It e-
O~aniel S. Tilley

Estimated Costs of\Packing and

Selling Fresh Florida Citrus,

1973-74 Season

Food and Resource Economics Department
Agricultural Experiment Stations
Institute of Food and Agricultural Sciences
University of Florida, GaiMesville 32611

July 1975

Economic Information
Report'30

**

ABSTRACT

Packing costs for two 4/5-bushel cartons of Florida oranges and
grapefruit are estimated at $2.09 and $2.06, respectively, for the
1973-74 season. The estimates are 12.2 and 16.2 percent above 1972-73
season estimates. Tangerine packing costs for two 4/5-bushel cartons
are estimated at $2.41, up 7 percent from previous season estimates.

Packing costs have increased steadily over the past 15 seasons
with the greatest increases shown in direct and indirect operating
expenses. Packing costs have risen relative to the FOB value of packed
fruit. For the 1973-74 season, packing costs were estimated to be be-
tween 39 and 47 percent of the value of fruit depending on region and
type of fruit.
The 1973-74 estimates are based on accounting information available
from 41 Florida packinghouses.
Key words: Fresh citrus packing costs, packinghouse cost trends,
fresh fruit, container costs, labor costs.

TABLE OF CONTENTS

SUMMARY . . . . . . .

SAMPLE FIRMS . . . . .

DATA COLLECTION . . . . . .

WEIGHTED AVERAGE PACKING AND BULK HANDLING COSTS .

VARIATION IN PACKING AND SELLING COSTS AMONG FIRMS .

COST TRENDS . . . : .

Page
1

8

. 16

. 20

SELECTED REFERENCES . . . . .

LIST OF TABLES
Table
1 Distribution of citrus handled by class of fruit,
41 Florida packinghouses, 1973-74 season . .

2 Distribution of the sample firms by total volume
packed compared with the industry distribution
of firms in Florida by total volume packed, 1973-
74 season . . . . .

3 Volume of citrus handled and total packing and
selling cost by type of container, 41 Florida
packinghouses, 1973-74 season . . .

4 Weighted average costs of packing and selling
Florida oranges, per 1 3/5-bushel equivalent,
by type of container, 39 packinghouses, 1973-
74 season . . . . .

5 Weighted average costs of packing and selling
Florida grapefruit per 1 3/5-bushel equivalent,
by type of container, 41 packinghouses, 1973-74
season . . . . .

6 Weighted average costs of packing and selling
Florida tangerines per 1 3/5-bushel equivalent,
23 packinghouses, 1973-74 season . .

. 26

Page

11

. . 13

LIST OF TABLES--Continued
Table
7 Weighted average costs of handling bulk Florida
citrus through 41 packinghouses, 1973-74 season

8 Weighted average costs of handling citrus elimin-
ations through 41 Florida packinghouses, 1973-74
season . . . . .

Page

9 Simple average packing and elimination handling
costs for five firms reporting the lowest costs
of packing 1 3/5-bushel of Florida oranges in
4/5-bushel cartons, 1973-74 season . . .... 18

10 Simple average packing and elimination handling
cost for the five firms reporting the highest
costs of packing 1 3/5-bushel of Florida oranges
in 4/5-bushel cartons, 1973-74 season . . .. ..19

11 Percentage change in the items that make up the
total cost of packing 1 3/5-bushel Florida oranges
and grapefruit in two 4/5-bushel cartons, 1973-74
over 1972-73 . . . ... .. .. 21

12 Total cost per 1 3/5-bushel equivalent for
packing and selling Florida citrus by type
of pack, 1963-64 through 1973-74 season . .... 23

13 Relative changes in the cost components that
make up the total cost of packing 1 3/5-bushels
of Florida oranges in 4/5-bushel cartons, 1959-
60 through 1973-74 seasons . . . .... 24

14 Value of packed 4/5-cartons of Florida oranges
and grapefruit relative to packing costs, years,
1967-68 through 1973-74 seasons, 1 3/5-bushel
equivalents . . . . ... ...... 25

ESTIMATED COSTS OF PACKING AND SELLING FRESH
FLORIDA CITRUS, 1973-74 SEASON

Daniel S. Tilley

SUMMARY

Packing costs for two 4/5-bushel cartons of Florida oranges and

grapefruit are estimated at $2.09 and $2.06, respectively, for the

1973-74 season. The estimates are 12.2 and 16.2 percent above 1972-73

season estimates. Tangerine packing costs for two 4/5-bushel cartons
are estimated at $2.41, up 7 percent from previous season estimates.

Packing costs have increased steadily over the past 15 seasons

with the greatest increases shown in direct and indirect operating

expenses. Packing costs have risen relative to the FOB value of packed

fresh fruit. For the 1973-74 season, packing costs were estimated to

be between 39 and 47 percent of the value of fresh fruit depending on

region and type of fruit.

The 1973-74 estimates are based on accounting information obtained

from 41 Florida packinghouses.

SAMPLE FIRMS

The 41 sample Florida packinghouses packed 18,249,838 equivalent

1 3/5-bushel boxes or approximately 56 percent of total Florida fresh

DANIEL S. TILLEY is assistant professor of food and resource
economics.

2

fruit shipments [2]. The average volume for all 164 Florida packing-

houses operating during the 1973-74 season was 197,880 1 3/5-bushel

equivalent boxes [2], while the average sample firm packed 445,118

1 3/5-bushel equivalent boxes. As indicated in Table 1, the sample

firms provided information on a total of nearly 55 million boxes

(including eliminations and direct to cannery fruit) or 24 percent of

total Florida citrus production [2, p. 6].

