) 159.00 (lge) 116.60 (lge&sm) 152.64 (sm) 169.60 (lge) 132.50 (lge&sm) 173.84 (sm) 190.80 (lge) 153.70 (lge&sm) (sm) denotes small c a r l o t s , with one c a r l o t = 30,000 lbs (lge) denotes large c a r l o t s , with one c a r l o t = 40,000 lbs Source: B.C. Tree F r u i t s Ltd., Kelowna, B.C., A p r i l 1, 1969. 142 be seen that r e f r i g e r a t i o n charges are given for small and large carloads, each accounting for 30,000 l b s . and 40,000 l b s . r e s p e c t i v e l y Consequently i t was assumed that the average of these two minimum weights, namely. 35,000 l b s . would represent the most frequently quoted quantity. Therefore, the 35,000 l b s . weight class minimum was used to compute an average for r e f r i g e r a t i o n charges. For example, the standard r e f r i g e r a t i o n charge from Kelowna to points in Ontario and Quebec is $170.74 per c a r l o t . U t i l i z i n g the 35,000 l b s . minimum weight, t h i s amounts to $.49 per 100 l b s . of fresh apples. Following t h i s procedure for a l l types of r e f r i g e r a t i o n and to a l l possible centres, a set of charges has been determined. The r e s u l t s are presented i n Table D-3. ' TABLE D-3 Average R e f r i g e r a t i o n Charges for Fresh Apples from Kelowna', B.C. To points of Demand i n Eastern Canada ($/00 lbs.) Type of „ R e f r i g e r a t i o n From Kelowna to Points i n : Standard Limited Mechanical Average Ontario and Quebec .49 .30 .39 .39 Nova Scotia & .56 .33 .47 .46 P.E.I. (1) Computed from Table D-2. 143. Therefore, the regular rate plus the estimated r e f r i g e r a t i o n charge has been used as the f i n a l transportation rate r e l a t i n g to the period from A p r i l 16th to October 14th. Since, approximately 75 percent^ of a l l fresh apples, as based on a crop year, are hauled during the October to A p r i l period, a quantity adjustment of the proportion 75:25 (protection against f r o s t : p r otection against;heat) was used to obtain a f i n a l transportation charge applicable on a yearly b a s i s . Consequently, the f i n a l transportation rate estimate for 100 l b s . of fresh apples from Kelowna, B.C.- to Toronto was computed as follows: (2.57) (.06)+ .75+ (2.42) (.06 + .39 + 2.42 (.25)= (a) (b) (c) (d) (e) (f) 2.04 + .74 = $2.78/00 l b s . (a) Regular rate (Table D-2) including protective charges against f r o s t . (b) 6 percent upward adjustment on quoted r a t e . (c) 75 percent of apples shipped during the period of October, to A p r i l where protection against f r o s t was. a p p l i c a b l e . (d) Adjusted average charge f o r p r o t e c t i o n against heat. (e) Regular rate, no protection included (f) 25 percent of apples shipped during the period of A p r i l to October where protection against heat was a p p l i c a b l e . Pursuing t h i s method, transportation rates were estimated from Kelowna to demand points i n eastern Canada and the f i n a l estimates have been As estimated by monthly unloadings in 12 Canadian markets given in "Annual Unloads S t a t i s t i c s i n 12 Canadian Markets," Fresh F r u i t s and Vegetables. CD.A. 0p_. C i t . 144. entered i n the transportation rate matrix, Table XI. Charges from Kelowna, B.C. to Vancouver, were obtained from Williams Transport Co.. Ltd. of Burnaby, B.C., because most apples from Kelowna to Vancouver are hauled by truck. Ontario Transportation costs r e l a t i n g to Ontario were estimated from Toronto to a l l demand centres i n Canada. Again, r e f e r r i n g to unloads s t a t i s t i c s , i t was determined that nearly a l l quantities of apples from Ontario to Western provinces were shipped v i a r a i l with the exception of Winnipeg, where there tends to be no d e f i n i t e pattern as to mode of transportation. For the study i t was assumed that a l l apples shipped