-5 - 



In situation I, Prodiiction A, apples have been upgraded Tdth no decrease in 

 production and no increase in production costs to harvest. Picking and packing costs 

 are increased by more careful handling and added expense for cartons. IVith prices 

 held constant by grade at their original level, the $3632 net income is $llhh over 

 the base net income of $21488 « This gain in income is possible by taking up slack in 

 management. Apples are upgraded by managing the same farm setup better than before* 

 Vifhere this upgrading is obtained with better but fevrer apples, Situation I with lOJ? 

 less production, net income drops to $227U or I21I4 less than the past year» 



Production A (10200 bu) 



Receipts 

 Expenses 

 Net Income 



|2U,360 



21,872 



$ 2,U8« 



$26,979 126,979 m,Q39 $33,8.79 



23.3U7 214,531 23,3ii7 2^/ ^-7 



# 3,632 $ 2,iaiB il0;ll92 0,6^0 



Production A-105?(9180 bu) 



Receipts 



Costs 



Net Income 



$214,281 $214,281 $30,1455 

 22,007 23.191 22,007 



$ 2j27i4 $ 1,090 i~H7W 



$30,1455 

 23. SC8 



1/ Past year apples graded l}i% U, S. Extra Fancy, $0% U. S, Fancy, 27^ U. S, No. 1 



and 9% U. S, Utility, 

 2/ Upgraded apples include 2S% U. S. Extra Fancy, 60^ U, S. Fancy, 105!^ U, S. No. 1, 



and 5$2 U, S, Utility. 

 3/ Past year market prices per bushel were Extra Fancy $3.10, Fancy $2,70, No, 1, 



$1,75, and Utility $1,50. 

 h/ Increased market prices per bushel are Extra Fancjr $i4#05, Fancy $3.30, No, 1, 



$2,25 and Utility $2,00, 

 5/ Production costs up to harvest are the same as in the past year but picking and 

 ~ packing costs are increased for more careful handling iinctaore expense for cartons. 



Situation II and IV include higher production costs to secure the upgrading. 

 Expenses are increased for additional spray and dust materials and for extra labor 

 for pruning and thinning. Under Situation II, where the original market prices pre- 

 vail and with no change in production, the net inccne of $2i4l|8 shoYfs no gain from 

 the upgrading. Under Situation III and IV, higher market prices for each grade are 

 shoam. Situation III, however, shavrs Situation I costs. Situations III and IV show 

 the highest net farm income but individual fruit growers may find difficulty in se- 

 curing higher prices for all their grades of apples. Hence, Situations I and II ap- 

 pear more realistic. If a grov/er could actually upgrade his fruit P-rid increase his 

 production vdthout increased costs he would fare still better. 



