anaheim-gazette 1932-09-22

TO OUR FELLOW GREETINGS:—The citrus growers of California have mutual problems which we believe can and should be solved in a friendly, open-minded and profitable way. This announcement is a sincere endeavor on our part to present facts which we hope will assist in furthering the welfare of all individual citrus growers of California. We have tried twice to have these suggestions submitted to the growers through the regular conferences which have been held in Santa Ana but both times such requests were refused. We are forced, therefore, to use this medium to reach you. We wish to point out that the suggestions set forth an immediate and temporary plan which without delay can be put into operation for the remainder of this season, and a permanent plan which we believe will go far in solving major citrus distribution problems. A careful analysis shows that the relative purchasing power of California citrus fruits is stronger than that of other farm commodities, and that the acreage values of California citrus groves are much higher than general farm values. We must safeguard the credit of our industry, the purchasing power of our crops, and the values of our groves against insidious gossip and rumor; against unwise publicity which tends to make the consuming public believe that we have a tremendous unmarketable surplus of California citrus fruits (and thus forces down market levels), and against malicious propaganda designed to harass and to disrupt the effective operations of our marketing groups. Cooperative marketing principles we know by experience are sound and dependable. The Mutual Orange Distributors was created more than a quarter of a century ago (1906) by individual citrus growers. It is strictly cooperative and directed by the individual citrus growers, and is a charter member of and represented on the board of the National Council of Cooperatives. The Mutual Orange Distributors, being a genuine cooperative, does not act without the consent and approval of the board of individual citrus growers who direct its policies and actions. We, who comprise its membership, therefore, express to you our views concerning several important matters which we believe are of vital interest to all individual citrus growers. All of us naturally acknowledge that the buying power of the consuming public and the amount of fruit produced by us, the individual growers, are two factors which directly affect the price we are to receive for our crops. And we, as growers, know, of course, that both of these are conditions not created by our marketing organizations and which are almost wholly beyond their control. When large crops are grown all marketing groups have increased burdens. It is the task of all individual growers to cooperate with them in the handling of the fruit. Assuming that fruit must be culled out, we believe it is logical to get rid of the poorest fruit raised. Such a policy means that the consumers and the market will be protected against the sale of lower grades and at the same time a place will be left for our quality fruit. We believe it is illogical and poor business for the growers to throw away their good fruit and at the same time continue to market low-grade fruit. However, before it is possible for any groups to gather at a table and settle common problems such as the matter of an orderly elimination of any of our fruit, there must be a common ground on which all can meet. One of the first essentials is that each party must be willing to subscribe to the doctrine of "live and let live." We believe that it is manifestly unfair and impossible for two or more groups to unite on a beneficial program when any one group sponsors the idea that all other groups should be destroyed or their membership weakened. Furthermore, we feel that before any plan affecting the interests of individual growers can be evolved that certain other basic principles must be recognized. These principles we believe are: 1. That the welfare of the individual growers is paramount and any plan affect We believe it is illogical and poor business for the growers to throw away their good fruit and at the same time continue to market low-grade fruit. However, before it is possible for any groups to gather at a table and settle common problems such as the matter of an orderly elimination of any of our fruit, there must be a common ground on which all can meet. One of the first essentials is that each party must be willing to subscribe to the doctrine of "live and let live." We believe that it is manifestly unfair and impossible for two or more groups to unite on a beneficial program when any one group sponsors the idea that all other groups should be destroyed or their membership weakened. Furthermore, we feel that before any plan affecting the interests of individual growers can be evolved certain other basic principles must be recognized. These principles we believe are: 1. That the welfare of the individual growers is paramount and any plan affecting the grower's fruit must be designed solely for the purpose of benefitting the individual growers of California; 2. That the plan first must be actually approved by the individual citrus growers who own or control the acreage