of The College of f UNIVERSITY OF CALIFORNIA IL IE MOST AND LEMON PRODUCTS CHANGING ECONOMIC RELATIONSHIPS, 1951-52 SIDNEY HOOS and R. E. SELTZER CALIFORNIA AGRICULTURAL EXPERIMENT STATION BULLETIN 729 A number of basic economic questions face the lemon industry today: In the marketing of the lemon crop, what pro- portion should be shipped fresh and what proportion processed? How competitive are the juice products to fresh lemons? How has production been affected by changing yield and acreage? How will the 50% cut in tariff on lemon imports affect markets for both fresh and proc- essed fruit? This bulletin discusses the above and re- lated problems in today's changing mar- keting scene. Its purpose is to provide information helpful in adjusting to con- ditions so the fresh and products markets may be developed and expanded. THE AUTHORS: Sidney Hoos is Professor of Agricultural Economics, Economist in the Experiment Station and on the Giannini Foundation. R. E. Seltzer, Research Assistant on the Giannini Foundation, resigned June 30, 1951. LEMONS AND LEMON PRODUCTS: Changing Economic Relationships,* 1951—52 SIDNEY HOOS and R. E. SELTZER INTRODUCTION Lemons, one of the major citrus crops, are an important agricultural commodity in California. The lemon industry in the state includes the cultivation and man- agement of groves for the production of the fruit ; picking, packing for fresh ship- ment and movement to processing; and the operation of processing plants for the production and shipment of processed lemon products. Such production and sales activities provide for the employ- ment and income of thousands of people. In addition, there is a wide range of sub- sidiary or secondary industries which depend in considerable part on the lemon industry. Such secondary industries in- clude lumbering and box factories, rail and truck transportation firms, fuel and gasoline suppliers, insecticide manufac- turers, and farm machinery and equip- ment companies. Hence, the economic status of the lemon industry itself directly affects other segments of the state's econ- omy. Developments during the past several years have raised new questions and brought into greater prominence existing production and marketing problems. The lemon industry appears to be experienc- ing a transition period during which the marketing structure is undergoing mod- ification. This change has repercussions on market prices, returns to shippers and growers, and the utilization of the crop. Long-established marketing practices are being modified in the light of current and prospective developments. For these rea- sons a review of the economic status of * Paper No. 128. The Giannini Foundation of the lemon industry and a consideration of its marketing problems are appropri- ate at this time. In order to provide adequate back- ground, the first major section of this report presents a review of some of the important economic developments in the lemon industry. Attention is given to trends and changes in acreage, yields, production, and picking and storage ; also discussed are utilization, domestic ship- ments, imports, and prices. Rather than providing a detailed description of such developments, the major and significant aspects are highlighted, so that the mar- keting and crop-allocation problems later considered have their proper setting. Those who are familiar with the economic trends in the lemon industry may benefit from the first section primarily in that it provides a pertinent background for the later sections. Those who have only a limited familiarity with the trends in the industry may need acquaintance with the first section of the report so as to have appropriate perspective for the consider- ation of the production-marketing prob- lems involved and discussed in the later sections. The second major section of the report is concerned with presenting and clarify- ing the essential characteristics of the demand for lemons. Particular attention is given to the domestic demand for lem- ons shipped for fresh use. The nature of lemon demand is of significance to the formulation of marketing policies and programs because of its interconnection Agricultural Economics. [3 with relative changes in prices and asso- ciated relative changes in sales, and thereby its reflection of the behavior of money returns from sales. Attention is also given, to the extent that available statistical data permit, to the demand re- lations between fresh lemons and canned lemon juice. The demand characteristics of fresh lemons and their relation to proc- essed lemon products are now highly per- tinent to marketing decisions, especially in view of recent developments in the markets for certain processed lemon products such as canned juice and frozen lemonade concentrate. The third major section of the report — the one to which the earlier sections serve as a necessary introduction — is concerned with the impacts on the lemon industry resulting from developments in the proc- essed lemon products markets. This first entails identification of how the lemon crop has been utilized in the past, and what trends are developing in the alloca- tion of the crop among alternative uses. Then attention is directed to the effects on prices and returns resulting from the manner in which the lemon crop is dis- tributed among the major usages. This concerns alternative marketing policies which may have differential effects with respect to grower equities. SUMMARY AND CONCLUSIONS Lemons are a major crop in California. In recent years, grower income from lemons in the state averaged some 4CM5 million dollars annually. In the seven counties where the bulk of the state's lemon acreage is located, the lemon crop accounts for 10 per cent of the agricul- tural income; in Ventura County, about 40 per cent of the total agricultural in- come comes from lemons. The present status of the state's lemon industry reflects some significant changes. There was little increase in lemon-bearing acreage during 1920-1936. During the late 1920's, however, considerable new acreage was planted, and beginning in the middle 1930's there developed a grad- ual expansion in bearing acreage which reached a peak in 1946-47. New plant- ings since then have been small, and bear- ing acreage has decreased. Lemon yield per bearing acre fol- lowed an upward trend from 1919-20 through 1935-36, then increased at an accelerated rate until an all-time peak was reached in 1940-41. Since then the yield has tended to decrease and in recent years has fluctuated around the level which prevailed in the latter 1930's. The increasing yield up to the end of the 1930's was due in large part to the in- creasing age of the existing acreage, with a larger proportion of trees coming into full bearing. Improved management and cultural practices, however, as well as plantings on more productive soils, also contributed to the greater yield. During the past ten years, a shift has occurred in the age structure of lemon trees. In contrast with a decade earlier, there are now fewer very young trees — about three times as many trees which are near to full-bearing, and slightly fewer mature and older trees. The change in age structure occurred along with a de- cline in total acreage, and with bearing acreage remaining about the same. Hence, the decline in total acreage has resulted primarily from a decline in non- bearing acreage. This change in age dis- tribution may have no noticeable effect on average yields in the next few years. But with fewer very young trees, reflect- ing the reduced plantings in recent years, a situation could develop wherein suffi- cient young stock would not come into bearing to offset removals. The production of lemons in California generally increased from the beginning of commercial lemon production in about 1875, until 1940. Production has tended to decrease since 1940, due in part to de- [4] dining yields since then and in part to decreased bearing acreage since 1946- 47. A combination of increased yield and expanded bearing acreage is required for lemon production to regain its earlier higher level. Lemons are harvested throughout the year, although there is a seasonal pattern in picking activity. Furthermore, the tim- ing of intense harvesting varies among the major producing districts. Half of the California lemon crop is harvested dur- ing the three-month period March-May, but the timing of heaviest shipment for fresh use and consumption occurs in the three-month period May-July. This calls for the storage of a substantial volume of lemons. The amount of lemons held in storage is influenced by market prices. When summer lemon prices are high rela- tive to those of the previous winter, No- vember 1 storage is relatively small, and vice versa. There is a noticeable negative relationship between the winter-summer lemon price ratio and volume in storage. There is also a general tendency for storage to be higher in years of extremely high production and lower in years of extremely low production. But it appar- ently is only the extremes in production which influence the level of supplies in storage. Costs of production and harvesting have exhibited marked changes during the past 25 years. Estimated average costs, following the general price level, have in large part reflected the cyclical swings in the economy. Per acre costs for production and harvesting were relatively high during 1923-1930, then generally declined through the 1930's, and reached a low in 1941. With the pressure of World War II, costs began to rise and have in- creased rapidly since 1944. Inflationary influences during the postwar years have pushed up production costs for lemons as well as for other products. The most sub- stantial increases in lemon production- harvesting costs in recent years have been imputed to labor ; but other items such as pest control, frost protection, taxes, and insurance have also increased markedly. Through the years, the larger part of the lemon crop has been harvested and shipped for fresh use. The lemon process- ing industry has operated primarily as a by-product operation, using that volume of fruit which could not be sold profitably in the fresh markets. In recent years new developments, such as frozen and canned lemon concentrates, appear to be bring- ing about a change in the relative im- portance of the market for processed lemon products. The increasing size of the lemon processing industry has not so much been the result of an increase in the total volume of lemons processed as it has resulted from an increase in the dollar value of the processed products. The change reflects a shift toward increased production of the more valuable lemon products — such as the frozen concen- trates — and a decreased relative produc- tion of low-value products like citric acid. The volume of fresh shipments of Cali- fornia lemons increased steadily from the earliest days of the industry until 1942- 43. That level was maintained during the war years, but has generally shown a downward trend in the postwar period. Within the year, there is a pronounced and regular seasonal pattern in the vol- ume of fresh shipments for the state as a whole. But different seasonal patterns exist for the various producing districts, with considerable overlapping. Hence, interdistrict competition prevails in the packing house sales of fresh lemons. Through the years about 95 per cent of total fresh lemon shipments moved to domestic markets, some 5 per cent being exported. Of the lemons exported, about 70 per cent went to Canada, and during the middle 1940's that country's propor- tion averaged over 95 per cent. But since 1942^3, Canada's percentage has tended to decrease, and in 1949-50 amounted to about half of the total exports. In contrast to other citrus, imports of foreign lemons are an important factor [5] influencing the domestic markets. During the period 1930 to 1950, the tariff on lemon imports, together with develop- ments in the foreign producing areas, effectively limited the quantity of lemons imported into this country. In 1950, the tariff on lemons for fresh use was cut in half. At the same time, conditions in foreign lemon-producing areas were such as would permit them to increase sub- stantially the volume of lemons available for export. Recently a relatively marked upsurge occurred in fresh lemon and lemon prod- ucts imports. This development resulted from the reduced tariff, the demand for dollar exchange in Italy, and the rela- tively high market prices in eastern mar- kets. Imports reached a level which was of concern to domestic producers and shippers. With domestic lemon produc- tion such that about one-third of the crop was channeled to products outlets, grow- ers and shippers realized that the prevail- ing level of fresh and processed lemon imports would result in further alloca- tions to products outlets, including the low value uses. The domestic demand for fresh lemons, it has been found, tends to be such that within the usual range of marketings, in- creased shipments yield lower f.o.b. gross revenues than do smaller shipments. This is generally characteristic of both sum- mer and winter lemons, but somewhat more so for the winter lemons. The de- mands for both summer and winter lemons are responsive to changes in con- sumer purchasing power as reflected by the level of national income. As income increases, the demand increases; as in- come falls, the demand decreases. But the demand response to income appears to be more pronounced for summer lemons than for winter lemons. The demands for both summer and winter lemons are responsive to changes in average daily temperatures in the prin- cipal marketing centers of the United States, but in different ways. As the tem- perature advances, the demand for sum- mer lemons also advances ; as the summer temperature declines, the demand for summer lemons recedes. In the winter lemon market, when the temperature ad- vances, the demand declines; when the temperature falls, the demand increases. The market for fresh lemons is to some extent affected by the price and avail- ability of certain processed lemon prod- ucts, especially canned lemon juices, and probably, frozen lemonade concentrate. Available evidence suggests the existence of some competitive demand interrelation between fresh lemons and canned lemon juice. Adequate data are not yet available to test the demand relations between fresh lemons and frozen lemonade concentrate ; yet, market information generally reflects the opinion that the two products do evi- dence some competitive demand relation. The competitive demand relation between fresh lemons and various processed lemon products emphasizes the problem of utiliz- ing most advantageously the lemon crop, not to introduce unbalance in the indus- try markets, but to promote market ex- pansion and increased returns to the industry. This question has become of increased significance fairly recently, since canned lemon juice and frozen lemonade concentrate have reached im- portant market development. The question of distributing the lemon crop, in a given year, among the fresh and processed outlets involves some diffi- cult planning and marketing problems. Yet, the consideration of such problems is of great significance to the industry. Its returns are affected, in both the short and long view. The problems concern the distribution of the lemon crop not only among the total fresh and total processed outlets, but also among the winter and summer fresh markets, as well as the various processed lemon products. When the total annual fresh shipments which have actually occurred — winter plus summer — are considered, the evi- dence indicates that a satisfactory distri- [6] bution among the winter and summer seasons has been accomplished. The sum- mer and winter fresh shipments, respec- tively, as a proportion of the annual total fresh shipments, did not vary widely from the proportions necessary to yield maximum gross f.o.b. money returns. In most years, the discrepancy did not ex- ceed 5 per cent. The indications are that the marketing organizations shipping fresh lemons have, in the aggregate, dis- tributed reasonably well the annual fresh supply between the summer and winter seasons. Within the practically permis- sible range of distribution, the seasonal allocation between the winter and sum- mer fresh markets may be judged to have been accomplished well. When the distribution between the total fresh and the total processed outlets is considered, the situation is somewhat dif- ferent. From the view of allocating the crop among the fresh and processed out- lets so as to maximize the on-tree value of the entire crop, the evidence suggests the following: there apparently has pre- vailed a tendency to overallocate supplies to the fresh outlet and underallocate sup- plies to the processed outlet. This, how- ever, has not been so pronounced in the postwar years as during the prewar years. Yet even now, there appears to be further opportunity to augment total industry re- turns, at the on-tree level, by allocating some additional supplies to the processed outlet. Industry consideration might be given to a gradual adjustment along those lines, with attention given to the potential effects of imports of lemons and lemon products. Consideration of adjusting the alloca- tion of the lemon crop among the fresh and processed outlets, however, involves several related problems. Attainment of increased total industry returns is an im- portant objective, but consideration must also be given to grower equity problems arising from relations among producing districts, and the allocation of the crop from the various districts to the alterna- tive outlets. Consideration must also be given to the maintenance of satisfactory stability in the industry, and to the effi- cient use of fresh marketing and process- ing facilities. Nevertheless, adjustments may be necessary to take advantage of changing market conditions so that the markets for both fresh lemons and proc- essed lemon products may be developed and expanded. I. REVIEW OF ECONOMIC TRENDS IN THE LEMON INDUSTRY The production of lemons in the United States is concentrated in seven southern California counties. California produces approximately 97 per cent of the nation's total lemon crop, and about 97 per cent of the California bearing acreage is lo- cated in these seven