Page 6 



BETTER FRUIT 



January, ig20 



example, is now less than 10 per cent 

 on the selling price, while the retailer's 

 margin is about 25 per cent. These 

 trade margins, which are the lowest on 

 any of the fruit crops, have been grad- 

 ually reduced because the growers have 

 furnished an even, dependable supply 

 of standard giades of advertised fruit 

 to the markets where they are to be 

 sold. 



Principles of Organization. 



"A cooperative organization, to be 

 successful permanently, must be found- 

 ed on economic necessity. It must be 

 composed of growers exclusively, and 

 it must be financed exclusively by the 

 growers. None has succeeded in which 

 the growers and the buyer and specu- 

 lator are joined together, because the 

 interests of the two are not the same. 

 The grower's primary interest is in the 

 permanent prosperity of his investment; 

 the buyer or sijcculator primarily in the 

 success of his immediate business trans- 

 actions. Only the man who owns the 

 land and whose investment runs into 

 the future is willing or is in a financial 

 position to make investments that safe- 

 guard the future of an industry. 



"A cooperative organization is one in 

 which the members form an agency 

 through which they work out their 

 common problems at cost without profit 

 to the agency — the benefits going to the 

 members in proportion to the business 

 transacted by each, but the cost being 

 the same per unit for each, irrespective 

 of the volume contributed. To be per- 

 manently successful the organization 

 must be formed by the growers, organ- 

 ized by them, and the benefits returned 

 to them. Any other tjpe of organiza- 

 tion is not cooperative, and if used, the 

 term misleads the public as to its 

 purposes. 



Capital in a Cooperative Organization. 

 "The California Fruit Growers' Ex- 

 change has no capital stock. It esti- 

 mates the cost per box of transacting 

 business annually, then levies an arbi- 

 trary assessment for the year. At the 

 end of each month it renders a bill to 

 each District Exchange for the number 

 of boxes shipped during the month. It 

 does not take the marketing cost out of 

 the proceeds before returning them to 

 the District Exchanges. At the end of 

 the year a surplus, if one has been 

 accumulated, is prorated to the District 

 Exchanges on the basis of the shipments 

 of each. The Exchange makes no profit, 

 receives no dividends, accumulates no 

 surplus. 



"Where a producers' organization re- 

 quires capital for the purchase of sup- 

 plies or for other purposes, the Ex- 

 change has worked out a plan by which 

 the capital contribution of the stock- 

 holder is kept permanently proportional 

 to their shipments by a revolving fund 

 into which the stockholders agree to 

 pay a specified amount per box annu- 

 ally, based upon their respective ship- 

 ments. With the money so contributed 

 an equivalent amount of the oldest 

 issued stock is purchased and is trans- 

 ferred to the stockholder making the 

 last contribution. The capital stock is 

 revolved out every five or more years. 



depending on the cycle adopted. The 

 grower contributes annually on the 

 basis of his previous siiipments, and 

 receives a return of capital based on his 

 shipments of five or more years pre- 

 viously. The capital contributed is paid 

 6 per cent interest, but no dividends are 

 paid to the capital except the interest 

 rate. The corporation is not formed for 

 money-making purposes. The capital 

 is necessary to provide the facilities 

 through which the members transact 

 their business, and both the benefits 

 and capital contribution of the mem- 

 bers are always kept proportional to 

 the use which the member makes of his 

 own facilities. American agriculture is 

 full of the wrecks of farmers' organi- 

 zations that were formed as stock cor- 

 porations, with disproportional capital 

 contributions of the members, with no 

 way to retain the capital within the 

 organization or to keep it always pro- 

 portional to the shipments of the mem- 

 bers. The revolving fund plan over- 

 comes the objections to a capital stock 

 corporation and provides a strictly 

 democratic form of organization. 



The Open Door to Square Deal. 



