Citrus fruit rates;

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Title:
Citrus fruit rates; development and economic appraisal
Physical Description:
viii, 134 p. : maps, diagr. ; 22 cm.
Language:
English
Creator:
Bigham, Truman C ( Truman Cicero ), b. 1896
Roberts, Merrill Joseph, 1915- ( joint author )
Publisher:
University of Florida Press
Place of Publication:
Gainesville

Subjects

Subjects / Keywords:
Citrus fruits   ( lcsh )
Fruit -- Transportation   ( lcsh )
Genre:
non-fiction   ( marcgt )

Notes

Statement of Responsibility:
by Truman C. Bigham and Merrill J. Roberts.

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Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
oclc - 01310859
lccn - 50007177
ocm01310859
Classification:
lcc - HE2321.F7 B5
ddc - 385.132383
System ID:
AA00010354:00001


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CITRUS FRUIT RATES













CITRUS FRUIT RATES

Development and Economic Appraisal



by

TRUMAN C. BIGHAM
Professor of Economics
and

MERRILL J. ROBERTS
Assistant Professor of Transportation and Economics
University of Florida


Gainesville
UNIVERSITY OF FLORIDA PRESS
1950









/ -- o -




COPYRIGHT, 1950
UNIVERSITY OF FLORIDA
ALL RIGHTS RESERVED


PRINTED IN THE UNITED STATES OF AMERICA
BY THE DREW PRESS, JACKSONVILLE, FLORIDA










FOREWORD


T HIS monograph is an exploration in commodity rate mak-
ing. As the authors correctly point out, commodity rates have
received less attention than class rates even though a much
larger volume of traffic moves under the former than under the
latter. Since this is the case, a serious study of any segment of
commodity rate making is worth while as contributing to the
knowledge of commodity rates in particular as well as of rate
structures in general.
The citrus industry, localized in Florida, California, and Texas,
highly specialized, and, like other agriculture, subject to the
vagaries of changing weather conditions, is vitally concerned
with freight rates. Citrus fruit, either fresh, canned, or in con-
centrates, is marketed largely outside the areas in which it is
grown. Moving it from points of production to points of con-
sumption requires rail, highway, and, to some extent, water
transportation. The rates charged by these agencies are factors
in regional competition and may make or break producers in
one area relative to another, depending upon the presence or
absence of rate differences. The citrus rate pattern has shaped
and has been shaped by the competition between Florida, Cali-
fornia, and Texas.
Although this book is brief and is analytical in character, it
is also factually informative. In chapter two complete and cur-
rent data on the production and distribution of citrus fruit are
presented. These data, however, are not merely displayed in
tables or left in the raw to speak for themselves: they are in-
terpreted; they are given meaning; they are fitted into their
proper economic setting. In chapter three the development of
the citrus rate structure is traced, using the reports of the Inter-
state Commerce Commission as the primary source of informa-
tion. In chapter four a careful comparison of rates from the
different origins is presented. Chapter five provides a thorough
and exacting appraisal of the rate structure. The final chapter








FOREWORD


contains the conclusions reached by the authors-conclusions
which logically follow from the preceding discussions.
The book is well written and meaningful. Producers and
shippers of citrus fruit, executives of transportation agencies,
traffic managers, and students of transportation alike will find
what the authors have had to say authoritative, challenging,
and well worth their reading.
It is not an accident that this book comes from two members
of the faculty of the University of Florida. The University is
naturally concerned with the relationships of its research, its
teaching, and its services to the life and economy not only of
Florida but also of the Southeast and of the nation. While the
University seeks primarily to educate Florida's future citizens
and producers of wealth, it also seeks, through the Bureau of
Economic and Business Research in the College of Business Ad-
ministration, through the Engineering and Industrial Experi-
ment Station, and through the Agricultural Experiment Station,
to discover new knowledge and to make that knowledge avail-
able for the advancement of Florida agriculture, Florida indus-
try, and Florida commerce and business. In addition to and
independent of these organized agencies, many individual facul-
ty members are engaged in research and, notwithstanding heavy
teaching loads, find time to complete research projects and to
publish their results. The authors of this monograph fall into
this class.
WALTER J. MATHERLY

Dean of the College of Business Administration
University of Florida
October, 1949


vi









PREFACE


T HIS is a study in commodity rates. As such, it deals with
the citrus fruit rate structure of the United States. Citrus fruit
was chosen not only because it is an important commodity but
also because the rates thereon have certain peculiarities that
involve basic rate-making issues. Citrus rates have been con-
sidered by the Interstate Commerce Commission on many oc-
casions and they have also been traced and compared by other
authorities, but a critical analysis of the development and charac-
teristics of the citrus fruit rate structure has apparently never
been published.
Commodity rates, including those on citrus, have not received
so much attention as class rates even though they move far more
traffic than the latter. For this reason a study of the present
sort seems to be desirable. It should throw needed light upon
the soundness of regulatory policies, especially if it serves to
encourage a series of commodity rate analyses.
Most of the information for this monograph has been ob-
tained from three sources: official carrier tariffs, Interstate Com-
merce Commission Reports, and publications of the United
States Department of Agriculture. Tariffs have necessarily only
been sampled, but the appropriate reports of the Interstate
Commerce Commission and of the Department of Agriculture
have been examined in full.
The authors are fully cognizant of the difficulties involved
in evaluating the citrus fruit rate structure. The lack of factual
data on many points, the weaknesses of the sampling method,
and the complexity of the factors to be considered prevent the
statement of conclusions in other than qualified terms. Not-
withstanding these drawbacks, the authors hope that their ob-
servations are definite enough to be worth while and that they
are formulated in the public interest even when sectional con-
flict is involved.
Grateful acknowledgement for valuable assistance is expressed
vili








viii PREFACE

to the following individuals: Mr. W. P. Bartel of the Interstate
Commerce Commission; Professors M. A. Brooker, R. B. Eutsler,
and H. G. Hamilton of the University of Florida; Mr. T. E.
Haile of the Growers and Shippers League of Florida; Messrs.
T. C. Maurer and J. R. Stanfield of the Jacksonville Traffic
Bureau; and Mr. R. C. Neill of the California Fruit Growers
Exchange. The authors also wish to express their indebtedness
to other specialists in the field of transportation.

TRUMAN C. BIGHAM
MERRILL J. ROBERTS
Gainesville, Florida
October, 1949










CONTENTS



FOREWORD BY WALTER J. MATHERLY .-.--... ---.............-- V


PREFACE -.......---------------------------.. ..---..... V


I. INTRODUCTION .....------..............--------------- ..------..---..---.. 1


II. PRODUCTION AND DISTRIBUTION OF CITRUS FRUIT-- 7
Production-Comparative Costs of Production-Process-
ing-Market Distribution-Auction Prices-Profit Mar-
gins-Carrier Distribution


III. DEVELOPMENT OF THE RATE STRUCTURE .---...--........... 49
Florida Rates-California Rates-Texas Rates


IV. COMPARISON OF RATES .--..----.......----....-.................... 84
Carload Rates-Rates in Relation to Distance-Rate
Spreads-Protective Service


V. APPRAISAL OF THE RATE STRUCTURE .-------... ..----......... 93
Market Competition-Blanketing-Maximum Rate Limits
-Interagency Relationships-Stability of Rates


VI. CONCLUSIONS .--......--...----------------.....--.............116


TABLE OF CASES .......----- .......-- ----------------------......................127


INDEX .------....---..... ---------------.. --- .......-........... 131













ILLUSTRATIONS



MAP-Major Citrus Producing Areas in California and
Arizona ........-- ----........ ------.............. .................. 13

MAP-Major Citrus Producing Areas in Texas and Florida 14

MAP-Rates on Citrus Fruit from Los Angeles as of August
21, 1948 ....................... ................ ................ 76

CHART-Distance Relationship of Florida, Texas, and Cali-
fornia Citrus Fruit Carload Rates as of August 21,
1948 ........... ............................... ................... 107
















INTRODUCTION



N O PRICING is more complex than railroad rate making.
No set of prices has a greater impact on economic development
than railroad rate structures. Significant among these structures
are citrus fruit rates. The latter are of concern to citrus produc-
ers and processors, to consumers, to carriers serving the citrus-
growing areas, and to students of transportation.
The total value of the oranges, grapefruit, lemons, and limes
produced in the United States in the season 1944-45, the peak
year, was $424,000,000.1 Reflecting price declines, in the three
following seasons it was, in order, $419,000,000; $265,000,000;
and $205,000,000.2 In the preceding season, 1943-44, the total
value was $403,000,000 according to the Bureau of Agricultural
Economics and $346,000,000 according to the Bureau of the
Census. The Census figures, used for purposes of comparison, in-
dicate that in 1944 the estimated value of citrus fruit was nearly
1.5 per cent of the calculated value of all farm products, which
was $24,498,000,000.3 The ratio of the value of citrus to the
value of so-called "money" crops was doubtless higher. Figures
are unavailable. Although outranked by the large field crops,
citrus fruit is thus of some significance in the agricultural econo-


1. Bureau of Agricultural Economics, Citrus Fruits: Production,
Farm Disposition, Value, and Utilization of Sales, Crop Seasons 1940-41
to 1946-47, p. 3 (1947).
2. Ibid. See also Bureau of Agricultural Economics, Citrus Fruits:
Acreage, Production, Farm Disposition, Value, and Utilization of Sales,
Crop Seasons 1946-47 and 1947-48, p. 2 (1948). Figures for 1947-48
are preliminary.
3. Bureau of the Census, United States Census of Agriculture 1945,
vol. 2, pp. 556-57, 586 (1947). Inquiry indicates that the figures of
the Bureau of Agricultural Economics are probably more accurate than
those of the Census.









CITRUS FRUIT RATES


my of the country as a whole. Its processing is a growing factor
in the industrial economy.
In Florida especially, but also in California and Texas, citrus
fruit is of outstanding importance. The value of production in
the three states together in 1944, about 98 per cent of the total
for the United States, was $337,000,000, or 10 per cent of the
value of all farm products in these states.4 In Florida the value
of the crop was $128,000,000, or 45 per cent of the value of all
farm products. Value figures for California and Texas were
$185,000,000 and $24,000,000, respectively. Although the value
of California citrus fruit exceeded that of Florida, it was only
11 per cent of all farm products in the former state and was
far less significant in the economy thereof than in Florida. In
Texas, citrus fruit was relatively less important than in either of
the other two states.
Since citrus fruit is a fairly high-grade product, requires special
services, and is grown largely for the market in localized areas
situated long distances from major consuming centers, trans-
portation is a vital problem for producers. Assuming adequate
service, producers are concerned, firstwith the absolute amount
of the transportation charge. For reasons just indicated, this
charge tends on the average to be high. To illustrate, the charge
per box for transporting Florida oranges to eastern terminal
markets in 1944-45 was over 28 per cent of the margin between
average auction prices per box and all costs of production other
/than transportation.5 During the short-run, the burden of rates
is likely to be borne by producers rather than consumers, for
the seasonal supply and price of citrus is not immediately gov-
erned by the cost of production. In 1946-47, when the auction
prices of Florida oranges were lower than in 1944-45, the trans-
portation ratio corresponding to that above was 50, and rates


4. Bureau of the Census, op. cit. Small amounts of citrus fruit are
produced in Arizona, Louisiana, Alabama, and Mississippi.
5. Computed from Florida State Marketing Bureau, Annual Fruit
and Vegetable Report, 1946-47 Season, p. 13 (1947).








INTRODUCTION


had increased only 3 cents. Since the decrease in prices was
less than the increase in the ratio, it is evident that the weight
of the rate burden varies more than in proportion to changes
in prices. The weight of the burden also varies frequently and
in great degree, for the fluctuation of citrus fruit prices is pro-
nounced.6 Between 1932 and 1936 the on-tree average price of
Florida oranges doubled; from 1936 to 1939 it fell by half; and
during the period 1939-45 it quadrupled.7 After 1945 the price
was again halved, only to rise once more in 1949. Grapefruit
prices likewise fluctuate sharply.
Producers are concerned, second with the relationship of
transportation rates from competing areas. After allowing for
differences in the quality of product, and assuming that margin-
al costs of growing and preparation are about the same, Florida
citrus growers can compete in a given market with California
producers if rates are equal, and in the long-run the transporta-
tion charge will tend to be shifted forward to consumers through '
prices; but if the rates from California are lower than from Flori-
da, the southeastern growers can compete only at the cost of
absorbing the charge for transportation. When rates are ab-
sorbed, profits fall and land values tend to decline. Marginal
growing ceases.
From the point of view of consumers, the transportation of
citrus fruit brings to most doors a food that on account of climate
would be unobtainable in the absence of transport. Before the
establishment of through railroad routes, citrus was seldom
found on tables except in ports, but today it has become a gen-
eral necessity. Because of lower prices, better standardization of
quality, more uniformity of supply throughout the year, wider
distribution, expansion of canning, dietary education, and na-
tional advertising, the consumption of citrus fruit has increased


6. Citrus fruit prices from 1910 to 1928 are listed in Marvin A.
Brooker, A Study of the Cost of Transportation of Florida Citrus Fruits
with Comparative Costs from Other Producing Areas, p. 127 (1930).
7. H. G. Hamilton, "The Citrus Situation." Unpublished.









CITRUS FRUIT RATES


tremendously during the last half century. Since 1910 production
per capital has risen sixfold, and consumption per capital in fresh
form has nearly quadrupled.8 Per capital production was 17
pounds in 1910 and 109 pounds in 1948. Per capital fresh con-
sumption was practically the same as per capital production in
1910, but in 1948 the former, as a result of the growth of can-
ning during the last two decades, was only 60 pounds, or notice-
ably less than per capital production. Although the use of citrus
varies considerably from year to year with fluctuations in the
national income, the trend of consumption has been definitely
upward.
As suggested above, consumption is affected by the price of
fruit, which in turn is influenced in the long-run by the cost
of transportation. Relative to prices, this cost is comparatively
high. In 1946-47 transportation from packing plants to termi-
nal markets absorbed 23 per cent of the wholesale price of
Florida oranges and grapefruit.9 The corresponding percentage
for California was probably about the same. The hauls from
California are longer and the rates are higher, but the excess of
rates is largely counterbalanced by the margin of California over
Florida prices. On a retail basis, freight and refrigeration charges
average from 14 to 15 per cent of prices in the case of Florida
and Texas citrus and about 17 per cent in the case of Cali-
fornia.10 Relative to traffic as a whole, and especially to manu-
factured goods or to animal products, these percentages are high.
For the carriers serving Florida, California, and Texas, citrus

8. Computed from the Statistical Abstract of the United States,
1943, p. 4 (1944); from Bureau of the Census, Population--Special
Reports, Series P-46, No. 7 (Sept. 15, 1946); and from Bureau of
Agricultural Economics, Citrus Fruits: Production, Farm Disposition,
Value, and Utilization of Sales, Crop Seasons 1909-10-1943-44,
1946-47 and 1947-48 (1945, 1948). Fresh sales were used in estimating
consumption in fresh form.
9. Computed from Florida State Marketing Bureau, op. cit.
10. Bureau of Agricultural Economics, Readjustments in Processing
and Marketing Citrus Fruits, p. 81 (1946). The prices referred to are
averages in 10 cities.








INTRODUCTION


fruit is a major source of revenue. In fact, in 1947 it produced
for the railroads as a whole approximately $86,000,000 of reve-
nue, or more than any other product of agriculture except wheat
and corn.11 The Missouri Pacific-Gulf Coast Lines received 10
per cent of their total freight revenue from citrus fruit; the At-
lantic Coast Line Railroad, 9 per cent; the Seaboard Air Line
Railway, 6 per cent; the Atchison, Topeka and Santa Fe, 4 per
cent; the Florida East Coast Railway, 4 per cent; and the
Southern Pacific-Pacific Lines, 3 per cent.12 On the Atlantic
Coast Line and the Seaboard Air Line, citrus fruit was more
productive than any other single commodity except phosphate
rock. Carriers other than railroads also receive a large volume
of traffic from this orchard product. In 1946-47 trucks moved
14,000 carloads of Florida citrus and 8,000 carloads of Texas
citrus.13 Boats carried 4,600 carloads from Florida and 1,500
carloads from Texas. Air lines are of little significance in trans-
porting citrus. Rates by air are several times higher than by
rail, and citrus fruit does not generally require the speed of air
transport. Neither are the barge lines on the inland waterways
carriers of citrus, for they do not regard perishable products as
desirable traffic.
To students of transportation, citrus fruit transport presents
several interesting features. First, the average haul is long and
many of the hauls seriously violate the distance principle. As
shown below, production is highly localized in California, Florida,
and Texas, whereas distribution follows population and is largely
concentrated north of the Ohio and east of the Mississippi
rivers. New York City is about 3,100 rail miles from Los Angeles,


11. Interstate Commerce Commission, Freight Commodity Statistics,
Class I Steam Railways in the United States, 1947, p. 7 (1948). During
some years only wheat is a more productive commodity.
12. Ibid., Table 7. Percentages are in round numbers.
13. United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1946-47 Season, p. 4 (1947), and Marketing Texas
Citrus, Lower Rio Grande Valley of Texas, Summary of 1946-47 Season,
p. 2 (1947).








6 CITRUS FRUIT RATES

California; 2,200 miles from Harlingen, Texas; and 1,200 miles
from Lake Wales, Florida. Second, the ratio of the transporta-
tion charge to other costs and to prices is high because of the
length of haul and the nature of the commodity. Figures were
given above. In the short-run it is unusually difficult to shift
rates forward, especially in a buyer's market. Third, citrus fruit
is adapted to transportation by at least three kinds of carriers:
railway, highway, and water. Interagency competition is keen
and has had notable effects upon citrus rates, sometimes chang-
ing their form and reducing them by half. Fourth, citrus fruit
rates illustrate every major type of rate structure: distance rates,
blanket rates, and key-point rates. Blanketing from California
is very extensive. Finally, citrus fruit rates have been greatly
influenced by market competition, primarily between California,
Florida, and Texas producers for the eastern market. This
competition has dominated the rate-fixing policies of both car-
riers and commissions. The last three features will be explained
and illustrated later. They raise difficult questions of rate policy.









II


PRODUCTION AND DISTRIBUTION OF
CITRUS FRUIT


CITRUS fruit rates can be analyzed to best advantage if the
discussion of rates is preceded by a description of the production
and distribution of citrus. Such a description should show where
and at what relative costs citrus fruit is grown, where and in
what forms it is marketed, at what prices it is sold, and by what
means it reaches the market.


PRODUCTION

The commercial shipment of citrus fruit dates from the latter
part of the nineteenth century in both California and Florida.
Total production in the United States reached 1,000,000 boxes
for the first time in 1886, and from the modest beginnings of
that period citrus output has increased many times over. In
addition to the great volume increases, citrus production is
marked by a high degree of geographical concentration.
As shown in Table 1, reliable production data for oranges go
back as far as 1902, in which year 699,000,000 pounds were pro-
duced. Subsequent years brought substantial increases, with a
fairly continuous upward trend which reached a level of nearly
10,000,000,000 pounds in recent seasons.
Some indication of the rate of growth is provided by relat-
ing average output for each 5-year period in the record to the
preceding 5-year average, the results of which are as follows:

Period Index
(1) 1902-06 100
(2) 1907-11 151
(3) 1912-16 131
(4) 1917-21 102









CITRUS FRUIT RATES


(5) 1922-26 149
(6) 1927-31 129
(7) 1932-36 121
(8) 1937-41 150
(9) 1942-46 141

This evidence shows fairly wide fluctuations in the rate of in-
crease over the 5-year periods, with no consistent trend. The
highest rate of increase occurred from the first to the second
periods, and the lowest from the third to the fourth. The index
for the fifth period is about equal to that for the eighth.


