campaign. The effect of advertising is quickly dissipated if the consumer is unable to procure the product in question when he asks for it.

An organization that advertises its products to the consumer assumes the responsibility of maintaining satisfactory quality, an adequate supply, and fair prices.

RELATION OF PRODUCTION TO COOPERATIVE MARKETING

In the five years, 1920-1924, shipments of fruits and melons increased 31.7 per cent from 346,369 cars to 456,469 cars; shipments of vegetables increased during the same period 41 per cent from 345,572 cars to 487,238 cars. The population of the United States during the same period increased approximately 8 per cent. In other words, shipments increased over four times as rapidly as population. (See Table 2.) Consequently, there has been an increase in the per capita consumption of fruits and vegetables, but in obtaining this increase the growers have been obliged to make concessions in price. It may be possible to increase further the per capita consumption of fruits and vegetables, but this opportunity is limited, if returns to the growers are to be brought in line with prices of other commodities. Efforts in this direction are handicapped also by high transportation charges, terminal costs, and wholesale and retail margins which make the retail price of most fruits and vegetables appear excessively high to city consumers. These margins will be high so long as the consumer demands the present service.

Some economies may be effected in the performance of marketing services, but the opportunities at present price levels for reducing the cost of the physical handling of the product are small. The shipper of western boxed apples, as an example, deals in car-lot units containing 750 boxes. The average consumer buys approximately 6 to 8 per cent of the contents of one box at one time, or one one-hundredth of 1 per cent of the car-lot unit. In other words, the original car lot may be sold to the consumers in more than 10,000 units of approximately 3 pounds each. This conveys some idea of the services and the actual handling of the product necessary to dispose of a carload of apples to the ultimate consumer. An analysis of marketing costs for northwestern apples in 1922-23 showed a combined retail and jobbing margin of approximately 47 cents of every dollar spent by the New York consumer.1

Considering fruits and vegetables, as a whole, it seems probable that the price is influenced chiefly by the available supply. This may not be true of a particular fruit or vegetable. Returns to apple growers, for example, have no doubt been depressed in part because of the tendency of the consumers to substitute oranges and other fruits when the prices of these competing fruits are comparable with those of apples. The use of grapefruit, strawberries, and cantaloupes as breakfast fruits has increased, and these products tend to compete with apples, as well as with each other. The demand for a favorite fruit may be a greater factor than the supply in affecting the price of the products mentioned. Or the increased use

14 Some facts about margins and costs in marketing fruits and vegetables in the port of New York district, the Port of New York Authority cooperating with the United States Department of Agriculture, April, 1925.

of orange juice at breakfast may depress the price of all of them and result in increased returns to the orange growers.

As is shown in Table 2, however, the production of all fruits and vegetables has been increasing steadily. Until the summer of 1925 the price level of these products, as compared with the pre-war period, was below the general price level. (See Table 1.) Increases in the returns received for fruits and vegetables depend on: (1) More economical production and marketing, (2) closer adjustment of the supply to demand, and (3) stimulation of the demand by advertising, better distribution and other means, by developing new markets and new uses for the product, or by manufacturing inferior grades into by-products.

The demand for fruits and vegetables is influenced by: (1) The total number of potential buyers, (2) the purchasing power of these buyers, and (3) the usefulness or desirability of fruits and vegetables as compared with other commodities which the consumers need or wish.

In general, it must be admitted that an increased consumption of fruits and vegetables results in a decrease in the use of other food products. The average person, perhaps, might eat another apple or another orange each day and still consume the same quantity of other foods as previously. It is more likely that he would eat correspondingly less of meat, or bread, or other fruits. Normally, an increase in the total consumption of fruits and vegetables would follow the increase in the total population. As has been shown, the percentage of increase in population since 1920 is less than one-third the increase in shipments of fruits and vegetables. Fruits and vegetables, however, have qualities which make their increased use in the diet desirable. This makes it possible for the producers and their cooperative associations to stimulate the demand for these products and increase the per capita consumption. Considerable progress has been made in this direction and undoubtedly the limit has not been reached. In fact, efforts of this kind have been confined to a few fruits, notably oranges and raisins.

The consumption of a certain product may be increased by demand stimulation, by enhancing its desirability, or by acquainting prospective customers with its desirable features. Growers are urged to produce varieties of fruits or vegetables which best meet the consumer's desires and favor. Standardization of grades, better methods of packaging, storage, transportation, and refrigeration are all efforts to make the product more desirable to the consumer and consequently to stimulate demand. These are all desirable activities, but it is necessary to appreciate that demand and consumption can be expanded only within relatively narrow limits and that each commodity comes into competition with other products. It must be appreciated also that demand created in this way is not necessarily permanent. The activities that created the demand must be continued to maintain it.

The fruit and vegetable growers may find buyers outside the United States. The extent to which foreign countries have afforded a market for American fruits is shown by Table 8 which gives the exports of the principal fruits for the years 1922 to 1924.

