Annual Report


of the

FLORIDA CITRUS
EXCHANGE






SEASON
I937-1938


General Manager


6S. 18
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UNIVERSITY
OF FLORIDA
LIBRARY















Annual Report
of the

FLORIDA CITRUS

EXCHANGE


SEASON
1937-1938

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OFFICERS, DIRECTORS AND HEADS
OF DEPARTMENTS, FLORIDA CITRUS EXCHANGE
SEASON 1937-38




W. L. Tilden, President and Chairman of the Board......Orlando
W. C. VanClief, First Vice President..............Winter Haven
A. W. Hurley, Second Vice President..............Winter Garden
W. M. Moseley, Third Vice President................Fort Pierce
L. L. Lowry, Fourth Vice President................Winter Haven
C. C. Commander, General Manager.................. ........ Tampa
Harold Crews, Assistant General Manager................... Tampa
L. D. Aulls, Traffic Manager..............................Tampa
S. L. Looney, Treasurer-Comptroller...................... Tampa
0. M. Felix, Secretary....................................Tampa
Counts Johnson, Attorney..................................Tampa












Sub-Exchange Director Address

Florence................ W. C. VanClief............ Winter Haven
Fort Pierce............. W. M. Moseley...............Fort Pierce
Indian River............ H. G. Putnam..................Oak Hill
International...........L. L. Lowry ...............Winter Haven
Lake .................... E. F. DeBusk ........ ....Gainesville
Lake Apopka....... .... A. W. Hurley .............Winter Garden
Lake Region.............J. W. Sample...............Haines City
North Pinellas.......... S. A. Whitesell.................. Largo
Orange .................. J. C. Palmer................ Windermere
Pinellas................. John S. Taylor, Jr............... Largo
Plymouth...... ....'.. ..W" G. O"ie '."..........W.. indermere
.. ... ** .' .. **.
Polk......... ... ... ..D. A. Hunt. ..*.... .' ..... Lake Wales
,* *,
Scenic...,.S ... ...... C. H. Walker.......- .; ,... ..... artow
St. Johns*jKv er ........t. J-. e4)jler, J ....... '. ... DeLand
West Coast .......... *' .*i v ....... ... .... Alva
Winter Haven............H. E. Cornell............. WLnt r Haven
Special, State-at-Large.W. L. Tilden ...................Orlando


miummummm













ANNUAL REPORT

SEASON 1937-38


From practically every standpoint the season just clos-
ing reveals a sharp and unfavorable contrast with the
1936-37 season for Florida citrus. Returns have been un-
certain and meagerand frequently below costof production.
The causes of what producers rightly regard as one of
the poorest seasonsin recent years are varied. Some have
been unfavorable whims of nature. Others are a result of
the national economy. Still others are peculiarly man-
made. Fortunately, however, none may be regarded as per-
manent or without hope of profitable solution.


Heavy Citrus Production

The constantly increasing volumes of all citrus pro-
ducing sections long has been remarked by cooperative
executives as a factor which, unless moved in an orderly
manner,proper distribution provided, and consumer demand
stimulated, would be an underlying cause of disaster.
Such has been the case. Through the present season inad-
equate provision has been made for the heavy Florida move-
ment.
The 5-year annual average from 19*8-3Q of total pro-
duction in citrus areas was 63,669,000 boxes. In 1936
the harvested crop was 85,854,000 boxes. The total crop
harvested duringthe present season from all sections when
final figures are in is estimated to be just under ioo,-
ooo,ooo boxes.
Nor doesthe future promise any relief from these heavy
citrus volumes. The bearing and non-bearing acreage he-
ing cultivated at the present time in Florida, Texas,
Arizona, and California reflects 17.3 per cent as non-
bearing. It should be remembered in this connection that
a substantial additional percentage is in trees of low-











production ages. The significance of this statement will
be fully appreciated upon examinationof Table 1,Page 23,
where latest available information by varieties and pro-
ducing sections has been tabulated.
In examining these data it is well to bear in mind
that they do not include citrus plantings in other Gulf
states-Alabama, Louisiana, and Mississippi. Nor do they
include any of the close-lying islands.

In addition, there are thousands of acres which have
been planted in Florida and other areas since the data
upon which this table was based have been compiled.
Barring climatic catastrophes, therefore, we may ex-
pect the next 5-year average annual productionto be rea-
sonably close to So per cent higher than the 1928-32 av-
erage.


Deciduous Cormetition

Paralleled with the excessive development of citrus
has been comparably heavy production in competitive de-
ciduous products. The 1937 apple crop of 11,0o6o,ooo
bushels is the largest producedin the country in 23 years
and represents the peak of constant increase during the
past ten years. Apples areadirect competitor of citrus.
This is particularly treat the lower price levels.

This huge crop of apples has been sold throughout the
season at sacrifice prices. The storage holdings, higher
during the present month than they have been at a compar-
able period during the past ten years,cannot be sold for
enough to meet the storage charges.
The southern strawberry crop-a direct competitor of
Florida citrus-showed an increase of about 30 per cent.
Imperial Valley cantaloupes are being shipped in greater
volume and with better quality than in previous seasons.

The peach crop came in early with heavy movement from
the Southeast, starting well before the close of our own
season. Pineapples from Porto Rico and Cuba show an in-
crease of nearly 7o per cent over a year ago. Tomato,
prune,and pineapple juice in cans,due to the advertising
pressure behind these commodities, compete directly with











'us and represent active competition.