TABLE 1

PRODUCTION OF ORANGES BY STATES AND CROP SEASONS,
1902-03 TO 1947-48
(Million pounds)

TOTAL
SEASON CALIFORNIA FLORIDA TEXAS UNITED STATES
1902-03 567 132 699
1903-04 717 176 893
1904-05 716 237 953
1905-06 628 266 894
1906-07 720 261 981
1907-08 752 341 1,093
1908-09 941 385 1,326
1909-10 857 477 1,332
1910-11 1,195 324 1,520
1911-12 1,069 359 1,426
1912-13 481 603 1,084
1913-14 1,378 558 1,936
1914-15 1,218 720 1,938
1915-16 1,200 585 1,784
1916-17 1,492 513 2,004
1917-18 579 360 938
1918-19 1,282 540 1,822
1919-20 1,164 720 1 1,898
1920-21 1,664 846 2,528
1921-22 981 756 1,758
1922-23 1,490 981 1 2,505
1923-24 1,691 1,233 1 2,962
1924-25 1,295 1,017 2 2,326
1925-26 1,694 918 1 2,642
1926-27 1,978 990 4 3,000
1927-28 1,592 855 8 2,490
1928-29 2,741 1,485 11 4,274









PRODUCTION AND DISTRIBUTION


TABLE 1 (continued)

TOTAL
SEASON CALIFORNIA FLORIDA TEXAS UNITED STATES
1929-30 1,484 882 23 2,438
1930-31 2,462 1,728 23 4,249
1931-32 2,425 1,278 47 3,795
1932-33 2,399 1,476 29 3,957
1933-34 1,991 1,611 39 3,674
1934-35 3,153 1,584 59 4,855
1935-36 2,297 1,620 70 4,026
1936-37 2,088 1,989 180 4,307
1937-38 3,214 2,358 130 5,761
1938-39 2,899 2,997 253 6,230
1939-40 3,109 2,520 212 5,916
1940-41 3,555 2,817 239 6,670
1941-42 3,651 2,637 257 6,609
1942-43 3,103 3,726 230 7,141
1943-44 3,637 4,482 320 8,538
1944-45 4,039 4,266 360 8,783
1945-46 3,389 4,860 432 8,804
1946-47 4,122 4,833 450 9,968
1947-48 3,511 5,256 468 9,682
Sources: For seasons 1909-10 to 1919-20 and 1945-46 to 1947-48, see Bureau of Agri-
cultural Economics, Citrus Fruits, Production, Farm Distribution, Value, and Utiliza-
tion of Sales, various issues. Data converted from boxes to pounds. For other sea-
sons, see Bureau of Agricultural Economics, Readjustments in Processing and Market-
ing Citrus Fruits, p. 165 (1946).

California and Florida account for nearly all the orange out-
put. Texas' output has increased considerably during the last
25 years, but it is still relatively unimportant. In the 1947-48
season the two states of California and Florida accounted for
90 per cent of the total and Texas for only 4 per cent. Additional
production occurs in Louisiana, Arizona, Alabama, and Missis-
sippi.
A constant struggle for leadership in orange production be-
tween Florida and California has taken place, with the wheel
of fortune turning frequently during the years. The Florida in-
dustry got the better start, and by 1894 had reached an output
of 5,000,000 boxes, nearly twice that of California. Drastic
freezes in 1894 and 1895, however, devastated the Florida in-
dustry. Recovery was interrupted by another severe freeze in
1899, and it was not until the season of 1909-10 that an output
of 5,000,000 boxes, representing 477,000,000 pounds, was again









CITRUS FRUIT RATES


attained.1 Meantime, California production advanced steadily,
running far ahead of the Florida output. Subsequently this su-
premacy steadily declined. In 1910 Florida production was but
27 per cent of that of California, but by 1920 it had reached
51 per cent. It advanced to 70 per cent in 1930 and to 79 per
cent in 1940. In the 1942-43 season Florida's output exceeded
that of California, as it has in every subsequent year.
The California output has continued to advance, but a greater
increase has occurred in Florida as a result of heavier fertiliza-
tion and of the fruition of new plantings, which have recently
been made on a greater scale than in California.2 New planting
in California has been retarded by several factors. Because of
the rapid expansion of population in the citrus-growing area,
land values have risen to a point where usage for other purposes
is more attractive than for citrus culture. One such use would
presumably be for subdivisions. In addition, expansion of citrus
culture has been handicapped in California by the limited supply
of water for irrigation. Finally, California trees have recently
been struck by a blight which is affecting their productivity.
In view of these facts, it is probable that Florida production will
continue to increase more rapidly than that of California.
Grapefruit became a commodity of commercial importance
much more recently than oranges. Reliable production data are
available from 1909. Although grapefruit was marketed by
Florida growers as early as the 1880's, output was small until
the late 1920's. As shown in Table 2, production has approxi-
mately quadrupled in the last two decades. From 1909-10 to
1913-14 grapefruit production was only about one-tenth that
of oranges; by 1928-29 it had risen to about one-fourth; and in
recent years has reached one-half the total orange yield.
The chief rivals in the country's grapefruit markets are now


1. Florida Department of Agriculture, Citrus Industry of Florida,
p. 7 (1948).
2. California Fruit Growers Exchange, Statistical Information on
the Citrus Industry, 1947, p. 1 (1947).


10









PRODUCTION AND DISTRIBUTION


TABLE 2

PRODUCTION OF GRAPEFRUIT BY STATES AND CROP SEASONS,
1909-10 TO 1947-48

(Million pounds)


SEASON CALIFORNIA FLORIDA


1909-10
1910-11
1911-12
1912-13
1913-14
1914-15
1915-16
1916-17
1917-18
1918-19
1919-20
1920-21
1921-22
1922-23
1923-24
1924-25
1925-26
1926-27
1927-28
1928-29
1929-30
1930-31
1931-32
1932-33
1933-34
1934-35
1935-36
1936-37
1937-38
1938-39
1939-40
1940-41
1941-42
1942-43
1943-44
1944-45
1945-46
1946-47
1947-48


1
2
4
5
6
8
10
11
14
29
22
24
22
24
22
23
36
40
43
58
60
77
86
81
106
130
136
92
117
115
120
119
191
184
198
227
224
208
193


88
96
92
160
176
192
192
200
160
280
472
464
536
624
680
712
608
688
600
904
664
1,264
856
928
872
1,216
920
1,448
1,168
1,864
1,272
1,968
1,536
2,184
2,480
1,784
2,560
2,320
2,640


TEXAS











1
3
5
24
16
28
42
60
124
96
208
115
96
219
222
770
947
1,253
1,152
1,092
1,160
1,401
1,417
1,784
1,920
1,864
1,856


TOTAL


UNrrED STATES


90
98
96
166
182
200
202
212
174
309
496
490
560
654
712
766
668
764
698
1,036
870
1,462
1,176
1,162
1,122
1,640
1,386
2,395
2,397
3,395
2,716
3,338
3,090
3,925
4,340
4,020
4,970
4,660
4,884


Sources: Seasons 1909-10 to 1919-20 and 1945-46 to 1947-48, Bureau of Agricultural
Economics, Citrus Fruits, Production, Farm Disposition, Value, and Utilization of
Sales, various issues. Data converted from boxes to pounds. For other years, see
Bureau of Agricultural Economics, Readjustments in Processing and Marketing Citrus
Fruits, p. 167 (1946).


11








CITRUS FRUIT RATES


Texas and Florida, although the rise of Texas to this position
has been a fairly recent development. Until the late 1920's the
only competition encountered by Florida producers came from
California, and that had not been substantial. At about that
time Texas production, which was initiated in 1921, was appear-
ing in increasing quantities and was soon to constitute a serious
challenge to the Florida producers. In 1920 Florida accounted
for 95 per cent of the total and Texas for none; by 1930 the
ratios had become 86 per cent and 7 per cent; and by 1940 the
relative shares were 59 per cent and 33 per cent. These two
sources thus contributed 93 per cent of the total in 1930, 92
per cent in 1940, and 90 per cent in 1946. During the past 5
seasons Texas production has accounted for nearly 40 per cent
of the total. This percentage may decline during the next 4 or 5
years as a result of a severe freeze in Texas early in 1949.
California grapefruit production is not substantial and does
not appear to be increasing to an important extent. As a result,
its relative importance is declining. It accounted for only 4 per
cent of total production in 1947-48 as compared with 9 per cent
in 1933-34. Florida continues to maintain the pre-eminent posi-
tion in grapefruit production that it has held from the outset, al-
though, as observed, Texas competition is becoming progressively
more pressing.
A significant aspect of citrus production is the high degree of
concentration within the three states in which it largely occurs,
although this is less true of Florida than of the other important
citrus states. The accompanying maps show the location of pro-
duction in each state. The following concentration data are
computed from the Census of Agriculture for 1945.
Oranges are grown in 36 counties in California, 6 of which
accounted for 96 per cent of the production in 1945. Grapefruit
and lemons were each grown in 25 counties in that year. In
the former case 3 counties produced 80 per cent and 5 counties
90 per cent of the total. With respect to lemons there was per-
haps slightly less concentration, but 2 counties accounted for 51


12









PRODUCTION AND DISTRIBUTION


MAJOR CITRUS PRODUCING AREAS IN CALIFORNIA AND ARIZONA


Collfornio Section


Coohello tIpfio4
Volley Section
Source: Railroad Committee for the Study of Transportation, Subcommittee on
Economic Study, Association of American Railroads, Citrus Fruits, p. 5 (1946).

per cent of the state production, 5 counties for 84 per cent, and
8 counties for 99 per cent.
Grapefruit, the major citrus crop in Texas, was produced in
17 counties, but 75 per cent of the total state production oc-
curred in 1 county, and 98 per cent in only 2. In the case of
oranges, 1 county had 71 per cent of the output, 2 counties had
93 per cent, and 6 had 99 per cent.
Although not so marked as in the other states, the concentra-
tion in Florida is substantial. The production of oranges in the
state is fairly widespread, being reported in 61 counties. One
county, however, reported one-third of the total. Over half
the production, 58 per cent, took place in 3 counties, 88 per
cent in 12, 93 per cent in 14, and 99 per cent in 25. Grapefruit
culture throughout the state is more restricted, being reported in


13













MAJOR CITRUS PRODUCING AREAS IN TEXAS AND FLORIDA


Loke Woles'


kLower Rio Oran4d Volley
Horlltnen Olstri5 t

Source: Railroad Committee for the Study of Transportation, Subcommittee on Economic Study, Association
of American Railroads, Citrus Fruits, p. 6 (1946).








PRODUCTION AND DISTRIBUTION


but 47 counties, with 1 of these recording 42 per cent of the
output. Six counties produced 77 per cent of the state total, 9
counties 84 per cent, and 20 counties 96 per cent.


COMPARATIVE COSTS OF PRODUCTION

Regularly compiled data do not give a complete picture of
comparative production costs in the different citrus-producing
regions. The regularly published series do not include such
charges as interest and depreciation, and the special studies
which include these items do not present them on a strictly
homogeneous basis. Some light can be thrown, however, on the
comparative costs of orange production in Florida and Cali-
fornia.
Table 3 shows costs of production for oranges in California
and Florida, exclusive of interest on investment and deprecia-
tion on trees. Included in separate categories are cultural costs
up to time of picking, and marketing costs including picking,
packing, and hauling expenses. Comparative transportation costs
are omitted from consideration at this point since they are dealt
with in detail in Chapter IV.
Cultural costs in Florida, exclusive of depreciation and in-
terest, are substantially below those for California for each year,
although the margin varies considerably. Growing costs for
Florida oranges averaged only about 53 per cent of those for the
California product in the period 1929-30 to 1930-34; 46 per
cent in the next 5 years; 64 per cent in the period 1939-40 to
1943-44; and 47 per cent in the last 3 years shown.
California marketing expenses, exclusive of transportation,
have been consistently below those of Florida, but Table 3 shows
that the advantage Florida maintains in cultural costs substan-
tially outweighs, in most years, its higher marketing costs. Over-
all costs are therefore lower in Florida. In only two seasons,
1928-29 and 1939-40, was the Florida total higher. The average
differential for all seasons considered was 32 cents per box. The


15










CITRUS FRUIT RATES


TABLE 3

COSTS OF PRODUCING AND MARKETING CALIFORNIA
AND FLORIDA PACKED ORANGES
(Dollars per equivalent box)

TOTAL
DIF-
FER-
SEASON CALIFORNIA FLORIDA ENTIAL
(NOVEMBER TO CUL- MAR- CUL- MAR-
OCTOBER) A TURALS KETING TOTAL TURALB KETING TOTAL
1927-28 1.66 .88 2.54 .72 1.30 2.02 .52
1928-29 1.08 .84 1.92 .72 1.28 2.00 .08c
1929-30 1.83 .86 2.69 .80 1.30 2.10 .59
1930-31 1.00 .85 1.85 .48 1.10 1.58 .27
1931-32 .83 .75 1.58 .60 .95 1.55 .03
1932-33 .70 .71 1.41 .47 .90 1.37 .04
1933-34 .92 .73 1.65 .46 .87 1.33 .32
1934-35 .65 .71 1.36 .45 .90 1.35 .01
1935-36 .96 .74 1.70 .45 .95 1.40 .30
1936-37 1.44 .83 2.27 .42 .93 1.35 .92
1937-38 .73 .73 1.46 .38 .88 1.26 .20
1938-39 .71 .77 1.48 .34 .84 1.18 .30
1939-40 .54 .72 1.26 .42 .91 1.33 .07c
1940-41 .54 .76 1.30 .40 .87 1.27 .03
1941-42 .64 .89 1.53 .44 .90 1.34 .19
1942-43 .83 .98 1.81 .40 1.01 1.41 .40
1943-44 .83 1.04 1.87 .50 1.25 1.75 .12
1944-45 .81 1.07 1.88 .50 1.21 1.71 .17
1945-46 1.23 1.27 2.50 .48 1.24 1.72 .78
1946-47 1.16d 1.33d 2.49 .53 1.30 1.83 .66
Averages:
1929-30 to 1933-34 1.05 .78 1.83 .56 1.02 1.58 .25
1934-35 to 1938-39 .90 .76 1.66 .41 .90 1.31 .35
1939-40 to 1943-44 .68 .88 1.56 .43 .99 1.42 .14
1944-45 to 1946-47 1.07 1.22 2.29 .50 1.25 1.75 .54
All Periods .32
Source: Adapted from California Fruit Growers Exchange, Statistical Information on
the Citrus Industry, 1947, p. 9 (1947), and 1948 Supplement, p. 3.
a. The Florida year begins in September.
b. This item covers costs incurred in producing the crop marketed in a given season
without regard to the time of expenditure. The cost figure for California is an un-
weighted average for valencias and navels. The differences are slight, averaging 8
cents for the years covered.
c. Excess.
d. Preliminary.

average for the periods separately computed was 25 cents for
1929 to 1933; 35 cents for the next 5 years; 14 cents for the
subsequent period; and 54 cents for the last 3 years included.


16








PRODUCTION AND DISTRIBUTION


The information available indicates that the inclusion of de-
preciation and interest charges would enhance the cost advan-
tage enjoyed by Florida. One study of Florida production costs
covers interest on grove valuation imputed at 6 per cent. It in-
cludes only a limited number of groves, all averaging over 10
years of age. For most years, only 2 to 3 per cent of the total
state acreage devoted to citrus production is included in the
study.
For the 1939-40 season, on the basis of this sample, the in-
terest charge was 16 cents per packed box.3 Another study, show-
ing production costs for 287 acres in San Bernardino County,
California, computed interest on investment for this season at
24 cents per packed box for navels and 40 cents for valencias,
or a weighted average of 30 cents.4 The average for the 10
seasons 1929-30 to 1939-40 was 36 cents, compared to an aver-
age interest charge for Florida production of 25 cents for the
period 1931-32 through 1939-40. This indicates lower interest
charges for Florida. It is probably also true that depreciation
charges are less in Florida because of the slightly longer life of
trees in that state.

PROCESSING

Processing embraces preparation for consumption in all except
fresh form, and thus includes canning, freezing, and the manu-
facture of sirups, concentrates, jellies, and marmalades. The
principal form of processing is canning and the main product is
canned juice, although the canning of segments is important,
particularly in the case of grapefruit. No attempt is made here
to measure quantitatively the relative importance of the differ-
ent types of processing. For the purposes of this study the signif-
icant fact in connection with processing is the withdrawal of a
portion of the citrus output from fresh marketing channels, and

3. Data supplied by the College of Agriculture, University of Florida.
4. Ibid.


17








CITRUS FRUIT RATES


its transformation into products having completely different
transportation characteristics and different transportation re-
quirements.
It should be noted that the amount of processing does not pre-
cisely measure this withdrawal. Some of it represents the disposi-
tion of substandard fruit which would not find a market in fresh
form. But the continuous advance in the ratio of fruit processed,
which is described below, strongly suggests that processing is
absorbing ever increasing amounts of the output, particularly
of lower grades, which would otherwise be marketed in fresh
form.5 The development of frozen concentrates is particularly
significant.
The growth of processing in the last two decades is explained
largely by increased production and by the enhanced sales possi-
bilities that have occurred in these years.6 Processing data are
available for the seasons since 1909-10, and are listed in Table
4. The processed portion of the total citrus production of the
country was very small until the late 1920's, remaining under 5
per cent until the 1926-27 season. The level was only slightly
higher during the early 1930's, but reached a new high of 14
per cent in the 1934-35 season. The increase in the share of
production processed has been steady and substantial since that
time, reaching 23 per cent in 1939-40, 30 per cent in 1942-43,
and attaining a new high of 40 per cent in 1947-48.
Processing has varied by production areas and by type of
citrus. Although a product of more recent commercial develop-
ment, grapefruit processing on a substantial basis preceded that
for oranges, and has since been carried much further. For in-
stance, in the 1930-31 season 16 per cent of the grapefruit crop
and only 3 per cent of the orange crop were processed. A dec-
ade later, 12 per cent of the oranges were being processed, but

5. Railroad Committee for the Study of Transportation, Subcom-
mittee on Economic Study, Association of American Railroads, Citrus
Fruits, p. 45 (1946).
6. California Fruit Growers Exchange, Statistical Information on the
Citrus Fruit Industry, 1947, p. 1 (1947).


18









PRODUCTION AND DISTRIBUTION 19

TABLE 4

PER CENT OF CITRUS PRODUCTION PROCESSED

TOTAL
SEASON UNITED STATES UNITED STATES FLORIDA CALIFORNIA TEXAS
CITRUS
Oranges Grapefruit Oranges Grapefruit Oranges Grapefruit
1909-10 a a b c a d
1910-11 a a a
1911-12 a a a
1912-13 1 1 1 -
1913-14 1 a 1
1914-15 a a 1
1915-16 1 a 1
1916-17 1 a 1
1917-18 a a 1
1918-19 2 1 1
1919-20 2 1 1
1920-21 2 1 -1 -
1921-22 2 1 a a 2
1922-23 1 a 2 2 -
1923-24 3 1 2 2 2
1924-25 3 2 3 4 3
1925-26 4 a 5 5 1
1926-27 6 2 7 7 2 -
1927-28 3 1 6 7 1
1928-29 7 4 8 9 6
1929-30 6 2 15 20 3 1
1930-31 8 3 16 19 6 5
1931-32 8 5 7 a 9 7 4
1932-33 8 5 18 a 21 8 3
1933-34 7 2 20 a 22 3 7
1934-35 14 5 30 2 36 8 14
1935-36 9 3 26 1 22 5 22
1936-37 18 11 33 3 38 20 27
1937-38 17 7 40 5 42 10 44
1938-39 18 7 36 5 40 12 35
1939-40 23 10 48 17 55 7 41
1940-41 27 12 50 14 57 11 46
1941-42 24 13 45 16 53 14 42
1942-43 30 16 54 17 65 16 45
1943-44 29 16 56 24 66 11 47
1944-45 31 21 55 31 70 16 43
1945-46 37 27 56 40 70 16 46
1946-47 33 28 48 37 55 18 38
1947-48 40 38 50 51 58 20 38
Source: Computed from data in Bureau of Agricultural Economics, Citrus Fruits,
Production, Farm Disposition, Value, and Utilization of Sales, various years.
a. Less than 1 per cent.
b. No data available prior to 1931-32 season.
c. No data available prior to 1921-22 season.
d. No data available prior to 1929-30 season.