from Ontario into the p r a i r i e and western provinces go v i a r a i l , and also apples shipped i n t o the Maritimes are assumed to go v i a r a i l . Shorter distance hauling would be e x c l u s i v e l y performed by trucking companies. Such distances were considered to be between Toronto and the demand centres at Ottawa, Montreal, and Quebec C i t y . R a i l rates from Toronto to designated points of demand were obtained from the Canadian P a c i f i c Railroad, Vancouver o f f i c e . These rates are stated in Table D-4 and include protective s e r v i c e s . The method fo r estimating these r a i l rates was necessitated because of lack of better information. In comparing the r a i l rate estimates with trucking rates from Toronto to Winnipeg and Regina, they were not found to agree c l o s e l y . Trucking rates from Toronto to Montreal, Ottawa, and Quebec Cit y were furnished by Smith Transport Ltd. of Toronto. These rates are 145 TABLE D-4 R a i l Rates for Fresh Apples From Toronto to Points of Demand ($/100 lbs.) Class From Toronto to 30,000 Minimum Weight 35,000 Minimum Weight A l l Rates Include Protective Service Charges, But Owners Risk of Breaking and Bruising Adjusted Winnipeg 2 .52 2.27 2.54 Regina 3. .13 2.89 3.19 Edmonton 3 .92 3.68 4.03 Calgary 3, .92 3.68 4.03 Vancouver 3 .92 4.15 Windsor N.S. 2 .40 2.54 (1) The adjusted rates which were entered i n the transportation rate matrix, Table XI were computed i n the following manner,, assuming both minimum weight classes to be equally a p p l i c a b l e . Example: Rate from Toronto to Regina. $3.13/00 l b s . + 2.84/00 lbs 2 $3.19/001bs. .06 + 3.13 00 l b s . + $2.89 lbs Source: A. Husena, Canadian P a c i f i c Railway Freight Rate Advisor, Vancouver :office. I46-. summarized i n Tables D-5 and D-6. TABLE D-5 P r o t e c t i v e Charges Between Points W i t h i n Ontario and Points Between Ontario and Quebec Stated as a Percentage of T r a n s p o r t a t i o n Cost To Points W i t h i n Ontario Quebec From ( i . e . Ottawa) ' (Quebec C i t y and Montreal) Points i n 10% of F r e i g h t Charges, 10%, of F r e i g h t Charges, Ontario Minimum Charge $25.00 Minimum Charge $25.00 (Toronto) Source: Smith Transport L t d . Toronto, O n t a r i o . of Toronto, 150 Commissioner S t r e e t , TABLE D-6 Transportation Rates for Fresh Apples Between Toronto and Points of Demand ($/100 l b s . based on minimum weight l i m i t s ) Quebec C i t y Montreal Ottawa Adjusted ( F i n a l Rates) To 24,000 l b s . 30,000 l b s . 24,000 l b s . 30,000 l b s . 24,000 l b s . 30,000 l b s . Quebec Montreal Ottawa From Min. Weight Min.. Weight Min. Weight Min. Weight Min. Weight Min. Weight Ci t y Toronto 1.28 1.27 .70 .67 .77 Niagara F a l l s (1) Adjusted Rates: The adjusted f i n a l rates as entered in the transportation cost matrix, Table XI were obtained by adding the relevant protective service charges to the regular r a t e . Also, an a d d i t i o n a l quantity adjustment was considered to compute the f i n a l estimates. For i l l u s t r a t i v e purposes the rate from Toronto to Montreal w i l l be used to show the d e t a i l e d computational procedure. 1. to f i n d protective service charge: (240) (70) + (300) (67) 1 Q _ $ L 8 .45/27,000 lbs . a = 24,000 lb s . Min. weight b = $.70/00 lb s . f r e i g h t rate c = 30,000 lbs. Min. weight (Table D-6) d = $.67/00 l b s . f r e i g h t rate e = 10 percent of f r e i g h t rate for protective service (Table D-5) Since the $18.45/27,000 l b s . however was less than the minimum charge of $25.00 per truckload, the $25.00 minimum charge was used to obtain the appropriate charge for p r o t e c t i v e services which was then added on to the regular rate. Therefore, protective service charge for the 24,000 lb s . Min. Weight and 30,000 lb s . Min. Weight were:' • . .- . 