June 1957 Agricultural Economics
Mimeo Report No. 57-9

COSTS OF PROCESSING, WAREHOUSING AND

SELLING FLORIDA CITRUS PRODUCTS, 1955-56 SEASON

A Study conducted with funds provided by the Research and Marketing Act

Department of Agricultural Economics
Florida Agricultural Experiment Stations
Gainesville, Florida
in cooperation with
Farmer Cooperative Service
U. S. Department of Agriculture
Washington, D. C. /.

FOREWORD

Costs of processing Florida citrus products have been published
annually for the past ten seasons. These costs have been assembled,
tabulated, and published by the Florida Agricultural Experiment Station
in cooperation with the Farmer Cooperative Service, U.S. Department
of Agriculture.

This is a report of one phase of Southern Regional Project SM-4,
" Marketing Citrus Fruits".

This report was prepared by:

A. H. Spurlock, Agricultural Economist, and H. G. Hamilton, Agricultural
Economist and Head, Department of Agricultural Economics, Florida
Agricultural Experiment Station, University of Florida, Gainesville, Florida.

1. W. Rust, and F. E. Hulse, Agricultural Economists, Fruit and Vegetable
Branch, and J. K. Samuels, Director, Marketing Division, Farmer Coopera-
tive Service, Washington, D. C. Etta Emmons, Farmer Cooperative Service,
made most of the computations for the data appearing in the tables.

TABLE OF CONTENTS

Cost of processing single-strength juices .

Variations in cost . .

Volumeand cost. ....

Cost of processing citrus sections .

Cost of processing frozen orange concentrate .

* . w

* 4

... 6

. 0 9

. 10

_ __ ____ ____ ______

COSTS OF PROCESSING, WAREHOUSING AND SELLING
FLORIDA CITRUS PRODUCTS, 1955-56 SEASON

Sixteen processing firms cooperated in the study for the season 1955-56.

These firms processed some 27 million actual cases of single-strength juices and

sections--approximately 68 percent of total Florida production; and 29 million

gallons of frozen orange concentrate, or 42 percent of total Florida production for

the season.

Detailed cost data were assembled from these cooperating firms and were

combined into the major cost categories listed below for single-strength juice and

sections:

Materials:

cans

cartons

labels and adhesives

Labor:

Direct--includes associated payroll taxes and compensation insurance

Indirect--includes supervision, associated payroll taxes and compensa-
tion insurance

Warehousing and shipping--includes all labeling labor and other ware-
housing and shipping labor, p!us associated payroll taxes and
compensation insurance

Other manufacturing costs:

Power, light and water

Maintenance, building and equipment (materials)

Royalties

Depreciation

Manufacturing overhead--includes appropriate insurance and taxes

Warehousing

Miscellaneous expense

Administrative and selling--includes such items as accounting, interest, travel,

telephone and telegraph, office supplies, salaries and associated pay-

roll taxes and compensation insurance, etc. Brokerage and discounts

are excluded.

Other costs--includes fruit advertising tax and inspection tax or fee.

An effort has been made in this report to provide more detailed information

than in previous reports. The category "materials" has been broken down into three

subcategories. "Other manufacturing" has been broken down to seven subcategories.

In general it is possible to be quite confident in the total cost figures for

various products and sizes. As categories are divided into subgroups, however, there

is room for some discrepancy. For example, the report attempts to put all labeling

labor--either from line or stack--into warehouse labor". Occasionally a cooperating

firm will include labeling from the line in with "direct labor". In such instances it is

difficult to isolate and measure.

One source of difficulty has to do with social security taxes and associated

charges. This report groups these items along with the wage or salary category to

which they apply. Some firms distribute such charges along worth distribution of labor
costs, while others distribute labor costs but charge social security and related items to
some heading such as "general and administrative expense". This calls for arbitrary
reallocation and distribution to make labor items consistent for all firms.

Costs of Processing Single-Strength Juices

Average costs of processing, warehousing, and selling single-strength juices,

excluding the cost of sugar, in 12/46 cases, are shown in Table 1. This table covers

the past nine years, and shows a definite increase in costs over the previous two years.