CITRUS FRUIT RATES


by that time grapefruit processing had reached 50 per cent.
Since then further substantial increases have occurred in the
rate of orange processing which have not characterized grape-
fruit. By 1947-48 the orange proportion had reached 38 per
cent, while that for grapefruit was the same as it had been in
1940-41, although a peak of 56 per cent had been reached in
the intervening years.
A similar diversity exists with respect to the rate of processing
in the different producing states. In the case of oranges, for
example, a larger portion of the Florida than of the California
output is now processed, notwithstanding the fact that process-
ing first became important in the latter state. In 1931-32, the
first season for which data are available for Florida, processing
of the orange crop of that state was negligible, as compared with
7 per cent for California. In 1936-37 the California rate reached
a peak of 20 per cent, compared with 3 per cent for Florida.
Since that time the California rate has fluctuated slightly be-
low that level, reaching 20 per cent again in 1947-48, whereas
the Florida rate has increased steadily. It advanced from 5 per
cent in 1938-39 to 17 per cent the following season, reached 31
per cent by 1944-45, and attained a peak of 51 per cent in
1947-48.
In the case of grapefruit the extent of processing in Florida
has been likewise well above the national average for this com-
modity, with that of its chief rival, Texas, being substantially
below. Grapefruit processing was important in Florida well be-
fore that of oranges, reaching 20 per cent by the 1929-30 season.
The trend since that season has been steadily upward, reaching
peaks of 36 per cent in 1934-35, 55 per cent in 1939-40, and 70
per cent in 1944-45. Although commercial grapefruit production
began slowly in Texas, processing soon became important. It
amounted to only 1 per cent in 1929-30, but became 14 per cent
by 1934-35. By 1937-38 the rate had risen to 44 per cent, about
which level it has since fluctuated.
In summary it may be stated that processing is more impor-
tant in the disposition of grapefruit than in that of oranges.


20








PRODUCTION AND DISTRIBUTION


Further, the rate of processing of the Florida output of both
oranges and grapefruit is considerably greater than that of Cali-
fornia oranges or of Texas grapefruit.


MARKET DISTRIBUTION

Production figures previously cited show that California and
Florida together account for nearly all the orange production,
and that Texas and Florida dominate the grapefruit market.
Texas production of oranges, however, is increasing. The princi-
pal movement of citrus fruit from these states is in carload quan-
tities to commission concerns and merchants.
The significant aspects of market distribution are (1) the
share of the total volume of shipments from the major produc-
ing states which goes to each of the geographical sections of the
country, and (2) the percentage of the total amount used in
each section which is supplied by the rival producing states.
The answers to these questions are important in a transportation
study because they indicate the main lines of movement.
Available data do not provide completely satisfactory answers.
Complete information for movements by states by all means of
transport is available for Florida but not for Texas and Cali-
fornia for recent years. As a result it is necessary to rely to some
extent on the report of rail carload unloads by origin states in
the important citrus auction markets of the country. These re-
ports currently cover 100 cities and account for the bulk of the
rail movements. For instance, the report for the 1947-48 season
takes account of 34,920 carloads of oranges from California and
29,975 from Florida, which represent 70 per cent and 89 per
cent, respectively, of the total rail movements for this season.
Similarly, the 100-city report for grapefruit, which includes
10,885 cars from Florida and 12,044 from Texas, accounts for
93 per cent and 72 per cent, respectively, of the total.
The carlot unload data include rail movement and such boat
shipments as occur, but not truck movement. Where these re-


21








CITRUS FRUIT RATES


ports are used it is impossible to include comprehensive trucking
data on a strictly homogeneous basis. Nevertheless, it is possible
to interpret the basic data in the light of supplementary trucking
reports, and thus to utilize trucking information on a fairly mean-
ingful basis.
The 100 cities included are grouped on the basis of the Census
groupings. The states represented in the unload reports, and the
groups to which they are assigned, are as follows:


Section
New England

Middle Atlantic
East North Central

West North Central

South Atlantic



East South Central
West South Central

Mountain
Pacific


States Included
Connecticut, Maine, Massachusetts,
Rhode Island
New York, New Jersey, Pennsylvania
Illinois, Indiana, Michigan, Ohio,
Wisconsin
Iowa, Kansas, Minnesota, Missouri,
Nebraska, South Dakota
District of Columbia, Georgia, Flori-
da, Maryland, North Carolina,
South Carolina, Virginia, West Vir-
ginia
Alabama, Kentucky, Tennessee
Arkansas, Louisiana, Oklahoma,
Texas
Arizona, Colorado, Montana, Utah
California, Oregon, Washington


The proportion of the total movements of Florida oranges
destined to each of the major geographical areas in 1947-48
can be shown quite accurately. Since there were no boat move-
ments in this season, the combined rail and truck shipments
shown in Table 5 are inclusive. By far the largest share, 37 per
cent, was sent to the populous Middle Atlantic states. The next
largest portion, 23 per cent, was disposed of in the South At-
lantic states. Another 10 per cent was destined to the East
South Central section, which means that about one-third of the
total movement was absorbed in what might be roughly termed
the Southeast, including the District of Columbia and the border
states. The East North Central states accounted for a signifi-


22








PRODUCTION AND DISTRIBUTION


TABLE 5

DISTRIBUTION OF FLORIDA ORANGES
BY GEOGRAPHICAL SECTIONS, 1947-48 SEASON

PER CENT
SECTION CARLOADS OF TOTAL
New England 4,060 9
Middle Atlantic 17,169 37
East North Central 7,918 17
West North Central 911 2
South Atlantic 10,719 23
East South Central 4,469 10
West South Central 784 2
Mountain 22 b
Pacific 8 b
Total 46,060 100
Source: Computed from United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1947-48 Season, pp. 25 and 29-31 (1948).
a. Includes rail carloads and truck movements reduced to equivalent carloads. There
were no boat movements during this season.
b. Less than 1 per cent.

cant share, 17 per cent. New England took 9 per cent, but the
movements to the other sections were of negligible importance.
The distribution summary for California is based on the 100-
city sample, as shown in Table 6. Figures therein must be cor-
rected for truck shipments, but unfortunately data are not avail-
able to permit correction on a completely satisfactory basis.
Since practically all truck movements from California are to
the western part of the country, particularly to Mountain,
Pacific, and, to a lesser extent, to West South Central states,
the inclusion of truck movements would increase the percentages
in these sections and reduce them in the others.
In 1947-48, unloads of 7,231 equivalent truck carlots were
reported for the cities of Los Angeles, San Francisco, and Oak-
land.7 Adding this to the 1,842 carloads for the Pacific section
shown in the 100-city report would produce a total of 9,073 car-
loads, which is roughly equivalent to the reported total for the
East North Central states. If this represented 70 per cent of

7. United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1947-48 Season, p. 15 (1948).


23









CITRUS FRUIT RATES


TABLE 6

DISTRIBUTION OF CALIFORNIA ORANGES
BY GEOGRAPHICAL SECTIONS, 1947-48 SEASON

SECTION REPORTED IN 100-CITY UNLOADS ESTIMATED CORRECTIONS FOR TRUCK VOLUME
Per cent Per cent
Carloads of total Carloads of total
New England 3,503 10 3,503 8
Middle Atlantic 12,229 35 12,229 29
East North Central 9,407 27 9,407 22
West North Central 4,347 12 4,347 10
South Atlantic 1,124 3 1,124 3
East South Central 370 1 370 1
West South Central 1,175 3 1,175 3
Mountain 923 3 923 2
Pacific 1,842 6 9,073 22
Total 34,920 100 42,151 100
Source: Computed from United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1947-48 Season, pp. 12, 13 (1948).

total truck movements from California,8 the percentage which
the 100-city sample bears to total rail movement, and if most of
the trucking occurred to Pacific destinations, it would be signifi-
cant to add the 7,000 cars to the Pacific receipts and to the
totals. The percentages would then be modified as shown in
Table 6. The corrected percentages indicate the largest share,
about 30 per cent, destined to the Middle Atlantic states, just
under 25 per cent each to the Pacific and East North Central
regions, and about 10 per cent each to New England and the
West North Central section. These broad approximations doubt-
less represent a correction of the raw rail data, which presents
a more accurate picture than the latter.
Both California and Florida marketed approximately 60 per
cent of their total shipments during the 1947-48 season in that
portion of the country roughly east of the Mississippi and north
of the Ohio rivers, embracing generally what is known as Of-
ficial Territory. The eastern portion of this region was relatively
more important to Florida and the western section to California.
Each marketed a significant share in its "home" territory. The


8. The total truck movement in 1941 was 9,000 carlots.


24









PRODUCTION AND DISTRIBUTION


other sections of the country took comparatively small shares of
the production of either.
The second question previously raised involves a consideration
of the relative importance of the sources from which the various
sections draw their supplies. Primary information with respect
to this matter is based on the 100-city report, with the results
as indicated in Table 7. This shows that in the 1947-48 season
the South (comprising roughly the South Atlantic and East
South Central states) was supplied largely by Florida. On the
other hand, the Pacific and Mountain states' market was con-
trolled almost exclusively by California. In the latter section
Texas output was taken in considerably greater volume than
that of Florida. The figures also indicate that the invasion of
the southern market by California output was much more sig-
nificant than Florida's invasion of the market of the Pacific
and Mountain states. In both cases the proportion supplied by
the "home" producer would be substantially enhanced by the
large unconsidered volume of truck movement.
Aside from the "home" markets, California clearly dominated
the market of the West North Central states, accounting for

TABLE 7

PER CENT OF ORANGE RECEIPTS IN DIFFERENT
GEOGRAPHICAL SECTIONS SUPPLIED BY CALIFORNIA,
FLORIDA, AND TEXAS, 1947-1948 SEASON
SECTION CALIFORNIA TEXAS FLORIDA TOTAL
New England 49 b 50 99
Middle Atlantic 45 b 55 100
East North Central 61 4 34 99
West North Central 76 11 12 99
South Atlantic 26 b 74 100
East South Central 16 2 81 99
West South Central 56 26 17 99
Mountain 85 13 2 100
Pacific 98 b 98
All Sections 52 3 45 100
Source: Computed from United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1947-48 Season, pp. 12, 13 (1948).
a. Based on rail carlot unloads in 100 cities.
b. Less than 1 per cent.


25








CITRUS FRUIT RATES


76 per cent of the movement to those states as compared with
Florida's 12 per cent. Since the volume of trucking from Florida
to this section is probably greater than that from California, this
gap would be closed somewhat, but the volume would not be
sufficient to alter significantly this division. Similarly, Cali-
fornia had a substantial advantage in the West South Central
markets: 56 per cent as contrasted with 17 per cent, with Texas
production accounting for 26 per cent. The inclusion of trucked
movement would substantially increase the Texas proportion,
and would probably enhance the California share relative to
that of Florida. California appears to dominate the East North
Central market, accounting for 61 per cent of the receipts as
compared with 34 per cent for Florida. Here again, if truck
volume were included, the effect would be to reduce the extent
of this dominance. During the 1947-48 season 2,330 carlots
moved by truck from Florida to this section, which represents a
substantial addition to the 5,233 rail carloads reported in the
100-city sample. It is probable that the distribution was more
nearly on a basis of about 55 per cent for California and some-
thing over 40 per cent for Florida.
In the very important market of the Middle Atlantic states,
the advantage was with Florida, which had a percentage of 55
as compared with a percentage of 45 for California. The
volume of trucking from Florida to this section was not great
enough relative to the rail unloads to alter significantly this
relationship, although its inclusion would increase the spread
shown. The New England market appears to have been quite
evenly divided.
By way of recapitulation, it can be concluded, on the basis
of the 1947-48 season distribution, that California nearly monop-
olizes the Pacific and Mountain states, dominates the West
North Central states, and has a clear superiority in the West
South Central and East North Central sections. Florida nearly
monopolizes the southern market and has a slight advantage
in the Middle Atlantic section, with New England being quite
evenly shared.


26








PRODUCTION AND DISTRIBUTION


In an effort to determine the stability of the relationships
indicated, a historical survey was made of the receipts at 15
important selected auction markets for 14 years between 1932
and 1947. The data are necessarily confined to rail and boat
receipts, and must be interpreted in the light of the growing
importance of truck movement to some of the markets included.
All the geographic sections except Mountain and Pacific are
represented. The percentage supplied by California and Florida
in each market in each year was computed. The results are
summarized as averages of successive periods and are presented
in Table 8.
In every case California accounted for a smaller share of the
market in the two postwar years than it did in the early 1930's.
Florida, on the other hand, recorded an increase in every market
except New Orleans. In all the markets, except those in the
West North Central section, the gain for Florida corresponded
quite closely with the California decline. This exception reflects
the increasing importance of Texas oranges in these outlets.
Comparison of the percentages of the last period (postwar)
with those for the first (early 1930's) shows the greatest Florida
gain in the South Atlantic states. The percentage change in the
other sections which showed increases was considerably less,
ranging around 10 points. In New Orleans, representing the
West South Central states, practically no change occurred.
It will be noted that in many instances the greatest change
in the market division occurred between the early and late
1930's, with the distribution relationship remaining fairly con-
stant since the second period (1936-37 to 1939-40). However,
in 10 of the markets the California share was less in the last
period than in the second. In the markets of the South Atlantic,
East South Central, and West South Central sections particularly,
the California decline appears to be continuing. By contrast,
the Florida share was greater in the last than in the second peri-
od in 10 of the markets. This is particularly noticeable in the
sections identified with California's continuing decline.
Since the amount moving by truck would be considerably


27








f3o
co


TABLE 8
PER CENT OF ORANGES SUPPLIED BY FLORIDA AND CALIFORNIA
IN 15 SELECTED AUCTION MARKETS, 1932 THROUGH 1947
CALIFORNIA FLORIDA
SECTION 1932-33 1936-37 1942-43 1946-47 Last period 1932-33 1936-37 1942-43 1946-47 Last period
to to to to versus to to to to versus
Market 1935-36 1939-40 1945-46 1947-48 first period 1935-36 1939-40 1945-46 1947-48 first period


New England
Boston
Middle Atlantic
Philadelphia
Pittsburgh
New York
Average
East North Central
Chicago
Cincinnati
Cleveland
Average
West North Central
Kansas City
Minneapolis
St. Louis
Average
South Atlantic
Atlanta
Baltimore
Washington
Average
East South Central
Memphis
West South Central
New Orleans


55 44 46 47 8

45 35 40 38 7
72 61 57 60 8
47 38 47 40 7
7

74 59 58 61 -13
54 39 39 35 -19
62 57 57 52 -10
-14

90 83 78 71 -19
97 89 80 84 -13
82 70 60 58 -24
-19

43 36 19 13 -30
48 33 31 29 -19
63 52 34 28 -35
-28

41 30 a 20 -21

26 18 37 25 1


42 57 54 53 +11

56 65 60 62 + 6
27 38 42 39 +12
53 62 58 61 + 8
+9

24 36 38 34 +10
46 60 59 63 +17
32 42 40 43 +11
+13

9 9 12 10 + 1
3 7 14 11 + 8
16 23 32 30 +14
+8

57 63 81 88 +31
53 67 70 71 +18
37 48 66 72 +35
+28

59 58 a 72 +13

69 77 55 68 1


n
1-1

rc
C.



>


g


Source: Computed from United States Department of Agriculture, Marketing Florida Citrus, various issues.
a. No data.









PRODUCTION AND DISTRIBUTION


greater from Florida than from California to most of the mar-
kets included, the figures shown understate the extent of the
change in the percentage relationships. To recapitulate, it ap-
pears from the sample evidence that California's share of the
orange markets has declined and that Florida's has increased
since the early 1930's. The greatest changes occurred from the
first to the last half of that decade. A fairly stable division has
prevailed since that time, although some evidence indicates con-
tinuing change in some of the markets.
These conclusions suggest that California is disposing of an
increasing portion of its output in the markets of the West. This
is confirmed by further analysis. Table 9 relates the total car-

TABLE 9

RAIL CARLOAD RECEIPTS OF CALIFORNIA ORANGES IN 14 MAJOR
EASTERN AUCTION MARKETS, RELATED TO TOTAL CALIFORNIA
ORANGE PRODUCTION

TOTAL PER CENT
SEASON TOTAL CALIFORNIA 14 CITIES
14 CITIES PRODUCTIONs OF TOTAL
1932-33 25,612 66,611 38
1933-34 24,868 55,306 45
1934-35 29,734 87,583 34
1935-36 26,820 63,806 42
1936-37 20,687 58,000 36
1937-38 19,476 89,278 22
1938-39 27,078 80,528 34
1939-40 28,809 86,361 33
1942-43 25,127 64,688 29
1943-44 19,870 75,771 26
1944-45 20,874 83,958 25
1945-46 21,411 70,604 30
1946-47 20,233 85,875 24
1947-48 21,009 73,146 29
5-Year Averages:
1932-33 to 1936-37 39
1943-44 to 1947-48 27
Source: Carlot unloads in the 14 cities, United States Department of Agriculture,
Marketing Florida Citrus, various issues. Production data, Table 1, p. 10.
a. Includes Baltimore, Boston, Chicago, Cincinnati, Cleveland, Kansas City, Minne-
apolis, New Orleans, New York, Philadelphia, St. Louis, Washington, D. C., Atlanta,
and Pittsburgh.
b. Converted from pounds on basis of 18 tons per car in period through 1939-40,
and on basis of 24 tons per car in subsequent years.


29









CITRUS FRUIT RATES


loads received in 14 major markets in the East to total California
production for the period 1932-33 through 1947-48. Although
there is some yearly fluctuation, the secular decline in the per-
centage of the total output going to these eastern markets is
apparent. The average for the first 5-year period was 39 per
cent, and only 27 per cent for the last 5 years. Since these mar-
kets are scattered throughout the entire eastern half of the
country, they can be depended upon to reflect with reasonable
accuracy the trend for this section. A decline in the portion of
the California output going to the East clearly indicates a com-
pensating increase in the share disposed of in the West.
The same data are available for grapefruit distribution, with
the same limitations, as for oranges. Accordingly, parallel
methods of presentation and analysis are employed. For this
commodity the comparisons are drawn between Florida and
Texas, since these states are the major suppliers.
The first determination to be made is the extent to which
the two states depend on each of the major sections of the coun-
try for the absorption of their output. Table 10 shows for
Florida the portion of its production marketed in each region

TABLE 10

DISTRIBUTION OF FLORIDA GRAPEFRUIT
BY GEOGRAPHICAL SECTIONS, 1947-48 SEASON

PER CENT
SECTION CARLOADS OF TOTAL
New England 1,283 9
Middle Atlantic 7,089 52
East North Central 1,445 12
West North Central 168 1
South Atlantic 2,999 22
East South Central 471 3
West South Central 49 b
Mountain 31 b
Pacific 73 1
Total 13,608 100
Source: Computed from United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1947-48 Season, pp. 26 and 29-31 (1948).
a. Includes rail carloads and truck movements reduced to equivalent carloads.
b. Less than 1 per cent.


30









PRODUCTION AND DISTRIBUTION


in 1947-48, as revealed by the total rail and truck movements.
Of the 13,600 carloads included, over half were shipped to the
Middle Atlantic states, indicating a much greater reliance on
these states for grapefruit than for orange marketing. The next
largest share, 22 per cent, was taken in the South Atlantic states.
The East North Central section accounted for 12 per cent and
New England for 9 per cent. Movements to the other sections
were insignificant.

TABLE 11

DISTRIBUTION OF TEXAS GRAPEFRUIT
BY GEOGRAPHICAL SECTIONS, 1947-48 SEASON
PER CENT
SECTION CARLOADS OF TOTAL
New England 282 2
Middle Atlantic 1,606 13
East North Central 5,372 45
West North Central 2,755 23
South Atlantic 325 3
East South Central 308 3
West South Central 396 3
Mountain 444 4
Pacific 556 5
Total 12,044 100
Source: Computed from United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1947-48 Season, pp. 12, 13 (1948).
a. Based on rail carlot unloads in 100 cities.

Trucking data are not available to permit the measurement
of grapefruit distribution from Texas with precision. Table 11
shows the Texas distribution based on the rail unloads, but the
percentages would be altered if truck movements were ade-
quately accounted for. The volume moving by truck is sub-
stantial, with the bulk of the movements to points in Texas,
Louisiana, Arkansas, Oklahoma, Missouri, Kansas, Nebraska,
Wyoming, Colorado, and New Mexico,9 that is, primarily to

9. United States Department of Agriculture, Marketing Texas Citrus,
Lower Rio Grande Valley of Texas, Summary of 1943-44 Season, p. 37
(1944).


