Division of Agricultural Sciences
UNIVERSITY OF CALIFORNIA

COST AND EFFICIENCY IN HOUSE
PACKING WESTERN HEAD LETTUCE

R. V. Enochian, F. J. Smith, and L. L. Sammet

UNIVERSITY OF CALIFORNIA
DAVIS

DEC i % 19S7

LIBRARY

CALIFORNIA AGRICULTURAL EXPERIMENT STATION
GIANNINI FOUNDATION OF AGRICULTURAL ECONOMICS

Mimeographed Report No. 199

September 1957

FOREWORD

This study reports on the costs and efficiency of house packing western
head lettuce. A previous report focused on the costs and efficiency of alter-
native methods of lettuce field-packing operations.

Prior to l Q f>2, most of the lettuce shipped from the Salinas district was
house packed. Since that time, due to adoption of the vacuum- cooling process,
there has been a rapid change-over to field packing. The shift to field pack-
ing has created considerable excess capacity in existing house-packing facili-
ties. The immediate problem confronting shippers is how most economically to
use these facilities. Since the investment in buildings and equipment has
already been made, the effect of this item on costs can be ignored in the im-
mediate situation, and a solution can be worked out in terms of direct costs
only. This study indicates that direct costs are higher in smaller than in
larger packing houses . If a large number of Salinas packing houses were used
to pack the 1956 volume of lettuce, none could have been effectively organized
except as low-capacity operations and with high costs. The 1956 volume of
house-packed lettuce could have been processed through a single packing plant
of either i±20- or 630-crate-per-hour capacity. Costs would have been consid-
erably lower in the larger plant. It is recognized that consolidation of the
house-packing operations of a number of shippers in a single plant would give
rise to many administrative problems, the cost of which would have to be weighed
against the possible savings from consolidation.

Eventually, existing plants and equipment will wear out and must be re-
placed. The problem of the most economical organization when investment costs
for replacement of plants and equipment are included is then of interest. Given
a level of demand for house-packed lettuce sufficiently high to permit full ex-
ploitation of economies of scale, this study shows that costs, including the
fixed costs of buildings and equipment, are lowest with a plant of 630-crate-
per-hour capacity. The greatest economies occur between the small- (210 crates
per hour) and medium- sized (i|20 crates per hour) plants. Sufficient data are
presented to permit computation of costs for any size plant betxreen the range
of 210- to 630-crate-per-hour capacity under specified operating conditions.
Thus, when and if the demand for house-packed lettuce eventually stabilizes,
the information contained in this report should prove useful in the design of
optimum-sized plants.

This study was made cooperatively by the Giannini Foundation of Agricul-
tural Economics of the California Agricultural Experiment Station and the Agri-
cultural Marketing Service, U. S. Department of Agriculture, under authority of
the Research and Marketing Act of 19U6. The work was performed as a part of
Western Regional Research Project WM-lh relating to the marketing of western
head lettuce.

iii

COSTS AND EFFICIENCY IN HOUSE PACKING WESTERN HEAD LETTUCE

TABLE OF CONTENTS

Page

FOREWORD i

INTRODUCTION 1

The Problem 1

The Physical Organization of the Industry 2

Method of Cost Estimation k

Major Cost Components , . 5

Simplifications in Analysis 5

PACKING PLANT OPERATIONS AND COSTS 7

Operations Performed 7

Factors Affecting Rate of Output and Costs 13

Crew and Equipment Requirements and Costs

in Relation to Plant Capacity 15

Size of Crew in Relation to Plant Capacity 15

Crew Costs in Relation to Plant Capacity 18

Equipment Requirements 18

Equipment Replacement Costs and Annual

Fixed Costs of Equipment 20

Variable Repair and Equipment Operating Costs 22

Costs of Packing Materials and Supplies. ........... 22

Building Requirements and Costs .... 22

Space Requirements 22

Building Replacement Costs and Annual Fixed

Costs for Buildings 27

HARVESTING AND HAULING OPERATIONS AND COSTS 30

Operations Performed 30

Factors Affecting Crew Requirements and Costs . 32

"to «*.tp.H

fisxl 1 ! InunnA buss RlioO ^aams^eJ.qsfi sai.
. . . .' .BT^C'O 'IMA SKOlTAHHIO OHIJUAH

Crew and Equipment Requirements and Costs

in Relation to Output Per Day 33

Production Standards 33

Harvesting Crew and Equipment Requirements 35

Truck Driver and Hauling Equipment Requirements 38

Harvesting and Hauling Labor and Supervision

Costs Per Day 42

Equipment Costs 45

Operating Costs Per Day 45

Annual Fixed Costs of Equipment . 1+5

COMBINED PACKING HOUSE AND HARVESTING -HAULING COSTS 49

Total Variable Costs Per Day 49

Annual Fixed Costs , 49

Total Season Costs and Total Costs Per Packed Crate 52

IMPLICATION OF RESULTS TO THE PRESENT SITUATION IN THE

SALINAS DISTRICT 60

LIST OF TABLES

Table

1 Crew Organization, Wage Rates, Labor, and Supervision
Costs for Lettuce Packing Plant Operations as Related to
Capacity in Crates Per Hour, Salinas District, California,

1953-54 16

2 Equipment Requirements, Prices, and Installation Costs
for Three Different Capacities of Lettuce Packing Plants,

Salinas District, 1954 1 9

3 Replacement Costs and Annual Fixed Costs of Equipment for
Lettuce Packing Plants of Three Different Capacities,

Salinas District, 1954 21

4 Variable Equipment Repair and Operating Costs Per Day for
Lettuce Packing Plants of Three Different Capacities,

Salinas District, 1954 2 3

5 Costs of Materials and Supplies for Packing Lettuce,

Salinas District, California, 1954 24

»H

Table Page

6 Building Space Requirements for Lettuce Packing House

of Three Different Capacities, Salinas District, 195^ 26

7 Replacement Costs and Annual Fixed Costs of Buildings
for Lettuce Packing Plants of Three Different Capacities,

Salinas District, 195^ 28

8 Cutter Time Requirements in Harvesting Head Lettuce
Expressed in Man-Hours Per Basket and Production Stand-
ards in Baskets Per Man-Hour with Different Levels of
Harvest Density and Length of Harvest Strip, Salinas

District, 1953- 5^ 36

9 Lettuce Harvesting Crew Organization and Hours Worked
Per Day in Relation to Daily Output and Harvest Density,

Salinas District, California, 195^ 39

10 Number of Truck-Trailer Units and Drivers Required for
Harvesting an:? Hauling Lettuce in Relation to Distance
Traveled, Harvest Density, and Output Per Day, Salinas
District, California, 1953- 5^ ^3

11 Total Daily Lettuce Harvesting and Hauling Labor Costs
with Varying Daily Outputs, Harvest Densities, and Round-
Trip Distances from Field to Plant, Salinas District,

California, 1953-5^ ^

12 Replacement Costs, Annual Fixed Charges, and Operating
Costs Per Hour for Each Equipment Item Used in Harvesting

and Hauling Lettuce, Salinas District, California, 1953-54. ... w

13 Total Daily Lettuce Harvesting and Hauling Equipment
Operating Costs with Varying Daily Outputs, Harvest
Density, and Round-Trip Distances from Field to Plant,

Salinas District, California, 1953-5^ ^7

Ik Annual Fixed Costs of Lettuce Harvesting Equipment with
Varying Daily Outputs, Harvest Densities, and Round-Trip
Distances from Field to Plant, Salinas District, California,
1953-5^ ^ 8

15 Total Variable Lettuce Harvesting- Hauling and Packing Plant
Costs Per Day as Related to Output Per Day, Round-Trip
Distance from Field to Plant, and Harvest Density, Salinas

District, California, 195^ 50

16 Annual Fixed Costs of Harvesting-Hauling and Packing Lettuce
as Related to Plant Output Per Day, Round-Trip Distance from
Field to Plant, and Harvest Density, Salinas District, Cali-
fornia, 195^ 53

17 Total Season Cost of Harvesting-Hauling and Packing Lettuce
as Related to Plant Output Per Day, Round-Trip Distance from
Field to Plant, and Harvest Density, Salinas District, Cali-
fornia, 195^ 55

3fli JLflcJ

Table Page

18 Total Costs Per Crate of Harvesting-Hauling and Packing
Head Lettuce as Related to Plant Output Per Day, Round-
Trip Distance from Field to Plant, and Harvest Density,

Salinas District, California, 195k 57

19 Monthly Distribution of Ice-Packed Shipments and Hours
Worked and Estimated Season Total and Per Crate Costs of
Packing House Labor and Direct Supervision in Plants of
420- and 630-Crate-Per-Hour Capacity, Salinas District,
California, 1956 6k

LIST OF FIGURES

Figure

1 Diagrammatic Layout of Typical "String" of Lettuce

Packing Houses . 3

2 Process-Flow Diagram for a Typical Lettuce Packing

House . 8

3 Floor Plan for a Typical Lettuce Packing House with

Ik Packing Stations 9

k Inside View of a Typical Lettuce Packing House Showing

the "Packing Line" 11

5 Crushed Ice Being Blown Into A Refrigerator Car Loaded

With House-Packed Head Lettuce 12

6 Relation Between Packout Per Basket and Rate of Output
Per Packer Hour in a Sample of Lettuce Packing Houses,

Salinas District, California, 1953-54 14

7 Exterior View of Typical Lettuce Packing House 25

8 Lettuce Harvesting Crew and Loader in Operation 31

9 The Effect of Harvest Density on Rate of Travel of

Harvest Crews, Salinas District, California, 1953- 5k 34

10 The Effect of Harvest Density and Length of Harvest
Strip on Output Per Man-Hour of Standardized Baskets
of Lettuce, 100 Cubic Feet in Volume, Salinas District,

1953-54 37

11 Highway Truck Travel Time in Relation to Round-Trip
Distance Between Field and Packing House, Salinas

District, California, 1953-54 kl

vii

Figure Page

12 Total Costs Per Crate of Harvesting, Hauling, and
Packing Head Lettuce as Related to Plant Output Per
Day, Round-Trip Distance from Field to Plant, and

Harvest Density, Salinas District, 1953- 5^ 59

13 Distribution of Monthly Carlot Shipments of Ice-
Packed lettuce, Salinas District, 1956 62

COSTS AMD EFFICIENCY IN HOUSE PACKING WESTERN HEAD LETTUCE

R. V. Enochian, F. J. Smith, 2/ and L. L. Sammet^/

INTRODUCTION

Prior to 1952, methods of harvesting and packing western head lettuce in
the Salinas district for interstate shipment were highly standardized. Lettuce
was harvested from widely scattered fields, hauled to centrally located packing
houses, trimmed, packed in wooden crates between layers of crushed ice, and
loaded into refrigerated railroad cars for shipment. In 1952 a significant
proportion of lettuce prepared for interstate shipment (20 per cent) was field
packed. This was a direct outgrowth of the application of the vacuum-cooling
principle to lettuce. This new cooling method eliminated the need for direct
icing, made it feasible to use a corrugated paper carton rather than the stand-
ard wooden crate, and to pack in the field rather than in a centralized packing
house. Since that time, the new method has been rapidly adopted, and in 1956
approximately 92 per cent of the shipments from the Salinas district were field
packed and vacuum cooled.— ^

The Problem

The shift to field packing leaves the industry with considerable excess
capacity in its centralized packing facilities. The extent of this excess for

1/ Enochian, Robert V., Agricultural Economist, Agricultural Marketing Serv-
ice7 U. S. Department of Agriculture .

2/ Smith, Frank J., Cooperative Agent, California Agricultural Experiment
Station and Agricultural Marketing Service, U. S. Department of Agriculture.

3/ Sammet, L. L., Specialist in the Experiment Station, University of Cali-
fornia.

]\/ Harvesting and packing costs for several different methods of field pack-
ing have been considered in an earlier report. Smith, Frank J., L. L. Sammet,
a:d R. V. Enochian, Costs and Efficiency in Field Packing Western Head Lettuce
(Berkeley: University of California, Division of Agricultural Sciences, Agri-
cultural Experiment Station, December, 1955), U6p. (Giannini Foundation Mimeo-
graphed Report No. 183.) Processed.

the Salinas district is indicated by comparison of the 1956 range in monthly-
shipments of 62 to 387 cars of ice-packed lettuce with the 1951 range in monthly-
shipments of approximately 1,500 to 6,000 cars. For the 1956 season, ice-packed
lettuce amounted to only 3»8 per cent of the total shipments.

Continuing demand from certain markets for ice-packed lettuce, as x-rell as
the need for field cleanup after field-packing crews have finished their har-
vest, make it reasonable to assume that a limited amount of lettuce will con-
tinue to be ice packed, perhaps with a level of volume similar to that of 1956.
This directs attention to the problem of how the reduced volume of ice-packed
lettuce can be handled most economically. In the present situation of exist-
ing plants with much excess capacity, plant investment costs can be ignored
as these are sunk costs — assuming no salvage value — and have no bearing on cost-
minimizing adjustments in operations with existing equipment. The problem can
be resolved in terms of minimizing only the direct costs of operation. Assum-
ing, however, a continuing demand for ice-packed lettuce, the present plants
and equipment will eventually wear out and require replacement. The problem
of most economical organization when investment costs for replacement of plants
and equipment are included then is of interest.