counties: Los An- geles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura. Lemons are a major crop in California, important to the agricultural economy of the state. During the five years 1944-45 through 1948-49, grower income from lemons in California averaged over 42 million dollars annually. In the seven counties where the bulk of the state's lemon acreage is located, the crop ac- counted for about 10 per cent of the agri- cultural income of these counties during 1949. This compares with about 14 per cent of the total agricultural income of these counties received from the orange crop during that year. Almost 40 per cent of the total agricultural income of Ven- tura County came from lemons in 1949, the lemon crop for this county bringing in over 25 million dollars to growers in that year. During the past several years, the value of the products of the citrus industry in California has declined in importance relative to the value of the rest of its agri- [7 cultural products. Prior to World War II, lemons and oranges together accounted for 15 to 18 per cent of the state's agricul- tural income. Since the war, the value of these two citrus fruits has amounted to about 6 per cent of the total state agri- cultural income. The decline, in per- centage terms, from the prewar to the postwar years, occurred because lemon production decreased and citrus prices in the postwar years did not increase as rapidly as prices of most other agricul- tural products. The trend in the production of lemons is determined by the trends of bearing acreage and yield per bearing acre. Although bearing acreage and yield are not wholly independent, they are affected in large part by different sets of influ- ences. Bearing acreage is influenced by plantings and removals of trees. Yield is influenced by factors such as manage- ment and cultural practices, rootstock, age of the trees, soil, water, and climatic conditions. Hence, before reviewing pro- duction trends, it is helpful first to con- sider the trends in acreage and yield. Acreage. Lemons were first brought to California from Mexico at about the same time as the orange (1769), but it was not until about 1875 that the lemon industry began to assume commercial im- portance. The growth of the California lemon industry paralleled that of the orange industry. As improved marketing and transportation facilities came into existence, midwestern and eastern mar- kets were made more readily accessible, and acreage and production expanded rapidly. By 1920 there were approxi- mately 40,000 acres of California lemons in production. The general business depression fol- lowing World War I coincided with a record lemon crop, and the expansion in production from the increased acreage had the effect of halting further plantings during the next few years. There was little increase in bearing lemon acreage during the period 1920-36, bearing acre- age in 1935-36 being the same as in 1920 (see fig. 1, page 9) . However, during the prosperous years of the late 1920's, sub- stantial new acreage had been planted, and beginning in 1936-37 there began a gradual expansion in bearing acreage which reached a peak of 66,600 acres in 1946-47. New plantings since then have been smaller than during the 1930's, and bearing acreage has decreased somewhat to a total of 54,418 acres in the 1950 bloom year. The relative importance of the major lemon-producing counties in California is changing. This change, which began in the early 1930's, has resulted in a gradual shift in the distribution of the state's lemon acreage. Figure 2, page 9, shows the percentage of the total California bearing lemon acreage found in each of the major producing counties for the years beginning with 1919. From figure 2 it is evident that bearing lemon acreage in Ventura and Santa Barbara counties has expanded much more rapidly than elsewhere in the state, with the conse- quence that these two counties have gained in their relative importance as lemon-producing areas. San Diego and San Bernardino counties have almost maintained their former positions, and are only slightly less relatively important than they were 20 years ago. The other producing counties have all become rela- tively less important than they were previously. The portion of the total available agri- cultural land that is planted to lemons constitutes another measure of the rela- tive importance of lemons to the agricul- ture of each county. Ventura County is, by far, the most highly specialized lemon- producing area, having 34 of each 1,000 acres of agricultural land planted to lemons. Los Angeles County is next with 15.8 acres per 1,000 in lemons. It is fol- lowed by Orange County, with 14.9; San Bernardino, 13.6; Santa Barbara, 9.8; San Diego, 6.0; and Riverside, 4.5 acres for each 1,000 acres of agricultural land. [8] Figure 1. California Lemon-Bearing Acreage, from 1919. 1920 1925 1930 1935 1940 1945 1950 The Eureka is by far the most common variety of lemon produced in California. The 1944 acreage survey showed 88 per cent of the state's total lemons to be of this variety or its derivatives. The second variety of importance is the Lisbon, ac- counting for about 8 per cent of the total acreage. The Villa Franca variety amounts to about 2 per cent and a num- ber of minor varieties 2 per cent more. Thus, two varieties account for the large part of the production. Those two varie- Figure 2. California Lemon-Bearing Acreage, Percentage Distribution Among Major Counties, from 1919. 40 30 g 20 S l0 u 06 r 55 LOS ANGELES-^ ^•"^-VENTURA *^^ *«— £ ORANGE SAN DIEGO -^ "■*^* SAN BERNARDINO-^ \ = — * ;^«»i SANTA BARBARA^_ ~ i ^"" ^'" ^ riverside! . . . . I . . , 1 1 _L l_ i I 1 i i i i 1 i i i i 1 i i i . 1 1920 1925 1930 1935 1940 1945 1950 [9 ties — Eureka and Lisbon, and especially the former — have proved to be the most acceptable for the production of lemons for fresh shipment. Yields. Yields of lemons in California average about 200 packed boxes per bear- ing acre. In reviewing yields over the period since 1919-20, it appears that the average production per bearing acre fol- lowed an upward trend through 1935-36, and then increased at an accelerated rate for several years, reaching an all-time peak of 318 boxes per acre in 1940^11. Since then, the yield has tended to de- crease and in recent years has fluctuated around the level of the latter 1930's. The general trend in yield is summarized in the table below. The increasing yield noted during the first half of the period was due in large part to the increasing age of the existing acreage, with a larger proportion of the trees coming into full production. Improved management and cultural practices, however, also contrib- uted, as did above-average rainfall. Within the state of California, there exists a rather wide range in yields among the various producing areas. The table at top of page 11 shows the average yield of lemons for the past 10 years in Yields, California Lemons Period Yield per bearing acre 5-year averages 1924-29 packed boxes 152 1930-34 173 1935-39 209 1940-44* 238 Annual 1945-46 221 1946-47 207 1947-48 198 1948-49 153 1949-50 198 * 1940-41 omitted because of unusually high yields (318). each of the major lemon-producing coun- ties. The variation in yield among the lemon-producing counties appears to have been an important factor in influenc- ing the shift in the relative importance of each of the counties involved. Those two counties having the highest yields (Ven- tura and Santa Barbara) have made the greatest gain, both in actual acreage and in relative importance, and those coun- ties having the lowest yields (San Diego and Orange) have had the greatest re- duction, both in actual acreage and in relative importance. Relative yield, then, may serve as an index of relative profit- ability and its influence on plantings, re- movals and maintenance of acreage. Since the age distribution of lemon acreage affects the average yield, it is pertinent here to consider the age status of the acreage. An indication of what has occurred in lemon acreage age distribu- tion may be obtained by referring to the situation in 1950 as compared with 1940. The table at bottom of page 11 shows the state's lemon acreage, in both of those years, classified into five age groups. Re- view shows that in 1950, in contrast with a decade earlier, there were fewer very young trees, slightly fewer trees of 22 years of age or older, but three times as many trees in the 12 to 21 age group. The indications are that in the past several years some 10-12 per cent of the acreage was nonbearing, contrasted with 20 per cent nonbearing in 1940. Some- what less than 40 per cent of the trees were 22 years and older in both 1940 and 1950. But an important difference exists: In 1940, about 12 per cent of the trees were in the 12-21 age group and almost 25 per cent in the 7-11 age group. In 1950, however, almost 40 per cent were in the 12-21 age group, whereas only slightly more than 10 per cent were in the 7-11 age group. The apparent shift to definitely fewer young trees and a decrease in the number of old trees has some influence on yield, [10] Average Yields and Changes in Acreage, California Lemons, 1940-1949 County Average yield per acre Per cent of state lemon acreage 1940 1949 1 2 3 Ventura packed boxes 252 226 219 192 192 170 160 216 22.7 9.7 21.2 10.0 6.6 13.8 12.6 30.4 15.1 18.4 9.8 5.6 8.9 9.3 Santa Barbara Los Angeles San Bernardino Riverside Orange San Diego State average but perhaps of equal significance is the effect of the maintenance of standing acreage. Since lemon trees, under ap- propriate care and cultural practices, have a very long bearing life, the change in age distribution which has developed in recent years may have only a limited effect on average yields in the next few years. But with fewer very young trees, reflecting a heavy reduction in plantings in recent years, there is developing a situation where sufficient young stock may not be available to come into bear- ing and offset removals. It is believed that at least 10 to 12 per cent of total lemon acreage is required to be of non- bearing age in order to offset losses due to age and disease, and to maintain a constant acreage of bearing trees. 1950 nonbearing acreage was in the neigh- borhood of 11 per cent of total acreage. Without additional plantings to offset removals for various reasons in the next several years, lemon-bearing acreage may decrease. Production. Ninety-seven per cent of the lemons produced in the United States are grown in California. Production was California Lemon Acreage, by Age of Trees, 1 939 and 1 949 Year Age'group in years Total Less than 7 7-11 12-16 17-21 Over 22 1 2 3 4 5 6 1940 Acres Per cent 17,315 25 7,908 13 16,194 24 6,729 11 4,319 6 12,484 20 3,770 6 10,945 18 27,092 39 23,613 38 68,690 100 61,679 100 1950 Acres Per Cent [11 generally increasing during the period from the beginning of commercial lemon production in about 1875 until 1940. Since 1940, production has decreased. However, California production in 1949- 50 was still nearly three times the pro- duction of 1919-20. Production in 1949- 50 was 11,500,000 boxes, or about 28 lemons per year for every person in the United States. The changes in production have oc- curred in three rather distinct steps : Dur- ing the period 1919-20 through 1936-37, the trend was gradually upward. Acreage was being expanded and production steadily increased as these additional trees came into bearing. In 1936-37 ap- proximately 7,600,000 boxes were pro- duced as compared to 4,500,000 in 1919- 20. Beginning in 1937-38, production shot sharply upward and reached an all- time high of 17,236,000 boxes in 1940- 41, when an unusually high yield was experienced. Plantings of lemons had been heavy during the late 1920's, and as this new acreage suddenly came into bearing, production increased rapidly. Since 1940-41, the trend has been down- ward, a low of 9,900,000 boxes being reached in 1948-49. During 1948-49 and 1949-50, unseasonably cold weather acted to reduce the expected volume of production. California produces nearly half of the world's lemons; another quarter to a third are produced in Italy; and the re- mainder is distributed among a number of minor producing countries. World pro- duction in 1949-50 was estimated to be 23,300,000 packed boxes of which Cali- fornia produced 11,500,000 boxes; Italy, 6,100,000 boxes; and all other countries, 5,700,000 boxes. In addition to the United States and Italy, other countries producing signifi- cant quantities of lemons are Argentina, Spain, Greece, Australia, Syria, Lebanon, and Algeria. Brazil was formerly in- cluded in the group of minor lemon- producing countries, but in recent years acreage has been extremely small. Figure 3, below, shows the trend in lemon production for the world and the major producing areas through the years since 1919-20. As shown in figure 3, world production was generally increas- 40 Figure 3. World Lemon Production, by Major Producing Countries, from 1919-20. WORLD- [12] Figure 4. California Lemons: Production, Acreage, and Yield, from 1919-20. 200 160 120 80 40 PRODUCTION — BEARING 0l_L J L 1919 •20 1924 -25 1929 -30 1934 -35 1939 -40 1944 -45 1949 -50 ing from 1919-20 to 1940-41, to a peak of 32,942,000 packed boxes. Since that time, some reduction has taken place. Italian lemon production increased to a peak of 18,596,000 boxes in 1932-33 and then dropped sharply, for the next several years ; since 1938-39, the trend has been downward. California production in- creased steadily up to 1937-38, rose sharply to a peak in 1940^11, and has declined somewhat since that year. Pro- duction in the minor lemon-growing countries has increased rather steadily over the entire period since 1919-20, from a volume of about 700,000 packed boxes in that year to a peak of 6,900,000 packed boxes in 1947-48. The aggregate production of these minor areas is now nearly equal in importance to the Italian lemon crop. The relative importance of the areas of lemon production is undergoing a change. The positions of Italy and Cali- fornia have been reversed when com- pared to the period just after World War I, and the aggregate importance of the minor areas of production has been steadily increasing. In the period just after World War I, Italy was producing about 70 per cent of the world's lemons, California about 25 per cent, and the other countries the remaining 5 per cent. The shift in positions has occurred rather gradually over the period since 1919. In California production, shifts have occurred among the 7-county group of major producers. Ventura is outstanding in its advance, in contrast with the other counties. Santa Barbara reflects only a slightly rising trend, although its pro- portion has decreased during the past several years. The remaining counties show either a stable or slightly declining trend in proportionate production. Comparison of Acreage, Yield, and Production. With the preceding summary highlights of trends in acreage, yield and production, it is time to con- sider their interrelationships, with a view toward explaining the extent to which production changes are accounted for by acreage changes, in contrast with varia- tions in yield. Figure 4, above, shows, for the period [13] starting in 1919, annual index numbers for production, yield, and acreage of California lemons. The comparative trends of the several series indicate how lemon production has been influenced by acreage and yields, respectively. Total acreage, after rising for the first several years, leveled off for a short period and then declined between 1925 and 1927. Thereafter, a gradual increase developed and continued through 1939. For the next 10 years, total acreage remained remark- ably stable until 1949-50, when a reduc- tion occurred.* In contrast, bearing acre- age which enters into the determination of production, after rising for several years, leveled off and remained stable for about 15 years until 1936; the dip in total acreage which began in 1925 and then recovered did not occur in the bear- ing acreage. After 1936, bearing acres began an upward trend that continued into the 1940's; thereafter, the trend in bearing acreage did not increase. Hence, substantial plantings occurred during the middle 1920's; during the latter half of the 1940's, plantings were not sufficient to maintain total acreage. Average yield per bearing acre over the period since 1919-20 followed an up- ward trend during the first two decades. After the peak, which occurred in 1940- 41, the yield receded but remained above the levels which existed prior to the middle 1930's. Year-to-year swings have occurred in the yield, and such swings are sharply reflected in the annual changes in production. The long-time trend in production reflects the corre- sponding trend in bearing acreage; the year-to-year changes in production reflect the annual changes in yield. It is clear, from the above, and from figure 4, that the production growth from 1919 through the middle of the 1930's was accounted for by the upward trend in yield during that period. During the latter half of the 1930's, the production increase reflected both improved yields and more acres in bearing. From 1940 through 1946, however, the increased bearing acreage was generally more than offset by a declining trend in yields ; and after 1946, both the bearing acreage and yield tended to decline, resulting in the production decrease. Picking and Storage of Lemons. Thus far, discussion has been concerned primarily with lemon production and some of the basic factors underlying it. But production, as such, is only one phase of the producer-consumer pipe line. The lemons must be harvested. In addition, practices include storage before ship- ment. It is necessary, therefore, to review the situation in lemon picking and stor- age. Lemons are harvested throughout the entire year. The harvesting season starts in November and gets fully under way in December. Picking then increases rapidly to a peak in April. The monthly volume picked then decreases rapidly until about August, when it levels off and continues low through September and October. Rate of picking varies seasonally among the four major lemon-producing districts within California. These four districts (Ventura-Santa Barbara, Los Angeles, San Diego, and northern Cali- fornia) may be considered separately since conditions of production are some- what different in each. Picking in the Ventura-Santa Barbara and Los Angeles areas follows in general the same seasonal pattern, both areas reaching a peak in their picking in April (fig. 5, p. 15) . However, the Los Angeles area tends to pick a greater portion of its fruit during the winter months (Novem- ber-April) than does Ventura-Santa Bar- bara. The Los Angeles area normally picks about two-thirds of its fruit during these winter months, while Ventura picks * In 1949-50, a lemon tree count was made, and served as the basis for suggesting the reduced acreage standing in that year. The acreage probably decreased over a period of years rather than dropping suddenly as shown in the published acreage figures, but no revisions were made for the years prior to 1949-50. [14] Figure 5. Seasonal Variation in Lemon Picking, by Producing Districts in California. 