2500 24 = $10.41/100 l b s . 2500 30 = $8.33/100 l b s . 2. R e f r i g e r a t i o n charges were based only on a minimum weight of 30,000 l b s . per truck load.. Therefore a quantity adjustment of the proportion 75:25 (protection against f r o s t : p rotection against heat) was allowed. The.necessary computational.procedure i s given below: (70 + 10.41) + (67 + 8.33) (.75) + (67 + 8.33) (.25) = $77.23/100 l b s . of fresh apples. 2 This therefore becomes the f i n a l estimate to be entered i n the tra n s p o r t a t i o n cost matrix. Rates from Toronto to Ottawa and Quebec City were computed in the same manner as outlined above. .72 1.59 .77 .83 ' 1.59 1.01 .83 148. Quebec In order to obtain f i n a l f r e i g h t rate estimates from Montreal to various points of demand, the same procedure was used as the one from Toronto, with one minor exception?" Table D-7 shows a l l f i n a l estimated rates from Montreal. Nova Scotia: 2 According to the domestic unload s t a t i s t i c s no fresh apples were shipped further than Saint John, N.B., with the exception of a very minute quantity (1 c a r l o t i n 1962-63 and 4 c a r l o t s i n 1964-65) into Toronto from 1962 through 1967. Consequently, no de t a i l e d computational method was pursued to estimate transportation rates from Windsor (the representative centre of supply for Nova Scotia) to the various points of demand. Only r a i l rates were considered and 3 such rates were furnished by C.P.R. on a 30,000 l b s . Minimum weight basis with protective charges included. No allowance for quantity adjustment was therefore necessary, because i t was assumed that t h i s r a t e would be applicable on a year round b a s i s . The rates have been d i r e c t l y entered into the transportation cost matrix, Table XI, and i t did not seem necessary to re s t a t e them in the appendix. "'"No trucking rates from Montreal to Quebec C i t y , Ottawa, and Toronto could be obtained. However, rates to these places were a v a i l a b l e from St. Hyacinthe, Lachute, Farnham, and V a l l e y f i e l d . Rates from these o r i g i n s were averaged and the average was assumed to be the rate a p p l i c a b l e from Montreal to Toronto, Quebec C i t y , and Ottawa. ^Crop and Seasonal Price Summaries, Fresh F r u i t s and Vegetables Part I I , C.D.A. o JRates were obtained from Mr. Brian Alcock of C.P.R. Vancouver office-, on February 26, 1970. 149. TABLE D-7 Transportation Rates for Fresh Apples from Montreal to Centres of Demand ($/100 lbs .) Class 30,000 l b s . Min. Weight 35,000 l b s . Min. Weight From A l l Rates include Protective Service Charges Montreal to but Owners.Risk of Breaking and Bruising Adjusted (2) Windsor, N.S. 1.31 1 .39 Winnipeg 2.92 2.68 2 .97 Regina .3.54 3.30 3 .62 Edmonton 4.33 4.09 4, .46 Calgary 4.37 4.09 4 .46 Vancouver. 4.38 4 .64 T o r o n t o ^ .83 O t t a w a ^ .81 Quebec C i t y ^ .93 (1) These are trucking r a t e s , a l l others are r a i l r a t e s . -(2) Adjustments based on s i m i l a r method as discussed previously, (see footnote to Table D-4). Source: A. Husena, C.P.R. Freight Advisor, Vancouver o f f i c e , and Mr. Coughlin, O f f i c e of Manager, Freight Rates, Canadian National Railways, Montreal, Quebec, and R. A. Finlayson, T r a f f i c Department, Smith Transport Ltd., Toronto, Ontario. 150. The P r a i r i e Provinces With respect to the following routes: Emmerson (Man.) to Winnipeg and Regina Northgate (Sask.) to Winnipeg, Regina, Edmonton and Calgary Coutes (Alta.) to Winnipeg, Regina, Edmonton, and Calgary. transportation rates were obtained from G.N.R. but the writer was unable to obtain aggregate protective••service charges. However, such charges were obtained on a per mile basis and are given below: 4c/30,000 l b s . of fresh apples/mile for heating charges 7.57o/30,000 l b s . of fresh apples/mile for r e f r i g e r a t i o n charges Therefore, the approximate mileage between any pair of destinations as stated above has been used to estimate protective services charges. For example, the approximate mileage from Emmerson to Winnipeg was taken to be 70 miles.. Again, the 75:25 quantity proportion adjustment method was u t i l i z e d to obtain the f i n a l estimate of protective services charge and t h i s was computed i n the manner shown below: (.75) (4) + (.25) (7.5) 7 0 = 3 4 1 . 