which on the average each year produces an adequate control volume of our total yearly crop. Previous plans worked on have placed this volume at 90 per cent; 3. That all shipping groups should utilize their man-power and resources constructively to build their selling efficiency, and to create new market outlets. Any plan to be effective must be based on confidence, on tolerance and genuine understanding. It should not be designed (nor taken advantage of) as a means to increase membership of any selling group, or to undermine the membership of, or to disrupt the operations of any selling group. In our own government, the consent of the governed is a primary requisite. So it is with selling groups, particularly cooperatives. We believe the individual growers should be given an opportunity to analyze and to approve or to reject any plan before any selling group tries to put it into operation. This is no time to try to remedy the situation by subterfuge. On the contrary, each grower must have all of the facts. The grower, we feel, isn't looking for any "indirect" or "painless" way out. He wants the right way, the one which will increase his returns. The argument that such a policy is impossible because "we haven't time" or "the growers should be told what to do," in our judgment, is not acceptable. (Of course, the grower cannot be expected to arrive at sound conclusions unless he has all sides of each question. He needs facts and is entitled to them). When earlier in the season the first conferences were called to consider the matter of protecting our better fruit against the sale of low-grades, the Mutual Orange Distributors on request submitted a plan based on the principles hereinabove set forth. That plan after brief consideration was rejected. At the conference held at Santa Ana on the 29th day of August, we submitted a resolution requesting that these same principles be recognized. That resolution likewise was rejected. Since we first submitted our recommendation we have received some very constructive advice which is included as suggestions in the plan which is here set forth for your study. PERCENTAGE OF TOTAL SHIPMENTS BY EACH SHIPPER WEEK ENDING 6-25 TO WEEK ENDING 6-27 ACTUAL SHIPMENTS OF CALIFORNIA FRUIT GROWERS EXCHANGE AND M.O.D. FROM JUNE 19,1932 TO AUGUST 21,1932 CARLOADS INCLUDING ALL EXPORTS PERIOD OF PRORATE WEEK ENDING 6-25 7-2 7-9 7-16 7-23 7-30 8-6 8-13 8-20 HOW CITRUS GROWERS CAN OUR RECOMMENDATION It is understood, of course, that no plan can be a panacea for all ills of the industry. It is particularly true that no plan of orderly elimination can be of maximum benefit until competing fruits and citrus fruits produced in other states are under a coordinated plan, and we feel that we must openly face these facts rather than be lulled into security by the belief that any plan can actually accomplish impossibilities. Various plans have been submitted, to us and from these we have sought to mould one which contains the basic principles necessary to protect the interests of the individual growers. At this time we respectfully submit to the individual citrus growers of California for their usual careful and open-minded consideration the following general outline of a suggested plan (subject, of course, to revision of such minor details as is found necessary) which it will be noted sets forth a definite relationship between the individual growers and their respective packing groups (or where the grower deals directly with a selling organization, then directly with the latter), and, in turn, between the packing groups and an unbiased unit called the NEUTRAL UNIT. THE GROWER AND THE PACKING HOUSE The arrangement between the individual grower and his packing house would grant to the packing unit the right to gay when and in what amount the grower's fruit would be picked, and the right to cull out fruit which is declared unfit to be marketed. The grower, in our judgment, should have the right to withdraw therefrom at a stipulated time each year after the first year. THE PACKING HOUSE AND THE NEUTRAL UNIT The arrangement between each packing unit (or between the selling unit, where the growers deal directly with the latter) and the Neutral Unit would provide that the packing (or selling) unit and the growers served by it would abide by the decisions of the Neutral Unit. Each packing unit should be permitted to withdraw, we believe, each year after the first year. THE NEUTRAL UNIT The Neutral Unit, we believe, should have the power to perform only the following specific acts: 1. From time to time to determine what portion, if any, of our crop should be declared unfit for market and to declare the same to be unfit for market, and, if necessary, to specify the particular fruit to be culled; provided, that in so doing the poorest fruit shall be so designated; and 2. To specify, if deemed advisable, the time when fruit declared unfit for market shall be culled out and not offered for sale. Provided that no decision of said Neutral Unit shall place an unequal burden on any packing unit or growers. It will be noted that any fruit to be culled out by the packing unit. The individual growers who compose each packing unit thus will be directly in touch with all handling of their