30 !]20 < 4 i\ i '.^-NORTHERN CALIFORNIA / I / I — / l- 10 SAN DIEGO LOS ANGELES VENTURA- SANTA BARBARA but half. Picking in the Los Angeles area decreases rapidly during May, and from June through October only about 15 per cent of the year's crop is harvested. Ventura-Santa Barbara continues pick- ing at a heavier rate and harvests about 35 per cent of its season's total from June through October. San Diego follows a middle path, har- vesting almost as much of its crop as early as Los Angeles, but continuing picking on a relatively stronger basis throughout the remainder of the year. Picking in the northern California area is done primarily during the early season. With the opening of the season in November, picking rapidly increases to a peak in January and then declines in a like manner through March. Very little fruit is harvested through the summer months until a limited preseason picking operation opens some time in September. The relative picking rates of each of the lemon producing areas throughout the year are shown in the table below. The Los Angeles district picks the maj or share of the total during the winter months. During the November-April period, the Los Angeles district picks half of the state total; the Ventura-Santa Barbara district about 38 per cent; San Percentage of Total California Lemon Picks from Each Producing District, by Months, Average of Period 1940-41 to 1949-50 Month Los Angeles Ventura- Santa Barbara San Diego Northern California Percentage of state total Total state percentage of year's total November December. January. . . February. . March. . . . April May June July August September October. . . Year 54.1 53.0 50.8 49.3 46.6 47.7 42.5 27.2 25.7 19.2 18.7 36.7 41.9 35.4 32.8 35.1 35.6 42.2 44.3 51.1 65.1 66.8 74.4 74.1 55.2 48.6 7.1 9.8 10.4 12.7 10.4 8.0 6.4 7.1 7.5 6.4 7.2 7.5 8.5 3.4 4.4 3.7 2.4 0.8 0.6 1.0 4.2 4.5 8.7 8.4 14.2 18.7 14.6 9.9 6.4 4.0 3.0 3.4 100.0 [15] Diego about 10 per cent; and northern California about 2 per cent. As the winter progresses, picking in the Ventura-Santa Barbara district increases, until from May through October this area accounts for nearly 65 per cent of the total pick. In August nearly three-fourths of the total pick comes from the Ventura-Santa Bar- bara district. From May through October, the Los Angeles district picks 28 per cent of the total, and San Diego the remaining 7 per cent. Picking in the northern Cali- fornia district does not get under way until some time in October; the volume picked is less than 1 per cent of the state total during the summer period. Although the time and rate of picking are determined in large part by natural factors which affect the condition of the fruit, growers have considerable latitude Picking may be deferred to some exten depending on market and storage condi tions. To the extent that picking is de ferred, the lemons are stored on the trees Hence, the picking operations are not in dependent of storage. Half of the California lemon crop is harvested during the three months, March, April, and May. The period of heaviest shipment for fresh use and con- sumption, however, occurs in May, June, and July. This necessitates the storage of a large amount of fruit. In addition, the seasonal pattern of consumption is more uniform than the seasonal pattern of picking. This further induces storage. Storage is also required to hold lemons during the "curing" process. Adequate storage benefits both producers and con- sumers by making possible partial stabi- lization of supplies and improvement of the quality of the lemons marketed. The quality improvement comes about be- cause considerably more juice can be ob- tained from a cured lemon than from one just picked. The volume of lemons in storage as of November 1 fluctuated widely over the period 1919-50, varying from a low of 204,000 boxes in 1921 to a high of 1,285,000 boxes in 1940. Prior to World War II, there appeared to be a tendency toward a three-to-five year cycle in vol- ume in storage. As may be expected, the volume of lemons held in storage is influenced by market prices. There is a noticeable negative relationship between the winter- summer lemon price ratio and volume in storage. When summer lemon prices are high relative to prices of the previous winter, November 1 storage is relatively small and vice versa. There is also a general tendency for storage to be higher in years of extremely high production and lower in years of extremely low pro- duction. However, only the extremes in production influence level of storage. Seasonal volume of lemons in storage is directly related to seasonal volume of picking and shipments (fig. 6, below). The bulk of the year's crop is picked dur- ing the spring months while heaviest volume of shipments occurs during the summer. At the opening of the lemon marketing season in November, storage is at a seasonal low. Volume in storage Figure 6. Seasonal Variation in California Lemon Operations; Picks, Storage, Shipments to Fresh Market and Processing. 300 200 100 • . > t <- STORAGE PICKS NDJFMAMJ A S [16] continues generally low through Decem- ber. Beginning late in December, the volume of picking increases rapidly while shipments continue at a relatively low level. Consequently, the volume in storage begins to increase rapidly. This situation continues through April. In April, picking reaches its peak, and while shipments are increasing, their rate of increase is less than the rate of increase in volume picked. In the latter part of April, shipments begin to increase rap- idly while volume of picking declines. Storage still increases, but the rate of in- crease is about half that of the previous month. The peak in storage is reached in May. For the rest of the season, ship- ments continue at a greater relative rate than pickings, and relative volume in storage decreases. Hence, storage of lemons, in addition to "curing" them to improve their quality, serves as a valve connecting and regulating the flow from picking to packing and shipping for some uses. Costs of Production and Harvest- ing. All fruit harvested, whether it moves into fresh fruit or processing channels, incurs certain common costs. The sepa- ration of the fruit into fresh and proc- essed channels generally takes place at the packing house and all fruit delivered Average Costs of Producing and Harvesting California Lemons, Average by Periods, 1923-1948 and 1949 Cost items Fertilizer Water Pest control Frost protection Cultivating and irrigating . Pruning and tree care Other materials Other labor General expense f Taxes Insurance Maintenance and repairs . . Depreciation, buildings and equipment Total cost per acre t Cultural cost Picking Hauling Cost at packing house door . 49.16 31.47 26.78 12.87 63.64 16.82 1.62 3.01 22.81 21.55 1.32 8.42 17.92 277.39 $1.63 .40 .06 $2.09 1923-1930 1931-1939 1940-1943 1944-1948 Average cost per acre $ 31.01 29.68 33.23 14.77 > 43.78 14.38 .40 4.34 22.38 19.83 1.74 6.76 16.16 $ 238.46 $ 26.74 20.22 31.98 8.22 32.63 16.93 3.19 9.01 17.52 18.59 1.55 4.97 16.37 $ 207.92 $ 55.45 32.47 82.50 32.40 51.91 31.43 5.33 26.54 22.73 27.68 4.08 8.92 16.40 $ 322.07 Average cost per packed box $1.27 .32 .05 $1.64 $1.01 .36 .05 $1.42 $1.22 .59 .07 $1.88 1949 $ 45.31 35.76 69.60 104.66 56.62 33.57 6.61 24.34 38.98 34.01 4.00 14.57 16.98 $ 428.40 $1.94 .68 .07 $2.69 * 1937 omitted from average (bad freeze). t Includes administrative and superintendence expenses. | The average cost shown for each individual cultural operation represents the cost reported only by growers who performed that particular operation, and does not represent the average per-acre cost for all growers, including those who did not perform that particular operation. Source of data: California Citrus League. [17 to the packing house door has already accumulated costs of production, pick- ing, and hauling from the grove to the packing house. The table on page 17 shows estimated changes in these costs which have oc- curred since 1923. During that period the national economy has moved from rela- tive prosperity and peace during the late 1920's, through the depression of the 1930's, and into the wartime inflation of the latter 1940's. The estimated average costs, following the general price level, have in part reflected the cyclical swings in the economy. Total cultural costs per acre were relatively high during the period 1923-30, then generally declined through the 1930's, and reached a low in 1941. With the pressure of World War II, the costs began to rise and have increased rapidly since 1944. There has been some variation in the relative changes occurring in the various items of cultural costs over this period. Certain items have increased more than others. During the period 1923-30, cost of pest control averaged $26.78 per acre. Over the five years 1944r-48, it averaged $82.50. Frost protection has become a more important item than formerly. The years from 1947 through 1950 had cold winters; more heating in the groves was necessary, and the cost of oil was higher. Pruning and tree care have also become a larger cost item, the 1944^48 average cost being $31.43 as compared to $16.82 during the period 1923-30. Higher labor costs and the necessity for pruning caused by freeze damage combined to raise this item. The greatest relative in- crease has been in "other labor." Cost of "other labor" in 1923-30 averaged $3.01 per acre. During 1944^48, it averaged $26.54 per acre. Most of this increase has resulted from the advance in wages of agricultural labor during World War II. Smaller increases have occurred in taxes, materials, and insurance. Several items have not increased as much as might have been expected. Fer- tilizer costs were higher, but the increase was only about 10 per cent. Water costs Figure 7. Cultural Costs for Producing Lemons in California, from 1924—25. 2 2 1 / § t t $ PER ACRE ^v^*"* * / V^/N/^ \^ ^\ $ PER PACKED BOX -^ / — i — 1 — i — i — i — i — 1 — i — i — i_i 1 i i i i I i i i i I i i i i 1 500 400 300 8 < 200 | 100 1924 1929 1934 1939 1944 1949 -25 -30 -35 -40 -45 -50 [18] per acre remained almost steady. Culti- vating and irrigating costs actually de- creased. General expense, including administration and superintendence, re- mained steady. Maintenance and repairs remained steady. Depreciation allowed decreased slightly. Harvesting costs increased, mostly re- flected in the picking operation. Higher labor rates increased cost of picking from $.40 per packed box from 1923-30 to $.68 per packed box during the 1944-49 period. The estimated average costs noted above are on a "per-acre" basis. As ex- plained earlier, yields per bearing acre have changed over the years. Hence, cost estimates on a "per packed box" basis are appropriate for consideration. Such estimates are shown in figure 7, page 18. The upward trend in yield through 1940 helped to reduce the costs on a per-box basis, but the decreasing trend in yield since 1940 has had an opposite effect. The costs referred to are averages, which reflect the operations of a large group of producers. They cannot claim to be precise nor representative of all producing districts. Some growers un- doubtedly have experienced lower costs, while other producers have been faced with higher. Yet the year-to-year changes may be considered as indicative of the general cost situation in the lemon pro- ducing districts. Viewed in that light, rather than as accurate measures, they are suggestive and helpful. Utilization. Through the years, the larger part of the lemon crop has been shipped for fresh use. The lemon process- ing industry has operated primarily as a by-product operation, using that volume of fruit which could not find a profitable market in fresh channels of trade. In recent years new developments, such as frozen lemonade concentrate, appear to be bringing about a change of the rela- tive importance of the market for proc- essed lemon products. The increased rela- tive importance of the lemon processing industry has resulted more from an in- crease in the dollar value of the processed products rather than from an increase in the total volume of lemons processed. The change reflects a shift toward in- creased production of the more valuable lemon products, such as the frozen con- centrates, and a decreased relative pro- duction of low-value products such as citric acid. Figure 8, page 20, shows the changes in the sales of California lemons, both fresh and processed, over the period since 1919. As indicated, the trend in volume of lemons moving into fresh consumption was generally upward, reaching a peak in 1942-43. In 1940-41, processed lemons reached their peak. During the past five years, the sales volume of both fresh and processed fruit has tended to follow a downward trend. A significant relationship evident in figure 8 is the difference in the amount of year-to-year variation in sales of fresh lemons as compared to variation in sales of lemons for processing. The volume of fruit moving into processing outlets varies much more from year to year than does that volume of fruit going to fresh sales. During the period 1919-20 through 1949-50, the average change in fresh sales of lemons from one year to the next was but 11 per cent; the average change in the volume of lemons sold for process- ing was 130 per cent. Another significant relationship con- cerns the percentage of the total lemon crop that was processed and the actual volume of lemons moving into processed channels. The percentage processed changes very much like the actual volume processed. This occurs because the fresh sales are relatively uniform from year to year, and the excess production — that over the fresh sales — moves almost en- tirely into processed channels. The volume of lemons processed tends also to vary with the size of the crop ; the larger the crop, the greater the percent- age of the total crop processed. For a [19] Figure 8. Utilization of California Lemons; Fresh and Processed, from 1919-20. 10 x 26 FRESH SALES ~\f\ V l\ A #Vr \y process 1 I 1 1 SALES ->| ; /I l\ S I / 1 1 v.. i II /' III 1 III 1 1 / 1 A *\ / \ / « A/ \/V -' i i W i i i i i i i i i i i i i 1 * / / / III 1 1 1 1 . 1 4 - r — 1919 1924 1929 1934 1939 1944 1949 -20 -25 -30 -35 -40 -45 -50 crop within the range of 9 to 14 million boxes, an increase in total crop of 1 million boxes has on the average been accompanied by an increase of about 3 to 5 per cent in the proportion of the total crop moved into processing chan- nels. The distribution of the lemon crop be- tween fresh and processed uses is a prob- lem of major significance to the lemon industry. Because of the nature of the demand for fresh lemons (which will be discussed in the next section of this re- port), with given purchasing power and income, there is a limit beyond which in- creased fresh sales will not result in greater gross money returns. Hence, there is the question of how the "excess" supply can be utilized. In other terms, because the lemon crop can be utilized and marketed in alternative forms, a sig- nificant marketing problem is related to the distribution of the lemon crop among alternative utilizations. The third major section of this report is concerned with such questions. But additional back- ground must be provided here. Fresh Shipments. Volume of fresh shipments of California lemons increased steadily from the earliest days of the in- dustry until 1942-43. In 1907-08, 1.6 million boxes of California lemons were shipped for fresh sale. In 1942-43, 9.7 million boxes were moved. Fresh ship- ments continued at a high level during World War II, but decreased after the end of the war. In 1946-47, 9.4 million boxes were shipped; in 1947-48, 8.5 mil- lion; 1948-49, 7.6 million; and in 1949- 50, 7.4 million. As an average over the years, almost 95 per cent of the fresh lemon shipments moved into domestic consumption, only 5 per cent being exported. Of the lemons exported, about 70 per cent went to Canada. During World War II, however, many of the foreign markets were no longer accessible, and during the period 1940-46, about 95 per cent of the lemons exported were sent to Canada. The pro- portion to Canada has declined since the war years, and in 1949-50 dropped sharply to about half of total exports of fresh lemons. [20 Seasonal Variation in Fresh Lemon Shipments. There is a pro- nounced and regular seasonal pattern in the volume of fresh lemon shipments (see fig. 6, page 16). At the opening of the marketing year in November, shipments are at a seasonal low. Volume builds up steadily until May, increases rapidly to a peak in June, remains high during July, and then drops off rapidly during the remainder of the year. There is some difference in the timing of shipments from the various producing areas within the state (fig. 9, below) . The northern California area ships practically all of its fruit during the six months, November through April. Shipments in- crease to a peak in January and then decline rapidly. Very little fruit is shipped from this district during the summer months, but shipments are resumed on a small scale late in September or early in October. The Los Angeles and San Diego dis- tricts both have the same general seasonal pattern of shipments. Movement of fresh fruit increases gradually from November Figure 9. Seasonal Variation in California Fresh Lemon Shipments, by Producing Districts. 300 200 100 A i i 1 \jF~ NORTHERN CALIFORNIA / \ » \ 1 \ 1 \ VENTURA- f \ SANTA BARBARA-} / san D|EG0 v'Cy/ VV f~^ """ ' \ LOS ANGELES -^^^ \ i i i i i I V I I l .w!