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Annual report of the Florida Citrus Exchange
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Permanent Link: http://ufdc.ufl.edu/UF00075941/00014
 Material Information
Title: Annual report of the Florida Citrus Exchange
Alternate title: Seald-Sweet story
Seald-Sweet annual report
Physical Description: v. : ill. ; 24 cm.
Language: English
Creator: Florida Citrus Exchange
Publisher: The Exchange
Place of Publication: <Tampa Fla.>
Creation Date: 1940
Frequency: annual
regular
 Subjects
Subjects / Keywords: Citrus fruit industry -- Statistics -- Periodicals -- Florida   ( lcsh )
Citrus fruits -- Statistics -- Periodicals -- Florida   ( lcsh )
Citrus fruits -- Marketing -- Statistics -- Periodicals -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
statistics   ( marcgt )
serial   ( sobekcm )
 Notes
General Note: Mimeographed, 1933/34-1934/35.
General Note: Description based on: Season 1926/27; title from cover.
 Record Information
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 001753794
oclc - 46798761
notis - AJG6778
lccn - 2001229399
System ID: UF00075941:00014
 Related Items
Preceded by: Annual report of the business manager of the Florida Citrus Exchange

Full Text








Annual Report
of the

FLORIDA CITRUS

EXCHANGE


1940-41
er I


General Manager


.1..... ---' -- L--- ------- ;----` ~ """ '~~ i


d-S"ee










Annual Report

1940-1941


IFLL A 1A TA U SEy
14 .A 4 10


The Sales Headquarters
of the Florida Citrus Exchange,
110 Oak Avenue, Tampa, Fla.







FLORIDA CITRUS EXCHANGE











OFFICERS. DIRECTORS AND HEADS
OF DEPARTMENTS. FLORIDA CITRUS EXCHANGE
SEASON 1940-41




C. H. Walker, President and C'I," ii,." of the Board ............ artow
H. E. Cornell. First Vice-President Winter Hfaven
H. G. Putnam, Second Vice-President Fort Pierce
J. C. Palmer, Third Tice-President Winderjwere
W. O. Kirkhuff. Fourth Vice-President Winter Haven
C. C. Commander. General Manager Tampa
Fred S. Johnston, Sales Manager 'ampa
L. D. Aulls, Traffic M ....., ," Tampa
S. Ij. Looney, Treasvrer-Comptroller 'Ilanpa
0. M. Felix, Secretary Tampa
Counts Johnson. Attorney Tampa



Sub-Exchange Director Address
Indian River................H. G. Putnam Oak Hill
Florence W. C. VanClief.................. Winter Haven
Fort Pierce W. M. Moseley Fort Pierce
International........... L. L. Lowry Winter Haven
Lake J. N. Mowery Eustis
Lake Region......... Fred T. Henderson--.................Winter Haven
North Pinellas ............ W. Smith Brooksvill-
Orange J. C. Palmer ..............Windermere
Pinellas.......................W. 0. Kirkhuff Bradenton
Plymonth .Wm. G. Geier Windermere
Polk D. A. Hunt... Lake Wales
Polk Packing........J. A. Snively, Jr Winter Haven
Scenic C. H. Walker .Avon Park
St. Johns River............Tom B. Stewart Del)and
West Coast W. W. Raymond Ft. Myers
Winter Haven..............H. E. Cornell Winter Thven
Clark R. J. Kepler DeLand


1, I










ANNUAL REPORT

SEASON 1940-41

Success or failure in the marketing of Florida citrus during
any given season Aepends on several basic variables. During the
season 1940-41 the conditions imposed by these factors appeared
as a dangerous threat to grower profits.
That the season is being concluded with returns to growers be-
yond the limits normally outlined by these oppressive marketing
factors has not been accidental. The Florida Citrus Exchange in
spite of the fact that it must operate with an organized strength
limited to about 25 per cent of the industry's tonnage, took the
lead in the creation and adoption of moves which helped create
better markets for growers:
"These individual actions of the industry, as discussed in this
report; achieved some results. They were hastily conceived and put
into action to meet emergencies which never would have arisen
under a thoroughly organized grower-controlled industry. Tempor-
ary stopgap action of this character cannot be substituted effectively
for the fundamental principles governing the successful merchan-
dising of any product. Particularly is that true of Florida citrus-
a highly competitive, huge volume, seasonal perishable.
Exchange Marketing Policies
These fundamentals continue to define the marketing policies
of the Florida Citrus Exchange and the objective of its program
for the industry. They are:
1. Preparation of the product uniformly and attractively ac-
cording to standards of quality consistently maintained pro-
portionate to the price levels sought.
2. The movement only of those volumes which, will yield the
desired price levels, diverting to non-competitive by-prod-
ucts or destroying any temporary surpluses beyond these
required volumes.
3. Development of consumer demand through productive ad-
vertising and sales promotion timed to meet sales require-
ments, and supported by adequate research.
As the industry progresses, these fundamentals will be applied.
They will become mandatory under the harsh and frequently un-
just law of "survival of the fittest." Or they will be adopted as the
basis for a governmental program of enforced regimentation and
control.
It is quite probable that the latter course will be followed. The
Federal government, through various agencies, has become the
biggest individual investor in industry securities as well as the
largest single buyer of its products. Protection of that investment

3


141.547


I









and the Ipr.tlll.li' operation of the industry, therefore, becomes a
matter of national public interest relatively as great as public in-
terest in the production of wheat, cotton and other agricultural
staples.


