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Group Title: Agricultural Economics report 12
Title: Changes in production areas and trends in citrus harvesting, packing and processing costs
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 Material Information
Title: Changes in production areas and trends in citrus harvesting, packing and processing costs
Physical Description: 44 l. : illus. ; 28 cm.
Language: English
Creator: Spurlock, A. H
Hamilton, H. G ( Henry Glenn ), b. 1895
Publisher: Dept. of Agricultural Economics, University of Florida
Place of Publication: Gainesville
Publication Date: 1970
 Subjects
Subject: Citrus fruit industry -- Florida   ( lcsh )
Genre: bibliography   ( marcgt )
statistics   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: by A. H. Spurlock and H. G. Hamilton.
Bibliography: Includes bibliographical references.
General Note: Cover title.
Funding: Florida Historical Agriculture and Rural Life
Bibliography: Agricultural economics report - University of Florida Dept. of Agricultural Economics ; no. 12
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Bibliographic ID: UF00027474
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
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oclc - 00525160
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Table of Contents
    Copyright
        Copyright
    Title Page
        Page i
    Changes in production areas: Total production and utilization
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
    Harvesting and hauling costs
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
    Fresh packing and selling costs
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
    Processing, warehousing, and selling costs
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida





A'
i-L


Packing and


Processing


Costs


Department of Agricultural Economics
Florida Agricultural Experiment Stations
Institute of Food and Agricultural Sciences
University of Florida, Gainesville






/
r


A. H. Spurlock

H. G. Hamilton


October 1970 Ag. Econ. Report 12




Changes in Production Areas


and Trends in Citrus Harvesting,


___________ml_~_11C*~F~LLl~a~JI~


__ 1 _I____~~___


_II~ ~ _II___ _~_~~_~__~__~_


~i~l-I'L--.~ -7~1___ --__
rl d












CHANGES IN PRODUCTION AREAS AND TRENDS IN CITRUS HARVESTING,
PACKING AND PROCESSING COSTS

A. H. Spurlock and H. G. Hamilton

CONTENTS
Page

Changes in Production Areas, Total Production and Utilization .. 1

Harvesting and Hauling Costs. . . . . .. 10

Fresh Packing and Selling Costs . . . .... 19

Processing, Warehousing and Selling Costs . . .... .33



CHANGES IN PRODUCTION AREAS, TOTAL PRODUCTION AND UTILIZATION

The citrus industry in Florida during the past two or three decades

U has been characterized by rapid change and development. Even the loca-

I tion of the production areas has shifted southward to some extent follow-

ing each severe freeze. This was accentuated after the 1957 and 1962

freezes by plantings in locations once thought to have soil and water

S conditions unfavorable to citrus.

Total acreage in citrus by areas or districts is the first evidence

of impending production shifts. In Figure 1 is shown the percent of the

total acreage of citrus at 5-year intervals by areas, delineated by

roughly parallel lines along county boundaries. The data in this fig-
1/
ure are from Commercial Citrus Inventory- as of December 1967 and re-

vision December 1969. Use of the data are accurate for the latest period



/ Florida Crop and Livestock Reporting Service, Orlando, Florida.

Agricultural Economist, and Agricultural Economist Emeritus and
former chairman, Department of Agricultural Economics.




























Area 1


Area 2 "


S HILLS

PINELLAS



Area 3






Area 4


TO MONROE COUNTY

/ e_


Percent of Total Acreage of
Citrus in Florida by Areas at
5-year Intervals, 1948-49, 1953-54,
1958-59, 1963-64 and 1968-69.


Figure 1.








shown but understate the acreage existing in earlier periods since some

acreage had gone out before the data of the inventory, with the earli-

est periods showing the largest discrepancy. The effect is to partially

conceal the movement southward, as the newer areas had proportionately

small plantings in the earliest years.

The southernmost area, 4, has shown the largest gain in percent of

the state's acreage as shown by the December 1969 inventory. Of the

counties in this area, Martin, Hendry, Hardee, Palm Beach and St. Lucie

were the principal gainers.

Area 2, which is still the center of acreage and production, had

the largest loss in percent of total citrus acreage in the state. Polk,

Orange, Pinellas and Putnam declined most percentage-wise. However, in

at least two of these counties, the percentage decline in citrus acreage

was not due to climate but probably to real estate developments.

Many factors affect the shift southward--availability and price

of land, adaptability to citrus as well as minimum temperatures ex-

pected. The movement to warmer areas may follow isotherms more closely

than degrees of latitude but it is difficult to get acreage estimates

on such a basis.

Production changes by areas lag new plantings by several years and

are not yet very pronounced. Total citrus production in percent of the

state's total at 5-year intervals is given by areas in Table 1.

Frederick L. Bein has shown the mean center of citrus production

in Florida as shifting from the Putnam-Marion county line in 1880 to

nearer the eastern center of Marion County in 1890. After the freeze

of 1894 the center of production shifted 100 miles south to the north-

east part of Polk County by 1910. It has since remained in various lo-

cations in Polk County. The mean location of non-bearing citrus (less








years old) in 1967 was in Highlands County, 50 miles to the

east of the traditional production center of Polk County.2/
east of the traditional production center of Polk County.-


Table 1. Total Production of Citrus in Florida at 5-year
by Areas, 1948-49 to 1968-69.


Intervals,


1 /


Area- 1948-49


1

2

3

4
2/
Other2/

Total


3.8

74.2

16.5

1.2

-4.3

100.0


1953-54 1958-59

(Percent of total production)

3.8 2.4

76.3 78.4

15.2 17.6

.7 1.1

4.0 .5

100.0 100.0


1963-64 1968-69


1.8

71.1

24.8

1.7

.6

100.0


2.6

74.6

19.3

3.5

.0

100.0


1/Areas of production include the same counties as grouped in Fig-
ure 1.

S/Production some years for Alachua, Flagler, St. Johns and Dade
counties was not shown separately and is lumped in "other".



Despite some years of unfavorable prices and occasional freezes,

bearing acreage and production of citrus have continued to increase.

These data are given for oranges, grapefruit and tangerines at 5-year

intervals from 1938-39 to 1968-69 in Table 2. Trends of total production

and yield per acre of all citrus for 40 years are shown in Figure 2.

