ANUARY 1955 AGRICULTURAL ECONOMICS M

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IMEO REPORT 55-4

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'hor and A. H. Spurlock

DEPARTMENT OF AGRICULTURAL ECONOMICS

FLORIDA AGRICULTURAL EXPERIMENT STATION

in Cooperation with the
Farmer Cooperative Service
U. S. Department of Agriculture

CONTENTS
Page

Nature of the Sample ............... . . ...... . 2

The Measurement of Cost .......... ............... 2

1953-54 Costs of Packing and Selling . . . .... .. .. . 4

Oranges. ........ ..... ..... . .......... 4

Grapefruit . . . . . . . .. ....... 7

Tangerines . . . . . . . . . . . . . 9

Variations in Packing and Selling Cost . . . . .. . . 9

Oranges ................... ....... . . 9

Grapefruit ........................... 12

Tangerines ................ . . . . . 14

Relationship of Seasonal Volume to Average Packing and Selling Cost.. 14

Trend in Packing and Selling Cost. . . . . . . . .. . 19

THE COST OF PACKING AND SELLING FLORIDA FRESH CITRUS FRUITS-/

Nature of the Sample

A sample of 43 packing houses was selected for this analysis from the 67 packing housa

included in the Agricultural Economics Mimeographed Report 54-5 "Cost of Handling Florid.

Citrus Fruit in Fresh and Processed Form 1951-52". The sample was selected by calculating

index of average total unit cost for each house, arraying these indices, and systematically

drawing a sample of 43 houses. An alternative house was drawn to replace one of the houses

selected because records were not available in time for this report. This group of houses

packed 16,521,526 1-3/5 bushel box equivalents or approximately 35.85 percent of the

1953-54 Florida fresh citrus fruit pack.

The original sample of 67 packing houses was drawn on the basis of three considera-

tions. First, the sample was restricted to firms which packed for commercial inter-state

trade. Houses engaged primarily in intra-state trade or express trade were excluded.

Second, consideration was given to the geographic location of the packing houses. An

attempt was made to select a proportional sample based upon the total number of houses in

each area. Third, only houses that possessed rather detailed cost records were included.

The Measurement of Cost

The primary cost data made available by the fresh citrus fruit packing houses show the

details of the annual expenditure of each packing house in the sample. The total operating

cost is broken down into 35 accounts and combined into seven major categories to obtain

total packing and total packing and selling costs. To give a clearer picture of the nature of

the costs of packing and selling fresh Florida citrus fruit, a brief description of each element

of operating cost is presented.

1/ This is a report of one phase of Southern Regional Project SM-4, "Marketing Citrus
Fruits". This report was prepared by: Eric Thor, Associate Agricultural Economist and
A. H. Spurlock, Agricultural Economist.
2

1. Material expense.

Material expense includes crates, boxes, bags, fruit wraps, nails, strips, straps,

wire, labels, paste, liners and end guards. Crate, box and bag materials were allocated

to the individual type of pack appropriate for each. Fruit wraps, nails, strips and straps

were allocated to standard nail boxes. Liners, labels, etc. were allocated at a piece

rate appropriate for each type of container.

2. Labor expense.

Labor expense was divided into six categories corresponding with the general

departmentalization of a packing house. The classifications are: (a) receive, truck and

dump; (b) crate making and labeling; (c) foremen, graders and box closer; (d) wrap and

pack; (e) truck, check and load; and (f) payroll taxes and workmen's compensation

insurance.

3. Other direct operating expense.

This expense includes power, light, water and fuel oil; repairs to buildings and

equipment, and miscellaneous supplies.

4. Indirect operating expense.

Included under this heading are fire and casualty insurance; taxes and licenses;

depreciation; interest on long-term debts; and rent.

5. Administrative expense.

Administrative expense includes management and office salaries; office supplies and

expense; auto and travel; interest on operating capital; and telephone and telegraph.

6. Selling expense.

Selling expense includes the salaries and operating expense of the sales section, but

does not include commissions and brokerage fees. It does include assessments made to

members for overhead expenses by a central organization such as the Florida Citrus

Exchange and others.

7. Other items.

In this category are included degreening; color add and wax royalties; pre-cooling;

Florida citrus advertising tax; Federal and State inspection on grade, maturity and color

add; Florida Citrus Mutual and Tangerine Co-operative charges; and Growers Administra-

tive Committee assessments.

Material, labor, other direct operating and indirect operating expenses are com-

bined to give total packing expense. To these are added administrative,, selling and other

expenses to arrive at the total packing and selling cost.