Economic Conditions Adverse

Here are bumper crops of citrus and its competitive
fruits. Yet they were sent to markets which were in the
throes of a depression peculiar to America whichwas equal-
ed only by the world-wide depression of 1930-32. This
"recession" continued to intensify its effect throughout
our current season.

For example, steel showed activity of 131 points of
the 1923-25 period in 1937. In January of this year,how-
ever, steel operated at 38.6 points and in February had
dropped .3 points to 38.3- Cotton mill activity dropped
from 129.2 points in 1937 to 84 in January and 82.8 in
Februaryof this year. Freight car leadings--8o.8in 1937,
but only 6a.1 in January and 60.6 in February. Factory
payrolls-go.6 in 1937 and 80.9 in January and 7iin Feb-
ruary.

The automobile industry showed a 1oo point production
in 1937, but dropped to 75.8 in January and 77.5 in Feb-
ruary. This was the only industrial index which showed
any increase whatever. This may be traced to seasonal
pickup.

These conditions reflect immediately upon citrus mar-
kets. Folks throughout the country are quick to drop
oranges and grapefruit from their diets in favor of basic
foods when their buying power becomes limited. Citrus
continues to be a semi-luxury.



Clisatic Hazards Show Effect

Agricultural successes invariably are dependent upon
weather conditions. Several climatic hazards have taken
their toll fromthe Florida citrus grower during the cur-
rent season. The cost to the industry has been enormous.
During the open winter of the 1936-37 season Florida
trees bloomed almost steadily from January through June.
During the current season,therefore, variable maturities











for all varieties hare presented a serious complication
to grading problems. Uniformity of quality has been diffi-
cult to maintain, even in the most carefully operated
associations.

The freeze in December added to the marketing problems
of the current crop. Following the freeze prompt action
was taken by the Florida Citrus Commissionby regulations
designedto prohibit the shipment of frost-damaged fruit.
Mr. Mayoand his corpsof inspectorsalso worked efficient-
lyin the application of these regulations to the general
movement. In spite of these well-advised precautions, it
is undoubtedly true thatsome frost-damaged fruit reached
the markets. Brands of unquestioned integrityare report-
ed to have shown some arrivals of a decidedly suspicious
quality. Naturally, a situation of this kind undermines
trade confidence and puts prices on the skids.

Some operators in the industry expressed dissatisfac-
tion becauseof the strict regulations designed to elimi-
nate frost-damaged fruit.. They resented the efficiency
and inflexibility of enforcement. While no regulatory
operationof this nature ever functions with ioo per cent
effect, it has been quite evident that much less damaged
fruit reached the markets following the December freeze
than any other in the industry's history.

The qualityof the later movement of the crop has been
affected seriously by a drouth unequaled in the recent
history of the industry. It has been so severe and gen-
eral that fruit has become soft and flabby. Much acreage
even under irrigation has been unable to cope with the
serious dropof the water table throughoutthe belt. Trees
everywhere are partially defoliated and in some sections
are totally so. Younger plantings in some sections not
available to irrigation have been killed entirely.
In one way the effects of this drouth may be regarded
as temporarily helpful. It has continued with such in-
tensity to affect the fruit set on the trees for next,
season that, when this dry spell is broken, it will be
necessary to revise the bumper estimates coming from all
sources prior to the realization of the serious propor-
tions to which it had grown.










Narketing Agreesent


Apparently unsatisfied with the economic,competitive,
and climatic hazards which made the present crop extreme-
ly difficult from a marketing standpoint, some Florida
operatorsand growers combinedto deny the industry organ-
ization and Federal benefits enjoyed by competitive pro-
ducing sections. California, Arizona, and Texas all have
marketing agreements. During part of last, season Florida
had a marketing agreement. An analysis of the benefits
available fromthe operation of an instrumentof this kind
reveals it to be productive and desirable, particularly
from a producer's point of view.

The 1936-37 Annual Report on Pages 6 and 7 discussed
in detail the affect the marketing agreementand prorates
had upon the crop handled during the agreement period.
It is safeto estimate that the lack of a marketing agree-
ment with which to coordinate and control the current
season's movement has caused immeasurable loss of trade
confidence in Florida operations. This has lopped mil-
lions of dollars fromthe industry's gross revenues. That
loss will affect all Florida citizens, practically re-
gardless of the nature of their business.

Denied the control afforded by a marketing agreement,
Florida dumped her 24,000,000 boxes of orangesand 15,ooo,
ooo boxes of grapefruit and tangerines into the market.
No semblance of orderly marketing existed. This disor-
ganization and chaos directly affectednot only Florida's
markets but those of other citrus producing sections as
well.

The Florida Citrus Exchange may point with pride to
its ceaseless effort fora marketing agreementwhich would
have giventhe industry protection against such disorgan-
ization. Its officers anda committee of directors labor-
ed constantly and earnestly from the middle of last sum-
mer in an effort to obtain the agreement. In spite of
many concessions made to opposing interests,the earnest-
ly-sought unity in the industry remained unattainable.
The compromise agreement finally offered was rejected by
Washington in February.











