Agricultural Economics Mimeo Report No. 55-10

THE COST OF PROCESSING. WAREHOUSING.

AND SELLING FLORIDA CITRUS PRODUCTS,

1953-54 SEASON ,

A Study Conducted With Funds Provided by the

Research and Marketing Act

Department of Agricultural Economics
Florida Agricultural Experiment Station
Gainesvitle, Florida

In Cooperation With

Farmer Cooperative Service
U. S. Department of Agriculture
Washington, D. C.

June 1955

TABLE OF CONTENTS

Page

Cost of processing single strength juices *......... .*. 1

Variations in cost ........ .................. 4

Volume and cost...........*......... *.......... 4

Cost of processing citrus sections ..... ....************ 8

Cost of processing frozen orange concentrate .....6...... 9

The Cost of Processing, Warehousing, and
Selling Florida Citrus Products,
1953-54 Season

The sample of 16 processing firms processed 32 million 24/2 case-equivalents

or 75 percent of the single strength juice and sections, and 32 million gallonsor49

percent of the frozen orange concentrate produced in Florida during the 1953-54

season.

Detailed cost data were assembled from each of the 16 processing firms and

were combined into the major cost categories shown below for single strength juice

and sections:

Materials cans, cartons, labels and adhesive.

Direct labor

Indirect labor

Warehousing and shipping labor

Other manufacturing costs depreciation, repairs, power, lights, water,

fuel, royalties, insurance, taxes, supplies.

Administrative and selling excluding brokerage and discounts.

Other costs fruit assessments.

Cost of! processing single strength juices

The average cost of processing single strength citrus juices declined during the

1953-54 season from the average of the previous season for the first time in eight

years (Table 1). Decreases for juices in 12/404 cases were nine cents each for

orange and grapefruit and eight cents for blended juice.

-2-

Table 1. Average Cost of Processing, Warehousing, and Selling
Florida Citrus Fruit Juices, EcilddingSugarCosti in 12/404Cases,.
1946-47 Through 1953-54 Seasons.

Season 1953-54 1952-53 1951-52 1950-51 1949-50 1948-49 1947-48 1946-47
Orange $1.26 $1.35 $1.30 $1.24 $1.21 $1.17 $1.09 $1.06
Juice
Grapefruit 1.26 1.35 1.31 1.23 1.19 1.17 1.09 1.06
Juice
Blended 1.26 1.34 1.31 1.23 1.19 1.15 1.09 1.05
Juice

The following comparison of 1952-53 and 1953-54 averages shows that for single

strength orange juice in 12/404 cases the decrease in cost of processing was divided

among the principal cost categories being largest in labor, administrative and

other manufacturing:
Change in Cost
1952-53 1953-54 from 1952-53 Percent
Materials $0.8796 $0.8578 -$0.0218 2
Labor .1397 .1136 .0261 -19
Other Manufacturing .1875 .1660 .0215 -11
Administrative selling .1044 .0868 .0176 -17
Other costs .0363 .0372 + .0009 + 2

Total Non-sweet $1.3475 $1.2614 -$0.0861 6

The itemized costs of processing single strength juices in the principal containers

(24/2 and 12/404 cases) for the 1953-54 season are shown in Table 2. The average

total cost for processing orange, grapefruit and blended juices (excluding sugar cost)

was $1.26 per 12/404 case while tangerine juice was $1.29.

The costs of processing and selling citrus juices in 12/404 cases were about

three cents higher than for 24/2 cases. However, for an equivalent volume of

juice (basis 24/2 case) the costs for 12/404 cases were 24 to 26 cents lower than

for 24/2 cases as shown by the following figures.

-3-

Table 2. Cost per Case by Type of Container of Processing, Warehousing, and
Selling Florida Citrus Fruit Juices, 15 Canneries, 1953-54 Season.
Orange Juice Grapefruit Juice
Type of container 24/2 12/404 24/2 12/404
Number of firms 15 15 15 15
Cases per firm 17,437 468,962 161,478 449, 249

Cost per case:
Material $0.8847 $0.8578 $0.8837 $0.8578
Labors
Direct .0675 .0697 .0701 .0730
Indirect .0095 .0120 .0104 .0137
Warehousing and shipping .0294 .0319 .0304 .0337
Total labor .1064 .1136 .1109 .1204
Other manufacturing .1340 .1660 .1150 .1406
Total processing and
warehousing 1.1251 1.1374 1.1096 1.1188
Administrative and selling .0749 .0868 .0651 .0776
Other cost .0293 .0372 .0542 .0676
Cost unsweetened 1.2293 1.2614 1.2289 1.2640
Sugar .0389 .0461 .0628 .0811
Total cost $1.2682 $1.3075 $1.2917 11.3451