The distribution of firms by size category shown in Table 2 in-

dicates that the proportion of existing larger firms represented in

the sample is greater than the proportion of smaller firms in the

sample. The number and type of firms in the sample is restricted by

availability of accurate data, and firms' willingness to provide

information. Eighteen of the firms in the sample have been in the

survey for the past 15 seasons. Most of the changes in the sample for

the 1973-74 season occurred in the Indian River area where four new

firms were added and two dropped from the sample. Three interior

packers were added to the sample.

DATA COLLECTION

Most of the firms provided information from their auditors' per-

box cost analysis report. The average costs of packing the more impor-

tant containers reported by the sample firms are shown in Table 3.

For the firms that did not distribute costs to different types of

fruit or packages, the per-box cost distributions are based on information

provided by houses that keep more detailed records. Quite often it

was necessary to distribute total per-box labor costs into the

categories shown in following tables. Again the labor allocations

Table 1.--Distribution of citrus handled by class of fruit, 41 Florida
packinghouses, 1973-74 season

Class of fruit

Total
volume

} 3/5-bushel
equivalent

14 East Coast packinghouses
Packed fruit
Cannery fruit through house
Total through house
Direct, grove-to-cannery
Total

27 Interior packinghouses
Packed fruit
Cannery fruit through house
Total through house
Direct, grove-to-cannery
Total

41 packinghouses
Packed fruit
Cannery fruit through house
Total through house
Direct, grove-to-cannery
Total

aGrove-to-cannery fruit data were
had these been included, it would have
directly to cannery. One firm did not
fruit.

4,709,671
2,396,683
7,106,354
1,942,474
9,048,828

13,540,165
8,944,445
22,484,610
23,396,227
45,880,837

18,249,836
11,341,128
29,590,964
25,338,701
54,929,665

notobtained from nine houses;
increased the volume going
supply information on eliminated

Cannery fruit through the house is fruit with acceptable internal
quality but does not meet fresh market size or external appearance
standards. Cannery fruit through the house is often called eliminated
fruit or eliminations.

Table 2.--Distribution of the sample firms by total volume
pared with the industry distribution of firms in
total volume packed, 1973-74 season

packed com-
Florida by

Number of firms Percentage of
Numberfirms in the
Total volume Number of firms included in rms in te
1 3/5-bu. equivalent in Floridaa the sample industry
h included in
the sample

Less than 25,000 49 0 0

25,001 50,000 11 1 9.1

50,001 100,000 16 2 12.5

100,001 200,000 24 5 20.8

200,001 300,000 22 8 36.4

300,001 400,000 12 7 58.3

400,001 500,000 18 10 55.6
Greater than 500,000 12 8 66.6

Total 164 41 25.0

aCalculated from [2].

Table 3.--Volume of citrus handled and total packing and selling cost
by type of container, 41 Florida packinghouses, 1973-74
season

Volume Total weighted
Sam- average pack-
Commodity and type of container pie ing and sell-
firms Total Averagerm ing cost per
per firm box
box
No. 1 3/5-bushel equivalent -
Oranges
4/5-bu. fiberboard carton 39 4,506,060 115,540 $2.09
5-1b. vexar bag in master ctn. 25 1,189,400 47,576 2.77
5-1b. poly. bag in master ctn. 28 808,332 28,869 2.63
4/5-bu. Bruce box 13 258,063 19,851 2.64
Bulk 13 211,159 16,243 .81
8-1b. poly. bag in master ctn. 24 82,440 3,435 2.52
8-1b. vexar bag in master ctn. 22 53,966 2,453 2.67
Field box 5 13,305 2,661 1.48
Miscellaneous containers 14 518,436 37,031 2.40
Total packed oranges 39 7,641,161 195,927 2.26

Grapefruit
4/5-bu. fiberboard carton 40 6,348,712 158,718 2.06
5-1b. poly. bag in master ctn. 27 1,083,826 40,142 2.52
5-1b. vexar bag in master ctn. 25 614,080 24,563 2.71
Bulk 11 109,375 9,943 1.03
Field box 5 41,897 8,379 1.14
8-1b. poly. bag in master ctn. 22 85,525 3,888 2.57
8-1b. vexar bag in master ctn. 17 30,141 1,773 2.57
Miscellaneous containers 13 862,322 66,333 1.97
Total packed grapefruit 41 9,175,878 223,802 2.54

Continued

Table 3.--Volume of citrus handled and total packing and selling cost
by type of container, 41 Florida packinghouses, 1973-74
season -- Continued

Vole Total weighted
Sam- ume average pack-
Commodity and type of container ple Ava ng and sell-
firms Total average ing cost per
per firm box

No. 1 3/5-bushel equivalent -

Tangerines
4/5-bu. fiberboard carton 23 713,345 31,015 $2.41
4/5-bu. Bruce box 5 180,499 36,100 2.63
Bulk 4 4,030 1,008 1.65
Miscellaneous containers 14 296,897 21,207 2.79
Total packed tangerines 29 1,194,771 41,199 2.54

Miscellaneous varieties
Miscellaneous containers 5 238,028 47,606 2.58

Total packed fruit 41 18,249,838 445,118 2.22

Bulk fruit through house to cannery
Oranges 38 5,972,654 157,175 .29
Grapefruit 40 4,644,120 116,103 .19
Tangerines 28 594,409 21,228 .39
Miscellaneous varieties 4 129,945 32,486 .13
Total bulk through house 40 11,341,128 283,528 .17

were based on information available from packinghouses showing costs

for each labor category.

