PROCESSING, WAREHOUSING AND SELLING


 Over 90 percent of oranges and 60 percent of grapefruit enter the
processing channel (Figure 1). The processing channel is a multiple
product channel in which frozen concentrate, chilled and canned products
are produced. For each product there are a different set of factors
that may influence costs. In order to simplify presentation, the major
product for oranges and grapefruit will be used to illustrate the cost
trends.
 For oranges, frozen concentrate is the dominant product form
(Table 11). For one case of 48 six-ounce cans, warehousing costs have
shown the greatest variability and the greatest percentage increase
(Table 12) of all processing, warehousing and selling costs. One potential
explanation for the increase and cost variability over time is the level
of inventory as measured by carryover at the end of the season. Carryover
has also increased and shown a great deal of variability since the 1959-60
season (Table 13). During the period, average warehousing costs increased
from $0.08 to $0.22 per case of 48 six-ounce cans, and ending inventory of
concentrate increased from 9.7 million gallons to 53 million gallons. Both
data series have shown great variability.
 Other items were quite stable until the last six seasons. Material
costs were just below base period levels during the 1971-72 season but
increased to 143 percent of the base period level in the 1974-75 season and
then decreased (Table 12). Labor expenses have shown a more dramatic
increase over the past six seasons by increasing to 156 percent of the
average level. Other processing and administrative expenses have increased
to 135 and 149 percent, respectively, and total processing costs have
trended upward since the 1964-65 season.
 For grapefruit, the dominant product form has been canned single-
strength juice (Table 14). For one case of 12 46-ounce cans, many of the
items have followed trends similar to those for FCOJ. Other processing
expenses have shown the greatest increase relative to the base period
(174 in 1976-77). Total processing costs have increased dramatically in
the past six years to 146 percent of the base period (Table 15).