Computing systems

To calculate marketing margins two systems are available: the direct and indirect; the most perfect system is direct and consists of the following: a) follow statistically representative batches of agricultural products from their exit of the farm until they reach the consumer; b) take note of the different costs and prices that are occurring in their way through the different agents; and c) limit the research to the movement of representative production batches of agricultural products, using statistical sampling to select the study items; in order for results to be considered as an estimate of the true margins (^{García et al., 1990}).

The direct system provides complete information to calculate the total margin and its components, but the procedure is very complicated and expensive; however, it is a suitable system to study the margins of certain channels or products. A less perfect system is the indirect, which consists of comparing statistics or price information in the different stages of marketing, a drawback of this system is that often the available statistics do not relate to comparable products in terms of quality and other physical characteristics as well as the time between the different phases regarding prices for comparison thereof. Therefore, it is recommended to combine both systems under certain situations; in the present work, the direct system was used, although it is more complicated and expensive, but it is more reliable and truthful about the information obtained.

Information used

Purchase and selling price information was obtained directly from the agents involved in the marketing process, which were weighted by their respective quantities bought and product sold to obtain even more actual prices.

Estimation procedure

To estimate marketing margins it should be careful that in the whole process the information used is comparable, i.e. it refers to the same unit and quality of products, whether processed or unprocessed. In the marketing process of the producer to the final consumer sub-products (viscera and scales) are extracted, so prices received by producers, are not directly comparable with sale prices to final consumer. In this case to calculate margins, it must solve the consistent problem in determining the equivalent value. Thus, the absolute total marketing margin (M) is calculated by difference between the product value in consumption (Pc) and the corrected production value (Pp) plus marketing costs incurred during the process (CC ); i.e. M= Pc - Pp - CC.

A marketing margin refers to the difference between the selling price of a product unit by a marketer and payment made in purchasing the equivalent amount of product sold to the unit. In addition, margins consist of a number of components corresponding to the different costs and agent’s benefits, such as the value in pesos of labor, transport, materials and packaging, advertising, depreciation, taxes, profits, interest, rents and other costs, which are named as marketing costs (CC) (^{García et al., 1990}).

Meanwhile, gross margin (MBC), expressed as a percentage is defined as the difference between the price per kilogram paid by the final consumer and the price per kilogram received by the producer. The MBC analysis aims to determine its magnitude at different marketing stages, according to the participant agent type thus the distribution of income among its agents (Acuña, 1980, quoted by ^{Vilavoa et al., 2010}); thus, MBC is calculated in relation to the final price or price paid by the final consumer and is expressed in percentage (^{Mendoza, 1987}); so: MBC = ((Pc - Pp)/Pc) *100; where: Pc represents the consumer price and Pp the producer price.

Marketing costs

To calculate marketing margins were defined as components of marketing costs (CC), incurred by the various agents involved in the process, to direct labor, transport costs, packaging, power, water, depreciation of machinery, various administrative expenses, indirect labor and other costs.

Consideration of by-products

In the case of livestock and fishery products, regardless of the system used in the calculation of marketing margins, it is of great importance to adequately address the aspect related to by-products, which must be compared with the equivalent amount (^{Caldentey, 1979}), but the problem lies in determining which is the equivalent amount. A practical advice to solve this problem may be to correct the price to producer by decreasing it in the percentage represented by sub-products, this percentage can be in physical terms or in terms of value, same that is calculated in the stage where the product is main product and by-products are separated.

According to the above, the marketing margin is calculated as the difference between the product value of consumption and corrected production corrected. To calculate this equivalent amount, tilapia yield without viscera was used, which averaged 90%, data consistent with the study by ^{Bello and Gil (1992)}, with which was determined the corrected production value and allowed to compare prices of the product throughout the marketing process and calculate the corresponding margins.