6 c / 3 0 j 0 0 0 l b s . a b c d e a = 75 percent of a l l apples shipped protected against f r o s t . b = 4c/30,000 lbs/mile protective service charge against f r o s t . c '= 25 percent of a l l apples shipped protected against heat. d «= 7.50/30,000 lbs./mile p r o t e c t i v e service charge for r e f r i g e r a t i o n . e = approximate mileage from Emmerson to Winnipeg. According to t h i s computation, the pr o t e c t i v e service charge on a year round basis would be £341.6/30,000 l b s . which, when computed on a per 100 l b s . basis amounts to about lc/100 l b s . This estimated pro t e c t i v e service charge was then added to the relevant transportation 151. rate to obtain the f i n a l cost of transporting 100 lbs . of fresh apples from Emmerson to Winnipeg. This method of computation was repeated for a l l designated pairs of points. The estimated protective service charges plus the relevant transportation charges are given i n Table D-8. TABLE D-8 Quoted Transportation Rates and Estimated Protective Service Charges for Fresh Apples From Points of Supply to Points of Demand To Calgary Edmonton Regina Winnipeg Prot Prof Prot Prot From Rate " To t a l Rate " To t a l Rate " To t a l Rate " Total Charge Charge • Charge Charge Coutes .58 .03 .91 .92 .05 .97 1.42 .14 1.56 2.02 .23 2.25 N o r ^ h " 1.18 .06 1.24 1.27 .07 1.34 .86 .03 .89 1.93 .08 2.01 gate E m m e r " 1.08 .06 1.14 .39 .01 1.40 son Source: B. P r a v i t z , Freight Rate Manager, Great Northern Railway, Vancouver o f f i c e . Mcst rates were given for the 30,000 l b s . and 24,000 l b s . weight class e s , but some were only a v a i l a b l e for the 24,000 l b s . minimum weight c l a s s . It was thought that the l a t t e r case would not introduce any inconsistency r e l a t i n g to rates per 100 l b s . , because such rates were l i k e l y to be the only ones applicable from a given o r i g i n to a s p e c i f i e d d e s t i n a t i o n . 152. Freight Rates From the United States to Canada Transportation costs from points i n the United States to demand centres i n Canada were based on quoted actual rates plus an estimated charge for protective s e r v i c e s . Rates from Washington State r e l a t e to Yakima as the point of o r i g i n , and rates from Yakima to a l l centres of demand i n Canada were obtained from the G.N.R. Since no prot e c t i v e services charges were included i n these rates, except to Vancouver and Alberta demand centres, service charges for protection from Kelowna to the various points of demand were used, on the assump-t i o n that mileages involved were s i m i l a r . Transportation costs from Rochester, N.Y., and Lansing, Mich., were obtained from Smith Transport Ltd . of Toronto and r e l a t e to trucking rates only. Protective service charges were estimated i n exactly the same way as i l l u s t r a t e d i n Tables D-5 and D-6, and the subsequent computational procedure. For purposes of s t a t i n g rates i n Canadian funds, a 4 percent surcharge, as given by Smith Transport Ltd., was applied to a l l quoted rates from points i n the U.S. to points i n Canada. Table D-9 summarizes a l l rates plus p r o t e c t i v e service charges . TABLE D-9 Transportation Costs from Points of Supply i n the United States to Points of Demand in Canada ($/100 lbs.) From Windsor Quebec City Montreal Ottawa Toronto Winnipeg Regina Edmonton Calgary Vancouver Yakima 441 297 297 297 - 297 256 219 256 217 58< 3 ) Y a k i m a ( 2 ) 408 221 194 . 