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Competition in agriculture : a case study of a marketing board Fredericks, Leo Jocelyn

Abstract

This study had two purposes: to analyze and assess the use of the legal powers vested in the British Columbia Fruit Board and its marketing agency, B.C. Tree Fruits, Ltd., and secondly, to evaluate the impact of the formation of the marketing scheme upon supply, market structure and market procedure in the fruit industry. Against the background of the theories of competition, an analysis of marketing was made for apples, crab-apples, pears, peaches, plums, prunes, cherries and apricots for the I963 crop season. Data for the study were obtained from the records of the B.C. Fruit Board and B.C. Tree Fruits Ltd., the Dominion Bureau of Statistics and the Canada Department of Agriculture. For the analysis, the following components of the scheme were examined: the integrated structure of marketing, the methods of distributing sales returns and the policing powers of the Fruit Board; the use of supply regulation in regard to time, place and form; pricing policy and price differentiation procedures. The structure of the marketing scheme was found to be both a vertical and horizontal integration of growers, packers and shippers, canners and processors and the marketing agency. The pooling distribution of revenues constitutes an important aspect of the relationship between growers and the Fruit Board. Of the three methods currently used, the trend line pooling method seems to offer the best possibilities for an equitable distribution. The policing of the regulated area is within the jurisdiction of the Fruit Board. Policing is done to ensure that there are no illegal movements of regulated fruit within the region or outside it and that rules pertaining to fruit-stand sales are complied with. The marketing agency has applied supply controlling procedures through expanding its markets spatially, through the use of storage facilities to regulate its shipments to all outlets and through the diversion of fruit in excess of normal fresh fruit consumption to the processed and canned fruit markets. The objective of the agency's pricing policy is the long-run maximization of returns to growers. The multiplicity of variables which have to be considered before a price can be quoted makes it impossible to state that there is a definite price policy followed by the agency. Price differentiation is applied whenever possible by the agency to maximize revenues. In extreme cases where traditional markets are saturated, excess fruit is "dumped" in other markets. The conclusion of this study is that the B.C. Fruit Board and B.C. Tree Fruits Ltd. have developed an extensive use of their powers to ensure stable returns for the fruit growers of the Okanagan. The existence of three main reasons prevent the B.C. Fruit Scheme from exercising greater monopoly powers. They are competition from other fruit growing areas, the absence of production controls on the farm level and the absence of tariff regulatory powers.

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