This study, therefore, considers both the immediate and long-term aspects
of the problem. Specifically, the costs of harvesting and hauling operations
with different conditions as to harvest density, length of haul, length of har-
vest strip, and size of operation are considered. Similarly, the costs of plant
operations and their relation to size of plant are studied and the combined costs
of field harvest, hauling, and packing are estimated. Finally, the cost rela-
tionships thus developed are considered in relation to the current level of ship-
ments in the Salinas-Wat sonville district.

The Physical Organization of the Industry

In the Salinas district individually operated lettuce packing houses usu-
ally are located in groups called "strings." A diagrammatic layout of such a
group is shown in Figure 1. Each of these strings has a central ice-making
plant and a crate-making facility. Ice and crates are delivered on order to
individual packing houses by conveyor systems. In most cases these strings
were developed by the ice companies which generally own the land, railroad
spurs, ice-making facilities, the packing houses, and some of the equipment
in the packing houses.

Figure 1. Diagrammatic Layout of Typical "String" of Lettuce Packing Houses.

There are various arrangements for charging a firm using the packing facili-
ties in a string. Under some of these arrangements, the tenant of the packing
house pays a fixed monthly rental for all the facilities owned by the ice com-
pany and, in addition, pays the standard price for ice.i^ In other cases the
quantity of ice used by the firm determines the rental that will be charged,
while some firms pay no rent except insofar as the rent is included in the
standard price of the ice. Under still other arrangements, the packing house
and all of the equipment in it are owned by the packing firm, and ice is pur-
chased at the standard or a somewhat lower price from the ice company.

Trucks and trailers and other harvesting and hauling equipment are either
owned by the packing firms or rented from companies that specialize in this
service. Trucks used for hauling culls and trimmings away from the packing
house are either owned or rented, or the entire cull-hauling operation may be
done on a custom basis.

Method of Cost Estimation

Estimated costs, rather than average accounting costs, of a sample of firms
are presented in this report. The bases for these estimates are production
standards which are measures of the potential output rate of workers of average
skills working under relatively efficient operating conditions. For the most
part, production standards for harvesting operations were developed from time
and production studies, while standards for the packing house operations were
derived from daily accounting records of labor utilization and output.-^

From these standards, details of which are given in later sections, esti-
mates of crew and equipment requirements for various levels of output were de-
veloped. Appropriate wage rates were applied to the number of workers in each
job category to obtain estimates of the direct labor costc per hour.

1/ In 19^3, the price per ton was f?U«00.

2/ Packing house employees were paid on a piece-rate basis, and the maximum
output rate per packer hour was determined by management as a quality-control
measure. Under these conditions, it was felt that time and production studies
would not be as fruitful as they are in the case of field operations where the
worker is allowed to find his own level of productivity,,

Requirements for equipment and buildings were estimated from engineering
studies of space and equipment layouts for packing houses of different capaci-
ties. From these estimates, replacement costs were obtained by applying the
appropriate prices for equipment, construction materials, and construction
labor „ Price and wage data were obtained from equipment manufacturers and
building contractors. Annual fixed charges for depreciation, taxes, insurance,
interest on investment, and repairs were determined by applying appropriate
percentages to the estimated replacement costs.

The estimates of direct costs per hour of equipment operation (such as the
costs of gasoline, tires, power, water, and repairs) xrere obtained by applying
appropriate prices to estimates of physical quantities used per hour.

Major Cost Components

Three major cost components— harvesting, hauling, and packing plant opera-
tions — are considered in this report. For each of these components, costs are
further broken down into direct costs related to hours xiorked and volume of
output and fixed costs involving expenses that are not dependent on hours
worked or related to specific units of packout. The items included in each
category are:

Direct costs : These include all labor, materials, and supplies
used in the packing operations ; operating costs such as fuel, elec-
tricity, and vehicle tires j equipment repair expense related to hours
of use; and direct supervision.

Fixed costs : These include depreciation, interest, taxes, and
insurance on the investment in buildings and equipment as well as
vehicle license fees and other miscellaneous fixed expense associ-
ated with the ice-pack operations.

Simplifications in Analysis

A great many factors affect the costs of lettuce packing. Since to
include all of these specifically would unnecessarily complicate the analysis,
certain conditions are assumed. With reference to the organization of activi-
ties and allocation of costs within each packing string, for example, it is
assumed that each packing firm owns all of the harvesting and hauling equipment,
the packing house and loading docks, and all equipment used in the packing,
icing, loading, and cull-disposal operations. It is al^o assumed that

bClS £5ojt*I' : .

■ ■

10 iJ

the ice company owns the ice-making facilities, the land on which the packing
house is built, parking space for motor vehicles, the railroad spurs, and the
conveyor system for delivering block ice to the packing house; the price
charged for ice includes the costs of these items. Package materials are esti-
mated so as to include the costs of assembly and delivery to the packing house.

Another simplification relates to hours of operation. While this varies
among different plants and operating seasons and with respect to time within a
given season, the general practice in the plants studied was to schedule opera-
tions so as not to exceed 8 hours per day and a UO-hour week in the plant opera-
tions. This pattern as to hours worked, therefore, is assumed in the analysis.
With the exception of a limited amount of overtime work in connection with re-
ceiving operations at the packing house, this permits the calculation of labor
costs on the basis only of straight-time wage rates.

In the plan of analysis, the packing house is recog^zed as the focal point
of the ice-packing operations so that when the rate of packing house output is
specified this becomes the controlling factor with respect to crew and equipment
requirements for both the house and field operations. As a matter of conven-
ience, the packing house output rates considered in the analysis are stated in
terms of volume packed per eight-hour day. With some storage capacity at the
packing house for unpacked lettuce, field and house operations do not need to
be perfectly synchronized. The beginning and ending time of the house and field
workday do not need to be the same nor do total field and house hours worked per
day. Field operations need only to be scheduled to have available a supply of
lettuce at the beginning of the house workday and to maintain an adequate level
of supply through the day.

While not directly linked to hours worked in the packing house, field hours
worked per day can conveniently vary only within certain limits. If too few
field hours are worked, with harvesting rate exceeding the house-packing rate,
difficulty might be experienced in recruiting labor for certain field jobs, and
an excessive proportion of time would be spent in mobilizing the field crews
for work. On the other hand, an excessively long field workday with the har-
vesting rate less than the house-packing rate would require an excessively
early start to provide the daily total volume required, or the field day would
have to extend beyond the end of the packing house workday with substantial
carry-over of unpacked lettuce to the next day. To avoid these difficulties,
the field work time in relation to an 8-hour packing house workday is assumed
to range from a minimum of 6 to a maximum of °§ hours per day.

■ . • ■ • 1 •

An omission in the cost estimates is allowance for miscellaneous packing-
house supplies (for example, janitorial and office supplies) and general ex-
penses such as dues, donations, and administrative costs. Some of these have
been omitted because of difficulty in obtaining adequate estimates. This is
particularly true with respect to administrative expense. Relatively little
data were available, and separation of administrative expense for packing and
shipping operations for lettuce as compared with other commodities in multi-
product firms and from crop production activities of grower-shippers was not
possible. IJhile these items in total per year per firm amount to a substantial
sum, they are quite small on a per-package basis and are of such nature that
their omission does not impair the usefulness of the cost relationships devel-
oped in this study.

The above simplifications and the use of typical production and cost rates
at later points in the analysis are consistent with the objective of developing
estimates of costs that are representative of efficiently organized operations
using harvesting and packing methods and equipment of the types specified.
However, the cost estimates may not be appropriate for application to a particu-
lar situation in which operating conditions differ from those specified, in
which equipment purchases were made in different time periods, or in which dif-
ferent rates for wages, depreciation, taxes, insurance, and other costs are ap-
plicable. Basic data are presented, however, which would permit adaptation of
results to other more specialized situations.

The discussion immediately following concerns crew and equipment require-
ments and costs of the packing house operations as related to size of plant.
This is followed by an analysis of field harvesting and hauling costs and a
summary section in which combined costs of field and packing house costs are
presented. Finally, the cost relationships developed ar^ considered with re-
spect to economical organization of house-packing operations xd.th the current
volume level of ice-packed lettuce in the Salinas district,

PACKING PLANT OPERATIONS AND COSTS

Operations Performed

Over-all packing plant operations may be conveniently broken down into a
number of suboperations or stages which are connected by in-plant transportation
or storage links. Figure 2 is an illustration of such a breakdown. Figure 3

INCOMING LETTUCE

D Temporary
storage

Transportation

ICE

EMPTY BASKETS

ODD(;

EMPTY CRATE SUPPLY

PACKING
MATERIALS

Figure 2. Process-Flow Diagram for a Typical Lettuce Packing House.

Conveyors

Packed crates

Crushed ice

Empty crates

^-Car spots 45' apart--

T_ ~J

y<T L.Q o.d_in g _j oc kj _

Misc. | >■ — "— ' — - — — — — 'At'is-sa? — -

Sl0r ° qe | , Lidded V////////A Packing ^////////////////////////% ^ZA

Shed 7\
foreman s j
office - — *

Baskets

Receive and
grind ice

Crate
lining
plat-
form

Full and empty basket storage

Doorway

Rest rooms

Misc.
storage

'••"*-Empty crate
supply

Cull
pit

Cull

elevator

Cull |
hopper

227'

Figure 3. Floor Plan for a Typical Lettuce Packing House with llj Packing Stations.

10 0

shows the floor plan for a typical lettuce packing plant in which the areas
where specific operations are performed are designated.

Operations begin with the receipt of lettuce from the field. The receiver
records the quantity in each lot and the field from which it came. A group of
workers, the floor help , roll the baskets off the field truck to temporary stor-
age and reload the truck with empty baskets. T rimmers , located at packing sta-
tions along the packing line (illustrated in Figure k) } are supplied with full
baskets from temporary storage by the floormen.^/ To make the lettuce access-
ible, each packing station has an independently operated lift for tilting the
baskets. Air pressure for the lift is supplied from a central compressor.
Trimmers remove outer leaves, divert undersized and soft or damaged heads to a
cull sluice in which a constant stream of water is running. Trimmed heads are
placed on a ribbed packing table which runs the full length of the packing line.
Packers , equipped with two metal packing stands, sort the lettuce by size and
place the heads in xjooden crates lined with *ja::ed paper. Each crate contains
either 1*8 or 60 heads depending on size. Half crates containing 2k or 30 heads
are sometimes packed. A chemically treated pad and a shovelfull of ice are
placed between the first two layers. Packed crates are marked with the packer's
number and placed on a power conveyor to the padman , who places a chemically
treated pad over the top layer. He pushes the crate along a roller conveyor to
the top iceman, who places a shovelfull of ice on top of the pad. The paper
folder , when used, folds the paper liner over the pack. In small plants, this
job is done by the lidder , who then positions the crate in a semiautomatic lid-
ding machine. After lidding, a checker records the packer number and lot, and
the crates move to the labeler. Labels, lids, and pads are supplied out of
storage by a miscellaneous xjorker . After labeling, the crates continue on a
power conveyor to a refrigerator car where car loaders stack and brace the
crates. Loaded cars are then "blown" with crushed ice by a car top iceman
(see Figure 5).

1/ A variation in the receiving and trimmer supply operations, not consid-
ered" in this report, involves the use of inclined conveyors (commonly called
"drapers") at each packing station. These extend at right angles to the pack-
ing line. The section of conveyor at each station is individually controlled.
Field trailers with tiltable beds are pulled along right angles to these con-
veyors depositing lettuce on them. The lettuce is then conveyed upward to the
trimmers, who perform the operations described.

Fifs^ire U. Inside View of a Typical Lettuce
Packing House Showing the
"Packing Line"

Figure 5. Crushed Ice Beinp Blown Into A
Refrigerator Car Loaded With House-
Packed Head Lettuce

trimmers to the packers. On the other hand, when much poor-quality lettuce is
thrown cut with little time spent on trimming, the rate flow of lettuce to
the packers is not necessarily reduced even though packout per basket is less.
While the percentage of packout or, conversely, the percentage culls may have
an important effect on the rate of output, this effect was not separated from
the effects of other factors. The limiting output rate of 30 crates per packer
hour used by most packing houses in the Salinas district during the 1953 season
is the basic rate used in determining crew and equipment requirements in the
following section.

Crew and Equipment Requirements and Costs
in Relation to Pl ant Capacity

Size of Crew in Relation to Plant Capacit y

A survey of lettuce packing plants in Salinas revealed that the potential
capacity of most of them, determined by the number of crates packed per plant
hour, was nearly the same. Since one of the objectives of this study is to
determine the relationship between capacity of operation and cost — commonly
called determination of economies or diseconomies of scale — crew organizations
as well as building and equipment requirements for different plant capacities
had to be synthesized from record data and observations of plant operations.

The packer is the focal point of the crew organization of lettuce packing
p7.ant operations. Union agreement and long industry experience determine the
ratio of the number of workers in each job category to the number of packers.
Given the rate of packer output per hour (30 crates in this study) and a target
rate of output per plant hour, the over-all crew organization is determined by
the number of packers required.

Plants with capacities of 210, U20, and 630 crates per hour were selected
for analysis in this study. The l±20-crate plant was the size typically observed
in Salinas. While no plants observed were designed to be operated at 210-crate-
per-hour capacity, this size was chosen to see if there were significant dis-
economies in small-scale operations.