THE MARKETING PROBLEM
Record Volumes. The first problem facing the citrus industry
was the marketing of crops of record Volume. The four major pro-
ducing sections (see opposite page) grew a total of 121,317,000
boxes of citrus fruit, This total is 22 per cent higher than the pre-
vious five year average crop. In fact it was exceeded only during the
season 1938-39 when less than one-half of one per cent more fruit
was produced.
Florida production itself touched new highs. The orange volume
was about 20 per cent higher than the five year average and was
equalled only during the season 1938-39 when approximately 8
per cent more oranges were produced. Grapefruit production ex-
ceeded that of any preceding season--over 40 per cent greater than
the five year average and exceeding by 600,000 boxes the previous
1938-39 record. Even tangerines approached the production record
of the 1938-39 season and exceeded the five year average by about
6 per cent.
Indications of new plantings, tree count and maturity in Ameri-
can citrus producing sections point to a continual increase in the
size of the national citrus crop. It is entirely possible for the next
five year annual crop average to be greatly increased over that of
the past five year average crop. This is a problem which should
give growers occasion to think about the answers which must be
developed if they are to protect their existing investments in the
industry.
Industry Facilities Unimproved. A second major marketing
handicap during the season was the imposition of this record pro-
duction in Florida and in competing citrus sections upon a Florida
industry which was no better organized to handle its marketing
than in previous lighter-crop years.
Grower organization in the industry was comparatively ineffec-
tive. There are many cooperative growers who unfortunately do
not cooperate. A number of large growers owning and operating
their own packing houses, together with several cooperatives, con-
tinue in the attempt to maintain their own marketing organizations
competitively with themselves and the rest of the industry. If'these
grower associations and grower-shippers alone would cooperate in
the movement of their fruit, a long step would be taken in the right
direction.
As it is, however, the current crop was sent to market by grower
and speculative shippers numbering 613 individual "marketing"











UNITED STATES CITRUS PRODUCTION

THOUSAND ORANGES
BOXES 5YR. Lares+ Est.
I 1935-36 36-37 37-38 38-39 39-40 AV'GE 1940-41

45,000
40,000 e
35,000

30,000


20,000
15,000
3, 000









TOTAL 49973 51938 72485 75131 73246 64575 75554


GRAPEFRUIT
THOUSAND
BOXES 5 YR. Latest Est.
1935-36 36-37 57-38 38-39 39-40 AV'GE 1940-41
24,000








23,000 O' /
19,000
18,000
17,000
1500 0










14,0 o0 0
1000
750



















9,ooo
53,00
250 011
2000 "" I


















I0 00 --OOO= ~~ CA LIFO R N IA ---- '
TOTAL 4 9 973 51938 72485 75131 73246 6724 4296375554
GRAPEFRUIT








THOUSANDTANGERINES
FLORIDA 3000 3400 00 640 2800atest Es
1935-36 36-37 37-38 38-39 3940 AV'GE 1940-41
24,000
23,000
19,000
18,000
24,000
16.000
15,000
32,000
11,000




TOTAL 183Z9 30440 31093 43594 35175 31724 42963

TANGERINES
FLORIDA 2100-1 3000 2300 3400 2400 2640 2800


TOTAL All Sechons
All varieties. 70402 85378 75878 122125 110821


98939 121317
May It, 1941










organizations.* Some attempt was made to coordinate these market-
ing activities through the Florida Citrus Producers Trade Asso-
ciation.t Thus far there has been no evidence that this program
will succeed.
The Marketing Agreement continued in force but, as in previous
seasons, was limited to the grade and size prorate. This method of
proration as a substitute for a positive volume prorate based on
current control, had proved its inadequacy to meet the situation in
previous seasons.
This prospect of irregular and uncontrolled movement of a
record crop created a hesitancy on the part of the trade to make
commitments on Florida fruit or handle it on any basis other than
a day-to-day operation. The industry could not extend protection
to the trade in their purchases. Buyers were anxious to avoid the
acquirement and maintenance of stocks which might be devalued
by excessive receipts from the state in any given market the fol-
lowing day.
It is natural that under these circumstances, the trade preferred
to handle California citrus when it was available in adequate
volume. The better organization of the California industry assured
a more uniform movement and a protection against the unpredict-
able peaks and valleys of prices inherent in the Florida movement.
Direct Sales Troublesome. Citrus prices are made either by bid
or barter. Auction sales are handled on a bid basis. Private sales
represent the barter method.
Public expression of the law of supply and demand in terms of
dollars is recorded through the auction method of bidding for citrus.
It is the record of sales performance at auction which serves to
set the market for the private sales made in territories not served
by auction. Particularly is this true of the large auction centers,
primarily, New York. Any withdrawal of buying support from the
flow of fruit through these auctions, therefore, tends to upset the
true balance of supply and demand, creating an unfavorable price
reaction.
In this manner a marketing situation has been created which
is unfavorable to the free movement and satisfactory pricing of
Florida citrus. Deals whereby shippers sell their goods to distribu-
tors in the markets served by primary auctions, obviously withdraw
support from those auctions. They are justified from a standpoint

* The Florida Citrus Commission reports 613 marketing licenses issued
to handlers of Florida citrus for the season, as of May 14, 1941.
t The Florida Citrus Exchange continued its membership in the Florida
Citrus Producers Trade Association which is composed of a group of
cooperative and grower-shippers. This organization has been very help-
ful in organizing representative grower action on legislative and other
industry matters. Some hope has been maintained that through this
organization a coordinated cooperative marketing program might be
developed for Florida citrus. This membership has incurred some con-
siderable expense on the part of the Florida Citrus Exchange which has
been absorbed in the regular sales retain.