own fruit. Naturally, they will see that the poorest fruit is culled out first. NEUTRAL UNIT—ITS COMPOSITION The Neutral Unit we believe should consist of those persons who are experts in the business. For that reason we would recommend that it consist of one (1) representative (preferably the sales expert) of each shipping organization whose packing groups have entered into contracts with the Neutral Unit. It is further recommended that the plan shall become effective only when individual growers who control the ageenge which annually produces a sufficient volume control are parties to the contract. Previous plans have worked on a 90 per cent basis. To avoid misunderstanding, it is suggested that the following definitions be adopted: Cull: To withhold from any channels of trade and sale, including diversion to by-products where by-products compete at any time directly or indirectly with our fresh citrus fruits; Unfit to Be Marketed: All citrus fruits not complying with the standardization laws of California and all citrus fruits which if sold will by reducing the general purchasing power of California citrus fruits lower; the total income of the industry. This plan, we believe, is built "from the bottom up" rather than from "the top down." Only by some such plan, we believe, are we going to be able to stop the sale of low-grade products which destroy the markets for our advertised good fruit. We respectfully request all individual growers to give these suggestions their usual careful and unbiased thought. CONCLUSION We are now, as we have always done in the past, regulating our shipments to meet It is further recommended that the plan shall become effective only when individual growers who control the aeration which annually produces a sufficient volume control are parties to the contract. Previous plans have worked on a 90 per cent basis. To avoid misunderstanding, it is suggested that the following definitions be adopted: Cull: To withhold from any channels of trade and sale, including diversion to by-products where the by-product compete at any time directly or indirectly with our fresh citrus fruits; Unfit to Be Marketed: All citrus fruits not complying with the standardization laws of California and all citrus fruits which if sold will by reducing the general purchasing power of California citrus fruits lower, the total income of the industry. This plan, we believe, is built "from the bottom up" rather than from "the top down". Only by some such plan, we believe, are we going to be able to stop the sale of low-grade products which destroy the markets for our advertised good fruit. We respectfully request all individual growers to give these suggestions their usual careful and unbiased thought. CONCLUSION: We are now, as we have always done in the past, regulating our shipments to meet demand conditions, including a constructive export plan. We urge other shippers to do the same thing so that all growers will be benefitted regardless of their marketing affiliations. We are ready and willing to abide by any suggestions which our individual citrus growers approve. We are ready and willing to have our sales experts confer on they did prior to 1927) with those of all other legitimate selling groups. We have repeatedly made this announcement. We can do no more until other groups express a willingness to do likewise. This could be done within 24 hours and get immediate action for the rest of the Valencia season. This announcement has been submitted to and unanimously approved by the boards of directors of all of the following packing associations affiliated with the Mutual Orange Distributors in Southern California which handle Valencia oranges. REDLANDS MUTUAL ORANGE ASSN. Redlands REDLANDS ORANGEDALE ASSN., Redlands REDLANDS FOOTHILL GROVES, Redlands ALLEN BREAK AND SON, Bryn Mawr CRAFTON MUTUAL ORCHARDS, Crafton HIGHLAND MUTUAL GROVES, Highland RIALTO ORANGE COMPANY, Rialto BLOOMINGTON ORANGE AND LEMON ASSOCIATION, Bloomington LITTLE LAKE MUTUAL ORCHARDS, Hemet RIVERSIDE COUNTY SELECT GROVES, Corona RIVERSIDE CITRUS ASSOCIATION, Riverside GOLDEN ORANGE GROVES, Covina FOOTHILL CITRUS UNION, Claremont UPLAND MUTUAL GROVES, Upland LA VERNE COOPERATIVE CITRUS ASSN., La Verne GLENDORA COOPERATIVE CITRUS ASSN., Glendora ANAHEIM COOPERATIVE ORANGE ASSN., Anaheim WHITTIER ORANGE AND LEMON ASSN., Whittier OLIVE HILLSIDE GROVES, Olive GARDEN GROVE MUTUAL ORANGE ASSN., Garden Grove INDEX MUTUAL ASSOCIATION, La Habra SANTA ANA-TUSTIN MUTUAL CITRUS ASSOCIATION, Tustin FULLERTON COOPERATIVE ORANGE ASSOCIATION, Fullerton ORANGE MUTUAL CITRUS ASSN., Orange ESCONDIDO COOPERATIVE CITRUS ASSOCIATION, Escondido FILLMORE COOPERATIVE ORANGE AND LEMON ASSN., Fillmore CHART NUMBER 1. This chart shows the comparative percentage of the total shipments of Valencia oranges made by the Mutual Orange Distributors (the small white spaces in the column), the California Fruit Growers Exchange (the largest black portion of the column), and all other shippers (the shaded portion at top of the column) for the period of week ending June 25, 1932, to and including the week ending August 20, 1932. This chart shows at a glance which shippers actually were effecting the market levels. It will be noted also that the