Due to the efforts of the Florida Citrus Exchange and
other factors in the industry, shippers representing 57
per cent of the fruit agreed toa request for a marketing
agreement. In addition,competent estimates indicate that
85 per cent of the growers throughout the belt favored
the establishment of an agreement. An organized minority
composed of speculative interests vigorously opposed any
agreement. It employed attorneysand sent representatives
to Washington to present its arguments. The successful
manner in which they killed any form of marketing agree-
ment is familiar to all.



Federal Purchase Program


The failure to obtain a marketing agreement deprived
the industry of the proper machinery through which it
might have obtained a more effective Government purchase
program. All contacts and requests in the handling of
Government relief purchases could have been handled, as
wasthe case during 1936-37gthrough the Control Committee
to much better advantage.
Here again,the Florida Citrus Exchange originated and
actively fought for a much needed marketing help. With
the cooperation of other grower-shipper interests, it
finally obtained the active interest of the Federal Sur-
plus Commodities Corporationin the Florida citrus indus-
try. While the policies were not all that could be de-
sired, some good was obtained through this activity.
Here again, disorganization and divided interest in
the industry precluded full results from this program.
While the Florida Citrus Commission, at the request of
the Florida Citrus Exchange and other constructive fac-
tors,appointed a committee to obtain a favorable correc-
tion of the purchase policiesof the Government organiza-
tion, that committee never succeeded in any definite ac-
complishment, again because of the organized opposition
to producer interests in the industry.
The Surplus Commodities Corporation bought fruit in
Floridaat prices opening during the week ending February
5 from 6o0 to 754. Acceptances at these higher levels













promptly were restricted, driving the price down until
the average for the last two or three weeks prior to th
close of its operations on May i2 are reported to hav
been 434 per box.




Federal frade Conmission Report


Reflecting the known advantage of cooperative market-
ing, the Federal Trade Commission in its report to Con-
gress dated June lo, 1937 covering its investigation in-
volving the fresh fruit and vegetable industry'said in
part:

The inquiry revealed that many unsatisfactory
conditions exist in the marketing of fruits, vege-
tables, and grapes. The marketing of a large part
of the fruit and vegetable crop is controlled by
dealers and others who have financed the production
of the products and such financing is often unfair
in its results and unduly costly to the producer.
Uncoordinated transportation of produce by motor
truck and inability to forecast supplies moving in
that manner is one of the factors resulting in un-
stable markets.

Also:

It is further concluded that in certain instan-
cesthe discounts and price concessions received by
chain store buying companies are in violation of
the provisions of the Robihson-Patman Act. In all
such cases,where the facts warrant, the Commission
will take appropriate corrective action.

And in a supplemental report, made November 8,1937, com-
mented on"Returns to Growers by Cooperatives and by Pri-
vate Agencies," in part as follows:

As a basis for comparing returns to growers by
cooperatives with returns to growers by other mar-
keting agencies, data have been compiled covering
wholesale prices,distribution expenses,and returns
to growers for shipments of the same kinds, sizes,
and grades made (a) by cooperatives,(b) by growers
shipping on their own account, and (c) by growers
selling to merchant-shippers at the point of origin
or to merchant-receivers in the terminal market.
Such comparisons have been made for California and
Florida oranges,Pacific Northwest apples,and Maine
and Florida potatoes. Themore significant compari-
sons made are for sales in the same market on the
same day, and, wherever possible, for identically
the same variety, size,and grade of each product.
In the marketing of both California and Florida











oranges, the figures show the grower receiving a
larger return, on the average, by disposing of his
products through a cooperative association than
through other channels. This results partly from
higher average prices obtained by the association
and partly from savingsin cost of picking,packing,
and marketing. This showing is true, also, whether
the competing shipper is a merchant-shipper or an
individual grower shipping on his own account, but
the merchant-shipper showed better average results
than the individual grower obtained for himself.
In 129 out of 136 comparisons for California navel
oranges shipped to Boston and Philadelphia, the
grower received a better return shipping through
the cooperative than when shipping on his own ac-
count. In 31 out of 52 comparisons for Florida
pineapple oranges shipped to the same two markets
and in 77 out of 124 for Florida Valencia oranges
shipped to New York City and Philadelphia, results
also favored the cooperative.

One conclusion only may be drawn from the above sec-
tion of the Commission's Report: cooperative marketing
control ofthe Florida citrus industry is imperative. The
reasoning is obvious--8o per cent cooperative control in
California produces more favorable returnsin 95 per cent
of the shipments studied. The 30 per cent cooperative
control in Florida dropped that favorable percentage of
comparisons to about 6o per cent.



frade Association Porsed


The stress of the present season, combined with the
glaring illustration of the penalty of disorganization
found in the failure to obtain a marketing agreement and
a helpful Federal purchase program,stimulated major gro-
wer-shipper interests in the industry to the development
of some type of organization throughwhich combined action
could be taken. The Florida Citrus Exchange gladly par-
ticipated in the preliminary conferences in which these
problems were discussed and the plans to meet them were
crystallized into the creation of a purposeful charter
and by-laws of the Florida Citrus Producers Trade Asso-
ciation.