of economy, in that they produce substantial savings over the
handling charges occasioned by the movement of fruit through
auction channels. This by-passing of fruit around the buyers who
patronize the auctions serves to restrict their patronage of the prod-
ucts so handled. In turn. this reflects a low price forcing a corre-
spondingly lowered level in the completion of the direct barter
deals which are based upon the auction level. It is a vicious circle
working against grower interests.
The development of these sales methods in Florida citrus has
been prompted by direct "field buying" operations. Competitive
trade channels insist upon obtaining supplies at levels which permit
them to handle the product in line with price levels established by
such levels. To do so they in turn must deal direct or force auction
prices down to where such purchases can be handled competitively.
This is a marketing problem, to a large extent, peculiar to
Florida. California has grower organizations strong enough to clear
their fruit either by bid or barter in any one market.. In terminal
auctions their supplies are handled almost exclusively through auc-
tion. Their averages, therefore, reflect a direct market price which
forms a proper base for f.o.b. pricing in contiguous territories.
Florida shippers, on the other hand, compete in the development
of direct deals and f.o.b. selling in auction centers and by so doing
destroy the possibility of consistently profitable price levels.
Canned Competition. A third marketing problem in the move-
ment of the current crop was the development of satisfactory price
levels on fruit moving to canneries.
That canned.citrus fruit and juice is directly competitive to
fresh fruit is now generally accepted. It has certain very definite
advantages which help maintain that competitive character. It is
non-perishable, reasonably uniform in quality, convenient to the
consumer and less expensive to transport and distribute.
For equal volumes of juice and edible portions of fruit, there-
fore, many consumers prefer the canned goods at the same price.
But the price is not the same. A survey made of the retail adver-
tising on fresh and canned citrus in twelve northern markets dur-
ing the current season proves conclusively that the fresh fruit in-
dustry is asking consumers up to twice as much per ounce of fresh
orange and grapefruit juice as it charges for the canned juice. It
is no wonder, therefore, that the canned product is rapidly driving
fresh fruit operations out of business.
This would be satisfactory if the canned movement was main-
tained on a base favorable to grower profits. Unfortiniiately. how-
ever, the movement of the raw product to canneries in Florida has
been on a salvage basis-frequently at less than cost of production.
Because of disorganization among producers, canners have been able
to take advantage of the situation and pass these savings along to
the trade. This immediately slows up consumption of fresh fruit
and.retards its movement at profitable price levels.


0










This canning dilemma of the industry is exaggerated still fur-
ther by the advertising policy in the state campaign. This advertis-
ing-is created by the same agency and attempts to advertise both
fresh and canned citrus. It creates the consumer impression that
canned fruit and juice is just as good as the fresh. Because of the
described competitive price situation which maintains, it is obvious
under these circumstances, that the campaign is fine for the canned
product but is worthless in the development of fresh fruit demand.
As' this season opened, one of the largest canners advertised
freely in the state an announcement of his opening prices for the
raw ,product' These prices in his opinion were justified because of
the volume of the crop but, in each case, represented a loss to the
grower and would have placed canned goods in the market at ab-
normally low prices in competition with fresh fruit.
This canning problem is not peculiar to the current season. Nor
is it limited to grapefruit, as the cannery consumption of oranges
is increasing rapidly (see chart below). It is one, however, which re-
quires an organized and grower-controlled industry to handle to
best advantage.
Some attempt to solve this problem has been made by the entry
of growers and grower organizations into the canning field. Whereas
several seasons ago, canning operations were mostly in the hands of
commercial canners, today grower-owned facilities have packed
32.6 per cent of the canned citrus in the state.
It is probable that grower-owned operations will increase with
new installations in certain areas. Handled judiciously, grower-
owned cooperative canning can be a factor in relieving the industry
from dependence upon the commercial operation. Properly organized
it becomes a competitor to, and a trading point with commercial

Percentages Above Bars Indicate the Part of the Season's Total Orange Production Diverted to Canneries
THOUSAND
BOXES Es/mated

4000 5 I .44%
3000
2000
1000 4.54/. 3.96%
50 0 2. .
250 1.70%
t00
75 o.35% %0.35%
50 o.3 % 0.26%
25

Season 1929-30 30-31 31-32 32-33 3334 34-35 3H36 36-37 .37-38 38-39 39-40 4041









canners in the establishment of price levels on the raw product.
Here ,again disorganization continues. These cooperatives and
grower-canners are attempting to sell their products competitively
and independently of each other; fighting with price cuts on orders
which, from the growers' standpoint, are too low to begin with
anyway. The necessity for a coordinated marketing program among
growers and cooperative canners is already very evident. It could
help stabilize the canning industry, prevent destructive price cut-
ting and develop a constructive program with the commercial can-
ners for the benefit of the industry's producers.
The immediate problem during the current season, however,
remained the development of satisfactory prices for the growers
on the general movement of fruit into cans.


MARKETING PERFORMANCE

Returns Inferior to Competition. The Florida citrus industry
moved nearly all of its huge 1940-41 crop. Non-commercial channels
accounted for only 5.6 per cent of its oranges, 12.1 per cent of the
grapefruit* and 15.8 per cent of the tangerines. (See Table on
page 24).
Tlhe prices received for the fruit, however, were not spectacular.
While growers whose cultural methods produced fruit of high
quality and yield per acre showing a fair profit on the season's
operations, the margins on the average were too low to compensate
for the severe freeze losses suffered last season.
These averages by commodities throughout the season and for
several seasons past compare unfavorably with competitive Ameri-
can-grown citrus (see graph on following page). Based upon auction
averages by weeks, 80 pounds of California oranges outsold 100
pounds of Florida's oranges by a wide margin throughout the
season. In only eight of the 30 weeks recorded through May 3. did
Florida's grapefruit averages exceed those of Texas.
Tangerines, on which Florida has a monopoly, sold at prices
far below those of last season. Prices on this commodity generally
were lower than in the two seasons of 1930-37 and 1938-39, when
shipments were greater and economic conditions much less satis-
factory throughout the country.
This unfavorable price situation is a serious reflection on the
efficiency of the commodity advertising program of the Florida
Citrus Commission. That campaign, now concluding its sixth
season, can be measured only by such comparative results. Instead
of these competitive differentials decreasing' in favor of Florida,
they have increased.
Tlhe advertising has ignored the merchandising fundamentals.

*Includes government purchases which this year were restricted to
grapefruit in all producing sections,












the importance of which has been emphasized repeatedly to the
Commission in the form of definite recommendations by the Florida
Citrus Exchange. With the exception of the present Valencia cam-
paign, these suggestions have been ignored. Growers, unorganized
and unable to control the situation, have paid the bill but lost their
investment.


FLORIDA OUTSOLD THROUGHOUT SEASON
Comparison of Auction Price Averages by weeks: California and
Florida Oranges; Texas and Florida Grapefruit.