31









CITRUS FRUIT RATES


destinations in the West South Central section and to a lesser
extent in the West North Central and Mountain states. The
rail unload percentages should therefore be revised by substan-
tially increasing the figure for the West South Central section,
and by adjusting the other figures accordingly. It is not possible
to make this adjustment in precise terms, but some approxima-
tions can be reached. Thus, the total truck movement for the
1946-47 season was about 4,000 carloads. If the 1947-48 volume
were at about this level, and if half of it had moved to the West
South Central section, that area would account for about 20
per cent of the total. Since there would be little truck movement
to the East North Central states, the share of this section would be
reduced to about 33 per cent. The largest single share of Texas
output apparently is taken in the East North Central states,
perhaps one-third, with about 20 per cent accounted for by
West South Central and 23 per cent by West North Central
states. Little reliance is placed on other sections of the country
in Texas grapefruit marketing, as indicated in Table 11.
Table 12 shows the estimated corrections in the Texas distri-
bution, and draws a comparison with the Florida distribution
pattern. On the basis of this evidence it can be said that Florida

TABLE 12

APPROXIMATE PER CENT OF TOTAL SHIPMENTS
OF FLORIDA AND TEXAS GRAPEFRUIT MARKETED
IN DIFFERENT GEOGRAPHICAL SECTIONS, 1947-48
SECTION FLORIDA TEXAS
New England 9 a
Middle Atlantic 52 10
East North Central 12 33
West North Central 1 23
South Atlantic 22 2
East South Central 3 2
West South Central a 20
Mountain a 6
Pacific 1 4
Total 100 100
a. Less than 1 per cent.


32








PRODUCTION AND DISTRIBUTION


depends more heavily on the eastern portion of the country and
Texas on the central in disposing of the grapefruit output.
The next determination to be made is the division of the
various markets between the two major producers. The evi-
dence given by the rail unloads is shown in Table 13, which
must be interpreted in the light of the trucking volume from
each origin. Florida's dominance in the eastern market, includ-
ing the Middle Atlantic and New England sections, is quite

TABLE 13

PER CENT OF GRAPEFRUIT RECEIPTS
IN DIFFERENT GEOGRAPHICAL SECTIONS SUPPLIED
BY FLORIDA AND TEXAS, 1947-48 SEASON

SECTION FLORIDA TEXAS TOTAL
New England 79 18 97
Middle Atlantic 79 19 98
East North Central 17 81 98
West North Central 05 92 97
South Atlantic 80 20 100
East South Central 45 53 98
West South Central 07 93 100
Mountain 05 86 91
Pacific 05 50 55
All Sections 45 50 95
Source: Computed from United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1947-48 Season, pp. 12, 13 (1948).
a. Based on rail carlot unloads in 100 cities.

clear. Florida furnished about 79 per cent of the rail unloads,
a share which would doubtless be increased slightly if the truck
volume were included. The 80 per cent shown for Florida in
the South Atlantic market would be substantially increased by
the inclusion of truck movement. It would appear that the
East South Central market is fairly evenly divided between the
two sources. In the West South Central section, Texas domi-
nance is quite complete, greater even than the 93 to 7 ratio
shown. In the North Central states, Texas holds a great advan-
tage, though probably slightly less than the rail data indicate.
Florida's contribution to the Mountain and Pacific markets is


33








CITRUS FRUIT RATES


minor, with Texas dominating the former and dividing the latter
with California and Arizona output.
A sample historical survey indicates that the grapefruit distri-
bution relationship has shown considerably less stability than
orange distribution, because of the rapid increase in importance
of the Texas output. As might be expected, in almost every
one of the 14 sample markets Texas' position has improved at
the expense of Florida. Table 14 provides comparative figures.
In the markets in the western sections, represented by the
North Central and the West South Central states, the Florida
decline was particularly severe and the Texas gain especially
spectacular. This geographical influence is shown clearly in
the different trends in the Pittsburgh and Philadelphia markets.
In the former, the Florida share dropped from 90 per cent to
24 per cent, but only from 98 per cent to 83 per cent in Phila-
delphia. In most of the markets west of Pittsburgh, Texas had
made substantial inroads by the early 1930's, and has since ex-
panded its share to a position of dominance. The Florida de-
cline in the markets east of Pittsburgh was much less severe, and
in the important New York market its share actually increased.
This survey shows that the rise in importance of the Texas
grapefruit output has caused a sharp decline in the importance
of the Florida product in all areas except the extreme eastern
portion of the country. Consequently, in the future greater
reliance than formerly must be placed on the markets of the
East to absorb the Florida output.


AUCTION PRICES

The important price relationships in the citrus fruit industry
are those between California and Florida oranges and between
Florida and Texas grapefruit.
The history of the annual weighted average auction prices of
oranges in the major markets shows that the Florida product
has consistently commanded a lower price than has the Cali-


34






TABLE 14

PER CENT OF GRAPEFRUIT SUPPLIED BY FLORIDA AND TEXAS
IN 14 SELECTED AUCTION MARKETS, 1932 THROUGH 1947

FLORIDA TEXAS
SECTION 1932-33 1936-37 1942-43 1946-47 1932-33 1936-37 1942-43 1946-47
Market to to to to to to to to O
1935-36 1939-40 1945-46 1947-48 1935-36 1939-40 1945-46 1947-48
New England
Boston 94 81 62 75 1 16 30 21 -
Middle Atlantic O
Philadelphia 98 88 72 83 1 12 23 15
Pittsburgh 90 60 30 24 6 36 43 73
New York 86 88 83 92 1 6 10 4
East North Central
Chicago 59 24 15 14 34 72 76 81
Cincinnati 89 45 24 21 6 50 66 73
Cleveland 82 42 19 14 13 55 72 85
West North Central
Kansas City 46 12 4 6 48 78 86 88 t
Minneapolis 49 14 8 6 43 81 85 91 C
St. Louis 41 13 9 5 47 81 85 89 1
South Atlantic 0
Atlanta 93 97 84 95 0 0 5 3 2:
Baltimore 99 91 75 80 1 9 21 18
Washington 91 89 69 74 8 11 22 25
West South Central
New Orleans 94 61 14 11 0 36 72 86
Source: Computed from United States Department of Agriculture, Marketing Florida Citrus, various issues.









36 CITRUS FRUIT RATES

TABLE 15

AVERAGE AUCTION PRICES OF CALIFORNIA AND FLORIDA
ORANGES IN 10 SELECTED CITIES,A SEASONS 1925-26 THROUGH
1946-47

AVERAGE PRICE DIFFERENTIAL
(DOLLARS PER BOX) FLORIDA OVER CALIFORNIA
SEASON
Per cent of Average
California Florida Cents Florida price per cent
1925-26 4.79 4.61 18 4
1926-27 4.84 3.81 -103 -27
1927-28 5.62 5.62 0 0 -18
1928-29 4.38 3.15 -123 -39
1929-30 5.69 4.62 -107 -23
1930-31 3.82 3.40 42 -12
1931-32 3.25 3.30 + 5 + 2 -14
1932-33 2.94 2.44 50 -20
1933-34 3.14 2.70 44 -16
1934-35 3.27 2.56 71 -28
1935-36 3.34 3.00 34 -11
1936-37 4.07 3.21 86 -27 -28
1937-38 3.12 2.24 88 -39
1938-39 2.82 2.09 73 -35
1939-40 3.07 2.35 72 -31
1940-41 3.15 2.35 80 -34
1941-42 3.58 2.83 75 -27 -32
1942-43 5.23 3.79 -144 -38
1943-44 5.15 3.89 -126 -32
1944-45 5.37 4.48 89 -20
1945-46 5.31 4.58 73 -16
1946-47 4.67 3.50 -117 -33 -28
1947-48 4.68 3.27 -141 -43
Average -24
Sources: California Fruit Growers Exchange, Statistical Information of the Citrus
Fruit Industry, 1947, p. 15. Data for 1946-47 from 1948 Supplement, p. 4i for
1947-48 from United States Department of Agriculture, Marketing Florida Citrus,
Summary of 1947-48 Season, p. 42 (1948). Percentages computed.
a. Chicago, St. Louis, Cincinnati, Cleveland, Detroit, Pittsburgh, New York, Phila-
delphia, Baltimore, and Boston.
b. During Florida's shipping season only.

fornia orange. As revealed by Table 15, the differential has fluc-
tuated considerably from year to year. Although there is no
clearly defined secular trend, it may be noted that the average
for the last 5 years was substantially greater than for any other
similar period. When the differential is related to the Florida
price, the fluctuations in the resulting percentages are somewhat








PRODUCTION AND DISTRIBUTION


more restrained. In the period 1925-26 through 1928-29 the
differential was 18 per cent of the Florida price and declined to
14 per cent in the following 5 years. Thereupon it turned sharp-
ly upward and averaged 28 per cent in the seasons 1934-35
through 1938-39. During the following 5-year period it advanced
to an average of 32 per cent, but declined again to 28 per cent
in the 4 seasons 1944-45 to 1947-48. The average differential
for the 23 seasons was 24 per cent of the Florida auction price.
Apparently a secular increase has occurred in the ratio be-
tween the price differential and Florida orange prices in the
important markets. The highest ratio in this record, 43 per
cent, was registered in 1946-47.
A secular change, even more sharply drawn, has taken place
in the grapefruit price relationships. An examination of the
annual weighted average auction prices in 10 important grape-
fruit markets shows that from 1934-35 through the 1940-41 sea-
son there was no consistent relationship. The Texas product
commanded a differential in 3 of these seasons. Since that time,
Florida grapefruit has consistently received a higher price. These
relationships are portrayed in Table 16. Relating the differential
to the Florida price, as in Table 15, it appears that in the period
1934-35 through 1938-39, the Florida product brought 4 per
cent less than that of Texas. In the subsequent 5 years there
was a differential of 6 per cent in favor of Florida. In the last
4 years recorded, Florida grapefruit has brought a premium of
20 per cent. The evidence presented shows quite clearly that
the grapefruit price situation, with respect to Florida, is the
reverse of that prevailing for oranges. In recent years the
Florida product has brought a higher price than that of its
major rival, with some evidence that this advantage may be
increasing.

PROFIT MARGINS

Although costs of production in Florida are lower than in
California, the prices received for the Florida fruit are less.


37









CITRUS FRUIT RATES


TABLE 16

AVERAGE AUCTION PRICES OF FLORIDA AND TEXAS GRAPEFRUIT,
SEASONS 1934-35 THROUGH 1947-48

AVERAGE PRICE DIFFERENTIAL
(DOLLARS PER BOX) FLORIDA OVER TEXAS
SEASON
PERCENT OF AVERAGE
TEXASA FLORIDAB CENTS FLORIDA PRICE PER CENT

1934-35 2.33 2.00 33 -17
1935-36 2.57 2.57 0 0
1936-37 2.09 2.23 + 14 + 6 4
1937-38 2.12 2.16 + 4 + 2
1938-39 1.93 1.72 21 -12
1939-40 2.10 2.13 + 3 + 1
1940-41 1.98 1.91 7 4
1941-42 2.22 2.52 + 30 +12 + 6
1942-43 2.86 3.11 + 25 + 8
1943-44 3.03 3.56 + 53 +15
1944-45 3.21 4.24 +103 +24
1945-46 3.11 3.82 + 71 +19
1946-47 2.70 3.29 + 59 +18 +20
1947-48 2.47 3.07 + 60 +19
Average + 7
Sources: Florida prices are from United States Department of Agriculture, Marketing
Florida Citrus, various issues; Texas prices for years through 1946-47 are from
United States Department of Agriculture, Marketing Texas Citrus, various issues;
for 1947-48 Texas prices are from United States Department of Agriculture, Market-
ing Florida Citrus, Summary of 1947-48 Season, p. 59 (1948).
a. Includes only 6 of the 10 cities prior to 1938-39. No reports are available for
Philadelphia, New York, Boston, and Baltimore. All 10 cities are included in subse-
quent years except 1943-44, when there were no reports for Detroit and Cleveland.
b. Weighted average price at 10 citiesI including Chicago, Cincinnati, St. Louis,
Cleveland, Detroit, Pittsburgh, Philadelphia, New York, Boston, and Baltimore.

This raises the question of the extent to which the lower pro-
duction costs balance the lower prices, that is, of relative profit
margins enjoyed in connection with production in each of the
states.
Precise determination of margins is impossible because of the
lack of completely homogeneous data. Nevertheless, it is possi-
ble to give a sufficiently clear picture to satisfy the requirements
of this discussion.
Profit margin is here indicated as the difference between
average prices received in 10 important orange auction markets
and production costs, including cultural costs, marketing costs


38








PRODUCTION AND DISTRIBUTION


exclusive of transportation, and interest. The limitations on the
adequacy of information concerning the last have been previous-
ly explained. Comparison of margins must be restricted to those
pertaining to California and Florida oranges and to the period
from 1931-32 to 1939-40 because interest costs are not available
for both states in more recent years.
As Table 17 shows, the California orange industry is more
than compensated for its higher production costs by the higher
prices received. In every season except 1931-32, the margin be-
tween auction prices and costs was considerably greater for
California than for Florida. The average margin for all years
considered was $1.29 per box in the case of California and $1.02
for Florida, a difference of 27 cents. In the last season included,
1939-40, the difference was 65 cents. This differential is signifi-
cant for present purposes as an indicator of the ability of the
citrus industries of the two states to bear transportation charges,
and is discussed in that context below.


CARRIER DISTRIBUTION

For many years the railroads held a virtual monopoly of the
transportation of citrus fruits. In the last two decades the com-
petition of highway and water carriers for this desirable traffic
has become progressively more intense. This development has
profoundly influenced citrus fruit transportation with respect
to both rates and services. The history of the distribution of
traffic is detailed below.
The movement of citrus fruit from Florida did not become
appreciable until the decade beginning in 1880.10 Although
oranges had been grown in Florida for many years, inadequate

10. Railroad Commissioners, State of Florida v. Director General,
Aberdeen and Rockfish Railroad Company, 61 I. C. C. 438, 440 (1921).
See also M. A. Brooker, A Study of the Cost of Transportation of Florida
Citrus Fruits with Comparative Costs from Other Producing Areas, p.
27 (1930).


39












0


TABLE 17


ESTIMATED PROFIT MARGIN PER BOX,A CALIFORNIA AND FLORIDA
ORANGES, 1931-32 TO 1939-40


AVERAGE CALIFORNIA COSTS MARGIN
AUCTION
PRICES Cultural Interest Marketing Total


$3.25 $ .83 $ .33 $ .75 $1.91 $1.34
2.94 .70 .34 .71 1.75 1.17
3.14 .92 .33 .73 1.98 1.22
3.27 .65 .44 .71 1.80 1.47
4.07 1.44 .34 .83 2.61 1.46
3.12 .73 .49 .73 1.95 1.17
2.82 .71 .29 .77 1.77 1.05
3.07 .54 .30 .72 1.56 1.51
3.21 .82 .36 .74 1.92 1.29


AVERAGE FLORIDA COSTS MARGIN -3
AUCTION ?0
PRICES Cultural Interest Marketing Total

$3.30 $ .60 $ .27 $ .95 $1.82 $1.48 1
2.44 .47 .28 .90 1.65 .79 P
2.70 .46 .40 .87 1.73 .97 d
2.56 .45 .30 .90 1.65 .91
3.21 .42 .23 .93 1.58 1.65
2.24 .38 .21 .88 1.47 .77
2.09 .34 .14 .84 1.32 .77
2.35 .42 .16 .91 1.49 .86 t
2.61 .44 .25 .90 1.59 1.02 En


SEASON


1931-32
1932-33
1933-34
1934-35
1936-37
1937-38
1938-39
1939-40
Average


Sources: Auction prices from Table 15, p. 36: cultural and marketing costs from Table 3, p. 16; interest costs from data supplied
by College of Agriculture, University o Florida.
a. Cultural and marketing costs are for equivalent boxes. Auction prices and interest are not thus equated.


I I


-III








PRODUCTION AND DISTRIBUTION


transportation had limited production primarily to local needs.
Out-of-state shipments moved in small volume by rail, by oxcart
or wagon over unimproved roads, and by river boat to ports
such as Jacksonville, whence the fruit was transported in slow,
unrefrigerated vessels to cities on the Atlantic Coast.11 Down
to 1880 only about 500 miles of railroad had been constructed
in Florida,12 chiefly in the northern part of the peninsula, and
the short lines were operated as detached enterprises. Through
routes had not been established and rates were on a local, any-
quantity, package basis.13 Ventilated, as distinguished from
refrigerated, cars were generally employed.14
As railroad systems and services developed, more of the traf-
fic was diverted to these carriers, and by 1913 practically all the
movement was by rail. Specific developments which encouraged
rail movements were the establishment of through routes, the
inauguration of precooling and refrigeration services, and the
allowance of reconsignment in transit.15
The railroads monopolized the movement during the subse-
quent years until the early 1930's. After that time both water
and truck movement gained considerably in importance, as shown
in Table 18. In 1929 the first refrigerated service was inau-
gurated from Tampa to New York. By the 1931-32 season the
boat share of the combined orange, grapefruit, and tangerine
movement amounted to 7 per cent, and by 1935-36 it had
reached 35 per cent. The proportion was somewhat lower in
subsequent years, largely because of rail rate reductions, but
it remained substantial until the advent of wartime dislocations.


11. Citrus Fruit from Florida to North Atlantic Ports, 211 I. C. C.
535 (1935). Vessels were first refrigerated in 1929.
12. Statistical Abstract of the United States, 1943, p. 451.
13. Florida Fruit & Vegetable Shippers? Protective Association v.
Atlantic Coast Line Railroad Company, 14 I. C. C. 476 (1908).
14. Railroad Commissioners of State of Florida v. Aberdeen and
Rockfish Railroad Company, 144 I. C. C. 603, 613 (1928).
15. Citrus Fruit from Florida to North Atlantic Ports, 211 I. C. C.
535 (1935).


41













TABLE 18

FLORIDA FRESH CITRUS INTERSTATE SHIPMENTS
BY RAIL, BOAT, AND TRUCK
(Thousand boxes)


ORANGES A
SEASON
Rail Boat Truck
1931-32 9,072 601 1,574
1932-33 9,401 2,220 1,854
1933-34 7,517 4,858 2,323
1934-35 5,760 5,350 2,891
1935-36 6,640 4,934 2,511
1936-37 8,936 5,574 2,151
1937-38 11,119 5,966 2,766
1938-39 13,968 7,365 5,014
1939-40 10,487 3,558 4,348
1940-41 12,261 4,493 5,793
1941-42 16,418 461 4,017
1942-43 25,800 0 2,444
1943-44 30,525 0 2,155
1944-45 24,626 0 1,550
1945-46 25,910 98 2,054
1946-47 25,471 1,316 3,510


GRAPEFRUITe
Rail Boat Truck
6,917 882 951
5,567 1,600 954
4,665 2,188 683
4,042 3,520 1,117
3,410 2,542 1,031
5,492 3,056 936
4,433 2,196 850
5,750 3,204 1,398
3,550 1,518 980
4,800 2,208 1,631
5,885 206 1,162
8,015 0 591
8,953 0 356
5,860 0 222
8,297 10 340
8,248 631 558


TANGERINESA
Rail Boat Truck
1,657 42 149
1,398 192 176
1,111 483 243
829 591 268
1,013 570 234
1,615 735 379
1,192 520 256
1,748 728 465
1,255 294 437
1,437 431 433
1,383 59 325
3,085 0 380
2,838 0 383
3,049 0 327
2,809 0 384
1,970 89 438


Q


t==
CA
rj
P

t=,l
q

q


Source: United States Department of Agriculture, Marketing Florida Citrus, various issues.
a. 90 pounds per box.
b. 80 pounds per box.








