FARM CREDIT ADMINISTRATION

rigid grading. The luxury market is limited and may be more easily overdone than the larger and less discriminating outlet. If all fruits and vegetables were closely culled and only the fancy or number one grades placed upon the market, the luxury market would seem to disappear, for a large part of the product would still have to be consumed by the middle classes and masses of the population. Hence, it may be more profitable to limit the fancy product to the luxury demand and let the larger volume of goods find its way to its logical outlet.

A peculiar problem with reference to the grading of fruits and vege tables is that the product seldom reaches the consumer or even the retailer in the same condition in which it leaves the packing house. Deterioration of highly perishable products in transit and through handling in terminal markets is surprisingly rapid. Not all of the commodities move directly to market from field or packing house. Some are stored for months. Products may possess all of the quality requirements of a given grade upon going into storage but when removed a few months later show evidence of deterioration; hence, the fine quality originally possessed may be largely or entirely absent when the commodity reaches the ultimate consumer.

STORING AND PROCESSING

The more staple agricultural commodities such as grain and cotton may be held for distribution, whereas many of the fruits and vegetables must move directly to market unless they are dried, frozen, or otherwise conserved. Processing immediately entails an additional cost which must be charged to the commodity. Many of the products do not lend themselves to such treatment and hence must be consumed immediately. As an illustration, fresh peaches may be held in storage for only a very short time, as storing them for even as short a period as 1 week materially lowers their quality. With commodities of this kind the distribution program must function quickly and effectively.

In this group we find a number of products which can be consumed in the fresh state, dried, canned, or frozen, thus rendering them suitable for local use or for wide distribution. However, quick handling is absolutely essential for the more highly perishable products such as berries, beans, peas, and many other fruits and vegetables. Through various methods of processing at point of origin, many of the commodities in this group are prepared for distribution in concentrated form. Reduction in volume means lower transportation cost. Also some products are rendered suitable for much wider distribution by processing. Taking the crops directly from the fields or vineyards to processing plants, and immediate handling, often result in furnishing the consumer in remote districts with a better product than would be possible if the commodity were transported the required distance in

the fresh state. The extent to which various processing methods can be employed will naturally be determined by their adaptability to the crop.

If necessary, some varieties of apples may be held in cold storage for long periods and distributed to the markets as needed (fig. 4). Potatoes are held in common storage in Maine, Idaho, and other potatoproducing States from harvest time in the fall until late spring; whereas, early potatoes produced in the South during the summer months must move into consumption promptly or be held in cold storage. Ordinarily, the cheaper products cannot bear the extra cost. of cold storage or other special handling.

4

Acreage of 11 commercial truck crops for canning increased from 979,100 acres in 1924 to 1,530,080 acres in 1937. The producers of certain products experience extreme difficulty in disposing of what, for the time being, seems to be surplus production. This situation is being met in part by canning. Figures from the United States Department of Commerce show that the quantity of grapefruit canned in the United States increased 152 percent during the period 1929 to 1935.5 The National Canners Association reports 4,209,875 cases of grapefruit sections and 6,016,240 cases of grapefruit juice canned during the 1936-37 season. If approximately 700,000 cases of grapefruit products canned and distributed by the Federal Surplus Commodities Corporation of the Agricultural Adjustment Administration is in

Barrels and tub-bushels are used as storage containers in the East; whereas, in the Northwest the box predominates.

4 Asparagus, lima beans, snap beans, beets, cabbage (kraut), sweet corn, cucumbers (pickles), green peas, pimientos, spinach, and tomatoes.

U. S. DEPARTMENT OF COMMERCE, BUREAU OF THE CENSUS. 1929-37.

BIENNIAL CENSUS OF MANUFACTURES.

84534-38- -3

cluded, the total becomes 10,926,115 cases, representing an increase of 720 percent over 1929.

From 1925 to 1935 the quantity of fruits and vegetables canned increased 43 percent, while statistics for carlot shipments for the same period indicate a decrease. It should be borne in mind that movement by motortruck compensates, in large measure, for the reduction in carlot shipments. Table 2 gives more detailed information as to the quantity of vegetables canned and marketed in the fresh state during the period 1928 to 1937. Large quantities of cherries, pears, peaches, and other fruits are canned each season; the percentage of production thus processed usually depends upon prices offered for the fresh product.