shipments outside cooperatives during each week exceeded the average shipments of the M. O. D. The first four columns were during the pro-rate. CHART NUMBER 2. This chart shows the percentage of total shipments of Valencia oranges (domestic) made by the M. O. D. during the period of the pro-rate and until August 21, 1932. The top line indicates the 12 per cent of the total Valencia crop which the M. O. D. actually handled during 1931. The next line represents 10.78 per cent, which is the percentage allocated the M. O. D. under the pro-rate. This is 1.22 per cent less than its actual proportion of the total crop. The dotted line with the figures shows the actual percentages shipped by M. O. D. under and since the pro-rate. The figures are CHART NUMBER 2. This chart shows the percentage of total shipments of Valencia oranges (domestic) made by the M. O. D. during the period of the pro-rate and until August 21, 1932. The top line indicates the 12 per cent of the total Valencia crop which the M. O. D. actually handled during 1931. The next line represents 10.78 per cent, which is the percentage allocated the M. O. D. under the pro-rate. This is 1.22 per cent less than its actual proportion of the total crop. The dotted line with the figures shows the actual percentages shipped by M. O. D. under and since the pro-rate. The figures are the actual percentages. The horizontal dotted line indicates that the M. O. D. averaged only 9 per cent of the total shipments when in fact it was entitled under the pro-rate to 10.78 per cent. It exceeded that percentage once, during the week ending July 9, 1932, by 22/100ths of 1 per cent! It will be noted that since the pro-rate was abandoned M. O. D. shipments have been far below the percentage it was entitled to market under the pro-rate. CHART NUMBER 3. This chart shows the actual shipments in carloads of the M. O..D. and the California Fruit Growers Exchange for the period of the week ending June 25, 1932, to and including the week ending August 20, 1932. Please note that the M. O. D. shipments since the pro-rate was abandoned (7-16) have gone downward. Compare with this downward trend of the M. O. D. shipments the large increase in shipments (1234 cars) of the California Fruit Growers Exchange for the week ending July 23, 1932. The market dropped thereafter. CHART NUMBER 4. This chart shows the downward trend of price for large sizes (176's and larger) during the period of the operation of the abandoned pro-rate. The lower line shows the upward trend of small sizes (250's and smaller) during the same period. The causes for these price trends are: an over supply of large sizes due to picking for sizes by groups other than M. O. D., thus leaving small sizes on the tree, and to the fact that the M. O. D. exported 19 per cent of its total shipments, principally small sizes. Mutual Orange Distributors REDLANDS, CALIFORNIA THE ABANDONED PRO-RATE The abandoned pro-rate plan, we believe, was detrimental to the best interests of the individual growers. The Mutual Orange Distributors filed official notice of its withdrawal therefrom on June 30, 1932, thus complying with all terms of the agreement. This action of the Mutual Orange Distributors was taken officially by its board of directors, all of whom are citrus growers. They directed the withdrawal to be filed, and we are all in accord with that official action. We set forth this fact particularly because propaganda has been spread to the effect that this action was dictated by paid officials. Such a statement is untrue. Under the provisions of the abandoned pro-rate plan, very few individual growers were first consulted or had any voice in its operations. We feel that the Mutual Orange Distributors made a mistake by signing the agreement before it had been referred to all of its growers. The abandoned pro-rate plan did not stop the sale of low-grade or loose fruit, the sale of which actually injures the market for our good fruit. On the contrary, under the pro-rate plan much good fruit would not be sold and at the same time poorer grades actually were being sold. This meant that the growers not only would have lost the value of their good fruit which would have remained unsold at the close of the season but the portion of their good fruit which was sold had to meet the competition of the lower grades. The plan "pro-rated" a class of fruit which ought not to have been sent into trade channels. It must be understood that the abandoned pro-rate plan actually consisted of two pro-rates, one which pro-rated packed fruit and one which pro-rated loose, low-grade fruit. The plan penalized the individual growers by forcing their good fruit into competition with lower grades. We are told repeatedly "auction sales set the price for our fruit. If such is admitted to be true, then the low level of prices set by the loose fruit auction in Los Angeles for lower grades reduce the prices of our advertised good fruit to that level. We know that the market for our good fruit not only in Los Angeles but generally in California and on the Pacific Coast and as far East as Denver has been substantially lowered by the sale of loose and low-grade fruit. Such a condition we believe is not sound or for the best interests of