For the period 1928-29 to 1968-69 citrus has had an average annual

growth in production volume of 4.3 percent per year, which is somewhat



2/Frederick L. Bein. Shifts in Florida Citrus Production. Unpub-
lished paper. University of Florida. 1970.


than five

south and





















Table 2. Bearing Acreage and Production of Florida Citrus at 5-year In-
tervals, 1938-39 to 1968-69.1/


Oranges
Bearing Production
Season Acreage of Value
(1000) (1000 boxes)

1938-39 213.5 29,900

1943-44 251.3 46,200

1948-49 289.9 58,300

1953-54 333.5 89,100

1958-59 353.4 83,000

1963-64 388.0 54,900

1968-69 601.6 129,700


Grapefruit
Bearing Production
Acreage of Value
(1000) (1000 boxes)

81.5 23,300

84.1 31,000

89.5 30,200

105.5 40,700

94.0 35,200

83.0 26,300

91.2 39,900


Tangerines
Bearing Production
Acreage of Value
(1000) (1000 boxes)

25.2 3,400

23.4 3,600

24.0 4,400

23.3 4,500

16.4 4,300

12.0 3,600

16.2 3,400


From Florida Agricultural Statistics, Citrus Summary, various years.
Florida Crop and Livestock Reporting Service, Orlando, Florida.








above the average of all crops in Florida (3.8%). However, despite the

very large crops produced in some recent years, freezes and similar dis-

asters have reduced the average rate of increase in citrus production

since 1948-49 to only 2.3 percent per year.

Bearing acreage of citrus in 1968-69 had increased by 263 percent

since 1928-29 and by 84 percent since 1948-49. In the past 10 years

bearing acreage increased 61 percent.


Index

160


140


120


100


80


60


40


20


-29 -34 -39 -44 -49 -54 -59 -64

Figure 2. Total Citrus Production and Yield Per Acre of Bearing Trees
in Florida, 1928-29 to 1968-69. (1957-59 = 100)








Yield per acre has gained 92 percent since 1928-29, but the largest

and most consistent increases have come since about 1936, with little

gain since the fifties. Citrus yields per acre in 1968-69 were only 2

percent above the 1957-59 average.

Citrus is clearly the largest income producer of any agricultural

commodity in Florida. Figure 3 shows income from citrus for a long per-

iod and is compared with citrus production. Both series are on an index

basis with the years 1957-59 as 100. Citrus production is on a season

basis and cash receipts from citrus marketing on a calendar year basis.

Cash receipts have often dipped severely in years of large production,

and sometimes (1947, 1948) for no overtly apparent reason. The volume of

citrus products was apparently increasing too rapidly in the days immed-

iately preceding frozen orange concentrate.

The advent of frozen citrus concentrates brought in a period of

change in marketing practices and a change in utilization of the crop.

The change in utilization at 5-year intervals, 1938-39 to 1968-69 is

given for oranges, grapefruit and tangerines in Table 3. Orange utili-

zation changed from 96 percent fresh use in 1938-39 to 11 percent in

1968-69. Conversely, processing utilized 4 percent of the crop in 1938-39

(mostly single strength canned juice) and 89 percent in 1968-69. Grape-

fruit utilization has not changed from fresh use as dramatically as have

oranges. In 1938-39, 64 percent of grapefruit production was for fresh

use, dropping to 35 percent in the latest year. Grapefruit has not found

as ready acceptance for frozen concentrate as have oranges. A large part

of grapefruit processing is for single strength juice and sections, canned

or chilled. Tangerines have continued to go principally for fresh use.

For oranges and grapefruit, fresh shipments have declined in the past

10 or 15 years not only in percent of the crop but in total boxes also.




8






















Index


160


140


120 I \ /


100 '
100 Citrus Production I


80

60 "

/* \ ',,'Cash Receipts from Marketings
I I
40 / \ I
SI


20 -


0. .... . l .' \
1938 1943 1948 1953 1958 1963 1968
-39 -44 -49 -54 -59 -64 -69

Figure 3. Total Production of Citrus by Seasons and Cash Receipts
From Marketings Calendar Years, Ended Last Year of Sea-
son, 1938-39 to 1968-69. (1957-59 = 100)





















Table 3. Utilization of Florida Citrus at 5-year Intervals, 1938-39 to
1968-69.


Orange Grapefruit
I, / I/
Fresh Use Processed- Fresh Use Processed-
(percent) (percent) (percent) (percent)

96 4 64 36

76 24 36 64

54 46 46 54

32 68 53 47

20 80 50 50

22 78 56 44

11 89 35 65


Tangerines
Fresh Use Processed-
(percent) (percent)

100 0

100 0

76 24

79 21

65 35

68 32

70 30


Season



1938-39

1943-44

1948-49

1953-54

1958-59

1963-64

1968-69


1 From Florida Canners Association, Statistical Summary, 1968-69 Season.
Fresh use is taken as the difference between the processed portion and the
total production.












HARVESTING AND HAULING COSTS

Most operations in citrus, from production through the marketing

process, have been mechanized--some even approaching automation. By

no other system would labor supply have been sufficient to handle the

crop.

Citrus harvesting is an exception to the mechanization that has

come in other segments of the industry. Some improvement in technique

has appeared in handling and loading fruit after it is picked from the

tree, but the process of hand picking into a bag from a ladder and pour-

ing into some container for transport is little changed from many years

earlier. The fruit picker is the core of the harvesting crew, making

up most of the labor required and incurring the principal cost. There

is frequently a shortage of labor for harvesting large crops during peak

months when 22,000 to 25,000 workers may be needed.

Citrus harvesting machines may now be on the horizon and a number

of types are undergoing development and trial. Mechanical assistance

has possibilities of giving citrus a needed competitive boost. In fu-

ture years most food and fiber crops will be harvested mechanically,

lowering both labor requirement and cost.

The average costs of picking and hauling citrus fruits by items

of expense for 1968-69 are shown in Table 4. The picking costs for

oranges, grapefruit and tangerines are shown separately, but include

fruit destined for fresh packing and for processing. All methods or

systems used in harvesting are included, making the costs given a com-

posite. Hauling cost from the roadside to the plant also is a composite

of box fruit and bulk fruit transported various distances with oranges,

10













Table 4. Average Cost Per Box for Picking and Hauling Citrus Fruits
for Fresh Packing and Processing, 1968-69 Season.


PICKING AND LOADING HAULING
Roadside
Item Oranges Grapefruit Tangerines to Plant
Number of operators 27 26 20 27
Average Volume
(boxes) 1,115,026 344,056 63,782 1,932,374

Costs per box (cents)


Labor:
Superv. & foremen
Pickers
Loaders & drivers
Semi-drivers
Other labor
Total
Payroll taxes & ins.
Total labor


Other Costs:
Fuel & oil
Repairs, maintenance
Licenses & taxes
Depreciation
Insurance
Supplies
Equipment rental
Migratory labor
Miscellaneous
a/
Administrative -
Total other costs
Total Costs


3.54
37.51
4.09


3.23
25.39
4.33


7.20
83.73
7.55


0.07


3.07


.46 .32 .75 .43
45.60 33.27 99.23 3.57
3.70 2.82 8.31 .33
49.30 36.09 107.54 3.90



0.76 0.76 0.78 1.60
2.66 2.66 2.76 2.50
.14 .16 .39 .56
1.40 1.06 2.65 1.90
.22 .20 .52 .44
.43 .51 1.14 .11
.39 .16 .09 .22
.75 .47 1.28
.20 .09 .32 .15
1.52 .83 3.08 .60
8.47 6.90 13.01 8.08


57.77


42.99


120.55


11.98


a/
Includes management and office salaries, office supplies, auto,
travel and entertainment, interest paid, legal and audit, advertising,
dues and subscriptions, donations and telephone and telegraph.









grapefruit and tangerines unsegregated. It is known that hauling tanger-

ines is more expensive than hauling oranges because of lighter loading

required. Hauling box fruit for fresh packing also may be somewhat more

costly than bulk loads for the same reason.