Blended Juice Tangerine Juice
Type of container 24/2 12/404 24/2 12/404
Number of firms 15 15 9 11
Cases per firm 9 02;761 195.251 21.064 42.758

Cost per case:
Material $0.8766 10.8518 $0.8873 $0.8635
Labor:
Direct .0638 .0664 .0913 .0822
Indirect .0098 .0120 .0100 .0129
Warehousing and shipping .0300 .0330 .0314 .0344
Total labor .1036 .1114 .1327 .1295
Other manufacturing .1288 .1535 .1266 .1512
Total processing and
warehousing 1.1090 1.1167 1.1466 1.1442
Administrative and selling .0740 .0848 .0712 .0811
Other cost .0435 .0555 .0478 .0618
Cost unsweetened 1.2265 1.2570 1.2656 1.2871
Sugar .0478 .0602 .0442 .0573
Total cost $1.2743 $1.3172 $1.3098 $1.3444

-4-

Orange Grapefruit Blended Tangerine
Juice Juice Juice Juice
24/2 cases $1.2293 $1.2289 $1.2265 $1.2656
12/404 cases (24/2 basic) .9872 .9893 .9838 1.0074
Difference $0.2421 $0.2396 $0.2427 $0.2582

Variations in cost

The average total cost of processing, warehousing, and selling single strength

citrus juices for the 1953-54 season showed less variation among firms than for

previous seasons. These variations are presented in Table 3. For the 12/404 cases,

nine of the 15 firms processing orange and grapefruit juice, 10 of the 15

processing blended juice, and 9 of 11 processing tangerine juice had average costs

from $1.20 to $1.35 per case.

In Table 4 are shown the variations in cost among firms for processing and

warehousing citrus juices, excluding administrative, selling, sugar and "other costs".

Volume and cost

The fifteen firms in the sample were divided into three groups on the basis

of total volume of fruit processed. Four firms were in a group processing under

750,000 cases, 5 processed between 750,000 and 1,500,000 cases and 6 firms

processed over 1,500,000 cases. The average volumes for these groups were

476,000 cases, 923,000 cases and 3,712,000 cases.( see Table 5).

A comparison of average costs of processing unsweetened orange juice in

12/404 cases by firms in each volume group is as follows:

Under 750,000 $1.26
750,000 to 1,500,000 1.30
Over 1,500,000 1.25

Table 3. Variations in Cost per Case of Processing, Warehousing and
Selling Florida Citrus Fruit Juices, excluding Sugar, 15 Canneries,
1953-54 Season.
Type of container 2472 12/404 2472 12/404
Orange Juice Grapefruit Juice
Number of firms
Cost per case
Under $1.2000 2 2 4 3
$1.20 1.2499 7 2 5 2
1.25-1.2999 5 5 5 4
1.30 1.3499 0 2 1 3
1.35 and over 1 4 0 3
Total number of firms 15 15 15 15
Blended Juice Tangerine Juice
Number of firms
Cost per case
Under $1.2000 4 2 1 0
$1.20 1.2499 5 2 3 2
1.25-1.2999 5 5 4 1
1.30 1.3499 0 3 1 6
1.35 and over 1 3 0 2
Total number of firms 15 15 9 11

Table 4. Variations in Cost per Case of Processing and Warehousing
Florida Citrus Fruit Juices, 15 Canneries, 1953-54 Season.
(Excludes Administrative, Selling, Sugar and 'Other cost)
Type of container 24/2 2/404 24/2 12404
Orange Juice Grapefruit Juice
Number of firms
Cost per case
Under $1.1000 3 3 5 4
$1.10-1.1499 3 2 6 4
1.15 1.1999 7 4 3 5
1.20-1.2499 1 4 1 2
1.25 and over 1 2 0 0
Total number of firms 15 15 15 15

Blended Juice Tangerine Juice
Number of firms
Cost per case
Under $1.1000 5 4 2 2
$1.10- 1.1499 4 1 1 0
1.15 1.1999 5 6 6 6
1.20 -1.2499 0 3 0 2
1.25 and over 1 1 0 1
Total number of firms 15 15 9 11