In general, the firms tended to use similar methods for allocating

materials, general and administrative, and selling expenses, but labor

and other direct operating expenses were allocated by various methods.

Two different auditing philosophies were reflected by the labor

and direct operating cost allocations shown in the auditors' reports.

One philosophy is based on the premise that all labor and other direct

operating costs should be allocated to the packed fruit. The other

philosophy is based on the premise that at least some of the direct

operating costs (unloading, grading, etc.) should be borne by the

eliminations.1

A simplified example should make the distinction between auditors'

philosophies clear. Assume a packinghouse handled 10,000 boxes of

oranges at a total cost of $10,500. Further assume that 5,000 boxes

were packed in 4/5-bushel cartons, and 5,000 boxes were eliminated

for cannery use. An auditor using the first approach would allocate

administrative expenses equally to packed and eliminated fruit and

the rest of the expenses would be allocated to packed fruit. Assuming

administrative expenses were $500 ($250 to eliminations and $250 to

packed fruit), the cost of handling eliminations would be five cents

(250 5,000 eliminated boxes = $0.05). The cost of packing 4/5-bushel

cartons would be $2.05 ($10,250 t 5,000 packed boxes = $2.05).

On the other hand, an auditor adhering to the second philosophy

might allocate a share of unloading, dumping, grading and loading

Eliminations are fruit intended for fresh use but not packed
because of exterior appearance or size. Most eliminations are sent
to processing plants.

labor to eliminations so that the total cost of handling eliminations

would be 35 cents per box (total of $1,750 = $0.35 X 5,000). This

auditor would then estimate the cost of packing two 4/5-cartons at

$1.75 per 1 3/5-bushel equivalent ($10,500 $1,750 = $8,750 remaining

to allocate; $8,750 5,000 = $1.75 per 1 3/5-bushel equivalent).

Of the 41 firms in the sample, 15 firms supplied information

consistent with the first philosophy, 25 firms supplied information

consistent with the second philosophy and one firm did not report

elimination handling costs. The range in elimination handling costs

is shown in Table 8. No correction or adjustment of either auditing

system was made so that the averages shown in the following tables

reflect both auditing philosophies. The procedures used in calculating

the averages shown in this report are the same as those used in

previous reports in this series.

WEIGHTED AVERAGE PACKING AND BULK HANDLING COSTS

The weighted average costs of packing and selling Florida citrus

in various types of containers are presented in Tables 4, 5 and 6.

Detailed costs are shown for only the more important containers listed

in Table 3. Costs for the 4/5-bushel fiberboard carton for Interior

and East Coast houses are shown separately.

The costs shown are the weighted average costs for the sample

packinghouses, i. e., the total monetary costs of each item for all

houses were divided by the total number of boxes packed. The use

of weighted averages tends to result in a lower estimated cost than

would the simple average because larger houses which usually have

lower costs affect the average more than smaller houses.

Table 4.--Weighted average costs of packing and selling Florida oranges
per 1 3/5-bushel equivalent by type of container, 39 packing-
houses, 1973-74 season

4/5-bu. 4/5-bu. fiberboard box
Type of container Bruce East Interior All
box Coast houses houses

Number of packinghouses 13 11 28 39

Average volume packed
(1 3/5-bushel equivalent) 19,850 50,139 141,233 115,540

Item of cost $ per 1 3/5-bushel equivalent -

Materials
Containers 1.0354 .6060 .5471 .5544
Other materials .0270 .0321' .0192 .0207
Total materials 1.0624 .6381 .5663 .5751

Labor
Receive, truck, dump .0562 .0652 .0491 .0511
Cratemaking & labeling .0911 .0621 .0748 .0732
Foremen, graders, others .1902 .2559 .1862 .1948
Packing .1859 .1706 .1514 .1538
Truck, check, load .1193 .1410 .1016 .1064
Payroll taxes, comp. ins. .0839 .1109 .0768 .0809
Total labor .7266 .8057 .6399 .6602

Other direct operating
Power, lights, water .0346 .0505 .0320 .0343
Repairs & maintenance .0975 .0824 .0938 .0924
Misc. supplies & expense .0772 .0535 .0418 .0433
Total other direct .2093 .1864 .1676 .1700

Indirect operating
Insurance-fire & casualty .0180 .0368 .0173 .0196
Taxes & licenses .0233 .0255 .0221 .0225
Depreciation .0779 .1419 .1057 .1101
Rent .0114 .0123 .0088 .0093
Total indirect operating .1306 .2165 .1539 .1615

Total packing expense 2.1289 1.8467 1.5277 1.5668
Administrative .1023 .1610 .1049 .1117
Sellingb .1618 .1741 .1572 .1593
Other items .2498 .2865 .2491 .2537

Total costs 2.6428 2.4683 2.0389 2.0915

-- low 2.1183 2.0331 1.6293 1.6293
Range in total costs 3
ange in total costs -- high 3.1344 2.8084 3.1330 3.1330
Standard deviationd .2602 .1959 .2927 .3158

See footnotes on page 14.