Table 1.--Average Cost of Processing, Warehousing, and Selling Florida Citrus Fruit
Juices, Excluding Sugar, in 12/46 Cases, 1947 through 1955-56 Seasons.
...... .. i

Orange Juice

$1.09
1.17
1.21
1.24
1.30
1.35
1.26
1.27
1.32

Grapefruit Juice

$1.09
1.17
1.19
1.23
1.31
1.35
1.26
1.27
1.33

Blended Juice

$1.09
1.15
1.19
1.23
1.31
1.34
1.26
1.28
1.33

Analysis of major cost categories shows that costs in every item except one

("other costs" --fruit taxes and inspection fees) were higher in 1955-56 than in 1954-55.

Details of the change among principal cost categories are as follows:

Orange Juice 12/46
(excluding sugar)

Material
Labor
Other manufacturing
Administrative and Selling
Other costs
Total --nonsweetened

1954-55

$0.8773
.1195
.1601
.0821
.0338
$1.2728

1955-56

$0.8982
.1341
.1640
.0894
.0338
$1.3195

Change in cost
from 1954-55

+$0.0209
+ .0146
+ .0039
+ .0073
0
+$0.0467

Season

1947-48
1948-49
1949-50
1950-51
1951-52
1952-53
1953-54
1954-55
1955-56

Percent

+ 2.4
+12.2
+ 2.4
+ 8.9
0
+ 3.7

IIII

~

I

I

- --

Itemized costs of processing single-strength juices in the most popular can

sizes (24/2 and 12/46 cases) for the 1955-56 season are shown in Table 2. Average

costs (excluding sugar costs) for processing and selling citrus juices were higher in

1955-56 than in 1954-55 except for tangerine juice in 24/2 cases. Increases ranged

from $0.0027 per case of 12/46 tangerine juice to $0.0560 per case of 12/46 grape-

fruit juice.

The costs of processing and selling citrus juices unsweetened, in 12/46 cases

were about eight cents per case higher than for 24/2 cases. However, for an

equivalent volume of juice, (basis 24/2 cases) the costs for 12/46 cases were approxi-

mately 19 cents per case lower than for 24/2 cases. The difference is somewhat

smaller than that existing in 1954-55, which in turn was three cents smaller than the

1953-54 difference. The following comparisons give details of cost, excluding sugar:

Orange Grapefruit Blended Tangerine
Item Juice Juice Juice Juice

24/2 cases $1.2395 $1.2417 $1.2499 $1.2509
12/46 cases (24/2 basis) 1.0481 1.0534 1.0528 1.0586
Difference, 1955-56 $0.1914 $0.1883 $0.1971 $0.1923
1954-55 difference 0.2065 0.2161 0.2218 0.2233

Variations in Cost

The average cost per case for all firms is a weighted average based an the total

cost and volume of each firm. Variations in the total cost of processing, warehousing

and selling single-strength juices for 1955-56 are shown in Table 3.
In Table 4 are shown the variations in cost among firms for processing and ware-
housing citrus juices, exclusive of administrative, selling, and "other costs".

Table 2.--Cost per Case by

Type of Container for Processing, Warehousing and Selling Florida Citrus Fruit Juices, 15 Canneries,
1955-56 Season

Product Orange Juice Grapefruit Juice Blended Juice Tangerine Juice
Type of Container 24/2 12/ 46 24/2 12/46 24/2 146 246
Number of Firms 14 15 14 15 13 14 6 6
CasesperFirm 165,906 424,172 151,881 374,727 51,626 167,078 7,984 54,327

Cost per case:
Material:
Cons
Cartons
Labels, etc.
Total material
Labor:
Direct
Indirect
Warehousing and shipping
Total labor
Other manufacturing:
Power, light, and water
Maintenance, bldg,, equip.
Royalties
Depreciation
Manufacturing overhead
Warehousing
Misc. expense
Total other mfg.expense
Total processing, warehsg.
Administrative and selling
Other costs
Cost unsweetened
Sugar