Production system

When considering the basis for the classification of tilapia production systems, conducted by ^{FAO (2005)}, ^{ITAM-CONAPESCA (2006)} and ^{SAGARPA-CONAPESCA (2012)}, the system developed by the producers from the southern region of the State of Mexico is more closely linked to a semi-intensive production system, characterized by farms where sterilized fry are used for fattening, which are grown in earthen or concrete ponds, sustained with balanced food and where animal health standards applied are emerging; also, this activity is carried as a complement to other agricultural and livestock activities.

Agents and marketing channels

The main agents in the marketing process of tilapia in the southern region of the State of Mexico are: producers, intermediaries, restaurants and final consumers. The traditional marketing channel that follows the product from its exit of the farm until they reach the final consumer is: producer → final consumer, which is developed by 75% of the agents involved in the process. Meanwhile, 20% of the agents practice two aspects of the traditional channel, represented by: 1) producer → intermediary → final consumer and 2) producer → intermediary → restaurant → final consumer, while the remaining 5% develops the channel: producer → restaurant → final consumer; noteworthy that intermediaries at the same time act as a retailer (Figure 1).

Fuente: elaboración con base en información de campo.

Figure 1 Commercialization chain of tilapia. 

Sale prices

Regarding selling prices achieved during 2014 by the different agents in the marketing process of tilapia in the southern state of Mexico, highlighted producers, who recorded an average selling price of $42.54 kg^-1, intermediaries $51.32 kg^-1, while restaurants recorded a price of $114.45 kg^-1.

Regarding to agents participation in the selling price of the product, intermediaries contributed with 15.92%, producers with 37.15%, and restaurants obtained the largest share with 46.93% of the final sales price.

The highest sales price achieved by all the agents involved (producers, intermediaries and restaurants), were recorded in the months of March and April, which coincide with the holiday period of Easter, where the consumption of fish and shellfish significantly increases (Table 1).

Gross marketing margin

The gross margin (MBC) is calculated in relation to the final price or price paid by the final consumer and is expressed in percentage; in this sense, MBC revealed that for every peso that consumer paid by purchasing a kilogram of tilapia, intermediaries earned 62.85% of that price, which corresponds to $71.91 kg^-1; meanwhile, producers obtained 37.15% of the total price paid by the consumer, corresponding to $42.54 kg^-1. The best gross margins recorded by intermediaries were obtained in the months of February and May (Table 2).

When analyzing gross profits obtained by each of the agents involved in the intermediation process, it was found that the total gross profit recorded in the process (62.85%), restaurants achieved higher sales margin, since by each kilogram of tilapia sold obtained $ 63.13 utility, which represented 55.25% of gross profit, the biggest margin was recorded in June ($65.47 kg^-1) and the lowest in May ($59.06 kg^-1); meanwhile, intermediaries achieved $8.78 kg^-1, 7.6% of the utility and its best gross margin in May with $16.00 kg^-1 (Table 3 and 4).

Total sales margins

The average total marketing margin was $63.00 kg^-1, of which restaurants obtained the largest margin average with $58.88 kg^-1, while the remaining $4.12 kg^-1 corresponded to intermediaries; the best overall margins were recorded in the months of May, $66.15 kg^-1, March ($65.88 kg^-1) and April ($64.44 kg^-1), while the lowest margins were achieved in the months of July ($60.16 kg^-1) and August ($60.47 kg^-1). In this regard, restaurants recorded their best margins in the months of June ($61.22 kg^-1), December ($60.76 kg^-1) and November ($60.72 kg^-1), while the lowest margin recorded was in May ($54.81 kg^-1); meanwhile, intermediaries obtained their higher margins in the months of May ($11.34 kg^-1), March ($9.35 kg^-1) and April ($7.00 kg^-1), and its lower margin in June with $1.13 kg^-1; thus, it can be seen that the lower gross margin that an agent registers coincides with the largest margin achieved by the other agent, complementing its participation in income distribution and product marketing (Table 5).