Page 6 



BETTER FRUIT 



May 



retailers. By taking ttie average price 

 paid by the consumer, it is possible to 

 make a distribution of the consumer's 

 dollar back to the grower and to show 

 the difTerenl factors which enter into 

 the consumer's price. Taking the thirty 

 representative markets as a whole, in- 

 cluding the 5,485 reports extending over 

 the year 1914, the factors entering into 

 the consumer's dollar are as follows: 



Retail distributing cost (gross) 33.3% 



Jobber's distributing cost (gross* 8.2% 



Grower's selling cost 1.5% 



Freight and refrigeration 20.5% 



Packing house cost 7.4% 



Picking and hauling to packing house. . 2.4% 

 Proportion returned for fruit on the tree 26.7% 



Consumer's Dollar represents 100 % 



Summarized, the data shows that 36.5 

 per cent of the consumer's dollar is re- 

 turned to the grower in California, of 

 which 9.8 per cent represents the pro- 

 portion allotted to picking, hauling and 

 packing; 20.5 per cent represents the 

 allotment to transportation; 1.5 per cent 

 the grower's cost of selling the jobber, 

 and 41.5 per cent the proportion repre- 

 sented by the jobbing and retail gross 

 distributing costs, the latter represent- 

 ing four times as much as the former. 

 The amount of the consumer's dollar 

 allotted to each factor referred to in 

 the table should not be confused with 

 the cost of handling each of these items. 

 The average cost of picking and hauling 

 a packed box of oranges from the grove 

 to the packing house is 10.5 cents; the 

 average cost of packing and loadine on 

 the cars is 32.4 cents per box; the aver- 

 age cost of freight and refrigeration is 

 90.7 cents per box; the average grower's 

 cost of the co-operative method of sell- 

 ing, including advertising, is 6.6 cents 

 per box; the average mark-up of the 

 jobber is 14.2 per cent on the purchase 

 price; the average mark-up of the re- 

 tailer is 49.8 per cent on his purchase 

 price, both of the latter figures includ- 

 ing the loss from decayed fruit. 



A considerable variation has been 

 found in the proportion of the consum- 

 er's dollar that goes to the jobber and 

 retailer in different parts of the coun- 

 try. West of the Rockies and in Can- 

 ada, for example, the jobbers' costs are 

 higher than in the East or in the Missis- 

 sippi Valley, on account of higher labor 

 costs, higher rents, higher interest and 

 greater geographical distances to be 

 covered by the traveling salesmen of 

 the jobbers. These costs are reduced in 

 the older, more densely populated parts 

 of the country, where interest rates are 

 lower and where the various costs of 

 distribution are more economicallv ac- 

 complished. The jobbing costs of the 

 eastern half of the United States are 

 often not more than one-half the cor- 

 responding costs in the West. There is 

 an eoually wide variation in the dis- 

 tributing margins in different cities, 

 sometimes due to the efficiency of the 

 men engaged in the jobbing business, 

 sometimes to natural local conditions, 

 and sometimes to understandings be- 

 tween different jobbers through which 

 a minimum margin is established. The 

 record shows that in one city the 

 average mark-up of the jobbers is ap- 



proximately 10 per cent. There is the 

 most active competition there, turn- 

 overs are quick, the margin on each 

 transaction is small, and the per capita 

 consumption is high. In another city 

 in one of the richest, most fertile stales, 

 where a few friendly jobbers work to- 

 gether, buying cars of fruit jointly and 

 selling at a high margin on each turn- 

 over, the average mark-up for the year 

 is 22 per cent. The consumption there 

 is restricted, sales are slow, and the 

 business is transacted on an artificial 

 competitive basis. There is apparently 

 a considerable variation in the margins, 

 due to the number of times a jobber or 

 a retailer turns over his capital. Quick 

 sales at a small margin of profit is the 

 policy usually followed by those who 

 specialize in the citrus fruit business. 

 They make their annual profit on a 

 large, steady volume of business. They 

 attract the consumer with fruit that is 

 always fresh, attractively displayed and 

 at reasonable prices. They stimulate 

 consumption by advertising and in 

 other ways. Others, especially among 

 the country retailers, or among jobbers 

 who carry citrus fruits as a side line, 

 do not specialize or push sales. Their 

 losses from decay and off condition are 

 large and their margin on each turn- 

 over must necessarily be large to pro- 

 tect themselves against fluctuation in 

 prices. These dealers are not important 

 factors in increasing the per capita 

 consumption. The margins charged by 

 the retailer may run as high as 75 per 

 cent above the cost in some cities, while 

 in others it drops as low as 20 per cent. 