ORANGE

PRICE
M4.50 /
$4.25 4,

3.75 .. / -VERAGES
$3.50
$3.25 .-, -*.......----- ,

$3.00
$2.5 -- L oIDtA oR V es
$2.50
$2.25
$2.00
$1.75
#1.50
12 19 26 1 9 16 23 30 1 14 22 284 1 18 2 1 8 15 22 1 8 15 22 29 5 12 19 3
OCT. NOV. DEC. JAN. FEll. MAR. APRIL

GRAPEFRUIT
PRICE
$3.50
$3.40
$3.30
$3.20
$3.10


$2.80
$2.70
$2.600- -
$2.50 -t
-$2.40
$2.30 ---U
$2.20 -l-1-
.210 GES r
$2.00 S *
$1.90
$1.70

$1.0 PLORIDA AVERAGES
$1.50 I I I I
12 19 26 2 9 16 23 3017 14 21 28 4 11 18 25 1 1 2 8 81 15 22 2 915 12 19 26 3


OCT. I NOV. I


DEC. I AN. I FEB. MAI. APRIL I









Finally these comparative prices are conclusive evidence that
buyers and dealers in citrus have confidence in the California move-
ment. They are willing to pay increased prices for the protection
the controlled movement from that state affords them. By the
same premise they are inclined to discount fruit from Florida be-
cause the industry refuses to protect its distributors.
Exchange Returns Premiums. Market levels are defined by fac-
tors at present beyond the control of the industry's growers. At
best, all any shipper can do is obtain "the market" for the fruit he
handles plus a small premium for superior grade and pack, more
widely known trademarks, and in skillful merchandising and sell-
ing methods.
Comparisons of such results may be made by reference to auction
records for the season-the only public register of information
available. Such comparisons this season reveal the fact that the
Florida Citrus Exchange obtained satisfactory premiums above the
average market for its growers.
These comparisons are made for all Exchange members against
all competition. Obviously, some pools and some entire houses in
the organization may have fared better than the Exchange average
indicated by these data. The premiums obtained on Exchange
fruit ranged from 4 cents on tangerines to 29 cents on seed grape-
fruit in standard boxes. The detail may be examined in the graph-
ically illustrated table on the following page.
One of the factors contributing to the record of satisfactory
Exchange performance is the localized dealer service and ad-
vertising methods used by the Florida Citrus Exchange. These
comprehend the definite financial participation of the Association
or District and frequently the trade itself in the exploitation of a
given market or territory for the Association's or District's brands.
In every case, these brands are featured in conjunction with the
Seald-Sweet or Mor-juce trademark.
The Florida Citrus Exchange employed eight specialty men
throughout the season. These men worked with jobbers and dealers
in nearly two hundred individual markets. They made approxi-
mately 10,000 calls, installed over 25,000 pieces of display material
and about 100 special window or floor demonstration displays. This
work was supplemental to and in conjunction with spot advertising
campaigns.
It is significant to observe in this connection that the pre-
miums on Exchange fruit do not include shipments from the Indian
River District. The Florida Citrus Exchange cooperated with the
growers of that District in the promotion of their Florigold and Flo
brands. The District levied a special assessment to cover the cost of
that campaign. It has achieved very definite results in putting
these district brands head and shoulders above competitive ship-
ments in the markets exploited.
















I- SOLID BAR, Exchange Average
1 OPEN BAR, Compe'fors 'AveraqIe
p.50 4l.oo 41.50


42.00 42.50


ROUND ORANGES P Premium
packed in
Standard Boxes


ROUND ORANGES Premium
packed in
Bruce Boxes

PINEAPPLE ORANGES Premium
packed in
Standard Boxes

PINEAPPLE ORANGES Rrem
packed in .08
Bruce Boxes

VALENCIA ORANGES Prem
packed in /
Standard Boxes

VALENCIA ORANGES __ W 7Premt'um
packed in
Bruce Boxes


SEED GRAPEFRUIT Premium
packed in I-Z9
Standard Boxes

SEED GRAPEFRUIT Premtum
packed in 18
Bruce Boxes


SEEDLESS Premium
GRAPEFRUIT 2/
packed in
Standard Boxes


SEEDLESS 'Premium
GRAPEFRUIT .09
packed in
Bruce Boxes

TANGERINES _Premium
packed in .0
,Standard Boxes I
III I


assssl









-Canadian Tangerine Market Pioneered. Florida holds a monop-
oly on tangerines. Yet, when the volume increases just slightly
above two million boxes, lowered prices are promptly incurred.
This is, due primarily to poor geographical distribution and the
lack of market development by the industry. The four states of
New York, Pennsylvania, Massachusetts and Ohio receive 60 per
cent of the state's total crop. Illinois consumes only one-third as
many tangerines per capital as New York; Iowa has just one-
fortieth of the per capital consumption developed in New York.
In addition, tangerines have a, very short season. They come in
at a time when oranges from Florida, California and Texas are
being shipped heavily. Much of this fruit. naturally finds its way
into the larger terminals and is highly competitive to the tanger-
ines which continue to be dumped in,those markets, in spite of
this direct citrus competition.
In recognition of this. necessity for greater distribution, the
Florida Citrus Exchange for several seasons has been active in
requesting associations to include a few boxes of tangerines in each
car going to territories and customers, which might be developed to
the consistent purchase .of tangerines. This has helped in many
cases to spread our distribution. Work will be continued along this
line.
During the early part of the current season an opportunity pre-
s(inted itself on which the Florida Citrus Exchange capitalized. A
large percentage of fruit retaileirs in western Canada. are Chinese.
As a race they naturally.-resented the Japanese invasion of their
home country. Their primary source of oranges had been the Jap-
anese mandarin. We found that they were waging an. economic war
by refusing to handle those imports, even before the Canadian gov-
ernment banned them.
The Japanese mandarin is similar in appearance and belongs
to the same citrus family as the Florida tangerine. The problem was
the development of a box in which to pack the Florida tangerine
which would carry them to the trade and consumers of that, ter-
ritory with least resistance. They were accustomed to handling fruit
in the Japanase box and most sales could be made on tangerines
in that unit.
This organization developed this production locally and closed
a 75 car order at a very favorable price. This fruit was shipped and
distributed without incident. It was supported with advertising
and news articles in the territory to acquaint the trade and con-
simers with the Florida tangerines. This work was handled by the
Florida Citrus Exchange.
Because of the critical economic conditions created by her par-
ticipation in the second world war, the Dominion government
found it necessary to restrict foreign exchange. American-produced
citrus unexpectedly was included in the embargo, and on December
2, 1940 stopped the booking of future orders in the territory. This