Labor is the largest item of cost in picking fruit being approxi-

mately 85 percent of the total cost for oranges, 84 percent for grape-

fruit and 89 percent for tangerines. Other substantial items of cost

in picking fruit are repairs and maintenance of picking equipment, de-

preciation and fuel.

Total costs in 1968-69 were $0.58 per box for picking and loading

oranges, $0.43 for grapefruit and $1.21 for tangerines.

For hauling, labor was likewise the most expensive single item of

cost but was only 33 percent of the total. Repairs and maintenance, de-

preciation and fuel for trucks together made up 50 percent of the total

hauling cost per box of $0.12 for 1968-69.

To obtain the total harvesting and hauling cost from the tree to

the plant, the picking cost for each kind of fruit should be added to

hauling.

These are operators' actual costs and do not include interest on

invested capital nor any profit margin for private operators. Costs

paid by growers for these services can therefore be expected to be

somewhat higher.

Table 5 shows the total cost per box for picking fruit by kind and

the cost of hauling to the plant for 19 seasons, 1950-51 to 1968-69.

Total picking costs for each kind of fruit have shown a steady increase

from year to year (Figure 4). In the past 10 seasons total orange pick-

ing costs increased 73 percent, grapefruit cost 78 percent and tangerine













Table 5. Average Cost Per Box for Picking and Hauling Citrus Fruits,
1950-51 to 1968-69.


No. HAULING PICKING TOTAL PICKING & HAULING a/
of Roadside Grape- Tanger- Grape- Tanger-
Season Firms to Plant Oranges fruit ines Oranges fruit ines
- - - Cents Per Box - - - -

1950-51 9 10.31 28.36 18.62 56.93 38.67 28.93 67.24
1951-52 26 9.81 28.42 19.51 61.93 38.23 29.32 71.74
1952-53 29 9.71 29.12 21.98 59.62 38.83 31.69 69.33
1953-54 37 9.61 28.87 20.58 60.86 38.48 30.19 70.47
1954-55 36 9.38 28.93 20.91 64.72 38.31 30.29 74.10
1955-56 36 9.47 30.52 21.73 66.39 39.99 31.20 75.86
1956-57 34 9.27 31.36 23.46 73.96 40.63 32.73 83.23
1957-58 34 11.31 33.30 24.09 75.53 44.61 35.40 86.84
1958-59 32 11.46 33.30 24.16 74.90 44.76 35.62 86.36
1959-60 33 11.23 34.17 25.16 83.68 45.40 36.39 94.91
1960-61 37 11.17 34.96 26.69 83.53 46.13 37.86 94.70
1961-62 33 10.41 33.79 25.75 81.66 44.20 36.16 92.07
1962-63 32 12.94 39.57 28.32 95.97 52.51 41.26 108.91
1963-64 30 13.73 43.04 31.47 100.71 56.77 45.20 114.44
1964-65 29 11.66 43.43 33.08 102.63 55.09 44.74 114.29
1965-66 27 11.96 46.12 37.77 107.47 58.08 49.73 119.43
1966-67 29 10.74 46.25 37.65 113.47 56.99 48.39 124.21
1967-68 29 13.32 54.09 41.45 118.46 67.41 54.77 131.78
1968-69 29 11.98 57.77 42.99 120.55 69.75 54.97 132.53


a/itrus
- Citrus


dealers usually have an additional cost which has varied from 3


to 6 cents for buying and selling fruit.


costs 61 percent. These increases were due largely to higher labor rates

and were equivalent to a 5.8 percent annual rate.

Hauling costs have not followed the same trend as picking costs

(Figure 4), but have fluctuated for different reasons. Hauling costs

per box seem to be related to the size of the citrus crop or the volume

of fruit available for transportation (Figure 5). The data are uncorrected

for price level changes and the scatter is rather wide about the trend but








Index
180


160-

Citrus picking cost
140


120. 1 \

1/ --. 1
100-- Hauling cost


80


60


40


20



1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967
-56 -57 -58 -59 -60 -61 -62 -63 -64 -65 -66 -67 -68

Figure 4. Trend in the Cost Per Box for Picking Citrus, and for Hauling
Citrus from Roadside to Plant, 1955-56 to 1968-69. (3-season.
average, 1956-57 to 1958-59 = !00)


each 10 million-box increase in the size of the citrus crop reduces the

hauling cost about 1 percent.

Some of the year-to-year variation in the average cost of picking

and hauling citrus is due to the firms included. They have not remained

completely identical throughout and a wide variation exists among firms

for providing the same service.
3/
T. E. Floyd- has shown that volume has a significant effect on

-T. E. Floyd, et al. Cost and Volume Relationships for Picking,
Hauling and Packing and Selling Florida Oranges. Florida State Horticul-
tural Society. Volume 80. 1967. Paper prepared from the author's M. S.
thesis.









costs of picking and hauling when actual costs are deflated to remove

the uptrend due to price level changes. The "least-cost" volume de-

termined was substantially higher than the average volume handled by

firms during the years 1954-55 through 1958-59. This was particularly

true of hauling fruit since in this operation hand labor is not so large

a segment of total operating costs.




Index of Hauling Cost


130






120






110


100 F


Figure


90 100 110 120 130 140 150 160 170 180 19(
Citrus Production (millions of boxes)

5. Relation of Florida Production of All Citrus and Average
Hauling Cost Per Box, 1958-59 to 1968-69.


0 200


.4-4..1 ,









The variation in the cost of picking citrus by firms is shown in

Figure 6 from 1951-52 to 1968-69. Variation by firms for hauling for

the same period are shown in Figure 7. All costs are converted to an

index basis using the three seasons 1956-57 to 1958-59 inclusive as a

base or 100 percent. The dispersion of costs about the average cost

seems wide most years, especially in hauling. Some firms can apparently

provide service at lower operating cost than others. This may contrib-

ute to their longevity or profits or both. Not enough is known, however,

about individual firms to state the reasons for costs being high or low.

Sometimes a firm may occupy an unfavorable cost position only one season,

but others seem to fall into the same pattern for a succession of years.

It is noted that in years of severe freezes and usually the year follow-

ing, the dispersion of costs is wider than usual. This is probably due

to the sudden reduction of volume for some operators with no opportunity

to adjust equipment capacity.

Whatever the cause, the low operating costs of some handlers give

reason for concern about costs among the less efficient.