Continued

Table 4.--Weighted average
per 1 3/5-bushel
houses-, 1973-74

costs of packing and selling Florida oranges,
equivalent, by type of container, 39 packing-
season--Continued

5-1b.poly 8-1b.poly 5-1b.vexar 8-1b.vexar
e of container bag in bag in bag in bag in
master master master master
carton carton carton carton

Number of packinghouses 28 24 25 22

Average volume packed
(1 3/5-bushel equivalent) 28,869 3,435 47,576 2,453

Item of cost

- $ per 1 3/5-bushel equivalent -

Materials
Containers
Other materials
Total materials

Labor
Receive, truck, dump
Cratemaking & labeling
Foremen, graders,othe
Packing
Truck, check, load
Payroll taxes comp.
Total

g
rs

ins.

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
AdministratiVe
Sellingb
Other items

Total costs

.9386
.0195
.9581

.0490
.0752
.2337
.2619
.0934
.0969
.8101

.0357
.1056
.0445
.1858

.0190
.0194
.1076
.0156
.1616

2.1156
.1213
.1507
.2418

2.6294

1.0004
.0150
1.0154

.0431
.0711
.2403
.2148
.0953
.0845
.7491

.0353
.0921
.0474
.1748

.0142
.0176
.0986
.0074
.1378

2.0771
.0788
.1343
.2341

2.5243

1.1380
.'0164
1.1544

.0464
.0712
.2262
.2473
.0932
.0899
.7742

.0350
.1022
.0442
.1814

.0199
.0211
.1146
.0095
.1651

2.2751
.1083
.1446
.2383

2.7663

1.0517
.0203
1.0720

.0470
.0773
.2242
.2278
.0896
.0863
.7522

.0321
.1123
.0408
.1852

.0181
.0173
.1012
.0094
.1460

2.1554
.1078
.1560
.2464

2.6656

-c low 2.1313 2.1513 2.3263 2.2010
Range in total coss high 4.0368 3.8122 4.3472 3.9999
Standard deviation .3213 .3347 .3406 .3762

See footnotes on page 14.

Table 5.--Weighted average costs
fruit per 1 3/5-bushel
packinghouses, 1973-74

of packing and selling Florida grape-
equivalent, by type of container, 41
season

4/5-bushel fiberboard box
Type of container East Interior ll
Coast houses houses

Number of packinghouses 13 27 40

Average volume packed
(l 3/5-bushel equivalent) 273,428 103,487 158,718

Item of cost

- $ per 1 3/5-bushel

equivalent -

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
Administrative
Sellingb
Other items

Total costs

See footnotes on page 14.

.6131
.0328
.6459

.0568
.0585
.1981
.1332
.1335
.0903
.6704

.0339
.0592
.0458
.1389

.0254
.0207
.1172
.0098
.1731

1.6283
.1490
.1885
.2469

2.2127

.5289
S.0166
.5455

.0446
.0792
.1413
.1243
.1025
.0662
.5581

.0272
.0676
.0534
.1482

.0099
.0162
.0847
.0063
.1171

1.3689
.1448
.1538
.2010

1.8685

.5760
.0257
.6017

.0514
.0676
.1731
.1293
.1199
.0797
.6210

.0310
.0629
.0491
.1430

.0186
.0187
.1029
.0082
.1484

1.5141
.1472
.1732
.2267

2.0612

-- low 1.8035 1.4590 1.4590
Range in total costs -
ange in total -- high 2.6114 2.5073 2.6114
Standard deviationd .1791 .2785 .2851

Continued

Table 5.--Weighted average costs of packing and selling Florida grape-
fruit per 1 3/5-bushel equivalent, by type of container, 41
packinghouses, 1973-74 season--Continued

5-1b.poly 8-1b.poly 5-1b.vexar 8-1b.vexar
Type of container bag in bag in bag in bag in
master master master master
carton carton carton carton

Number of packinghouses 27 22 25 17

Average volume packed
(1 3/5-bushel equivalent) 40,142 3,888 24,563 1,773

Item of cost -$ per 1 3/5-bushel equivalent -

Materials
Containers .9191 .9138 1.1371 .9714
Other materials .0137 .0138 .0135 .0318
Total materials .9328 .9276 1.1506 1.0032

Labor
Receive, truck, dump .0438 .0463 .0432 .0402
Cratemaking & labeling .0754 .0652 .0734 .0615
Foremen, graders, others .2099 .2225 .2268 .2599
Packing .2400 .1848 .2457 .1855
Truck, check, load .0931 .1217 .0934 .0770
Payroll taxes, comp. ins. .0954 .0871 .0921 .0932
Total labor .7576 .7276 .7746 .7173

Other direct operating
Power, lights, water .0345 .0444 .0340 .0426
Repairs & maintenance .0852 .0933 .0832 .0793
Misc. supplies & expense .0625 .0699 .0554 .0529
Total other direct .1822 .2076 .1726 .1748

Indirect operating
Insurance-fire & casualty .0120 .0206 .0119 .0292
Taxes & licenses .0172 .0219 .0184 .0222
Depreciation .0930 .1843 .0940 .1229
Rent .0099 .0067 .0063 .0003
Total indirect operating .1321 .2335 .1306 .1746

Total packing expense 2.0047 2.0963 2.2284 2.0699
Administrative .1832 .1071 .1464 .1039
Sellingu .1417 .1455 .1358 .1531
Other items .1949 .2215 .1955 .2425

Total costs 2.5245 2.5704 2.7061 2.5694
c -- low 1.9865 2.0266 2.2045 1.9881
Range in total costs high 3.2469 3.3269 3.6686 3.1936
Standard deviationd .3125 .4416 .3115 .3098

See footnotes on page 14.

