COPYRIGHTED by mm ELWOOD BROADBENT 1951 THE DEMAND FOR QUALITY EGGS IN THE CHICAGO RETAIL TRADE BY EMER ELWOOD BROADBENT B.S., Utah State Agricultural College, 1942 M.S., Utah State Agricultural College, 1947 THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN AGRICULTURAL ECONOMICS IN THE GRADUATE COLLEGE OF THE UNIVERSITY OF ILLINOIS, I960 URBANA, ILLINOIS UNIVERSITY OF ILLINOIS THE GRADUATE COLLEGE AUGUST. .8., _ 1950 I HEREBY RECOMMEND THAT THE THESIS PREPARED UNDER MY SUPERVISION BY. -_EMER_ELWQOD BROADBENT ENTITLED THE DEMAND FOR QUALITY EGGS IN THE CHICAGO RETAIL TRADE BE ACCEPTED* AS FULFILLING THIS TART OF THE REQUIREMENTS FOR THE DEGREE OF. DOCTOR OF PHILOSOPHY /vt?l(^v Head of Department Recommendation concurred inf JyQju/ Committee f ^zr jlMt^ on ITM^LJMO -A- J&€4<e*zM- Final Examinationt * Subject to successful final examination in the case of the doctorate. t Required for doctor's degree but not for master's. 6M—12-48—401WK ACKNOWLEDGMENT The writer expresses appreciation to Dr. H. C. M. Case, Head of the Department of Agricultural Economics, University of Illinois, who through his administration made possible the research which forms the basis of this thesis; to Dr. L. J. Norton, thesis advisor, who inaugurated this egg marketing re search, for counseling in the organization of the study and preparation of the manuscript and for critically reading the manu script and offering many helpful suggestions for its improvement; to Dr. J. Fred Bell for critically reading and suggesting changes in certain chapters; to the major chain store companies and dairies in Chicago who made confidential records available for this study; and to his wife, who was a constant source of encourage ment and help during the entire period of his graduate study. ii TABLE OF CONTENTS Page LIST OF TABLES v LIST OF FIGURES xi Chapter I. INTRODUCTION 1 The Market 4 Objectives 7 Source of Data 8 Definition of Terms 13 II. ORIGIN, MARKET CHANNELS, AND INTEGRATION OF FUNCTIONS 18 Origin 18 Market Channels 32 Integration of Marketing Functions 36 III. CONDITIONS OF MARKET, SEASONAL PATTERN OF SALES AND PRICE DIFFERENTIATION 42 Conditions of Market 42 Seasonal Pattern of Sales 55 Price Differentiation by Grade at Retail . .. 62 Price Differentiation by Weight 68 IV. NET COST, RETAIL VALUE AND MARGINS FOR EGGS SHIPPED TO OUTLETS 78 Percent of Value and Volume Comparisons by Grade 78 Net Cost by Grade 89 Margins by Grade 93 Percent Gross Margin by Grade 100 iii TABLE OF CONTENTS Chapter Page V. EGG SHIPMENTS TO OUTLETS BY FIRMS, THEIR NET COST, RETAIL PRICE AND MARGINS 105 Net Cost Comparisons by Firms 105 Margin Comparisons by Firms 107 Comparative Net Cost, Retail Price and Margins 114 Egg Shipments to Outlets 123 VI. SUMMARY AND CONCLUSIONS 156 BIBLIOGRAPHY 170 APPENDIX A. U. S. Standards for Quality of Individual Shell Eggs, U.S.D.A 173 APPENDIX B. Supplemental Tables and Figures 187 VITA 241 Iv LIST OF TABLES Page Ratio of Eggs Received by Firms In This Study, to U.S.D.A. Report of Receipts by Chain Stores and Milk Distributors, 1947 10 Ratio of Eggs Received by Firms in This Study, to U.S.D.A. Report of Receipts by Chain Stores and Milk Distributors, 1948 11 Ratio of Eggs Received by P'irms in This Study to U.S.D.A. Report of Receipts by Chain Stores and Milk Distributors, 1949 12 Adjusted Origin of Eggs Sold at Retail on a Graded Basis by Firms In This Study, Percentage by States, Chicago Market, 1947 . . .. 21 Adjusted Origin of Eggs Sold at Retail on a Graded Basis by Firms In This Study, Percentage by States, Chicago Market, 1948 . . .. 22 Adjusted Origin of Eggs Sold at Retail on a Graded basis by Firms in This Study, Percentage by States, Chicago Market, 1949 and Summary 23 Adjusted Origin of Eggs Sold at Retail on a Graded Basis by Firms in This Study, Chicago Market, 1947 24 Adjusted Origin of Eggs Sold at Retail on a Graded Basis, by Firms in This Study, Chicago Market, 1948 25 Adjusted Origin of Eggs Sold at Retail on a Graded Basis, by Firms in This Study, Chicago Market, 1949 and Summary 26 Comparative Retail Prices for Various Grades of Eggs 63 v LIST OF TABLES Table Page 11. Index of Sales of A. Extra Large and A. Large Eggs and Ratio of Dairy to Chain Sales . . .. 