On the basis of the above plant output rates and the rate of packer output
of 30 crates, the crew organizations shown in Table 1 were developed. The ratio
of some workers—for example, the trir.imers to packers— does not vary with ca-
pacity of operation. For other workers— for example, the floormen— the ratio
decreases with larger operations. For still other workers — for example, the

■ !

TABLE 1

Crew Organization, Wage Rates, Labor, and Supervision Costs for Lettuce Packing Plant Operations
as Related to Capacity in Crates Per Hour, Salinas District, California, 1953-55

Crew organization and extra

time per plant hour

Wage rate per crate or

Total labor and

Number

Extra

Number

Extra

Number

Extra

per

hour in dollars?/

supervision costs

of wor-

time,

of wor-

time,

of wor-

time,

Per

| Per

Per

per plant hour

kers

hours

kers

hours

kers

hours

crate

hour

crate

hour

i crate

hour

in dollars

Plant size (crates per

hour)

Item

210

520

630

210

520

630

210

520

630

Crew required

Receiver

.500

.07500

1.500

.07500

1.500

.07500

1.500

3.00

Floor help

.500

.875

1.250

.O6875

1.375

.06875

1.375

.O6875

1.375

6.88

11.51

16.16

Trimmers

.06625

55.65

111.30

166.95

Packers

.08125

17.06

35.12

51.19

P adman]?/ .

.06625

.08125

.09875

1.99

2.55

2.96

Crate top icer£'

.07250

.10250

.08500

2.18

3.08

5.10

Paper folder 0 /

.09875

.08125

2.96

5.88

Lidder .

.01350

.01010

2.81

5.25

6.36

Checker^/

.06625

.08125

.09875

1.99

2.55

2.96

Labeler 0 /

.06875

.09875

.13375

2.06

2.96

5.01

Miscellaneous

.250

.06625

1.325

.06625

1.325

.06625

1.325

2.32

5.31

Carloader

.OI92.O

.01920

5.03

8.06

12.10

Car top icer

.250

.06875

1.375

.08375

1.375

.10125

1.375

2.50

2.85

3.38

Ice crusher]?/

.250

.07875

1.575

.09375

1.575

.08506

1-575

2.75

3.20

5.59

Crate liner 0 '

.07500

.08750

2.25

5.50

5.25

Cull truck driver

1.650

1.65

3.30

5.95

Packer bcssj*/ .

2.500

2.50

Shed foreman^/

3.125

3.12

Crew costs per hour

112.15

207.90

305.67

Net

Plus 5 per cent

218.30

for payroll taxes

117.75

319.90

Total cost per

1,756.50

eight-hour day

952.00

2,559.20

(Continued on next page.)

I 3J.

■

i ess, rot rc^i.*

1 fc& ?c*i£*

■ • . ■■ . • • . ■ c

t> v. r r

Table 1 continued.

a/ Piece rates for trimmers, packers, lidders, and carloaders are on a straight per-crate basis. Hourly costs for these
jobs are obtained by multiplying the appropriate piece rate by the number of crates packed per plant hour Other piece
rate job categora.es are paid on the basis of an average packer rate of output per hour (in this study 30 crates) For
these jobs hourly costs are computed by multiplying the appropriate piece rate by 30 and then multiplying this product
by the number of workers in the particular category. The cost of extra time, obtained by multiplying extra time worked
by the hourly rate, is added to the costs of particular job categories where applicable.

b/ For each packer over 8, | cent per crate is added to the average packer rate. When there are 2 employees, the \ cent
shall be paid for each packer over 16 and divided between the 2 employees. 4

c/ For each packer over 8, | cent per crate is added to the average packer rate. When there are 2 employees, the * cent
shall be paid for each packer over 16 and divided between the 2 employees.

d/ The packer boss received $100 per week and the foreman $125. The hourly rate is based on a to-hour week.

18,

crate lidder or the receiver— the number remains the same regardless of the
size of operation.

Crew Costs in Relation to Plant Capacity

Nearly all workers in the packing houses studied were paid a piece rate
based on the packout rate with a minimum hourly guarantee.

Crew costs per hour for crews of different sizes x*ere determined by apply-
ing appropriate piece rates to the output rates for each worker. These rates
and the costs per crew hour for each job category with ti .. ee different crew
sizes are given in Table l.i/

Because of the nature of packing house operations, some of the workers in
certain job categories report for work earlier or leave later than the remainder
of the crew. These include the receiver, some of the floor help, the iceman,
the ice blower, and a miscellaneous category. The receiver and floor help gen-
erally commence work about two hours before the packing house crew. The ice
crusher reports early to receive block ice from the central ice plant and to
prepare a supply of crushed ice for the packing crew. A miscellaneous worker
reports early to have ready for other workers a supply of pads, lids, labels,
paper crate liners, etc., which he keeps supplied throughout the day's opera-
tion. The car top iceman leaves later than the remainder of the crew because
he must ice the last car of lettuce packed. The extra hours required per day
for these jobs with different crew sizes x^ere determined from plant record data.
These requirements were converted to man-hours per crew hour for different crew
sizes and are given in Table 1, Pay for these extra hours is on an hourly basis.

Total labor costs per crew hour for each size plant T^ere obtained by add-
ing the costs for each job category, and these hourly totals were extended to
an eight-hour day. For 210-, U20-, and 630-crate plants, daily costs are $9l}2,
$1,71+6, and $2,559, respectively.

Equipment Requirements

Equipment requirements for the three sizes of plants are presented in
Table 2, The packing line, shown in Figure U, is the focal point of the entire

1/ The wage rates given in Table 1 were taken from the 1953 Packing House
Agreement between the Grower-Shipper • s Vegetable Association of Central Cali-
fornia and the United Fresh Fruit and Vegetable Workers' Local Industrial
Union No, 78 (CIO).

♦mutfsvnw to ©f.ta"

o&si aoaiq ftfceq s'sau fcofcifctfa soejBOfi gftiJcAr arid a*>: •«/'£&•.• r Xs rXiosi'
<r<j£ ^ 'Jborjfrratel^ ei?»y eosia inatalUfc io rt-ra-io sot wofi *zeq atfaoo wt90 •

- ■ /

.... .. fjjta t ' ■ . • ■ . ■ •:• . ..

, ' , • . . ■ '. 1 : :.

%m xoq h&'slir^t rj;?ri stixB exIT *fHB#3*q a&i^dal 'to igd #eil *xid aoi -tern art
■ . . • ... . .• •} -r; ■ >■ i; i -j "(c :

.stoo M»<?yx nu&g too** 1 * fiafii«t9d*ai> ©Ttgw aeais ws*s> dfmaYLL*:. tf.fJbHr stfofc' ^©rtf wx

s" • .'r't'i

TABLE 2

19.

Equipment Requirements, Prices, and Installation Costs for Three Different
Capacities of Lettuce Packing Plants, Salinas District, 1954

Number of

units required as

Delivered

related to plant capacity

Cost component and equipment

Unit of

price per

Installa-

Installed

Capacity in crates per hour

specification

measure

unit

tion cost

price

210

420

63O

dollars

Trimming and packing

Baskets

each

121

—

121

100

200

300

Air compressor and receiver:

5 h.p. motor, 80-gallon tank

each

625

637

- 1 ,

10 h.p. motor, 120-gallon tank

each

1,429

1,441

15 h.p. motor, 120-gallon tank

each

1,505

Air hoists and cradles for dumping baskets

each

379

397

Air feed line and I beam for hanging hoists

100 feet

335

293

620

.7^

1.48

2.22

Packing table

100 feet

1,213

-1 On

loO

1,393

•7^

1.48

2.22

Packing stand and humps

each

OU-LJ. QlSpOGEU.

tJKuuy 11 w ± LfLi n , p . inu uur

each

1,242

1.31* ,

Oill 1 G> "1 Avatar tj -f *- Vi C V| ~r\ tti r\ *- t-

viiii cievabur vi tn 7 n .p • mo lot

each

2,273 I

450

4,7505/

Cull hopper, complete

each

2,027 J

Pull tmrk

each

5,000

Loaded crate conveyor

Head section, with legs, spans 10 feet

each

207

Tall section, vlth legs, spans 10 feet

each

191

1,7865'

j u « p . i . p . m ■ mu bur

each

316

288

—

5 h.p. 1^5 r.p.m. motor

each

387

—

Sprockets, drive chain, etc*

set

Center section, complete

iw reel

1,180 .

1 250

1.70

3.35

5.00

Legs for center section, pair every 10 feet

pair

•7
1

Roller conveyor, rust proof, 10— foot section

each

641

144

±1

1
X

Curve, right angle, 5-foot section

each

62 r

Turn off, 1 per car spot

each

Roller conveyor, 16 -inch on 6 -inch center,

10 -foot section, 1 per 2 car spots

each

—

■ "4 '-'

Accordion conveyors, 1 per 2 car spots

each

121

Slide back skids, 1 per 2 car spots

each

—

Tread plate, vooden, 1 per 2 car spots

each

—

Icing

Ice crusher, complete with sheaves, belts,

and 10 h.p. motor

each

1,083

Ice feed screw, 12 Inch

each

206

2,715^

Vertical lift, 12 inch with 10 h.p. motor

each

1,366

Horizontal icing screw in 9 -inch V-shaped trough

100 feet

991

1.35

2.25

3.15

Caps for end of screw

each

Brackets to hang trough

each

3 1 *

1.5 h.p. motor

each

233

2,2182'

3 h.p. motor

each

316

5 h.p. motor

each

387

Sprockets, drive chain, etc.

per motor

Icing screw gates (manual) :

Packing and top ice stations

each

Car spots

each

31 J

Ice bins, galvanized iron:

Packing station, 5 foot

each

Top ice station, 10 foot

each

100

112

Scoop shovels

each

Ice blower, portable, 20 h.p. complete with tubes,

hose, and deflector nozzle

each

1,266

Miscellaneous, other items

Lidder

each

4,000

Empty crate conveyor, 14 Inch roller type, on

6 inch centers

100 feet

301

137

438

1.00

1.75

2.50

Clamp trucks

each

Label soaking tank

each

a/ Cull elevator and cull hopper installed as a unit.

b/ Bracketed items installed as a complete system. The $1,786 installed price is applicable to 210 crate capacity plants.
" For 420 and 630 crate capacity plants, the installed prices are $1,857 and $1,928, respectively,
c/ Bracketed items installed as a unit.

d/ Bracketed items installed as a unit. Installation charges may be computed on the following basis: I = $10 + 62.5F,
" where I Is the Installation charge and F is the number of 100-foot sections of icing screw. The $2,218 represents the

installed price of the system for a 210 crate capacity plant. For 420 and 63O crate capacity plants, the installed prices

are $3,58l and $4,963, respectively.

20.

plant operation, and to a large extent its capacity determines the total amount
of equipment required for various levels of output. Most of the equipment uti-
lized is designed either to supply packers lettuce or other packing materials,
such as crates and ice, or to move the packed crates from the packer to the
railroad car.

As a matter of convenience, equipment requirements shown in Table 2 are
broken down into six categories, namely, trimming and packing, cull disposal,
packed crate conveyor, car loading, icing, and miscellaneous. The kind and
amount of equipment used in each of these categories were determined by obser-
vation made in packing plants, discussion with packing plant managers, and esti-
mates by equipment manufacturers. Where particular equipment items differed
slightly either in design or operation but with little discernable difference
in performance, the lower cost item was chosen.

From Table 2 it is clear that some of the items, for example, packing
stands, are identical for all sizes of plants and that osrly the amounts vary*
Other items are necessarily larger in the larger plants. For example, the
capacities of electric motors used in driving conveyors must increase as scale
of operation increases because of the greater length of the conveyor involved.

Equipment Replacement Costs and Annual Fixed Costs of Equipment

When equipment requirements have been determined, replacement costs for
equipment may be computed by applying the appropriate prices to each of the
items included and multiplying by the number required. Table 2 includes the
price of each equipment item delivered in Salinas, the installation cost, and
the total installed price. Certain items are installed as part of an integrated
system, for example, conveyors, and for them the installed prices are presented
for the system rather than for individual components,

Estimated equipment replacement costs for the three sizes of packing plants,
computed by the above procedures, are presented in Table 3« Also included in
the table are the estimated annual fixed costs of equipment which are derived
from the replacement costs. Included in fixed costs are allowances for depre-
ciation, annual fixed repair, insurance, interest, and taxes. The rates for
these charges, as per cents of replacement costs, were determined from infor-
mation contained in previous studies of packing plant operation and published
estimates of plant equipment use life by the U. S. Treasv y Department. The
specific rates used and the sources are included in Table 3.

