ECONOMICS OF SCALE ON DUTCH AUCTIONS

G. Hogewoning
Economics on the net-auction-costs are estimated for:
glasshouse-produce at 650 million à 0. 8% = 5. 2 million guilders
outdoor vegetables at 380 million ` 1. 2% = 4. 6 million guilders
fruit at 250 million ` 1. 5% = 3. 8 million guilders
    ------ ----------------
    13. 6 million guilders
For the export-trade 825 million ` 1. 9% = 15. 5 million guilders
For the wholesale trade   P. M.  
For the retail-trade   nihil  
    ------ ----------------
  Total 29. 1 million guilders

This means ± 2.3% of the total Dutch turnover of fruit and vegetables at auction prices and can only be achieved by a drastical decrease of the number of auctions from 80 at this moment to 25.

Against the above mentioned economics, there are disadvantages for some growers, who have to cover longer distances from nursery to the new central auction. This may mean to them higher costs of transport. In general these higher costs may be fully neglected, not only in relation to the above mentioned economics, but especially also in relation to the important savings on waiting-time for the growers for unloading their products due to better organisation in the auctions.

To achieve all these advantages, a better management is, however, one of the most important direct requirements for these new auctions. In the old system there were only few services offered. In the new structure the auction rightly takes over many activities of the grower and dealers. Where in former days not only the control but also daily management was in the hands of one or several grower-members of the board, an expert-manager has now become a necessity.

By applying a better system of management, the auction in close cooperation with the "Central Bureau of Horticultural Auctions" can apply itself in future more successfully to a number of tasks which are of great importance such as:

  • the development and application of new packaging (better eye-appeal for the products);
  • encouraging packaging in non-returnable containers by the growers themselves (which saves on the labour-costs of re-packing by the exporters);
  • improving daily and weekly information about supplies.

We have mentioned the structural changes of demand: a substantial decrease in the number of buyers and an increasing importance of group-buying by supermarkets etc. This group of buyers requires less fluctuating prices. The difficult question whether the auction system can fulfil

Hogewoning, G. (1974). ECONOMICS OF SCALE ON DUTCH AUCTIONS. Acta Hortic. 40, 543-555
DOI: 10.17660/ActaHortic.1974.40.42
https://doi.org/10.17660/ActaHortic.1974.40.42
English
40_42
543-555

Acta Horticulturae