Research Progress Report 348 August, 1968

Pricing and Contracting Practices by Processors of Indiana Shell Eggs
Bruce C. Waterman and Lee F. Schrader
Department of Agricultural Economics

Introduction
The trend toward decentralized marketing of eggs and the consequent reduction in number of stages and ownership changes in the marketing process has aggravated the problem of egg pricing. The question centers on the need for a system for price discovery capable of rendering a price consistent with supply and demand conditions over space and time.

This report is a contribution to a broad program of research on egg pricing being carried out by the USDA and 13 state agricultural experiment stations by direction of the Congress. The program involves studies of present egg pricing systems, methods for their improvement, and possible alternative pricing systems. The Economic Research Service and the Consumer and Marketing Service, USDA, and the New Hampshire, Cornell, Pennsylvania, Rutgers, Maryland, North Carolina, Georgia, Ohio, Michigan, Illinois, Purdue, Missouri, and California stations are participating in the research program. Participating agencies or stations will publish and disseninate reports on their particular areas of work.

The objective of this study was to determine (1) how Indiana egg processors estab-
lished buying and selling prices, (2) the relationship between pricing and contractual arrangements and (3) opinions of the trade relative to egg pricing practices.

Processors (assembly, grading and packing and delivery to store or warehouse) handle most of the eggs moving in commercial channels and represents contact at both the farm and retailer levels in the market. Ownership changes but twice between producers and final consumer for a major portion of the commercial egg supply.

Procedure
Nineteen shell egg processors were interviewed in early summer, 1967. These 19 processors handled nearly 60, 000 cases weekly, about one-half the eggs produced in the State of Indiana. Although three of the firms were in Ohio, a significant portion or their volume originated in Indiana.

The interviews were held at the processor's facilities and an interview worksheet was used as a format for the interview. Generally, the processors interviewed were cooperative; however, six of the processors were unwilling to answer some questions concerning their operations. Responses

PURDUE UNIVERSITY • Agricultural Experiment Station • Lafayette, Indiana