the citrus growers of California. It penalizes our advertised good fruit. The abandoned pro-rate we did not believe was intended to govern foreign shipments. Our position is based on the fact that the matter of foreign shipments was discussed before the agreement was signed and it was our understanding as expressed by one of our representatives in the conference that any marketing group which exported fruit was to be congratulated for thus relieving the domestic market. As soon as the agreement became effective the majority of the distribution committee took the opposite position and insisted that exports must be included in the pro-rate and the shipper making them thus was to be penalized. We objected to this interpretation. No change was made until after the Mutual Orange Distributors withdrew, which was one month after the plan went into effect. (The plan was in actual operation for four (4) consecutive weeks during all of which time the Mutual Orange Distributors was shipping under the pro-rate). It is argued that the mere announcement of the signing of the abandoned pro-rate agreement had the psychological effect of causing the market to advance. If such be the truth, then the same psychological law should have reacted to cause the market to drop when the pro-rate was abandoned. The facts are that the trade on July 2nd knew the pro-rate was doomed, yet the market continued strong for two (2) weeks thereafter. The decline in the market which then set in was caused by the effect of the competing crops, less favorable weather conditions, and the fact that one large shipper materially increased its shipments. (See Chart No. 3 below). Under present buying power conditions we know, of course, that the market cannot withstand such heavy shipments. We objected to this interpretation. No change was made until after the Mutual Orange Distributors withdrew, which was one month after the plan went into effect. (The plan was in actual operation for four (4) consecutive weeks during all of which time the Mutual Orange Distributors was shipping under the pro-rate). It is argued that the mere announcement of the signing of the abandoned pro-rate agreement had the psychological effect of causing the market to advance. If such be the truth, then the same psychological law should have reacted to cause the market to drop when the pro-rate was abandoned. The facts are that the trade on July 2nd knew the pro-rate was doomed, yet the market continued strong for two (2) weeks thereafter. The decline in the market which then set in was caused by the effect of the competing crops, less favorable weather conditions, and the fact that one large shipper materially increased its shipments. (See Chart No. 3 below). Under present buying power conditions we know, of course, that the market cannot withstand such heavy shipments. The abandoned plan endangered cooperatives by forcing more growers to sell for cash. Already a larger part of the total crop is being and will be handled by speculators. This is breaking down the cooperative work of the past quarter century. Growers naturally want to know what a plan is before it begins to operate. It is imperative that it be referred to them first for their individual approval. A study of the price levels over a period of years during the months of July to October of each year reveals seasonal fluctuations similar in action to the ones we just have been passing through. The market is now advancing. This is to be expected under the present buying conditions, and general farm commodities prices show an upward trend. THE ACTUAL OPERATION OF THE ABANDONED PRO-RATE During the season 1931, based on carloads of 462 packed boxes each, the Mutual Orange Distributors handled 12 per cent of the total Valencia carload shipments. Under the abandoned pro-rate the Mutual Orange Distributors were allocated only 10.78 per cent. According to the 1931 annual report of the largest shipper, that organization shipped approximately 72 per cent. It was, however, allocated 86 per cent of the pro-rate shipments. The actual shipments (domestic) of the Mutual Orange Distributors during the four (4) weeks of the pro-rate averaged only 9 per cent of the total California shipments. The Mutual Orange Distributors under the abandoned pro-rate for all four (4) weeks were allocated only 452 carloads. It actually shipped to all domestic markets only 485 carloads. This was an excess of 33 cars over its allocation. This excess, of course, was not sufficient to affect the general market. Your attention respectfully is called to the charts set forth below. They set forth clearly the actual picture of shipments under and since the abandonment of the pro-rate agreement. We believe it is essential that all individual growers know the facts, shown in said charts, not alone because they prove the ineffectiveness of the abandoned pro-rate but principally because they show the necessity for all growers to know what any plan is and how it is to work before their fruit is handled under it. ACTUAL SHIPMENTS (DOMESTIC) NOTICE OF WITHDRAWAL PERIOD OF PRO-RATE WEEK 0-25 ENDING 7-2 7-9 7-16 7-23 7-30 8-6 8-13 8-20 PRICE TREND OF SIZES DURING PRO-RATE JUNE 18-JULY 16 DAILY AVERAGE SALES NEW YORK MARKET ON 7-10 7-25 8-1