$0.7648
.0773
.0478
$0.8899
.0515
.0090
.0538
$0.1143
.0165
.0222
.0434
.0129
.0086
.0275
.0096
$0T407
$r1.449
.0679
.0267
$1.2395
.0501

$0.7442
.0982
.0558
$0.8982

.0643
.0105
.0593
$0.1341
.0184
.0255
.0523
.0155
.0104
.0304
.0115
-=$0.16409
$1.1963
.0894
.0338
$1.3195
.0651

$0.7635
.0774
.0468
$0.8877

.0538
.0093
.0529
$0.1160

.0165
.0230
.0202
.0125
.0080
.0261
.0098
$0. 1161
$1.1198
.0668
.0551
$1.2417
.0866

$0.7460
.0986
.0522
$0.8968

.0669
.0112
.0565
$0.1346
.0183
.0279
.0270
.0156
.0108
.0278
.0118
-$..T392
$1.1706
.0855
.0701
$1 262
060

$0.7671
.0770
.0482
$0.8923

.0508
.0101
.0551
$0.1160
.0162
.0245
.0283
.0154
.0095
.0251
.0104
0. 1294
$1.1377
.0696
.0426
$1.2499

$0.7459
.0981
.0528
$0.8968

.0570
.0122
.0564
$0.1256
.0190
.0295
.0388
.0201
.0122
.0280
.0115
$U.15Y1>
$1.1815
.0899
.0541
$1

$0.7605
.0766
.0455
$0.8826

.0673
.0099
.0543
$0.1315

.0149
.0259
.0367
.0099
.0084
.0230
.0078
$0. T266
$1.1407
.0630
.0472
$1 2509
.0931

$0.7412
.0989
.0548
$0.8949
.0773
.0125
.0554
$0.1452
.0185
.0339
.0457
.0127
.0099
.0266
.0096
$0.1 56
$1.1970
.0759
.0599
$1.3328
.1139

$1.3440 $1.4467

$1.2896 $1.3846 $1.3283 $1.4322 $1.3251

--

$1.4186

Total Cost

J .

Ill

I III

I II I

III

Table 3.--Variations in Cost per Case of Processing, Warehousing, and Selling Florida
Citrus Fruit Juices, Excluding Sugar, 15 Firms, 1955-56 Season

Type of Orange Juice GrapefruitJuice Blended Juice Tangerine Juice
Container 24/2 -1/46 24/2 12/46 24/2 12/46 24/2 12/46

Cost a- - Number of firms - - - --
Cost per case:
Under $1.20 2 0 2 0 1 0 0 0
$1.20- 1.24 4 1 3 2 3 1 3 0
1.25- 1.29 4 2 5 1 5 2 2 1
1.30- 1.34 2 5 1 6 2 5 0 2
1.35 and over 2 7 3 6 2 6 1 3
Total number
of firms 14 15 14 15 13 14 6 6

Table 4.--Variations in Cost per Case of Processing and Warehousing Florida Citrus Fruit,
15 Firms, 1955-56 Season,(Excludes Administrative, Selling, Sugar, and
"Other Costs")

Type of Orange Juice Grapefruit Juice Blended Juice Tangerine Juice
Container 24/2 12/46 24/2 12/46 24/2 12/46 24/2 12/46
- -- Number of firms -- --- - - -
Cost per case:
Under $1.10 2 0 3 1 2 1 2 0
$1.10- 1.14 4 1 3 2 3 2 2 1
1.15- 1.19 5 3 6 4 6 3 1 1
1.20- 1.24 1 6 0 4 0 5 1 2
1.25 and over 2 5 2 4 2 3 0 2
Total number
of firms 14 15 14 15 13 14 6 6

Volume and Cost

The fifteen firms processing single-strength juice were divided into two groups on

the basis of total volume processed. Seven firms processed fewer than one million cases,

and eight firms more than one million cases each. Average per-firm volumes for each

kind of juice are detailed in Table 5.