Index





220




200




180



160



140



120



100 :



.. **
80




60




40



20



0


1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968
-52 -53 -54 -55 -56 -57 -58 -59 -60 -61 -62 -63 -64 -65 -66 -67 -68 -69

Figure 6. Trend of Florida Citrus Picking and Loading Costs and Variation by Operators, 1951-52 to 1968-69.
(3-year Average Cost, 1956-57 to 1958-59 = 100)


.i
..


..
..
~





....


..
~
~

~







Index

260



240



220



200



180



160



140


120



100 :


*60
60 .


95T 1952 1953 1954 1955 1956 1957 1958 1959 1960
-52 -53 -54 -55 -56 -57 -58 -59 -60 -61


1961 1962
-62 -63


1963 1964 1965
-64 -65 -66


1966 1967 1968
-67 -68 -69


Figure 7. Trend


of Florida Citrus Hauling Costs and Variation by
(1956-57 to 1958-59 = 100)


Operators, 1951-52 to 1968-69.




~


* *



. .




't
'z
.











FRESH PACKING AND SELLING COSTS

It has already been shown that a smaller percentage of the citrus

crop is shipped fresh than in former years (Table 3). In 1968-69 only

11 percent of the orange production and 35 percent of the grapefruit

were shipped fresh. Tangerines have clung to the fresh market better

with 70 percent of production shipped fresh in 1968-69.

The number of boxes shipped fresh also has declined (Table 6).

Orange shipments have declined most because of alternative uses or

market outlets. Fresh orange shipments in 1968-69 were only 11 million

boxes or 40 percent of the volume 20 years earlier. Fresh grapefruit

shipments were almost the same as 20 years earlier but have declined

from a peak reached in 1953-54.

The decrease in the number of boxes of citrus shipped fresh has

curtailed sharply the number of packinghouses operating, with the drop

in number showing up distinctly after the large 1953-54 shipments.

The trend in the number of licensed packinghouses operating has

declined in 30 years from 417 in 1938-39 to 171 in 1968-69 (Table 7).

The decrease was acute after the peak year of 1953-54 and coincided to

some extent with the total volume of fresh shipments. The size of

packinghouses as indicated by box volume of packed fruit has been some-

what erratic but has been considerably larger in the last 15 years than

prior to that period. Each year there are many firms licensed to oper-

ate packinghouses that make but small shipments. A volume of less than

10,000 packed boxes was shipped in 1938-39 by 125 packinghouses; in

1953-54 by 54 houses; and in 1963-64 and 1968-69 by 34 houses. The

competition of processed citrus as a market outlet has reduced the need

for fresh fruit packing facilities.
19









In 1968-69 the Growers Administrative Committee compiled data from

the Fruit and Vegetable Inspection Division of the Florida Departmenf of

Agriculture showing regulated shipments from 147 firms operating packing-

houses. Regulated shipments included fruit shipped interstate, west of

Suwannee River in the state and exports. Several firms operated more

than one packinghouse. The number and size of these shippers are shown

by volume groups in Figure 8. The most common size firm in 1968-69 was





Table 6. Certified Fresh Citrus Fruit Shipments, at 5-year Intervals,
1938-39 to 1968-69.


Grapefruit



10,654

9,299

12,384

18,899

14,455

12,809

12,334


Oranges

1000 boxes of 1

27,727

32,752

28,302

24,116

11,554

8,748

11,458


Tangerines

3/5 bushels -

2,949

3,104

2,958

3,066

2,323

2,141

2,021


between 200,000 and 300,000 packed boxes with this group accounting for

24 percent of the total fresh shipments. Firms which packed under 100,000

boxes, while being 44 percent of the total number, shipped only 7.2 per-

cent of the fruit.

A few large firms handled a high percentage of the 1968-69 crop. A

cumulative total of the proportion handled by the largest packers indicates


Season


1938-39

1943-44

1948-49

1953-54

1958-59

1963-64

1968-69


Total



41,330

45,155

43,645

46,081

28,332

23,698

25,813




















Table 7. Certified
at 5-year


Fresh Citrus Shippers in Florida by Volume Group,
Intervals, 1938-39 to 1968-69.


Volume Group 1938 1943 1948 1953 1958 1963 1968
(1000 boxes) -39 -44 -49 -54 -59 -64 -69

- - No. of Packinghouses - -

Under 100 297 182 232 149 101 83 84

100 399 97 104 104 96 61 53 73

400 699 18 24 17 21 12 10 11

700 999 4 5 6 6 3 5 3

1,000 & over 1 1 1 3 2 0 0



Total 417 316 360 275 179 151 171


- 1000 boxes - - - -

Total Florida
Fresh Shipments 41,330 45,155 43,645 46,081 28,332 23,698 25,813

Average Volume
Per House 99 142 121 168 160 157 151


Source: Annual reports, Fruit and Vegetable Inspection Division,
Florida Department of Agriculture, Winter Haven, Florida.








that the largest five shipped 15.4 percent of the fresh pack, and the

largest 25 shipped approximately half (Figure 9).

Containers used for Florida citrus have changed almost completely

in 15 years (Table 8). In 1953-54 the 1 3/5 bushel wirebound box was

used for 63 percent of all fresh shipments, with the 4/5 bushel wire-

bound used for 9.7 percent. Nailed boxes still carried 14 percent and

mesh bags, 9.7 percent. By 1968-69 the 1 3/5 bushel wirebound box and

mesh bags of all sizes had practically disappeared. Nailed boxes had

been discarded for more than 10 years.






Percent
of
Total
Volume

35

30


under
100

Figure


100 200 300 400 500 600 700 800 900
-199 -299 -399 -499 -599 -699 -799 -899 -999
Volume Group 1000 boxes
8. Distribution of Total Volume of Citrus Packed by Volume
Groups, 147 Regulated Packinghouses, Florida. 1968-69.


~llli~Un,~L~








In 1968-69 the 4/5 bushel fiberboard box, which was in minor use

15 years earlier, was used for 61.3 percent of Florida citrus shipped.

Its use was particularly important for grapefruit shipments, though less

used for tangerines. Five-pound polyethylene and vexar bags were gaining

in importance.

Several factors contributed to a change in packages used--one of

which was an industry-approved move to reduce the number of different

types of containers. The 1 3/5 bushel box is said to have fallen into

disfavor because of its weight in handling. It had been one of the least

expensive containers from the standpoint of container and packing labor




Percent of Total


5 10 15 20 25 30 35 40 45 50
Number of Largest Firms

Figure 9. Cumulative Percent of Regulated Citrus Shipmentsfrom
Florida Packed by Largest Firms, 1968-69.





















Table 8. Containers Used for Florida Citrus Fruits by 5-year Intervals,
1938-39 to 1968-69.