TABLE 3

Replacement Costs and Annual Fixed Costs of Equipment for Lettuce Packing Plants
of Three Different Capacities, Salinas District, 195U

Replacement costs as related
to plant capacity

Annual fixed cost as related
to plant capacity!!/

Crates per hour

Cost component

210

U20

630

210

^20

630

dollars

Trimming and packing

17,236

31,638

51,312

2,620

5,265

7,799

Cull disposal
Packing plant equipment

6,06U

922

Cull trucks

5,000

10,000

15,000

1,12U

2,2U8

3,376

Loaded crate conveyor

U,307

6,560

8,735

655

997

1,328

Carloading

U68

702

936

107

1U2

Icing

6,819

8,686

10,576

1,036

1,320

1,608

Miscellaneous

U,693

5,022

5,351

713

763

813

Total

Wi,587

71,672

97,97U

7,lUl

11,622

15,988

a/ The use life for equipment was derived from info mation contained in Samraet, L» L., and I. P, Davis, Buildinr
J and Equipment Costs, Apple and Pear Packing (Berkeley: University of California, College of Agriculture,
AgriguiWL Experiment Station, December, 1952), p. 19. (Giannini Foundation Mimeographed Report No. lijl.J
Processed, Also, U, S. Department of Treasury, Tables of Useful Lives of Depreciable Property (Washington:
Gotu 0 Print. Off., 19U8), p. 17. (U. S. Internal Revenue Service Publication 117, Bulletin F.)

The annual charges for each cost component, excluding cull trucks, computed as a per cent of replacement
cost, are as follows: depreciation, 6.7 per cent; repairs, 3.0 per centj insurance, 1.5 per cent; and _ interest
and taxes, U.O per cent. For cull trucks these per cents of replacement costs are as follows: depreciation,
3 2.5 per cent; interest on investment, 3 per centj fixed repair, 3 per centj and tax and license fees were esti-
mated to be $531 per year based on information furnished by the State Department of Motor Vehicles. Insurance
was estimated to be $68 per year based on information supplied by a mutual automobile company.

•c-' -Mia

■

■ -

... ' -

.. ..

i ■ .

■

22.

Variable Repair and Equipment Operating Costs

Table 1; presents estimated variable repair and equipment operating costs
per day for the three sizes of packing plants. This category includes the cost
of fuel, lubrication, tires, and repair on cull trucks, and the costs of elec-
tric power and repairs for plant equipment. The details of operating costs per
hour for cull trucks are presented in a footnote to the table. Variable repair
costs were estimated as 0.8 per cent of replacement costs per 100 hours' use.
The costs of electric power were estimated to be 1.0 cent per kilowatt hour per
horsepower hour. Repair costs for packing plant equipment were estimated as
being 0,£ per cent of replacement costs per 100 hours' use. These costs were
estimated on an hourly basis and then extended to the standard eight-hour day
used in this analysis.

Costs of Packing Materials and Supplies

Unit costs of packing materials and supplies taken from accounting record
data on a sample of plants are presented in Table 5. Insofar as could be de-
termined, these costs did not vary significantly with size of plant. Materials
and supplies costs per day, obtained by multiplying the crates packed per day
by unit costs, were £;1,UU8, :)2,096, and &U,3U* for plants with 210-, U20-, and
630-crate-per-hour capacity, respectively.

Building Requirements and Costs

Estimation of replacement costs for buildings is a txro-stage process in-
volving estimation of floor space requirements as it is related to output and
the construction costs incurred in meeting these requirements. In Salinas the
type of building construction used is relatively uniform. Buildings usually
have a concrete floor built to truck -bed height on an earth fill. The sides
and roof are corrugated, galvanized iron sheets with a clear height from the
floor to the underside of the roof trusses of 12 feet and a short-span roof
construction, An exterior view of a packing plant of this type of construction
is shown in Figure 7.

Space Requirements

Floor space requirements for the interior of the packing house and the
loading dock are given in Table 6, Also included in the table are the surface
area requirements for the cull sluice, cull pit, and ice-crusher pit.

TABLE h

Variable Equipment Repair and Operating Costs Per Day for Lettuce
Packing Plants of Three Different Capacities, Salinas District, 195U

Capacity,
crates
per hour

Estimated equipment
replacement costs

Total
installed
motor
horsepower

Estimated variable equipment repair and operating cost

Repair

Qperating ,

Total

Packing plant | Cull trucks

Packing plants/ 1 Cull trucksV

Power£/ i Cull trucksif/

210
U20
630

dollars

73
81
90

dollars

39,587
61,672
82,97U

5,000
10,000

15,000

l5»83
2h»6l
33.19

3.20
6 o ii0
9.60

5o8U
6 a U8
7.20

5.76
11.52
17.28

30.63
1*9-07
67.27

a/ Variable repair for packing plant equipment is estimated on the basis of 0,5 per cent of replacement cost per
100 hours of use.

b/ Variable repair for trucks is et&imated on the basis of 0.8 per cent of replacement cost per 100 hours of use„

c/ Cost of electric power is estimated on the basis of l o 0 cent per kilowatt hour per horsepower hour.

d/ Operating costs for cull trucks per hour are as follows: gasoline, U8 cents j oil and grease, 5 cents; tires,
19 cents j and repairs and miscellaneous, U0 cents.

— .

. . - ...... - . -

2U.

TABLE $

Costs of Materials and Supplies for Packing Lettuce,
Salinas District, California, 195k

Item

Costs per cratejV

dollars

Crates

.5106

Liners (2 per crate)

.0719

Pads (3 per crate

.0765

Lids

.0886

Nails, labels, and paste

.0090

Car bracing

.0115

Crate ice^

.0600

Water

.0030

Total

.8621

a/ Average of record data from several firms,
b/ Includes chemical treatment,

c/ Based on a charge of &U.00 per ton for ice delivered to the pack-
ing house which was typical in the Salinas district in 195U. The
average amount of ice per crate was estimated at 30 pounds. Crushed
ice blown over the crates after they have been loaded in the rail-
road car is paid for by the buyer on f.o.b. sales and is not included
in this analysis.

.irrtx..

TABLE 6

Building Space Requirements for Lettuce Packing House of
Three Different Capacities, Salinas District, 195U

Plant
capacity,

crates
per hour

Floor

space

Surface area of
cull sluice, cull pit,
and ice-crusher pit£/

Enclosed areaf/

Loading doclcjV

square feet

210

9,210

1,550

1,930

U20

13,620

2,U5o

2,210

630

18,030

3,350

2,H90

a/ Estimated from the following equation: A = 60 (80 + 10. 5P) where A is area in square feet,
~~ P is the number of packing stations, and 60 is the width of the packing house in feet.

b/ Estimated from the following equation: A = 10 (20 + U5C) where A is area in square feet,
" G is the number of car spots, and 10 is the width of the loading dock in feet.

c/ Estimated from the following equation: SA = 1,650 + I4.OP where SA is surface area in square
feet and P the number of packing stations.

27.

Interior space requirements represent the sum of the requirements for each
piece of equipment, the necessary storage space, and allowances for passageways
through the plant. Over-all interior space requirements were found to be uniquely
related to the number of packing stations. This relationship is expressed in
footnote a, Table 6.

In addition to the interior space requirements, a roofed loading dock is
required for the packing plant. The important factor affecting the space re-
quired in this case was found to be the number of "car spots" needed for posi-
tioning refrigerator cars along the dock. While there was some variation in
the number of car spots utilized by the packing plants observed, it was deter-
mined that k> 6, and 8 car spots, each h$ feet long, would be required for pack-
ing plants with capacities of 210, U20, and 630 crates per hour, respectively.
The relationship between the number of car spots and loading dock space require-
ments is shown in footnote b, Table 6.

The surface area of concrete required for the cull sluice, cull pit, and
ice-crusher pit shown in Table 6 was determined by measurements made in packing
plants. These measurements in turn were related to the number of packing sta-
tions, and this relationship is shown in footnote c, Table 6.

3uilding Replacement Costs and Annual Fixed Costs for Buildings

When total space requirements have been determined, building replacement
costs may be estimated. These estimates are presented in Table 7 for the three
sizes of packing plants along with estimates of annual fixed costs. The type
of construction to which they apply has been described earlier. The prices for
materials and wages used in their construction are those which applied in 195U.
The relationships between floor space requirements, for both the interior of the
plant and the loading dock, and replacement costs are given in the footnotes to
Table 7.

In addition, an estimate is given in the table for installing the switch
gear, wiring electric motors, and installing fluorescent lighting over the pack-
ing line. The data on which these estimates were based were supplied by an
electrical contractor in Salinas. These estimates were related to total re-
quired horsepower and the number of packing stations which is shown in foot-
note e, Table 7.

Since the life of buildings extends over a number of years, their costs
per operating season must be computed on the basis of annual charges which in-
clude depreciation, interest on investment, insurance, and repairs.

exl.t

TABLE 7

Replacement Costs^' and Annual Fixed Costs—' of Buildings for Lettuce Packing Plants
of Three Different Capacities, Salinas District, 195U

Replacement costs as related
to plant capacity

Annual fixed cost as related
to plant capacity

Crates per hour

Cost component

210

L;20

630

210

U20

630

dollars

Building and loading dock-

38,850

56,990

75,120

U,079

7,888

Cull sluice, cull pit, and ice-
crusher pitfy

1,310

i,5oo

1,690

138

158

177

Wiring ,
Motors and fluorescent lighting-/

1,590

1, 900

2,200

167

200

231

Total

111, 750

60,390

79,030

U,38U

6,3U2

8,296

a/ Based on 195U prices for building materials and equipment and 195U wage rates for construction labor.

b/ The use life for buildings was derived from information contained in Sammet, L. L., and I, F» Davis, Building
and Equipment Costs, Apple and Pear Packing (Berkeley: University of California, College of Agriculture, Agri-
cultural Experiment Station, December, 1952), p. 19. (Giannini Foundation Mimeographed Report No. lhl.) Proc-
essed, Also, U. S. Department of Treasury, Tabl e s of Useful Lives of Depreciable Prope rty (Washington: Govt-,
Print, Off., 19U8), p. 17. (U. S. "nternal Revenue Service Publication 117, Bulletin FT)

The annual charges for each cost component computed as a per cent of replacement cost are as follows:
depreciation, 3.0 per cent; repairs, 2.0 per cent; insurance, 1<,5 per cent; and interest and taxes, U.O per cent.

c/ Estimated from the following equation: C = 02,090 + 3.U16A where C is the building cost and A is the total floor
space and square feet for the packing house and loading dock.

d/ Estimated from the following equation: C * &0.678A where C is the cost of cull sluice, cull pit, and ice-crusher
pit; and A is the surface area in square feet of this item.

e/ Estimated from the following equation: C = §300 + 20H + 20P where C is the cost of wiring electric motors and
fluorescent lighting, II is the total horsepoxjer rating of the motors, and P is the number of packing stations <,

29.

The rate of depreciation is dependent on the expected use life of the
building. In this study it was estimated that buildings would last about 33
years with no salvage value at the end of that time. This would lead to a
depreciation rate of 3 per cent of replacement costs per year 0 The rates for
the other annual charges as per cents of replacement costs were determined
from information contained in previous studies of packing plants and published
estimates of the U. S. Treasury Department. The rates and sources are included
in Table 7.

30.

HARVESTING AND HAULING OPERATIONS AND COSTS

Operations Performed

The harvesting method to which the costs in this section apply is illus-
trated in Figure 8 which shows a loader and harvesting crew in operation.
Other methods were observed^/ but this one predominated. The crew for each
field loader consists of from 12 to 1$ cutters, 2 load arrangers, a crew boss
or "pusher," and drivers for the equipment. A field foreman generally over-
sees and coordinates the harvesting operations of two loaders. The equipment,
aside from the loader, consists of trucks and trailers fitted with baskets for
hauling the harvested lettuce to the packing house and a field tractor or "bug"
which is used for pulling the trailers through the field while they are being
loaded.

The loader consists of a mechanized conveyor pivot mounted on a specially
constructed truck chassis so that it can be swung to a trailing position
during highway travel and extended at right angles to the power unit when in
use for harvesting. Conveyor lengths varied on different loaders ranging from
13 to Ik beds coverage. The conveyor length is limited by regulations on
equipment that travel on public highways as well as by technical considerations o

The rate of travel of the loader through the field is regulated by the
driver in accordance with the harvest density-'' — slow at heavy densities and
speeding up as the density becomes light. Since there are variations in the
harvest density from one end of the field to the other as well as across the
beds, the rate of output of the crew depends, in large measure, upon the skill
of the loader-driver in adjusting the forward- speed to the harvest density.

The cutters walk behind the loader — one in each irrigation furrow. They
select and cut the mature heads of lettuce and toss them on the conveyor,
Each cutter harvests the two rows adjacent to the furrow in which he is walk-
ing. The crew boss or "pusher" specifies the desired firmness and size of the

1/ The most common other method involved use of field trailers drawn through
the harvest strip by farm tractors. Six to eight cutters - positioned to the
rear and sides of the trailer, cut lettuce from the harvest beds and toss it
directly on the trailer, A limited number of studies of this method indicated
little difference in the rate of output per man-hour between it and the one
described in the text.

2/ Harvest density is an important concept that will be used throughout this
report. It refers to the number of baskets of lettuce harvested per 1,000
feet of bed in a given cutting.

■i ' O i,

Figure 8. Lettuce Harvesting Crew and Loader in Operation.

32.

heads to be cut and spot checks the harvested lettuce to see that the instruc-
tions are being followed. He also walks across the beds behind the cutters
and harvests any mature lettuce that has been missed.

Cut lettuce is conveyed toward the power unit, elevated over it, and
dumped into baskets on a truck or trailer moving parallel to the loader.
Truck capacities vary from five to six baskets and trailer capacities from
four to five baskets. The baskets are mounted on casters and range in volume
from approximately 100 to 120 cubic feet when loaded— roughly equivalent to
7^0 to 900 heads of lettuce. The two load arrangers ride the trucks or trailers
as they are being loaded and arrange the lettuce on top of the baskets to assure
a full load without spillage en route to the packing house.