Table 6.--Weighted average costs of packing and selling Florida tangerines
per 1 3/5-bushel equivalent, 23 packinghouses, 1973-74 season

Tangerines
Type of container 4/5-bu.
carton

Number of packinghouses 23

Average volume packed
(1 3/5-bushel equivalent) 31,015

Item of cost $ per 1 3/5-bushel equivalent

Materials
Containers .5981
Other materials .0249
Total materials .6230

Labor
Receive, truck, dump .0688
Cratemaking & labeling .0760
Foremen, graders, others .3016
Packing .2255
Truck, check, load .1149
Payroll taxes, comp. ins. .1156
Total labor .9024

Other direct operating
Power, lights, water .0474
Repairs & maintenance .1333
Misc. supplies & expense .0434
Total other direct .2241

Indirect operating
Insurance-fire & casualty .0296
Taxes & licenses .0274
Depreciation .1266
Rent .0047
Total indirect operating .1883

Total packing expense 1.9378
Administrative .0827
Selling .1605
Other items .2296
Total costs 2.4106
-- low 1.9783
Range in total costs-- whi 1.9783
-- high 3 .4571
Standard deviation .2655

See footnotes on page 14.

Not all of the houses pack every container listed in Table 3. The

cost estimates presented in Tables 4, 5 and 6 are weighted averages for

the firms packing that container. Because the sample houses and weights

(volumes) change with each container, some of the cost differences be-

tween containers can be attributed to the composition of firms packing

each container. The costs of handling and selling bulk fruit are shown

in Table 7.

The weighted average costs allocated to eliminations are shown in

Table 8. Note that both the range and standard deviation reported at the

bottom of Table 8 are quite large relative to the weighted average. The

broad range reflects differences in accounting procedures used to allocate

expenses to eliminations.

VARIATION IN PACKING AND SELLING COSTS AMONG FIRMS

The great variability in estimated packing and selling costs

as indicated by the relatively wide ranges and large standard deviations

presented in the bottom two rows in Tables 4, 5 and 6 are difficult

to explain. While it might be assumed that cost per box should be

related to volume packed by the individual packinghouses, many other

factors other than volume affect per-box packing costs. In addition to

accounting procedures, factors such as packout percentage, wage rates,

aAdministrative expense includes management and office salaries,
office expense, auto and travel, interest paid, telephone and telegraph.
Selling includes sales salaries, travel, telephone and telegraph,
and brokerage.

cOther items include Florida citrus advertising tax, federal-
state inspection, precooling, coloring and waxing and various industry
assessments.
A range of one standard deviation above and below the mean usually
includes about two-thirds of the observations.

Table 7.--Weighted average costs of handling bulk Florida citrus through
41 packinghouses, 1973-74 season

Bulk in truck sales
Type of container
Oranges Grapefruit
Number of packinghouses 13 11

Average volume packed
(1 3/5-bushel equivalent) 16,243 9,943

Item of cost $ per 1 3/5-bushel.equivalent

Materials
Containers .0000 .0000
Other materials .0031 .0000
Total materials .003T .0000

Labor
Receive, truck, dump .0246 .0351
Cratemaking & labeling .0095 .0018
Foremen, graders, others .1109 .1469
Packing .0537 .1079
Truck, check, load .0462 .0701
Payroll taxes, comp, ins. .0398 .0469
Total labor .2847 .4087

Other direct operating
Power, lights, water .0137 .0147
Repairs & maintenance .0661 .0494
Misc. supplies & expense .0164 .0132
Total other direct .0962 .0773

Indirect operating
Insurance-fire & casualty .0185 .0129
Taxes & licenses .0123 .0113
Depreciation .0610 .0423
Rent .0002 .0003
Total indirect operating .0920 .0668

Total packing expense .4760 .5528
Administrativea .0673 .1516
SellingD .1095 .1380
Other itemsc .1569 .1918

Total costs .8097 1.0342

-- low .0524 .0459
Range in total costs
-- high 1.4958 1.2617
Standard deviations .6041 .3804

See footnotes on page 14.

Table 8.--Weighted average costs of handling citrus eliminations through
41 Florida packinghouses, 1973-74 season

Bulk.through house to cannery

Oranges Grapefruit Tangerines

Number of packinghouses 38 40 28

Average volume
(1 3/5-bushel equivalent) 157,175 116,103 21,229

Item of cost $ per 1 3/5-bushel equivalent -

Materials
Containers .0000 .0000 .0000
Other materials .0008 .0002 .0000
Total materials .0008 .0002 .0000

Labor
Receive, truck, dump .0290 .0141 .0357
Cratemaking & labeling .0000 .0000 .0000
Foremen, graders, others .0594 .0214 .0825
Packing .0000 .0000 .0000
Truck, check, load .0058 .0037 .0097
Payroll taxes, comp. ins. .0198 .0060 .0302
Total labor .1140 .0452 .1581

Other direct operating
Power, lights, water .0089 .0036 .0137
Repairs & maintenance .0455 .0147 .0757
Misc. supplies & expense .0101 .0068 .0147
Total other direct .0645 .0251 .1041

Indirect operating
Insurance-fire & casualty .0089 .0025 .0140
Taxes & licenses .0054 .0023 .0082
Depreciation .0331 .0116 .0399
Rent .0006 .0005 .0001
Total indirect operating .0480 .0169 .0622

Total handling expense .2273 .0874 .3244
Administrativea .0672 .1012 .0640
Selling .0000 .0000 .0000
Other items .0000 .0000 .0000

Total costs .2945 .1886 .3884
-- low .0059 .0059 .0059
Range in total costs __ high .7394 .5642 .9425
Standard deviationd .1787 .1075 .2853

See footnotes on page 14.

packing methods and age of the facility may be related to average per-

box packing costs.