This organization hasbeen hailedby many familiar with
Florida citrus difficultiesas being the most progressive
step since the formation of the Florida Citrus Exchange
ag years ago. Its membership already includes the most











sound packing and selling operations in the State,total-
ing somewhat in excess of 50 per cent of the total crop.
It is probable that between 60 per cent and 65 per cent
of next season's crop will have been accepted as members
by October 1. Membership in the Trade Association is not
wide open. It is being limited purposely to those con-
structive factors representing producer interests which
may be expected to work together in harmony for common
objectives. Were it not for this restriction,it is prob-
able that 95 per centof the fruit could be signed up be-
fore fall.
The organization of the Trade Association has been
planned very carefully. A digest of its charter and by-
laws, together with a summary of its purposes, are out-
lined in Appendix A, Page 26. A thorough study of this
information will reveal thatthe organization may well be
a strong and constructive influence in the future opera-
tions of the industry.

The Trade Association forms immediately operable ma-
chinery which can be used effectively in correcting such
evils in the industry as the multiplicity of containers,
the many grades and sizes, the lack of standard in car
loadings,and any other practices which in the opinion of
8o per cent of its members deserve attention.
None of these objectionable features exist in the Cal-
ifornia industry. This is oneof the reasons for its con-
tinued success. It is believed that harmony of agreement
provided by this organization will accomplish the same
for the Florida citrus industry.
Andthe formationof the Florida Citrus Producers Trade
Associationis timely. Control Committee records obtained
duringthe operationof the Marketing Agreement during the
1936-37 season revealed the existence of 263 shippers
handling the Florida crop. With such information it is
not difficult to recognize the fact that uncontrolled,
internal competition has been oneof the most destructive
factors in the marketing of Florida citrus fruit. ,
The percentages handled by individual shippers for
that year also were made available. It is significant
to note that, while in California one shipping organiza-
tion handled 75 per cent of the orange crop and 95 per











cent of the lemon crop, io2 shippers are used by Florida
growers to ship 93.3 per cent of the Florida crop. The
balance of 6.7 per cent is split between 161 additional
shippers, many of whom in political activity and vocal
argument make themselves appear to the uninformed as im-
portant as the largest.






EXCHANGE PERFORMANCE



The stress of economic and marketing conditions which
caused the formation of the Florida Citrus Producers Trade
Association also made action timely on certain operating
and sales policies of the Florida Citrus Exchange which
have been consideredby its executive officers during the
past several seasons. It has been obviousto all informed
on citrus problems thatthis cooperative organization must
seekto meet the changing conditions caused by increasing
citrus volumes, market competition, and economic depres-
sion.

In summary,its officers have sought to place the Flo-
rida Citrus Exchange in a position whereby it could

1. Place in fresh fruit channels only those sizes
and grades in trade demand so distributed in
such quantitiesto guaranteeprofitable returns,
diverting surpluses to canneries and other by-
products channels.
2. Eliminate the intra-organization handling and
sales competition which is creating considera-
ble sales difficulty.
3. Perfect its sales and merchandising methods.

In line with the general policies thus expressed, the
general management gave considerable studyto the methods
by which these policies mightbe adoptedin the operations
of the organization. Many individuals within the organ-
ization both in Florida and in the terminal markets, as
well as men whose experience-and position in the fruit
industry place them in a position to be helpful, were
contacted. The recommendations made to the Board at its
meeting of April 15 and adopted unanimously represented












essentially the consensus of this group.

A complete copy of the detailed sales recommendations
adopted by the Board, together with the reasoning behind
them andthe causative situations which they seek to cor-
rect, are availa'bleto any interested individual and will
be sent upon request. In summary they provide for

i. Association Responsibility-Association mana-
gers are directed to keep themselves currently
and adequately postedon the condition,quality,
size and all relative dataon his members'crops
available for shipment and to see that he or
somebody in his office is constantly available
with this information so that a definite "yes"
or 'no- may be obtained upon inquiry by the
Sales Department for orders.

2. District Brands-Each district shall adopt a
setof brands for the optional use of all hous-
es within the district, covering first, combi-
nation, and second grades of fruit,such brands
to be controlled by this Board.

3. Grades Under Seald-Sweet--he trade-mark'Seald-
Sweet" shall be used with all district brands
on the grades U. S. No. 1 and U. S.Combination
fruit and all fruit of these grades moving un-
der the district brands shall be stamped with
the trade-mark "Seald-Sweet' on the skin.

4. Individual Market Bx loitation--ndividual mar-
kets shall be. selected for the primary exploi-
tationof individual district brands--one brand,
one dealer. Sales, merchandising, and adver-
tising work in such markets shall be coordina-
ted with the use of the Seald-Sweet trade-mark.

5. Season Pools--Season pools shall be establish-
ed by varieties, sizes, and grades by associa-
tions for all fruit.

6. Sales Comittee--A sales committee shallbe du-
ly constituted by the Board of Directors, con-
sisting of all district managers, the general
manager and sales manager.
This committee will be invaluable in working
out the details of sales and advertising poli-
cies as they apply in various markets and as
they affect the saleof various district brands
in those markets. A committee of this nature
will work to meet any criticism that certain
brands are being givenundue preference and more
than their fair shareof dealer service and ad-
vertising work. Inequities brought before fre-
quent meetingsof the committee canbe corrected
even before they exist.

7. Standard Containers And Car Loads-The Florida
Citrus Exchange should adopt as a definite pol-
icya program looking toward the use of a stan-











dard container and car loadfor Floride citrus.

8. Reduction Of Production Costs-The boardof di-
rectors should adopt as a policy and make a
strong recommendationto association boards for
a more thorough effort either through the asso-
ciation production service or otherwise to im-
prove the general quality of fruit handled by
the association and to assist the grower in re-
ducing the production cost of that fruit.