When the end of a harvest strip is reached, the equipment is turned and
moved to the next harvest strip. When a truck or trailer is loaded, it is
driven from the loader to the edge of the field, and a waiting truck or trailer
takes its place — usually with no interruption to the harvesting operation* En
route to the packing house, a loaded truck usually picks up a loaded trailer.

Factors Affecting Crew Requirements and Costs

Many factors affect crew requirements and costs. A major determinant of
the over-all requirements is the scale of operation of the packing plant.
Total field crew size, with given levels of productivity, must be large enough
to sustain the levels of plant output desired. The productivity of given sizes
of harvesting and hauling crews is in turn affected by a number of factors o

In harvesting operations output rate with a given crew is affected by
management policy with respect to the "quality" of pack, scheduled rest periods
for the workers, skills of the crew (particularly certain key members), the num-
ber of times the field has been previously cut, the condition of the field, the
length of the harvest strips, and the harvest density (previously defined).

The productivity of hauling crews is also affected by these factors since
all have a bearing on the time required for loading and, in addition, depend
on the distance from the field to the packing plant.

However, of all the factors bearing on productivity, only a few could be
included specifically in the analysis. Harvesting time requirements have been
related to harvest density and length of harvest stripj and the number of trucks,
trailers, and drivers required has been related to hauling distance and harvest-
ing time requirements. Average relationships are presented with respect to the
other factors.

33.

Crew and Equipment Requirements and Costs in Relation to Output Per Day

Production Standards

Production standards for labor and equipment in relation to the factors
discussed above were developed from time and production studies of the har-
vesting and hauling operations. In all, 252 separate field studies were made
of 7 different firms representing 15 different crews operating in h3 fields «
Each field study represents the observations made of a harvesting crew while
working through one harvest strip — one traverse of the fxeld. Observations
were made as to the size of the crew, the number of workers in each job cate-
gory, the number of trucks and trailers used, the net time required to harvest
the strip, the time spent in delays and the reason for the delay, the time
spent in turning at the end of each strip, the amount of lettuce harvested, the
size of the baskets, the length of the harvest strips, the number of beds cut
per strip, the number of times the field had been previously cut, the time of
day, the distance from the field to the packing plant, and a log of the time
required by the trucks to make a round trip from the field to the packing plant
and return o

The standards are based on net labor requirements to which have been added
allowances for unavoidable delays, personal time, and turning time at the end
of the harvest stripe Gross time requirements estimated in this way are then
converted to output rates per hour to obtain the production standards*

One of the most important factors affecting the rate of output of a crew
is the harvest density 9 This relationship is illustrated in Figure 9 which
shows net time requirements per 1,000 feet of strip in relation to harvest
density — expressed in standardized baskets of approximately 100 cubic feet —
observed in each of the 252 field studies. Average net time requirements in
relation to harvest density are shown by the sloping line drawn through the
points for individual studies plotted in Figure 9.- The field studies indi-
cated that, in addition to the net time requirements, an additional 5 per cent
should be allowed for unavoidable delays and personal timej and an average
turning time of three minutes at the end of each strip should be included.

1/ A regression equation fitted to this relationship gave the following
result: T = 11.255 + 30.2li8D where T is the travel time in minutes per 1,000
feet of bed and D is harvest density in baskets per 1,000 feet of bed.

100

c
E

O
O

- 50

a.
a>
E

i i i
• i i

i i i r — i 1 —

I'll

•

' 1 "

•

Individual

harvest strip

•

Average

•

• •

—

•

' . • • .

•

• • * • ^

••

•

* • •

ir .:* ... .: •

-?•*

1 1 1

1 1 1 1 1 1

1.0 2.0
Density - baskets harvested per 1,000 feet of bed

Figure 9. The Effect of Harvest Density on Rate of Travel
of Harvest Crews, Salinas District, California.
1953-5U.

35.

Standard time requirements and output rates per cutter hour— in stand-
ardized baskets of 100 cubic feet volume — based on the above data are given
in Table 8 for harvest strips of different harvest densities and lengths. Out-
put per crew hour for crews of any size may be obtained by multiplying output
per man-hour by the number of cutters used. For example, with a crew of 30
cutters (two loading machines with 15 men each) and a harvest density of .ij35
baskets per 1,000 feet of bed, output per crew hour would be 27.57 baskets.

The estimates of output per cutter hour given in Table 8 and shown
graphically in Figure 10 indicate output rates increase as harvest density in-
creases. This rise in output rate becomes smaller, however, as harvest density
increases, and little increase is indicated beyond harvest densities of 1.3
baskets per 1,000 feet of bed. Output rates are also shown to increase as
length of harvest strip increases. However, the rise in output drops rapidly
as length of strip increases, and the fixed turning time at the end of the
strip is spread over a large total volume. This effect is relatively small
with harvest strips greater than 500 feet long. The crew organizations and
costs of harvesting and hauling presented in the sections that f olloxtf will be
based on strips 1,000 feet in length which is the average for all on whi^b
studies were made.

Harvestin g Crow and Equipment Requirements

With the data on cutter output rate described above, harvest crew organi-
zation can be studie in relation to variations in harvest density and the
volume of lettuce required per day at the packing house. Plant and field
operating conditions specified earlier, which have particular bearing on field
crew organization, include? the 8-hour plant day; the 3 plant sizes of 210-,
U20-, and 630- crate -per-hour capacity j and the 6- to 9o-hour limit imposed on
field hours per day.

With the 8-hour per day plant operation and the selected plant sizes,
daily outputs of 1,680, 3,360, and 5>0l;0 crates would result. The average pack-
out in crates per standardized field basket for firms coooerating in this study
was 8.8. While there was some variation around this average, it was considered
representative enough to be used as the basis for estimating the number of bas-
kets needed — given the number of crates to be packed. Accordingly, the number
of baskets required per day for the three sizes of plants are 191, 382, and
573> respectively. For packouts per basket of less than 8.8 crates, the bas-
ket requirements would be correspondingly higher; and the converse is true for
higher packouts per basket.

TABLE 8

Cutter Time Requirements in Harvesting Head Lettuce Expressed in Man-Hours Per Basket
and Production Standards in Baskets Per Man-Hour with Different Levels of Harvest
Density and Length of Harvest Strip, Salinas District, 1953-51*

Harvest density
in baskets per

Time requirements in man-hours per basket for strips of varying length^

1,000 feet of bed

250 feet

500 feet

1,000 feet

1,500 feet

1.101

1.202

1.088

1.052

•Op*!

1.161

1.006

.925

.899

.870

.982

.867

.810

.791

1.087

.877

• 787

.71*1*

.729

1.301*

. .81*1*

.765

.726

.712

Output in baskets per man-hour

.1*35

.709

.832

.919

• .951

.652

.861

.991*

1.081

1.113

.870

1.018

1.153

1.231*

1.261*

1.087

1.11*0

1.270

1.31*1*

1.372

1.30k

1.185

1.306

1.378

1.1*01*

a/ Time requirements per basket for strips of varying length were estimated by the following equations:

250 feet T = 2.129750 - 1.9851*60D + .766251D 2
500 feet T = 1.770581* - 1.57l*952D + .616 70 3D 2
1,000 feet T = 1.559012 - 1.30i*5llD + .5l0l*27D 2

1,500 feet T = 1.1*93772 - 1.225661D + .l*8o!*l6D 2

where T is time in man-hours, and D is harvest density.

37.

Figure 10. The Effect of Harvest Density and Length of Harvest
Strip on Output Per Man-Hour of Standardized Baskets
of Lettuce, 100 Cubic Feet in Volume, Salinas Dis-
trict, 1953-5U.

38.

Technical and legal limitations on size of equipment also play a role in
the determination of crew organization. Field loading equipment usually-
covered from 13 to Ik harvest beds when extended at right angles from the power
unit (see Figure 8). Operating difficulties concerning side draft and balance
prevent extension much beyond these lengths. In addition, since the conveyor
part of the loader swings to the rear for overroad travel, its length must be
limited to conform to the California Vehicle Code. These considerations sug-
gest, for purposes of this analysis, that the conveyor be assumed to extend
over Ik harvest beds. This would permit cutter crew sizes up to 1$ men— 1 man
working beyond the end of the conveyor. To get the maximum utilization out of
the loader, it should where possible be operated with 15 cutters. However, the
lower limit of a 6-hour workday for harvesting cre-ws, discussed earlier, makes
it necessary to operate with less than 15 men under certain conditions.

On the basis of the production standards shown in Table 8, the number and
sizes of crews necessary to attain the specified levels of output within the
limits imposed above were designed. These crew organizations are presented in
Table 9« Also included in the table are the number of hours worked per day for
the various sized crews and levels of harvest density. Loader and tractor
drivers were allowed an extra hour per day to account for the time spent in
driving to and from the field. The time actually spent in travel would vary
with distance, and this allowance represents an average.

Cutter crew sizes per loader vary only in the case of those serving the
small plants. The number of other workers required per loader is fixed for
any level of output. For example, each loader requires one loader driver, one
tractor driver, two load arrangers, and one row boss. Insofar as over-all
supervision was concerned, it was estimated that one field foreman could handle
up to two harvest crews. Assistant supervisors were added as necessary for
more than two crews.

Truck Driver and Hauling Equipment Requirements

The number of truck drivers and truck-trailer units needed to attain the
target levels of output specified above depends on several factors. These
include the distance from the field to the packing plant, traffic conditions
over the route traveled, condition of the field being harvested, harvest den-
sity, the length of harvest strip, the number of crews operating, and the
size of each crew.

TABLE 9

Lettuce Harvesting Crew Organization and Hours Worked Per Day in Relation to
Daily Output and Harvest Density, Salinas District, California, 195U

Baskets of
lettuce re-
quired per
dayV

Harvest density,
baskets per
1,000 feet
of bed£'

Number of

machines

and /

«, . c/

drivers—

Number of
field tractors
and /
drivers—

Number

of
cutters

Number of

load
arrangers

Number

of
row
bosses

Number of
supervisors

and
assistants

dumber of

hours
worked by
crew per
day

.U35

7.00

191

.652

6.25

.870

6.00

1.087

6.25

.U35

i»

7.00

382

.652

8.00

.870

7.00

1.087

6.50

.U35

8.50

573

.652

9.00

.870

7.75

1.087

7.25

a/ Based on plant output rates of 1,680, 3,360, and 5,01*0 crates per day and a packout of 8.8 crates per
~" standardized field baskets.

b/ At the average packout of 8.8 crates per basket, these harvest densities are equal to 50, 75, 100,
~" 125 crates per acre.

c/ The loader and tractor drivers are allowed an additional hour per day to drive to and from the fie
~* being harvested.

trusts 8£G sjjttisq

fjousj pctx. be-.. gstf. pc gijae fo

;A«

ho.

One of the most important of these factors is distance from field to plant.
A log of departure and arrival times of trucks taken at the field was used to
estimate the round-trip time requirements at varying distances. This relation-
ship is illustrated in Figure 11 »3/ Average travel time per round trip can be
estimated from this chart. This includes an average 23 minutes per trip re-
quired for the truck and trailer to be unloaded and reloaded with empty baskets
plus normal delays at the plant and en route. In addition, approximately seven
minutes were required for a truck to be driven from the loader to the edge of
the field, coupled to a loaded trailer and, on returning to the field, uncoupled
from the empty trailer and driven to the loader. Total time per round trip,
therefore, would average slightly over 30 minutes spent in necessary prepara-
tion and in terminal operations and delay plus about If minutes for each mile
traveled. This means that, for example, when harvest crews were operating at
a distance of 10 miles from the plant (20 miles round-trip distance), approxi-
mately 60 minutes would be required from the time a loaded truck drives away
from the loader to the time it could be in a position to load again.

A second factor affecting hauling requirements is the size and produc-
tivity of the harvesting crews. This determines the time required for actu-
ally loading the truck-trailer unit with lettuce. As was indicated earlier,
the productivity of the crew, given the length of harvest strip, is prin-
cipally affected by the harvest density. Thus, for example, with a crew of

15 cutters, a harvest strip of 1,000 feet in length, and a harvest density
of .625 baskets per 1,000 feet, crew output per hour would be approximately

16 baskets. This would mean that approximately hO minutes would be required
to load a truck-trailer unit (11 baskets). This time plus a travel time of
60 minutes, assuming a round-trip distance of 20 miles, would give a total
time requirement of 100 minutes per truck-trailer unit for each round trip.
On the basis of this total time requirement, the average number of baskets
hauled per hour per truck-trailer unit — the production standard — would be
6.6. Thus, with a crew output of 16 baskets per hour, 3 truck-trailer
units would be required. This is obtained by dividing the hourly output rate
(16 baskets) by the production standard (6.6 baskets) and rounding to the
nearest whole number.

1/ A regression analysis of this relationship resulted in the following
equation: T = 23.315 + l.li88R where T is round-trip time in minutes, and R is
round-trip distance. An additional seven minutes must be allowed for necessary
preparation and delay at the field to obtain total operating time.