1953-54 Costs of Packing and Selling

The cost of packing and selling fresh Florida citrus fruit varies with the type of

fruit and type of container. -- The accounting records show that the average total cost

of packing and selling grapefruit is less than that of oranges and cost for oranges is less

than tangerines. The cost of packing and selling fruit in wirebound containers tends to be

lower than the other containers. (Figure 1)

Oranges. -- The 1953-54 seasonal average cost of packing and selling oranges for

the sample of fresh citrus fruit packing houses included in this study is shown in Table 1.

This table shows the unit costs for the major expense items by type of pack.

The average cost per box for packing and selling oranges in the 1-3/5 bushel wire-

bound box was $0.9355. The two major expense items, material and labor, accounted for

67 percent of the total cost. Material expense, which included the wirebound crate,

1.60

11.40

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S .80 X:,z

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Figure .. The Average Total Cost Per Box for Major Types of Packs for Oranges, Grapefruit and Tangerines
.60 o ...-Qi..
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0.00,

Table 1. -- Average Total Cost of Packing and Selling Florida Oranges per 1-3/5
Bushel Box Equivalent by Type of Container, 43 Packing Houses, 1953-54.

Type of Container
i -- ii i l _

Number of packing houses
1-3/5 bu. boxes per firm

1-3/5
Wirebound
Box
41
128,356

Costs per 1-3/5 bushel:
Material
Labor:
Receive, truck, dump
Crate making and labeling
Foreman, graders and box
closer
Wrap and pack
Truck, check, load
Payroll taxes and insurance
Total labor
Other direct operoaipg
Indirect operating-
Total packing
Administrative
Selling
Other items-

Total packing
and selling

$0.3998 $0.6913 $0.4059 $0.3194

.0309
.0333

.0493
.0623
.0380
.0153
.2291
.0500
.0275
.7064
.0472
.0643
.1176

.0427
.0434

.0797
.1153
.0537
.0225
.3573
.0746
.0547
1.1779
.0496
.0607
.0853

.0356
.0491

.0571
.0775
.0582
.0173
.2948
.0607
.0371
.7985
.0469
.0558
.1076

$0.5623 $0.7547

.0377 .0429
.0275 .0272

.0622
.0675
.0510
.0170
.2629
.0611
.0356
.6790
.0454
.0625
.1070

$0.9355 $1.3735 $1.0088 $0.8939 $1.2335

I/ Other direct operating expense includes power, lights and water, repairs of buildings
and equipment, and miscellaneous supplies.

2/ Indirect operating expense includes fire and casualty insurance, taxes and licenses,
depreciation, interest and rent.

2/ Other items include an advertising assessment of three cents per box, a testing and
inspection charge of approximately two and three quarters cents per box, Growers
Administrative Committee and Florida Citrus Mutual assessments, degreening, and color
add and wax.

1-3/5
Std. Box
Wrapped
20
30,046

4/5
Card-
Board
26
16,364

1/2-Box
Mesh
Boa
26
531

8-lb.
Mesh
Baq
29
24,869

5-lb.
Mesh
Baq_
30
16,840

.0789
.1003
.0576
.0205
.3274
.0737
.0489
1.0123
.0550
.0586
.1076

.0508
.0248

.0873
.12G7
.0660
.0216
.3712
.0690
.0484
1.2433
.0489
.0595
.1080

$1.4597

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liner and label, averaged $0.3998 per box. The total average labor expense was

$0.2291.

The average cost of wrapping, packing, and selling oranges in the 1-3/5 bushel

standard nailed box was $1.3735. Materials, which included the box, fruit wraps,

liners, end guards and labels, accounted for $0.6913 of this total cost, and labor for

$0.3573 per box.

The cost per 1-3/5 bushel box equivalent for oranges packed in 4/5 bushel cardboard

boxes was $1.0089. This cost was higher than oranges packed in 1-3/5 bushel wirebound

boxes but less than oranges packed in standard nailed boxes. The allocated labor expense

of packing and handling oranges in 4/5 bushel cardboard boxes was approximately 6-1/2

cents per box higher than for oranges packed and handled in 1-3/5 bushel wirebound

boxes.

The average cost for the three major types of mesh bags also is shown in Table 1.

The total cost of packing and selling oranges in mesh bags was $0.8939 for 1/2 box bags,

$1.2335 for 8-lb. bags and $1.4597 for 5-lb. bags. Both material and labor expense

increased as the size of the bag decreased.

Grapefruit. -- The 1953-54 seasonal average cost of packing and selling grapefruit

based upon the accounting records of the firms included in the sample is shown in Table 2.