67 12. Price of A. Extra Large Eggs Compared to Weight Value of Other Grades Sold by Firms in This Study of the Chicago Market, 1947 71 13. Price of A. Extra Large Eggs Compared to Weight Value of Other Grades Sold by Firms in This Study of the Chicago Market, 1948 72 14. Price of A. Large Eggs Compared to Weight Value of Other Grades Sold by Firms In This Study of the Chicago Market, 1947 73 15. Price of A. Large Eg^s Compared to the Weight Value of Other Grades of Eg?s Sold by Firms in This Study of the Chicago Retail Market, 1948 . .. 74 16. Net Cost, Retail Valtie, Gross Margin, and Percent of Gross Margin, by tirade, for All Eggs Sold 79 17. Percent of Eggs Sold by Grade for Sample Firms on Chicago Retail Market 84 18. Percent of Total Value by Grade of Eggs Sold by Sample Firms on Chicago Retail Market 85 19. Percent of Total Value, Total Volume, and Margins, by Grade of Eggs Sold on This Market . .. 86 20. Comparative Net Cost to Retailers by Grade of Eggs Purchased in This Study 90 21. Comparative Periods of Highest, Lowest and Average Margins 99 22. Percent Gross Margin by Grade Received by Representative Firms on the Chicago Market 101 23. Percent of Gross Margin Taken by Firms on Chicago Market, 1947-1949 115 24. Comparative Net Cost by Firms 118 25. Comparative Retail Prices by Firms 119 vi LIST OF TABLES Table Page 26. Comparative Margins by Firms 120 27. Index of Egg Shipments to Retail Outlets, by firms, Chicago Market, 1947 124 28. Index of Egg Shipments to Retail Outlets, by Firms, Chicago Market, 1948 125 29. Summary Data for Grades of All Eggs Sold by Firms from January 1, 1947 through April 23, 1949 166 30. Summary of Average Net Cost, Retail Value and Margins by Grade 167 31. Summary Data by Firms for Eggs Sold 168 Appendix Tables 32. Comparative Egg and Poultry Statistics Illinois - North Central States and United States 1900-1949 188 33. Origin of Eggs Sold at Retail on a Graded Basis by Representative Firms, Chicago Market, 1947 189 34. Origin of Eggs Sold at Retail on a Graded Basis by Representative Firms, Chicago Market, 194a 190 35. Origin of Eggs Sold at Retail on a Graded Basis by Representative Firms, Chicago Market, 1949 and Summary 191 36. Origin of Eggs Sold at Retail on a Graded Basis by Representative Firms, Chicago Market, 1947 192 37. Origin of Eggs Sold at Retail on a Graded Basis by Representative Firms, Percent by States, Chicago Market, 1948 193 vil LIST OF TABLES Page Origin of Eggs Sold at Retail on a Graded Basis by Representative Firms, Percent by States, Chicago Market, 1949 and Summary 194 Retail Price, Net Cost, and Margin Per Dozen Eggs by Firms for A Extra Large Eggs, Chicago Retail Market, 1947 195 Retail Price, Net Cost, and Margin Per Dozen Eggs by Firms for A Large Eggs, Chicago Retail Market, 1947 196 Retail Price, Net Cost, and Margin Per Dozen Eggs by Firms for A Medium, A Small, and Current Receipt Eggs on Chicago Retail Market, 1947 . . 197 Retail Price, Net Cost, and Margin Per Dozen Eggs by Firms for b Large Eggs, Chicago Retail Market, 1947 198 Retail Price, Net Cost, and Margin Per Dozen Eggs by Firms for A Extra Large Eggs on Chicago Retail Market, 1948 199 Retail Price, Net Cost, and Margin i-er Dozen for A Large Eggs on Chicago Retail Market, 1948 . 200 Retail Price, Net Cost, and Margin Per Dozen Eggs by firms for B Large Egcs on Chicago Retail Market, 1948 201 Retail Price, Net Cost, and Margin Per Dozen Eggs by Firms for A Medium, A Small, and Current Receipt Eggs on Chicago Retail Market, 1948 202 Retail Price, Net Cost and Margin Per Dozen Eggs by Firms on Chicago Market, 1949 . . . 203 Retail Price, Net Cost, and Margin Per Dozen Eggs by Firms on Chicago Market, 1949 204 Retail frice, Net Cost, and Margin Per Dozen Eggs by Firms on Chicago Market, 1949 205 viii