PRODUCTION AND DISTRIBUTION


It amounted to 21 per cent in 1940-41, but dropped off to a little
over 2 per cent in the following year and was suspended entirely
during the remainder of the war years. In 1946 the service
was revived, but boat movement accounted for only about 5
per cent of the total. The service was again withdrawn because
of unprofitability, and no boat traffic occurred in 1946-47.
Although less absolutely, the water movement of grapefruit
has been relatively more important than that of oranges. For
instance, in 1940-41 about one-fifth of the total orange traffic
was by boat, but one-fourth of the grapefruit shipments uti-
lized that means.
Water movement has been of particular importance to the
North Atlantic ports of Boston, New York, Philadelphia, and
Baltimore. The boat portion of the total receipts increased
rapidly from 7 per cent in 1930 to 86 per cent in 1934.16 The
bulk of the water volume has been destined in every year to
these ports, but considerable quantities have been carried to
other ports and to numerous inland cities. For instance, boat
shipments made in the period September 10, 1935, to June 2,
1936, were destined to 53 different points, including such in-
land cities as Buffalo, Dallas, Little Rock, and Memphis.17
The ascendancy of boat movement in the decade preceding
the war is attributed to a number of factors which may be sum-
marized as follows:
(1) The free refrigerator service established in 1939, in con-
trast with the railroad practice of modified free service offered
only in competitive circumstances.
(2) Precooling storage facilities at ports while awaiting space.
(3) Free storage at destination, which was not provided in
connection with rail movement.
(4) The absence of a direct loading charge for truck-water


16. Ibid., p. 554.
17. United States Department of Agriculture, Marketing Florida
Citrus, Summary of 1935-36 Season, p. 49 (1936).


43








CITRUS FRUIT RATES


movement. The cost of loading into rail cars was estimated
at 1.39 cents per box in 1938-39.
(5) Reduced rates by water. It was believed that diversion
of traffic to the boat lines would bring down rail rates. The
need for economy was particularly pressing in the depression
years.
(6) Improved roads and truck facilities for shipments to
ports. An increasing number of shippers owned their trucks,
which further facilitated the diversion to water.18
Utilization of water lines has been limited by several factors,
including the longer transit time required, the necessity for ad-
vance space arrangements, and the absence of reconsignment-
in-transit privileges.
Truck transport has likewise limited the former railroad
monopoly of the citrus movement. It attained significance in
the early 1930's, but has never made such inroads on rail traffic
as water lines.
By 1931-32, the first year for which data are available, truck
movement accounted for 12 per cent of the citrus transported
from Florida. By 1935-36 the truck portion had advanced to 17
per cent, and in 1940-41 reached a high of about 23 per cent.
It then declined in the subsequent years as a result of wartime
restrictions, reaching a low of 7 per cent in 1944-45. Since the
war, trucking has revived, the truck portion for 1946-47 being
over 13 per cent. The trucking of oranges has been relatively
more important than that of grapefruit.
Although the bulk of. trucked-out shipments is destined to
points in the Southeast, the dispersion of truck movement seems
to be increasing. In 1934-35 truck consignments were made to
29 states, in 1946-47 to 34 states. In the latter season consider-
ably more was trucked to Indiana, for instance, than to several
of the southern states. In some years destination states as re-


18. See Citrus Fruit from Florida to North Atlantic Ports, 266 I. C. C.
627, 641 (1946). Also, Bureau of Agricultural Economics, Readjustments
in Processing and Marketing Citrus Fruits, pp. 86, 87 (1946).


44








PRODUCTION AND DISTRIBUTION


mote as North Dakota have been reached by truck from Florida.
The large-scale movement of citrus from Texas dates from
the late 1920's, and motor-truck competition with the railroads
has played a prominent part almost from the outset. Highway
movement has been relatively more important from this origin
than from Florida, while water shipment has played a less im-
portant part. During the 1934-35 season trucking accounted for
39 per cent of the total citrus traffic from Texas.

TABLE 19

TEXAS FRESH CARLOT CITRUS SHIPMENTS

ORANGES GRAPEFRUIT
SEASON
SEASON RAILA BOAT TRUCK RAIL BOAT TRUCK

1937-38 1,324 4 1,990 12,637 174 2,817
1938-39 1,746 10 4,724 14,963 589 5,200
1939-40 1,195 1 4,093 11,256 528 6,404
1940-41 1,051 2 4,837 8,663 57 8,931
1941-42 2,083 0 3,818 13,951 0 5,026
1942-43 b 2,940 0 2,170 17,193 0 2,438
1943-44 3,895 0 3,014 16,486 0 1,866
1944-45 5,640 0 2,799 22,237 0 2,199
1945-46 4,919 0 3,705 23,585 114 2,774
1946-47 4,253 0 4,832 22,333 1,501 3,656
Source: United States Department of Agriculture, Marketing Texas Citrus, various
issues.
a. Straight and mixed cars.
b. Conversion at 400 boxes, but actual rail loading about 525 boxes.

Texas rail rates, like those from Florida, have been very
responsive to truck competition. Alternative highway movement,
in fact, has been one of the outstanding forces conditioning rail
rates on citrus from Texas. Changes in these rates doubtless
account to some extent for the fluctuations in the truck portion
of the hauls. In 1937-38 the truck share of the total movement
dropped to 25 per cent, but in 1939-40 it advanced to 45 per
cent, as indicated in Table 19. The diversion was even greater
in the first part of the following season, but railroad rate reduc-
tions in February were somewhat effective in halting the diver-


45








CITRUS FRUIT RATES


sion.19 The war years, as might be expected, saw a decline in
the importance of truck movements, the proportion dropping to
19 per cent in 1943-44. By the 1946-47 season some recovery
had occurred, but the truck share had still not reached prewar
levels, being 24 per cent for that year.
As in the case of Florida, truck shipments from Texas are
quite widely dispersed, but move principally to Louisiana, Ar-
kansas, Missouri, Oklahoma, Kansas, Nebraska, Wyoming,
Colorado, and New Mexico. A common operation is the truck-
ing of citrus from the producing areas to San Antonio, Fort
Worth, Houston, and Dallas. At these points traffic is inter-
changed with trucks which have brought in other fruits and
vegetables and which return with citrus loads.20 Much of the
trucking is by itinerant truckers who purchase their cargo.
Numerous advantages of truck movement have been cited,
some of the most important of which are as follows:21
(1) Faster service is often possible.
(2) Icing is not usually required, particularly if the shipment
has been precooled prior to forwarding.
(3) Economies arise from direct movement from packing
sheds to wholesale warehouses, without the necessity for re-
handling.
(4) Flexibility of truck construction and operation facilitates
closer conformity to the peculiar needs of citrus transportation
than is feasible with rail movement.
(5) Frequently diversion is easier when fruit is trucked, par-
ticularly in the numerous instances where the operator of the
truck owns the fruit.
(6) Motor truck operations involving citrus are unregulated,
which gives truckers a competitive advantage over the railroads.

19. United States Department of Agriculture, Marketing Texas Citrus,
Lower Rio Grande Valley of Texas, Summary of 1940-41 Season, p. 1
(1941).
20. Bureau of Agricultural Economics, Readjustments in Processing
and Marketing Citrus Fruits, p. 88.
21. Ibid., p. 87.


46








PRODUCTION AND DISTRIBUTION


Although the boat movement of Texas citrus has at times at-
tained some importance, it has not been nearly so significant as
trucking, or as water transport from Florida. The first adequate
data indicating the water movement from Texas are for 1937-38,
when only 1 per cent of the shipments was by this means. In
1939-40 it represented only 2 per cent. Water service was
suspended during the war years, but has since been resumed. It
has not gained substantially in the postwar years, the proportion
for 1946-47 being only 3 per cent.
Movements by water to the 4 major North Atlantic ports
have been a substantial portion of the Texas receipts in those
cities. For instance, during the years 1937-40 the percentage of
total carlot equivalents of Texas receipts which had a water
haul was as follows:22

New York 46.7
Boston 32.5
Philadelphia 4.8
Baltimore 5.5

The water movement to New York and Boston, it will be noted,
was particularly substantial, although the total Texas receipts
at these cities were not great.
The transportation of citrus from California by water has
never attained much importance, and has never been a signifi-
cant factor in the citrus traffic from that state. Highway move-
ment, on the other hand, is more important, and truck competi-
tion has had a noticeable effect on the rail rates from California
to some sections of the country. Traffic figures are given in
Table 20.
Complete records of trucking are unavailable, but there is
sufficient evidence to show the increasing importance of this
service. In the period 1933-36, the first years for which compari-
son is possible, truck movement accounted for 4.4 per cent of
the combined rail-truck traffic in oranges. During this period


22. Ibid., p. 86.


47









CITRUS FRUIT RATES


TABLE 20

CALIFORNIA FRESH CITRUS CARLOT INTERSTATE SHIPMENTS
BY RAILA AND TRUCK

ORANGES GRAPEFRUIT
SEASON
Rail Truck Rail Truck
1933 53,329 619 2,201 49
1934 71,134 2,056 1,878 697
1935 58,484 4,440 2,710 1,168
1936 42,563 3,151 1,076 911
1937 72,801 6,266 2,455 1,652
1938 58,159 8,011 1,665 2,147
1939 70,702 9,015 2,189 2,595
1940 72,341 9,047 2,271 2,413
1941 81,648 9,318 2,784 2,302
Averages:
1933-36 56,378 2,567 1,966 706
1937-41 71,130 8,331 2,273 2,222
Source: Adapted from Association of American Railroads, Subcommittee on Economic
Study, Citrus Fruits, p. 185 (1946).
a. Includes the small volume of boat shipments which moved.

highway carriers handled 26.5 per cent of the grapefruit, largely
because much of this crop is consumed locally. In the succeeding
period, 1936-41, the truck share of the orange traffic had risen
to 10.5 per cent and that of the grapefruit traffic to 49.4 per
cent. Thus it can be said that highway transportation is a very
important factor in the marketing of California grapefruit. Its
position in orange transportation has become significant and
appears to be increasing, but it will probably be limited by the
large portion of the California orange output which is marketed
in the distant Northeast.


48










III

DEVELOPMENT OF THE RATE STRUCTURE



T HE nature of the citrus fruit rate structure and the forces
that have shaped it can be revealed, at least in part, by studying
the citrus rate decisions of the Interstate Commerce Commission.
Rates from Florida should be considered first, for they have re-
ceived more attention from the Commission and have served
as the basis for rates from California and Texas.


FLORIDA RATES


From the very beginning of an appreciable interstate move-
ment of citrus soon after 1880, transportation rates on Florida
citrus fruit have reflected in varying degrees carrier competition.
Prior to 1908 rates were generally on an any-quantity, package
basis.' During the early period most citrus moved out of Florida
by water, and the railroads adopted the water-carrier method
of quoting rates.2 Until the short-line railroads of Florida and
the Southeast were consolidated to some extent and through
routes were created to the North, about 1887, citrus was carried
at local rates by river or rail to Jacksonville or Fernandina,
Florida, or Savannah, Georgia, whence it was transported by
ocean carriers in unrefrigerated vessels to eastern cities.3 Dur-
ing the four years prior to 1890 the rail-water rate from Jack-


1. Florida Fruit & Vegetable Shippers' Protective Association v.
Atlantic Coast Line Railroad Company, 14 I. C. C. 476, 493 (1908).
2. Railroad Commissioners of State of Florida v. Aberdeen & Rock-
fish Railroad Company, 144 I. C. C. 603, 609 (1928).
3. Railroad Commissioners, State of Florida v. Director General,
Aberdeen and Rockfish Railroad Company, 61 I. C. C. 438, 440 (1921).
49









CITRUS FRUIT RATES


sonville to New York was 30 cents per box of 80 pounds.4 Rates
to the other large Atlantic ports were differentially higher or
lower by a few cents.
After the establishment of through routes, an increasing por-
tion of the citrus traffic moved all-rail under two-part rates.5
One part consisted of gathering charges, equivalent to the full
local rates, from origin to "base points," such as Jacksonville,
Lake City, Gainesville, and Live Oak. The other part com-
prised so-called "base rates" from the basing points to destina-
tions in the East and Midwest. This second factor, composed of
combinations to and from gateways such as Richmond and Cin-
cinnati, was lower mile for mile than the first, varied less with
distance, and bore a closer relation to water rates. For example,
beginning in 1891 the local rate averaged about 25 cents per
box for a typical haul of less than 200 miles, and the all-rail
base rate from Jacksonville to New York was 50.5 cents for a
haul of approximately 1,100 miles." In other words, one-sixth
of the haul paid one-third of the total rate. This distribution
of the rate burden began when traffic moved in small quantities
to the base or assembling points and loading was performed by
the carrier, but was continued long after the volume of traffic
reached carload proportions from origin and cars were loaded
by the shipper. The distribution was also the result in part of
the depression of the base rate by water competition. In 1891
the rail-water rate from Jacksonville to New York was 35 cents,
or 15 cents lower than the all-rail rate. Approximately this re-


4. Florida Fruit & Vegetable Shippers' Protective Association v.
Atlantic Coast Line Railroad Company, 14 I. C. C. 476, 492 (1908).
The all-rail rates were 43 cents per box.
5. Citrus Fruit from Florida to North Atlantic Ports, 211 I. C. C.
535, 539 (1935).
6. Florida Fruit & Vegetable Shippers' Protective Association v.
Atlantic Coast Line Railroad Company, 14 I. C. C. 476, 482 (1908).
From 1888 to 1890 the through rate from Jacksonville was 43 cents by
the Atlantic Coast Dispatch Line. Railroad Commission of Florida v.
Savannah, Florida & Western R. Co., 3 I. C. R. 688, 690 (1891).


50








DEVELOPMENT OF RATE STRUCTURE


lationship had applied and continued to apply for some years.
From Jacksonville to Chicago, over almost the same distance
but with no water competition, the all-rail rate was 60 cents.
The first significant modification of the Florida citrus rate
structure was made in 1908 by the Interstate Commerce Com-
mission after its authority to fix rates had been established by
the Hepburn Act, but several slight adjustments occurred before
that date. For example, in 1891, the Interstate Commerce Com-
mission had approved an advance in the base rate of 5 cents
instead of the 10 cents published by the carriers; and the Florida
Railroad Commission had reduced the gathering charges from
Arcadia by 2 cents in 1897 and by 3 cents in 1902.7 The rate
from Jacksonville to New York then became 50.5 cents and re-
mained at this level until 1908, notwithstanding a large increase
in the volume of traffic and reductions in rates from Califor-
nia.8 Freezes in 1895 and 1899 had practically destroyed the
Florida crop, as previously explained, but growing had shifted
farther south down the peninsula, and by 1908 production ex-
ceeded any previous year in history.
By its decision in 1908 the Interstate Commerce Commission
prescribed carload rates from Florida base points to the East
with a carload minimum of 300 boxes.9 It also ordered a reduc-
tion in the level of base rates, from 50.5 cents to 46 cents on
Jacksonville-New York traffic.10 Gathering charges were not


7. Railroad Commission of Florida v. Savannah, Florida & Western
R. Co., 3 I. C. R. 688, 690 (1891).
8. Railroad Commissioners, State of Florida v. Director General,
Aberdeen & Rockfish Railroad Company, 61 I. C. C. 438, 441 (1921).
The carriers had advanced the rate to 53 cents in 1890, but the Com-
mission disapproved.
9. Florida Fruit & Vegetable Shippers' Protective Association v.
Atlantic Coast Line Railroad Company, 14 I. C. C. 476, 494 (1908).
10. Corresponding adjustments applied to other points in the East.
The rate per box was equivalent to 57.5 cents per 100 pounds. The rate
to Baltimore was 43 cents, to Philadelphia it was 44 cents, and to Boston
it was 51 cents.


51








CITRUS FRUIT RATES


changed and continued as proportionals on a relatively high any-
quantity basis. The Commission asserted that the base rates had
been too high but that the local rates should not be disturbed
on account of the poor financial condition of the carriers and
the expensive character of the gathering service. Several con-
siderations were said to justify lower base rates. One was that
the citrus fruit traffic had proved highly profitable'to the Florida
carriers and that its failure to produce better financial results
arose in part from the overcapitalization of the companies and
from the excessive divisions of rates exacted by the northern
railroads. Another factor was the need to recognize the active
water competition to the East, where three-fifths of the Florida
citrus was marketed. Still another and the most important ele-
ment was market competition. Rates per box from California
had been lower than from Florida, even to Boston, for an average
haul twice as long; and it seems probable that the principal
California shippers had failed because of extensive rebating
actually to pay the rates in effect,11 although the Commission
did not mention this abuse. Moreover, Florida rates had not
changed in sixteen years, whereas California rates had been re-
duced over 17 per cent. During this period the Florida groves
had shifted farther from the base points, thereby increasing the
average gathering charge. Mile for mile the California rates
were far below those of Florida, and in the opinion of the Com-
mission the differential was not altogether justified, notwith-
standing the circumstance that the California traffic was denser
and involved little gathering cost.
These rate advantages over Florida were intensified by the
easier diversion of California shipments resulting from the great
destination rate blanket east of the Missouri River, and by the
more favorable cost-price margin of the California producer.


11. On rebating see Consolidated Forwarding Company v. Southern
Pacific Company, 10 I. C. R. 590, 624 (1905). California rates to New
York were higher than from Florida, probably because of water compe-
tition from Florida.


52








DEVELOPMENT OF RATE STRUCTURE


Growing costs were said to be about the same in the two states,
but California oranges commanded from 25 cents to 50 cents
more per box in the market. The Commission recognized that
California and Florida producers could have been placed on a
more equal competitive footing by raising the rates from Cali-
fornia, but it asserted that these rates were already above the
level that had been approved. Assuming the reasonableness of
the approved rates, it would have been unlawful to raise them
for the purpose of depriving California of its advantages.
The readjustment of 1908 slightly improved Florida's position
in the East with reference to California. In the Midwest no
change occurred, the carriers failing to follow the Commission's
suggested revision to that area. The first midwestern modifica-
tion by Commission order was in 1910. At that time, and for
reasons set forth in the decision of 1908, the Commission pre-
scribed carload rates from base points to the territory north of
the Ohio River and east of the Buffalo-Pittsburgh line, saying
that the Chicago rate should be about the same as the New
York rate.12 Accordingly, the rate to Chicago was reduced from
60 cents to 53 cents and the rates to other midwestern points
were also cut. Existing local rates to the base points were again
approved as parts of the through rates. As in the case of east-
bound traffic, gathering charges had been lowered twice by
the Florida Railroad Commission.13
The next major change in the Florida citrus rate structure
concerned the any-quantity local rates which had long been
used as proportionals. In 1911 the Interstate Commerce Com-
mission prescribed carload rates based upon distance to apply
as proportionals from all producing points throughout the state.14


12. Florida Fruit & Vegetable Shippers' Protective Association v.
Atlantic Coast Line Railroad Company, 17 I. C. C. 552, 556 (1910).
13. Railroad Commissioners, State of Florida v. Director General,
Aberdeen & Rockfish Railroad Company, 61 I. C. C. 438, 441 (1921).
14. Florida Fruit & Vegetable Shippers' Protective Association v.
Atlantic Coast Line Railroad Company, 22 I. C. C. 11, 20 (1911).


53








CITRUS FRUIT RATES


The distance scale began at 9 cents for hauls of less than 40
miles and increased by 1 cent for each 20-mile block up to 32
cents for hauls of 500 miles. The Commission declared that
small differences in distance need not be reflected in through
rates when the hauls are long, and it permitted the creation of
a number of small origin groups, but it refused to allow the
blanketing of the entire producing area on the ground of oppo-
sition from growers in the northern part of the Florida peninsula.
The Commission's decision in this case rested primarily upon
the changed conditions as to gathering. Citrus fruit had moved
for some time in large volume by the carload directly from pro-
ducing centers with loading by the shipper instead of by the car-
riers. Both the Atlantic Coast Line and the Seaboard Air Line
quoted carload rates from origin that exceeded the base point-
destination rate by the amount of the any-quantity rate to the
base point. Before the decision the rate from Arcadia to New
York was 71 cents per box; after the decision it was 66 cents.
Corresponding rates from Arcadia to Chicago were 78 cents
and 73 cents. These reductions strengthened Florida's competi-
tive position, although the blanket rate from California had
been reduced in 1907 from $1.25 per 100 pounds to $1.15.1'
The reductions, together with improved refrigeration and ex-
tension of diversion privileges, also caused most of the citrus
fruit traffic to move from Florida by rail.16 Water transporta-
tion did not become important again until about 1930.
Four other changes in Florida citrus fruit rates before 1928
deserve brief mention. The first was a realignment in 1917 of
rates to points in the Southeast in conformity with an order of
the Interstate Commerce Commission requiring the railroads

15. Arlington Heights Fruit Exchange v. Southern Pacific Company,
19 I. C. C. 148, 150 (1910).
16. Citrus Fruit from Florida to North Atlantic Ports, 211 I. C. C.
535, 539 (1935). At first ventilated, as distinguished from refrigerated,
cars were used. Only a small part of the traffic had been refrigerated
as late as 1908.


