BETTER FRUIT 



AN ILLUSTRATliD MAGAZINE PUBLISHIlD MONTHLY IN THE INTEREST OE MODERN. PROGRESSIVE FRUIT GROWING AND MARKETING 



Rovolving the Consumer's Dollar Backwards 



or the Elements that Enter Into the Consumer's Orange Price. 



By G. Harold Powell, General Manager California Fruit Growers Exchange, Los Angeles, California, Delivered before the Twelfth Annual Meeting 

 of the Western Fruit Jobbers Association of America, Memphis, Tennessee, January 16-19, 1916. 



THE Aniericiin con.suiTier pays an- 

 nually from $7,"),()00,nOO to $8."),nno,- 

 000 for till' California cilriis fiuit 

 crop of 20.000,(100 boxes. The retail cost 

 of distiibiitins 'he fruit to the con- 

 sumers varies from .*2."),000,00(l to -$30,- 

 000,000, incUKiins the net profit of the 

 retailer. The jobber's cost of dislribul- 

 ing the fruit to the retailer, iiuhidin.ii 

 his net prolit, varies from *(),000,()00 to 

 .f8,000,000. The railroads receive ap- 

 proxiniateh- •'«1 7,000,000 to transport 

 the the fruit from California. The cost 

 of selling by the producers to the .job- 

 bers on a non-i)rofit, co-ojjerative basis 

 is approximately •$1,000,000; the cost of 

 national advertising is •*,3,')0,000. This 

 leaves a return to (California of .*,'iO,- 

 000,000, out of which the grower must 

 pay the cost of iiroduction and of pre- 

 paring the fruit for shipment. 



Revolving the Consumer's Dollar 

 Backwards 



Stating the problem difTcrenth : When 

 the consumer buys a dollar's worth of 

 citrus fruits this dollar splits up 

 approximately into the f(dlowing ele- 

 ments when revolved backwards to the 

 producer: 



The retaileis" gross margin, 27" to 

 35% of the consumer's dollar; 



The jobber's gross margin, S" to 

 8%% of the consumer's dollar; 



The railroad's gross earnings, 20% to 

 237o of the consumer's d(dlai'; 



The non-profit, co-o|)erative distribu- 

 tion from i)roducer to jobber, I'; to 

 l',l>% of the consumer's dollar; 



National advertising, .5% of the con- 

 sumer's dollar. 



The crop brings to California from 

 35% to 40% of the consumer's dollar, 

 of which the fruit on the tree gets 25% 

 to 277o or more. 



Operating Costs and Profits 



The operating costs of the retailer, 

 the jobber, the railroads and the pro- 

 ducer are largely fixed. They are inde- 

 pendent of the value of the fruit. Tlu\ 

 represent the cost of producing the 

 fruit; of railroad and refrigeralioii 

 service; of delivery by the retailer and 

 jobber; the jobber's selling cost to 

 nearby retailers; the jobber's cost of 

 develoiiing trade with the countless 

 retailers in the small outlying towns 

 and country places; and the cost of 

 rent, management, buyin.g, credit losses 

 and expenses, heal, light, telephone, 

 taxes, interest and other miscellaneous 

 expenses, iiichiiling losses fiom decav 

 and stealing. 



Whether the job'ber or letailer makes 

 a net profit depends on the buying and 

 selling pi'ice, the cost of doing Inrsiness, 

 the volume and the number of capital 

 turn-overs. 



The railroad's gross earnings are 

 always the same, as the rate per hun- 

 dred pounds is fixed. 



^^'hether the producer makes ji profit 

 ilepends on the quality of his fruit, the 

 yield of his grove, the amount ex- 

 pended in production, including the 

 management of his place, tlie elliciency 



(.. IIAliuIJi I'OWEEL 



Oi'uei-al Man;\gei- CMlilninia Eruit (iiiiwei^ 



Excliange, Los Angeles, California 



of his general management, and the 

 selling price. It costs the grower an 

 average of $1.20 to produce, harvest, 

 pack and place a box of oranges on the 

 cars in California. It costs the lemon 

 grower an average of Sl.OO per box. It 

 ma> be interesting to note that the ele- 

 ments that cuter into the cost of i)ro- 

 diicing oranges and placing them in the 

 hands of the jobber genei'all> divide 

 ap|)roxiinately as follows: Labor, M.8% ; 

 nialeiials, 23.3'V; harvesting, ■!.()% ; 

 Ij.ukiug, H.3'; ; freight and I'efrigera- 

 tion, 10.0';, and selling, 3.0';. 



The Machinery Which Dislrihules the 

 California Citrus Fruit Crop 



The machinerx which carries the 

 cilrus fruit crop from the pro<lucer to 

 llu- consumer begins with 11,000 Cali- 

 fornia gioweis, who, through tlieir 

 own agencies, distribute and sell the 



bulk of the crop, either direct or at 

 auction, to 2,500 to 3,000 carlot jobbers 

 in the principal cities of the United 

 Slates and Canada. 



The jobbers assemble and distribute 

 the fiiiit, either <lirect or through 7,500 

 traveling salesmen, to 300,000 retail 

 dealers, including grocery stores, chain 

 and department stores, popular stores, 

 general merchandising stores, drug 

 stores, restaurants, hotels, fruit stores, 

 push carts, wagons, stands and other 

 miscellaneous avenues of distribution. 

 The jobber is a banker for the retailer 

 in addition to the functions outlined 

 above. 



The retailers distribute the fruit to 

 100,0110,000 people, one-half of whom 

 live in villages of 2,500 or less, and on 

 the farm. 



The consumer bu.\s the fruit over 

 the counter, by telephone, through 

 order takers, from the push carts, 

 street stands and in other ways, the 

 gieat bulk of the fruit passing through 

 the grocery stores or other stores from 

 which he gets his daily food supplies. 



This machinery represents the sim- 

 plest from of distributing an .\merican 

 agricultural crop. In most industries, 

 the i)i-oducers are not organized. The 

 crop is distributed largely through un- 

 organized local buyers, by representa- 

 tives of jobbers, by brokers or others 

 who make a profit on the distribution 

 to the jobbers or wholesale dealers, 

 thereby imijosing an unnecessary ex- 

 pense of two, three and even ten times 

 as nnich as the systematic distribution 

 of the organized producer, and at the 

 same time giving onl.x' an ina(le(iuate 

 distribution. 



Are the Jobbers and Ketailers 

 Necessary? 



One cannot contemijlale the vast 

 machinery that bridges the span be- 

 tween the producer on the one hand 

 an<l one hundred million consumers on 

 the other, without asking the i|uestion, 

 "Is every link in the chain necessary 

 to serve the interests of both the pro- 

 ducer and consumer, and, if so, are 

 their interests ediciently and econom- 

 ically served".'" The answer is being 

 sought in every i)art of America at the 

 |)rescnt time through investigations by 

 producers and consumers, by various 

 kinds of oiganizalions and by the state 

 and federal governments. If the job- 

 ber and retailer arc performing a vital 

 service in bridging the gap and arc 

 doing il elli<ieutly and ecoTiomically, 

 then each has an economic justification 