To show the differences between firms at the upper or lower ends

of the range in costs, simple average costs of packing for the five

firms reporting the lowest and highest costs of packing oranges in 4/5-

bushel cartons are presented in Tables 9 and 10, respectively.

The simple average packing cost for the five firms reporting the

lowest per-box packing costs was only 81 percent of the weighted

average cost reported in Table 4. The same five firms reported costs of

handling eliminations of only 81 percent of the weighted average cost

reported in the first column of Table 8. Note that the biggest relative

savings were from administrative, operating and labor items and the

least savings were on materials costs.

Similar information for the five firms reporting the highest

orange 4/5-bushel packing costs is shown in Table 10. Note in Table

10 that while these firms reported very high packing costs, the average

per-box cost of handling eliminations is only 42 percent of the weighted

average shown in Table 8. Operating costs were the items reflecting

the greatest relative difference and materials costs were again not much

different than the average. None of the firms with high packing costs

allocated any costs except administrative costs to eliminations.

A comparison of Tables 9 and 10 suggests that labor and other operating

expenses are the items where the greatest absolute differences between

high and low-cost firms are found. Of the items that make up total other

operating expenses, depreciation is the item showing the greatest

absolute and relative difference between the two groups. Firms

reporting high costs reported 23 cents per box for depreciation while

Table 9.--Simple average packing and elimination handling costs for
five firms reporting the lowest costs of packing 1 3/5-bushels
of Florida oranges in 4/5-bushel cartons, 1973-74 season

4/5-bushel carton Orange eliminations

Relation to Relation to
costs weightedcosts weighted
average average

$ per $ per
Item of cost 1 3/5-bu. Percent 1 3/5-bu. Percent
equivalent equivalent

Materials ..5498 95 .0000 0

Labor, payroll
taxes & insurance .5071 77 .0879 79

Other operating costs .2038 61 .0966 86

Total packing expense 1.2607 80 .1845 81
Administrative .0645 58 .0541 81
Selling .1410 89 .0000 0
Other items .2235 88 .0000 0

Total costs 1.6897 81 .2386 81

aIncludes both indirect and direct
4 and 8.

operating expenses from Tables

Table 10,--Simple average packing and elimination handling costs for the
five firms reporting the highest costs of packing 1 3/b-bushels
of Florida oranges in 4/5-bushel cartons, 1973-74 season

4/5-bushel carton Orange eliminations

Average Relation to Average Relation to
packing weighted packing weighted
cost average cost average

$ per $ per
1 3/5-bu. Percent 1 3/5-bu. Percent
equivalent equivalent

Materials .6305 110 .0000 0

Labor, payroll
taxes & insurance .9183 139 .0000 0

Other operating costs .5921 179 .0000 0

Total packing expense 2.1409 137 .0000 0
Administrative .1670 149 .1246 185
Selling .1716 108 .0000 0
Other items .2850 112 .0000 0

Total costs 2.7645 132 .1246 42

expenses from

aIncludes both direct and indirect operating
Tables 4 and 8.

low-cost firms reported only 5.9 cents per box for depreciation. In

addition, those firms reporting high costs did not allocate any labor or

operating expenses to eliminations.

Tables 9 and 10 serve to point out that both the accounting methods

for depreciating buildings and equipment and allocating costs to

eliminations influence the reported per-box costs. There are several

potential reasons why the five high-cost firms reported high depreciation.

First, several of the firms are new packinghouses and are using rapid

depreciation procedures for relatively expensive facilities. Second,

the results suggest the hypothesis that the new houses have not fully

utilized the new technology. Third, it might be hypothesized that the

high-cost firms have not yet been able to procure sufficient volume to

achieve the advantages of newly expanded capacity.

COST TRENDS

Changes in the reported costs of packing oranges and grapefruit

in 4/5-bushel cartons from the 1972-73 season are shown in Table 11.

Total packing and selling costs for oranges and grapefruit in 4/5-bushel

cartons are reported to have increased 12 and 16 percent, respectively.

Comparing individual items, power, lights and water costs were up over

50 percent. Materials costs rose 15 and 17 percent, reflecting the
2
high carton coats. Labor costs were up 8 and 21 percent2, other

direct operating costs increased 22 and 20 percent and indirect

operating costs rose by 30 and 39 percent, respectively. With only one

The reason for the larger percentage increase in labor for grape-
fruit packing is not clear from the data. Some of the changes could be
attributed to the addition of several large grapefruit packinghouses
to the sample.