Table 5.--Volume and Cost of Processing, Warehousing and Selling Florida Citrus Fruit Juices in 12/46 Cases, 1955-56 Season

Product Orange Juice Grapefruit Juice Blended Juice Tangerine Juice
SUnder 1,000,00 Under 1,000,000 Under 1,000,000 Under 1,000,000
Volume, cases 1,000,00 and over 1,000,000 and over 1,000,000 and over 1,000,000 and over
Number of firms 7 8 7 8 6 8 1 5
Cases per firn 96,119 711,218 104,501 611,175 70,706 239,357 5,945 64,003

Cost per case:
Material:
Cans
Cartons
Labels, etc.
Total material
Labor:
Direct
Indirect
Warehousing and shipping
Total labor
Other manufacturing:
Power, light, and water
Maintenance, bidg., equip.
Royalties
Depreciation
Manufacturing overhead
Warehousing
Misc. expense
otaj other mfg. expense
Total processing and
warehousing
Administrative and selling
Other costs
Cost unsweetened
Sugar

$0.7475
.0981
.0453
$0.8909

.0998
.0130
0575i

$0.7438
.0982
.0570
$0.8990
.0601
.0103
.0595

$0.7480
.0963
.0431
$0.8874

.1141
.0126
.0507

$0.7457
.0989
.0536
$0.8982
.0598
.0111
.0573

$0.7447
.0950
.0634
$0.9031

.0640
.0140
.0652

$0.7461 $0.7439
.0989 .0942
.0504 .0135
$0.8954 $0.8516

.0555
.0118
.0544

.2167
.0097
.0083

$0.7412
.0990
.0555
$0.8957
.0747
.0125
.0563

$0.1703 $0.1299 $0.1774 -$0.1282 $0.1432 $0.1217 $0.2347 $0.1435
.0218 .0180 .0203 .0180 .0199 .0189 .0165 .0186
.0386 .0240 .0400 .0261 .0396 .0272 .0343 .0340
.0595 .0514 .0437 .0245 .0467 .0370 .0676 .0453
.0415 .0125 .0395 .0120 .0487 .0137 .0310 .0123
.0166 .0097 .0172 .0098 .0194 .0106 .0165 .0097
.0177 .0318 .0153 .0297 .0187 .0301 .0045 .0270
.0235 .0101 .0242 .0100 .0175 .0102 .0367 .0091
$0.2192 $0.1575 $0.2002 $0.1301 $0.2105 $0.1477 $0.2071 $0.1560
$1.2804 $1.1864 $1.2650 $1.1565 $1.2568 $1.1648 $1.2934 $1.1952
.1005 .0881 .0989 .0834 .1161 .0841 .1222 .0750
.0356 .0336 .0724 .0698 .0539 .0541 .0480 .0602
$1.4165 $1.3081 $1.4363 $1.3097 $1.4268 $1.3030 $1.4636 $1.3304
.0585 .0659. .0866 .1095 .0857 .0942 .0700 .1147

$1.4750 $1.3740 $1.5229 $1.4192 $1.5125 $1.3972

$1.5336 $1.4451

I

- I- --

Total Cost

A comparison of average costs of processing and selling unsweetened juices in

12/46 cases reveals a cost difference between those firms handling over one million and

those handling under one million cases in excess of 10 cents per case as follows:

|,,- i i- i i ll o lrlj iln, ii .

Size Group

Under 1 million cases
I million cases and ov
Difference

Orange Juice Grapefruit Juice
- - -cost per 12/46 case,
$1.4165 $1.4363
er 1.3081 1.3097
$0.1084 $0.1266

Blended Juice
unsweetened -
$1.4268
1.3030
$0.1238

Tangerine lucer.

$1.4636
1.3304
$0,1332

Total costs per 12/46 case for those firms handling over one million cases were

lower than for those handling fewer than one million cases for all kinds of single-strength

Size Group

Under 1 million cases
1 million cases and ov
Difference

Orange Juice Grapefruit Juice
- -- cost per 12/46
$1.4750 $1.5229
er 1.3740 1.4192
$0.1010 $0.1037

Blended Juice Tangerine Juice

case, sweetened - ---
$1.5125 $1.5336
1.3972 1.4451
$0.1153 $0.0885

With container and sugar costs approximately the same for both groups the

difference in costs is most apparent in the major categories of labor, other manufacturing

costs, and administrative and selling costs. Differences between large and small volume

firms in costs of processing, warehousing and selling sweetened Florida citrus fruit juices

in 12/46 cases are shown in Table 5. This year for the first time a detailed breakdown

of items within the major category "Other manufacturing" has been achieved. The cost

variation within groups, shown in the following summary for single-strength orange juice

*

in 12/46 cases, illustrates the advantage of the larger volume operations as reflected in

lower costs.