The miner in far-away Alaska or the lumberman in a remote forest region would seldom enjoy any fruits or vegetables if they were not made readily available by some type of processing. Improvements in methods of processing have probably contributed more toward widening distribution than any other one factor. When fresh fruits or vegetables are canned, further waste or loss from decay is practically eliminated, and the commodity assumes a more concentrated form, reducing both the cost of transportation and the risk of loss from spoilage.

TABLE 2.-ACREAGE AND FARM VALUE OF 22 PRINCIPAL TRUCK CROPS FOR MARKET AND FOR MANUFACTURE, 1928-37

Compiled from reports of the U. S. Department of Agriculture, Bureau of Agricultural Economics.

Freezing is becoming an increasingly important means of processing for distribution (fig. 5). According to figures compiled from various sources, in 1936 the United States processed 70,000,000 pounds of

6

frozen fruits. This was slightly smaller than the 77,200,000-pound pack of 1935, but larger than that of any other year since 1930, when the pack was approximately 84,800,000 pounds. The West produced slightly under 50,000,000 pounds, or a little more than two-thirds of the total 70,000,000-pound pack in 1936. Strawberries are the leading frozen-pack fruit of the Northwestern States, accounting for 60 percent of the 1936 output. Red raspberries made up 20 percent, and blackberries, 10 percent. Red sour cherries and loganberries accounted for about 3.5 percent each.

According to the same source the western frozen-vegetable industry, a relatively new development, has grown from an estimated pack of 2,500,000 pounds in 1933 to over 12,000,000 pounds in 1936. The western frozen-vegetable pack represents an estimated 60 percent of the total United States output, although no definite figures are available for the rest of the country. Peas represented about two-thirds of the total 12,570,000 pounds of frozen vegetables packed in Washington and Oregon.

FINANCING

The extent and the method of financing the distribution of agricultural commodities depend largely upon the commodity and the method of handling. Products such as apples and late potatoes are sometimes carried in storage for rather long periods. The expense of storing and

6 WESTERN CANNER AND PACKER, YEARBOOK AND STATISTICAL NUMBER, 1937, p. 235.

FARM CREDIT ADMINISTRATION

making advances wherever necessary requires considerable money. Likewise, carrying canned or frozen products for any considerable length of time necessitates financing. During recent years the making of advances to producers upon commodities handled at time of shipment has become general. This practice is employed in order to provide growers with ready cash to meet payrolls and to pay for containers and other expenses incident to harvesting, packing, and shipping.

SALES METHODS

A fundamental principle in industry is that the producer either develops or exercises a guiding influence over the distribution of his product. The same principle should hold true in agriculture, especially with reference to systems of distribution for perishable and semiperishable products. The individual commission house or jobber in the terminal market cannot be expected to exert an appreciable influence on the development of a distribution system for commodities grown in remote or scattered areas of production or even to control the flow of these products to his own market. The conditions are beyond his control.

As an illustration, in the city of New York there are more than 700 wholesale distributors of fruits and vegetables. Each of these distributors is handling commodities that arrive upon consignment, through purchase at shipping point, at auction, or otherwise. Producers and shippers may complain of results obtained in that market, yet fail to realize the position of the carlot receiver. One who has invested money in a shipment may find that his next-door competitor has the same commodity upon consignment, and that receipts are so heavy in the market as to cause him heavy loss upon his purchase. He naturally begins to solicit consignments in order to meet competition. The market may become demoralized, with producers and shippers both responsible for the condition.

and

About 15,000 handlers of fruits and vegetables are licensed by the Department of Agriculture each year. This group may be considered as embracing mainly wholesale distributors of these products; it includes cooperatives, buyers, brokers, jobbers, commission houses, others. There is an annual turn-over of about 20 percent in this group. About half of these changes may be accounted for by consolidations, reorganizations, and voluntary retirement from business; the other half by business failures.

The line of demarcation between the functions of various factors involved in the distribution of fresh fruits and vegetables becomes less marked as the problem increases in complexity. In the old days the commission merchant received carlots upon consignment. The jobber purchased full loads and sold in smaller quantities. The broker