4o*

Table 5. Volume and Cost of Processing, Warehousing and Selling
Florida Citrus Juices in 12/404 Cases, 1953-54 Season.
Volume, cases Under 5IIT UW- Over
.. 750.000 15 00, 000 1o 500. 000
Orange Juice
Number of firms 4 5 6
Cases per firm 110, 700 221, 222 914, 253
Cost per case:
Material $0.7964_ $0.8627 $0.8618
Labor:
Direct .0589 .0774 .0690
Indirect .0169 .0190 .0101
Warehousing and shipping .0503 .0360 .0296
Total labor .1261 .1324 .1087
Other manufacturing .2112 .1901 .1575
Total processing and
warehousing 1.1337 1.1852 1,1280
Administrative and selling .0879 .0758 .0889
Other cost .0346 .0420 .0365
Cost unsweetened 1.2562 1.3030 1.2534
Sugar .0494 .0366 .0482
Totol cost $1.3056 $1.3396 $1.3016

Grapefruit Juice
Number of firms 4 5 6
Cases per firm 166, 176 263.288 792.932
Cost per case:
Material $0.8314 $0.8569 $0.8619
Labor:
Direct .0631 .0773 .0731
Indirect .0205 .0206 .0109
Warehousing and shipping .0461 .0399 .0302
Total labor .1297 .1378 .1142
Other manufacturing .1587 .1505 .1352
Total processing and
warehousing 1.1198 1.1452 1:1113
Administrative and selling .0687 .0718 .0805
Other cost .0691 .0744 .0655
Cost unsweetened 1.2576 1.2914 1.2573
Sugar .0769 .0752 .0840
Total cost $1.3345 $1.3666 $1.3413
3- -11 1 Z m II I I L I I I Ii I i i iiiiI- IL i ll, .. L ,

.?4-

Table 5. Volume and Cost of Processing, Warehousing and Selling Floridd Citrus Fruit
Juices in 12/404 Cases, 1953-54 Season (Continued).

Volume, cases Under 750, 000- Over
750,000 1,500, 000 1,500,000
Blended Juike
Number of firms 4 $5 .. 6
Cases per firm 90,230 95, 566 348,336

Cost per case:
Material $0.7784 $0.8601 $0.8626
Labor:
Direct .0589 .0680 .0673
Indirect .0151 .0182 .0101
Warehousing and shipping .0429 .0421 .0292
Total labor .116Y 23 IU-6
Other manufacturing .1824 .1552 .1481
Total processing and
warehousing 1.0777 1.1436 1.1173
Administrative and selling .1023 .0677 .0857
Other cost .0529 .0610 .0546
Cost unsweetened 1.2329 1.2723 1.2576
Sugar .0602 .0526 .0623
Total cost 1.2931 $1.3249 $1.3199

Tangerine Juice
Number offirms 2 4 5
Cases per firm 29,443 7,984 75,902
Cost per case:
Material $0.8731 $0.8497 $0.8631
Labor:
Direct .1175 .0923 .0760
Indirect .0257 .0271 .0097
Warehousing and shipping .0518 .0395 .0312
Total labor .1950 .1589 .1169
Other manufacturing .1572 .1883 .1471
Total processing and
warehousing 1.2253 1.1969 1.1271
Administrative and selling .0418 .0909 .0864
Other cost .0647 .0627 .0613
Cost unsweetened 1.3318 1.3505 1.2748
Sugar .0617 .0446 .0579
Total cost $1.3935 $1.3951 $1.3327
Toa cost-- .....

Total cost of the smallest volume group was low in relation to the middle

group because one processor in the smaller group had material costs of 72 cents

per case of 12/404 in comparison with average container cost of approximately

86 cents for other firms. Other container costs were comparably lower. This

was probably caused by inventory adjustment.

Costs for the three groups, except container costs for unsweetened orange

juice in 12/404 cases, are as follows:

Under 750, 000 $0.46
750,000 to 1,500,000 .44
Over 1,500,000 .39

The variation within groups shown in the following table for single strength

orange juice in 12/404 cases also supports the fact that large-volume processors

generally have lower costs than do low-volume processors.