The above recommendations as adopted constitute a de-
tailed statement of policy which will govern the opera-
tions of the organization and its-affiliates insofar as
they may be affected. It is earnestly recommended that
all associations undertake to cooperate to the fullest
possible extent on these policies.



Surplus Diversions

It will be noted that the Sales Recommendations deal
only with fresh fruit in the standard channels of trade.
In additionto the corrections providedby these revisions
of operating policy,the Florida Citrus Exchange has rec-
ognizedthe necessity forthe diversion ofthe lower grades
and discount sizes of the increasing crops. The avenues
for such diversions must be developed to accommodate ap-
preciable quantities so they will have a definite and
measurable effect in relieving the fresh fruit markets.
Such operations also must be able to pay a reasonable
profit to the grower for the fresh fruit supplies re-
quired.

Canning operations pioneered by the Florida Citrus
Exchange as early as iga9 have developed to such an ex-
tent that they form an industry within the citrus indus-
try. Diversions to canneries have grown to such volumes
that's high as 60 per centof seeded grapefruit now finds
its way into tin. Viewed as a whole, the canning indus-
try has been of immeasurable benefit to fresh grapefruit
growers by receiving the diversions of surplus crops.

The Florida Citrus Exchange, however, recognizes the
necessity for the development of additional channels
through which citrus maybe moved profitably for the pro-
ducers. In studying this situation it has been success-











ful in acquiring and preparing for commercial exploita-
tion two operations which offer considerable help to the
industry.

Florida Orange Juice Vending Machine. The first of
these developments undertaken by the Florida Citrus Ex-
change is a fresh orange juice vending machine invented
and brought through the workingmodel stageby Tracy Acosta
of New Smyrna and Godfrey Rockefeller of New York.
Expert engineers have approved the feasibility of the
commercial production of these machines at a cost which
would permit their wide distribution and operation. Cer-
tain engineering refinements have been undertaken by the
Exchange before production is begun and commercial tests
are run on the vendor. It is believed that these may be
completed in time to permit the widespread use of the
vendor in the World's Fair beginning in the spring of
1939 in New York City.

The machine itself is somewhat larger than the aver-
age cigarette vending machine (see cuton following page)
but is entirely automatic in its operation. The consum-
er merely drops a nickel in the slot,watches the machine
cut,extract and strain the fresh chilled orange, and re-
ceives the juice in a paper cup ready to drink.
Plans for a service organization designed to operate
the machines on Florida Citrus Exchange members' fruit
are under way. All familiar with the details are confi-
dent thatit offers unlimited possibilities to foster the
healthy growth of cooperative marketing through the Flo-
rida Citrus Exchange.
The organization has acquired full rights to the ex-
clusive use of the machine.
Seald-Sweet Breakfast Food. The Florida Citrus Ex-
change also has been active in the perfection of a dry
breakfast food made from whole oranges. The product was
invented by Ramon Bustamante of Cape Girardeau,Missouri,
and broughtto the attention of the FloridaCitrus Exchange
through its St. Louis district manager.
Brought to Florida for study, test productions were
made under the formula developed by Mr. Bustamante. When

































































The Acosta Vending Machine

The fresh orange juice vending machine inventedby Mr. Acosta
stands about 7'in height. A glass panel reveals to the consumer
the intricate operation of the automatic juicing equipment. bne
observer once remarked that "anybody would put a nickel in just
to see the wheels go 'round.-
Its designand dispensing features makelt ideal for locations
reaching heavy pedestrian traffic in office buildings, hotels,
factories, railroad and bus stations, cigar stores, etc. Con-
venience of access and the purity of the product assure a heavy
and constant patronage.
The sanitation of the nachlnein operation has been inspected
underthe directionof Dr. H.H. Humeof the Universityof Florida's
Agricultural Experiment Station, and approved after a thorough
examination as "disgustingly sanitary."










sold through local channels where constant observation
of trade and consumer acceptance of the product could be
maintained,results were so encouraging that the Exchange
felt justifiedin bringing the product to commercial per-
fection.
Through the able assistance of Dr. H. H. Hume, Assis-
tant Director of Research of the Agricultural Experiment
Stationsof the University of Florida,and his associates,
laboratory work throughthe winter brought the product to
a stage admittedly justifyingcommercial operations. In-
terest on the part of the trade in this development has
been exceptionally keen. For example, one of the largest
operatorsin the British Isles,after samplingthe product,
was ready to undertake the distribution in those markets
assuring volume well in excess of a5o,ooo cases annual-
ly.
Negotiations are under way for the construction of a
pilot plant and the productionof commercial volumes suf-
ficiently adequate to permit a low unit cost operation.


Exchange Purchases Building

About eight years ago the Standard Oil Company erected
a substantial building in Tampa designed to house its
headquartersfor the Florida district. Several years lat-
er rearrangementsin their operating program necessitated
the closing of the office in Tampa, leaving the building
vacant.
Inasmuch as it is a one-purpose building unsuited to
the average commercial organization, it presented a con-
siderable liability to the company. The Florida Citrus
Exchange,therefore, was enabled to purchase the building
at a price which will reduce its annual housing costs
nearly 50 per cent. This is an appreciable item in the
selling budget and represents a material saving to the
growers.
In addition, however, the building is so designed as
to require very few changes to fit the requirements of
the Florida Citrus Exchange. The work of the various
departments can be coordinated more efficiently in the










layout available in this building than was possible in
its present home.