The average total cost per 1-3/5 bushel equivalent for packing and selling grapefruit was

$0.8375 for the 1-3/5 bushel wirebound box, $1.1871 for the 1-3/5 bushel standard nailed

box, $0.9058 for the 4/5 bushel cardboard box, $0.7159 for the 1/2 box mesh bag, $1.1659

for the 8-lb. mesh bag and $1.3666 for the 5-lb. mesh bag.

The cost of packing grapefruit was less than that of packing oranges in the same con-

tainer. The difference in cost is due mostly to lower labor and direct operating expenses.

Table 2. -- Average Total Cost of Packing and Selling Florida Grapefruit per 1-3/5
Bushel Box Equivalent by Type of Container, 43 Packing Houses, 1953-54.

1-3/5 1-3/5 4/5 1/2-Box 8-lb. 5-lb.
Type of Container Wirebound Std. Box Card- Mesh Mesh Mesh
Box Wrapped Board Bag Bag Bag
Number of packing houses 42 21 26 8 29 28
1-3/5 bu. boxes per firm 108,540 71,998 -5,859 861 9,652 6,049

Costs per 1-3/5 bushel:
Material $0.3989 $0.6632 $0.4035 $0,2269 $0.5465 $0.7364
Labor:
Receive, truck, dump .0258 .0333 .0289 .0319 .0473 .0460
Crate making and labeling .0275 .0370 .0456 .0261 .0274 .0236
Foreman, graders, and box
closer .0323 .0536 .0366 .0550 .0633 .0648
Wrap and pack .0470 .0839 .0626 .0677 .0928 .1154
Truck, check, load .0320 .0317 .0501 .0392 .0543 .0571
Payroll taxes and insurance .0108 .0164 .0123 .0144 .0194 .0189
Total labor .1754 .2559 .2361 .2343 .3045 .3258
Other direct operating .0348 .0326 .0358 .0467 .0654 .0583
Indirect operating .0212 .0344 .0250 .0433 .0424 .0387
Total packing .6303 .9861 .7004 .5512 .9588 1.1592
Administrative .0426 .0403 .0435 .0375 .0519 .0461
Selling .0537 .0508 .0484 .0460 .0487 .0519
Other items3/ .1109 .1099 .1135 .0812 .1065 .1094

Total packing
and selling $0.8375 $1.1871 $0.9058 $0.7159 $1.1659 $1.3666

1/ Other direct operating expense includes power, lights and water, repairs of buildings
and equipment, and miscellaneous supplies.

2/ Indirect operating expense includes fire and casualty insurance, taxes and licenses,
depreciation, interest and rent.

./ Other items include an advertising assessment of six cents per box, a testing and
inspection charge of approximately two and one quarter cents per box, Growers
Administrative Committee and Florida Citrus Mutual assessments, degreening, and color
add and wax.

Tangerines. -- The total cost of packing and selling tangerines was higher than that of

packing and selling oranges, which in turn was higher than grapefruit. The seasonal average

costs of packing and selling tangerines are shown in Table3. The 1-3/5 bushel equivalent for

packing and selling tangerines in the 4/5 bushel wirebound bruce box was $1.3689, in the 4/5

bushel wirebound flat box $1.4373, and in the 4/5 standard nailed box $1.5768.

As with oranges and grapefruit material was the greatest single expense item. The cost

of the material, which includes the crate, liner and label was 44 percent of total cost for the

4/5 bushel wirebound bruce box, 46 percent for the 4/5 bushel wirebound flat box, and 54

percent for 4/5 bushel standard nailed box.

Variations in Packing and Selling Cost

Oranges. -- The average total cost of packing and selling oranges in the various con-

tainers showed considerable variation among the firms. The packing and selling costs of

oranges for the sample are arrayed in five cent intervals for six types of containers, Table 4.

For the 41 firms packing oranges in 1-3/5 wirebound boxes, the total packing and selling

costs ranged from $0.79 to $1.27, with 36 firms falling within the range of $0.85 to $1.09.

For 1-3/5 standard nailed boxes, 20 firms ranged from $1.01 to $1.56 and 17 of these were

within the range of $1.15 to $1.49. Twenty-six firms packing 4/5 cardboard boxes had costs

between $0.80 and $1.26 with 23 in the range of $0.90 to $1.24.

Packing and selling costs of oranges in 1/2 box mesh bags fell between $0.33 and $1.39

for 26 packing houses, of which 22 had costs up to $1.04. For 8-lb. mesh bags the total

average packing and selling costs were from $1.04 to $1.50 for 29 firms of which 21 ranged

from $1.10 to $1.29. Thirty firms had costs from $1.23 to $1.81 for 5-lb. mesh bags, and 28

of these firms had packing and selling costs over $1.35.