100

1 1

1 | 1 | 1 |
:

—

• ^

—

•

m
•
•

• Observed trip time
— Average

1- 1 1 1 1 1 1

20 30 40

Round trip distance - miles

Figure 11. Highway Truck Travel Time in Rela-
tion to Round-Trip Distance Between
Field and Packing House, Salinas
District, California, 1953-51*.

■

k2.

In a similar manner the estimated truck and driver requirements for vary-
ing distances, harvest density, and crew size presented in Table 10 were devel-
oped. The exact computational procedure is summarized in an equation given in
a footnote to the table. This equation is applicable to round- trip distances
from field to plant of up to b.0 miles and to the range of crew organizations
and harvest densities observed in the Salinas district. As was indicated ear-
lier, it would apply only to harvest strips 1,000 feet in length. It assumes
that all crews are operating in the same field. Where operations are widely
separated, separate estimates xfould be required for each individual operation.

Harvesting and Hauling Labor and Supervision Costs Per Day

Total daily harvesting and hauling labor and supervision costs are pre-
sented in Table 11 for varying conditions in regard to output per day, harvest
density, and distance from field to plant. These costs were obtained by multi-
plying the total number of man-hours worked per day in each job category derived
from Tables 9 and 10 by the appropriate wage rate shown in the footnotes to
Table 11. Costs of each category were added to obtain total labor costs.

Wage rates for equipment operators and foremen are based on straight time
up to eight hours per day and time and one half for all hours over eight. Wage
rates for the other job categories are based on straight time for all hours.

In the field operations studies, the cutters and load arrangers were Mexi-
can Nationals who lived in labor camps. In the cost calculations, their wages
were inflated by 11 per cent to cover camp costs borne by the employer M The
wages of other workers xrare inflated by £ per cent to cover the employer's con-
tribution to workmen's compensation, social security, and unemployment insurance
funds.

The typical salary for field foremen was $12$ per week and that of assist-
ants was $100. These men usually performed other functions when not supervising
harvesting crews, but in this analysis their salaries were assumed to be allo-
cated entirely to field harvest work on the basis of a U0-hour week. This is
equivalent to $3.13 and $2.^0 per hour, respectively.

1/ The 11-per cent allowance is based on estimates supplied by employers.

TABLE 10

Number of Truck-Trailer Units and Drivers Required for Harvesting and Hauling Lettuce
in Relation to Distance Traveled, Harvest Density, and Output Per Day-
Salinas District, California, 1953-5U

Distance, field to
pacKxng nouse anu
return in miles

Harvest density

J_Ii UdoAt; uO Pel .

1,000 feet of bed 3 ./

Number of truck-trailers and drivers required*?/

Baskets harvested per day

191

382

573

.135

.652

.870

1.087

.U35

.652

.870

1.087

.U35

.652

.870

1.087

a/ At the average packout per basket of 8.8 crates, these harvest densities are equal to 50, 75» 100,
and 125 crates per acre.

b/ Add one trailer to each of the requirements shown to provide a minimum "overlap" in case of truck
delay. Truck-trailer requirements are computed by the following equation:

N . 1 + (1.U88R + 30.315 )C

660 [1.559012 - 1.30U511D + .510U27D 2 ]

where N is the number of truck-trailer units required rounded to the next highest whole number, R is
the round-trip distance traveled, C is the number of cutters, and D is harvest density in baskets per
1,000 feet.

TABLE 11

Total Daily Lettuce Harvesting and Hauling Labor Costs— 7 with Varying Daily Outputs,
Harvest Densities, and Round-Trip Distances from Field to Plant
Salinas District, California, 1953-5U

Output,
baskets

pel t ~- ( -s/

T J «-\ mwft fill"

riarvesT/
density,
baskets
per 1,000
feet

Labor and supervision costs

Total

Field harvest

Hauling

Truck drivers

Round- trip distance,
miles

Round-trip distance,
miles

Cutters

Load ar-
rangers

Row
boss

Loader
driver s^/

Tractor
driver siy

Super-
visors

Hollars

.U35

20U

363

375

388

1 Q/l

.652

176

319

330

352

.870

152

111

291

301

322

1.087

11+0

283

29U

316

.U35

Uo8

111

709

721

758

.652

35o

113

627

655

68U

382

.870

306

111

558

570

607

1.087

28U

519

5U2

576

.U35

619

123

169

1,080

1,126

1,172

.652

52U

117

167

926

959

1,009

573

.870

U52

109

150

803

830

871

1.087

U22

115

153

7U9

787

825

a/ Wage rates per hour on which these costs are based are as follows: cutters and load arrangers — $0,875; row boss —
~~ $1,075; supervisors — 03.13; assistant supervisors — $2.50; and equipment and truck drivers — $1.65. Wage rates of
cutters and load arrangers were inflated by 11 per cent to take care of camp costs. Rates for other workers were
inflated by 5 per cent to cover the employer's contribution to workmen's compensation, social security, and un-
employment insurance.

b/ Loader and tractor drivers are allowed an additional hour of wages per day for travel time to and from the packing
"" plant regardless of distance. This would tend to overestimate their wage costs slightly for short distances from
field to plant and underestimate them for longer distances.

*5.

Equipment Costs

In addition to the costs of equipment drivers, there are other operating
costs for equipment which include gasoline, oil, grease, tires, maintenance,
and variable repairs as well as fixed costs which include depreciation, taxes,
licenses, interest on investment, insurance, and fixed repairs.

Operating Costs Per Day . — Costs of gasoline, oil, grease, and tires for
each equipment item are given on an hourly basis in Table 12. They are based
on data published in a report of the California Public Utilities Commission M
Variable repair and maintenance costs also included in the table were estimated
to be 0.8 per cent of replacement costs per 100 hours of use. Equipment operat-
ing costs per day shown in Table 13 were obtained by applying these hourly rates
to each of the equipment items shown in Tables 2 and 3 and multiplying by the
number of hours used per day.

Annual Fixed Costs of Equipment . --Annual fixed costs of equipment presented
in Table ll; are derived from equipment replacement costs shown in Table 12.
Fixed costs include allowances for depreciation, interest on investment, taxes,
licenses, insurance, and fixed repairs. Depreciation rates are based on an
eight-year use life of equipment with no allowance for salvage value. Tax and
license fees were estimated from information provided by the California Depart-
ment of Motor Vehicles. Insurance rates were supplied by a mutual automobile
company and are representative of charges by truck insurers. Interest on in-
vestment was estimated at $ per cent of the undepreciated balance of the invest-

ment which is equivalent to about 3 per cent of replacement costs per year.-'

1/ Malquist, G. L., and Fred P. Hughes, California Public Utilities Commis -
sion Report on Cost of Transporting Fresh Fruits and Vegetables by Hotor Vehicle
Equipment Within California, Excluding Movements to Canneries and Processing
Plants I Los Angeles; June 19, 19b?-)* (.Case No. ItbOO.J

2/ This estimate is based on the use life of similar equipment used in Cali-
fornia apple and pear packing houses. See Sammet, L. L,, and I. F. Davis, Build -
ing and Equipment Costs, Apple and Pear Packing (Berkeley: University of Cali-
fornia, College of Agriculture, Agricultural Experiment Station, December, 1°52),
p. 19. (Giannini Foundation Mimeographed Report No. Tljl ») Processed. (The
fifth report in a series on Efficiency in Fruit Marketing.)

h6.

TABLE 12

Replacement Costs, Annual Fixed Charges, and Operating Costs Per Hour
for Each Equipment Item Used in Harvesting and Hauling Lettuce
Salinas District, California, 1953-5U

Item

Loader,
wide
tread

2-ton
truck,
wide
tread

Field
bug,
wide
tread

Trailer,
wide
tread

dollars

Replacement cost

8,500

7,600

6,000

2,500

Fixed annual charges
Depreciation!*/ .
Tax and license?/
Insurance

Interest on investment^/
Fixed repair^/
Total

1,063
161

255

255
i,BiU

950
153
75
228
228
1,63k

750
121
68
180
180
1,299

313

25
75
75
F29

Operating cqsts per hour*;/
Gasoline*/
Oil and grease£/
Tire si' .
Repairs and miscellaneous^/
Total

.U8
.10
.08
.68

T3E

•U8
.05
.19
.61

1.33

,U8
.05
.08
.U8
1.09

.Oii
.20

T2i

a/ Estimated on the basis of eight-year use life and no salvage value.

b/ Derived from rates supplied by State of California Department of Motor Vehicles.

c/ Approximately 5 per cent on undepreciated balance of investment (3 per cent of
cost).

d/ Estimated as 3 per cent of replacement cost,
e/ Excluding operator's wages.

f/ Derived from data in Malquist, G. L», and Fred P. Hughes, California Public
Utilities Commission Report on Cost of Transporting Fresh Fruits and Vege -
tables by Motor Vehicle Equipment Within California, Excluding Movements to
Canneries and Processing; Plants (Los Angeles: June 19, 1952). (Case No, U808 • )

g/ Estimated as 0 9 8 per cent of replacement cost per 100 hours of use.

.' t

TABLE 13

Total Daily Lettuce Harvesting and Hauling Equipment Operating Costs with Varying Daily Outputs,
Harvest Density, and Round-Trip Distances from Field to Plant
Salinas District, California, 1953-54

Output,
baskets
per day

Harvest
density,
baskets
per 1,000
feet of
bed

Loaders

Tractors

Equipment item

Trucks

Round-trip distance, miles
5 I 20 I hO

Trailers

Round- trip distance, miles

5 T 20 I ko

Total

Round-trip distance, miles

20 I

191

382

573

.^35
.652
.870
1.087

.435
.652
.870
1.087

.^35
.652
.870
1.087

dollars

124

120

113

116

8
8

7
8

13
12
12

18
17
17
17

135

146

179

118

142

167

115

126

159

107

128

158

185

224

264

171

199

242

160

184

220

150

184

219

TABLE 1U

Annual Fixed Costs of Lettuce Harvesting Equipment with Varying Daily Outputs,
Harvest Densities, and Round-Trip Distances from Field to Plant
Salinas District, California, 1953-51*

Harvest
density,

Equipment item

Output,
baskets

baskets

Trucks

Trailers

Total

per 1,000
feet of

Loaders

Tractors

Round-trip distance,
miles

Round- trip distance,
miles

Round-trip distance,
miles

per day

bed

1*0

JiO

dollars

191

.652
.870
1.087

3,628
3,628
3,628
3,628

2,598
2,598
2,598
2,598

U,902
I*, 902
U,902
1*,902

6,536
6,536
6,536
6,536

8,170
9,80l*
9,80l*
9,801*

2,116
2,116
2,116
2,116

2,615
2,61*5
2,61*5
2,61*5

3,171
3,703
3,703
3,703

13,21*1*
13,210*
13,21*1*
13,2UU

15,1*07
15,1*07
15,1*07
15,1*07

17,570
19,733
19,733
19,733

382

.1*35
.652
.870
1.087

7,256
5,14*2
5,1*1*2
5,1*1*2

5,196
3,897
3,897
3,897

8,170
6,536
8,170
8,170

9,8ol*
9,801*
9,801*
11,1*38

11*, 706
13,072
1U,706
16,3U0

3,171*
2,61*5
3,171*
3,171*

3,703
3,703
3,703
1*,232

5,290
U,76l
5,290
5,819

23,796
13,520
20,683
20,683

2$ t 9S9
22, 81*6
22,8U6
25,009

32,1*1*8

27,172

29,335
31,1*98

573

.1*35
.652
.870
1.087

9,070
7,256
7,256
7,256

6,1*95
5,196
5,196
5,196

8,170
8,170
9,80U
9,80U

13,072
11,1*38
13,072
lit, 706

17,971*
16,3U0
17,97U
19,608

3,171*
3,17U
3,703
3,703

l*,76l
it, 232
U,76l
5,290

6,31*8
5,819
6,3U8
6,877

26,909
23,796
2$ t 9$9
2$,9S9

33,39Q
28,122
30,285
32,1*1*8

39,887
31*, 611
36,771*
38,937

*9.

COMBINED PACKING HOUSE AND HARVEST ING -HAULING COSTS

Total Variable Costs Per Day

Table 15 presents total variable packing plant and field harvesting-hauling
costs per day in relation to plant output per day, round-trip distance from field
to plant, and harvest density. These costs were derived from those presented in
earlier sections. It is clear from the table that, for any given output per day
and distance from field to plant, variations in variable costs arise largely from
variations in harvest density. With, for example, an output per day of 1,680
crates and a round-trip distance of 5 miles, total variable costs decrease from
02,857 to 02,770 ($87) as harvest density increases from .U35 to 1.087 baskets
per 1,000 feet of bed. On the other hand, as round- trip distance from field to
plant increases, variable costs increase. For example, with an output of 3,360
crates per day and a harvest density of .1|35 baskets per 1,000 feet of bed, costs
increase from s 05,535 to 05,628 (093) as round-trip distance increases from 5 to
k0 miles. Further, while variable costs increase with increases in daily output,
they do so in less than direct proportion. For example— with a round-trip dis-
tance of 5 miles, a harvest density of .135 baskets per 1,000 feet of bed, and
outputs of 1,680, 3,360, and 5,0UO crates per day— variable costs are $2,857,
05,535, and 08,235, respectively. As compared with the small plant, costs in
the medium-sized one are approximately 1.9U times as great (with an output twice
as large) and in the large plant 2.88 times as great (xri.th an output three times
as large). This less than proportional increase in variable costs is the result
of a more efficient utilization of labor and other variable inputs as scale of
operation increases. As will be seen in a later section, this has important ef-
fects on average cost per unit of output.