54








DEVELOPMENT OF RATE STRUCTURE


to cease charging more for short than for long hauls.17 Rates
were advanced by a few cents to certain cities, were undisturbed
to others, and were reduced to still others, but more people were
affected by the increases than by the decreases. Further reduc-
tions were held to be unjustified because of the nature of the
traffic and the special services required, such as refrigeration
and reconsignment.18 The other three citrus rate changes prior
to 1928 were the results of two general advances in all railroad
rates-25 per cent in 1918 and 25 to 40 percent in 1920-and
of one general reduction of 10 per cent in 1922.19 The effect
of these increases was to raise the rate between Arcadia and
New York, for example, from 66 cents per box to $1.10, or a
total of 44 cents.20 From Los Angeles to New York the rate
rose from $1.15 per 100 pounds to $1.92, or a total of 77 cents.
Maximum absolute limits were not applied.
In 1928 the Interstate Commerce Commission established the
present so-called "normal rates" for citrus.21 Desiring further
to rationalize and simplify all southern rates, including those
on citrus, the Commission related citrus rates to the distance
scale of first-class rates that had already been prescribed in the
Southern Class Rate Investigation, and that had become effec-
tive earlier in the year.22 Existing citrus rates were very com-


17. Florida Growers' & Shippers' League v. Alabama & Vicksburg
Railway Company, 43 I. C. C. 595, 598 (1917).
18. The Commission again refused to change Florida citrus rates in
1921 and in 1922. See Railroad Commissioners, State of Florida v.
Director General, Aberdeen & Rockfish Railroad Company, 61 I. C. C.
438 (1921), and 74 I. C. C. 157 (1922).
19. Interstate Commerce Commission, Statement of General Rail and
Rail-Water Freight Rate Changes Made During the Period October,
1914, to April, 1948, Inclusive, pp. 3-4 (April, 1948).
20. These rates per 100 pounds were 82.5 cents and $1.375. Unless
otherwise indicated, rate quotations after 1928 will be expressed on a
100-pound basis.
21. Railroad Commissioners of State of Florida v. Aberdeen & Rock-
fish Railroad Company, 144 I. C. C. 603 (1928).
22. 100 I. C. C. 513 (1925).


55








CITRUS FRUIT RATES


plicated. One tariff alone contained rates from 1,700 origins
to 14,000 destinations. Rates on bulk citrus differed from pack-
age rates. Proportional rates varied widely from territory to
territory. Units of charge were not the same and were subject
to varying minima.
In making the citrus adjustment of 1928, the Commission
chose a relationship that would leave citrus rates on approxi-
mately the existing level, although expressed in cents per 100
pounds rather than in terms of boxes. Generally speaking, car-
load rates to the South, East, and West, carrying a uniform
minimum of 32,400 pounds, were fixed through combinations
to and from gateways not to exceed sixth-class rates, or 40 per
cent of first class, with a maximum of $1.80 to transcontinental
territory.23 Since class rates were based largely upon distance,
the new citrus rates conformed more closely thereto than in the
past, subject to the stated maximum and to considerable destina-
tion grouping in the East as a result of the Commission's de-
cision in the third supplemental report in the Southern Class
Rate Investigation.24 That decision created class-rate groups
around key points.25 Offsetting these qualifications of the dis-
tance principle, the Florida base points and origin groups were
eliminated.26 Spokesmen for Florida had requested the Com-
mission, as in 1911, to blanket the state's entire producing area
to correspond with a similar blanket in California, but the Com-


23. The existing minimum to Eastern and Southern territories was
24,000 or 27,000 pounds, depending upon the rate applied. Because of
the fact that the rate of $1.80 was later blanketed back within the region
between Western Trunk-Line and Transcontinental territories, the Com-
mission found it necessary in 1931 to order a grading of rates to that
region on a distance basis. Railroad Commissioners of State of Florida
v. Aberdeen & Rockfish Railroad Company, 177 I. C. C. 735 (1931).
24. 128 I. C. C. 567, 599 (1927).
25. Growers & Shippers League of Florida v. Atlantic Coast Line
Railroad, 195 I. C. C. 265, 266 (1933).
26. Prior to the readjustment of 1928, Florida shippers paid the same
rate to base points on interstate movements regardless of destination.


56








DEVELOPMENT OF RATE STRUCTURE


mission denied this request because of the large size of the area
and the opposition from growers located in its northern portion.
The chief California producing area was much smaller and lay
with its long axis at right angles to the eastward flow of traffic.
Florida interests had also asked the Commission to transform
Official Territory into a destination blanket like that enjoyed
by California, but the Commission asserted that the existence
of the blanket for California did not justify one for Florida and
that it would not have been justified had it created the Califor-
nia blanket.
Although the readjustment of 1928 was not designed to
change the level of citrus fruit rates, it actually brought about
a slight average reduction. In some instances rates were undis-
turbed, in others they were decreased, and in still others they
were increased. Before the readjustment the Arcadia-New York
rate, reflecting the general reduction of 10 per cent in 1922,
was 99 cents per box and it remained at this figure.27 The cor-
responding rates to Chicago were $1.10 and $1.00.28 Those to
Boston were $1.06 and $1.07.29 Florida shippers vigorously con-
tended that the great increase in the volume of traffic and heav-
ier loading justified a sharp downward revision of rates, but
the Commission was not impressed with this argument. It point-
ed out that railroad operating expenses had risen more than the
volume of traffic, that Florida rates were lower than those of
California to all important destinations east of a line from Du-
luth through South Dakota, Nebraska, and Kansas to west
Texas, and that car-mile earnings under Florida rates were fre-
quently less than under Texas rates for approximately the same
distance. The Commission admitted, of course, that mile for
mile California rates were much the lowest.


27. These rates are in terms of a box of 80 pounds in 1922 and of 90
pounds in 1928. On the basis of 100 pounds the rates were reduced
from $1.24 to $1.10.
28. In terms of 100 pounds these rates were $1.38 and $1.12.
29. In terms of 100 pounds these rates were $1.33 and $1.19.


57









CITRUS FRUIT RATES


In 1931 Florida spokesmen, citing a depression in the citrus
fruit industry, protested the Commission's decision of 1928 and
again asked for a reduction of rates together with a blanket
rate of 95 cents per 100 pounds east of the Buffalo-Pittsburgh
line and 98 cents west thereof.30 Once more Florida's appeal
was denied, largely on the grounds set forth three years earlier.
The Commission stated that the depression was probably tem-
porary and that it had no authority to equalize climatic conditions
and costs of production. It also repeated that Florida rates were
lower than California rates to points east of the Mississippi River.
Since 1931 Florida citrus has been subject to eight changes
in the general level of rates. First, on January 4, 1932, at the
time of the general emergency increase of 2 cents per 100
pounds, citrus rates were increased 1 cent.31 Second, in 1938
the rates on agricultural products, including citrus, were in-
creased 5 per cent.32 Third, in 1942 citrus rates were again in-
creased 3 per cent.33 Fourth, this increase was suspended in
1943 but was restored in 1946.34 Fifth, on January 1, 1947,
basic rates were generally increased 20 per cent, subject to a
maximum of 13 cents per 100 pounds for citrus fruit.35 The
basic rates did not include the increases that were restored in
1946. Sixth, in 1947 citrus rates were temporarily increased 10
per cent.36 Seventh, in August, 1948, the emergency increase of
the preceding year became 25 per cent within and from South-
ern Territory, with a maximum on citrus of 20 cents per 100


30. Southern Fruit Distributors v. Alabama Great Southern Railroad
Company, 178 I. C. C. 373, 374 (1931).
31. Fifteen Percent Case, 1931, 178 I. C. C. 539 (1931).
32. Fifteen Percent Case, 1937-38, 226 I. C. C. 41 (1938).
33. Increased Railway Rates, Fares, and Charges, 1942, 248 I. C. C.
545 (1942).
34. Increased Railway Rates, Fares, and Charges, 1946, 264 I. C. C.
695 (1946).
35. Increased Railway Rates, Fares, and Charges, 1946, 266 I. C. C.
537 (1946).
36. Increased Freight Rates, 1947, 269 I. C. C. 33 (1947).


58








DEVELOPMENT OF RATE STRUCTURE


pounds.37 Eighth, on August 11, 1949, rates were further in-
creased by 10 per cent, subject to a maximum on fresh citrus of
9 cents. Interterritorially, other than between Eastern and
Southern territories, the increase was 9 per cent. As of August
21, 1948, when the first increase of 1948 became effective, Flori-
da citrus rates to important cities were at the highest level in
history, with the exception of the substantial upward revisions
of World War I. For example, the rate from Arcadia to New
York was $1.23 per 100 pounds and to Chicago it was $1.25.
During World War I the Arcadia-New York rate rose to $1.375.
Aside from general changes, the principal recent modifications
of Florida citrus rates have been caused by interagency competi-
tion. As already indicated, about 1930 citrus began moving in-
creasingly by truck and water, forcing the railroads to readjust
their rates. Trucking led to readjustments in Southern Territory
especially, and truck-water transportation brought about modifi-
cations to North Atlantic ports and the Midwest. Many of the
adjustments were temporary. Some were novel in character.
Their general effect was a reduction in rates, including the
elimination of the Florida arbitraries, which had been reflected
in the "normal rates" prescribed by the Commission in 1928.
The reader will recall that these arbitraries were additional
amounts based upon distance superimposed upon the southern
scale of interstate class rates on hauls in Florida south of the
line of the Seaboard Air Line Railway from River Junction to
Jacksonville for the purpose of compensating for the lack of
overhead traffic in the peninsula.
In 1933 the Interstate Commerce Commission approved re-
duced rates from Pensacola to points on the lines of the St.
Louis-San Francisco Railway Company in Mississippi, Alabama,
Arkansas, Oklahoma, Missouri, Kansas, and Tennessee.38 The

37. Increased Freight Rates, 1947, 270 I. C. C. 403 (1948). Within
Eastern Territory the increase was 30 per cent, within Western Territory
other than Zone I of Western Trunk-Line Territory it was 20 per cent.
38. Citrus Fruit from Florida via St. Louis-San Francisco Railway,
194 I. C. C. 445, 446 (1933).


59








CITRUS FRUIT RATES


new rates were approximately 80 per cent of the all-rail rates
from Tampa, Lakeland, and Lake Wales less 28 cents, which
represented an average trucking charge of 11 cents to Tampa
plus a water rate of 17 cents from Tampa to Pensacola. Al-
though this adjustment improved the competitive strength of
Florida growers, especially with reference to Texas citrus, the
railroads serving the Florida peninsula opposed the truck-water-
rail route as an improper invasion of their territory through the
use of joint arrangements never intended to aid one railroad in
competing with another. Obviously, the railroad argument over-
looked the public interest in cheaper transportation routes. Be-
fore the reduced rates became effective, the rate from Lake
Wales to St. Louis was $1.03; afterward it was 55 cents, or about
half as high.39
Trucking has influenced Florida citrus rates roughly in pro-
portion to the nearness of markets. Between 1932 and 1938
rail rates were reduced about 50 per cent to that portion of
Southern Territory nearest Florida, 35 per cent to the next zone,
and 15 per cent to the most distant areas.40 Rates were also re-
duced first by 12 cents per 100 pounds and then by 8 cents to
Western, Central, and interior Eastern territories, to meet like
reductions from California. Illustrating the effects of these ad-
justments, the rate from Lake Wales to Atlanta fell from 70
cents in 1932 to 35 cents in 1939. Corresponding rates to
Memphis were 90 cents and 60 cents. Proposals were made in
1940 to increase the rates to inland markets, but the Interstate
Commerce Commission rejected the higher rates on the ground
that they would further divert traffic from the railroads and en-
courage canning. More canning tends to affect the railroads
adversely in two ways. A larger proportion of canned than of

39. Ibid., pp. 446, 449.
40. Estimated Weights on Citrus Fruits, 237 I. C. C. 313, 354 (1940).
Successive reductions were made in January, 1932; October, 1932;
December, 1932; December, 1935; March, 1939; February, 1941; and
November, 1941.


60








DEVELOPMENT OF RATE STRUCTURE


fresh citrus moves by truck, and the rates on canned citrus are
generally lower than on fresh.
The greatest reductions in Florida citrus rates to distant
points have been to the North Atlantic ports, Baltimore, Phila-
delphia, New York, and Boston, where over half the citrus is
marketed.41 In order to meet the active truck-water competi-
tion to these ports, after the railroads had tried several pre-
liminary reductions, the Interstate Commerce Commission in
1935 permitted the railroads, without observing the Long- and
Short-haul Clause,42 to quote rates approximately equal to those
maintained over the truck-water routes, or about 63 per cent of
"normal."43 For example, the reduced rate from Lake Wales
to New York was 66 cents, whereas the normal rate as pre-
scribed in 1928 was $1.05.44 This drastic reduction was severely
criticized by three members of the Commission, and the elimina-
tion of the differential of 18 per cent in favor of water trans-
portation that had been fixed in 1928 was protested by the
water carriers as a violation of Congressional policy, but the
majority of the Commission ruled that the lower rates were
reasonable and necessary if the railroads were to compete success-
fully for the citrus traffic. At first the new rates applied only on
Monday, Thursday, Friday, and Saturday, when boats usually
sailed, with the objectives of making the all-rail service approxi-
mately equal to that of the truck-water and of encouraging the
consolidation of rail traffic so that it could be handled in larger

41. Successive reductions were made in rail rates in February, 1932;
April, 1933; December, 1934; December, 1935; and November, 1937.
42. Rates to the distant points were to yield not less than 12 cents
per car-mile on the basis of a carload minimum of 36,000 pounds. In-
termediate rates could not be more than 50 per cent above distant rates.
The carload minimum for truck-competitive rates was fixed at 34,560
pounds in refrigerated cars and 22,500 in ventilated cars.
43. Citrus Fruit from Florida to North Atlantic Ports, 211 I. C. C.
535 (1935). Previously the railroads had unsuccessfully experimented
with reductions that left the all-rail rate above the truck-water rate.
44. The water rate from Jacksonville to New York was 51 cents.


61








CITRUS FRUIT RATES


units. These sailing-day rates proved impracticable, however, and
in 1937 the reduced rates were made effective on all days of the
week.45 The sailing-day feature had not caused a concentration
of traffic because the shipping lines increased their sailings and
provided free storage on nonsailing days. It had also created
operating difficulties, such as an uneven flow of traffic, un-
balanced power, delays, and interference with train schedules
and closing hours. An important result of these and similar re-
ductions that followed during the next few years was an increase
in the spread between Florida rates to New York and to Chicago,
thereby encouraging the marketing of citrus in the East rather
than in the Midwest. In 1940 the spread between the Lake
Wales-New York rate and the Lake Wales-Chicago rate was
about 28 cents. In 1928 the spread was 4 cents.
When the truck-water competitive rates to North Atlantic
ports were approved in 1935, the all-rail rate to Baltimore was
made 5.6 cents higher than the truck-water rate, on account of
the need for a rail movement of citrus from the Baltimore docks
to terminal markets owned by the railroads, where trucking was
not permitted.46 Because of the failure of the railroads to re-
cover a larger share of the traffic, even after reducing their
rates, this differential was removed in 1938; but the shipping
lines lowered their rates again, precipitating a rate war, and in
1940 the Interstate Commerce Commission attempted to check
the rate cutting by restoring the differential.47 The Commission
pointed out that the absence of a differential at New York did
not call for the same adjustment at Baltimore.48


45. Citrus Fruit from Florida to North Atlantic Ports, 226 I. C. C.
315, 330 (1938).
46. In 1932 the differential in favor of truck-water transportation
had been 23.6 cents.
47. Citrus Fruit from Florida to Baltimore, Md., 237 I. C. C. 245,
252 (1940). The shipping lines declared their intention of keeping
truck-water rates below the all-rail level.
48. The all-rail rate to Boston was 2.5 cents per 100 pounds higher
than the truck-water rate.


62








DEVELOPMENT OF RATE STRUCTURE


In 1940 the railroads proposed to change the estimated weight
of a box of Florida citrus from 90 pounds to 100 pounds, there-
by increasing the charge for a car of fruit by about 7 per
cent, but the Interstate Commerce Commission denied this pro-
posal, saying that estimated weights should correspond to actual
weights and that the citrus industry could not well bear higher
rates.49 The Commission also asserted that an increase in rates
would divert more traffic to the railroad competitors, and that
once a shipper became accustomed to employing a given means
of transportation, he tended to continue patronizing that agency
even though rates by another carrier were reduced. The Com-
mission further declared that higher rates on fresh citrus stimu-
lated canning and were especially burdensome on traffic to
interior points where Florida shippers were finding distribution
difficult under existing rates. The wide spread between the
rates to the Midwest and those to the East was a major factor
in causing three-fifths of the entire movement of Florida citrus
by rail, boat, and truck to be marketed in New England and
Trunk-Line territories. Over 40 per cent moved to the North
Atlantic ports.
In 1941 the Interstate Commerce Commission, having been
given jurisdiction over water transportation in 1940, cancelled
the proportional rates that had been maintained by the water
carriers between Jacksonville and Fort Pierce and the North
Atlantic ports.50 One member of the Commission stated that
the cancellation was unfair to the water lines, since railroad
rates were to remain unchanged, but the majority held that the
proportionals from Jacksonville unduly preferred that port over
other Florida ports. The proportionals from Jacksonville, estab-
lished in 1935, ranged from 35 cents to 45 cents according to
point of origin, and the steamship companies in advancing the


49. Estimated Weights on Citrus Fruits, 237 I. C. C. 313, 316-17
(1940).
50. Proportional Rates on Citrus Fruit from Jacksonville, Fla., 246
I. C. C. 615 (1941).


63








CITRUS FRUIT RATES


trucking charge to the port were alleged to have allowed the
shipper more than he actually paid the trucker. From other
Florida ports the proportionals were higher and the steamship
companies did not advance the trucking charge. The effect
of this decision was to raise the water rate from Jacksonville to
New York to the level of the port-to-port charge, which was 46
cents for local delivery.
In 1942 the railroads proposed to return to a package basis
for citrus rates, since truck and water lines employed this basis,
but the Interstate Commerce Commission disapproved the pro-
posal.51 At the same time the Commission increased the esti-
mates used in computing minimum carload weights; made the
minima from Florida, California, and Texas the same; and
ordered a reduction of 5 per cent in Florida rates other than to
the North Atlantic ports, in order to offset the higher carload
minima.52 The estimated Florida weight for all 1 3/5 bushel
containers had been 90 pounds for both oranges and grapefruit,
with a minimum carload weight of 36,000 pounds, or 400 boxes,
as established in 1928. These specifications were changed to 100
pounds for the 1 3/5 bushel nailed box and to 93 pounds for
the 1 3/5 bushel Bruce box in the case of oranges, and to 91
pounds and 83 pounds, respectively, in the case of grapefruit.
Inasmuch as actual carloadings generally exceeded the minima,
a carload minimum of 40,000 pounds was prescribed for oranges
and of 36,000 pounds for grapefruit. The estimated Texas
weight for all 1 3/5 bushel containers had been 85 pounds with
a carload minimum of 30,600 pounds or 360 boxes. The new
estimates were 96 pounds for the 1 3/5 bushel nailed box and
90 pounds for the 1 3/5 bushel Bruce box in the case of oranges,
and 87 pounds and 83 pounds, respectively, in the case of
grapefruit. The estimated California weights for the 1 2/5 bush-

51. Package Rates on Citrus Fruits, 251 I. C. C. 691, 697, 707
(1942).
52. Although citrus rates were reduced by 5 per cent, they were
subject to the general increase of 3 per cent in 1942.