1938 1943 1948 1953 1958 1963 1968
Container-39 -44 -49 -54 -59 -64 -69



1 3/5 wirebound 48.3 77.2 69.2 62.9 26.7 12.0 *
4/5 bu. 5.3 .9 7.6 9.7 32.9 22.1 18.2

20 lb. mesh bag .1 .4 .5 .3 .3 .2 *
8 lb. 2.5 1.7 8.5 5.6 4.2 .6 .1
5 lb. 1.0 .1 .9 4.1 5.3 4.4 .1

8 lb. poly bag .2 .1 .9
5 lb. 2.5 5.7 8.8

8 lb. vexar bag .5
5 lb. 6.3

4/5 bu. fiberboard 2.9 27.7 53.4 61.3
Other 3.8

Nailed boxes 34.6 14.5 11.8 14.1 .1 *

Other containers 8.2 5.2 1.5 .4 .1 1.5 -

Total Percent 100.0 100.0 100.0 100.0 100.0 100.0 100.0


*Less than .05 percent.









cost. Machines to erect, fill, close and seal fiberboard boxes moved

them a step nearer an automated pack and with their low cost and trade

acceptability were widely adopted. Machinery is being developed and is

now used in some packinghouses to save hand labor and facilitate citrus

packing in consumer size bags. Because of the cost of labor and pack-

aging materials, bags in master containers have been the most expensive

form of packing.

The average costs of packing and selling oranges by the more tra-
4/
ditional methods by 40 packinghouses for 1968-69 are given in Table 9.-

The four packs included 92 percent of the oranges by 40 houses and were

48 percent of the state shipments of fresh oranges. Bulk oranges elim-

inated for cannery use were about 46 percent of the volume received at

the packinghouse. The areas covered include both the East coast or

Indian River section and the Interior packinghouses. The 4/5 bushel

fiberboard box was the principal pack on the East coast, where a heav-

ier and more expensive box was used and higher labor costs incurred.

Packaging materials costs were highest for the 5 lb. vexar bag and

the 5 lb. polyethylene bag, both of which are packed in 4/5 bushel fiber-

board master containers. The 4/5 bushel fiberboard box as a container

for oranges had the lowest cost. Total labor for packing and handling

this pack was lowest and will probably be even lower in the future as

newer machines take over more of the labor operations now performed by

hand.




/A more complete discussion, including costs for grapefruit and
tangerines, is given in Costs of Packing and Selling Florida Fresh
Citrus Fruits, 1968-69 Season. Ag. Econ. Report 4. February 1970.







Table 9. Weighted Average Costs of Packing and Selling Florida Citrus Fruits


per 1 3/5 Bushel
1968-69.


Equivalent, by Type of Container, 40 Packinghouses,


ORANGES


ALL
FRUIT


5 lb. 5 b. Bulk
poly. vexar 4/5 bu. 4/5 bu. through Direct,
Type of Container bag in bag in Bruce fiber- house grove
master master box board to to
carton carton carton cannery cannery
Number of Packinghouses 27 25 34 39 37 32
Average Volume Packed
1 35 bu. equivale22,853 27,395 34,558 78,547 137,322 503,928
(1 3/5 bu. equivalent)3/5 B
- - Cost per 1 3/5 Bushel - -


Materials:
Containers
Other materials
Total materials
Labor:
Receive, truck, dump
Cratemaking, labeling
Foremen, graders, others
Packing
Truck, check, load
Payroll taxes, comp. ins.
Total labor
Other direct operating:
Power, lights, water
Repairs & maintenance
Misc. supplies & expense
Total other direct
Indirect operating:
Insurance, fire & casualty
Taxes & licenses
Depreciation
Rent
Total indirect operating
Total Packing Expense
a/
Administrative -
Selling b/
c/
Other items -
Total Packina and Selling


$0.7581 $0.9395 $0.6439 $0.4473 -
.0189 .0153 .0283 .0164 -
$0.7770 $0.9548 $0.6722 $0.4637 -


$0.0580 $0.0571 $0.0510 $0.0480 $0.0266 $0.0017
.0777 .0777 .0866 .0743 -
.1690 .1691 .1494 .1414 .0544 .0012
.2047 .2060 .1306 .1282 -
.0965 .1052 .1031 .0950 .0032
.0692 .0679 .0590 .0546 .0155 .0003
$0.6751 $0.6830 $0.5797 $0.5415 $0.0997 $0.0032

$0.0286 $0.0277 $0.0214 $0.0217 $0.0060 $0.0001
.0868 .0859 .0709 .0749 .0376 .0039
.0373 .0348 .0356 .0307 .0074 .0003
$0.1527 $0.1484 $0.1279 $0.1273 $0.0510 $0.0043

$0.0140 $0.0140 $0.0140 $0.0143 $0.0073 $0.0002
.0164 .0178 .0184 .0155 .0048 .0001
.0842 .0868 .1014 .0689 .0222 .0011
.0222 .0072 .0020 .0066 .0025 -
$0.1368 $0.1258 $0.1358 $0.1053 $0.0368 $0.0014
$1.7416 $1.9120 $1.5156 $1.2378 $0.1875 $0.0089
.0670 .0613 .0847 .0739 .0629 .0536
.0788 .0794 .0824 .0748 .0016 -
.2476 .2430 .2568 .2490 .0142 .0069


S2.1350 S2.2957


S1.9395 $1.6355 $0.2662 $0.0694


a/
a/Administrative expense includes management and office salaries, office ex-
pense, auto and travel, interest paid, telephone and telegraph.
Selling includes sales salaries, travel, telephone and telegraph, but ex-
cludes brokerage, commission and auction charges.
/ Other items include Florida Citrus Advertising Tax, Federal-State inspection,
various industry assessments, coloring and waxing, precooling. Citrus stabiliza-
tion tax of $0.05 per box part season on round oranges omitted.








The most expensive container for oranges was the 5 lb. vexar bag in

master carton and the least expensive was the 4/5 bushel fiberboard box.

Total packing and selling costs were $0.66 less per 1 3/5 bushel equiva-

lent for the fiberboard box.

Costs for eliminated fruit, house to cannery, are composites of

two accounting theories of cost allocation. One of these, charges to

fruit eliminated for the cannery, a portion of the labor incurred in

receiving and grading; also certain other packinghouse operating costs.

Administrative expense is usually applied equally to all classes. The

other method is to allocate costs to fruit eliminated at the same rate

as that going direct from grove to cannery. The packinghouse grading-

out adds no value to the eliminated fruit and is held to be an expense

of obtaining packed fruit.

All fruit, direct from grove to cannery, averaged $0.0694 per 1 3/5

bushel equivalent box in 1968-69, which was largely administrative ex-

pense. Oranges, bulk through house to cannery, averaged $0.2662 and

included a partial allocation of other packinghouse expenses.

For packing grapefruit and tangerines, identical containers should

cost about the same as for oranges. Packinghouse labor and other oper-

ating costs are somewhat less for grapefruit and more for tangerines

than those given in Table 9 for oranges.