Annual Fixed Costs

Table 16 shows the annual fixed costs of harvesting-hauling and plant opera-
tions in relation to output per day, round-trip distance from field to plant, and
harvest density. The dominant factors affecting these costs are apparently dis-
tance from field to plant and plant output per day. The effects of harvest
density are somewhat less pronounced than they were in the case of daily vari-
able costs. For example, with a plant output of 1,680 crates per day and

TABLE 15

50.

Total Variable Lettuce Harvesting- Hauling and Packing Plant Costs
Per Day as Related to Output Per Day, Round-Trip Distance
from Field to Plant, and Harvest Density
Salinas District, California, 1954

Output,
crates

Round-
trip
distance,

Harvest
density,
baskets per

Labor

Equipment

Packing
materials

Total
per day

per ,
dayl'

field to
plant

1,000 feet
of bed}*/

Harvest -
hauling

Plant

Harvest -
hauling

Plant

and

supplies

miles

dollars

.435
.652
.870
I.087

363
319
291
283

942

73
66
64
66

1,448

2,857
2,806
2,776
2,770

1,680

.435
.652
.870
1.087

375
330
301
294

942

83
76
73
76

1,448

2,879
2,827
2,795
2,791

.435
.652
.870
I.087

388
352
322
316

942

95
95
92
95

1,448

2,904
2,868

2,835
2,832

.435
.652
.870
I.087

709
627
558
519

1,746

135
118

115
107

2,896

5,535
5,436
5,364
5,317

3,360

.435
.652
.870
I.087

721
655
570
s42

1,746

146
142
126
128

2,896

5,558
5,488
5,387
5,361

.435
.652
.870
I.087

758

684
607
576

1,746

179
167
159
158

2,896

5,628
5,542
5,457
5,425

.435
.652
.870
1*087

1,080
926
803
749

2,559

185
171
160
150

4,344

8,235
8,067
7,933
7,869

| 5,040

.435

.652
.870
1.087

1,126

959
830

787

2,559

224

199
184
184

4,344

8,320
8,128
7,984
7,941

.435
.652
.870
1.087

1,172
1,009
871
825

2,559

264
242
220
219

4,344

8,406
8,221
8,061
8,014

(Continued on next page.)

■id fit -rri '-f-. ■:

■

>ll«Fc'.XC

— i

51.

Table 15 continued.

a/ Output in crates packed per day is determined by multiplying respective
plant capacity rates of output per hour of 210, k20, and 630 crates by 8,
the length of packing plant workday assumed in this analysis. Daily out-
put rates of 1,680, 3,360, and 5,0^0 crates are the equivalent of 191, 382,
and 573 baskets, respectively, where the packout per basket is 8.8 crates.
Each crate contains approximately 70 pounds of lettuce.

b/ At an average packout of 8.8 crates per basket, harvest densities of .^35,
~ .652, .870, and I.087 baskets per 1,000 feet of bed are equivalent to 50,
75, 100, and 125 crates per acre, respectively.

ill

TABLE 16

Annual Fixed Costs of Harvesting-Hau ling and Packing Lettuce as
Related to Plant Output Per Day, Round-Trip Distance
from Field to Plant, and Harvest Density
Salinas District, California, 195*+

UU opuk ,

crates
packed

per

day£/

Round -trip
distance,
field to
plant

Hai've st
density,
baskets per
1,000 feet
of bed*y

Harvest-
hauling

Plant

Total

dollars

.1+35
.652
.870
1.087

13,2l+l+
13,21+1+
13,21+1+
13,21+1+

7,11+1

20,385
20,385
20,385
20,385

1,680

.1+35
.652
.870
1.087

15,*+07
15,1+07
15,1+07
15,to7

7,11+1

22,51+8
22,5*+S
22, 5I+8
22,51+8

1+0

.1+35
.652
.870
I.087

17, 570
19,733
19,733
19,733

7,1^1

2l+,711
26,874
26,871+
26,874

.1+35
.652
.870
1.087

23,795
18, 520
20,633
20,683

11,622

35,*+l8
30,11+2

32,305
32,305

3,360

.1+35
.652
.870
1.087

25,959
22,81+6
22,81+6

25,009

11,622

37, 581
3l+,l+68
3l+,l+68
36,631

1+0

.1+35
.652
.870
1.087

32,1+1+3
37,172
29,335
31,1+98

11,622

1+1+,070
1+8, 79*+
1+0,957
1+3,120

.1+35
.652
.870
1.087

26,909
23,796
25,959
25,959

15,988

1+2,897
39,781+
41,947
4l,9i+7

5,0U0

.1+35
.652
.870
1.087

33,398
28,122
30,285

32,1+1+8

15,988

1+9,386
l+l+,110

46,273
1+8,1+36

1+0

.1+35
.652
.870
1.087

39,837
3i+,6ll
36,774
38,937

15,988

55,875
50,599
52,762

54,925

(Continued on next page.)

ovs.

53.

Table 16 continued.

a/ Output in crates packed per day is determined by multiplying respective
~ plant capacity rates of output per hour of 210, 1*20, and 6^0 crates by 8,
the length of packing plant workday assumed in this analysis. Daily output
rates of 1,680, 3,560, and 5,0U0 crates are the equivalent of 191, 382, and
573 baskets, respectively, where the packout per basket is 8.8 crates. Each
crate contains approximately 70 pounds of lettuce.

b/ At an average packout of 8.8 crates per basket, harvest densities of

.652, .870, and I.087 baskets per 1,000 feet of bed are equivalent to 50,
75, 100, and 125 crates per acre, respectively.

a round-trip distance of 5 miles, fixed costs are the same for all levels of
harvest density. On the other hand, with the same output per day--but with dis-
tance increasing from 5 to Uo miles--annual fixed costs increase from $20,585
to $24,711 ($4,526). Similarly, with a round-trip distance of 5 miles and a
harvest density of .455 baskets per 1,000 feet of bed, costs with outputs of
1,680, 3,560, and 5,01*0 crates per day are $20,385, $55,4l8, and $42,897- As
in the case of variable costs, these costs increase in less than direct propor-
tion to output. For example, fixed costs in the medium-sized plant as compared
with the small plant at the above -specified distance and harvest density are
approximately 1.74 times as great (with output twice as large) and in the large
plant 2.10 times as great (with output three times as large).

Total Season Costs and Total Costs Per Packed Crate

Total costs per season for the harvesting-hauling and packing plant op-
erations are estimated as the annual fixed costs given in Table 16, plus total
variable costs per season obtained by multiplying variable costs per day given
in Table 15 by l6o— the length of season selected for the Salinas district. To-
tal season costs estimated in this way are given in Table 17. In the smallest
plant--none of which were actually observed in operation- -total estimated sea-
son costs are almost $500,000 when all costs are considered and in the medium-
sized plant—the most common in Salinas --nearly $1,000,000.

Total costs per packed crate are computed by dividing total season costs
(Table 17) by total season volume. » These costs are given in relation to op-
erating conditions and daily output^ in plants of three different capacity
rates in Table 18 and shown in Figure 12. The table shows that plant costs
vary only with size of plant; harvesting and hauling costs, however, are af-
fected not only by this factor but also by harvest density and distance from
field to plant. For example, with a daily output of 5,560 crates and a round-
trip distance of 20 miles, harvesting and hauling costs decrease from 50.6
cents to 24.6 cents per crate (6 cents) as harvest density varies from .1+55 to
I.O87 baskets per 1,000 feet of bed, and plant costs remain constant at $1.4l8

1/ For plants with daily outputs of 1,680 , 5,560, and 5,040 crates, total
season outputs would be 268,800, 557,600, and 806,400 crates, respectively.

2/ Daily output is determined by multiplying the capacity rate of output
per~hour by the eight-hour workday.

55.

TABLE 17

Total Season Cost of Harvesting-Hauling and Packing Lettuce as
Related to Plant Output Per Day, Round-Trip Distance
from Field to Plant, and Harvest Density
Salinas District, California, 1954

Output,
crates
packed
per
dayg/

1,680

5,560

Round-
trip
distance,
field to
plant

miles

Harvest
density,
baskets
per 1,000
feet of
bedV

.455
.652
.870
I.087

.455
.652
.870
1.087

.435
.652
.870
1.087

.455
.652
.870
1.087

Harvesting and
hauling costs

Vari-
able

Fixed

Total

Plant costs

Vari-
able

Fixed

Total

season

costs

69.8
61.6
56.8
55.8

75-5
65.O
59-8
59-2

77.3
71.5
66.2
65.8

135.0
119.2

107.7
100.2

138.7
127.5
111.4
107.2

149-9
156.2
122.6
117.4

202. k
175.5
154.1
143.8

216.0
185.3
3.62.2
155.4

229.8
200.2
174.6
167.0

13.2
13.2
13-2
13.2

15.4
15.4
15.4
15.4

17.6
19.7
19-7
19.7

23.8
18.5
20.7
20.7

26.0
22.8
22.8
25.0

52.4
37.2
29.3
31.5

26.9
23.8
26.0
26.0

33.4
28.1

30.3
32.4

39.9
34.6
36.8
38.9

1,000 dollars

83.O
74.8
70.0
69.O

88.7
80.4
75-2
74.6

94.9
91.2

85.9
85.5

158.8

137.7
128.4
120.9

164.7

150.3
134.2
132.2

182.3
173.4
151.9
148.9

229.3
199.3
180.1
169.8

249.4
213.4

192.5
187.8

269.7
234.8
211.4
205-9

387.4
387.4
387.4
387.4

750.6
750.6
750.6
750.6

750.0
750.6
750.6
750.6

750.6
750.6
750.6
750.6

1,115.2
1,115.2
1,115.2
1,115.2

1,115.2
1,115.2
1,115.2

1,115.2

7.1
7.1
7.1
7.1

11.6
11.6
11.6
11.6

16.0
16.0
16.0

394.5
394.5
394.5
394.5

762.2
762.2
762.2
762.2

1,131.2
1,131.2
1,131.2

16.0 1,131.2

16.0
16.0
16.0
16.0

16.0
16.0
16.O
16.0

1,131.2
1,151.2
1,131.2
1,131.2

1,131.2
1,131.2
1,131.2
1,131.2

477.5
469-3
464.5
465.5

485.2
474.9
469-7
469.1

489.4

435.7
480.4
480.0

921.0

899.9
890.6

885.I

926,9
912.5
896.4
894.4

944.5
955.6
914.1
911.1

1,560.5
1,550.5
1,511-5
1,501.0

1,580.6
1,544.6
1,525.7
1,519.0

1,400.9
1,366.0
1,342.6
i,557.i;

(Continued on next page.)

t xp.y«

56.

Table 17 continued.

a/ Output in crates packed per day is determined by multiplying respective
plant capacity rates of output per hour of 210, k20, and 6j0 crates by 3,
the length of packing plant workday assumed in this analysis. Daily output
rates of 1,680, 3,360, and 5,0to crates are the equivalent of 191 ; 532, and
573 baskets, respectively, where the packout per basket is 8.8 crates. Each
crate contains approximately 70 pounds of lettuce.

b/ At an average packout of 8.8 crates per basket, harvest densities of .*+35>
.652, .870, and I.O87 baskets per 1,000 feet of bed are equivalent to 50,
75> 100, and 125 crates per acre, respectively.

jMHSEp

TABLE 18

57.