action beyond our control, suspended for the duration of the war
what undoubtedly will become a profitable and substantial market
for Florida tangerines. It was pioneered by the Florida Citrus
Exchange.
F.O.B. Sales Increased. The Florida Citrus Exchange sales
organization increased its f.o.b. and private sales distribution very
materially over the previous season. This is an indication of im-
proved geographical distribution. While auction centers serve huge
concentrations of population, sales dependence upon them is un-
desirable: obviously overloading of these centers reduces the price
which in turn affects market levels elsewhere.
Observe in the following table that approximately 58 per cent
of our fruit was distributed in auction channels this season as
compared with nearly 65 per cent last season:

EXCHANGE SALES
Through Tampa Sales Department
In- De-
*Season Percent Season Percent crease crease
1940-41 1939-40
Boxes Boxes
Auction Sales 2,579,546 57.76 3,016,160 64.66 6.90
Private Sale 1.886,760 42.24 1,648,698 35.34 6.90

Total 4,466,306 100.00 4,664,858 100.00
This season as of May 1; 1939-40 figures for entire season.

Exchange Breaks Bottleneck. The problem of the direct f.o.b.
deals described earlier in this report reached a climax in New York
City as the Valencia season opened. The finest crop of Valencias
Florida produced were found to be selling as much as a dollar per
box below California Navels of less weight, quality and attractive
appearance.
The trade in that market publicized what amounted to a man-
date to the Florida citrus industry in the form of advertising sup-
ported by editorial comment in the trade and Florida newspapers.
The Association of Buyers of Florida fruit at New York auctions
described the impossibility of handling Florida fruit under the
multiple distribution methods used by the industry. They found
it impossible to determine their requirements and obtain them at
auction, only to find their trade loaded up behind their backs by
direct deals from the state. Another point at issue was the irregular
distribution of Florida fruit from day-to-day in the market. Sup-
plies purchased one day would be depreciated in value before they
had an opportunity to move them because of the uncontrolled ship-
ments to the market.
Their only course as a matter of good business was to restrict
their patronage of Florida fruit, and even at higher levels handle


a









the California product. This caused the Florida market to sag
seriously. While it opened strong, in a few weeks tree prices threat-
ened to go as low as 50 cents per box. Growers became panicky and
started to unload at prices far below the intrinsic worth of the fruit.
The Florida Citrus Exchange recognized this situation and
some of the factors which caused it. It led the development of con-
structive shipper opinion which influenced the Florida Citrus Com-
mission to throw its entire facilities behind a strongly competitive
campaign on Florida Valencias. This development of consumer de-
mand was supported by the action of a committee from the industry
which met with the trade in New York and developed a better un-
derstanding of both factors in the mutual problems to be solved.
This prompt action averted the threat of demoralization in Va-
lencia prices and brought tree returns back from a low of 60 cents
to a current $1.00 per box. While Exchange action in this instance
made money for all growers, without such organized effort Ex-
change growers would have paid the same penalty as unorganized
growers.
Cannery Prices Forced Higher. Similarly, action by the Florida
Citrus Exchange in industry problems helped to improve the market
for grapefruit during the current season. As the season opened*
canners publicly announced that they confidently expected to buy
Florida fruit at levels below cost of production. A continuation of
this situation would automatically throw the market for 60 per
cent of Florida's grapefruit crop into-the red. The secondary reac-
tion of cheap canned fi nit on the fresh fruit movement would also
be disastrous.
Grower and cooperative canners were not organized to meet and
defeat this threat. The only alternative was to put a floor under
the grapefruit market by calling in the facilities of the Federal
Surplus Commodities Corporation.
Conferences were held between the executives in charge of
Federal surplus purchases and responsible leaders in the industry.
The first move was the direct purchase of fresh grapefruit at 75
cents per box f.o.b. cars, packed in wirebound containers. After
picking, hauling and packing charges were deducted this repre-
sented approximately the cost of production on the tree.
While substantial weekly purchases were made at this price, they
proved to be inadequate to raise the price levels to canneries. Short-
ly after the first of the year, therefore, a program of grapefruit
purchases for processing was developed. This began on January
18, priced at $7.00 per ton delivered to the cannery and later was
raised to $7.50 per ton, then on March 22 to $8.50 per ton. These
prices were followed directly by commercial canners in their pur-
chases of grapefruit. As the demand for the canned product in-
creased and the trade saw a bottom for the raw material thus firm-

*See Page 8


I










ly established, prices rose above that floor and the deal developed
favorably for the growers.
Improved buying policies of the Federal Surplus Commodities
Corporation may be credited with much of this accomplishment.
It parallels to a large extent the policy which proved so effective
during the first season of the Federal Surplus Commodities Cor-
poration's operations when it took all offers at a given figure of
31 cents per box on the tree. At that time it was prepared to. buy
any amount necessary. Its actual purchases were under 800,000
boxes. The action was enough to tone the market and give confi-
dence to the trade in a stabilized movement.
While the fresh fruit purchasing program through the week
ending March 22 bought nearly a million boxes at 75 cents, only


FEDERAL SURPLUS PURCHASES
Florida grapefruit during season 1940-41


For Distribution
as fresh fruit
Week ending 1-3/5 bu. box Price
Nov. 23 41,529 $.75
Nov. 30 62,393 .75
Dec. 7 72,994 .75
Dec. 14 83,516 .75
Dec. 21 83,247 .75
Dec. 28 No Purchases a/c Holidays


Jan. 4 No Purchases a/c


Jan.
Jan.
Jan.
Feb.
Feb.
Feb.
Feb.
Mar.
Mar.
Mar.
Mar.
Mar.
Apr.