__i_ Figure 10. Percentage Distribution, by Months, of California Shipments of Fresh Lemons from Producing Districts. 100 80 - _60 z IXJ U of LLI a. 40 20 imBGa ventura -santa Barbara *m£M NOJFMAMJJASO NDJFMAMJJASO to April and then at a faster rate, reach- ing a peak in June. Volume of shipments then declines steadily during the remain- der of the season. Shipments from the Ventura-Santa Barbara district follow a pattern similar to that of Los Angeles and San Diego, but the movement tends to be more con- centrated in the latter half of the season. During the period June through October, the Ventura-Santa Barbara district moves 58 per cent of its fruit, compared to 45 per cent moved from the Los Angeles and San Diego districts. Figure 10, above, shows the relative importance of fresh shipments originat- ing in each district throughout the year. Shipments from the northern California district are small and reach their greatest importance in January when 5 per cent of the state total is shipped from there. The San Diego district ships about 8 per cent of the state's total. Volume from this district is greatest during January, February, and March, when slightly more [21] i of the state's total for comes from the area, ngeles district moves about ent of the state's fresh lemons. : furnishes the most fruit during the months of December through April. In December, almost 52 per cent of the state's total fresh shipments originate in the Los Angeles area. During January, February, March, and April, this area continues to dominate, but its importance relative to the Ventura-Santa Barbara area diminishes steadily; in May, Ven- tura-Santa Barbara becomes the most im- portant shipping area. During the last two months of the season, about two-thirds of the state's total fresh shipments come from that district Reference to figures 5 and 9, pages 15 and 21, indicates that the Ventura-Santa Barbara, Los Angeles, and San Diego dis- tricts have somewhat similar seasonal patterns of picking and fresh shipments, and a large degree of shipping-period overlapping exists. Interdistrict competi- tion prevails, therefore, in the packing house sales of fresh lemons. Imports of Lemons and Lemon Products. In contrast to the situation existing for oranges and grapefruit, im- ports of foreign lemons are an important factor influencing the domestic lemon market. For the past 20 years, a relatively high United States tariff, together with European wars, have combined to limit effectively the quantity of lemons which were imported by the United States. How- ever, in 1950, the United States tariff on lemons for fresh consumption was cut in half. At the same time, political, agri- cultural, and economic conditions in for- eign lemon producing areas — particularly Italy — were approaching a stage that would permit these areas to increase ap- preciably the volume of lemons which would be available for export. The importance of securing American dollar exchange makes the American market particularly attractive to foreign competition. The amount of competition from foreign lemons is related to pre- vailing tariff duties. These duties, since 1897, have been as shown in the table below. United States Import Duty on Fresh Lemons Tariff act Duty in cents per pound 1897 1.0 1909 1.5 1913 0.5* 1922 2.0 1930 2.5 1950 1.25f * The actual rate was 35 cents per box which was approximately equivalent to 0.5 cents per pound. f The United States government reserves the right to increase the rate to 2.5 cents per pound on lemons which are entered in any calendar year in excess of an aggregate quantity by weight equal to 5 per cent of the production of lemons in the United States during the preceding calendar year. In the early years of the United States lemon industry, production was relatively limited. Imports helped to meet the do- mestic demand for this fruit, and growers generally were not particularly concerned with the impact of lemon imports. During this early period, prior to World War I, the fresh lemon markets west of the Mis- sissippi River were supplied chiefly with California lemons; the region north of the Ohio River and east of the Mississippi was a market in which foreign and do- mestic lemons were highly competitive; and the South Central and Atlantic Sea- board states were supplied in significant part by foreign lemons. World War I materially reduced the importation of foreign lemons, although a relatively sub- stantial volume continued to come into the country. During the war period, the increased California production found profitable markets in the East and in the South Atlantic states. With the re-estab- lishment of more normal international trading conditions after World War I, lemon imports into this country did not regain their earlier volume. 22 Foreign production conditions, the re- covery of the European markets, and increased tariff for fresh lemon importa- tions, as well as the pressure of domestic production, combined to make a situation wherein foreign exports of lemons to the United States tended to decline. In 1930, the tariff was raised again and its effect, along with other conditions, resulted in small lemon imports during the 1930's. This situation continued until 1950 when the tariff reduction of 50 per cent and the need for dollar exchange encouraged increased lemon exports from Italy. The current situation with respect to the importation of fresh lemons differs from that prevailing at the end of World War I or in the following decade. Supply conditions now are quite different. Do- mestic production in 1950 totaled nearly 12 million boxes of which the domestic market took about 8 million boxes as fresh fruit. The importation of lemons on a scale comparable to that of the 1920's — a million to a million and a half boxes per year — would result in either much greater supply pressure on the summer lemon market, or a reallocation between summer lemons for fresh market and for processing. An increment of a million boxes to the fresh lemon summer market, with no reallocation of domestic summer lemon supply to processing, would de- crease returns to a level which in many cases would be insufficient to cover har- vesting, handling, and transportation costs. Imports of fresh lemons into the United States were generally decreasing over the 40-year period ending in 1945-46. Since that time the trend has been slightly up- ward; the 1949-50 and 1950-51 seasons will be years of heaviest imports since 1930. Several factors may be considered as contributing to the general decline in the imports of fresh lemons until the past year or two. A major factor was the great increase in United States lemon produc- tion which occurred during the 1920's and 1930's. In this period, the United States changed from a deficit area of lemon production to one which harvested annually more than sufficient lemons to meet domestic needs. As a result, in- creased competition of California lemons, particularly in the Atlantic Seaboard market, reduced the demand for the im- ported fruit. A second factor was the changes in the United States tariff duty on fresh lemons. As seen in the table on page 22, the duty on this fruit, with the excep- tion of the period 1913-22, was becoming greater with each new tariff act. This dis- couraged importation. The third factor which reduced the importation of lemons was the prevalence of economic and po- litical disturbances during the period considered. Included were two world wars, a major business depression, and a violent change in the government of Italy, from which country come practi- cally all of our fresh lemon imports. The relatively marked upsurge in fresh lemon imports since 1948-1949 was accounted for by several factors. One was the 50 per cent reduction of the import duty made effective in 1950. Another was the demand for dollar exchange in Italy, which encouraged the channeling of Ital- ian lemon production into this country in contrast with European markets. A third factor of some significance was the domestic price level reflecting an econ- omy subjected to inflationary pressures. In foreign exchange terms, summer lemon prices on the Eastern Seaboard have been attractive to Italian lemon exporters. These three factors, in combination, have resulted in a situation where lemon im- ports are now again beginning to ap- proach a level where they are of concern to domestic producers and shippers of lemons. Although fresh lemon importations occur throughout the year, the large bulk in earlier years came in during the sum- mer months. The period of most heavy imports in the past was in May, June, and July. In fact, almost 60 per cent of total [23] annual imports were unloaded during those three months. Since the end of the war, however, most of the imports have occurred during the winter months. Aside from the seasonal timing of imports, the domestic market for fresh lemons is again faced with increased supplies of imported fresh lemons and lemon juice as well as the developing market for canned lemon juice and frozen lemonade concentrate. The United States domestic market re- ceives imports of various processed lemon products. They include lemon juice and lemon oil as well as some quantities of citric acid and lemon peel (crude and candied). Most of the imported lemon oil — over 90 per cent — originates in Italy. The crude and candied lemon peel also comes mainly from Italy, although some was obtained from Spain during the war years. The importations of processed lemon products have generally followed a de- clining trend during the past several dec- ades. In the past several years, imports of lemon oil have reflected a tendency to- ward recovery. The earlier levels have not yet been regained, however. The factors underlying the imports of processed lemon products are largely the same as those of fresh lemon imports mentioned earlier.* The year-to-year var- iation tends to be more pronounced in the processed products than in the fresh lemon imports. This is characteristic es- pecially of citric acid, and to a consider- able extent for lemon peel. With the apparent restoration of lemon production in Italy and other Mediter- ranean countries, their strong desire for dollar exchange and purchasing power in dollars, as well as the recent reduction in the import tariff rate, increased exports of lemons and lemon products to the United States market are taking place. From the views of the growers, shippers and processors in this country, however, potential developments are even more sig- nificant than the present status. The im- portation of an additional half-million boxes of lemons, for example, and their impact on the Eastern Seaboard markets (such as New York, Boston, and Balti- more) would not only adversely affect the prices in those cities but in others as well, because of the intermarket price rela- tions. The importation of 734,000 gallons of concentrated lemon juice (equivalent to 612 carloads of fresh lemons) in 1950 caused much concern in the domestic lemon industry. In the eyes of California lemon grow- ers, shippers, and processors, the prospect of additional lemon and lemon product imports is considered as a real threat to their markets and income. In the eyes of consumers, the prospect of such imports is considered as contributing toward lower prices. From the over-all national view, consideration must be given to the relative interests of all groups in the economy. Important to consumers as well as to the national interests, too, is the factor of stability in the flow of supplies to the consuming markets. Highly spo- radic and fluctuating imports, from year to year, do not contribute to stability in supply. To that extent, highly variable imports, as have occurred in fresh lemons and processed lemon products, lend insta- bility to the lemon markets. Such insta- bility is conducive to uncertainties in both supply and demand as well as in price, and accordingly may adversely af- fect the interests of consumers as well as producers. Although the situation is not similar in all respects to dumping, its ef- fects are largely the same as those which result from sporadic and short-run dump- ing practices. * The Tariff Act of 1950 reduced the import duties on lemon products as well as fresh lemons. The changes from the 1930 to 1950 Acts on several lemon products are as follows : lemon oil, from 25 per cent ad val. to 17% per cent ad val.; lemon juice, from 70 cents per gallon to 35 cents per gallon (on the unconcentrated natural juice content) ; crude lemon peel, from 2 cents per pound to 1 cent per pound; candied lemon peel, from 8 cents per pound to 6 cents per pound. [24] Figure 1 1. Prices of California Lemons Shipped for Fresh Use, F.O.B. and On-Tree, from 1919-20. 8 - A - ^>\ s_ 8 LU ex. 3 s 1 1 | 'N/- g> i^ 1 1 - 0) CO t _ IO < / — IO Z o LU a: < \ _ en o LU Q. LU 1- / / / - o oc «■ ^ - O — >- ^^^^^^ i — ^ 1 ^^* ^^^ _l _ E >- I 0) —1 1 ^_ ^^^^^^* 1— \^y -c Q- ~~ — o z i^r — o »— Q- o 3 — ro en O — 2 * CO ^ ^ ■^^^^ & 00 J z ^^^^ s Relc . U. — IO CM < LU ^-- ^ J 8 en 2 * 1 ^ *^i ~ 1 ^^0^^ u i 1 i jzr Q i . jT^T 1 ." D c >. *X c >. *>. Q *>. K 1 m G> ^ d Bl r- h- -o U > tO tf > «■ «• IO a o 0) S3> oa Nomiw d ('d3S-AVW) 3ciniVcl3dW31 a! CO O ll! UJ 3 ) E O ^^1 1— ( E < IO 3 v - IO 3 Q£ 52 (J X _ ro tO LU r^ en en a $ K o2 O d) __ < § S o z s - o O) O ro o s ro iZ CO < 2 z ( en LU co \ CO 1 . to 3 1 IO < CM . V CM en U \ en , ^ci 1 ^~ < 1 _1_ V c h- t o io «■ K> D O O O O O < D l o o to o io o to r t* r> CM J — xoa y3d savnoa 00l=6e-9C6L 'X3QNI noted here that the index reflects money income and thus reflects the postwar in- flationary level of prices in general. If the index is adjusted so as to reflect real income, or what the money income could purchase in terms of goods and services, a postwar rise is evident but to a much less degree than in money income. The fourth variable included in the analysis is an index of temperature in the summer lemon marketing period. The index is constructed from monthly mean maximum temperatures, May through September, in some 22 cities, with the respective temperature values weighted by 1931-38 average unloads of lemons in those cities for corresponding months. The values for the index since 1922 are shown in panel D of figure 13. The wide variations from year to year are evident. Also the existence of an upward trend in temperature may be noted during the period under review, with the trend rising somewhat sharply in the first half of the period but only very slightly during the latter half. It is now time to review the relation between price changes and the other vari- ables in the analysis. That may be ap- proached by consideration of an equation which expresses the price as a function of the supply, income, temperature and "time" which is viewed as a proxy for those influences which have changed smoothly and persistently over time. Such an equation not only serves as a basis for explaining in a statistical sense the be- havior of the prices, but may also serve as a basis for drawing inferences regard- ing the demand characteristics for sum- mer lemons. The statistical equation developed for summer lemons* may be interpreted as describing the following average rela- tions prevalent during the period ana- lyzed : A change of 100,000 boxes in the supply of summer lemons, with other factors held constant, on the average was associated with an f.o.b. price change in the opposite direction of about 11.5 cents per box. This relation is shown in panel A of figure 14, page 33. A change of 10 points in the index of nonagricultural income, with other fac- tors held constant, on the average was associated with an f.o.b. price change in the same direction of about 32 cents per box. This relation is shown in panel B of figure 14. A change of 1 point in the summer temperature index, with other factors held constant, on the average was as- sociated with an f.o.b. price change in the same direction of about 31 cents per box. This relation is shown in panel C of figure 14. The above average relations are shown graphically in figure 14, panels A, B, and C. In panel D of figure 14 is shown the estimated trend in the demand for sum- mer lemons as it has shifted during the years. The points plotted about the net relation lines in panels A, B, C, and D of figure 14 are the differences between the actual prices and those estimated by the statistical equation for the respective years. The evidence suggests a tendency * The following multiple regression equation for summer lemons was fitted to the data for the period beginning with 1922, but omitting the war years from 1942 through 1946: X l8 = -19.3605 - 0.1148 X 2 s + 0.0323 X 3 s + 0.3103 X 4 s - 0.0994T - 0.0085T 2 (4.338) (6.668) (3.935) (2.510) (2.419) R = 0.915; n = 23; and the figures in parentheses are t-ratios. Equation was fitted to data in table 2, page 70. Also see table 8, page 76. Xis = F.o.b. price of summer lemons for fresh consumption, in dollars per box. X 2 s = United States supply of summer lemons, in units of 100,000 boxes. X 3 s = United States nonagricultural income payments, May-October (1935-39 = 100) . X 4 s = Average maximum monthly temperature, May-September, in degrees Fahrenheit. T = Time, with origin at 1935. [32] a. "* Os •~~ CN CS o> r— «. E a> _c t- O *— -a 9) •*- o m O) o < a c o iA o (O c 4) Q) * 0) CQ C o 0) a: o u 'JZ <\l o ■1- X (•> 00 c o -C i o IO u ** <1) E E a> 3 it - « xoa ^3d savnoa - x x CO IO 5T IO xo9 y3d Sdvnoa - f> 1 1 _ *".« \ — & — LU ^ U_ 1 1939 -40 EC. - - ~~ Q _ Z - 1934 -35 RE 1 ^J^ 58 - z> i— ~" < ^c_ - 1929 -30 MPER • - LU \- _ as d - ^^^ 1 1 1 ^ 1 - 5*> 8§ - <* g>»; 00L = Z£-[£6l 'X3QNI s (O io ^ io xoa d3d savnoa "1 r **s < 5s So 2 i $io $2 ^ o o o O O o o IO o IO o IO o IO to IO CM CM — — 00l=6C-9C6L 'X3QNI O uj 10 O u o 7 o "■" _j II < On OL CO 3 1 1— iO H- CO o-> On ir> CM£ ^, CO o ^-^ o < rv + 7 a. O < o z 1 0> > 8= o z IO II *•■— * » K- X X Q (0 xo9 H3d savnoa i I * / • — • • y '• X •/ 0> csj 6 • • / / • - o A / • — a> / # - X • / < i 1 CD IO IO CM — to LU X oO O O o to o OJ to 2E a. _ X Oto CM — * ,' —" ^-COMPUTED "OPTIMUM" J I L J L J ! L 1920 1924 1929 1934 1939 1944 1949 -21 -25 -30 -35 -40 -45 -50 [50] vantage, the statistical demand equations developed in Section II. There, we con- sidered equations expressing the f.o.b. prices of winter and summer lemons, re- spectively, as functions of specified vari- ables including the quantity of lemons, income, temperature and "time trend." With the income, temperature and time trend values given for each of the years, we may derive the statistically estimated net relation between the price and quan- tity prevailing in the specified years, and thus have approximations to the fresh lemon demand situation in the respective years. Such was done for winter and sum- mer lemons, respectively. An indication of the answer to the first question may be obtained by using the annual equations referred to in the pre- ceding paragraph and deriving the quan- tity associated with maximum gross money returns at the f.o.b. level.