64








DEVELOPMENT OF RATE STRUCTURE


el nailed box had been 78 pounds for oranges, with a minimum
carload of 36,000 pounds, and 68 pounds for grapefruit with
a minimum of 31,000 pounds. These weights were made 85
pounds in the case of oranges and 76 pounds in the case of
grapefruit.53
When carrying out the Commission's order of 1942, the rail-
roads published rates in 1943 applicable on shipments in ven-
tilated, as distinguished from refrigerated, cars that differed in
some instances according to kind of fruit and type of container.
These rates, representing increases in most cases, reduced the
differential in favor of ventilated cars that had been created by
the railroads in 1941 in an effort to move citrus to the South-
east in competition with peddler trucks, which were not refriger-
ated.54 Although the railroads admitted that the cost of
handling fruit was lower in ventilated than in refrigerated cars,
on account of less dead weight and empty movement, they pro-
posed to reduce the differential on the ground that higher citrus
prices justified higher rates. The Interstate Commerce Com-
mission disagreed, saying that inducements were needed to en-
courage shippers to use the cheaper service.55 Pointing to the
good results that had been realized by the railroads under the
larger differential, the Commission asserted that ventilated ser-
vice was impractical unless the condition of the fruit, the length
of haul, and the weather were favorable.56 In addition, when
loading ventilated cars, shippers incurred the expense of covering
open vents with cloth to prevent smoke damage. Besides dis-
allowing the proposed rate increases, the Commission directed


53. The 1 3/5 bushel container is used almost exclusively in Florida
and Texas and the smaller 1 2/5 bushel box is practically always em-
ployed in California and Arizona.
54. During the rail-truck rate war of the period between 1932 and
1943 the rates and minimum weights for both refrigerated and ventilated
cars were changed again and again.
55. Citrus Fruit from Florida to Southeast, 258 I. C. C. 7, 13 (1944).
56. The differential had varied from 6 cents to 12 cents per 100
pounds. Under the proposed rates it ranged from nothing to 6 cents.


65








CITRUS FRUIT RATES


the carriers to name the same rate for all types of containers.
During World War II coastwise water transportation from
Florida virtually ceased, and in 1946 the Interstate Commerce
Commission reconsidered the rail-water competitive rates, vacat-
ing its various orders granting the railroads relief from the
Long- and Short-haul Clause.57 The relief rates to the North
Atlantic ports, which had ranged from 6 cents to 24 cents below
normal, were thereby cancelled and all-rail rates were generally
increased to a level equal to the port-to-port rates maintained
by the Refrigerated Steamship Company plus the purported
trucking costs to the ports. Operating expenses of both water
and truck lines had risen substantially. Spokesmen for the water
carriers had requested an increase in railroad rates and an all-
rail differential of 7 cents per box above the rail-water level,
so that water transportation could revive, but the Commission
based its decision on the disappearance of the conditions that
had justified fourth-section relief. The Commission asserted
that the law did not require it to increase the rates of one type
of carrier in order to permit another type to share the traffic.
As a result of this decision, the rate from Orlando to New York,
for example, became 84 cents. It had been 69 cents on the basis
of a minimum carload of 40,000 pounds, including the 3 per
cent general increase of 1946. This readjustment, together with
the reduction of 5 per cent in 1942 other than to North Atlantic
ports, restored the spread between Florida rates to New York
and to Chicago to the original 4 cents established in 1928.
Table 21, for purposes of ready reference, shows chronologi-
cally the history of the basic railroad citrus fruit rate in cents
per 100 pounds from Arcadia, Florida, to New York City from
1896 to 1948. The rates are based upon varying minimum car-
load weights, but on any given date the rate shown is that ap-


57. Citrus Fruit from Florida to North Atlantic Ports, 266 I. C. C.
627 (1946). Departures could be corrected by reducing the higher in-
termediate rates, by increasing the port rates, or by some adjustment
in both.


66









DEVELOPMENT OF RATE STRUCTURE


TABLE 21

CHRONOLOGICAL HISTORY OF THE BASIC RAILROAD RATE ON CITRUS
FRUIT FROM ARCADIA, FLORIDA, TO NEW YORK CITY, 1896-1948A


DATE
Nov. 5, 1896
Nov. 30, 1897
Nov. 1, 1902
Sept. 15, 1908
April 16, 1912
June 25, 1918
Aug. 26, 1920
Jan. 1, 1922
Nov. 9, 1928
Jan. 4, 1932
Feb. 22, 1932
April 1, 1933
Oct. 8, 1935
Nov. 16, 1936
March 28, 1938
March 18, 1942
Nov. 15, 1942
May 15, 1943
Jan. 1, 1947
Aug. 21, 1948


RATE
100.6
98.1
94.3
88.7
82.5
103.1
137.5
123.7
110.0
111.0
91.0
99.0
98.0
90.0
95.0
98.0
93.0
90.0
103.0
123.0


CHANGE
First authentic record of through rate
Reduction in gathering charges to Jacksonville
Reduction in gathering charges to Jacksonville
Reduction in proportional rate from Jacksonville
Reduction in gathering charges to Jacksonville
General increase of 25 per cent
General increase of 33 1/3 per cent
General reduction of 10 per cent
Prescribed in 144 I. C. C. 603
Emergency increase of 1 cent
Reduction of 20 cents to meet motor competition
Rates made 18 cents over rail-water rates
Reduction of 12 cents under rate of Nov. 9, 1928
Reduction of 8 cents
Increase of 5 per cent
Increase of 3 per cent
Increase in minimum weight
Suspension of 3 per cent increase
General increase with maximum of 13 cents
General increase with maximum of 20 cents


a. Compiled from Railroad Commissioners, State of Florida, v. Director General,
Aberdeen & Rockfish Railroad Company, 61 I. C. C. 438, 441 (1921), and from the
Exhibit of John A. O'Rourke in Ex Parte 162 (1946). Rate changes since 1943 are
taken from appropriate carrier tariffs.

plicable to the highest minimum even though a higher rate
carrying a lower minimum may have been in effect at the same
time. Omitted from the table are the temporary truck-water
competitive rates which have applied for varying periods be-
ginning on December 10, 1934. These rates were initially 86.5
cents and first reached a low point of 66.5 cents on December
12, 1935. The latter rate continued until changed by the gen-
eral rate increases, the first of which became effective on March
28, 1938.

CALIFORNIA RATES

California citrus rates have been conditioned by market com-
petition since citrus fruit first began to move from the Pacific
in large quantities, about 1886. The competition of Florida


67








CITRUS FRUIT RATES


production has been of primary importance throughout the en-
tire period. Foreign production was also important in the early
years, but was soon eliminated. Texas competition has been a
factor of increasing significance since the late 1920's. The citrus
rate pattern has also reflected the prevailing practice in the con-
struction of transcontinental rates, namely, the blanketing of
large destination territories in the East. In fact, the citrus
blanket has been considerably more extensive than that applying
on most other commodities.
The initial commodity rate for both lemons and oranges was
$1.25 per 100 pounds, made applicable to all the territory east
of the Rocky Mountains and north of the Ohio and Potomac
rivers, and from all producing areas in California. This rate,
as indicated, was designed to permit California growers to mar-
ket their citrus in the East in competition with Florida and for-
eign producers.58
The blanket rate of $1.25 was first contested before the Inter-
state Commerce Commission in 1902. In this instance, as in
all subsequent litigation, the propriety of the blanketing of the
rate was not called in question either by the carriers or Cali-
fornia shippers, the controversy centering about the level of the
blanket charge. The rate of $1.25 appeared to be unreasonable.
Ton-mile earnings were favorable, shipments were made at the
owner's risk, and the volume of traffic, as well as carload mini-
mum weights, had increased since the movement of citrus began.
The Commission concluded, however, that the evidence was
not sufficiently strong to warrant a finding that the rate was
too high, and the matter was reserved for further investigation.59
The published rate had not always been the effective rate, since
rebating of as much as $25 per car had been common up to
1900.60

58. The Consolidated Forwarding Co. v. Southern Pacific Company,
10 I. C. R. 590, 620 (1905).
59. The Consolidated Forwarding Co. v. Southern Pacific Company,
9 I. C. R. 182, 204 (1902).
60. Ibid., p. 196.


68








DEVELOPMENT OF RATE STRUCTURE


The first departure from the initial blanket rate occurred in
1902 when the carriers voluntarily reduced the lemon rate on
an emergency basis because of the severe competition of Sicilian
production in the eastern market. To meet this competition
effectively the California shippers requested a graded rate of
$1 to the Middle West and of 75 cents to the Atlantic sea-
board.61 The carriers' concession, however, was a rate of $1 to
all blanket territory. This reduced rate was initially established
to apply only from December to April inclusive, but in 1904 the
period was extended to June 15.62
In 1905 the Commission further considered the reasonableness
of the citrus rates from California. Complaining shippers point-
ed out that the orange rate was as high with a movement of
20,000 to 30,000 cars annually as it had been when only a few
hundred cars were moving.63 Further, the service had deterio-
rated drastically since 1900. Although the scheduled transit time
to New York was 12 days, it commonly took 20 days for the
movement, with a consequent increase in the deterioration of
the product en route. Considering these conditions and the level
of Florida citrus rates, the Commission found that the $1.25
rate on oranges was unreasonably high. It ordered a reduction
of 15 cents in the orange rate unless the service improved sig-
nificantly, in which case the reduction should be 10 cents. The
lemon rate was found to be reasonable.64
The Commission's order of 1905 was unenforceable, but in
1907 the orange rate was voluntarily reduced to $1.15. In 1910,
after a 1909 increase in the lemon rate from $1 to $1.15, the
orange and lemon rates were again contested before the Com-
mission. A reduction in the orange rate was said to be necessary
in order to enable growers to market an expanded production.

61. Arlington Heights Fruit Exchange v. Southern Pacific Company,
19 I. C. C. 148, 153 (1910).
62. The Consolidated Forwarding Co. v. Southern Pacific Company,
10 I. C. R. 590, 593 (1905).
63. Ibid., p. 595.
64. Ibid., pp. 606, 607.


69








CITRUS FRUIT RATES


Further, production costs were increasing in the face of stable
prices.65 Emphasis was also placed on the desirable nature of
the traffic, which moved in trainload lots for long distances.66
Interested shippers advanced 85 cents as a reasonable rate on
oranges, but the Commission, while recognizing that the existing
rate was highly profitable to the carriers, found $1.15 to be
reasonable, since the quality of the service had improved. On
lemons, $1 was prescribed as the maximum reasonable rate. The
Commission noted that the average cost to the carriers of
handling lemons was less than for oranges because the average
haul was longer.67
The finding with respect to the lemon rate was appealed by
the carriers to the Commerce Court, which enjoined the Com-
mission's order, as in many other instances, on the ground that
it had been based primarily on the assumed authority of the
Commission to protect the domestic lemon industry from the
rigors of foreign competition, and not on traffic considerations.68
Upon reconsideration the Commission reaffirmed its finding of
$1 as a maximum reasonable lemon rate, specifically indicating
the traffic considerations upon which it based its judgment. In
general, the evidence seemed to require a rate on lemons dif-
ferentially lower than that on oranges because of the more
favorable transportation characteristics of the lemon movement.69
In 1909 a commodity rate was established on citrus from Cali-
fornia to the Southeast, the so-called "blanket rate" applying
with later qualifications to that territory. In terms of the trans-
continental rate groups, the blanket then covered groups A
through M.

65. Arlington Heights Fruit Exchange v. Southern Pacific Company,
19 I. C. C. 148, 149 (1910).
66. Ibid., pp. 150, 151.
67. Ibid., p. 154.
68. Atchison, Topeka & Santa Fe Ry. Co. v. U. S., 190 Fed. Rep.
591 (1911).
69. Arlington Heights Fruit Exchange v. Southern Pacific Company,
22 I. C. C. 149, 152-54 (1911).


70








DEVELOPMENT OF RATE STRUCTURE


The next change in transcontinental rates did not come until
1918, the $1 lemon rate continuing from 1910 and the $1.15
orange rate prevailing after 1907. In 1918 General Order No.
25 of the Director General authorized a blanket increase of 25
per cent in rail rates, which resulted in an orange rate of $1.44
and a lemon rate of $1.25. Shippers protested the application of
the general increases to citrus traffic, urging that the transporta-
tion rate included charges for special services which had come
to be levied separately. Comparisons were made with rates both
on apples from the Pacific Coast and on citrus from Florida.
However, the Commission pointed out that the apple rates re-
flected the competition of local apple production and of water
routes, which was not true of citrus rates. As to the comparisons
with Florida, citrus rates therefrom were on a higher basis. The
California rates were upheld as reasonable and the increases
were applied in full.70
The 1920 general rate increase of 33 1/3 per cent brought
the blanket orange rate to $1.92 and the lemon rate to $1.665.
Two years later the general reduction of 10 per cent resulted in
a rate of $1.73 on oranges and of $1.50 on lemons.
On December 3, 1923, the rate on oranges was voluntarily re-
duced to $1.55, applicable to all groups except those in the
Southeast and New England. This reduction, together with an
increase in the carload minimum weight from 26,700 to 36,000
pounds, was expected to result in revenues as great as those
realized from the higher rate and the lower minimum weight.
The $1.73 rate was continued to the excepted destination groups
and as an alternative rate, to be used in conjunction with the
lower minimum weight, to the other groups.71 In 1928 the
$1.55 rate was made effective to all blanket territory, including
the Southeast.


70. California Citrus League v. Director General, 58 I. C. C. 373
(1920).
71. California Growers' & Shippers' Protective League v. Southern
Pacific Company, 100 I. C. C. 79, 85 (1925).


71








CITRUS FRUIT RATES


Participating transcontinental carriers cited the following
reasons for the readjustment of 1923:
(1) Economies affecting operation by reason of the heavier
loading would produce practically the same net revenue to the
carriers under the proposed rate as they had received under the
old rate.
(2) The importance of the orange tonnage, which was the
backbone of the California perishable traffic, warranted such
reductions as might be made without sacrifice of net revenue
to the carriers.
(3) Lower rates would forestall movement by the Panama
Canal.
(4) A basis of rates should be established which would be
satisfactory to the shippers, which would correspond to what
the traffic would reasonably bear as a permanent adjustment,
and which would secure the withdrawal of complaints then
pending before the Interstate Commerce Commission.72
These rates, $1.55 on oranges and $1.50 on lemons, applied
until 1932 when an emergency surcharge of 1 cent per 100
pounds was authorized by the Commission. In 1933 both rates
were voluntarily reduced to $1.44, and were thus placed on the
same basis for the first time since the early years of the century.
This rate went to $1.43 in 1933 with the expiration of the
emergency surcharge. A further reduction to $1.35 was made
in 1935, in direct response to a reduction of 20 to 25 cents in
the rates from Florida which had been made to meet truck-
water competition.73
The $1.35 rate was advanced to $1.42 as a result of the
Ex Parte 123 increase of 5 per cent in 1938. The tariff rate was
subsequently increased to $1.63, but the $1.42 charge was con-
tinued as a temporary rate and remained effective until the


72. From Defendant's Brief in I. C. C. Docket No. 16, 939, p. 130,
cited in Brooker, op. cit., p. 70 (1930).
73. Estimated Weights on Citrus Fruits, 237 I. C. C. 313, 334, 335
(1940).


72








DEVELOPMENT OF RATE STRUCTURE


imposition of a 3 per cent increase authorized by the Commis-
sion in 1942.74 This raised the rate to blanket territory to $1.46.
On November 15, 1942, the rates were reduced and the large
blanket which had covered most of the eastern half of the coun-
try was cut into two major parts. A rating of $1.39 was quoted
to that portion of the country north of the Ohio River and east
of a line running through Chicago and St. Louis. A rate 4
cents lower applied to the territory east of the Mississippi River
and south of the Ohio River, and in general to the states of
Illinois, Minnesota, North Dakota, and Wisconsin, the eastern
portions of Iowa, Missouri, and South Dakota. The rate to these
states had formerly been the same as to the areas previously
mentioned.
This break in the blanket was caused by an increase in esti-
mated weights prescribed by the Commission for the purpose of
achieving closer conformity with actual weights.75 The western
carriers compensated for this increase by reducing their rates to
a level which would yield only slightly more than the revenue
realized from the lower estimated weights. The eastern carriers,
however, refused to reduce their rates comparably, contending
that to do so would necessitate a reduction in the rates from
Florida. As a result of these varied policies of the eastern and
western carriers, the rates east of Chicago are now higher than
those to the rest of the territory embraced in the blanket.76
Subsequent changes in California rates have reflected only the
general rate level changes. On May 15, 1943, with the suspension
of the Ex Parte 148 increases, rates became $1.35 and $1.31
and remained at that level until the restoration of the 3 per cent
increase on July 1, 1946. In connection with the Ex Parte 162
findings in 1947 an increase of 13 cents was applied to citrus,
making the rates $1.48 and $1.44. The percentage increases

74. Ibid., p. 334.
75. Ibid., p. 313.
76. Letter from Mr. R. C. Neill, Traffic Manager, California Fruit
Growers Exchange (March 18, 1949).


73










CITRUS FRUIT RATES


authorized in Ex Parte 166 in 1948 were subject to a maximum
limitation on citrus of 20 cents per 100 pounds, making the rates
$1.68 and $1.64. An additional increase of 9 per cent, subject
to a maximum of 9 cents per 100 pounds, granted in August,
1949, brought the rates to $1.77 and $1.73.
Table 22 summarizes the history of the rate on oranges from

TABLE 22

CHRONOLOGICAL HISTORY OF THE ORANGE RATE
FROM CALIFORNIA TO BLANKET TERRITORY


RATE RATE
PER 100 PER CHANGE
POUNDS BOX

$1.25 $0.90


1.15 0.828


1.44 1.037 25 per cent increase

Increase in
1.44 1.123 estimated weight


1.92 1.498 33 1/3 per cent increase


1.73 1.349 10 per cent reduction

Increase in minimum
1.55 1.209 carload weight

Emergency surcharge
1.56 1.217 of 1932

1.44 1.123 Reduction of 12 cents

Expiration of
1.43 1.115 emergency surcharge


1.35 1.053 Reduction of 8 cents

Ex Parte 123
1.42 1.108 increase of 5 per cent


DATES

2-25-07
and prior

2-26-07 to
6-24-18

6-25-18 to
9-30-18

10-1-18 to
8-25-20

8-26-20 to
12-31-21

1-1-22 to
12-2-23

12-3-23 to
1-3-32

1-4-32 to
5-4-33

5-5-33 to
9-30-33

10-1-33 to
11-5-36

11-6-36 to
3-27-38

3-28-38 to
3-17-42


74









DEVELOPMENT OF RATE STRUCTURE


TABLE 22 (continued)

RATE RATE
DATES PER 100 PER CHANGE
POUNDS BOX
3-18-42 to Ex Parte 148
11-14-42 1.46 1.138 increase of 3 per cent

11-15-42 to 1.39a 1.181 Adjustment in
5-14-43 1.35b 1.147 estimated weights

5-15-43 to 1.35a 1.147 Suspension of
6-30-46 1.31b 1.113 Ex Parte 148
3 per cent increase

7-1-46 to 1.39a 1.181 Restoration of 3 per cent
12-31-46 1.35b 1.147 increase Ex Parte 148-162

1-1-47 to 1.48a 1.2580 Ex Parte 162 increase of
10-12-47 1.44b 1.2240 13 cents per 100 pounds

10-13-47 to 1.628a 1.3838 10 per cent interim
1-4-48 1.584b 1.3464 increase in Ex Parte 166

1-5-48 to 1.776a 1.5096 20 per cent interim
1-12-48 1.728b 1.4688 increase in Ex Parte 166

1-13-48 to 1.68a 1.428 Maximum increase of 20
5-5-48 1.64b 1.394 cents per 100 pounds
in Ex Parte 166

5-6-48 to 1.70a 1.445 Maximum increase of 22
8-20-48 1.66b 1.411 cents per 100 pounds

8-21-48 to 1.68a 1.428 Reduction in maximum to
effective date 1.64b 1.394 20 cents Ex Parte 166
of Ex Parte 168
increase
Source: California Fruit Growers Exchange (1948).
a. East of Chicago.
b. Chicago and St. Louis.