TABLE 8.-Exports of principal fruits by countries of destination, years ended June 30, 1922 to 19241

1 From the Division of Statistical and Historical Research, Bureau of Agricultural Economics.

* Jan. 1 to June 30 not separately classified prior to Jan. 1, 1922.

Except possibly for a few specialties, like raisins, prunes, and grapefruit, the possibility of increasing European demand for American fruits and vegetables appears to be limited. Canada, however, is an important market for many crops. Several national sales agencies have representatives in the more important Canadian cities, and there is some evidence that the per capita consumption of fruits and vegetables in Canada is about the same as in the United States. The opportunity for increasing consumption of fruits and vegetables is, therefore, no greater in Canada than in the United States.

The cooperative associations may also increase the consumption of fruits and vegetables by promoting new uses or new outlets for the product. One of the most striking examples of this is the popularity of raisin bread which was stimulated by the raisin growers' organization and provided an outlet for many tons of California raisins. The California Fruit Growers' Exchange states that an orange-juice extractor, manufactured by a subsidiary of the exchange, now provides a profitable outlet for over 2,500 cars of oranges each year. These oranges are consumed as orange juice which does not compete directly with fruits and vegetables, but with various drinks dispensed at soda fountains.

The manufacture of low-grade fruits and vegetables into byproducts opens up new outlets for these grades. What is more important the better grades no longer have to compete with inferior products. The difficulty in by-product manufacture has been to discover methods whereby cull products can be utilized profitably. The fruit and vegetable organizations should be interested in developing research work in this field.

CHANGES IN THE SUPPLY

Changes in the supply of fruits and vegetables tend to be made at the present time on the basis of the prices of past seasons, and usually fail to take into consideration the probable conditions during the period when the crops must be marketed. Changes in acreage of particular crops do not always reflect price changes, however, because it is not always possible to make readjustments in production practices even when a crop has been unprofitable for one or more years. Though production may increase rapidly in response to the stimulus of high prices, a year of low prices may not bring about a corresponding reduction in production. Furthermore, fruit trees and vines do not produce a commercial crop until from 3 to 10 years after they are planted. Consequently, the bearing acreage of this season has been determined several years previously. Adjustments in production are slow and difficult.

Over a long period, however, no grower will continue to produce crops that fail to bring him cost of production. Many growers abandon their orchards or truck fields under unfavorable market conditions. Others neglect fertilization, cultivation, spraying, and pruning because they can not afford to spend money to produce an unprofitable crop. As a result there are swings from periods of overproduction and low prices to periods of underproduction and high prices. Such swings, in one direction or the other, may occur without noteworthy changes in demand. This problem points to the

necessity on the part of the growers and their cooperative organizations to attempt to anticipate future conditions in view of trends instead of being guided solely by conditions that have passed.

Attempts to adjust the supply which result in alternating cycles of increased and reduced production are wasteful from the point of view of both the producer and the consumer. Both classes are interested in stabilized production. The supply should be adequate for the needs of the market, but not in excess of those needs. If supplies are greatly in excess of market requirement, prices to the producers are disastrously low, quantities of products are left to rot in the fields, orchards, or warehouses. These conditions in production. usually result in unstable market conditions which in turn tend to restrict consumption.

The advantages the consumer receives from buying fruits and vegetables at a comparatively low price are offset by unduly high prices during subsequent years of reduced production. In fact, since retail prices change more slowly than wholesale prices the consumer does not receive the full benefit of the low prices resulting from overproduction. The grower suffers, first, from unduly low prices during the period of abundant production, and, second, from an actual restriction of consumption, caused by fluctuating prices, unstable market conditions and, in the second phase of the cycle, inadequate or uncertain supplies.

Much has been written regarding the stabilization of distribution. It seldom has been realized that this must include stabilization of production. In so far as the supply of fruits and vegetables can be adjusted to conform to the normal demands of the market, both the producers and consumers will benefit. Some of the greatest possibilities for cooperative associations lie in adjusting production practices the better to fit market requirements.

FUNCTIONS OF THE COOPERATIVE ASSOCIATIONS

Up to the present time the efforts of the fruit and vegetable marketing organizations have been devoted mainly to preparing for market and selling the products of their members. Many cooperative associations have introduced definite savings and have brought about improvements in the grade and pack of fruit and vegetable products.

The question of the stabilization of production has not been met except incidentally. The Fruit Growers' Supply Co., the purchasing organization of the cooperative associations affiliated with the California Fruit Growers' Exchange, has maintained a bud-supply department. By furnishing the growers with buds from citrus trees of known productivity which bear fruit of good quality, it has been instrumental in improving the marketing qualities of California oranges and lemons. Some associations are concerned with questions of fertilization, cultivation, and pruning with the avowed purpose of establishing approved methods and raising the quality of the fruit or vegetables placed on the market.

This, however, is but one phase of the problem. Partly because of the successful merchandising and advertising program of the California Fruit Growers' Exchange, as one example, the produc