* An indication to the second question may be obtained by noting differences between the actual quantities and the derived quantities associated with maximum re- turns. In figure 21, page 50, are shown, for winter lemons, the actual quantities and the corresponding derived quantities which maximize gross money returns for the years beginning with 1921-22. f Sim- ilar results for summer lemons are shown in figure 22, on page 52. Figure 21 suggests that in the period considered, except for three of the years, the gross revenue-maximizing quantities of winter lemons are less than correspond- ing actual quantities. This result is in line with the price-flexibility characteristics noted, for the various years, in Section II. In other terms, for each of the years except three, larger money gross returns from winter fresh shipments could have been obtained by shipping a smaller quantity than was actually shipped. The "excess" quantity shipped of winter lem- ons each year is represented by the verti- cal difference between the line of actual shipments and the line of derived ship- ments. It may be noted that except for the early years in the period, the trends are roughly similar for the actual and derived winter quantities. The actual and derived quantities asso- ciated with gross money returns (f.o.b. level) for summer lemons are charted in figure 22. During the first decade of the period covered, both quantity series fluc- tuate roughly about the same level, with the derived quantities in some years ex- ceeding the actual ones. After 1934, how- ever, the actual quantities rose substan- tially, whereas the derived ones continued fluctuating around their previous level. During the postwar years shown, both series varied within comparable ranges; although in 1948 and 1949, the derived quantities exceeded the actual ones. Hence, for those two years, it appears that the actual quantity of summer lemons was undershipped while the quantity of winter lemons was overshipped, in terms of deriving maximum gross money re- turns, at the f.o.b. level, from the summer and winter supplies, respectively. The sit- uation in 1949 was created by the severe freeze resulting in a shortage of supply. The preceding comparative analysis of actual and derived quantities of fresh lemons, winter and summer separately, * The quantity may be indicated as follows: where p and q, respectively, are price and quantity, and p = a - bq is the estimated demand relation prevailing in a given year; q = a/2b. f The computed "optimum" shipments of winter lemons were determined by applying to the equation for winter lemons on page 37 the annual values of the respective independent variables, except for X 2 w, and deriving the annual net statistical demand relations between Xiw and X 2 w; from such equations, the "optimum" shipments were derived as indicated in the preceding footnote. The results for individual years are in table 4, page 72. The computed "optimum" quantity of summer lemons each year was determined in a similar manner, except the equation for summer lemons on page 32 was used to derive the annual net statistical demand relations between Xis and X 2 s. For summer lemons, also, the results for the individual years are in table 5, page 73. [51] Figure 22. Summer Fresh Lemons; U. S. Supply, Actual and Computed "Optimum' at F.O.B. Level, from 1922. 6.0 r 5.5 5.0 x O CO §4.5 4.0 3.5 ACTUAL i COMPUTED OPTIMUM ^A 1921 1925 1930 1935 1940 1945 1950 is based on the premise that the supplies it indicates the differentials between ac- of the two seasons are freely variable and tual supplies made available to the fresh independent of each other. But that is so market, winter and summer separately, only to a limited extent. The preceding and the corresponding levels of seasonal analysis, however, is informative in that supplies that would have maximized Figure 23. Distribution of Total Fresh Lemon Shipments Between Summer and Winter Seasons, Actual and Computed "Optimum" at F.O.B. Level, from 1921-22. / OPTIMUM - SUMMER-^// /^.^y^ACTUAL- SUMMER z §3 ^-optimum"- winter J I I I L J I L 1924 1929 1934 1939 1944 1949 -25 -30 -35 -40 -45 -50 [52 gross money returns at the f.o.b. stage of marketing. Another type of question pertaining to the supply levels of winter and summer fresh lemons is pertinent here. The ques- tion may be put in the following terms: With a given total supply of fresh lemons to be allocated among the winter and summer seasons, what allocation will yield maximum gross money returns from the sale of the quantities in both seasons? The same type of question may be put in terms of the sum of the total quantities actually supplied, in a given year, to the summer and winter markets. On that basis, the question pertains to allocating supplies to the summer and winter mar- kets in such manner that the total for the two seasons equals the corresponding total actually supplied, but the distribu- tion of supplies between the two seasons yields maximum gross money returns from both seasons together.* By again using the statistical demand relations between price and quantity of fresh lemons, for summer and winter re- spectively, we may estimate the seasonal distribution of fresh lemons which would yield maximum gross money returns at the f.o.b. level. Such quantities are shown in figure 23, page 52; the sum of the summer and winter quantities, derived for each year, equal the sum of the sea- sonal quantities actually experienced in each year.f Figure 23 shows the annual fresh quan- tity distributed between the summer and winter seasons. The series indicated as "optimum" reflects the quantities which were to be supplied if total maximum gross money returns were to have been realized from the supplies of both the summer and winter seasons. The figure indicates a tendency prevailing toward the "oversupply" of the winter quantities and a corresponding "undersupply" of the summer shipments; that is, if the attainment of maximum gross money re- turns from both seasons together is viewed as the standard of allocation between the winter and summer seasons. The same type of relation is illustrated in figure 24, where the seasonal distribu- tion is expressed in terms of per cent of the sum of the quantities actually sup- plied during the summer and winter sea- sons. As a percentage of the total annual supply of fresh lemon supplies available to the market, summer lemons have tended to be in an "undersupply" posi- tion, and winter lemons have tended cor- respondingly to be in an "oversupply" situation. Here, again, the criterion is the realization of maximum gross money re- turns for the crop year as a whole by distributing the annual fresh supply be- tween the winter and summer seasons. The evidence suggests that over the years there has been a slight trend in the summer and winter distribution of fresh lemon supplies. The summer proportion has tended somewhat to decrease, and the winter proportion to increase corre- spondingly. But the change has not been a marked one — less than 5 per cent over the period as a whole — and practically all of the change developed in the first half of the period. Since the middle of the 1930's, the summer and winter propor- tions have been remarkably stable, and * The solution may be indicated as follows: Let pi = a - bi qi and p 2 — a^- b 2 q 2 where p and q are price and quantity, respectively ; qi + q 2 = Q, a given value such as total annual fresh shipments ; and subscripts 1 and 2 pertain to winter and summer seasons, respectively; then ai - a 2 + 2b 2 Q qi 2 (bt + b,) and q 2 = Q - qi t The "optimum" (or gross-revenue maximizing) distribution between summer and winter was determined by deriving the annual net statistical demand relations between price and quantity, for summer and winter fresh lemons, respectively, by using the equations on pages 32 and 37 ; and from such equations, the "optimum" distribution each year was derived as indicated in the pre- ceding footnote. The results for the individual years are in table 6, page 74. [53 the minor fluctuations were about a nearly level trend. Of some significance is the apparent fact that the actual proportions of sum- mer and winter fresh supplies made avail- able to the market did not vary widely from the proportions necessary to yield maximum gross money returns from the sale of the annual fresh supply, summer plus winter. In most years, the discrep- ancy did not exceed 5 per cent. One may interpret such evidence as an indication that the marketing organizations ship- ping fresh lemons have, in the aggregate, distributed reasonably well the annual fresh supply between the winter and sum- mer seasons. Although the seasonal dis- tribution is in part determined by the production process, the latitude allowed by varying the picking time and holding in storage for curing permits a large degree of flexibility in distributing the supply going to fresh market between the summer and winter seasons. Within the permissible range of distribution, the sea- sonal allocation between winter and sum- mer may be judged to have been well accomplished. Allocation of the Crop to Fresh Market and to Processing. The pre- ceding analyses of supply allocation have been oriented to and pertain directly to the distribution of fresh shipments be- tween the winter and summer seasons. Allocation to processed lemon products outlets was considered only indirectly, and only in the sense that the supply not shipped to the fresh markets would be available for processed utilization. There appears to be the suggestion, in the avail- able evidence, that in most years the mar- keting of the lemon crop has followed such a pattern. There does exist, however, a question concerning the "optimum" allocation of the lemon crop between the fresh and processed markets. Yet, such a question is not very meaningful unless the "optimum" is specified in reasonably precise terms. Various criteria may be selected for specifying the "optimum" allocation be- tween the fresh and processed markets. To some extent, the particular selection adopted depends upon factors other than market conditions. For example, impor- tant equity problems may exist. For the present, we shall abstract from such equity questions and limit the analyses to market conditions exclusively. Later we shall bring in some equity considera- tions and note how they, when super- imposed upon the market situation, affect the results. Hence, for now, we shall pro- ceed with a consideration of various crite- ria which may be viewed as the objectives of allocating the lemon crop between the fresh and processed markets. One may consider the view that the desirable distribution of the lemon crop between the fresh and processed outlets is one which equalizes the prices received from them.* The prices may be either in gross terms, or in net terms after costs have been reflected. Compared with con- ventional practice in the lemon industry, a policy of price equalization among the fresh and processed outlets would entail a substantial increase of the quantity shipped for fresh use and a correspond- ing decrease in the quantity processed. But other than attaining price equaliza- tion, such a distribution policy would have little point. Inspection of the fresh and processed-use prices in figure 20, page 48, clearly shows that the industry has not followed the policy of equalizing prices or returns from the fresh and proc- essed outlets. * The distribution would be as follows, where : pi = ai - biqi + Ciq 2 , and p 2 = a 2 - b 2 q2 + c 2 qi are demand functions; p and q are price and quantity, respectively; subscripts 1 and 2 are fresh and processed, respectively; and qi + q 2 = Q, a given value such as the total crop to be distributed. To equalize prices from the two outlets, the distribution is such that _ (a,-a 2 ) + (ci + b 2 )Q qi - — - — —r— , and q 2 = Q - q u (bi + c 2 + Ci + b 2 ) [54] Figure 24. Percentage Distribution of Total Fresh Lemon Shipments Between Summer and Winter Seasons, Actual and Computed "Optimum" at F.O.B. Level, from 1921-22. 100 80 60 40 20 -"optimum"- summer >- ACTUAL -SUMMER ACTUAL- WINTER OPTIMUM- WINTER j I J L 1924 1929 1934 1939 1944 1949 -25 -30 -35 -40 -45 -50 Another allocation policy considered may be that of equalizing money value (price times quantity) from the fresh and processed utilizations.* Here, also, the money value may be either in gross terms, or net terms after costs have been reflected. Such allocation policy would be much different from that which has been followed, and the reason is ob- vious; the returns from the whole crop would be reduced much below the levels which have been experienced. Review of the allocation data clearly indicates that the lemon industry has not followed the policy of equalizing the money values of the volumes channeled to the fresh and processed markets. This raises the ques- tion of what allocation policy has been followed. Before inquiring into that ques- tion, however, we shall consider a third possible policy of allocation between the fresh and processed outlets. Rather than viewing price-equalization or returns-equalization as the objective of allocating a given lemon crop between the fresh and processed markets, another objective may be selected which from many viewpoints may be considered as more rational. This third allocation pol- icy may be termed as revenue maximiza- tion; it involves distributing the crop among the two outlets in such a manner that the money revenue derived from both outlets together sums to the largest amount possible or a larger amount than could be obtained by using any other al- location, f There may be practical or ad- ministrative reasons why an allocation * Such a distribution would be as follows, where : pi = ai - biqi + Ciq2, and p 2 = a 2 - b 2 q2 + C2qi are demand functions; p and q are price and quantity, respectively; subscripts 1 and 2 are fresh and processed, respectively ; and qi + q 2 = Q, a given value such as the total crop to be distributed. To equalize money returns from the two outlets, the distribution is such that the quadratic equation (b 1 + c 2 -b 2 -c 2 )qi 2 - [ai + a 2 i- (ci-2b 2 -c 2 )Q]qi+ (a 2 -b 2 Q)Q = is solved for the value qi; and q 2 = Q - qi. f The revenue-maximizing distribution may be indicated as follows, where : pi = at - biqi + dq 2 , and p 2 = a 2 - b 2 q 2 + c 2 q! are demand functions; p and q are price and quantity, respectively; subscripts 1 and 2 are fresh and processed, respectively ; and qi + q 2 = Q, a given value such as the total crop to be distributed. The revenue-maximizing distribution is such that a 2 + (2b 2 + ci + c 2 )Q qi = 2(bi + b 2 + ci + c 2 ) [55] , and q 2 = Q - qi. policy yielding maximum revenue cannot or should not be followed, but from the view of objective standards or alternative policies to be considered, it is of consid- erable significance. In connection with allocating a given size of lemon crop between the two out- lets, fresh and processed, there arises the question of whether the two outlets are related in demand. At first thought, one may have the view that the fresh and processed outlets are related in demand, and competitive. But such a view must be limited to edible utilizations, in the sense that the housewife purchases fresh lemons or processed lemon products de- pending on relative prices. As noted ear- lier, and as will be shown in more detail below, that portion of the crop used for lemon processing is divided into a num- ber of different products, some of which are not directly competitive with fresh lemons. Hence, it is necessary to investi- gate statistically the extent to which, in the past, the total or aggregate demand for processed lemons is competitively re- lated to the total demand for fresh lemons. The resulting indications are pertinent since the allocation of the crop between the fresh and processed outlets is affected. Testing Demand Relationships: Fresh and Processed Markets. There are several procedures of testing the de- mand relations between the fresh and processed markets. One obvious proce- dure is to use the summer and winter demand equations for fresh lemons, dis- cussed in the previous section. This may be done by inserting the price and quan- tity, respectively, of processed lemons into the demand equations. The results of such procedure are summarized in table 8, page 76. As may be noted, such procedure provides no significant evidence that the demands are related. Here, it may be noted again, processed lemons in the aggregate are reflected. Hence, the results do not provide evidence concerning the demand relations between particular processed lemon products, such as canned lemon juice, and fresh lemons. But a major shortcoming of the analyses, the results of which are sum- marized in table 8, is that the prices for fresh lemons are on an f.o.b. basis while the prices for processed lemons are on an "on-tree" basis. Another characteristic, which may also be a shortcoming, is that the prices and quantities for processed lemons pertain to the entire crop year, while the prices and quantities for fresh lemons are segregated into summer and winter, with each season described by its own separate equation. For these reasons, it is worth while to look further into the question of demand relations between the fresh and processed portions of the lemon crop. There are available annual average "on-tree" prices for lemons processed and shipped fresh, respectively. Such price data were used in conjunction with the total annual quantities shipped fresh and processed in order to detect measurable and significant demand relations between the total fresh market and the total proc- essed market. Since temperatures are known to affect the demand for fresh lemons, they are reflected in the analyses. The results of this analysis are summa- rized by the equations in table 9, shown on page 77. None of the equations offers statisti- cally significant evidence that the de- mands for fresh lemons and lemons for processing have generally in the past been interdependent in a market sense. This apparent situation may be explained by one or both of the following rationaliza- tions. First is the fact, noted earlier, that the processed market is considered in the aggregate, wherein actually there are a number of processed outlets and markets. Second is the apparent fact that during the period under consideration lemon marketers have oriented their primary attention to the fresh market; the proc- essed outlet was viewed primarily, if not entirely, as a by-product or salvage oper- ation. [56] Figure 25. Distribution of Lemon Crop Among Fresh and Processed Outlets, Actual and Computed "Optimum" at On-Tree Level, from 1921-22. 