The effect of the January 2007 frost on prices
and availability of oranges in local stores
Erica Stenz and Matt Fuller talked to produce managers and
investigated prices and quantities. Here is their interesting report:
We collected data from Vons and Albertsons located on
Fairview and Calle Real. The original prices at both
stores before the frost set-in were .99 per pound and
each store sold roughly 8-9 cases (one case=40 lbs) a
week. After the frost set in prices rose to $1.69 a
pound and sales decreased to roughly 6 cases sold a
week. The only time prices decreased was when oranges
were on sale. At Vons oranges were on sale for 10
oranges for $10. During this two-week sale Vons sold
9-10 cases a week. Meanwhile, Albertsons sold oranges
at $1.69 and sold about 1 case a day or 6 cases a
week. According to the store managers, prices now
should stay around $1.69-$1.99 because the navel
season is ending. Albertsons was affected by the
frost most because they did not have a large amount of
oranges in storage before frost. Vons seemed to do a
little better because they had a large warehouse that
held oranges. In addition, the produce managers told
us that their greens, especially broccoli, were
destroyed by the frost. Another interesting
observation we made was that the frost caused the
dinning commons to lose their supply of oranges.
Carrillo seemed to keep the same amount of oranges,
but De La Guerra and Ortega ran out of oranges for
about three weeks. Ortega take-out is still out!
Some Questions this raises.
What does the experience of Albertson's suggest
about the price elasticity of demand for navel oranges?
Why do you think the UCSB dining halls stopped serving oranges altogether
while oranges were still available in grocery stores?
Do you think the dining halls could have obtained more oranges if they had been
willing to pay the wholesale price?