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Another advantage in relatively large grower equities, with correspondingly 

 less borrowed capital, is in reduced business interest cost. For example, 

 if a 200,000-box association were to borrow $100,000 at 5 percent, the 

 annual interest cost would be $5,000; or, on a per box basis, it would 

 increase operating costs 2 1/2 cents a box. If the loan were for $200,000, 

 the operating costs would be increased to 5 centa a box, and so forth. 



The "economies of scale" can also be seen in relation to borrowed capital. 

 A large-scale operation can borrow a given amount of capital at a lower 

 per unit cost than a smaller unit can. For example, a loan of $200,000 

 would increase the per box costs of a 200,000-box operation by 5 cents 

 a box. The per box cost of a $200,000 loan by a 400,000-box operation 

 would be only 2 1/2 cents a box. For a 500,000-box operation, the cost 

 would be 2 cents a box. . ; ,. 



The financial position of individual grower -members of the association 

 also has an important influence on the total situation. Neither the data 

 nor the time are available to analyze the advantages and disadvantages of 

 each alternative to each grower. But even more difficult would be the in- 

 tangible influences of each grower's attitude and opinions regarding his 

 position. 



Nevertheless, four general groups of growers can be visualized: 



1. Growers who are only part-time patrons of the associations, or who 

 have only a very small volume to be packed, stored and/or marketed . 

 Probably to this group the prospect of immediate cash payment of their 

 equities and the capital gain of the association appears more important 

 than warehouse facilities for their fruit. 



2. Growers who are long-time members of the associations and are now 

 considering retiring from fruit production. Here again, it appears 

 likely that cash allocations seem most important. However, in viev/ of 



the tax treatment of funds from an involuntary conversion (see Tax Situation) 

 gradual repayment of equities may be preferable to a lump-sum payment. 



3. Growers who are actively in fruit production and plan to continue with 

 it. While cash allocations are no doubt attractice, it seems probable that 

 their future need of modern facilities to pack, store, and market their 

 fruit makes investment in such facilities of greater economic benefit 



to them than cash allocations. This applies if growers decide to rebuild 

 in Entiat, as well as in the case where they do not rebuild. In this 

 latter case, investment will be required in other cooperatives and in 

 transportation equipment. Of course, settlement funds received as a 

 result of not rebuilding (dissolution of the associations) would be taxed 

 at the Federal income tax rate. 



^. Former members of the associations. These persons, as "outsiders," 

 are probably most interested in getting cash for their equities in the 

 facilities. However, the importance of this group will depend on by-law 

 provisions covering former members; and in the number of former members 