10 54 Z o ^ACTUAL FRESH 7 V V V OPTIMUM- FRESH OPTIMUM-PROCESSED /^ACTUAL- PROCESSED ■»/ 1924 1929 1934 1939 1944 1949 -25 -30 -35 •40 -45 -50 Actual and Derived Volumes of Lemons Marketed Fresh and Proc- essed. We may now note how the actual distribution of the lemon crop between the total fresh and total processed outlets, through the years, compares with distri- butions which would have maximized the sum of total "on-tree" revenue from both outlets.* In figure 25, above, are shown the actual annual allocations of lemons to the fresh and processed outlets, as well as the statistically estimated "optimum" alloca- tions. The "optimum" allocations have been computed so that the on-tree value of the total supply used (fresh and proc- essed) would be at a maximum.! Examination of figure 25 suggests sev- eral significant characteristics of the uti- lization allocation pattern. The trends of actual and optimum fresh quantities are largely similar; also the year-to-year changes in the two series are generally in the same direction, although there are several exceptions. Over the period as a whole, the level of actual fresh-use quan- tities is above the "optimum" levels for the respective years. With respect to the processed-use pat- terns, several characteristics may be * The revenue-maximizing distribution may be indicated as follows, where: q x = a t - bipi, and q2 = a2 - b2p2 are demand functions; p and q are price and quantity, respectively; subscripts 1 and 2 are fresh and processed, respectively ; and qi + q 2 = Q, a given value such as the total crop to be distributed. The "on-tree" revenue-maximizing distribution is: _ aib 2 - a 2 bi + 2b x Q _ „ q ' - 2(b, + b 2 ) i*-Q"*- f The "optimum" (or gross-revenue maximizing) distribution between fresh and processed utilization was determined by deriving the annual net statistical demand relations between quan- tity and price, for fresh and processed uses, respectively, by using equations 8 and 11 in table 9, page 77 ; and from such equations, the "optimum" distribution each year was derived as indicated in the preceding footnote. The results for the individual years are in table 10, page 78. [57] noted. There, also, the trends of actual and "optimum" processed quantities are largely similar; and the year-to-year changes in the two series are generally in the same direction. Over the period as a whole, the level of actual processed-use quantities is below the "optimum" levels for the respective years. From the view of maximizing on-tree total returns, the evidence so far sug- gests — but does not show conclusively — mat the industry has tended somewhat to overship to the fresh market and chan- nel correspondingly lower quantities to the processed market outlets. There may have been, of course, rational reasons for such practice; and later we shall consider some of them. But here it may be helpful to review the actual and "optimum" allo- cation patterns in a different manner so as to bring out the differential character- istics in bolder relief. Figure 26, below, shows the annual percentage distribution of the total sup- ply marketed, as between the fresh and processed outlets, with both the actual and "optimum" percentages for compar- ison. Here also, the percentage trends are broadly similar for both the actual and "optimum" series and the year-to-year changes are also generally in the same direction for the actual and "optimum" series; these two characteristics apply to both the fresh and processed outlets. Fig- ure 26, though, clearly emphasizes the gap between the levels of the actual and "optimum" percentages. In the fresh out- let the "optimum" percentage level is under the actual percentage level. In the processed outlet, the "optimum" percent- ages are greater than the actual ones. This is the same evidence, noted earlier, that from the standard of maximizing on-tree returns from the total lemon supply mar- keted, allocation to the fresh outlet has probably been too high and allocation to the processed outlet has probably been too low. Over the period as a whole since 1921- 22, a persistent tendency to narrow the gap between the actual and "optimum" allocations has not prevailed. But there is a marked difference between the pre- war and postwar years. This may be fortuitous, since there are only four post- war years which have been observed. Considering the record available, though, the percentage differentials, in the pre- war years, between the actual and opti- mum relative allocations varied from Figure 26. Percentage Distribution of Lemon Crop Among Fresh and Processed Outlets, Actual and Computed "Optimum" at On-Tree Level, from 1921-22. 100 .rACTUAL- FRESH ^OPTIMUM"- FRESH ^ >T ^-'OPTIMUM- PROCESSED V m*"* /^ACTUAL- PROCESSED V /v v V J L 1924 1929 1934 1939 1944 1949 -25 -30 -35 -40 -45 -50 [58] about 15 per cent to slightly over 30 per cent. The annual differentials fluctuated about a horizontal trend at an average level of about 23 per cent. In the postwar years, however, the annual differentials varied from 15 to slightly over 20 per cent, and averaged close to 18 per cent. Hence, there is some basis for conclud- ing that in the postwar years, not only have the allocation distributions gener- ally been closer to optimum than in the prewar years, but also the year-to-year departures have tended not to be so wide. The conclusion tentatively reached earlier, however, still stands, even in the postwar years; a somewhat larger pro- portion of the crop allocated to the proc- essed outlet would very likely have re- sulted in greater on-tree returns from the total crop marketed. The preceding analysis of allocation of the lemon crop among the fresh and processed outlets requires, at this point, several qualifying comments. First, it may be noted that the "optimum" alloca- tions developed are based on statistical estimates, rather than upon precise in- formation, of the demands for lemons going to fresh market and to processing. Hence, a margin of error surrounds the estimates. Also, it should be noted that the statistical relations developed reflect past experience over a period during which changes have occurred in the lemon industry. Therefore, as new con- ditions develop and arise, they may not be sufficiently well explained by the rela- tions based on earlier experience. Yet such a situation often exists when at- tempting to analyze industry develop- ments in quantitative terms. Hence, in the lemon industry, which is apparently now in a transition phase where the signifi- cance of the processed products is begin- ning to gain more attention, the market structure and crop allocation practices of earlier years can be projected only cau- tiously into the future. Another qualifying comment is that the results cited are from an analysis which assumed that the fresh and proc- essed markets were independent in de- mand, as suggested by the statistical demand analysis for the period as a whole. If it is assumed, however, that the fresh and processed markets are related in demand — a characteristic which ap- pears to have developed more in the recent postwar years — the results are altered to some extent. The "optimum" level for fresh lemons is nearer to, but still less than, the actual level experi- enced; and the "optimum" level for proc- essed lemons is nearer to, but still greater than, the actual level.* Therefore, rather than insisting that the optimum percentage allocation of the lemon crop between the fresh and proc- essed outlets for the next several years is about 55 per cent for the fresh and about 45 per cent for the processed, a less firm projection is advisable. It might be ex- pressed as follows: During the next sev- eral years, consideration might well be given to gradually decreasing the per- centage of the crop allocated to the fresh outlet and correspondingly increasing the percentage of the crop going to the processed outlet. Such a change in crop allocation, though, merits consideration only if industry policy and objective are oriented in the direction of increasing the industry total returns, on-tree basis, from the lemon crop. Another point which should be noted with respect to the preceding analysis is that it is in some respects considerably simplified. Allocation is considered be- tween the fresh outlet and the total proc- essed outlet. But in fact, the processed outlet includes a number of separate products. The relative proportions of the products vary from year to year, as well as their prices. Hence, a complete analy- sis would also indicate "optimum" alloca- tions of lemons for use in the manufac- * The analysis, with related demands, was based on equations 1 and 2, table 9, page 77, to which was applied the procedure indicated in the second footnote on page 55. [59] ture and sale of the various processed products. But adequate statistical data are not available to undertake such an analysis, and with the marked growth of certain products and the introduction of new ones very recently, one may well question the value of such an analysis at this stage for projection purposes. Yet it is necessary to inquire, in less formal terms, into the developments within the processed lemon products group. Various Types of Lemon Prod- ucts. The principal lemon products pro- duced include the following : frozen lem- onade concentrate ; lemon beverage base ; canned or bottled single-strength lemon juice; citric acid; powdered lemon juice; sodium citrate; lemon oil, cold-pressed or distilled, single-strength or concen- trated (terpeneless) ; dried lemon peel; candied lemon peel; pectin; cattle feed; and marmalade. Lemons used for processing may be classed according to utilization into two general groups: those used for juice products, and those used for products such as citric acid and sodium citrate. This classification has significance in that the juice products generally yield a greater value per ton of lemons processed than do the citric acid or sodium citrate. Figure 27, below, shows the per- centage distribution of lemons processed into juice and other products for the period since the 1941-42 season. This graph is of interest in that it emphasizes the rapid increase in the relative im- portance of juice product uses since 1946-47. During the war years, juice products manufacture was stimulated by the Armed Services and lend-lease de- maud. In 1946 17. approximately 24 per (cut of all lemons processed were utilized in juice products. In 1949-50, juice products took 84 per cent of the total lemons processed. For the latter year, however, the total lemon supplies were smaller. This sharp increase in the relative im- portance of juice products stems from the increase <»f two products, frozen lemonade concentrate and frozen con- centrated lemon juice. This change is re- flected in fin ure 2JI. pane 61, which shows Figure 27. Percentage Distribution of Lemons for Processing: Juice and Other Uses, from 1941-42. 100 80 60 40 20 ...... ',?--.'. •;■■;:' C- - mm mm M - m i mm 1941 -42 1942 -43 1943 1944 1945 1946 1947 1948 1949 -44 -45 -46 -47 -48 -49 -50 [60] Figure 28. Percentage Distribution of Lemons Processed for Various Juice Products, from 1945-46. 1945-46 1946-47 1947-48 1948-49 mk^tmsm^ m^^mmmmd 'H • ,• t.'. ■• T I t *ft*fe- ; ■■■>■■**&* ■;.;.;. ;«.-.* > «.».'. 1 . i . i .'.'.*. j . •.*.'. J 1949-50 J fflM£ &»» CANNED SINGLE- STREN G T H :;".|:Y:;:; ; j:; ; | ; ; ; y.;:j:: ; :^ concentrated FRESH FROZEN, SINGLE-STRENGTH AND LEMONADE CONCENTRATE J I I I I 20 40 PER CENT 60 80 the utilization of lemons processed for the several juice products. The greatest change occurred in frozen single-strength juice. Included in this category is the new product, frozen lemonade concen- trate. In 1949-50, the first year of pro- duction on a commercial scale, 1,702,209 gallons of frozen lemonade concentrate were produced, absorbing the equivalent of nearly 19,000 tons of lemons. Another new product, frozen concentrated lemon juice, also took a substantial volume of fruit. In 1949-50, almost 91,000 gallons of frozen lemon concentrate were pro- duced, equivalent to about 7,000 tons of fruit. Thus, these two new products pro- vided an outlet for about 26,000 tons of lemons. A relatively significant volume of lem- ons move into the manufacture of citric acid and sodium citrate. But the output of these products by the citrus industry amounts to only some 10 or 15 per cent of the total production, since most of the products are supplied by chemical and allied industries. A third major processed lemon prod- uct is lemon oil. Most of the lemon oil produced in this country is made by passing the cut fruit through presses in such a way that both the juice and the oil are extracted. The two are then sepa- rated by a centrifugal process. Other de- vices press the peel alone. There is also some oil produced by distillation. A third type of lemon oil, terpeneless or concen- trated oil, is made by fractional solution in alcohol or by fractional distillation of the cold-pressed oil. Over the period since 1940, production of lemon oil has averaged about 1,000,000 pounds per year. During that period, cold-pressed oil has increased in importance relative to distilled oil. In 1939-40, about 75 per cent of the total oil produced was cold- pressed oil. In 1947-48, about 93 per cent of the total was cold-pressed. Lemon oil is essentially a by-product using the oil from all lemons processed. There is a wide range in the per ton gross returns to the processor, depending on the product made from the lemons. Citric acid and sodium citrate are low- value products (fig. 29, page 62), with gross returns to the processor, in 1949- 50, of $9.48 and $14.86 per ton of lemons [61] processed. Cold-pressed oil is also a low- value product with gross returns to the processor of $13.95 per ton of fruit proc- essed in 1949-50. The juice products are all considerably more valuable. Con- centrated lemon juice, beverage base, and single-strength juice other than canned, had gross returns to the processor of about $64 to $70 per ton of fruit used in 1949-50. Canned single-strength juice had gross returns to the processor of about $150 per ton of fruit processed; the comparable figure for frozen lemon- ade concentrate and canned lemonade base was $216 per ton of fruit processed. Prices of lemon juice products have moved generally upward during the past ten years (fig. 29). Frozen lemonade concentrate is an exception. In 1948^19, only a small amount was processed and the price was relatively high. The great increase in the volume of this product processed during 1949-50 was accom- panied by a corresponding decline in the price. Juice product prices declined after the end of World War II, but since have more than regained their loss. Non juice lemon products prices re- cenly have been at levels comparable to those of 1940. Prices of lemon oil rose during World War II, dropped to below prewar prices immediately after the war, but have risen somewhat during the past year. Prices of citric acid and sodium citrate have remained relatively steady over the past decade, rising but 7 cents and 8 cents per pound, respectively, during the ten years. This is an example of price rigidity associated with many industrial products, in contrast with price-flexibility characteristic of most agricultural products. Timing and District Origin of Lemons Sent to Processing. In ad- dition to volume and price differences among the various lemon products, there exist important differences in the timing and district origins of the lemons sent to processing. First, we may consider the timing of movement to processing. There is a pronounced seasonal varia- tion in the movement of California lemons to processing. As the lemon mar- keting season opens in November, move- Figure 29. F.O.B. Prices of Processed Lemon Products, Juice and Others, from 1940-41. JUICE PRODUCTS OTHER PRODUCTS 5 i , 3 z o 22 BEVERAGE BASES CANNED SINGLE- STRENGTH LEMON JUICE -> / , -/_ /— MOTHER SINGLE^"'- STRENGTH LEMON JUICE §2 o _v DISTILLED OIL \ \ V _\ SODIUM CITRATE ^CITRIC ACID J 1 1 1 L 1940 1943 1946 1949 1940 1943 1946 1949 -41 -44 -47 -50 -41 -44 -47 -50 [62] ment to processing is relatively small and decreases still more during the next month, reaching a seasonal low in Decem- ber. Volume processed then increases steadily to a peak in May, remains high during June and July, and decreases rapidly during September. Processing of the winter lemon crop starts at a relatively low level in Novem- ber and gradually increases to a peak at the end of the winter season about the last of April. This is true for all produc- ing districts except northern California, where the peak in processing is reached late in February. Processing of the summer crop starts at a high level in May and then gradually declines to a low in October. While these seasonal patterns are similar for all dis- tricts, there is less variation in shipments to processing from the San Diego area than from the others. The relative volumes of lemons going to processing from the several producing districts also follow a pattern during the year. The proportionate volume originat- ing in the Ventura-Santa Barbara dis- trict, the one with the heaviest volume, is about half as much (in percentage terms) during the four-month period January through April as during the rest of the year. The Los Angeles district, in contrast, becomes relatively most im- portant in the January-April period. But the San Diego district maintains a fairly stable percentage, about 10 per cent of the state's total movement to processing, during the entire year. It is clear, then, that the district origin of lemons going to processing, as well as the timing of the movement, is of significance in con- sidering the allocation of the lemon crop among the fresh and processed outlets. The interaction among district origin and timing of the movement to process- ing is only partly identified unless dis- tinctions are also made between the summer and winter seasons, since the market for fresh lemons varies between the summer and winter months. During [ the winter lemon season, about 35 per cent of the state's total lemons for proc- essing come from the Ventura-Santa Barbara district, and about 50 per cent from the Los Angeles area. During the summer season, however, the relation is reversed; about 55 per cent of the total processed originates in the Ventura- Santa Barbara district, and about 35 per cent comes from the Los Angeles district. As noted above, the San Diego district furnishes about 10 per cent of the total throughout the year. All northern Cali- fornia lemons processed move during the winter season, this district furnishing about 3.5 per cent of the total winter lemons processed. The seasonal variations, winter and summer separately, as well as for the four lemon producing districts respectively, are shown in figure 30, page 64. It sum- marizes the complex interaction existing within the movement of lemons to proc- essing — with the timing, district of origin, and seasonal characteristics re- flected. With the exception of northern California, the remaining districts have broadly similar seasonal patterns, al- though important differences exist, as noted earlier, in the absolute and relative volumes from the respective districts. The data considered clearly indicate that each district has its own problems and characteristics. For that reason, alloca- tions and movement to processing and the fresh market, respectively, can be considered on a statewide basis only in very broad terms. In an operational sense, districts and smaller units must be considered. The interrelations existing among the timing, seasonal aspects, and district origins of lemons moving to processing have been discussed to indicate the far from simple conditions. Also of signifi- cance is the fact that grower equities may be involved. Whether such is so or not depends in large part upon the type of marketing organization through which the lemons pass. 63] Figure 30. Seasonal Variation in the Movement of California Lemons to Processing, by Producing Districts. 