"A cooperative organization should 

 have an open-door policy, i.e., one by 

 which every grower who will conform 

 to the policies of the organization, who 

 will abide by its rules and regulations, 

 and who will assume his share of its 

 responsibilities may be admitted to 

 membership. It is equally important 

 that a member be permitted to with- 

 draw from the organization should be 

 become dissatisfied, provided his with- 

 drawal is in accordance with the by- 

 laws or contract provisions governing 

 withdrawals. No grower should be held 

 permanently in a cooperative organiza- 

 tion against his judgment. A contract 

 or membership agreement between the 

 association and the grower is funda- 

 mental for purposes of business stabil- 

 ity. The association must know defin- 

 itely what it is expected to do, the 

 volume of business to be transacted, the 

 approximate overhead cost and the 

 preparation necessary to transact the 

 business in an orderly, economical man- 

 ner. But in the long run the benefits 

 of a cooperative organization are the 

 only things which hold the members 

 together. 



Cooperation and Standard Grades. 



"No community can become known 

 in the markets of the country, and espe- 

 cially to the consumers, unless the fruit 

 is handled, graded and packed under 

 standard rules and regulations and sold 

 under an association trademark brand, 

 each local unit retaining its own local 

 brand in addition to the trademark to 

 identify the quality of the fruit of the 

 community. The wholesale and retail 

 dealer buys on the quality of the local 

 brand to supply the quality required by 

 their customers. The consumer buys 

 on the advertised trademark of the gen- 

 eral association. The trademark is the 

 guarantee of the association to the con- 

 sumer and the public. It represents a 

 minimum standard grade, with various 

 grades above the minimum representing 

 the quality of fruit of each community. 



An unadverfised local or buyer's brand 

 may have been sold for twenty years in 

 a community and not be known to 2 per 

 cent of the consumers who have actually 

 used the fruit, while a nationally adver- 

 tised brand will be known to more than 

 half the consumers in the same com- 

 munity. Such has been the actual ex- 

 perience of the association of citrus 

 fruit growers selling under local brands 

 alone as compared with the growers 

 selling under the Sunkist brand with 

 the local brand added. 



The Need of National Advertising. 

 "Advertising to the consumer is fun- 

 damental in increasing the consumption 

 of a rapidly increasing production of 

 fruit. It increases the per capita con- 

 sumption and develops new consumers. 

 It widens the growers' markets and pro- 

 duces a consumers' demand which helps 

 the jobber and the retailer, who are 

 primarily order takers, sell the fruit. 

 It strengthens the relations between the 

 grower, the trade and the consumer. 

 It makes it possible for the jobber and 

 retailer to sell quicker at lower margins 

 per turn over, and to give the consumer 

 a product uniformly distributed at a 

 lower cost of distribution. 



Coiiperation Between the Producer 

 and the Trade. 



"There should be the closest coopera- 

 tion between a producers' organization 

 and the wholesale and retail trade. The 

 latter are the distributing agents which 

 bring the producer and consumer to- 

 gether, and the span can be efficiently 

 and economically bridged only when 

 there is a mutual understanding of each 

 others' problems. The producer cannot 

 deliver his fruit to the retailer without 

 the jobber, nor to the consumer without 

 the retailer. There are 3,500 fruit job- 

 bers in America, with 10,000 or more 

 traveling salesmen to develop a country 

 business, and 3.50,000 retail merchants 

 who sell the fruit to the consumer. The 

 producer cannot take the place of either. 

 The risk and the cost are both pro- 

 hibitive. 



The Future of Cooperation. 



"The future of cooperation will de- 

 pend not alone on how well the growers 

 handle the business in hand, whether it 

 be in production, in distribution and 

 marketing, or in development of a larger 

 consumer demand, but largely on how 

 well they meet the vital questions of the 

 day which are leading to world-wide 

 social and economic unrest. A cooper- 

 ative organization has a public interest 

 relationship which it must scrupulously 

 fulfill, as well as the relationship to its 

 members. It cannot live for itself alone. 



"A cooperative organization of fruit 

 growers by illustration should be an 

 important factor in reducing the cost of 

 living as well as insuring the grower a 

 fair price for his fruit if it is to play a 

 vital part in future social and economic 

 life. The producer is entitled to a fair 

 return on the cost of production, if the 

 law of supply and demand warrants it. 

 The cooperative organization, however, 

 should make a larger production possi- 

 ble by reducing the cost of production 



Continued on page 35. 