Removal of the organization is expected to commence
following the close of the current season and will be
completed in time to begin next season's operations at
the new address.



Cooperative Publication Planned

The necessity for prompt and adequate dissemination
of adequate information on cooperative operations to all
growers in the State has been subject of discussion for
some time. The need for this type of grower advice con-
stantly became more emphasized. Upon recommendation of
the General Manager, the Board authorized the purchase
of a multigraph duplicator, a vari-typer, and accessory
equipment upon which will be produced a citrus news mag-
azine. Arrangements will be made to mail it to all grow-
er-members of the organization, as well as to those who
are not members but who in the opinion of association
managers should receive the publication.

The first issue will be published June 16. Subsequent
issues will appear every third Thursday thereafter. Ad-
vertising will be accepted in the publication and rates
will be based upon its circulation. The print order for
the initial issue will exceed 7,000.
The new publication will be known as Citrus. Its edi-
torial make-up will bea frank imitationof the style per-
fected by Time magazine. It will attempt to digest and
present in easily read form all news pertinentto the pur-
pose of the publication.



Operating Economies

The distressed marketing conditions commonto the pre-
sent season's operations naturally cause the grower to
inquire into the efficiency of the marketing machinery
upon which he depends. He demands assurance that he is
getting the full market price and that, in addition, the.
18











minimum possible deductions are made from that price in
the transfer of the returns to his use.

It is timelyas the season draws to a close,therefore,
to analyze the general returns for the season by grades
and varieties for Exchange offerings in comparison with
comparable data for sales made by competitive shippers.
The only sources available for the development of such
a comparison are the auction reports which are public
property.

In the table below these comparisons will be noted.
Observe that Exchange average premiums range as high as
30o per box on No. i regular grapefruit. In only one
pointof comparison did the Exchange fall behind competi-
tive averages and that only 40 per box.

Boston and Baltimore are not included as nearly all
Exchange sales in Boston were Indian River which would
make the comparison unfair to competition. Baltimore Ex-
change offerings have been about twenty times as great
as competition,again making an unfair comparison. Indian
River has been excluded altogetherin computing these av-
erages.


FLORIDA AUCTION AVERAGES

As of May 1
Season 1937-38


U.S. NO.1 U.S. NO.2
Exch. Exch.
Exch. Comp. Prem. Exch. Comp. Prem.

Round Oranges $2.74 $2.78 (.04)* $2.30 $2.23 .07
Pineapple 2.48 2.36 .12 2.06 1.97 .09
Valencia 2.20 2.00 .20 1.84 1.76 .08


Total Oranges

Regular Grapefruit
Marsh Seedless "

Total Grapefruit

Tangerines


*Loss


2.57 2.46 .11 2.12 2.00 .12

2.53 2.23 .30 2.08 1.89 .19
2.66 2.37 .29 2.08 2.02 .06

2.56 2.28 .28 2.08 1.95 .13

2.96 2.76 .20 2.38 2.22 .16











In summary, therefore, the Exchange sold in all auc-
tion markets as of May 1 a total of %,777,093 standard
boxes of oranges, grapefruit, and tangerines at an aver-
age price of $2.41 as compared with 5,405,443 standard
boxes sold by competitors for an average of $2.37 per box.
The Exchange sold 454,814 Bruce boxes for $2.84 per box
in all auctions,ioo per box higher than was obtained for
the xi759,aoi Bruce boxes sold by competitorsin all auc-
tions.

No marketing agency can do more than get the market
for fruit, plus a small premium. The Florida Citrus Ex-
change has done that. The size of the premium which it
has been ableto obtain on individual brands is dependent
upon the uniformity of the pack and the trade confidence
in the house whence the fruit originated.
The Florida Citrus Exchange assessed a retain of io
per box for its sales work. This is the lowest sales
charge of any responsible selling organization in the
State. While the retain is lo* per box, the actual cost
of selling fruit is 6.850. The balanceis spent for sales
promotion, trade-mark advertising, industry promotion
such as the effort in favor of the marketing agreement
and the participationin the formationof the Florida Cit-
rus Producers Trade Association,the development and pro-
motionof favorable state legislation,limited by-products
investigation and a reserve. The total of all of these
extra-sales operations is only 3.154 per box.
This sales cost compares very favorably with that of
the CaliforniaFruit Growers Exchange. The Florida Citrus
Exchange 6.854 cost was based upon 6,706,380 boxes. The
California Fruit Growers Exchange sales cost during the
same season was 6.684 but was based upon a volume of
21,976,878 boxes. Every Florida grower should note that
the volume of the California Fruit Growers Exchange was
more than three times that of the Florida Citrus Exchange,
yet the sales expense per boxis about the same. The com-
bined sales and advertising expense of the California Fruit
Growers Exchange is 12.68t--over 25 per cent more than
thatof the Florida Citrus Exchange whichwent into adver-
tising to create consumer demand for their trade-marks
and products.











This information testifiesto the efficiency and econ-
omywith which expenses cf the Florida Citrus Exchange are
conducted. Sales retains of competitive Florida market-
ing agencies vary anywhere from lot to 2so per box.
In addition to inquiry as to the efficiency of the
selling operation, growers should interest themselves in
determining whether they are obtaining the lowest possi-
ble costof packing service. Shipping through cooperative
associations they pay only the cost of the service. As
members they have a voice in determining that cost. If
itis unreasonably high as compared with other associations
with like varieties and volumes, the causes of such dis-
crepancies should be located and corrected.