The trend in the cost of packing and selling citrus for the past

15 years has been definitely up, increasing in stages by 63.7 percent

since 1953-54. Because of the complexity of packages used and kinds

of fruit, it was necessary to use index numbers to trace the changes

in average cost level from season to season. The three seasons, 1956-57

to 1958-59 were used as a base or 100 percent. Costs were moving on a

stable plateau for five seasons, 1957-58 to 1961-62 (Figure 10). The
























c of Cost


Inde


260



240



220



200



180



160



140



120



100



80



60



40



20


0


1955 1956
-56 -57



Figure 10.


1957 1958 1959 1960 1961 1962 1963 1964
-58 -59 -60 -61 -62 -63 -64 -65


1965 1966 1967 1968
-66 -67 -68 -69


Season


Trend of Florida Citrus Packinghouse Costs
Firms, 1955-56 to 1968-69.


and Variation by


(Average Cost 1956-57 to 1957-59 = 100)


I I I










-r
-*






-*


-*


,


*


-~ *'





-~~ ....



": *1 11* '. .. **g *.. .* *.' I *y
*:: :: *: \** .. :
:: ,. ...
: |.


I -



-
.




.... 2" ":..


," -: .
.... ... .:
-... ... IU I U








I I I | I I









freeze of December 1962 reduced volume for 1962-63 and increased costs

for many packinghouses. Comparative stability at a lower level then

followed for four seasons with a significant increase in 1967-68. Costs

increased further in 1968-69 to 41 percent above the base years 1956-57

to 1958-59.

The trend line of citrus packing and selling costs in Figure 10

represents an average of about 40 packinghouses each season. There was

a wide variation in costs among houses each year. In general, the cost

range was narrower in years of average low or stable costs with a wide

range in costs in years of high or rapidly increasing costs. Note the

extreme fluctuation of costs in 1962-63, 1963-64, 1967-68 and 1968-69.

The cost level was lowered in 1963-64, but the aftermath of the pre-

ceding freeze year probably caused uncorrected dislocations.

The index for each packinghouse removes the dissimilarities of

package mix and kind of fruit among houses. Each is compared with a

hypothetical packinghouse with an identical output at average costs.

Scale of operations or size of business in terms of volume of fruit

handled, packed and bulked, is one factor affecting packing and selling

cost. This is shown on a scatter diagram in Figure 11, relating all

fruit handled by each house to the index of packing and selling cost

for 1968-69. The calculated trend line indicates that for each increase

of 100,000 boxes received, packing and selling costs decreased by 1.6%.

The effect of volume of fruit handled on packing and selling cost

can be illustrated in dollars using oranges packed in 4/5 bushel fiber-

board boxes (Figure 12). The downward trend in costs with increasing

volume indicates that for each 100,000 boxes the average cost of packing

and selling decreases by $0.0280 per 1 3/5 bushel equivalent. The scatter









of cost levels about the trend lines is wide in both Figure 11 and Fig-

ure 12 indicating an imperfect relationship. Volume is not the only

factor affecting costs, and packinghouses of high volume as well as

those of low volume were found to vary from the average trend cost. The

volume packed in percent of the packinghouse capacity may be an important

indicator of costs. A house operating at near capacity can be expected

to have lower costs per box than the same house operating at 50 percent

capacity.





Cost Index




130


120


110


100


90


80


70


60 -


50 ,0 ^3 1- - I -1 -1 I I
0 200 400 600 800 1000 1200 1400 1600

Volume (1000 boxes)

Figure 11. Relation of Volume Through House and Packing and Selling
Cost, All Fruit, 40 Packinghouses, 1968-69.
(1956-57 to 1958-59 = 100)







5/
A study by T. E. Floyd- covering the seasons 1954-55 through 1958-59

indicated that firms in the citrus packing industry could decrease costs

considerably by increasing the size of their operations. The average firm

was found to be operating at less than the "least-cost" volume which was

estimated then at 438,000 boxes packed. A curvilinear line (exponential)

fitted to the volume-cost data indicated rapidly decreasing costs with

increasing volume at first, with the line becoming almost straight past



5/
T. E. Floyd, et al. Cost and Volume Relationships for Picking,
Hauling, and Packing and Selling Florida Oranges. Florida State Horticul-
tural Society. Volume 80. 1967. Paper prepared from the author's M. S.
thesis.


er Box
1 I ,I I I I I I % ( I !













1* o .
*.








-1 -- -- l -- --- --


0 200


Figure 12.


400 600 800 1000 1200 1400 1600
Volume (1000 boxes)
Relation of Volume Through House and Packing and Selling
Cost Per Box of Oranges in 4/5 Bushel Cartons, 39 Pack-
inghouses, 1968-69.


Cost P


$2.40


2.20


2.00


1.80


1.40


1.20


1.00

.80


.60








200,000 boxes. Costs continued to decline with volume to 600,000 boxes

which was the limit of the comparisons.

During the latter part of the period covered, technological improve-

ments caused a different volume-cost relationship and increased the least-

cost volume by 126,000 boxes over the first part of the period. Costs

were further lowered by the larger volumes.

Significant factors affecting costs may be obscured in the season-

average accounting data used. No relation has been found between the

percent packout achieved by an individual house and the packing and sell-

ing cost per box. However, it seems reasonable that the larger the pro-

portion of fruit eliminated, the lower the proportion left to pack with

resulting higher per unit costs.

No relation was found between the number of packs and packing cost

per box. The largest houses usually had the largest number of different

packs, but because of their volume, the lowest costs. Volume packed had

more effect on costs than the number of different packs.











PROCESSING, WAREHOUSING AND SELLING COSTS

After the freeze of 1894, citrus production in Florida recovered

slowly. Because outlets were few and consumption low, surpluses did

not arise again until about the time of World War I. After some exper-

imentation, commercial production of canned citrus began in a small way

6/
about 1921-22.-' From the 14 plants operating in 1922-23, plant numbers

were increased as techniques and processes were gradually improved. Sin-

gle strength production was supplemented by hot process concentrates for

some years until the largest outlet became frozen concentrate. Production

of frozen concentrate began in 1945-46 and increased rapidly after 1947-48

to the point that it now uses the major part of the whole crop of oranges.

In Table 10 is given the number of registered citrus canning or con-

centrate plants receiving fruit by 5-year intervals, 1938-39 to 1968-69.

In most years, some of the firms included operated plants at more than

one location. In 1968-69, the 60 registered plants were operated by not

more than 55 firms.

The utilization of the citrus crops for processing, by kind of fruit,

for the same period is shown in millions of boxes and in percent of the

crop in Figure 13. The stimulus given orange processing by frozen con-

centrate is clearly evident beginning in 1948-49. Grapefruit has not

been so widely accepted for concentrate and tangerines are little used.