194 135 376 n .a. n .a. n. a. n .a. Yakima v ' 328 163 132 142 103 354 n .a. n .a. n .a. n. a. (1) A l l rates are r a i l rates (2) A l l rates are trucking rates (3) According to unloads s t a t i s t i c s nearly the ent i r e import quantity of fresh apples from Washington into B r i t i s h Columbia moved by truck i n recent years but since no truck rate could be obtained, the r e q u i s i t e r a i l rate was used. n.a. No information was av a i l a b l e for these routes. APPENDIX.E DATA AND COMPUTATIONS RELATING TO COSTS OF PRODUCTION . PACKING AND STORAGE COSTS, F.O.B. PRICES AND TARIFFS 155. TABLE E-.l Average Per Acre Cost Items for Apple Production in the Four Major Apple Growing Regions i n Canada Based on 1965-66 Survey Data ($ Per Acre) Item of Operation Nova Scotia & Quebec Ontario B r i t i s h New Brunsxtfick" Columbia Investment on Land, Trees, and Buildings 76 . o o( 4 ) 52 .00 52 .00 169, . o o ( 5 ' Machinery Costs 33 .00 65 .00 100 .00 60 .00 Orchard Labour C o s t s ( 2 ) 13 .00 22 .00 59 .00 . 13. .00 I r r i g a t i o n Costs 8 .00 15 .00 22 .00 17 .00 (3) M a t e r i a l Costs '29 .00 46 .00 73 .00 65 .00 Misc. Expenses 7 .00 38 .00 57 .00 14 .00 Harvesting Costs 51 .00 87, .00 97 .00 134 .oo<6: T o t a l Per Acre Cost 217.00 325.00 460.00 472.00 Source: A Cost Study of Pest-Control for Apple Growing in Canada, G.Gilmor B.Sc. Ag r i c . Essay, Department of A g r i c u l t u r a l Economics, Faculty of A g r i c u l t u r e of the U n i v e r s i t y of B r i t i s h Columbia, Tables, 21, 22, 23, and 24, 1968. (1) Machinery costs are comprised of: 1 - Depreciation charges 2 - Cost of maintenance and repa i r s 3 - Miscellaneous maintenance costs 4 - Interest on machinery investment (2) Orchard labour costs consist of: .1 - Cost of f e r t i l i z e r hours 2 - Cost of maintenance hours 3 - Cost of pest-control hours and of custom p e s t - c o n t r o l . (3) M a t e r i a l Costs consist of: 1 - Pest-control materials 2 - F e r t i l i z e r and custom f e r t i l i z e r 156. (4) . In Nova Scotia the cost item for investment i n land trees, and buildings has been adjusted upward by $52.00 per acre. Owing to the lack of more accurate information regarding land values and b u i l d i n g costs i t was assumed that the adjustment could be based on the Ontario cost study (Budgeting for Crops per acre, Department of A g r i c u l t u r a l Economics, O.A.C. August 1966, p. 210-82) which was-thought to r e f l e c t more accurate estimates of costs a r i s i n g from land value. (5) With reference to B r i t i s h Columbia, l i t t l e information was a v a i l a b l e for t h i s cost item. A d d i t i o n a l information on costs of investment was obtained and, therefore, t h i s cost item has been revised according to the following method: Investment Cost per acre for 1968^ Land $1,200/acre 6% charge on land = $72.00 Trees $l,500/acre 6%; charge on trees = 93.00 Buildings $225/acre 6% charge on buildings= 13.50 + depreciation = 10.50 T o t a l . 189.00 The t o t a l f i g u r e of $189.00 per acre had been deflated by the consumer p r i c e index for a l l items to obtain an estimate applying to the 1965-66 period. 1968 p r i c e index = 1 2 0 . 1 = 189 x 107.4 = ., q 1965 p r i c e index = 107.4 X 120.1 Therefore the 1965 cost of investment was estimated at $164.00 per acre. ^Sample Costs to Produce Macintosh, Red D e l i c i o u s , and Winesap, by John A. Smith, Supervisory H o r t i c u l t u r a l i s t , B.C.D. of A g r i c u l t u r e , 1968. 