Total Costs Per Crate of Harvesting-Hauling and Packing Head
Lettuce as Related to Plant Output Per Day, Round-Trip
Distance from Field to Plant, and Harvest Density
Salinas District, California, 1954

Output ,

crates

packed

Round-
trip
distance,

Harvest
densitv.
baskets
per 1,000

Harvesting and
hauling costs

Plant costs

per
day&/

field to
plant

feet of
bed?./

Vari-
able

Fixed

Total

Vari-
able

Fixed

Total

miles

dollars

.^35
, .652
I .870
I.087

.260
.229
.211
.208

.0^9
.0U9
.01+9
.01+9

.309
.278
.260
.257

1.1+1+1
1.1+1+1
1.1*1
1.1+1+1

.027
.027
.027
.027

1.1+68
1.1+68
1.1+68
1.1*68

1.777
L.746
1.728
1.725

1,680

f .^35
.652
| .870
, I.O87

.273
.2*42
.223
.220

.057
.057
.057
.057

• 330

• 299
.280

.277

1.1+1+1
l.l+l+l
1.1+1+1
1.1+1+1

.027
.027
.027
.027

1.1+68
1.1*68
1.1*68
1.1*68

1.798
1.767
l.Tl+8
1.7^5

1*0

' .^35
, .652
.870
, 1.087

.288
.266
.246
,2k5

.065
.073
.073
.073

.353
.339
.319
.318

1.1+1+1
1.1+1+1

l.k-'l
1.1+1+1

.027
.027
.027
.027

1.1*68
1.1+68
1.1+68
1.1*68

1.821
1.807
1.787
1.786

f .435
J .652
1 .870

1 1.087

.251
.222
.200
.186

.01+1+

.03 l +
.038
.038

.295
.256
.238
.221+

1.396
1.396
1.396
1.396

.022
.022
.022
.022

1.1+18
1.1+18
1.1+18
1.1*18

1.713
1.674
I.656
1.642

3,360

f .435
.652

.870
. 1.087

.258
.237
.207
.199

.01+8
.01+2
.01+2
.01+7

.306
.279
.21+9
.21+6

1.396
1.396
1.396
1.396

.022
.022
.022
.022

1.1*18
1.1*18
1.1+18
1.1+18

1.721+
1.697
1.667
1.661+

1*0

J .652

1 870
1 1.087

.279
.253
.228
.218

.060
.069
.055
.059

•339
.322
.283
.277

1.396
1.396
1.396
1.396

.022
.022
.022
.022

1.1*18
1.1+18
I.1+18
1.1+18

1.757
1.740
1.701
1.695

' ^35
d .652
1 .870

i nft7

. i. .UO (

.251
.218

.191
.178

.033
.030
.032
.032

.281+
.21+8

.223
.210

1.383
1.383
1.383
1.383

.020
.020
.020
.020

1.1*03
1.1*03
I.1+03
1.1+03

1.687
I.651
I.626
1.613

5,040

.435
I .652
.870
„ 1.087

.268
.230
.201
.193

.Cl+1

.035
.038
.01+0

.309
.265
.239
.233

1.383
1.383
1.383
1.383

.020
.020
.020
.020

1.1*03
1.1+03
1.1+03
1.1*03

1.712
1.668
1.642
I.636

, .652
.870
. I.087

.285
.248
.216
.207

.01+9
.01+3
.01+6

.01+8

• 33^
.291
.262
.255

1.383
1.383
1.383
1.383

.020
.020
.020
.020

I.1+03
1.1*03
1.1*03
1.1*03

1.737
1.694
1.665
1.658

(continued on next page.)

l_-

58.

Table 18 continued.

a/ Output in crates packed per day is determined by multiplying respective
plant capacity rates of output per hour of 210, ^20, and 63O crates by 8,
the length of packing plant workday assumed in this analysis. Daily output
rates of 1,680, 5,360, and 5,0k0 crates are the equivalent of 191, 382, and
573 baskets, respectively, where the packout per basket is 8.8 crates. Each
crate contains approximately 70 pounds of lettuce.

b/ At an average packout of 8.8 crates per basket, harvest densities of .^35,
.652, .870, and I.O87 baskets per 1,000 feet of bed are equivalent to 50,
75> 100, and 125 crates per acre, respectively.

■

59-

<
cc

cc
ui

o
o

<
i-
o

1.80
1.75
1.70
1.65
1.60

—

1 1 1 1 1

ROUND TRIP DISTANCE ■

1 1 1 1
5 MILES

—

HARVEST

^ DENSITY

* .435

.652 —

--C^ .870

1 1

1 1 1 1 1 1

1.087 _

III!

1.0

2.0

3.0

4.0

6.0

£ (.8 0

IT
UI
0.

en
o
o

<
i-

1.75 f-
1.70
1.65
1.60
0

ROUND TRIP DISTANCE - 20 MILES

HARVEST
DENSITY
.435

1.0

3.0

4.0

5.0

6.0

ui 180
cc

o 1.75

DC
UI

°- 1.70
l-

o 165
<

o l-«0

1 > 1 ! 1 '

v^ROUND TRIP DISTANCE

1 1 1 1
- 40 MILES

HARVEST

DENSITY

— .435 ~~

*"*"-*■ .652 ~

^ = =^—— _ 870

1.087 -

h 1

1 1 1 1 1 1

1.0 2.0 3.0 4.0 5.0

OUTPUT PER DAY - 1000 CRATES

6.0

Figure 12. Total Costs Per Crate of Harvesting, Hauling,
and Packing Head Lettuce as Related to Plant
Output Per Day, Round-Trip Distance from Field
to Plant, and Harvest Density, Salinas Dis-
trict, 1953-5U.

6o.

per crate. Total costs per crate decrease from $1,742 to $1,661*. on a season
basis this difference amounts to $32,500. It is clear from Figure 11 that the
rate of this decrease is smaller at high than at lov harvest densities. For
example, as harvest density increases from .1*35 to .652 baskets per 1,000 feet,
costs decrease about 2.5 cents per crate as compared to only about .5 cent per
crate with the same increment in harvest density in the range of .870 to 1.037
baskets per 1,000 feet. Conversely, with an output of 3,360 crates per day
and a given level of harvest density— for example, .652 baskets per 1,000 feet-
harvesting and hauling costs increase from 25.6 to 32.2 cents (6.6 cents), as
round-trip distance increases from 5 to 1*0 miles; plant costs remain at $1,418;
and total costs per crate increase from $1,671* to $1.7^. This would mean
that, if one firm continuously carried on its field operations at a distance
from the plant of 2| miles while another operated at a 20-mile distance, the
difference in harvesting and packing costs per season between the two firms
would be $35,600.

As size of plant increases, both harvesting and hauling and plant costs
decrease. For example, with a round-trip distance of 5 miles and a harvest
density of .870 baskets per 1,000 feet of bed, harvesting and hauling costs de-
crease from 26.0 cents to 23-9 cents (2.1 cents) and plant costs decrease from
$1.1*86 to $1.1*18 (5 cents) as daily output increases from 1,680 to 3,360 crates;
total costs per crate decrease from $1,728 to $1,657 (7-1 cents). As daily
output increases from 3,360 to 5,0l*0 crates, harvesting and hauling costs per
crate decrease from 23.9 cents to 22.3 cents (1.6 cents) and plant costs from
$1.1*18 to $l.lK)3 (1.5 cents). Total costs per crate decrease from $1,657 to

$1,626 (3.1 cents).

These comparisons indicate that a large portion of the savings possible
with large-scale operation is achieved in the medium-sized plant— the most
common in the Salinas district— and the curves in Figure 11 show that nearly
all such savings would be accomplished in plants of the largest size considered
(63O -crate -per-hour capacity) .

IMPLICATION OF RESULTS TO THE PRESENT SITUATION
IN THE SALINAS DISTRICT

The preceding analysis illustrates the economies possible with the opera
tion of large-scale lettuce packing plants. Since 1952, however, the demand
for ice -packed lettuce has rapidly diminished. In 1956, for example, only

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1,528 cars— as compared to over 30,000 cars in 1952— were ice packed in the
Salinas district. This declining volume raises questions as to the practica-
bility of large-scale operation. Even prior to the shift away from ice pack-
ing, the variation in seasonal distribution of lettuce shipments had contributed
to considerable excess packing plant capacity in the industry, and the present
low total season volume has greatly increased this excess capacity. The dis-
tribution of these ice-packed shipments from the Salinas district in 19S>6 is
shown in Figure 13. The heaviest volume occurred in the months April through
July reaching a maximum of 387 cars in May and decreasing thereafter.

A major problem in the existing situation is how to organize existing and
surplus facilities most economically. Some guides are available from the pre-
ceding cost analysis, although several adjustments in the final results are
appropriate. The preceding analysis would be of interest to those individuals
planning the construction of new or the modification of old facilities. In
this case it is necessary to consider both variable and fixed costs. Since the
immediate problem in the Salinas district is not the construction of new plants
but rather the optimum utilization of existing packing facilities, an analysis
of alternative packing plant operations can ignore the effect of fixed costs,
and the problem can be considered in terms of variable costs only. The analysis
can be further simplified by considering only packing plant labor and supervi-
sion costs since the other variable costs would differ only slightly from those
presented earlier. For example, material and supply costs would be expected,
under present conditions, to be slightly higher than those shown previously
because of the smaller scale on which they are produced. This would tend to
shift costs upward by the amount of the increase, but it would not affect the
relative costs of alternative types of organization. Similarly, field harvest-
ing and hauling costs would probably approximate those shown earlier in regard
to small-scale operation since the fields from which lettuce is harvested for
ice packing would be too widely scattered to warrant large-scale field opera-
tions. Inclusion of these costs would merely tend to complicate the analysis
of alternative methods of packing plant operations while adding little to the
conclusions drawn.

The analysis that follows focuses on a comparison of plant labor and super-
vision costs assuming the entire Salinas district output of ice-packed lettuce
is processed in a single plant of either 1420-crate-per-hour capacity or in one
of 630-crate-per-hour capacity. Table 19 contains a summary of the distribution
of shipments of ice-packed lettuce by months from the Salinas district in 1956

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400 —

{2
z

300

< 200

H
Z
O
2

100

APRIL MAY JUNE JULY AUGUST SEPTEMBER

Figure 13. Distribution of Monthly Carlot Shipments of Ice-Packed
Lettuce, Salinas District, 1956.

63.

TABLE 19

Monthly Distribution of Ice-Packed Shipments and Hours Worked and Estimated
Season Total and Per Crate Costs of Packing House Labor and Direct
Supervision in Plants of 1+20- and 630-Crate-Per-Hour Capacity
Salinas District, California, 1956

Monthly and total season hours

Monthly and

U20-crate-per-houi-
plant

630-crate-per-hour
plant

Item

crates packed

Regular
time

Over-
time

Regular
time

Over-
time

Month

April

97,920

176

£7

123. 81iO

18U

181+

June

88,000

160

ll+O

July

71,360

170

113

August

1+8,000

lilt

September

1*0.000

October

19,81+0

Season total

1+88,960

9h6

218

763

Total season packing
house labor and direct
supervision costsfy

$277,5lU

$250,1+00

Packing house labor
and direct supervision
costs per crate

$0,568

$0,512

a/ Total season plant labor costs were computed by multiplying total labor costs
per hour (shown in Table 1 for the two sizes of plants) by the number of hours
worked. Costs for overtime hours were computed at 1§ times the rate for regu-
lar time hours.

6U.

(previously shown in Figure 13) as well as an estimate of regular time and over-
time hours of plant operation per month for the two sizes of plants. Total sea-
son packing labor and supervision costs, shown in the table for the two plants,
were computed by multiplying total labor costs per hour (given in Table l) by
the total number of hours worked during the season e Costs of overtime hours
were computed at 1^ times the rate of regular time hours. Costs per crate were
obtained by dividing total season costs by the total season volume shown in the
table*

Table 19 indicates that the entire season's output could have been proc-
essed in 1,16U hours of operation in the U20-crate-capacity plant or, alter-
natively, in 776 hours in the 630-crate-capacity plant. These hours are based
on the assumption that each plant works at its capacity hourly rate of output.
In neither plant could the peak daily volume be packed in eight hours so some
overtime would be required. In the smaller plant, 218 hours of overtime per
season would be required as compared to only 13 overtime hours in the larger
plant.

The cost difference per crate between the U20- and 630-crate plants, shown
in Table 19, is approximately 6 cents. This difference arises largely from the
greater number of overtime hours worked in the smaller plant. In addition,
labor costs per crate in the 630-crate plant are lower than those in the It-
erate plant due to a more complete utilization of the labor force.

As was indicated previously, the above cost differences are based on the
assumption that the two sizes of plants are operated at their respective capacity
hourly rates of output throughout the season, With this assumption, variations
in daily output would be met by varying the number of hours worked . But varying
the number of hours worked creates certain problems with respect to the labor
force. For example, in Table 19 it is clear that, after the peak of the season,
the total number of plant hours worked per month continuously declines. This
would mean that fewer hours would be worked per month (or day) per worker as
the season progressed. This decline is especially pronounced in the case of
the plant of 630-crate-per-hour capacity. It would seem reasonable to suppose
that workers would resist excessive decline in hours worked because of its ef-
fect on their incomes. As a practical matter, therefore, it would probably be
impossible to operate at the capacity rate of output for the entire season.

An alternative to this would be to operate at or near the 630-crate-per-
hour capacity during the peak of the season but at lower rates of output per
hour as season volume decreases. This reduction in rate of output per hour

65.

would be brought about by reducing the number of workers employed. Under these
conditions the average number of hours worked by those still employed could re-
main relatively constant.

Labor costs per crate with the above method of operation would be somewhat
higher than that shown for the 630-crate plant in Table 19 because the work time
of certain members of the crew-f or example, the lidder-would not be as com-
pletely utilized with the reduced hourly volume. Nevertheless, this method of
operation would still yield lower labor and supervision costs per crate than if
a similar method were used in a U20-crate-capacity plant. There would be no
change in the number of overtime hours worked in either plant (shown in Table 19),
and the reduced volume per hour as the season progressed would affect the costs
in the smaller plant in exactly the same way as it does in the larger plant.

Operation of more than a single packing plant under present conditions in
Salinas seems unwarranted. With several plants operating, the daily volume
processed through a particular plant could be quite irregular. Recruiting labor
under such conditions would be difficult. In addition, because of the low total
season district volume, season volume per plant would be lower than those pre-
viously discussed. Low volume per plant would undoubted?/ be associated with
low rates of plant output per hour. Under these conditions labor and supervi-
sion costs would be considerably higher than for the plant sizes discussed in
Table 19.

The consolidation of ice-packing operations of a number of producers into
a single plant raises a number of administrative problems. Questions of label-
ing, coordination of field and plant operations, and decisions as to whose let-
tuce and how much of it to pack in a given day require considerable administra-
tive skill. The costs of these added administrative responsibilities would have
to be weighed against the possible savings with a consolidated operation.