Cost per case Under 1,000,000 cases 1,000,000 cases and over

Under $1.25 0 1
$1.25- 1.35 1 6
1.35 and over 6 1

Cost of Processing Citrus Sections

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

resumed the upward trend which has characterized eight of the past ten seasons. The

following comparison for grapefruit sections for nine seasons show these trends in costs:

Type of Container

Season

1947-48
1948-49
1949-50
1950-51
1951-52
1952-53
1953-54
1954-55
1955-56

24/2

$2.27
2.26
2.28
2.34
2.52
2.62
2.67
2.65
2.68

24/303
-e

$2.19
2.23
2.33
2.23
2.34

Lower costs for sugar and other minor factors were more than offset by increases

in costs for materials and labor.

Production of the 12/46 case size of grapefruit sections introduced in last year's

report for the first time, showed a sharp per-firm increase in 1955-56, while production

of 24/2's dropped even more sharply. Average per-firm output of 24/303 salad sections

Typ of Cotie

I

also dropped substantially under the rate for 1954-55. Table 6 carries a breakdown of

major cost items for the most popular case sizes and fruit packs of citrus sections. Due

to the nature of the data available it was not possible to itemize categories within the

"Other manufacturing" designation.

Table 6.-Cost of Processing, Warehousing, and Selling Florida Citrus Sections,
1955-56 Season

Product Grapefruit Sections Salad Sections
Type of container 24/303 12/46 24/2 24/303
Number of firms 12 7 4 8
Cases per firm 205,388 37, 633 20,978 24,327
Cost per case:
Material:
Cans $0.7167 $0.7455 $0.7780 $0.7208
Cartons .0715 .0967 .0767 .0727
Labels, etc. .0612 .0600 .0417 .0515
Total material $0.8494 $0.9022 $0.8964 $0.8450
Labor:
Direct .8896 1.2865 1.0630 1.2486
Indirect .0241 .0329 .0609 .0312
Warehousing, shipping .0537 .0662 .0657 .0538
Total labor $0.9674 $1.3856 $1.1896 $1.3336
Other manufacturing .2027 .3110 .2353 .2193
Total processing and
warehousing $2.0195 $2.5988 $2.3213 $2.3979
Administrative and selling .0821 .1051 .0757 .0944
Other costs .0432 .0665 .0534 .0387
Sugar .1934 .3030 .2336 .1850
Total cost $2.3382 $3.0734 $2.6840 $2.7160

Cost of Processing Frozen Orange Concentrate

The average cost of processing and warehousing frozen orange concentrate during

the 1955-56 season for the nine firms cooperating in this study was slightly over 34 cents

per gallon, as shown in Table 7.

Table 7.--Cost per Gallon of Processing and Warehousing Frozen Orange Concentrate,
Excluding the Cost of Cans, Cartons, and Selling, 9 Florida Firms,
1955-56 Season

Frozen Orange Concentrate
3,272,391

Gallons per firm

Cost per gallon:
Labor:
Direct
Indirect
Warehousing and shipping
Total labor
Other manufacturing:
Power, light and water
Maintenance, building and equipment
Royalties
Depreciation
Manufacturing overhead
Warehousing
Miscellaneous expense
Total other manufacturing expense
Administration
Other costs
Total cost

$0.0652
.0104
.0193
$0.0949

.0393
.0212
.0335
.0332
.0128
.0168
.0181
$0.1749
.0407
.0307
$0.3412

While higher than in 1954-55, 1955-56 costs are only 1-1/2 cents per gallon

higher than the low of 32.6 cents per gallon reported in this study for 1951-52, and

are substantially below the 46.5 cents per gallon cost for 1948-49. The following

comparison shows average per-gallon costs for the eight seasons that frozen orange

concentrate has been a major factor in the Florida citrus industry:

