30 BULLETIN 1261, U. S. DEPARTMENT OF AGRICULTURE. 
ments. Within reasonable limits this is true, although it does not 
follow that the sale price of citrus fruit can be increased by increasing 
the cost of the packing-house operations, or that it is necessary to 
increase the cost of these operations to secure better grading, or pack- 
ing, or more careful handling of the fruit. There are many factors 
that determine the price at which a shipment of citrus fruit sells. 
Although the grade and character of the pack are important, variety, 
quality, and market conditions are no less so, and these factors are 
not under the control of the association management. 
Economy in packing-house operation made at the expense of the 
merchantable quality of the fruit may result in losses several times 
greater than the amount saved. Packing-house expense, over the 
5-year period, averaged one-sixth of the sale price of oranges, and 
less than one-fourth of the sale price of lemons. In other words, a 
change of 16§ per cent in the price received for oranges by an aver- 
age association would influence the growers' receipts as much as a 
change of 100 per cent in total packing-house costs. A similar change 
of 25 per cent in lemon prices would affect the growers' receipts as 
much as a change of 100 per cent in lemon packing-house costs. 
However, this does not minimize the importance of reducing pack- 
ing-house expense. It will be noted that in 1920 and 1921, packing- 
house expense tended to become more nearly equal to the growers' 
receipts. In 1921 the lowest average growers' receipts for oranges 
are a little less than the highest packing-house expense. Packing- 
house expense, therefore, is becoming an increasingly important 
item and its relation to the growers' receipts a matter for careful 
consideration. 
EXPENSE OF DISTRIBUTION. 
The local associations affiliated with the California Fruit Growers 
Exchange, harvest, grade, and pack the fruit, and load it in refrigerator 
cars. The fruit is sold by the district exchanges through the facili- 
ties provided by the central exchange. The central exchange main- 
tains an orange and lemon sales office in Los Angeles, and agents in 
all important markets. At the present time there are six division 
offices and 54 district offices which are under the direction of men 
on the pay roll of the exchange. In addition, the exchange is repre- 
sented by eight brokers with whom it has direct contacts, and also by a 
number of brokers in smaller markets who operate under the direction 
of the nearest district or division manager. Although the district 
exchange managers do not deal directly with the market agents of the 
exchange, they direct, after consultation with the sales managers of 
the exchange, the place and time of sale and the price of shipments from 
their district. 
Proceeds from the sale of shipments are remitted by the market 
representative, through the central office, to the district exchange (or 
direct contract shipper). The district exchange manager retains an 
amount from the proceeds of each sale sufficient to pay the expense 
of the central organization and his own exchange. He also deducts 
an authorized amount per box to purchase stock of the Fruit Growers 
Supply Co., or the by-products companies, and remits the balance of 
the receipts to the association making the shipment. If the market- 
ing " retain" is in excess of the amount necessary for the expense of 
the district and central exchanges, the surplus is refunded to the 
associations at the end of the fiscal year. 
