SOUTHERN JOURNAL OF AGRICULTURAL ECONOMICS
DECEMBER, 1980
ASSESSMENT OF THE PRICE IMPACT OF THE
SOUTH CAROLINA CUCUMBER MARKETING ORDER
Gary J. Wells and Jerold F. Pittman
In 1970 a marketing order, made possible by
a 1968 state enabling act, was formed for
South Carolina fresh market cucumbers. This
legislation is similar to current federal legisla-
tion, but South Carolina has no federal market-
ing order for cucumbers. Order provisions that
affect price formation are the subject of this
article. Price posting and adoption of statewide
USDA inspection requirements are the order
provisions that yield the largest and most
direct price impact (S.C. Cucumber Board.)1
The apparent goal of these provisions is higher
and more stable prices.
The objective of our research is to investigate
the success of the South Carolina marketing
order in achieving its goal of higher and more
stable fresh market cucumber prices.
A brief description of the price posting and
inspection provisions is followed by informa-
tion about the order’s mandatory grower
assessments. A model and empirical results
are presented.
PRICE POSTING, INSPECTION
PROVISIONS, AND GROWER
ASSESSMENTS
The price posting provision of the South
Carolina Cucumber Marketing Order enables
the S.C. Cucumber Board to require handlers
“to file at the office of the Board a complete
schedule of prices at which each handler will
quote, offer for sale, or sell cucumbers during
the regulated period” (S.C. Cucumber Board,
p. 4). The Cucumber Board in return provides
each handler with a current list of prices
posted by all handlers. Growers also can obtain
access to this price information. Handlers are
allowed to revise their posted prices after
giving at least two hours notice to the Board.
The regulations do not cover cucumbers of-
fered at auction or shipped on consignment.
Price posting probably has enhanced the
price discovery process for producers by
reducing the number of price changes. If we
assume that South Carolina cucumber prices
are determined as part of a national cucumber
market which is competitive, price posting
within South Carolina should reduce the
frequency of South Carolina price changes but
not substantially alter the price determination
process. Less frequent price changes should re-
flect changed market conditions—mainly
shifts in the supply curve—more accurately be-
cause market participants have more time and
more information for making adjustments.
Therefore, the dynamic price adjustment pro-
cess has been altered within South Carolina by
the price posting provision, and a reasonable
hypothesis is that price variability is reduced
for South Carolina cucumbers.
Another force is present, however, which
tends to increase price variability. For example,
if a series of numbers are doubled the variance
is increased by a factor of four. Therefore if
price posting increases the price level, the vari-
ance tends to increase. It is reasonable to hy-
pothesize that within the limits of national
price movements the average South Carolina
price level for cucumbers will increase with the
increased availability of price information. In-
flation also increases the price variability. A
relative variability measure is used to compen-
sate for this mechanical aspect of the increased
variability. Therefore, given more accurate
searching out of a new equilibrium price, in-
creased market information, and compensation
for the mechanical increase in variability, rea-
sonable hypotheses seem to be that the net
effect of the order’s price provision is to reduce
the price variability in relation to what it
would have been otherwise and to increase the
price level for South Carolina cucumbers.
In addition to price posting, the marketing
order requires uniform USDA inspection of all
Gary J. Wells is Assistant Professor and Jerold F. Pittman is Professor, Department of Agricultural Economics, Clemson University.
Technical Contribution No. 1852 from the South Carolina Agricultural Experiment Station.
1Other provisions of the order are (1) packaging, (2) IabeEng, (3) advertising, (4) research, (5) control of unfair competition, 16) market development, (7) educational
programs, and (8) regulation of the selling period. Some or all of these provisions could possibly influence prices, but many are not functional and others are given
only token attention.
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