Table 3. -- Average Total Cost of Packing and Selling Florida Tangerines per 1-3/5
Bushel Box Equivalent by Type of Container, 43 Packing Houses, 1953-54.

Type of Container 4/5 Wirebound 4/5 Wirebound 4/5 Standard
Bruce Flat Nailed
Number of packing houses 21 16 8
1-3/5 bu. boxes per firm 17,793 20,936 1, 284

Costs per 1-3/5 bushel:
Material $0.6071 $0.6638 $0.8500
Labor:
Receive, truck, dump .0403 .0472 .0359
Crate making and labeling .0668 .0601 .0702
Foreman, graders, and box
closer .0770 .0840 .0603
Wrap and pack .1106 .1059 .1027
Truck, check, load .0702 .0794 .0694
Payroll taxes and insurance .0247 .0275 .0240
Total labor .3896 .4041 .3625
Other direct operating- .0803 .0771 .0819
Indirect operating-Z .0395 .0609 .0346
Total packing 1.1165 1.2059 1.3290
Administrative .0448 .0507 .0370
Selling .0666 .0767 .0583
Other items/ .1410 .1040 .1525

Total packing
and selling $1.3689 $1.4373 $1.5768

1/ Other direct operating expense includes power, lights and water, repairs of buildings
and equipment, and miscellaneous supplies.

/ Indirect operating expense includes fire and casualty insurance, taxes and licenses,
depreciation, interest and rent.

/ Other items include an advertising assessment of five cents per box, a testing and
inspection charge of approximately two and one quarter cents per box, Growers
Administrative Committee and Florida Citrus Mutual assessments, degreening, and color
add and wax.

Table 4. -- Variation in the Cost per 1-3/5 Bushel Box Equivalent of Packing and Selling
Florida Oranges by Type of Container, 43 Packing Houses, 1953-54.

Cost per : 1-3/5 :1-3/5 : 4/5 : 1/2 Box : 8-lb. : 5-lb.
1-3/5 Bushel :Wirebound :Std. Box : Card- : Mesh : Mesh : Mesh
-/ Box .Wrapped : board Bag : Bag : Baq
-- ---- - Number of packing houses -- ----------
Packing and Selling
Under $0.80 1 0 0 6 0 0
$0.80 .84 1 0 1 1 0 0
.85 .89 8 0 1 7 0 0
.90 .94 7 0 3 2 0 0
.95 .99 5 0 3 4 0 0
1.00 1.04 11 1 3 2 1 0
1.05 1.09 5 1 5 1 0 0
1.10 1.14 1 0 3 1 4 0
1.15 1.19 0 3 2 0 6 0
1.20 1.24 0 1 4 0 5 1
1.25 1.29 2 2 1 1 6 0
1.30 1.34 0 2 0 0 1 1
1.35 1.39 0 6 0 1 1 6
1.40 .44 0 0 0 0 2 6
1.45 1.49 0 3 0 0 2 5
1.50 1.54 0 0 0 0 1 2
1.55 1.59 0 1 0 0 0 2
1.60 1.64 0 0 0 0 0 1
1.65 and over 0 0 0 0 0 6
Total number of firms 41 20 26 26 29 30
Packing
Under $0.55 0 0 0 4 0 0
$0.55 .59 0 0 0 3 0 0
.60 .64 4 0 0 2 0 0
.65 .69 10 0 1 7 0 0
.70 .74 10 0 3 5 0 0
.75 .79 6 0 9 0 0 0
.80 .84 5 1 3 1 0 0
.85 .89 4 2 1 1 2 0
.90 .94 0 0 3 0 9 0
.95 .99 0 4 4 1 8 0
1.00 1.04 1 1 1 1 1 1
1.05 1.09 1 1 1 0 2 1
1.10 1.14 0 2 0 1 3 5
1.15 1.19 0 2 0 0 1 6
1.20 1.24 0 3 0 0 1 6
1.25 and over 0 4 0 0 2 11
Total number of firms 41 20 26 26 29 30

12
For total packing costs the variations among the firms were similar. The range for the

41 firms handling 1-3/5 bruce boxes was from $0.60 to $1.06. The packing cost for 39 of

these firms ranged from $0.60 to $0.89. Twenty firms packing in 1-3/5 standard nailed boxes

had costs from $0.81 to $1.35 with 17 of these firms having packing costs over $0.95. The

variation in the cost of packing oranges in 4/5 cardboard boxes for 26 firms ranged from

$0.67 to $1.08, and for 23 firms from $0.70 to $0.99.