126,071
73,619
83,745
(i6,874
(i3,003
41,942
25,010
31,432
42,047
31,431
41,909



970,765


Holidays
.75

.75
.75
.75
.75




.b.i
.75
.75

.75


For Canning
and subsequent distribution
1-3/5 bu. box Price per ton


"."., '.;i 7
61,677
69,116
64,853
81,459
57,136
61,942
31,704
33,713
54,340
18,086
15.659
601,992


$7.00
7.00

7.00

7.00
7.00
7.00
7.00

7.50
8.50
8.50
8.50


Combined Relief Purchases 1,572,757


I









the purchase of somewhat' over 600,000'boxes through April 5 for
processing was necessary to support the market. This detail is
pictured in the table on the opposite page.


EXCHANGE OPERATIONS
The above described actions of the Florida Citrus Exchange
during the season are the high lights which stand out above the
routine day-to-day functions of the Florida Citrus Exchange-the
manifesting, promotion and sale of the fruit, its collections and
remittance of collected funds to associations-these remain the
foundation of our operations.
All information on actions taken by the Florida Citrus Ex-
change Board of Directors or its officers are available to all member
growersat all times. Such information may be obtained from the
grower-director representing his district or from the file of the
minutes of Directors' meetings in his local association. Similarly,
current daily market information is constantly available to all
member growers through files maintained by the Florida Citrus
Exchange in the office of each association or associate shipper.
These data include the movement, routing and pertinent sales in-
formation on each car shipped by the association and sold by the
Florida Citrus Exchange.
Sales Economies Maintained. The retain by which the national
sales organization of the Florida Citrus Exchange is maintained
compares very favorably with the charges made for the limited
services rendered by responsible competition. It is a charge well
iii line with that of the California Fruit Growers Exchange, tak-
ing into consideration the much larger volume handled by the
latter organization.
The retain for the current season has been eight cents per
1-3/5 bushel box on oranges and tangerines, and six to eight cents,
dependent upon the market price, on grapefruit. Distribution of
these funds and the various functions of the Florida Citrus Ex-
change during the current season and the relative cost of these oper-
ations per box is available in the table on the following page.
It is significant in this connection to note that through April
30 the Florida Citrus Exchange handled approximately one mil-
lion boxes more fruit than for the same period last season, but that
actual expenditures for this work were approximately $50,000 less.
In other words, economies effected in the organization without de-
crease of efficiency have permitted more fruit to be handled for
less money. This is a policy which will be continued in the future.
These sales costs expressed in terms of the cost per unit handled,
frequently are misleading. Cost of selling is generally stated in
relation to its' percentage of the gross sales volume. Retailers, for
example, will handle foods on margins from 18% to 20% for the


I










FLORIDA CITRUS EXCHANGE REVENUE,
EXPENDITURES AND RELATED PER BOX COSTS
Comparative from Sept. 1 Thru April 30, 1941-40 & 39
Per Box Cost Per Box Cost Per Box Cost
at 4-30-41 at 4-30-40 at 4-30-39
A B C D E F
REVENUE
Net Assessment
from Sale of Fruit ........6.29c 4.68c 7.19c 5.34c 7.91c 6.38c
Other Income ............. .75c .56c .91c .67c .c .51c
Total Revenue ..............7.04c 5.24c 8.10c 6.01c 8.54c 6.89c
EXPENDITURES
Sales Department
Tampa 1.00c .75c 1.37c 1.02c 1.25c 1.01c
Northern Offices .............66c 1.98c 3.57c 2.65c 2.44c 1.97c
Total Sales 3.66c 2.73c 4.94c 3.67c 3.69c 2.98c
General Department
Advertising and
Dealer Service ................ .58c .43c 1.03c .76c 1.36c 1.09c
Inspection and Field .....52c ,39c .73c .54c .76c .61c
Other Departments ........1.55c 1.15c 2.08c 1.54c 1.56c 1.27c
Total General ................2.65c 1.97c 3.84c 2.84c 3.68c 2,97c
Total Sales and
General Departments ....6.31c 4.70c 8.i8c 6.51c 7.37c 5.95c
Other Expenses ............ 23c .17c .40c .30c .27c .21c
Total Expenditures ........6.54c 4.87c 9.18c 6.81c 7.64c 6.16c
Excess of Revenue
over Expenditures .........50c .37c (1.08c) (.80c) .90c .73c
(A) Based on 5,492,313 boxes on which retain was collected.
(B) Based on 7,367,060 boxes recorded as shipped.
(C) Based on 4,442,093 boxes on which retain was collected.
(D) Based on 5,988,044 boxes recorded as shipped.
(E) Based on 5,756,648 boxes on which retain was collected.
(F) Based on 7.139.732 boxes recorded as shipped.
Note: Per Box Cost expressed in cents and fractions thereof.

Super markets and chains, on up to 40%-50% for outlying retail
stores. Wholesalers generally operate on a basis of from 10% to 15%
dependent upon their volume.
On this basis the marketing costs of the Florida Citrus Ex-
change are very low. The total cost of all operations with relation
to the delivered values of the merchandise sold during the current
season through April 30, amounted to but 3.54 per cent. Even if
these costs are based on returns at the Tampa office (excluding
freight, brokerage, auction charges, etc.) the cost is but 5.3
per cent.
A breakdown of this cost relationship appears in the follow-
ing t.ill :










COST OF MARKETING IN RELATION
TO GROSS DOLLAR SALES
Period: From Sept. 1, 1940 thru April 30, 1941
Based upon Delivered Values
Returns at Tampa (estimated)
Direct Cost of Selling 3.45% 2.29%
Cost of Other Departments 1.68 1.12
Cost of Sales and Other Departments......5.13 3.41
Cost of All Other Expenses .19 0.13
Total Cost of All Phases of Operations....5.32% 3.54%
The Florida Citrus Exchange also assumes responsibility for
the collection of fruit sold for its associations. This is included in
the regular service charges.
Personnel in the Comptroller's Department handled the credit
work of the Florida Citrus Exchange. Over five hundred individual
files are kept accurately up to date on customers in the United
States and Canada. Accurate credit information is obtained through
various responsible credit agencies. It was through this work that
credit losses on sales made by the Florida Citrus Exchange have
been held very low. This is an excellent performance as compared
with some shippers in the State where reliable information indicates
heavy and, in some cases, critical losses of this nature.