157 (6) For the same reason and using the same method as stated under (5), t o t a l costs for harvesting have been rev i s e d . From the sample cost study the average harvesting costs per acre amounted to $150.00. Since t h i s estimate was based on 1968 data a downward adjustment for the 1965 harvesting cost has been made. Therefore, average harvesting costs per acre i n 1965 were calculated as $134.00. . Costs of Packing and Storing As explained i n the text, owing to lack of comprehensive data on costs for packing and s t o r i n g c e r t a i n methods were adopted to estimate such costs. These methods are shown below for a l l producing regions i n Canada: 1. Nova Scotia - ' Sample F.O.B. prices for 1965 were a v a i l a b l e and a given percentage of the F.O.B. p r i c e was computed: 1965 (November) F.O.B. p r i c e ^ $2.70/40 l b s . Sales and Administration $ .10/40 l b s . Cost of Packages $ .60/40 l b s . Cost of Packing $ .30/40 l b s . Returns to grower $1.70/40 l b s . Tot a l packing cost = Cost of packages + Cost of packing .60 +. .30 = $.90/40 l b s . Converted into a 100 l b s . basis t h i s amounts to $2.25 for the cost of Packing. ^Nova Scotia F r u i t Growers As s o c i a t i o n . Annual Report, December 7, 8 and 9, 1965, p. 67. 158. 1.2 percent of the F.O.B. p r i c e was charged for st o r i n g (this percentage is based on B r i t i s h Columbia c a l c u l a t i o n s and i t was assumed to hold true for Nova Scotia ) and the computed amount was augmented with t o t a l packing cost to obtain a f i n a l average estimate of: $2.33/100 l b s . of fresh apples for charges of st o r i n g and packing, which was considered to r e l a t e to the time period used i n the study. Since no data on packing and storage costs were a v a i l a b l e for Quebec and Ontario, monthly wholesale quotations as tabulated i n the Crop and Seasonal Price Summaries S t a t i s t i c s were assumed to provide the basis for estimating annual average F.O.B. p r i c e s , which were computed as follows: Using 1965-66 wholesale quotations of a l l Quebec apples at the Montreal Market, and 1965-66 wholesale quotations of a l l Ontario apples at the Toronto market, A l l quotations have been averaged f o r both markets. The two annual average F.O.B. prices were found to be $5.13/100 l b s . for Quebec, and $8.35/100 l b s . f o r Ontario apples at the respective Montreal and Toronto markets. T h i r t y f i v e percent 1 of these average F.O.B. prices was charged f o r packing and s t o r i n g to obtain f i n a l estimates of: $1.80/100 l b s . for Quebec $2.08/100 l b s . for Ontario ^Total packing and storage charge as computed f or Nova Scotia approximated 35 percent of the F.O.B. p r i c e . Therefore, t h i s percen-tage was assumed to be applicable for Quebec and Ontario as w e l l . 159 . TABLE E-2 •'" Percentage Composition of Average F.O.B. Prices at Kelowna, B.C., for Fresh Apples Item Year(s) Packing ; and Storage Returns to Growers Tree F r u i t Charges 1942-56 ( 1 ) % % 40 55 % 5 1 9 6 3 ( 2 ) 43 50 7 1 9 6 8 ( 3 ) 34 63 3 Average 39 56 5 The $8.41/100 Sold. 1965-66 average Kelowna F.O.B. p r i c e was compu l b s . , where F.O.B. p r i c e = To t a l $ Pool Sales ted to be • To t a l Quantity Therefore, 39 of storaging percent of $8.41 amounted to $3.28/100 l b s . and packing . for the cost (1) Data obtained from, "The Report of the Royal Commission on the Tree-Fruit Industry of B r i t i s h Columbia, V i c t o r i a , B.C. October 19 58, p. 637. (2) Data obtained from, B.C.F.G.A. Quarterly report December 1965, Vol. 10, No. 3, based on 1963 c l o s i n g statement on F.O.B. returns, p. 19. (3) Data obtained from B.C.F.G.A. Quarterly report, Special No. 1, October 1969, Pool Operating Trust Account, pp. 19-20. 