The spread in packing cost for 1/2 box mesh bags for 26 firms was between $0.33 and

$1.14 with 20 firms included within the cost interval of $0.45 to $0.74. For the 29 firms

packing oranges in 8-lb. mesh bags the packing cost ranged from $0.88 to $1.33 and 23 of

these firms had costs from $0.90 to $1.14. Thirty firms packing 5-lb. mesh bags had packing

costs ranging between $1.02 and $1.63, with 28 packing houses having costs over $1.10 per

box.

Grapefruit. -- The spread in grapefruit costs among the different packing houses was

not as great as in oranges. The 42 firms using 1-3/5 wirebound boxes varied between $0.73

and $1.10 for packing and selling each box, Table 5. Of these firms 37 had costs between

$0.75 and $0.99. For the 1-3/5 standard nailed boxes 21 packing houses had packing and

selling costs from $0.93 to $1.30, and 15 had costs between $1.00 and $1.24. The 26 firms

using 4/5 cardboard boxes had total packing and selling costs ranging between $0.73 and

$1.08. Of these, 22 had costs from $0.85 to $1.04.

The packing and selling costs for 1/2 box mesh bags were from $0.65 to $1.27 for 8

firms. For 8-lb. mesh bags, 29 firms ranged from $1.02 to $1.47. The range for 5-1b.

mesh bags for 28 firms was from $1.23 to $1.75.

Packing costs for grapefruit in 1-3/5 bruce boxes for 42 firms varied from $0.54 to

$0.85. Thirty-eight of these firms ranged between $0.55 and $0.79. Twenty-one packing

Table 5. -- Variation in the Cost per 1-3/5 Bushel Box Equivalent of Packing and Selling
Florida Grapefruit by Type of Container, 43 Packing Houses, 1953-54.

: 1-3/5 : 1-3/5 : 4/5 : 1/2 Box : 8-lb. : 5-lb.
Cost per : Wirebound : Std. Box : Card- : Mesh : Mesh : Mesh
1-3/5 Bushel Box : Wrapped : board : Bag BaBag : Bag
- - - - - Number of packing houses - - - - -
Packing and Selling
Under $0.70 0 0 0 2 0 0
$0.70 .74 1 0 1 0 0 0
.75 .79 7 0 2 2 0 0
.80 .84 6 0 0 1 0 0
.85 .89 9 0 6 0 0 0
.90 .94 10 1 6 0 0 0
.95 .99 5 2 6 0 0 0
1.00 1.04 3 2 4 2 6 0
1.05 1.09 0 3 1 0 6 0
1.10 1.14 1 2 0 0 8 0
1.15 1.19 0 2 0 0 3 0
1.20 1.24 0 6 0 0 1 2
1.25 1.29 0 2 0 1 0 5
1.30 1.34 0 1 0 0 0 7
1.35 1.39 0 0 0 0 1 9
1.40 1.44 0 0 0 0 2 0
1.45 1.49 0 0 0 0 2 0
1.50 1.54 0 0 0 0 0 1
1.55 and over 0 0 0 0 0 4
Total number of firms 42 21 26 8 29 28
Packing
Under $0.55 1 0 0 3 0 0
$0.55 .59 5 0 0 0 0 0
.60 .64 17 0 3 2 0 0
.65 .69 7 0 9 0 0 0
.70 .74 6 1 9 0 0 0
.75 .79 3 1 1 1 2 0
.80 .84 2 2 2 0 5 0
.85 .89 1 3 2 1 12 0
.90 .94 0 3 0 0 4 0
.95 .99 0 5 0 0 0 1
1.00 1.04 0 2 0 0 0 5
1.05 1.09 0 2 0 1 2 5
1.10 1.14 0 2 0 0 1 7
1.15 1.19 0 0 0 0 1 4
1.20 1.24 0 0 0 0 1 1
1.25 1.29 0 0 0 0 1 0
1.30 1.34 0 0 0 0 0 0
1.35 1.39 0 0 0 0 0 2
1.40 1.44 0 0 0 0 0 2
1.45 and over 0 0 0 0 0 1
Total number of firms 42 21 26 8 29 28

14

houses had packing costs ranging from $0.72 to $1.13 for 1-3/5 standard nailed boxes, with

17 of these firms ranging from $0.80 to $1.09. The 26 firms packing 4/5 cardboard boxes

were within the cost range of $0.60 and $0.88, with 18 of the firms falling between $0.65

to $0.74.

The cost of packing in 1/2 box mesh bags for 8 firms ranged from $0.44 to $1.09.

Variation in cost for the 29 firms packing grapefruit in 8-lb. mesh bags ranged from $0.79 to

$1.27, and in 5-lb. mesh bags of 28 firms from $0.98 to $1.52.