12 O z t/> CO SlO 2 8 o t— z o CO CO S 4 WINTER LEMONS I 7 A A CALIFORNIA -^' y I VENTURA- SANTA BARBARA J_L I I I I I I 1 I I I I I i I |SUMMER LEM0NS| A^ LOS ANGELES " \ a k ^-SAN DIEGO ill I l I 1 > I 1 1 1 1 1 l.J ... I NOV. DEC. JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. The Question of Grower Equities. If the lemons are sold by individual growers to private fresh-shipping or processing concerns, the equity problems are essentially no different than those existing in any commodity sold and bought under private auspices. The lemon grower-seller attempts to seek out that buyer, whether he be a fresh-shipper or processor, with whom he can bargain most profitably. The lemon buyer, in turn, whether he be a fresh-shipper or processor, will attempt to purchase as cheaply as he can the types of fruit in which he is interested. The price deter- minants here are similar to other sale- purchase private transactions. If the lemon grower belongs to a co- operative to which he forwards his fruit for marketing, certain equity problems arise in connection with allocating the co- operative's total volume of lemons among the fresh and processed outlets. If the cooperative attempts to follow some policy as to allocation among the fresh and processed outlets — not necessarily a policy of maximizing gross (or net) reve- nue from the total crop — there is in- volved the problem of imputing returns to the various participating members. Under a policy of revenue maximization for the cooperative as a whole, the usual pooling systems could result in inequities in the sense that comparable grades and sizes of fruit would yield different re- turns, depending upon the outlet (fresh or processed or type of processed prod- uct) to which the pool fruit is allocated. A cooperative might follow a profit- maximizing policy which includes the distribution of total revenue among the individual growers in accordance with some proportionality system and which reflects differential grades, sizes, pound- acid rating, and other important char- acteristics by the use of a modified pooling system. Such a plan could ap- proximate the realization of short-run maximum revenue for the cooperative as a whole, but some individual growers may receive lower returns and other growers may receive higher returns than they would have received under a dif- ferent policy, such as those presently [64] followed. There remains, therefore, the problem that the attainment of maximum (or increasing) gross revenue to the co- operative as a whole need not always be consistent with increasing the returns to each of the individual growers participat- ing in the cooperative. Hence, as con- sideration is given to allocating the flow of lemons to the fresh market and to processing, respectively — either by the returns-maximizing plan, a variant of it or some other rational plan — the prob- lems of maintaining equity among in- dividual grower participants remain in the forefront. As the processed outlet gains increasing recognition, modifica- tions may be necessary in pooling sys- tems and procedures for the maintenance and balance of equities among individual participants. That the allocation of somewhat greater supplies to the processing outlet may well result in greater total returns to the lemon industry has been suggested by consideration of the analyses re- viewed earlier. Yet, reactions on lemon importations must not be neglected. The transition which the lemon industry seems to be experiencing at present — in the sense of an orientation of interest to the potentialities latent in the balanced use of the fresh and processed outlets — is evidenced by a recent California mar- keting order for lemon products. The order merits review so that its role and position may be evaluated. The California State Marketing Order for Lemon Products. On March 10, 1951, a California state marketing order for lemon products became effec- tive. The order provides for volume regu- lation, grade and size regulation, sales promotion, and the conducting of in- dustry research pertaining to lemon products. The order is administered by an ad- visory board of eight members, with alternates provided for each member. Representation on this board is provided in the following manner: (1) Any co- [ operative which received or processed more than 50 per cent of the total volume of lemons processed in 1949-50 shall be represented by four members and four alternates; (2) all other cooperatives shall have, collectively, one member and one alternate; (3) other processors shall have the remaining three members and three alternates. The board is directed to investigate economic and marketing conditions and, on the basis of the information obtained, may recommend the establishment of the percentage of lemons to be acquired by processors in any marketing season, which shall be: (1) free tonnage, or (2) stabilization pool tonnage. The total of the free and stabilization tonnage is to equal 100 per cent. All recommenda- tions of the board are subject to the ap- proval of the Director of Agriculture of the State of California. On receipt of a recommendation that marketing percentage regulations be es- tablished, the Director may issue such regulations, establish such percentages, and notify the board. The board, in turn, notifies the processors. The percentage of lemons designated as "free tonnage" is exempt from the re- strictions of the order. "Stabilization pool tonnage," however, is subject to the order and all regulations issued under it. Free tonnage and stabilization pool tonnage are computed by applying the applicable percentages to all lemons ac- quired by each processor. Excepted, however, are those lemons which have been included in the computation for a prior holder, unless the processor files with the board a request to have such computation made on the basis of the total tree crop from any designated grove. Such request is to be granted only to processors who declare their total tree crop from the designated grove is for processing only; and, in addition, the processor must show evidence that such crop is not included during the market- ing season in any computation of alloca- 65] tion for fresh shipment pursuant to any federal or state marketing control pro- gram applicable to lemons. In such an event, no stabilization pool tonnage obli- gation is to arise from that part of the total tree crop equal to the estimated in- dustry average shipped in fresh form dur- ing the respective marketing season. The board may dispose of stabilization pool tonnage in its original form, or after conversion into approved products, or by any other means which will tend to effec- tuate the declared purpose of the act. The board, also, on approval of six members, may fix prices for stabilization pool ton- nage. On the basis of information available to it, the board may recommend to the Director the issuance, modification, sus- pension or termination of minimum grade or size regulations for lemons which may be acquired by processors or for stabilization pool lemons. The board is authorized to prepare and administer plans for promoting the sale of lemon products without reference to private brands and is authorized to participate in or conduct research into the distribu- tion, production and processing, or mini- mum quality specifications for processed lemon products. The act authorizes the Director to investigate and stop "unfair trade practices" in the processing, sale or distribution of lemon products. The program is financed by an assess- ment of up to 75 cents per ton on all lemons acquired by processors, or financ- ing may be from money accumulated in the stabilization pool fund. After deduc- tion of necessary expenditures, all money remaining in the stabilization pool is to be paid on a prorata basis to the par- ticipants in the pool. It is clear that two of the major pro- visions of the marketing order for lemon products are to enable the industry, with state legislative authority, to influence the grade and size characteristics of lem- ons going to processing and to influence the volume flow of lemon-processed prod- [ ucts to market outlets. In that sense, the order is broadly similar to a number of currently effective marketing orders for other crops. Major marketing organizations may significantly influence the crop alloca- tions to the fresh and processed outlets on the basis of their own policy and marketing decisions. After such alloca- tions are made, the organizations, along with the rest of the industry, may then operate within the present framework of separate orders for the fresh and products markets. Promoting the sale of lemon products is one of the objectives of the lemon products order. Consumer and trade edu- cation and advertising and sales pro- motional activities are pertinent here. Well-planned and well-prosecuted cam- paigns of this type have apparently been effective in other commodities, such as the advertising activities on clingstone peaches by the Cling Peach Advisory Board, operating under a California state marketing order. That certain lemon products, such as canned lemon juice, are to some extent competitive in consump- tion with fresh lemons does not neces- sarily mean that the markets for both the fresh and canned juice products are limited one by the other. One may well conjecture that the markets for both fresh lemons and processed lemon products can be expanded. There are many examples where the sales of fresh and processed products have increased simultaneously. One may cite vegetables, such as peas and asparagus, in which the sales of fresh, canned, and frozen have expanded together. The same applies to berries and other products. In lemons, however, there exists an aspect which does not prevail in most other products marketed as fresh, canned, and frozen. Items such as fresh peas and asparagus or berries are marketed mainly on a highly seasonal basis during a portion of the year. The fresh product, being available in plentiful supply dur- 66] ing only a part of the year, has a tem- poral advantage. Consumers tend to be interested in the fresh product when in season because of limited availability, and only at relatively high prices during the rest of the year. Fresh lemons, how- ever, are in plentiful supply during all months of the year, and for that reason, might not have the type of temporal ad- vantage characteristic of the fresh prod- ucts noted above. Hence, the promotion of fresh and processed lemon products might be oriented in the directions of complementary rather than competitive uses. Along such lines, the markets for both the fresh and processed lemon products may be developed and ex- panded. The lemon products order specifies that the board may recommend (to the State Director of Agriculture) the issu- ance, suspension or termination of mini- mum grade or size regulations for lemons which may be acquired by processors or for stabilization pool lemons. In that connection, it might be noted that dif- ferent characteristics of lemons affect their acceptability for the fresh market in contrast with the processed outlets. The quality factors pertinent for lemons shipped fresh include characteristics such as general appearance, color, size, and shape. Acceptability of lemons for proc- essing, however, is based on their per- formance in a juice-acid test; color, size, shape, and similar appearance character- istics have a bearing only to the extent that they affect the juice-acid rating. It is reasonably clear that a different set of acceptability standards is appro- priate for lemons going to processing than for those shipped to the fresh mar- ket. It is likely true that practically all lemons could be physically acceptable for processing, whereas only part of the crop is acceptable for fresh shipments. But the essential distinction is the divi- sion of the crop into fresh and processed portions, not so much along lines which represent physical acceptability but [ rather along lines which represent eco- nomic profitability. The juice-acid test is important for processing acceptability because it reflects the yield-returns which may be realized; and appearance char- acteristics are important for fresh ship- ping acceptability because they influence the returns to be realized from the sale of the fresh lemons. In view of the experience gained in other products which enter the fresh and processed markets, different varieties of lemon trees may be developed and culti- vated for the fresh and processed outlets. Such practice has developed in a number of vegetables, canned and frozen. The packers often even furnish appropriate varietal seeds to insure obtaining prod- ucts which are adaptable for processing. As the processed outlets expand, lemon varieties best suited for processing may be developed; and, in turn, there may be further development of varieties having appropriate characteristics for the fresh market. Citriculturally, varieties of lem- ons may be developed which sacrifice appearance in favor of increased juice- acid contents; such varieties would be best adapted for use in processing. This is only brought out to suggest that, as the lemon marketing structure varies in view of the changing significance of the fresh and processed outlets, there may be re- actions on the production side of the lemon industry. The appropriate distribution of the lemon crop among the fresh and proc- essed outlets is undoubtedly one of the major marketing problems facing the California-Arizona lemon industry. Al- though the total volume of lemons going to processing has not expanded in the past several years, a significant change is developing. The change is reflected in the increasing proportion of the higher value processed lemon products. It is significant as an index of changing mar- ket structure and also significant in that the processed outlet is assuming a chang- ing role in the industry. 67] The principles of crop distribution among the fresh and processed outlets have been discussed to indicate in specific terms the nature of some of the problems involved. Actual distributions were com- pared with estimated "optimum" distri- butions. The so-called optimum dis- tributions are "optimum" only in the sense that they are consistent with realiz- ing the maximum on-tree value of the total lemon crop in given seasons. Yet other considerations, especially problems of equity between production districts and among individual growers, merit at- tention, and they may well support valid departures from the "optimum" distri- bution. It is clear, however, that lemon growers as a group are likely to realize more from the whole crop when its dis- tribution among the several alternative outlets is considered appropriately. Such distribution cannot be expected to solve all of the problems facing the lemon in- dustry ; new ones could arise. Yet, further progress can be made toward marketing the lemon crop most advantageously. THE FOLLOWING TEN PAGES CONTAIN APPENDIX TABLES » [68] Table 1. Consumer Purchases and Retail Prices, Fresh Lemons and Canned Lemon Juice, by Months, October 1 948 to July 1 951 Year and month 1948 October . November. December 1949 January . . . February. . March April May June July August. . . . September October. . . November. December 1950 January. . . February. . March. . . . April May June July August. . . September October. . November December 1951 January. . February. March. . . April May June July Consumer purchases Fresh lemons Canned juice 1,000 dozen 6,236 6,903 6,224 5,844 5,777 6,469 7,593 10,168 16,386 16,599 14,179 8,189 5,961 5,210 5,175 5,164 6,119 7,258 7,465 9,594 15,557 15,355 13,930 7,705 7,088 6,043 6,126 5,790 6,000 6,720 7,380 9,420 13,980 17,520 1,000 cases, 24 No. 2 35 31 34 42 40 36 44 63 130 136 95 33 40 26 38 37 40 37 37 48 96 112 67 43 34 31 35 41 45 36 48 63 86 103 Retail prices Fresh lemons Canned juice cents per dozen 45.2 43.9 44.7 47.0 49.8 44.7 43.0 45.7 51.2 50.7 45.6 43.1 46.8 51.0 55.9 61.3 48.1 44.4 40.8 42.4 45.5 44.4 40.3 41.8 40.5 40.8 42.8 44.8 48.1 46.9 42.3 44.5 41.8 40.4 cents per No. 2 can 28.0 28.8 28.1 28.6 28.4 28.5 27.2 30.2 32.1 35.6 38.7 39.9 39.3 38.8 38.6 38.1 38.3 40.3 40.2 41.7 41.0 41.4 42.1 41.1 37.7 38.8 38.9 35.9 37.5 37.4 35.8 34.0 33.8 34.1 Source: National Consumers Panel of Industrial Surveys Company as reported in monthly issues of U. S. Bureau of Agricultural Economics, Consumer Purchases of Selected Fresh Fruits, Canned and Frozen Juices, and Dried Fruits, Washington, D.C. [69] Table 2. Summer Lemons: F.O.B. Prices and Major Factors Related to Them, 1922-1949. (Series Used for Determining Least Squares Multiple Regression Equation Given on Page 32) Year, May- October F.O.B. price U.S. supply Nonagricultural income Mean monthly maximum temperature 1 2 3 4 1922 dollars per box 4.48 5.23 2.74 4.93 3.23 4.88 4.86 5.36 5.18 4.50 4.41 3.60 3.85 3.39 4.51 4.86 2.87 3.17 3.04 3.19 5.66 5.89 7.34 a 100,000 boxes 32.8 31.2 36.9 39.9 40.3 35.1 35.0 35.5 38.8 39.9 31.2 35.4 40.6 41.6 43.1 38.7 43.5 47.0 46.1 55.0 55.9 b 53.9 b 50.8 b 1935-39 = 100 88 100 101 110 114 116 119 125 111 95 72 70 80 86 104 109 100 107 115 141 282 306 308 degrees F 79.5 1923 79.0 1924 76.6 1925 79.9 1926 77.8 1927 76.6 1928 77.6 1929 78.7 1930 81.2 1931 80.7 1932 1933 80.2 81.1 1934 82.3 1935 78.7 1936 . 