Average costs of processing typical citrus products for 1968-69

are given in Table 11. Packaging materials (cans, glass jars, drums,



6/
D- E. Timmons. Citrus Canning in Florida. AE Series 50-4.
Florida Agricultural Extension Service. January 1950.








cartons, labels) are a large part of the total cost for each product

except for frozen orange concentrate in barrels. For single strength

orange juice in cases of 12/46 oz. cans, materials were 61 percent of

the total and for orange concentrate in cases of 48/6 oz. cans, materials

were 46 percent of the total cost.


Table 10.


Number of Registered Citrus Canning or Concentrate Plants /
Receiving Fruit by 5-year Intervals, 1938-39 to 1968-69.


Season Number of Plants



1938-39 31

1943-44 49

1948-49 57

1953-54 46

1958-59 57

1963-64 55

1968-69 60


a/
From Season Annual Reports of the Division of Fruit and Vegetable
Inspection, Florida Department of Agriculture, Winter Haven, Florida.



Labor was a comparatively small part of the total cost of processed

citrus products, except for sections. Because of the large amount of

hand labor still used in their production, labor was 44 percent of the

total. Labor was only 9 percent of the total cost for single strength

orange juice, 12/46 oz., 7 percent for chilled orange juice, 12/32 oz.

glass, and 12.4 percent for frozen orange concentrate, 48/6 oz. cases.














Boxes
(Millions)
130 F


1938-39 1943-44 1948-49 1953-54 1958-59 1963-64 1968-6
Figure 13. Utilization of Florida Citrus Crop by Processors at 5-year
Intervals, 1938-39 to 1968-69.
Source: Florida Canners Association, Winter Haven, Florida. Statistical
Summary. 1968-69 Season.






Table 11.


Costs of Processing, Warehousing and Selling Florida Citrus
Products, 1968-69 Season.


Orange Chilled Grapefruit Frozen Orange Con-
Product Juice Orange Sections centrate (45 o Brix)
Juice
Container size 12/46 12/32 24/303 48/6 gals.(bbls.)
Number of plants ,9 5 7 11 11
Average units/plant 427,180 461,752 135,627 678,867 1,297,700
- Cost per unit - - --


Materials:
Cans, jars, drums
Cartons
Labels
Total materials
Processing Labor:
Direct
Indirect
Payroll tax, insurance
Total processing labor
Other Processing Expense:
Power, lights, water
Maintenance & repairs
Depreciation
Royalties on machinery
Taxes, insurance, rent
Miscellaneous expense
Total other processing
Total Processing Expense
Warehouse Expense:
Whse. & shipping labor, tax
Other warehouse expense
Total warehouse expense
a/
Administrative-
Selling Expense:
Brokerage b/
Other selling expense-
Total selling expense
Other Expense:
c/
Adv. tax- & inspection
Other (int., misc. deducts)
Total other expense
Total Cost Unsweetened
Sugar
Total Cost


$1.0352
.0922
.0662
$1.1936


$0.9530


$0.9530


$0.9398
.0764
.0770
$1.0932


$0.9614
.0665

$1.0279


$0.0187


$0.0187


$0.1159 $0.0731 $1.3863 $0.1788 $0.0654
.0420 .0202 .0614 .0699 .0195
.0188 .0135 .1765 .0289 .0105
$0.1767 $0.1068 $1.6242 $0.2776 $0.0954


$0.0238 $0.0379 $0.0621 $0.0744 $0.0311
.0336 .0421 .0629 .0550 .0227
.0246 .0496 .0783 .0589 .0272
.0511 .0258 .0823 .0823 .0388
.0120 .0241 .0297 .0213 .0154
.0189 .0340 .0511 .0461 .0253
$0.1640 $0.2135 $0.3664 $0.3380 $0.1605
$1.5343 $1.2733 $3.0838 $1.6435 $0.2746


$0.0773 $0.0436 $0.0882 $0.0510 $0.0252
.0393 .0337 .0484 .0602 .0192
$0.1166 $0.0773 $0.1366 $0.1112 $0.0444
$0.0551 $0.0504 $0.0499 $0.1203 $0.0547


$0.0534 $0.0447 $0.0495 $0.0648 $0.0263
.0225 .0145 .0392 .0521 .0200
$0.0759 $0.0592 $0.0887 $0.1169 $0.0463


$0.0896 $0.0596 $0.0628 $0.2028 $0.0909
.0271 .0192 .0251 .0453 .0137
$0.1167 $0.0788 $0.0879 $0.2481 $0.1046
$1.8986 $1.5390 $3.4469 $2.2400 $0.5246
.0696 .2177 -


$1.9682 $1.5390 $3.6646 $2.2400c


a/
-Management and office salaries, telephone,


$0.5246


travel, office expense.


Sales salaries, telephone advertising, travel. Excludes brand royalties,
discounts, allowances.
c/ Does not include special stabilization tax applying part of season.
Does not include special stabilization tax applying part of season.


--


--


Total Cost








The trend in the cost of processing, warehousing and selling single

strength orange juice in cases of 12/46 oz. cans is shown by the solid

line for the past 16 years in Figure 14. The average cost in dollars

per case for the sample firms rose gradually but steadily from 1953-54

through 1961-62. A sudden increase in cost appeared in 1962-63 and

lasted for two seasons, probably due to the effects of the December 1962

freeze. Some reduction in average costs occurred in 1964-65, but was

followed by increases which peaked in 1967-68 and 1968-69.

The fluctuation of costs for individual firms about the average is

indicated by dots in Figure 14. Exact reasons for the variation by firms

is not known. The range of fluctuation is frequently wider in seasons of

high or rising costs than in seasons of low or stable cost. The 1968-69

season was an exception to this, but a smaller number of firms was in-

cluded.

Average costs in dollars per case for processing, warehousing and

selling frozen orange concentrate, 48/6 oz., are shown for the sample

firms for 16 years in Figure 15. The average cost in dollars per case

is indicated by the solid line with a dot representing each firm's lev-

el. The trend in costs for frozen orange concentrate since 1953-54 is

somewhat different from that for single strength orange juice. However,

there was a large increase in concentrate costs in 1962-63 and 1963-64,

even more pronounced than for single strength. Since these two seasons,

concentrate costs have been at a lower level erratically, showing some

increase again in 1967-68 and 1968-69. Concentrate costs peaked in

1962-63 and 1963-64 rather than in the final two seasons as did single

strength juice.

Individual firm variation about the average was wider in years of

high or rising costs with 1968-69 being an exception here also.












Cost per case

$2.80


2.60


2.40


2.20


2.00


1.80


1.60


1.40 -


1.20 -


1.00


.80


.60


.40


.20


'52 '53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63 '64
-53 -54 -55 -56 -57 -58 -59 -60 -61 -62 -63 -64 -65

Season
(Excludes Selling Cost prior to 1961-62)


Figure 14.


'65 '66 '67
-66 -67 -68


Trend of Florida Orange Juice Canning Costs per Cases, 12/46 oz.,
Unsweet, and Variation of Costs by Firms, 1952-53 to 1968-69.