Tangerines. -- Packing and selling cost for 4/5 wirebound bruce boxes ranged from

$1.21 to $1.59 for 21 firms, for 4/5 wirebound flat boxes from $1.30 to $1.62, and for 4/5

standard boxes from $1.23 to $1.67, Table 6.

The unit costs of packing tangerines varied from $0.96 to $1.38 for 4/5 wirebound bruce

boxes, from $1.03 to $1.42 for 4/5 wirebound flat boxes, and from $0.99 to $1.56 for 4/5

standard boxes.

Relationship of Seasonal Volume to Average Packing and Selling Cost

The data indicate that there is a relationship between the average total packing and

selling cost and the seasonal volume handled by the individual house. -- In order to investi-

gate some of the firm to firm variation in cost, the relationship between the size of the packing

house, based on the total volume of citrus packed per season, and the average total cost of

packing and selling were considered. The packing houses were divided into four seasonal

volume classes of (1) under 200,000 boxes, (2) 200,000 to 399,999 boxes, (3) 400,000 to

699,999 boxes, and (4) over 700,000 boxes. The average total cost of packing and selling

oranges and grapefruit packed in the 1-3/5 bushel wirebound box was calculated for each

volume group and is shown in Tables 7 and 8. The average total packing and selling cost also

15
Table 6. -- Variation in the Cost per 1-3/5 Bushel Box Equivalent of Packing and Selling
Florida Tangerines by Type of Container, 43 Packing Houses, 1953-54.

Cost per : 4/5 Wirebound : 4/5 Wirebound 4/5 Standard
1-3/5 Bushel : Bruce : Flat : Nailed
-- - -------Number of packing houses -------------
Packing and Selling
Under $1.25 3 0 1
$1.25 1.29 1 0 1
1.30 1.34 3 3 0
1.35 1.39 4 1 0
1.40 1.44 2 7 0
1.45 1.49 3 0 2
1.50 1.54 2 3 2
1.55 1.59 3 1 0
1.60 and over 0 1 2
Total number of firms 21 16 8
Packing
Under $1.00 2 0 1
$1.00 1.04 2 1 1
1.05 1.09 4 1 0
1.10 1.14 4 4 0
1.15 1.19 3 3 0
1.20 1.24 0 2 1
1.25 1.29 3 3 2
1.30 1.34 2 1 0
1.35 1.39 1 0 2
1.40 1.44 0 1 1
1.45 and over 0 0 0
Total number of firms 21 16 8

was calculated for each volume group of tangerines packed in the 4/5 bushel wirebound bruce

box, Table 9.

The data in all three of the tables showing average total packing and selling cost by

volume classes, indicate that houses with the larger seasonal volumes tended to have lower

unit cost. However, upon a more detailed study of the data, it was found that there were

houses that had high and some that had low accounting costs in all volume groups. This

Table 7. -- Volume and Cost of Packing and Selling Florida Oranges in 1-3/5 Bushel
Wirebound Boxes, 43 Packing Houses, 1953-54.

Citrus Fruit Ha: Under : 200,000-: 400,000-: 700,000: All
Citrus t H d ( ) : 200,000: 399,999 : 699,999 : and over: Volumes
Number of packing houses 1 14 7 19 41
Average pack of oranges
(1-3/5 bu. equivalent) 955 45,603 103,734 205, 109 128,356

Cost per 1-3/5 bushel:
Material $0.4262 $0.4327 $0.3891 $0.3964 $0.3998
Labor:
Receive, truck, dump .0429 .0335 .0332 .0300 .0309
Crate making and labeling .0272 .0347 .0415 .0315 .0333
Foreman, graders and box
closer .1005 .0464 .0577 .0482 .0493
Wrap and pack .0995 .0606 .0611 .0629 .0623
Truck, check, load .0450 .0435 .0464 .0355 .0380
Payroll taxes and insurance .0366 .0187 .0181 .0142 .0153
Total labor .3517 .2374 .2580 .2223 .2291
Other direct operating/ .1152 .0531 .0539 .0488 .0500
Indirect operating/ .1173 .0335 .0253 .0269 .0275
Total packing 1.0104 .7567 .7263 .6944 .7064
Administrative .0911 .0596 .0546 .0437 .0472
Selling .0796 .0898 .0611 .0608 .0643
Other items3/ .0660 .1201 .1198 .1168 .1176

Total packing
and selling $1.2471 $1.0262 $0.9618 $0.9157 $0.9355

/ Other direct operating expense includes power, lights and water,
and equipment, and miscellaneous supplies.

repairs of buildings

2/ Indirect operating expense includes fire and casualty insurance, taxes and licenses,
depreciation, interest and rent.