Table ll.--Percentage change in the items that make up the total cost of packing 1 3/5-bushel Florida
oranges and grapefruit in two 4/5-bushel. cartons, 1973-74 over 1972-73

Oranges Grapefruit
Volume packed (1 3/5-bu. Oranges Grapefruit
equivalent) 1972-73a 1973-74 Change 1972-73a 1973-74 Change

$ per 1 3/5-equivalent Percent $ per 1 3/5-equivalent Percent.

Materials
Containers .4804 .5544 15.4 .4974 .5760 15.8
Other materials .0180 .0207 15.0 .0177 .0257 45.2
Total materials .4984 .5751 15.2 .5151 .6017 16.8

Labor
Receive, truck, dump .0445 .0511 14.8 .0362 .0514 42.0
Cratemaking & labeling .0706 .0732 3.7 .0637 .0676 6.1
Foremen, graders, others .1666 .1948 16.9 .1298 .1731 33.4
Packing .1433 .1538 7.3 .1175 .1293 10.0
Truck, check, load .1022 .1064 4.1 .1013 .1199 18.4
Payroll taxes, comp. ins. .0765 .0809 5.8 .0662 .0797 20.4
Total labor .6037 .6602 8.3 .5147 .6210 20.7

Other direct operating
Power, lights, water .0221 .0343 55.2 .0199 .0310 55.8
Repairs & maintenance .0811 .0924 13.9 .0614 .0629 2.4
Misc. supplies & expense .0365 .0433 18.6 .0_80 0491 29.2
Total other direct .1397 .1700 21.7 .1193 .1430 19.9

Indirect operating
Insurance-fire & casualty .0139 .0196 41.7 .0116 .0186 60.3
Taxes & licenses .0190 .0225 18.4 .0165 .0187 13.3
Depreciation .0842 .1101 30.8 .0774 .1029 33.0
Rent ..072 .0093 29.2 .0013 .0082 630.8
Total indirect operating .1243 .1615 30.0 .1068 .1484 39.0

Total packing expense 1.3661 1.5668 14.7 1.2559 1.5141 20.6
Administrative .0943 .1117 18.5 .1376 .1472 7.0
Selling .1489 .1593 7.0 .1528 .1732 13.4
Oer items .2554 .2537 -1.0 .2277 .2267 0.0

Total costs 1.8647 2.0915 12.2 1.7740 2,0612 16.2

aThe data reported by Sherrod, Ward and Spurlock [3] for the 1972-73 season were revised because two
firms included in the 1972-73 sample reported incorrect repair and maintenance expenses.

minor exception, every item for both packs were reported to be higher

than previous season levels.3

Trends in orange and grapefruit packing costs for the past 15 seasons

are reported in Table 12. The change in 4/5-carton packing costs between

the 1972-73 and 1973-74 seasons was the largest percentage increase

reported in Table 12.

The changes in the components that make up total packing costs

for 1 3/5-bushel of oranges in two 4/5-bushel cartons that have taken

place since the 1959-60 season are shown in Table 13. Indirect operating

expenses have risen more than any other expense category while materials

have been the item showing the lowest relative increase. In general,

packing costs had not risen rapidly until the 1970-71 season. Some of

the year-to-year differences reflect changes in the number and type

of firms in the sample.

The relationship between packing costs and the FOB value of packed

fruit for 4/5-cartons of oranges and grapefruit in the Interior

and Indian River regions for the past seven seasons is shown in Table 14.

In general, packing costs have risen relative to the value of fruit.

The changes in the ratio have not been steady because the value of fruit

has shown great variability over the past seven seasons. Interior

grapefruit and Indian River orange packing costs have shown the greatest

increases relative to the value of packed fruit.

3The exceptionally large 631.8 percent increase in rent cost for
grapefruit in 4/5-bushel cartons reflects the addition of a firm that
was not in the sample the previous season.

Table 12.--Total cost per 1 3/5-bushel equivalent for packing and selling
Florida citrus by type of pack, 1963-64 through 1973-74 season

4/5-bu. 5-1b.poly 8-1b.poly 5-lb.vexar 8-1b.vexar
fiber- bag in bag in bag in bag in
Season
board master master master master
box carton carton carton carton

- - - Oranges - - - -

1959-60 $1.26 $1.66
1960-61 1.33 1.71 --
1961-62 1.32 1.69
1962-63 1.50 1.96
1963-64 1.42 1.88

1964-65 1.44 1.74 -
1965-66 1.49 1.88
1966-67 1.48 1.87 -- $1.99 $1.76
1967-68 1.57 2.02 -- 2.27 2.12
1968-69 1.64 2.14 -- 2.30 2.16

1969-70 1.76 2.25 $2.21 2.35 2.30
1970-71 1.78 2.23 2.42 2.42 2.33
1971-72 1.81 2.27 2.21 2.41 2.30
1972-73 1.86 2.33 2.22 2.52 2.36
1973-74 2.09 2.63 2.52 2.77 2.67

- - Grapefruit - - -

1959-60 $1.18 $1.58 $1.52
1960-61 1.20 1.63 1.50
1961-62 1.28 1.62 1.53
1962-63 1.29 1.77 1.69
1963-64 1.29 1.66 1.85

1964-65 1.37 1.56 1.46
1965-66 1.41 1.74 1.69 -- --
1966-67 1.41 1.76 1.72 $2.05 $1.79
1967-68 1.56 2.07 2.02 2.27 2.10
1968-69 1.57 1.98 1.99 2.18 2.04

1969-70 1.66 2.12 2.13 2.29 2.16
1970-71 1.71 2.14 2.19 2.35 2.21
1971-72 1.72 2.09 2.12 2.31 2.18
1972-73 1.77 2.16 2.01 2.37 2.10
1973-74 2.06 2.52 2.57 2.77 2.67

information
Ward and Spurlock

for seasons prior to 1973-74 season are from Sherrod,
[3].