160. C a l c u l a t i o n of Estimated U.S. F.O.B. Pr ices New York S tate, with Rochester as the representa t i ve point of F.O.B. quotat ions^ w i l l serve to i l l u s t r a t e how the f i n a l average F.O.B. p r i ces were estimated for U.S. po in t s . The 1963-64 trend equation for New York State was used to obta in monthly F.O.B. p r i c e est imates. The geometric mean was then computed for these monthly f i gu re s . Bas ic p r i ce data i s g iven in Table E-3 and E-4 shows the monthly estimated F.O.B. p r i c e s , and the assoc iated log va lues . TABLE E-4 Computed Y Values for Monthly F.O.B. Quotations at Rochester, New York Est imat ing Equation = Y. = 6.05 + .49X. i I Y. in cents per l b : X. from 1 to 9 months i . e . r l September 1963 to May 1964 Time Values Sept. Oct. Nov. Dec. ( Jan. Feb. March A p r i l May Y 6.54 7.03 7.52 8.01 8.5 8.99 8.48 9.97 Log of Y .81558 .84696 .87622 .90363 .92942 .95376 .97681 .99870 of LOGS = 7.30108 The Log Average - 7.30108 8 = .91264 The a n t i l o g of .91264 = 8..18 Therefore, the average F.O.B. p r i c e at Rochester for the per iod of Sept. 1963 to May 1964 was $8.18/per pound of f resh apples. S im i l a r estimates for Michigan State and Washington State were determined as $7.92 and $8.67 respect i v e l y . TABLE E-3 M o n t h l y F .O.B . Q u o t a t i o n s o f F r e s h A p p l e s f o r t he Second H a l f o f 1964 and t h e F i r s t H a l f o f 1963 E x p r e s s e d i n Cent s p e r Pound (Based on U.S . Fancy 2% I n c h , up ( f i l m b a g s , and c o n t r o l l e d a tmosphe re i n c l u d e d ) ) T ime and Or i g i n V a r i e t y X Y Z X Y Z X Y Z X Y Z X Y Z X Y Z X Y Z X Y Z X Y Z J o n a t h a n 7.4 6.6 6.7 6.8 7.3 7.8 7.3 8.2 8.3 9.9 9 .6 D e l i c i o u s 7.1 7.1 6.6 6.3 6.5 6.3 7.5 8.8 8 .4 ." 8.9 10 .1 9.2 10.2 11.8 R.&G. . 9-4 10.1 8.8 9 .4 8.8 8.2 9.8 8.2 8.1 9.8 7 .810 .0 9.6 11 .2 10 .5 9.9 11 .0 11 .9 11 .3 10.8 13 .811 .8 12.2 D e l i c . M a c - 7 .0 7.1 6.8 7.5 6.9 7.9 6.9 8.0 . 7 . 5 6.8 7.5 7.1 9 . 0 8.1 9.1 I n t o s h Rome 8.3 6.9 7.6 7,4 7.7 - 7 . 7 7.4 11.2 7.7 B e a u t y • . " S taymen 6.8 6.8 6.8 7.1 7.6 7.8 C o r t l a n d 6.2 6.5 7.0 6.7 5.4 Red Rome 7 . 8 7 . 5 9 . 4 7 . 4 7 . 5 7.4 7.5 7.1 9 .5 9.6 7.3 9 . 4 1 0 . 9 9 .0 9.3 1 1 . 7 9 . 2 W inesap 7.7 7 . 3 . 7.4 8.9 8.8 - 8.5 9.2 10.9 X = M i c h i g a n S t a t e Q u o t a t i o n s a t B e n t o n H a r b o u r ! Y = New Y o r k S t a t e Q u o t a t i o n s a t R o c h e s t e r Z = W a s h i n g t o n S t a t e Q u o t a t i o n s a t Y a k i m a . ^ T r a n s p o r t a t i o n c o s t s were o n l y a v a i l a b l e f r o m L a n s i n g , M i c h i g a n , c o n s e q u e n t l y l a n s i n g was c o n s i d e r e d as t h e r e p r e s e n t a t i v e p o i n t o f s u p p l y f o r t h e s t a t e o f M i c h i g a n . ,-. S o u r c e : U . S .D .A . S t a t i s t i c a l B u l l e t i n No. 347 , F r e s h F r u i t s and V e g e t a b l e s P r i c e s , 1963 t o 1964, A g r i c u l t u r a l 2 M a r k e t i n g S e r v i c e , F r u i t and V e g e t a b l e D i v i s i o n , . W a s h i n g t o n , D.C. June 1964, T a b l e 3 . ' 162. T a r i f f s Seasonal duties on Canadian imports of fresh apples from the United States f a l l under the MFN (most favourer nations) t a r i f f item. The following table l i s t s the seasonal duties by time and place. TABLE E-5 Seasonal Duties on Canadian Imports of Fresh Apples From the U.S.A. (1) Duty 1965-66 S p e c i f i c a t i o n Ad Valorem 1969-Place Equivalent Seasonal Duration June 4th 1969 Seasonal Rate Duty of Duty A t l a n t i c Provinces Quebec and Ontario P r a i r i e Provinces and B r i t i s h Columbia ' % 3.1 3.4 3.8 C/Ib. 1/4 1/4 1/4 Weeks 52 52 52 FREE E f f e c t i v e as of June 4th, 1969. (1) Canadian T a r i f f item designated 9300-1. Source: Canada Department of A g r i c u l t u r e , Canadian and U.S. T a r i f f s on Selected A g r i c u l t u r a l Products 69/8, Ottawa, July 1969, p. 15. 

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