Season Frozen Orange Concentrate
-Cost per gallon -
1948-49 $0.465
1949-50 .451
1950-51 .346
1951-52 .326
1952-53 .372
1953-54 .340
1954-55 .328
1955-56 .341

Table 8 lists detailed costs in the major categories for frozen orange concentrate

for three popular container sizes-48/6, 12/32, and 24/12. Container cost is included,

selling omitted. Here, as with the similar tabulation for single-strength juice, it has

been possible to provide greater cost detail than in previous reports.

The 48/6 and 24/12 cases each contain approximately the same net volume,

which is 25 percent less than that contained in a case of 12/32's. Therefore, for an

equivalent volume (basis 48/6) the 1955-56 costs of 12/32 cases compared as follows

with those for 1954"55:

Type of Container 1955-56 1954-55 Difference

48/6 $1.81 $1.73 $+0.08
12/32 1.34 1.28 +0.06
24/12 1.53 1.53 0

_

Table 8.--Type of Container and Cost of Processing and Warehousing Florida Frozen
Orange Concentrate, Excluding Selling, 1955-56 Season

Type of Container 48/6 24/12 12/32
Number of firms 7 7 7
Cases per firm 951,000 248,825 102,700
Cost per case:
Material:
Cans $0.9517 $0.6792 $0.6120
Cartons .0668 .0673 .0689
Total material $1.0185 $0.7465 $0.6809
Labor:
Direct .1476 .1292 .2004
Indirect .0214 .0224 .0281
Warehousing and shipping .0526 .0513 __.0565
Total labor $0.2216 $0.2029 $0.2850
Other manufacturing:
Power, light and water .0908 .0932 .1263
Maintenance, bldg. and equipment .0442 .0449 .0668
Royalties .0745 .0784 .1105
Depreciation .0802 .0782 .1303
Manufacturing overhead .0282 .0278 .0373
Warehousing .0462 .0475 .0715
Miscellaneous expense .0426 .0486 .0602
Total other mfg. expense $0.4067 $0.4186 $0.6029
Total processing and warehousing $1.6468 $1.3680 $1.5688
Administrative .0925 .0938 .1280
Other costs .0704 .0699 .0937
Total cost $1.8097 $1.5317 $1.7905

Definitions of Terms

COST PER FIRM

The cost per firm or per container is a weighted average obtained by dividing
the sum of all the dollar costs for the specific container by the total number
of containers to which those costs apply.

PROCESSING OPERATIONS

Blended Juice: A mixture of orange and grapefruit juices, with the proportion
of each varying from 60-40 to 40-60 percent.
Cases per firm: Number of cases processed.

Containers:

Kind Cans per case Size of can
-24/2 24 18-ounce
12/32 12 32-ounce
12/404 or 12/46 12 46-ounce
24/12 24 12-ounce
48/6 48 6-ounce
24/303 24 15-ounce

Cost items:

Material: Cans, cartons, labels, adhesives, freight on material.

Labor: Plant and warehouse labor, supervision, mechanic, watchman,
payroll taxes, workmen's compensation insurance.

Other manufacturing: Depreciation, repairs and maintenance of building
and machinery, power, lights, water, fuel, royalties, insurance, taxes,
miscellaneous supplies, other operating expense, warehouse expense other
than labor.

Administrative: Management and office salaries, office supplies and expenses,
auto and travel, operating interest, telephone and telegraph, legal and audit,
dues, subscriptions, other administrative expense.

Selling: Salaries of salesmen and others, advertising, other plant selling
costs. Brokerage, discounts and allowances are omitted.

Total cost: The cost, excluding sugar, of processing, administration and
selling. When given, the cost of sugar is the average for those firms that
produced sweetened juices, sections and salads.

25 o.

	Front Cover
	Foreword
	Cost of processing single strength...
	Cost of processing citrus...
	Cost of processing forzen orange...
	Definitions of terms