81.4 1937 1938 1939 1940 1941 80.1 79.8 80.9 78.8 81.0 war years 1947 1948 79.6 80.2 1949 82.1 a Preliminary price of $7.32 was used in the calculation of the regression constants. b Preliminary estimates of supply of 60.0 for 1947, 53.8 for 1948, and 49.9 for 1949 were used in the calcu- lation of the regression constants. Sources : Col. 1: Based on prices received by the California Fruit Growers Exchange for lemons shipped during the specified periods and sold for consumption fresh. Beginning May, 1926, prices of lemons sold loose are in- cluded. For the seasons 1936-1941 prices of exported lemons are excluded. Col. 2: 1922-1941 see Giannini Foundation Mimeographed Report No. 84, Table 18, p. 67. 1947-1949 based on total shipments for consumption fresh as reported by the Lemon Administrative Committee less domestic exports plus imports for consumption as reported in "Monthly Summary of Foreign Commerce of the United States" (U.S. Department of Commerce). Exports for 1949 and all imports converted from pounds to boxes on basis of 76 pounds per box. Col. 3: 1922-1928 see Giannini Foundation Mimeographed Report No. 84, Table 22, p. 74. 1929-1949, averages of seasonally corrected monthly estimates of nonagricultural income as reported in "National Income Supplement to Survey of Current Business" (U.S. Department of Commerce). Col. 4: Giannini Foundation Mimeographed Report No. 84, Table 35, p. 109 extended through 1949. The entries are monthly mean maximum temperatures May through September in 22 cities weighted by the average unloads of lemons for corresponding months. [70] Table 3. Winter Lemons: F.O.B. Prices and Major Factors Related to Them, 1922-1949. (Series Used for Determining Least Squares Multiple Regression Equation Given on Page 37) Year, November-April F.O.B. price Domestic shipments Nonagricultural income Index of temperature 1 2 3 4 1921-22 dollars per box 3.48 4.20 2.38 3.87 3.33 2.73 4.81 3.58 4.94 3.09 2.49 3.09 3.20 2.18 3.72 3.79 3.50 2.56 2.99 2.42 3.21 4.89 4.78 6.49 a 100,000 boxes 16.4 13.1 19.1 16.5 17.5 19.5 15.2 21.5 15.6 20.1 19.8 17.6 20.7 26.1 23.4 25.6 22.8 24.9 27.5 30.1 27.8 30.7 30.1 28.6 1935-39 = 100 81 95 105 106 115 116 116 121 119 105 83 67 77 83 92 106 100 104 111 126 156 267 294 309 1931-32 = 100 81 1922-23 78 1923-24 85 1924-25 82 1925-26 80 1926-27 82 1927-28 84 1928-29 81 1929-30 86 1930-31 87 1931-32 100 1932-33 91 1933-34 76 1934-35 79 1935-36 67 1936-37. . 90 1937-38 84 1938-39 87 1939-40 77 1940-41 83 1941-42 82 war years 1946-47 85 1947-48 75 1948-49 92 ■ Preliminary price of $6.51 was used in the calculation of regression constants Sources : Col. 1: Based on prices received by the California Fruit Growers Exchange for lemons shipped during the specified periods and sold for consumption fresh. Beginning with November, 1926, prices of lemons sold loose are included. For the seasons 1935-1941, prices of exported lemons are excluded. Col. 2: For seasons through 1940-41 see Giannini Foundation Mimeographed Report No. 84, Table 17, p. 65. Data for later seasons are based on total shipments for consumption fresh as reported by the Lemon Administrative Committee less domestic exports as reported in "Monthly Summary of Foreign Commerce of the United States" (U.S. Department of Commerce). Exports for 1949 and all imports converted from pounds to boxes on a basis of 76 pounds per box. Col. 3: Figures are averages of seasonally corrected monthly estimates. Through the season 1928-29 averages are based on monthly relatives reported in "Nonagricultural Income Payments, United States, 1919 to Date," Bureau of Agricultural Economics, Washington, DC, July 21, 1941 (Mimeo.). For later seasons, the sources are July 1947 Supplement to "Survey of Current Business" (U.S. Department of Commerce) and current issues of the Survey. Col. 4: Giannini Foundation Mimeographed Report No. 84, Table 23, p. 77 extended through 1949. The entries are based on monthly mean temperatures, December through February in 32 cities weighted by the population in the corresponding metropolitan districts. [71] Table 4. Fresh Winter Lemons; Derived "Optimum" Shipments (Unconstrained), and Actual Shipments from 1921-22 Season a w Computed "optimum" shipments Actual shipments 1 2 3 1921-22 7.411484 7.828091 7.865984 8.095248 8.407693 8.476422 8.530740 8.817648 8.746823 8.631494 8.015593 8.192512 8.936759 9.045436 9.678951 b 9.485484 9.565339 10.105818 10.247873 10.830842 12.926802 13.755501 13.544379 100,000 boxes 13.8 14.6 14.7 15.1 15.7 15.8 15.9 16.5 16.3 16.1 15.0 15.3 16.7 16.9 18.1 b 17.7 17.8 18.8 19.1 20.2 24.1 25.7 25.3 16.4 13.1 19.1 16.5 17.5 19.5 15.2 21.5 15.6 20.1 19.8 17.6 20.7 26.1 23.4 b 22.8 24.9 27.5 30.1 27.8 30.7 30.1 28.6 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33 1933-34 1934-35 1936-37 1938-39 1940-41 war years 1947-48 1948-49 ments) were used to obtain, for each year, a winter seasonal statistical demand equation in the form p w = a w — 0.267921 q w . The a w values, for the individual years, are in Col. 1, above. The computed "optimum" • The 1936-37 winter season was omitted from the analysis because of the unusual price-quantity relation of that year, due to nonmaterialized expectations of frost damage to the crop. [72 Table 5. Fresh Summer Lemons; Derived "Optimum" Shipments (Unconstrained), and Actual Shipments from 1 921—22 Season a 3 Computed "optimum" shipments Actual shipments 1 2 3 8.000752 8.347082 7.731569 9.126139 8.666434 8.404379 8.840257 9.386952 9.705312 9.011042 8.073696 8.231741 8.853242 7.838952 9.150085 8.783115 8.257394 8.665635 8.096038 9.424926 12.024619 12.672892 12.997225 100,000 boxes 1921-22 1922-23 34.8 36.4 33.7 39.8 37.8 36.6 38.5 40.9 42.3 39.2 35.2 35.8 38.6 34.1 39.8 38.2 36.0 37.4 35.3 41.0 52.4 55.2 56.6 32.8 31.2 1923-24 36.9 1924-25 39.9 1925-26 1926-27 40.3 35.1 1927-28 35.0 1928-29 35.5 1929-30 1930-31 38.8 39.9 1931-32 31.2 1932-33 35.4 1933-34 40.6 1934-35 41.6 1935-36 43.1 1936-37 38.7 1937-38 43.5 1938-39 47.0 1939-40 46.1 1940-41 55.0 war years 1946-47 55.9 b 1947-48 53.9 b 1948-49 50.8 b a Using equation IS in Table 8, page 76, the annual values of the independent variables (except U.S. supply) were used to obtain, for each year, a summer seasonal statistical demand equation in the form p 3 = as — 0.114787 q 9 . The a a values, for the individual years, are in Col. 1, above. The computed "optimum" shipments were derived from the condition that q 9 = a 3 /2 (0.114787). b Preliminary estimates of shipments of 60.0 for 1947, 53.8 for 1948, and 49.9 for 1949 were used in calcu - lation of regression constants. [73 Table 6. California Lemons, "Optimum" 21 (Constrained) Allocation Between Summer and Winter Fresh Shipments from 1921-22 Season aw as Constrained "optimum" winter shipments b Constrained "optimum" summer shipments 7.411484 7.828091 7.865984 8.095248 8.407693 8.476422 8.530740 8.817648 8.746823 8.631494 8.015593 8.192512 8.936759 9.045436 9.678951 9.485484 9.565339 10.105818 10.247873 12.926802 13.755501 13.544379 8.000752 8.347082 7.731569 9.126139 8.666434 8.404379 8.840257 9.386952 9.705312 9.011042 8.073696 8.231741 8.853242 7.838952 9.150085 8.257394 8.665635 8.096038 9.424926 12.024619 12.672892 12.997225 100,000 boxes 1921-22 13.986869 12.609009 16.971894 15.569420 16.998124 16.470498 14.652291 16.352433 15.064144 17.500146 15.220705 15.845231 18.495045 21.881753 20.636539 21.490073 22.740673 24.700850 26.599515 27.152935 26.608831 24.529576 35.213131 1922-23 31.690991 1923-24 39.028106 1924-25 40.830580 1925-26 40.801876 1926-27 38.129502 1927-28 35.547709 1928-29 40.647567 1929-30 39.335856 1930-31 42.499854 1931-32 35.779295 1932-33 37.154769 1933-34 42.804955 1934-35 45.818247 1935-36 45.863461 1936-37* 1937-38 44.809927 1938-39 49.159327 1939-40 48.899150 1940-41 58.500485 war years 1946-47 59.447065 1947-48 57.391169 1948-49 54.870424 a Using the seasonal price- quantity net relations, p w = a w — 0.267921q w and p s = a 3 — 0.114787q 3 , where qw + q s = Q. a w — a s +2(0.114787) Q bq w = . 2(0.267921 + 0.114787) c q s = Q — qw. * The 1936-37 marketing year was omitted from the analysis. Note: The equations p w = a w — 0.267921q w and p s == a s — 0.114787q s respectively, are based on equations IS and 1W in Table 8, page 76, also from which the a w and a , for the individual years were obtained by substi- tuting the annual values for all the independent variables except q. [74] Table 7. California Lemons, "On-Tree" Prices, Quantities Utilized, Fresh and Processed Use, and U. S. Nonagricultural Income, from 1921-22 "On Tree" prices Quantities utilized U.S. nonagricul- Season Fresh use Processed use Fresh use Processed use tural income 1 2 3 4 5 dollars per packed box equivalent 1,000 packed boxes 1935-39 = 100 1921-22 1922-23. 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 war y 1946-47 1947-48 a 1948-49* 1949-50 2.34 3.06 0.97 2.87 1.75 2.53 3.27 3.15 3.49 2.53 2.18 2.13 2.48 1.71 2.93 3.04 1.70 1.56 1.67 ears 3.07 3.02 4.45 3.89 0.01 0.01 0.15 0.15 0.20 0.22 0.55 0.40 0.16 0.06 0.02 0.01 0.08 0.07 0.48 0.54 0.11 0.05 0.22 -0.28 -0.36 0.05 0.33 4,085 3,676 5,264 4,775 5,821 4,534 4,895 5,574 5,629 5,704 5,247 5,742 6,194 7,184 7,422 6,533 7,761 7,777 8,327 9,369 8,469 7,780 7,569 281 96 1,157 515 1,484 2,315 511 2,033 466 2,232 2,435 948 1,087 3,549 351 1,032 1,529 3,315 3,642 4,414 4,386 2,215 2,916 84.5 97.5 103.0 108.0 114.5 116.0 117.5 123.0 115.0 100.0 77.5 68.5 78.5 84.5 98.0 107.5 100.0 105.5 113.0 274.5 300.0 308.5 323.9 a The following preliminary on tree prices were used in the regression analyses: 1947-48, fresh use 3.00, processed use —0.47; 1948-49, fresh use 4.57, processed use —0.34. Sources : Cols. 1 and 2: U. S. Bureau of Agricultural Economics. "Fruit and Nut Prices, Prices Received by Growers for Fruit and Nut Crops, by Type of Sale and Utilization Groups, 1909-1946," and "Agricultural Prices," Oct. 27, 1950. Cols. 3 and 4: U. S. Bureau of Agricultural Economics. "Citrus Fruits, Production, Farm Disposition, Value and Utilization of Sales," Oct. 1945, Oct. 1947, Oct. 1948, Oct. 1949, and Oct. 1950. Col. 5: Computed from data published monthly in "Survey of Current Business," Bureau of Foreign and Domestic Commerce, U. S. Dept. of Commerce. [75] •H o W la 8 fl'SS e« < « » s X O O D < "8 C 8 a S B X 8 '■£ £ 8 >■ 3 b .7 o :* o '5 x *n +■ £ » 8).E 0) tj a 3 O w H Q. X +■ w ' "3 2 C0 3 o E * § ? o 0* 8 H o X ■- "2 M *- o *■ w w •a 5 *" CH "8 CH O 1 a +■ _ & 2 es X « o 0* CO a — l ctors nter, 8 > o"g X — c 8 8 U o E u> 3 X (A U i. «> 0- S C 8 o *■ & ^a o H » -J u O X (A •i .8 Ik $ 5 * • 00 Q ? o CO to ©"* 00 H ©■<* to to CO H tH CO *tf os OSH coos co-^ CM Tt« oeo o-^ OCO ^ CO 00 tr-t- CO OS 00 c- lO CM co to CM 00 "^O 00 CO CM t- OOS H CM coco CO H CO OS oco o to OCM OCD oco OCO ^ t-oo 05^ H t- 00^ 00 CM coos t-00 CM 00 t>H ^ t- to t- OS -«tf H CO HCN O OS HCO HCO HCO ©"* OTjt OCO 1 W 1 w 1 W 8 8 9 ■«tf t- OS o CO o o § CO CM CO o H 3 1 H 1 X X X 03 03 03 H CM CO H ^ to H 8 H OS OS OS Tj<^H CM OS o to OCM OH 1 "-" t- H H^ 00 H CO CO CO CM 00 CO HT* CM *tf too H !> CO CD t- OS CM H to ^ CO CM t- CO 00 ^ CO 00 CM CO H H lO CM O 00 H00 ,H lO HO O CO O CO oco b- Tt< CMO 00 t- s§ os to i-H CO HO CO H CM CO O CO -^ CM CO H CM OS CM lO OCM ooo o to OCM OH OH 1 W 1 " 1 ^ ^ H00 •^ t- OS H H OS o ^ to to ■«* CO CM CO o to -* •«* t- to ■^ to H CM H OS tH to 0"# OCM O CM ot- OH Ot- H / HO0 co to H00 CM 00 CM CM O 00 OS ^ CO CO ■^ 00 t- OS O OS t- 00 COH OI> o oo CM CO coco CM H OCO OOS o co 1 " 1 w CO oo H t> l> to c- "* to to CO CO oo H H CO CO t- o os 00 H X X X £ * * H CM CO o I? _ m T3 n <0 (C iill S"X E o X If G 3 «- O in if § IS" 3 Hi * n < O c .2 -2 3 7. " o- S o .2 o m m °"2 2 ■D J O) 8 - fig •^ -£ 0) — ill o ci o pi - 1 ^ 00 w OCN °d- OCO* o'co OCO* odd 00 CN OCN d^ do .2 "3 l~ l~ 1^ co^ CN 1 — W s w eo^^ w o — 1 1 1 1 I) M ^^ ^ ^^ ^ ^ ^ ^ ^ ^^ M CD CD t-W OCO TUt- COtP OO 00 t- COrH OCN OO V at ss CNW m co OSIO coco §s ■^00 COCN OCN coo 3 »2 COO CN© COCN rHCO OO wt- COCN OW t-o eo OCN CNW cn ta OCO OCO rHCO OO OCO ss CNt- M ©w 83 89 OO CNCN o w 80 SJ 1 V Ot-; Tj|rH COCN coco WCN WCN OO 09 © CN ©CN on' OCN do do 1* 00 rH O'rH O'CN* | W I"- 1 W l~ \- TJ cS a. COCO ©rH ©rH sS WW IOH 01 rH© HIO rHCO rHO fl ooo ©CN OtN 8S OrH 5 X CO 83 ©w qco bo OrH OCN o"c4 o'co' 1^ 1^ \- £ Wt- COO C-tN CDi-t T* W rHOO ^05 ©w OCO >< OCO 89 8S OCO o-# ©w OCN ©cn o'd o'd I w I w l w rH^f OrH rHrH" N^C s§ OrH~ CNO t-CO OCN WW COrH COt- COrH O W OO rHO OW ■^t- esTS •rH o£2 CN ? 8 s . •fl) IS l* t-00 00 CO OCO OCN do CO — 2?B CO ^-^ esTS riS, CN rH 1 1 1 1 OCO COCO wco OCO OO rHO rHO ooo ^w 00 rH COO WOO rHT* s^ COtN 88 O W WO t-co OCO t-rH ©** t-t- CNrH t-T}< t-00 OCO CN.S CNO >« C-rH COrH t-;CN ^O CO'tN w'cd co'eo' CO,*' 66 o'd OS — W 1 1 w^ I w—^ w 1 CO — 1 r CN 00 CN CN 00 w 2 w o i CN o « CO rH rH rH s CO 1 1-t s 3 g 8 § 3 s g2 t" CO CN *< t- rH o o o t- CN CN CD w' 00 O 6 o* rH CN 6 s w 1 t- 00* 6 8 w 2 t- CN* CN W I rH H rH 00~ ri ^J" ri w w o~ r**" H rH rH ■<* ^ ^ CO ■o .2 Q $ £ a a c rH >< r< r< r< a. X 0. a X >< o is' tH CN CO ■^ w o t- 00 o o ^4 CN rH y-i cr W t-' ^ H r-' • © bp . ° a oS am o .S eo"^- 6 - - m o S ■.-"» &EH •° "m^^ - ^ « © W O-OTf g S s S"fl- ft ag 8 -co .3.1^2-n as h J3 >- 2 S to "S-o-l gilis? J C w 222S552" "op," ao ssii||s- ggo6|5|5 © ©S'^'o £** o © ©-rt'is c c S . G C s 3 . S £ -° OOo > , £3W!>H II II II II II II II II Table 10. California Lemons, "Optimum" (Constrained) Allocation' Between Fresh and Processed Utilization from 1921-22 Season &i a P Constrained "optimum" fresh allocation 13 Constrained "optimum" process allocation 1 : 5609.5 5924.8 5813.1 6128.4 6401.0 6502.8 6604.6 6919.9 6893.6 7038.1 6670.2 7241.7 8069.4 8128.5 8828.1 8033.2 8476.6 8535.7 9149.9 10118.7 10732.9 10194.2 10424.1 420.295 762.875 2198.690 561.570 1826.425 2650.320 2286.435 1832.600 744.270 1338.570 2000.295 1784.795 1236.515 3315.715 1926.120 2732.085 3150.980 2697.145 3953.010 3395.705 3032.020 2119.295 3736.059 1,000 equivalent packed boxes 1921-22 3064.775 3044.802 3371.347 3438.526 3814.676 3688.740 3487.149 4081.721 3884.838 4240.304 3979.196 4039.775 4540.478 5028.617 4875.149 4436.604 4907.311 5321.648 5617.579 6411.494 6515.890 5835.788 5867.341 1301.225 1922-23 727.198 1923-24 3049.653 1924-25 1851.474 1925-26 3490.324 1926-27 3160.260 1927-28 1918.851 1928-29 3525.279 1929-30 2210.162 1930-31 3695.696 1931-32 3702.804 1932-33 2650.225 1933-34 1934-35 1935-36 1936-37 1937-38 2740.522 5704.383 2897.851 3128.396 4382.689 1938-39 1939-40 5770.352 6351.421 war years 1946-47 1947-48 1948-49 1949-50 7371.506 6339.110 4159.212 4617.659 a Using the seasonal price-quantity net relations, qf = af — 2,333.015pf and q P = a P — 556.0771p P qf + q P = Q- where 2,333.015a f — 556.0771a P + 2(556.0771Q) q f = q P = Q — qf- 2(2,333.015 + 556.0771) Note : The equations qf = af — 2,333.015j»f and q p = a P — 556.0771p P , respectively, are based on equa- tions 8 and 11, Table 9, page 77, also from which af and a p for the individual years were obtained by substi- tuting the annual values for all the independent variables except p. [781 The tables and figures appear- ing in this circular are sum- maries of more detailed tables, which are published in a sepa- rate Statistical Supplement in mimeographed form and which give the sources in detail. This supplement can be obtained by writing to the Giannini Founda- tion of Agricultural Economics, University of California, Berke- ley 4, California. 12Jm-2,'52(8675)L.B. test tube farming pays off for you Not all of the agricultural research done by the University of California is field work. Much useful knowledge comes to light through work done under controlled laboratory conditions. This information, after thorough checking and application to field problems, becomes available to all California farmers. Distribution of this knowledge is made through: LITERATURE: Circulars, bulletins, lithoprints, and leaflets by specialists are available free. These publications cover many subjects re- lating to agriculture in the state. For a catalog of this litera- ture write to the Office of Agricultural Publications, 22 Giannini Hall, University of California, Berkeley 4. COUNTY FARM ADVISORS: Farm Advisors are agricultural specialists with a background of practical knowledge. They serve 52 counties throughout the state and their mission is to help farmers work out their problems. Get to know your Farm Advisor — take advantage of his services. MAIL INQUIRIES: If you prefer to put your questions in a letter, mail them to the Public Service Office of the College of Agriculture, Uni- versity of CaJifornia, either at Berkeley or at Davis. Your problem will be referred to the person or department best £ able to give you the exact information you need. THE COLLEGE OF AGRICULTURE UNIVERSITY OF CALIFORNIA