Table 13.--Relative changes in the cost components that make up the total cost of packing 1 3/5-bushels
of Florida oranges in 4/5-bushel cartons, 1959-60 through 1973-74 seasons

Otherelling Total packing
Materials Labor Odther a Indirect operatingb administrative & Totl paing
direct operating other & selling
Year ___ _
Cost Inde Cost Indexc Indec Cost Index Cost Index Cost Index
Cost Index Cost Index Cost Index Cost Index Cost Indexc Cost Indexc

1959-60
1960-61
1961-62
1962-63
1963-64

1964-65
1965-66
1966-67
1967-68
1968-69

1969-70
1970-71
1971-72
1972-73
1973-74

$.4649
.4818
.4857
.4639
.4372

.4433
.4634
.4723
.4645
.4637
.4756
.4699
.4440
.4984
.5751

99.6
103.2
104.1
99.4
93.7

95.0
99.3
101.2
99.5
99.4
101.9
100.7
95.1
106.8
123.0

$.3697
.3998
.4012
.4507
.4277

.4531
.4795
.4790
.5182
.5415
.4938
.5187
.5765
.6037
.6601

90.2
97.6
97.9
11.0
104.4

110.6
117.0
116.9
126.5
132.1
120.5
126.6
140.7
147.3
161.1

$.0805
.0896
.0850
.1076
.0926

.0906
.0926
.0850
.1059
.1273
.1185
.1275
.1484
.1397
.1700

88.4
98.4
93.3
118.1
101.6

99.5
101.6
93.3
116.2
139.7
130.1
140.0
162.9
153.4
186.6

$.0739
.0833
.0693
.0915
.0804

.0776
.0843
.0820
.0877
.1053
.1019
.1361
.1534
.1243
.1616

92.7
104.5
87,0
114.8
100.9

97.4
105.8
102.9
110.0
132.1
127.9
170.8
192.5
156.0
202.8

$.2758
.2784
.2776
.3819
.3823

.3749
.3743
.3667
.3950
.3977
.4734
.4756
.4885
.4986
.5247

86.4
87.2
87.0
119.6
119.8

117.4
117.3
114.9
123.7
124.6
148.3
149.0
153.0
156.2
164.4

$1.2648
1.3329
1.3188
1.4956
1.4202

1.4395
1.4941
1.4850
1.5713
1.6355
1.6632
1.7278
1.8108
1.8647
2.0915

92.6
97.5
96.5
109.4
103.9

105.3
109.3
108.7
115.0
119.7
121.7
126.4
132.5
136.5
153.1

father direct operating expenses
miscellaneous supplies.

include power, lights, water, repair, maintenance and other

bIndirect operating expenses include insurance, taxes, licenses, depreciation and rent.

CIndex is based on average 1959-60 through 1963-64 = 100.

Table 14.--Value of packed 4/5-cartons of Florida oranges and grape-
fruit relative to packing costs, years, 1967-68 through
1973-74 seasons, 1 3/5-bushel equivalent boxes

Interior East Coast
Season FOB FOB
value of Packig Ratioc value of Packig Ratio
packed fruit cost packed fruit cost

$ per 1 3/5-equiv.. Percent $ per 1 3/5-equiv. Percent
Oranges
1967-68 4.56 1.53 32 5.50 1.84 33
1968-69 4.36 1.59 36 4.72 1.90 40
1969-70 3.86 1.63 42 4.60 2.01 44
1970-71 4.26 1.75 41 4.86 1.89 39
1971-72 5.08 1.80 35 5.44 2.01 37
1972-73 4.64 1.86 40 4.88 2.14 44
1973-74 5.14 2.04 40 5.30 2.47 47

Grapefruit
1967-68 4.68 1.84 33 5.70 1.67 29
1968-69 4.72 1.90 40 4.30 1.72 42
1969-70 4.60 2.01 44 5.04 1.81 36
1970-71 4.86 1.89 39 5.20 1.84 35
1971-72 5.16 2.01 37 5.80 1.84 32
1972-73 5.30 2.14 44 6.12 1.96 32
1973-74 5.16 2.47 47 5.74 2.21 39

aFrom Florida Citrus Mutual [1].

bSeasons prior to 1973-74 are from Sherrod, Ward

cRatio = packing cost A value of packed fruit.

and Spurlock E3].

SELECTED REFERENCES

[1] Florida Citrus Mutual. Annual Statistical Report. Lakeland:
various issues.

[2] Florida Division of Fruit and Vegetable Inspection. 1973-74
Season Annual Report. Winter Haven: 1974.

[3] Sherrod, W. H., Jr., A. Lewis Ward, Jr. and A. H. Spurlock. Costs
of Packing and Selling Florida Citrus Fruits, 1972-73 Season.
Food and Resource Economics Department Economics Report 61.
Gainesville: University of Florida. April 1974.

This public document was promulgated at an annual cost of $5404,44 or $3,60
per copy to report citrus handling cost research results to county agricultural
directors and firms and agencies in the citrus industry.

	Front Cover
	Abstract
	Table of Contents
	Main
	Reference