Under 750,000 to Over
Cost 750000 1,500,000 1,500,000
Under$1.25 1 1 2
$1.25 to $1.35 1 2 4
Over $1.35 2 2 0

Cost of processing.citrus sections

The average costs of processing, warehousing, and selling citrus sections

increased again for the 1953-54 season as they had for each of the previous

five seasons. The increase over the 1952-53 season was five cents for 24/2 cases

and ten cents for 24/303 cases. The following comparison for grapefruit sections

for eight seasons shows the cost for 24/2 cases has increased 54 cents or 25

percent since the 1946-47 season:

-9-

1953-54 1952-53 1951-52 1950-51 1949-50 1948-49 1947-48 1946-47
24/2 $2.67 $2.62 $2.52 $2.34 $2.28 $2.26 $2.27 $2.13
24003 2.33 2.23 2.19 -

Most of the increase in cost of grapefruit sections for 1953-54 over the previous

season was due to direct labor costs which increased 12 cents for 24/2 cases and 8 and

10 cents respectively for grapefruit and salad sections in 12/303 cases. About 38

percent of the average total cost for grapefruit sections in 12/303 cases was direct

labor costs. Some costs declined in 1953-54.

The 24/2 case size has been replaced by the 24/303 case since the 1950-51

season as the most popular container for citrus sections. Table 6 shows the major

items of cost for both case sizes and the most common fruit packs.

Table 6. Cost of Processing, Warehousing and Selling Florida Citrus Sections,
1953-54 Season.
Grapefruit Sections Salad Sections
Type of container 24/2 24/303 24/303
Number of firms 7 12 10
Cases per firm 40,794 192,846 53,507
Cost per case:
Material $0.8960 $0.8189 $0.8158
Labor:
Direct 1.0556 .8885 1.1569
Indirect .0481 .0460 .0356
Warehousing and shipping .0316 .0293 .0288
Total labor 1.1353 .9638 1.2213
Other manufacturing .2062 .1807 .2064
Total processing and
warehousing 2.2375 1.9634 2.2435
Administrative and selling .0994 .0823 .0949
Other cost .0534 .0478 .0400
Sugar .2834 .2345 .2220
Total cost .$2.6737 $2.3280 $2.6004

Cost of processing frozen orange concentrate

The average cost of processing and warehousing frozen orange concentrate during

-10-

the 1953-54 season for the ten sample firms was 34 cents per gallon as shown in Table 7.

This cost is a 3-cent decrease from the previous season average cost shown in the

following comparison of costs for the six seasons since frozen orange juice became a

major citrus product:
Frozen Orange
CFonent ratge 1953-54 1952-53 1951-52 1950-51 1949-50 1948-49
Concentrate
Cost per gallon $0.340 $0.372 $0.326 $0.346 $0.451 $0.465

Table 8 presents detailed costs for orange concentrate for three major container

types, 48/6, 12/32 and 24/12. Container cost is included, but selling expense is

omitted. The 48/6 and 24/12 cases each contain the same volume which is 25 percent

less than the 12/32 case. Therefore, for an equivalent volume (basis 48/6) the costs

were as follows:
48/6 $1.80
12/32 1.44
24/12 1.51

Table 7. Cost per Gallon of Processing and Warehousing Frozen Orange
Concentrate, excluding the Cost of Cans, Cartons, and Selling,
Ten Florida Firms, 1953-54 Season.
Frozen Orange Concentrate
Gallons per firm 3,222,657

Cost per gollon:
Labor:
Direct
Indirect
Warehousing and shipping
Total labor
Other manufacturing:
Power, light, water
Maintenance, building and equipment
Royalttes
Deprciation
Taxes, licenses and insurance
Miscellaneous
Total other manufacturing
Administration
Advertising stamps, testing and inspection
Total cost

$0.0723
.0163
.0101
.0987
.0389
.0161
.0338
.0444
.0278
.0119
.1729
.0377
.0306
$0.3399

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Table 8. Type of Container and Cost of Processing and Warehousing
Frozen Orange Concentrate, Florida Firms, 1953-54 Season.

Type of container
Number of firms
Cases per firm

Cost per container:
Material:
Cans
Cartons
Total material
Labor
Other manufacturing
Total processing and
warehousing
Administrative
Advertising, stamps, testing
and inspection
Total cost

48/6

8

123/1

6

Z4/12

6

- .,, ---, m.-,P- nl "

y69 4iA/

$0.9536
.0665
1.0201
.2284
.3835

I U4.4/

$0.6976
.0876
.7852
.3367
.5550

1/3, 043

$0.6714
.0775
7489
.2030
.3787

1.6320 1.6769 1.3306
.0902 .1382 .0972

.0756 .0987 .0794
$1.7978 $1.138 $1.5072

Ag.Econ.-700
AHS:dc-6/20/55

49/A 1( I-

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	Title Page
	Table of Contents
	Cost of processing single strength...
	Cost of processing citrus...
	Cost of processing forzen orange...