/ Other items include an advertising assessment of three cents per box, a testing and
inspection charge of approximately two and three quarters cents per box, Growers
Administrative Committee and Florida Citrus Mutual assessments, degreening, and color
add and wax.

Table 8. -- Volume and Cost of Packing and Selling Florida Grapefruit in 1-3/5 Bushel
Wirebound Boxes, 43 Packing Houses, 1953-54.

: Under : 200,000-: 400,000-: 700,000 : All
Citrus Fruit Handled (boxes) : 200,000 : 399,999 : 699,999 :and over : Volumes

Number of packing houses 1 15 7 19 42

Average pack of grapefruit 725 31,589 108,217 175,086 108,540
(1-3/5 bu. equivalent)

Cost per 1-3/5 bushel:
Material $0.4248 $0.4198 $0.3955 $0.3967 $0.3989
Labor:
Receive, truck, dump .0428 .0281 .0242 .0258 .0258
Crate making and labeling .0276 .0325 .0305 .0261 .0275
Foreman, graders, and box
closer .0676 .0309 .0310 .0328 .0323
Wrap and pack .0593 .0460 .0440 .0478 .0470
Truck, check, load .0455 .0400 .0334 .0306 .0320
Payroll taxes and insurance .0248 .0137 .0114 .0102 .0108
Total labor .2676 .1912 .1745 .1733 .1754
Other direct operating-/ .0800 .0467 .0347 .0332 .0348
Indirect operating-/ .0772 .0231 .0226 .0206 .0212
Total packing .8496 .6808 .6273 .6238 .6303
Administrative .0897 .0529 .0494 .0396 .0426
Selling .0607 .0768 .0673 .0473 .0537
Other items" .0952 .1243 .1165 .1078 .1109

Total packing
and selling $1.0952 $0.9348 $0.8605 $0.8185 $0.8375

1/ Other direct operating expense includes power, lights
and equipment, and miscellaneous supplies.

and water, repairs of buildings

2/ Indirect operating expense includes fire and casualty insurance, taxes and licenses,
depreciation, interest and rent.

3/ Other items include the advertising assessment of six cents per box, a testing and
inspection charge of approximately two and one quarter cents per box, Growers
Administrative Committee and Florida Citrus Mutual assessments, degreening, and color
add and wax.

Table 9. -- Volume and Cost of Packing and Selling Florida Tangerines in 4/5 Bushel
Wirebound Boxes, 43 Packing Houses, 1953-54.

Citrus Fruit Handled (boxes) : 200,000- : 400,000- : 700,000 : All
Citrus Fru Handled (boxes) 399,999 : 699,999 : and over : Volumes

Number of packing houses 6 3 12 21
Average pack of tangerines
(1-3/5 bu. equivalent) 6211 8394 25,934 17,793
(1-3/5 bu. equivalent)

Cost per 1-3/5 bushel:
Material $0.6613 $0.4911 $0.6101 $0.6071
Labor:
Receive, truck, dump .0361 .0558 .0396 .0403
Crate making and labeling .0685 .0763 .0658 .0668
Foreman, graders, and box
closer .0754 .0881 .0763 .0770
Wrap and pack .1015 .0990 .1126 .1106
Truck, check, load .0696 .0948 .0683 .0702
Payroll taxes and insurance .0292 .0296 .0238 .0247
Total labor .3803 .4436 .384 .3896
Other direct operating./ .1036 ..0913 .0767 .0803
Indirect operating/ .0592 .0484 .0364 .0395
Total packing 1.2044 1.0744 1.1096 1.1165
Administrative .0745 .0674 .0394 .0448
Selling .0770 .0634 .0656 .0666
Other items/ .1234 .1206 .1447 .1410

Total packing
and selling $1.4793 $1.3258 $1.3593 $1.3689

1/ Other direct operating expense includes power,
and equipment, and miscellaneous supplies.

lights and water, repairs of buildings

2/ Indirect operating expense includes fire and casualty insurance, taxes and licenses,
depreciation, interest and rent.

3/ Other items include an advertising assessment of five cents per box, a testing and
inspection charge of approximately two and one quarter cents per box, Growers
Administrative Committee and Florida Citrus Mutual assessments, degreening, and
color add and wax.

variation within groups is shown in Table 10 and indicates that the larger volume groups

contained more houses with lower costs than the smaller seasonal volume groups.