California to blanket territory. Rates are shown in cents per 100
pounds and in cents per box. As has been indicated, citrus fruit
is shipped on the basis of estimated weights, any modification
thereof representing a change in the transportation charge.
Only two such adjustments have occurred, the one previously
described and one in 1918. The latter caused an increase in
the rate per box, but the rate per 100 pounds remained stationary.


75













RATES ON CITRUS FRUIT, IN CENTS PER 100 POUNDS, FROM Los ANGELES, AS OF AUGUST 21, 1948


Source: Stuart Daggett and J. P.
Carter, The Structure of Transcon-
tinental Railroad Rates, p. 64
(1947).
a. Supplied by authors.








DEVELOPMENT OF RATE STRUCTURE


An important feature of California citrus rates which should
be noted is the recent tendency toward the breakup of the
blanket, which in earlier years reached as far west as Denver.
One incident in the splitting of the blanket has been described
above. Another significant factor in the increasing gradation
of rates is the pressure of motor-truck competition. The process
of gradation, dating from 1936, has been particularly significant
on the western fringes of what was formerly blanket territory,
a fact which is evident from an examination of the accompanying
rough map.
Truck competition had two main aspects. First, it caused a
reduction in rail rates to the nearer destinations for the pur-
pose of enabling the railroads to compete with direct truck move-
ment from the Pacific Coast by contract and proprietary and
itinerant truckers. The grading of the rates, on the other hand,
was designed to discourage trucking from unloading points in
one group to final destinations in a higher rated group. For ex-
ample, the transcontinental rate of $1.35, applicable in 1936
to groups E, F, and H, in which are located eastern Texas and
Oklahoma, Arkansas, Louisiana, and western Kentucky, Ten-
nessee, and Mississippi, was graded into rates of 93 cents, 97
cents, $1.02, $1.11, $1.16, and $1.25.77 An additional factor
which has doubtless contributed to the gradation is the attempt
to compete with favorable local rates from Texas.78


TEXAS RATES

The movement of citrus fruit in volume from Texas dates
from the late 1920's. The stamp of the Interstate Commerce
Commission has never been firmly placed on the Texas citrus


77. Merchants & Manufacturers Traffic Bureau v. Atchison, Topeka
& Santa Fe Railway Company, 266 I. C. C. 515, 517, 518 (1946).
78. Stuart Daggett and J. P. Carter, The Structure of Transcon-
tinental Railroad Rates, p. 63 (1947).


77








CITRUS FRUIT RATES


rates since that time. As a result, they do not closely conform
to any general standard, but reflect the pressures of market and
carrier competition. Except for fourth-section applications, ad-
justments have been made largely without the specific sanction
of the Commission.
Commodity rates were established as early as 1916, but were
confined to principal nearby cities, including Memphis, Okla-
homa City, and Little Rock. The third-class rate was assessed
on movements to other points. By 1922 the volume had become
sufficient to justify the extensive provision of commodity rates,
which were established at the same level per mile as the rates
from Florida.79
Shortly thereafter, with the increasing volume of movement
of Texas citrus, the Commission examined the rates on this
commodity in a general rationalization of Southwestern Terri-
tory class and commodity rates. Citrus was considered along
with other fruits and vegetables rated third class in Western
Classification Territory. A basis of 50 per cent of the applicable
first-class rates was prescribed for this group of commodities.80
In a supplemental report this finding was made nonapplicable
to citrus fruit, a step which was supported by both carriers and
shippers. Both groups apparently desired to preserve greater
flexibility in rate making than would be permitted by such an
adjustment, in order to deal more adequately with market com-
petition.81 As a result of this action, the rates from Texas were
left largely without any systematic or consistent basis of con-
struction.
When the Florida rates were reduced in 1928, the Texas rates
were adjusted accordingly,82 and a general basis of 40 per cent


79. Railroad Committee for the Study of Transportation, Subcom-
mittee on Economic Study, Association of American Railroads, Citrus
Fruits, p. 164 (1946).
80. Consolidated Southwestern Cases, 123 I. C. C. 203 (1927).
81. Consolidated Southwestern Cases, 147 I. C. C. 165, 166 (1928).
82. Citrus Fruits from Texas, 248 I. C. C. 25, 26 (1941).


78








DEVELOPMENT OF RATE STRUCTURE


of first class was adopted. The new rates became effective in
October, 1930, for movements to the area east of the Mississippi
and north of the Ohio and Potomac rivers, and in November,
1928, to the rest of the country.83 In this system all origins are
grouped, the rate from Harlingen being applied. Forty per cent
of the first-class rate from Harlingen has since been regarded as
the "normal" basis, although departures are numerous and sub-
stantial.84 The extent of the deviations is shown by the fact
that the weighted average rate in 1938 for traffic accounting for
84 per cent of the total to Official and Southern territories was
only 28.75 per cent of first class.85
The Commission has prescribed a basis of 50 per cent of the
first-class rates as a maximum reasonable level to a limited
number of destinations in Western Trunk-Line Territory.86
Some consideration is given to the relationship to first class
as a guide, but most rates are constructed by providing a dif-
ferential over or under the California or Florida rates, which-
ever is controlling, to the same destinations. The differential is
of a nature and size which will permit the Texas producers to
compete effectively with California and Florida shippers.87
This means, in effect, a basis that is 40 per cent of first class,
subject to competing rates from California or Florida as a maxi-
mum.88

83. Railroad Committee for the Study of Transportation, Subcommit-
tee on Economic Study, Association of American Railroads, Citrus
Fruits, p. 164 (1946).
84. Citrus Fruits from Texas to North Atlantic Ports, 222 I. C. C.
390, 391 (1937).
85. Estimated Weights on Citrus Fruits, 237 I. C. C. 313, 341 (1940).
86. American Fruit Company, Incorporated v. Rapid City, Black
Hills & Western Railroad Company, 163 I. C. C. 211 (1930); Citrus
Fruits from Texas to Destinations in South Dakota and Related Points,
176 I. C. C. 331 (1931).
87. Citrus Fruits from Florida via St. Louis-San Francisco Railway,
194 I. C. C. 445, 449 (1933).
88. Citrus Fruits from Texas to North Atlantic Ports, 222 I. C. C.
390, 391 (1937).


79








CITRUS FRUIT RATES


As previously indicated, the Texas rates have been further
conditioned by motor and water carrier competition. This has
resulted in fourth-section departures on a large scale and in gen-
erally reduced rates where competition is active to inland points.
One application for fourth-section relief in connection with
movements from Texas was made in 1937. This request was
based on market competition with Florida as well as on truck-
water competition from Texas. Up to that time, little Texas
citrus had been disposed of east of Pittsburgh. The rates from
Texas to the important North Atlantic ports were higher than
from Florida. Because of the rapid expansion of the Texas out-
put, it was becoming necessary for producers to compete in
these markets. The Texas shippers had been promised water
rates which would enable them to meet Florida competition.
The rail carriers, in turn, desired to meet the water rates without
upsetting the adjustment to intermediate points.89
The rates at the time of the application were $1.38 to Boston
and $1.35 to New York, Philadelphia, and Baltimore. The re-
quested relief was granted, and the rates to all the ports were
reduced to $1.10. Relief was continued in a subsequent pro-
ceeding which arose as a result of the 5 per cent general in-
crease authorized in 1938. Water rates were not increased ac-
cordingly, and the rail carriers desired to keep the through rates
from Texas to the ports at the level prevailing prior to the in-
crease. This resulted in further fourth-section violations which
were authorized by the Commission.90
Fourth-section departures have also been authorized to many
destinations in the interior to enable circuitous rail carriers to
compete with direct lines whose rates were conditioned by motor
competition.91 Rates from Texas to destinations in Southwestern


89. Ibid., p. 392.
90. Citrus Fruits from Texas to North Atlantic Ports, 232 I. C. C.
365, 366 (1939).
91. Citrus Fruits from Texas, 248 I. C. C. 25 (1941).


80








DEVELOPMENT OF RATE STRUCTURE


and Western Trunk-Line territories and to limited sections of
Official and Southern territories have been involved.92
Aside from the fourth-section departures, there is abundant
evidence that motor-truck competition has had a great influence
on the level of Texas rates. On October 23, 1940, reductions
of 5 to 19 cents were made to Western and Southwestern terri-
tories and of 7 to 17 cents to Central Territory.93 The purpose
of this readjustment was to permit the rail carriers to secure
"a fair portion of the movement in competition with unregulated
motor carriers."94 This reduction produced little response in
traffic volume, and in February, 1941, an additional reduction
in the grapefruit rate was made to the same territories. On this
occasion no change was made in the orange rate because of the
desire of the carriers to maintain the existing relationships with
California and Florida rates.95 The reductions in the grapefruit
rates ranged from 6 to 24 cents in the West and Southwest and
from 7 to 17 cents in Central Territory.96
The resulting rates did not conform to any systematic basis,
each rate being designed to meet specific motor-carrier competi-
tion.97 An example is found in the rate to Detroit, which was
proposed and approved in one of the fourth-section cases. The
proposed rate to this point was 95 cents per 100 pounds, based
on a truck charge of 80 cents per box of 85 pounds, which is
equivalent to 94.1 cents per 100 pounds.98 This rate was used
as the key rate in the adjustment to other points in Central
Territory. To illustrate, the rate to Cleveland was 4 cents over
the Detroit rate and that to Indianapolis 5 cents under that
rate.99

92. Ibid., p. 30.
93. Package Rates on Citrus Fruits, 251 I. C. C. 691, 711 (1942).
94. Citrus Fruits from Texas, 248 I .C. C. 25, 26 (1941).
95. Ibid.
96. Package Rates on Citrus Fruits, 251 I. C. C. 691, 711 (1942).
97. Citrus Fruits from Texas, 248 I. C. C. 25, 26 (1941).
98. Ibid., p. 27.
99. Ibid., p. 28.


81
















TABLE 23

CITRUS RATES FROM TEXAS TO SEVEN MAJOR MARKETS

DATE BOSTON NEW YORK PHILADELPHIA MEMPHIS CHICAGO ST. LOUIS KANSAS CITY
1927 160 160 160 105.5 130.5 -
1931 115 110
1933 87 100 110
Prior to May, 1937 138 135 135 -
After May, 1937 110 110 110
1941 65b 100b 80b 75b
55c 80c 65c 59c
Prior to January, 1947 116 116 116 91b 77b 73b
87c 73c 59c
January, 1947, to 129 129 129 104b 90b 86b
August, 1948 100c 86c 71c
August, 1948, to effective 149 149 149 124b 110b 103b
date of Ex Parte 168 120c 105c 85c
increase
Source: Rates through 1941 compiled from various Interstate Commerce Commission Reports. Other rates compiled from official
railroad tariffs.
a. Rates quoted in cents per 100 pounds.
b. Rate is for oranges.
c. Rate is for grapefruit.


n
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DEVELOPMENT OF RATE STRUCTURE 83

The Texas rates have been subject to the same general changes
which have previously been described as applying to the Florida
and California rates. In 1942 all rates were ordered reduced by
5 per cent by the Commission in connection with an increase in
estimated weights.'00 Subsequent general modifications include
those arising from the rate-level increases in 1947 and 1948.
Table 23 shows some of the changes which have occurred in
the rates from Texas to a number of important markets. Informa-
tion is not at hand to provide a complete history of these rates.
The table simply indicates what the rates were at particular
times. A rather substantial decline is noted from the earliest
year to 1941 in every case. This trend was reversed by the gen-
eral rate increases, but the current level is somewhat below that
of 1927.

100. Package Rates on Citrus Fruits, 251 I. C. C. 691, 742 (1942).










IV

COMPARISON OF RATES



CITRUS fruit rates between the leading producing areas and
major markets invite comparison, for they have been shaped
largely by market competition. The Interstate Commerce Com-
mission has stated that the rates from California have been
fixed to enable California producers to compete in large eastern
cities with Florida and foreign fruit rather than on the basis
of maximum reasonableness.1 It has also asserted that the rates
from Texas have been made with relation to those from Cali-
fornia and Florida to the same territory.2 Florida rates, in turn,
have frequently been adjusted with reference to California and
Texas rates, although the so-called "normal" rates from Florida
were fixed, to some extent at least, on the basis of maximum
reasonableness. For some time these normal rates have not been
the going rates, except to a limited portion of Western Terri-
tory,3 but the rates from Florida, the producing area nearest
the major markets, have generally been taken as a starting point,
with the rates from California and Texas maintained at more
or less fixed differentials above the Florida rates, so as to permit
the movement of citrus from all three states.4


CARLOAD RATES

The 1948 rates from representative origins to 10 large markets
are compared in Table 24. These rates are so listed as to show

1. Railroad Commissioners of State of Florida v. Aberdeen & Rock-
fish Railroad Company, 144 I. C. C. 603, 621 (1928).
2. Estimated Weights on Citrus Fruits, 237 I. C. C. 313, 341 (1940).
3. Package Rates on Citrus Fruits, 251 I. C. C. 691, 734-35 (1942).
4. Increased Railway Rates, Fares and Charges, 1946, 266 I. C. C.
537, 564 (1946).
84








TABLE 24


COMPARISON OF ALL-RAIL CARLOAD RATES ON ORANGES AND
GRAPEFRUIT FROM 3 REPRESENTATIVE ORIGINS TO 10 LARGE MARKETS
BEFORE AND AFTER GENERAL INCREASES IN EX PARTE 162 AND
Ex PARTE 166 IN CENTS PER 100 POUNDS

Origins
Los ANGELES, CALIFORNIA HARLINOEN, TEXAS LAKE WALES, FLORIDA 0
DESTINATION
Prior to On On Prior to On On Prior to On On
Jan. 1, Jan. 1, Aug 21, Jan. 1, Jan. 1, Aug. 21, Jan. 1, Jan. 1, Aug. 21,
1947 1947 1948 1947 1947 1948 1947 1947 1948
New York 135 148 168 116 129 149 86 99 119
0
Philadelphia 135 148 168 116 129 149 82 95 115 z
Boston 135 148 168 116 129 149 97 110 130
Chicago 131 144 164 87b 100b 120b 86 99 119 0
91c 104c 124c
Cleveland 135 148 168 110 123 143 90 103 123
Buffalo 135 148 168 117 130 150 96 109 129
Pittsburgh 135 148 168 113 126 146 87 100 120 `
Cincinnati 131 144 164 98 111 131 72 85 105 c
St. Louis 131 144 164 73b 86b 105b 83 96 116
77c 90c 110c
Kansas City 116 129 149 59b 71b 85b 100 113 133
73c 86c 103c
a. Compiled from official railroad tariffs. Rates do not reflect changes subsequent to August 21, 1948, including the 5-6 per cent
increase in Ex Parte 168, subject to a maximum of 6 cents, effective January 4, 1949.
b. Grapefruit only.
c. Other citrus fruits.
0o
(it








CITRUS FRUIT RATES


the 20 per cent increase of 1946 in Ex Parte 162, subject to a
maximum of 13 cents per 100 pounds, and the 25 per cent in-
crease of 1948 in Ex Parte 166, subject to a maximum of 20
cents. Los Angeles and Harlingen may be and generally are
used in quoting rates from California and Texas, respectively,
inasmuch as the origin points in these two states are blanketed.
Lake Wales, situated in the midst of the citrus belt, is repre-
sentative of the Florida producing area since it lies south of
Jacksonville about 205 miles, which is approximately the average
length of the citrus rail haul within the Florida peninsula.
Observation of the table indicates that the present rates from
California are substantially higher to all destinations included
than the rates from either Texas or Florida. The rates from
California to the eastern destinations are equal at $1.68, and
are only 4 cents higher than the blanket rate of $1.64 to desti-
nations as far west as Minneapolis. Texas rates to Chicago and
points west thereof are lower than the Florida rates to these
cities, but the Texas rates to destinations east of Chicago are
higher than the corresponding rates from Florida.
The spreads among the rates from competing points to given
destinations on the three dates shown were kept fixed through
the imposition of a maximum limit of 13 cents under Ex Parte
162 and of 20 cents under Ex Parte 166. For example, the
spread between the Los Angeles-New York rate and the Lake
Wales-New York rate remained 49 cents after the two increases.
The corresponding spread in the Chicago rates was 45 cents.
Without the maximum limits, the spread in the New York rates
would have increased from 49 cents prior to January 1, 1947,
to 59 cents on January 1, 1947, and to 74 cents on August 21,
1948. On the other hand, the imposition of the maxima dis-
turbed the relationships among rates above and below 65 cents
prior to January 1, 1947, and above and below 80 cents on Jan-
uary 1, 1947. Percentage increases below these figures added
less to existing rates than the maxima added above these figures.
This improved the position of Florida over California to markets
closer to Florida than about 850 miles. To illustrate, the spread


86








COMPARISON OF RATES


between the Los Angeles-Cincinnati rate and the Jacksonville-
Cincinnati rate increased from 69 cents prior to January 1,
1947, to 71 cents on August 21, 1948. Similarly, California and
Texas were given some advantage over Florida in markets near
their orchards. The critical area, of course, is in the East. Al-
though rate relationships there were undisturbed, Florida pro-
ducers were adversely affected because a given absolute increase
in rates represents a larger fraction of Florida prices and profit
margins than of California prices and margins.
While maintaining the existing spreads among competitive
rates to major markets, the levy of maxima in Ex Parte 162 and
Ex Parte 166 also had the effect of increasing Florida rates by
a larger percentage than California or Texas rates. The average
rate from Lake Wales to all the destinations shown was 88 cents
immediately prior to January 1, 1947. On August 21, 1948, the
average rose to $1.21, producing an increase of 33 cents, or 37
per cent. The rise in the average Los Angeles rate from $1.33
to $1.66, represented an increase of only 24.7 per cent. The
average Harlingen rate rose from $1.00 to $1.33, or 32 per cent.


RATES IN RELATION TO DISTANCE

Mile for mile, California rates are much lower than Florida
rates. Table 25 compares rates from three representative origins
to four large cities in cents per mile, and revenue in cents per
ton-mile and per car-mile. In all instances the rate per mile
from California is less than the rate from Texas and far less than
the rate from Florida. In fact, the rate per mile from Los
Angeles to New York is about half that from Lake Wz.Es to New
York. The comparison in terms of revenue per ton-mile and
per car-mile is similar. Los Angeles and Harlingen figures differ
moderately, but the excess of the Lake Wales revenue over the
Los Angeles is striking. The revenue per car-mile from Lake
Wales to New York is 77 per cent greater than that from Los
Angeles to New York. If the average loading from the two


87


















TABLE 25

COMPARISON OF CALIFORNIA, TEXAS, AND FLORIDA CITRUS FRUIT
RATES ON A MILEAGE BASIS AS OF AUGUST 21, 1948

Origins
Los ANGELES, CALIFORNIA HARLINGEN, TEXAS LAKE WALES, FLORIDA
DESTINATION Distance Rate per Revenue Revenue Distance Rate per Revenue Revenue Distance Rate per Revenue Revenue
in mile per ton- per car- in mile per ton- per car- in mile per ton- per car-
milesA in cents mile mile milesA in cents mile mile milesA in cents mile mile
in cents in cents in cents in cents in cents in cents
Chicago 2,200 .075 1.491 35.287 1,479 .081 1.623 35.356 1,269 .094 1.880 44.033
Pittsburgh 2,634 .064 1.276 30.193 1,708 .085 1.710 37.252 1,265 .095 1.897 43.427
New York 3,073 .055 1.093 25.876 2,171 .069 1.373 29.909 1,188 .100 2.003 45.858
Boston 3,302 .051 1.017 24.082 2,400 .062 1.242 27.054 1,417 .092 1.835 41.999
a. Distances are listed as in Estimated Weights on Citrus Fruits, 237 I. C. C. 313, 335 (1940).
b. Rate per 100 pounds per mile.
c. Revenue per car-mile is computed on the basis of average loadings of oranges and grapefruit in cars originated in 1946 in the
Southern Region, the Central Western Region, and the Southwestern Region as reported in Interstate Commerce Commission, Freight
Commodity Statistics Class I Steam Railways in the United States for Year Ended December 31, 1946. Average loadings were
respectively 22.89, 23.67, and 21.79 tons, or considerably above the tariff minima of 40,000 and 36,000 pounds for oranges and
grapefruit.




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