There are instances in which cash buyers -paid growers
more than the latter could have obtained for their fruit
through any other source, This is not because of super-
ior handling ability on the part of the cash buyer as he
can getno more for the fruit thanthe general market per-
mits. Quite on the contrary, such higher purchases rep-
resent bad judgment on the part of the purchaser and are
the basic reason forthe high mortality rate of the spec-
ulative shippers in Florida.

Thorough appreciation of these facts is necessary.
There is no escape from a definite obligation toward a
coordinated merchandising program which will produce av-
erage prices sufficiently above the costs of production,
packing and selling to assure a reasonable return to the
producer for his investment and labor.

The Board of Directors of the Florida Citrus Exchange
and the executive officers of the organization have rec-
ognized the necessity of low cost packing and have done
everything in their power to bring about more favorable
conditions affecting this operation in all associations.
Where high costs were caused by limited volume, efforts
have been made to build up t)at volume to a point where
the per box cost of operation is lowered to a point in
linewith practical operations throughoutthe State. Where
such volume could notbe obtained,efforts havebeen made-
and successfully in several cases-to merge this volume
with adjacent operations to the benefit of both.











Efforts should be made to produce the highest quality
and greatest yield per acre at the lowest possible cost.
Here the most successful and effective answer has proved
to exist in the establishment of efficient production or
grove care-taking services operated by the association.
Such services serveto improve the general average of the
crops handled by the association, to lower the cost of
production for the grower through consolidated buying
power and operating costs and tend to increase the yield,
with a corresponding greater net return per acre,regard-
less of marketing conditions.
Some of the most successful associationsin the organ-
ization today owe that successto the efficient operation
of production services. These have sufficient history of
profitable results behind them to justify those growers
not now enjoying such servicesin looking into the possi-
bility of developing a department of this character in
their association.



Routine and fabular Inforsation

All departments of the Florida Citrus Exchange have
combined their respective activities under the direction
of the executive officers to accomplish the general re-
sults described.

The organization employed a large number of well-train-
ed sales promotion men throughout the season. These co-
operated with our brokers and salaried representatives
in working with the wholesalers and retailers, popular-
izing our association brands under the organizations
trade-marks. In addition to this promotion work, the
Florida Citrus Exchange maintained poster and car card
campaigns in the subway and elevated systems in New York,
as well as spot radioand newspaper advertising elsewhere.
The detail of these campaigns is available to any member
upon request.

Statistical data are included in the following tables
as a matter of information on Exchange performance during
the current season.


I












(Table 1)


TOTAL CITRUS PLANTINGS

Lines and lemons not included


Oranges


Florida

12,333,773
2,038,042


California

18,428,424
2,039,576


Texas

471,952
1,378,004


Arizona

476,393
148,752


Total

31,710,542
5,604,374


14,371,815 20,468,000 1,849,956 625,145 37,314,916
Grapefruit

5,198,872 1,344,954 3,819,537 897,278 11,260,641
548,260 344,516 2,361,268 295,009 3,549,053

5,747,132 1,689,470 6,180,805 1192,287 14,809,694
Tangerines & Miscellaneous

1,587,667 No 34,567 4,441 1,626,675
45,486 Report 135,883 661 182,030

1,633,153 170,450 5,102 1,808,705
Totals

19,120,312 19,773,378 4,326,056 1,378,112 44,597,858
2,631,788 2,384,092 3,875,155 444,422 9,335,457

21,752,100 22,157,470 8,201,211 ,822,534 53,933,315


Note: Trees over four years old classed as bearing.

(Table 2)


SHIPMENTS FROM MAJOR PRODUCING SECTIONS

Oranges, Grapefruit and Tangerines

1937-38 and 1936-37
In Cars as of May 22


Florida
California
Texas
Arizona


Total


1937-38

75,577
36,398
18,945
2,224


1936-37

73,997
25,038
22,455
1,236


% Increase

2.1
45.4


79.9


% Decrease




15.6


133,144 122,726 8.5
23


hearing
Non-Bearing

Total


Bearing
Non-Bearing

Total


Hearing
Non-Bearing

Total


Bearing
Non-Bearing

Total












(Table 3)

TOTAL RAIL, BOAT AND TRUCK SHIPMENTS (Carlots)

Entire State and Exchange

As of May 22


Season Oranges Grapefruit


1937-38
1936-37
Increase
Decrease


51,492 18,935
40,769 26,286


Tangerines Total

5,150 75,577
6,942 73,997


10,723 -- -- 1,580
--- 7,351 1,792 ---

11,481 5,304 1,186 17,971
9,389 8,957 1,817 20,163


2,092


2,192


(Table 4)

EXCHANGE DISTRIBUTION

Season 1938

As of May 22


Number State sold-4o.
Number Canadian provinces entered-5.
Number markets entered---95 of which 56 were new (19g).
Number customers sold--569of which 18o were new (31.6%).




(Table 5)

GOVERNMENT PURCHASES

Florida-2,259 cars oranges of which 946, or 41.9%, were
Exchange cars.
California and Arizona, as of May ao-1,925 cars oranges
and 750 cars grapefruit.