Credit losses during the past three seasons have been decreased
progressively:
.r.,ss IPer Cent of Total
F.O.B. Tampa
Season 1938-39 1,258.60 12/1000 of 1%
Season 1939-40 835.09 10/1000 of 1%
Season 1940-41 .. 611.25 6/1000 of 1%
(through May 12).
Packing and Allied Charges Reduced. The bulk of the cost
of I.lll.miig fruit from the tree through the sales and collections,
therefore, is involved in the picking, hauling and packing opera-
tions. These costs are directly under the control of the Associations
and Affiliated shippers who are members of the Florida Citrus Ex-
change, either directly or through Sub-Exchanges.
The average growers' mind includes this cost of handling with
the cost of selling when he speaks of a local association as "the
Exchange." Any defection of an association, therefore, reflects
upon all other associations and the Florida Citrus Exchange in-
dividually. It becomes a mutual responsibility, therefore, for all
units in the organization loosely termed "the Exchange," to hold
costs at a minimum.
Association managers have recognized their responsibility in
this connection and have performed in most cases with remarkable
efficiency. In spite of increases in labor and material costs, reduc-










tions in total charges for packing house operations generally have
been reduced.
An over-all statement for the current season covering all
Exchange members is not available. It has been possible, however,
to assemble accurate information on eight average associations*.
In no sense of the word can these associations be called large nor
are they the smallest in the organization. Larger associations will
probably show some reduction from the above average, whereas,
smaller associations with limited volumes may run higher than
the average costs indicated.
Observe in the following table that material costs for standard
wrapped boxes have increased nearly 3 cents; for the 1-3/5 bu.
Bruce box the increase has amounted to over 21/2 cents. The per
box costs of labor have been reduced in spite of the higher man-
datory wage and tax schedules forced upon the industry. This alone
reflects efficient management. Similarly, substantial reductions
in indirect costs (office salaries, telephone and telegraph, office
supplies etc.) are another tribute to efficient management.

CONSOLIDATED STATEMENT OF 'OPERATIONS
for Eight Associations
Comparative Seasons 40-41, 39-40 and 37-38

Oranges-Standard Nailed Wrapped Box
Expense
Estimated
3-31-41 Actual Actual
40-41 39-40 37-38
Materials 31.23c 29.03c 27.52c
Labor 14.93c 16.25c 15.34c
Other Direct 2.95c 3.14c 2.91c
Indirect ........... 5.11c 6.14c 5.41c
Fixed ............ 4.33c 5.19c 4.97c
Total 58.55c 59.75c 56.15c

Oranges-Standard Bruce Box
Expense
Materials 20,77c 18.51c 17.55c
Labor 11.95c 12.53c 14.89c
Other Direct 2.82c 3.14c 2.85c
Indirect 4.44c 6.23c 6.79c
Fixed 3.76c 5.16c 4.26c
Total 43.74c 45.57c 46.34e

The association costs used in the above computations are for the
Winter Haven Citrus Growers Association, Palm Harbor Citrus Growers
Association, Orlando Citrus Growers Association, Haines City Citrus
Growers Association, Florence Citrus Growers Association, Dundee Cit-
rus Growers Association, Alturas-Garfield Citrus Cooperative, and
Clearwater Growers Association.


I









Law Department. During the current season the law depart-
ment of the Florida Citrus Exchange has continued handling
routine matters of the organization. In addition, its services to
Exchange affiliations in handling problems relating to Social
Security, the Wage-Hours Act, et cetera, have occupied a sub-
stantial percentage of the department's time.
The department collaborated with other factors in the industry
in the preparation of industiv Bills for introduction into the State
Legislature, in session as this report is written.
The cost of these services and the expenses they incurred are
borne by the Florida Citrus Exchange and absorbed in its general
sales retains.
Traffic Matters. The efficient routing and checking of freight
bills for fruit moved by Exchange members always has been one
of the functions of the Florida Citrus Exchange. In recent years
this work has become more difficult because of the entry of other
classes of carriers into the field. Fifteen years ago, railroad carriers
handled over 98 per cent of the total tonnage from the industry.
Today, percentages handled by railroads have levelled off at a
range from 50% to 60% of the total. The balance is handled by
boats and trucks, with trucks reflecting a steady increase in per-
centage of the total. The detail of this comparative service by the
three types of carriers for the past six seasons, and the percentage
of the total crops handled is presented in the following table:

FLORIDA CITRUS, ALL VARIETIES
Rail, Boat and Truck Shipments Shown in Percentage
of Total Movement
(as of May 5th-Season 1937-38 thru 1940-41-Percentages for
prior seasons and for entire Season)
Season Rail Boat Truck
1940-41 54.89% 19.64% 25.47%
1939-40 58.77% 17.77% 2'3.46%
1938-39 55.30% 24.57% 20.13%
1937-38 59.62% 24.42% 15.96%
1936-37 55.20% 31.05% 13.75%
1935-36 48.09% 35.72% 16.19%

In the Southeastern zones where ventilated box cars are used
with 200-box minimum in handling Florida citrus fruit, we have
had much complaint with regard to soot and cinder damage. Then,
too, we have had freezing damage in the zones directly south of the
Ohio and Potomac rivers. To overcome these conditions, we pre-
vailed on the rail lines to allow the use of refrigerated cars in these
zones with a 300-box minimum at the same reduced rate. This has