 We desire to bring out another phase 

 of the orange distributing business. It 

 relates to the fluctuations in the job- 

 bers', retailers' and consumers' prices. 

 The impression is widespread that the 

 consumer's price does not fluctuate 

 with the retal purchase price, and that 

 the jobbers' price to the retailer docs 

 not fluctuate with the price paid the 

 produce. In order to determine the 

 facts, we have taken the carlot, the job- 

 bers' and the retailers' prices in twelve 

 representative cities for one year and 

 have charted the fluctuations in the re- 

 snective prices. They are shown in the 

 diasram herewith. 



From this chart it will be seen that 

 the three prices, taken as a whole, do 

 follow each other with almost exact 

 recularity, and this must necessarily 

 follow where the competition between 

 the different wholesale and retail deal- 

 ers exerts itself naturally. There are 

 many exceptions to the general rule, 

 where the retailers or the jobbers main- 

 tain a somewhat uniform price throush- 

 out the year, and especially where the 

 jobbing and retail prices are hebl 

 abnormally high after the producer's 

 delivered orice has been reduced. This 

 is especially true where the fruit is car- 

 ried as a side line to meet the ordinary 

 demands of the customers of a store. 

 It may be more true in the country 

 districts where there is not so active a 

 competition in the sale of fruit and in 

 markets where the forces of competi- 

 tion do not operate naturally. \Mien 

 the [jioducer's price is low, the con- 



sumer reaps a benefit only when the 

 price of the jobber and retailer is re- 

 duced correspondingly. 



No attempt will be made to interpret 

 these figures at the present time except 

 in a general way. The citrus industry 

 is vitally interested in seeing the cost of 

 production and of distribution reduce 1 

 to a minimum by a more etlicient organ- 

 ization of every distributing process, 

 and by a better understanding of the 

 problems of each factor, to the end that 

 a more effective co-operation between 

 them all may be brought about. The 

 industry recognizes that the distribu- 

 tiiui of a food product is a series of 

 complex operations; that the railroads, 

 the jobbers and the retailers each per- 

 form ;. vital economic and social service 

 in bringing the producer and consumer 

 together; that each should receive a fair 

 return for the service he performs, and 

 that a more efficient and direct service 

 should be the aim that each should 

 strive for, if the basic factor, the in- 

 dustry which furnishes the fruit, is to 

 prosper. It also recognizes that many 

 of the conditions under which food 

 supplies are distributed in the cities are 

 created for the jobbers and retailers by 

 large economic forces and by the re- 

 quirements of the consumer, which are 

 beyond their power to influence or con- 

 trol. But if the producer, as well as the 

 distributing agencies, the railroads, the 

 jobbers or the retailers are not effec- 

 tively organized, or if they are not fol- 

 lowing sound merchandizing practices, 

 their overhead cost are excessive and 

 they impose an undue burden on both 

 the producer and the consumer, con- 

 sumption is restricted, the investment 

 of the producer is jeopardized, and the 

 stability of the industry is threatened. 

 We may suggest in a general way some 

 of the conditions which seem desirable 

 to be brought about. 



First, on the part of the producer, it 

 is essential that he furnish the jobbers 

 ;>n(l retailers a uniform supply of citrus 

 fruits of dependable grade and pack 

 and of good keeping (piality if a stable 

 merchandizing business is to be devel- 

 oped by either. Variable grades, packs 

 and keeping quality increase the hazard 

 of fruit merchandizing and the jobber 

 and retailer must necessarily add a 

 margin large enough to cover these 

 risks. I'niformity in grades and sup- 

 plies stablize trade and the margins 

 naturallv adjust themselves on a lower 

 level. This is a fundamental require- 

 ment in fruit merchandizing often over- 

 looked by the producer, difficult to 

 handle on account of the large number 

 of growers involved, but one in which 

 progress is being constantly made. The 

 producer must utilize every known 

 agency under his control to produce a 

 higher grade of fruit, at a lower cost 

 of production. To this end he is also 

 making progress, with the aid of the 

 state and federal governments, though 

 there is no immediate prospect that the 

 costs of production will be reduced. 

 Rather are they growing higher on 

 account of the higher costs of material 

 and labor. It now costs the producer 

 an average of •*1.29 per box for oranges 