STATE


EXCHANGE 1937-38
1936-37
Increase
Decrease












(Table 6)


EXCHANGE DECAY RECORD

As of Nay 20


1937-38 Twenty-two hundredths of one per cent.
1936-37 Thirty-five hundredths of one per cent.




(Table 7)

TOTAL INCOME ON PACKED FRUIT

As of May 21


Number Boxes
5,226,849
5,606,249

379,400
6.8%


...


Amount Received
$ 8,498,674.02
11,690,218.99


3,191,544.97
27.3%


Remittances
to Associations
$ 7,975,989.12
11,129,594.09


3,153,604.97
28.3%


*. .


Season
1937-38
1936-37

Decrease
% Decrease











(Appendix A)


FLORIDA CITRUS PRODUCERS TRADE ASSOCIATION

In the early part of 1938 a small group of recognized
leaders in the Florida citrus industry, discouraged by
many recent events that had beset all citrus growers,met
in Winter Haven to discuss the wisdom, necessity and ex-
pediency of creating an industry trade association, the
membership of which would be composed of shippers who also
owned substantial citrus acreage,and the primary purpose
of which would be to coordinate the constructive efforts
of those who labor in the interest of the grower rather
than the speculative operator who has no investment in
Florida. The opinion was unanimous that there was imper-
ative need of such an organization to represent and ex-
press the views of the representative grower-shipper units
in the industry. To give reality to the plan, a small
committee was appointedto draft suitable charter and by-
laws.
A series of meetings of this drafting committee with
its attorneys resulted in the preparation of a proposed
charter, set of by-laws and members' uniform agreement,
all of which was unanimously approved by representatives
of more than 5o per cent of the total volume of citrus
fruit grown in Florida. This was indeed remarkable in
view of the fact that muchof the tonnage in the State is
handled by parties who cannot meet the exacting require-
ments and qualifications for membership in the organiza-
tion.
The corporate name of this trade associations Florida
Citrus Producers Trade Association. Its regular routine
functions will be to (1) assemble and distribute among
its members important information affecting the produc-
tion and merchandising of citrus fruit,as well as credit
information relating,.ta'th .business of its members, (a)
cooperate in pFroouring'qlpfl .Feiadtal-.and State legisla-
tion affect fg:tihe Florida citrus 'udusr.ry, (3) estab-
lish,pminIgate and regulate the use, 'by'.i.s members, of
any dis~i'ntiive A&mBDim -thatriayabe adopted,.'-'rd (4) per-
form X.ny additional' ;sr; ies.aAitborized by 'he charter
"*











and by-laws that may be made available through action of
the Board of Directors.
When approved by 80 per centof the tonnage within the
organization, it may (i) engage in prorating shipments
among its own membersor enter into any general scheme of
proration under any Federal marketing agreement, (2) en-
gage in advertising Florida citrus fruit, (3) engage in
experimental operations,investigations and research work
with reference to citrus, and (4) engage in any plan of
consolidated or unified marketing or selling of citrus
fruit. However, any effort at consolidated or unified
selling of citrus fruit will be limited to those members
actually voting for it.


(Appendix B)


GROWERS LOAN AND GUARANTY COMPANY

The Growers Loan and Guaranty Company is cooperative
financing organization, organized by and for members of
the Florida Citrus Exchange. It has rendered material
assistanceto the cooperative program during its a1 years.
of operation.
The twenty-first annual reportof the Growers Loan and
Guaranty Company will not be completed until the season
is closed and final figures are available. However, a
preliminary survey indicates thatit will show a substan-
tial increase of loans for the period,both in number and
dollar volume.

In addition to the making of short-term production
loans to growers and operating loans to associations,the
company is now financing, at a low rate of interest, for
the Exchange Supply Company all Trade Acceptances given
itby associations for the purchase of packing house sup-
plies. This type of financing reaches considerable pro-
portions during the peak of the shipping season.
Notwithstanding the low prices which have prevailed
throughout most of the season,the company has liquidated
sufficient loans to pay in full all of its bank borrow-
ings, thereby continuing its enviable record. The com-











pany has never failedto liquidate in full its bank loans
by the close of each season.
While the cash position of the company is not as fa-
vorable as at the close of the preceding year, yet cash
on hand together with collections that will be made be-
fore the end of the season will provide sufficient oper-
ating capital for the company's requirements. The com-
pany has ample resources to finance all reasonable and
sound requirements of those associations and growers who
use its facilities.







(Appendix C)

EXCHANGE SUPPLY COMPANY

In spite of the increased use of the Bruce box during
the past season, the volume of business handled by the
Exchange Supply Companywas approximatelythe same as dur-
ing the previous season. During the current year, how-
ever, the company paid off all bonds and materially im-
proved its financial position.
When C. H. Walker assumed Presidency of the Exchange
Supply Company in 1923,a total of $447,900 of 8 per cent
gold bonds was outstanding. In addition to this the com-
pany had issued $152,400 in capital stock bearing inter-
est at 8 per cent. Only $5,ooo of this latter had been
subscribed to in cash. The balance had been issued to
associations as stock dividends.
At the close of business on April 30,1938 the company
had retired the bonds with interest at 8 per cent, paid
cash dividends on stock in the amount of $85,344,and had
provided a direct saving for associations in excess of
$650,000 on their purchase of supplies.
Auditors have just completed an examinationof the ac-
counts of the Exchange Supply Company. They state the
affairs of the company are in better shape today than
they have been at any time during the past 15 years.