'68
-69



















Cost Per Case


'53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63 '64 '65 '66 '67 '68 '69
Season Ended
Figure 15. Trend in Costs for Frozen Orange Concentrate Per Case,
48/6 oz., and Variation of Costs by Firms, 1952-53 to
1968-69.
(Excludes selling cost prior to 1961-62.)


$3.40


3.20


3.00


2.80


2.60


2.40


2.20


2.00


1.80


1.60


1.40


1.20


1.00








Accounting data do not readily provide reasons for costs being high

or low for an individual firm. Season-end costs are composites of what-

ever factors, processes, methods or materials were used throughout the

year. It is frequently impractical to segregate costs in sufficient de-

tail to analyze completely the factors affecting them and many of the ele-

ments contributing to the final result are obscured. Fixed costs in a

plant are reduced by increasing daily volume output to capacity and op-

erating continuously for a long season. Management costs and even some

of the variable costs may be reduced by large continuous volume. But

other considerations may make this impossible.

There is some evidence that average processing costs vary with the

total volume processed in the state each season. This is shown on a

scatter diagram in Figure 16 for single strength orange juice. The data


Cost per case, 12/46 oz.

$1.90 -


1.80 -


1.70


1.60


1.50 -


1.40


1.30


1.20 0m4 _, I I
0 5 10 15 20 25 30 35 40 45 5
Single Strength Juices Processed (1 million cases, 24/2 equiv.)
Figure 16. Relation of Volume of Single Strength Juices Processed in Flor-
ida and Deflated Processing Cost per Case of Orange Juice,
12/46 oz., 1948-49 to 1968-69.








represent the average cost at each annual volume of single strength orange

juice and the solid line indicates the average trend in costs as related

to volume. The cost data are adjusted for price level changes by the in-

dex of wholesale prices of all commodities (1957-59 = 100) since costs

have been rising throughout the 20-year period from 1948-49 to 1968-69.

The trend indicates that for each increase of 10 million cases of 24/2

equivalent single strength juice processed, costs of processing orange

juice decreased by $0.193 per case, 12/46 oz. Large citrus crops in-

crease the prospect of a large volume canned and of lower costs.

The exact relation of volume and cost for single strength juices is

curvilinear rather than straight-line. Because of certain rigid costs

such as cans, cartons, labels and fixed costs, the line of trend only ap-

proaches a point well above zero and begins to become level thereafter.

The relation of frozen orange concentrate packed in Florida and

average processing costs, 48/6 oz., for 20 years, 1948-49 to 1968-69,

are shown in Figure 17. Actual costs have been deflated by the index

of wholesale prices (1957-59 100) to convert to constant dollars and

partly compensate for the increase in price level.

For each 10-million gallon increase in orange concentrate packed,

costs per case decreased about $0.02. Materials costs were not affected.

The reduction applied principally to fixed costs but also affected to some

extent variable costs per unit such as labor and other direct processing

costs.

The relation of the state's volume of orange concentrate to deflated

processing costs, 48/6 oz., for the last 10 seasons indicates that for

each 10-million gallon increase, total cost decreased by $0.09 per case.

However, this is calculated from the high-cost low-volume year of 1962-63








and exaggerates the potential savings. Recent improvements in technology

have probably improved plant efficiency as there is a closer relationship

between volume and costs in recent years than formerly when the technical

processes were developing.

Average cost only approaches some point well above zero before fixed

costs and materials costs cause the curve to level.

Consumer demand for citrus products has probably determined the form

in which they are packed for market. Marketing agencies state that they

pack what they can sell. The demand for processed orange products has

grown rapidly in recent years as shown by the utilization of the crop





Cost per case

$2.80 I I i I

2.60


2.40

2.20

2.00

1.80

1.60

1.40

1.20


00 10 20 30 40 50 60 70 80 90 100 110 120 130 40 150 16

Frozen Orange Concentrate Processed (Million Gallons)
Figure 17. Relation of Volume of Frozen Orange Concentrate Processed in
Florida and Deflated Processing Cost Per Case, 48/6 oz.,
1948-49 to 1968-69.








(Table 3 and Figure 13). Most of the increased processing of oranges has

gone into frozen orange concentrate.

In 1968-69 the cost of preparing a box of oranges for market was less

when converted to frozen concentrate than in any other form. In Table 12

the average cost per box at prevailing yields is shown as $0.59 when con-

centrated into drums or $1.12 per box when packed in cases of 48/6 oz.

cans. To process a box of oranges into single strength juice, 12/46 oz.

cost $2.20 and chilled orange juice in 12/32 oz. glass, $2.54. Orange

sections, 12/46 oz., because of the large amount of hand labor, cost

$4.98 per box of fruit used. The cost of packing oranges fresh into

4/5 bushel cartons was $1.64 per 1 3/5 bushel equivalent.

The cost relationships change each year with yield but frozen con-

centrate remains as the lowest-cost method of market preparation for a

box of oranges.













Table 12.


Cost to Pack or Process One Equivalent of Orangeslinto Various
Products, Based on Costs and Yields for 1968-69.-


Chilled Orange Concen-
One Box S. S. Orange Orange Orange trate (450 Brix)
Fresh in Juice in Juice in Sections 48/6 oz. Gal.
Item 4/5 bu. 12/46 oz. 12/32 oz. 12/46 oz. Cans (Bbls.)
Cartons Cans Glass Cans
Yield, 1
box oranges 1 box 1.116 cs. 1.653 cs. .836 cs. .502 cs. 1.13 gal.
- - Costs per equivalent box - - -

Materials (con-
tainers, labels) $0.4637 $1.3323 $1.5757 $1.0298 $0.5162 $0.0211
Labor (inc. pay-
roll tax & ins.) .5415 .1972 .1766 2.5503 .1394 .1078
Other processing .2895 .1831 .3532 .5829 .1698 .1814
Total Processing $1.2941 $1.7126 $2.1055 $4.1630 $0.8254 $0.3103

Warehouse Expense $0.1301 $0.1278 $0.1596 $0.0558 $0.0502

Administrative2 $0.0739 .0615 .0833 .1254 .0604 .0618

Selling Expense3 .0748 .0847 .0979 .1602 .0587 .0523

Sugar (if used) .0777 .2482 -

Other Expense .1921 .1303 .1301 .1235 .1246 .1182

Total $1.6355 $2.1969 $2.5446 $4.9799 $1.1249 $0.5928


- Yields from


Statistical Summary 1968-69 Season. Florida Canners Associa-


tion, Winter Haven, Florida.
2/
Z/Management and office salaries, telephone, travel, office expense.

3/
Sales salaries, telephone, advertising, travel and brokerage except for
fresh fruit.

-/Advertising taxes, inspection fees and for fresh fruit also includes wax-
ing, coloring, precooling and miscellaneous industry assessments. Citrus sta-
bilization tax applying to part season not included.




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