worked out very nicely and minimized our losses from these causes.
For the past several years rates on Florida citrus to Eastern
interior cities throughout New York, Pennsylvania, New Jersey
and Maryland have been entirely out of line with Atlantic seaports
and New England markets. At last the rail carriers were pre-
vailed upon to establish truck competitive rates to these Eastern
interior cities with the result that transportation cost was reduced
$25.00 to $54.00 per car.
During the past season up to March 1, Texas rail lines lost
approximately 60% of their grapefruit tonnage to the trucks. To
meet this competition the rail lines of Texas established truck
competitive rates to the Western and Mississippi Valley territories,
including St. Louis and Chicago on grapefruit only. A like re-
duction was finally granted Florida shippers to St. Louis and Chi-
cago and later on this reduction on grapefruit was extended East-
ward to all the territory north of the Ohio River with few excep-
tions. This reduction amounts to approximately $72.00 per car.
The traffic department during the season made approximately
6,000 diversions, 2,000 boat bookings, checked freight transporta-
tion charges on about 20,000 shipments. It also filed overcharge
and loss and damage claims in all cases where these errors existed.
Claim collections for the season 1940-41 amounted to approxi-
mately $35,000.
Car supply has been adequate, however. The Government is
using thousands of cars at shipside for storage in the defense pro-
gram, causing considerable congestion. Consequently, we are watch-
ing this matter very closely, particularly in view of the fact that
e' cannot "tell when coastwise boats may be pressed into defense
service. We do not, however, anticipate any transportation diffi-
culties during the balance of this season.










EXCHANGE SERVICE AFFILIATES.

Grower members of the Florida Citrus Exchange own and oper-
ate two service organizations in addition to the sales organization
of the Florida Citrus Exchange. The first organized in October
1916 under the name of Citrug"Growers Guaranty Company, then
in March 1918 the name was changed to the Growers Loan and
Guaranty Company, a cooperative financial organization. The sec-
ond, is the Exchange Supply Company.
The personnel of the Board of Direct6rs of the Florida Citrus
Exchange acts as the Board of the Growers Loan and Guaranty
Company. The Exchange Supply Company Board on the other
hand, is made up largely of operating personnel including house
nman aers of various associations.
Growers Loan and Guaranty Company. This organization has
been very helpful in working out the financial problems of growers
anId shippers using the Exchange service.
Many associations ard '-rowers fiance through the Columbia
Bank for Cooperatives and Prof jcer Credit Associations, affiliated
with the Farm Credit Administration. The Growers Loan has been
very helpful to many of these by making supplemental loans on
short notice for specific r ur),owes which do lot fully comply with
the eligibility requirements of the Federal agencies.
Mr. S. L. Looney, Comptroller of the Florida Citrus Exchange,
is general manager of the Growers Loan and Guaranty Company.
He has years of experience in citrus financial matters. His advice
and counsel is available to every grower and shipper member of
the Florida Citrus Exchange in placing and keeping their financial
problems on a solidly operating basis.
Exchange Supply Company. The Exchange Supply Company
operates as a purchasing organization for grower and packing house
supplies. It's primary importance to Exchange membership is its
function as a stabilizing factor for packing house supplies. In this
function it serves to help those who buy outside or through other
sources just as .*iil' I iy as those associations which buy their
supplies through it. This premise holds true because of the fact
that competition must meet the price levels developed by the Sup-
ply Company.
The effectiveness of the Exchange Supply Company would be
considerably strengthened with increased patronage from associa-
tions. However, the Company has shown some increases during the
current year. It has completed a very desirable paper contract for
those associations usiig wraps on their fruit. Other contracts of
equal effect on other articles are being developed.













EXCHANGE DISTRIBUTION
Summary of Distribution as of May 17th
1940-41 1939-40 Increase
Number of States Distributed to 46 43 3
Number of Canadian Provinces entered............ 6 6
Total Number of Markets entered......................373 284 89
Number of New Markets entered 121 71 50
Total Number of Customers Sold 706 621 85
Number of New Customers Sold 280 207 73


FLORIDA RAIL, BOAT and TRUCK SHIPMENTS
Carlots by Varieties as of May 17, Entire State and Exchange Movement
(exclusive of Cannery Sales)

SHIPPER Season Oranges Grapefruit Tangerines Total
Florida 1940-41 51,167 22,980 5,743 79,890
1939-40 49,368 15,534 5,282 70,184
Increase 1,799 7,446 461 9,706
Exchange 1940-41 9.944 5,838 1,459 17,241
1939-40 8,371 3,782 1,142 13,295
Increase 1,573 2,056 317 3,946


SEASON AVERAGES
Following Is the Florida, (nlifornia, and Texas Auction Averages to date
as of May 17th, Season 1940-41 and 10:9!-40.

STATE Variety and Section 1940-41 1939-40
Florida Interior Oranges-Standard Boxes $2.24 $2.28
Interior Oranges-Bruce Boxes 2.19 2.16
Indian River Oranges-Std. Boxes 2.69 2.76
Interior Seed Grapefruit-Std. Boxes................... 1.70 1.93
Interior Seed Grapefruit-Bruce Boxes................ 1.46 1.63
Indian River Seed Grapefruit-Std. Boxes-......... 1.85 2.19
Interior Seedless Grapefruit-Std. Boxes.-......... 1.77 ,2.05
Interior Seedless Grapefruit-Bruce Boxes....... 1.57 1.77
Indian River Seedless Grapefruit-Std. Boxes.... 2.17 2.59
*Tangerines-All Sections 2.39 2.74
California Oranges 3.16 2.92
Texas Grapefruit (Seedless) 1.95 2.03

*Full box basis.




ESTIMATED DISPOSITION OF CITRUS
SEASON 1940-41

Fresh Commercial Relief
Commercial Cannery Consumption
Boxes % Boxes % Boxes % Total
ORANGES:
Florida 22,720 82.6 3,250 11.8 1.530 5.6 27,500
California 35.418 80.0 800 1.7 8,132 18.3 44,350
Texas 2.344 82.2 506 7.8 2,850
Arizona 200 33.4 200 33.3 200 33.3. 600
Others 80 31.5 174 68.5 254
Total 60,762 80.4 4,250 5.6 10,542 14.0 75,554
GRAPEFRUIT:
Florida 8,000 33.5 13,000 54.4 2,900 12.1 23,900
Texas 6 900 47.9 7,250 50.3 250 1.8 14,400
Cal.-Ariz. 2,100 45.0 350 7.5 2,213 47.5 4,663
Total 17,000 39.6 20,600 47.9 5,363 12.5 42,963
TANGERINES:
Florida 2,357 84.2 443 15.8 2,800