-13- 



6. Five or six small packing plants might arise if the associations do 

 not rebuild. This would mean a smaller volume per plant for selling pur- 

 poses, and thus less competitive advantage. This lesser competitive advan- 

 tage would be reflected in lov/er prices to growers in the Entiat area. 



Alternative Number 2 - Completely Merge the Two Cooperatives . 



Under this alternative the two cooperatives would merge into one, which 

 would build and operate one storage and packing facility and sell all fruit 

 through one sales agency. 



Advantages 



1. Construction of one large modern packing and storing facility would 

 require less investment per box than a smaller facility. (See table 2.) 

 Where the cost of constructing and equipping a 400,000-box plant is approxi- 

 mately $2.16 a box, the cost for the 200,000-box unit is $2.61 a box and 

 for a 100,000-box unit, $2.92 per box. 



2. The total investment for constructing and equipping one large facility 

 would be less than for two smaller units with the equivalent packing capacity. 

 (See table 2.) Where a 400,000-box unit would cost approximately $865,000, 

 tv;o 200,000-box units would cost approximately $1,044,800; or $179,800 more. 



3. A large-scale plant would benefit from the "economies of scale"; that 

 is, the per unit operating cost would be lower in a larger plant than in 



a smaller one. (See tables 4, 5 and 6.) While the data come from accounting 

 records and thus many factors affecting cost are not held constant, the 

 experience of 16 Washington State warehouses shows higher per box cost 

 (44 to 76 cents a box) for plants under 200,000 boxes as compared with . 

 plants over 200,000 boxes (36 to 57 cents a box). A California study shows 

 fixed costs dropping from 36 cents a box for a 43,000-box operation to 

 4 cents a box for a 429,000-box operation. Similarly, a study of apple 

 handling costs made by the U. S. Department of Agriculture shovjs a declining 

 cost as size plant increased for each of three different types of handling 

 equipment. , 



4. A large-scale operation would be able to retain or attract, demand, 

 and afford top- flight management. . 



5. Just as larger-size plants can operate at lower per unit cost, so the 

 pooling of the fruit of many growers into a large-scale selling or marketing 

 operation can bring benefits to growers. These benefits can come (1) from 

 reduction of selling costs by more efficient utilization of sales personnel; 

 (2) from improved competitive position in relation to buyers by reducing 

 the number of persons selling apples; and (3) from better serving the needs 

 of the market by having large quantities of many sizes, varieties, and packs 

 available to meet the specifications of large-scale buyers in a mass dis- 

 tribution system. .. • -. 