The reason for the variation in costs between types of fruit can be accounted for to

a certain extent by differences in labor and container costs. However, this does not

account for the variations in cost among firms providing the same service. The firm to firm

variation in costs may be associated with economies of scale, or economies associated with

work methods, or a combination of both. The department of Agricultural Economics,

University of Florida, Agricultural Experiment Station is currently making an analysis of

the arrangement and use of equipment in fresh citrus fruit packing houses and of the time

and labor used in handling the fruit from the tree through the packing house. Two avail-

able publications based upon this study are: (1) "Cost of Moving Citrus from Tree onto

Highway Trucks as Related to Methods of Handling", Florida Agricultural Experiment

Station Bulletin 547, and (2) "Cost Analysis of Bulk Handling Methods for Fresh Citrus",

Florida Agricultural Economics Mimeo Report 55-1.

Trend in Packing and Selling Cost

The cost of packing and selling Florida citrus is increasing. -- The average total

cost of packing and selling Florida citrus in the six containers shown in Table 11 has

increased during the past six years with minor fluctuations.

The average total cost of oranges packed in 1-3/5 wirebound boxes increased from

$0.83 for the 1948-49 season to $0.94 for the 1953-54 season. A comparison of these

seasons for oranges packed in 1-3/5 standard nailed boxes showed an increase from $1.16

to $1.37 per box, for 8-lb. bags the increase was from $1.01 to $1.23, and for 5-1b. bags

the average total packing and selling cost changed from $1.18 to $1.46.

20
Table 10. -- Volume of Fruit Handled and Variation in the Cost of Packing and Selling
Florida Citrus Fruit in Wirebound Boxes, 43 Packing Houses, 1953-54.

1-3/5 bushel box equivalent handled
Cost per : Under : 200,000- : 400,000- : 700,000 : All
1-3/5 bushel : 200,000 : 399,999 : 699,999 : and over : Volumes

Oranges in 1-3/5 wirebound boxes

-------- Number of firms--------
Under $0.80 0 0 0 1 1
$0.80 .89 0 1 2 6 9
.90 .99 0 3 2 7 12
1.00 1.09 0 8 3 5 16
1.10 and over 1 2 0 0 3

Grapefruit in 1-3/5 wirebound boxes
Under $0.80 0 0 2 6 8
$0.80 .89 0 5 0 10 15
.90 .99 0 8 4 3 15
1.00 1.09 0 2 1 0 3
1.10 and over 1 0 0 0 1

Tangerines in 4/5 wirebound boxes
Under $1.30 0 0 1 3 4
$1.30 1.39 0 2 1 4 7
1.40 1.49 0 0 1 4 5
1.50 and over 0 4 0 1 5

The average total cost for 1-3/5 wirebound boxes of grapefruit increased from $0.74 in

1948-49 to $0.84 in 1953-54, and from $1.08 to $1.19 for 1-3/5 standard nailed boxes.

Mesh bags ranged from $0.92 in 1948-49 to $1.17 in 1953-54 for 8-lb. bags, and from $1.17

to $1.37 for 5-lb. bags.

The average total cost per box for packing and selling tangerines in 4/5 wirebound

bruce boxes increased during the six-year period from $1.19 in 1948-49 to $1.37 in 1953-54.

For 4/5 standard nailed boxes this cost increased from $1.35 to $1.58.

Table 11. --

Average Total Cost per 1-3/5 Bushel Equivalent for Packing and Selling
Florida Citrus Sold for Fresh Consumption, 1948-49 through 1953-54. /

SType of Pack
Season Boxes :Mesh Bags
1-3/5-
S 1-3/5 1-3/5 8-1b. 5-lb.
Wirebound : Std. Wrap : .
- - ---- Dollars per 1-3/5 bu. equivalent ------

Oranges
1.1590
1.1368
1.2062
1.2526
1.2730
1.3735

1.0052
1.0488
1.1490
1.1069
1.2067
1.2335

Grapefruit

1.0785.
1.0257
1.0945
1.1907
1.1669
1.1871

.9153
.9453
1.0849
1.0467
1.1231
1.1659

1.1822
1.2580
1.4086
1.3444
1.4469
1.4597

1.1736
1.2387
1.3201
1.2670
1.3233
1.3666

.Tangednes
4/5 wirebound bruce box 4/5 standard nailed box

1948-49
1949-50
1950-51
1951-52
1952-53
1953-54

1948-49
1949-50
1950-51
1951-52
1952-53
1953-54

1948-49
1949-50
1950-51
1951-52
1952-53
1953-54

1.3479
1.5702
1.4938
1.5074
1.5827
1.5768

.8330
.8785
.9166
.9111
.9530
.9355

.7359
.8046
.8196
.8487
.8543
.8375

1.1916
1.2491
1.4250
1.3994
1 4417
1.3689

1/ Number of houses included in each of the years: 1948-49 73; 1949-50 73;
1950-51 77; 1951-52 67; 1952-53 43; 1953-54 43.