University of California College of Agriculture Agricultural Experiment Station Berkeley, California RTATT.qTTnAT, ANAT.Y.STfl 07 THE ANNUAL AVER.\GE F.O.B. PRICES OF CANNED CLINGSTOME PEACHES. 1924-25 TO 1947-48 by Sidney Hoos DAVIS August, 1948 Contribution frcm the Giannini Foundation of Agricultural Economics Mimeographed Report No, -93 statistical Analysis of the Annual Average F.O.B. Prices of Canned Clingstone Peaches, 19S4-25 to 1947-48 Sidney Hoosi/ During a number of the years before World War II, the Giannini Fotindation of Agricultural Economics issued annmlly a report presenting the results of statistical analyses of canned clingstone peaches. Those reports were made available for the benefit of the canned peach industry, growers, packers, shippers and purchasers. During the war years, the reports were suspended because of the abnormal conditions which prevailed then, such as federal price control. t In May 1948, the California Agricultural Experiment Station issued tv/o publications on clingstone peaches .2/ Those publications were made available for the purpose of presenting in general terras the economic trends underlying clingstone peaches, and providing background information on the industry and its economic status. The prewar, wartime, and immediate postwar developments were considered to give a comprehensive basis for the industry' s outlook. This report undertakes to resume the type of statistical analyses of the F.O.B. prices of canned clingstone peaches v;hich were issued in the prewar years, as noted above. With the experience of only two postwar pack-years available now, it is still too early to establish clearly a firm postwar pattern of the statistical relations. Ana3.ysis of the available evidence indicates, however, the existence of a pattern which bears some similarity to but also has some characteristics different from the prewar statistical relations. The major difference concerns the effects of consumers' income as reflected by the index of nonagricu].tural income. In the prewar years, the net relation between the prices and consumers' income was well measured by a straight-line; that is, a change of income from one level had the same effect on price as a change of income from another level within the range of experience. But when the postwar years are included in the analysis, the net relation between the prices and consumers' income is more adeqxjately measured by a cvtrve; that is, the effect which a change of income has on price is in- fluenced by the income level from which the change is considered. In other terms, an increase of 10 points in the income index, if money income is high as in postwar years, is associated with a smaller increase in the price than if the income index increases 10 points in relatively low income years such as the middle 1930' s. This relation is noted further below. | Below we present the results of an analysis of the major factors which have influenced the annual average F.O.B, prices received for canned cling- stone peaches by canners in California from 1924-25 through 1947-48, but ex- cluding the war years 1941-42—1945-46. The war years were emitted from the analysis because of the reasons noted above. 1 i/ Associate Professor of Agricu].tural Economics, Associate Agricultural Economist in the Experiment Station, and Associate Agrictiltural Economist on the Giannini Foundation, ^ Sidney Hoos and H, Fisk Phelps. California Clingstone Peaches, Economic Status 1948. Calif. Agr. Exp. Sta, Circ. 385 (May 1948). Sidney Hoos and H. Fisk Phelps, Statistical Supplement to Calif. Agr. Exp, Sta. Circ. 385 (May 1948). 9CSCI V of 3 Xfc- U (IS , ■ ,{8f'5r;pM) see . ■ « * 2. The average relationships which prevailed from 1924-25 through 1947-48 (excluding 1941-42 — 1945-46) between the F.O.B. prices of canned clingstone peaches and three major factors were measured. The three factors are (l) total domestic shipments of California canned peaches, including both clingstones and freestones, (2) index of nonagri cultural income in the United States, and (3) an adjusted index of prices of competing canned fruits. | Figure 1 shows graphically the average relations between the F.O.B. price and each of the independent variables, as determined by equation No. 4, table 5. Expressed in numerical terms, these average relations are as follovis for the period of years under consideration: (a) A change of one million cases in domestic shipments of canned peaches, with income and competing canned fruit prices held constant, was on the average accompanied by a change in the opposite direction of 14 cents a case in the F.O.B. price of canned clingstone peaches. This relation is shown by the diagonal line in panel A of figure 1. (b) A change of one-hundreth unit in the logarithm of the index of nonagricultural income in the United States, with domestic ship- ments and prices of ccipeting canned fruits held constant, was on the average accompanied by a change in the same direction of 9 cents a case in the F.O.B. price. Expressed in other terms, a change of 10 per cent in the level of nonagricultural income in the United States, ¥fith domestic shipments and prices of competing fruits held constant, was on the average accompanied by a change in the same direction of about 36 cents a case in the F.O.B. price. This relation is shown in absolute terms and more simply by the curve in panel B of figure 1. (o) A change of 10 points in the adjusted index of prices of competing canned fruits, with domestic shipments and nonagricultural income held constant, was on the average accompanied by a change in the same direction of 22 cents a case in the F.O.B. price. This re- lation is shown by the diagonal line in panel G of figure 1. Differences between the actual prices and those explained by the corre- lation analysis are given in table 4, column 3. The differences are plotted as deviations from the net regression lines in panels A, B, and C of figure 1. For purposes of comparison and as a check on the analysis vd.th price as the dependent variable, an analysis was also made in which quantity of domestic shipments was considered as the dependent variable. In such an analysis, em- phasis is shifted from the major factors influencing the F.O.B. prices of canned clingstone peaches to the major factors influencing the volume of domestic ship- ments of canned peaches (clingstone plus freestone) by California canners. Total movement out of canners' hands minus United States exports is assumed to equal domestic shipments. j The average relations between domestic shipments of canned peaches by California canners and each of three variables (F.O.B. prices of canned cling- stone peaches, index of nonagricultural income, and an adjusted index of com- peting canned fruit prices) were measured. In numerical terms, and as deter- mined by equation No. 5, table 5, the average relations for the period under consideration are as follows: 0 a CO (a) A change of $1.00 a caso in the F.O.B. price of canned clingstone peaches, with the nonagri cultural income and prices of competing canned fruits held constant, was accompanied on tho average by a change in the opposite direction of 3.86 million cases in the domestic shipments of canned peaches (clingstones plus freestones). (b) A change of one-tenth unit in the logarithm of the index of non- agricultural income, with the F.O.B. price of csxnned clingstone peaches and prices of competing canned fruits held constant, was on the average accompanied by a change in tho same direction of 3.9 million cases in the domestic shipments of canned peaches. Expressed in other terms, a change of 10 per cent in the level of nonagri cultural income, with the F.O.B. price of canned clingstone peaches and prices of competing canned fruits held constant, was on the average accompanied by a change in tho same direction of about 1.57 million cases in the domestic shipments of canned peaches. (c) A change of 10 points in the adjusted index of prices of competing canned fruits, vdth the F.O.B. prices and nonagricultural income held constant, was on the average accompanied by a change in tho same direction of 621 thousand cases in the domestic shipments of canned peaches. Differences between actual domestic shipments and those reflecting the relations noted above are shown in table 4, column 6. Of tho various analyses made in tho course of the study, the two sum- marized above appear to bo the most acceptable from the combined viewpoints of economics, marketing and statistics. As additional postwar data and ex- perience arc accumulated, the evidence should become clearer and sharper concerning t he relations of the prices and shipments to the major factors affecting them under postwar conditions. • ''4 &-3.^o&z%allc.-, ...:c{!xjioq ton.. ...j-j;x..u.>;iria, 'oid'aVirio'?) - , ■ . . * -■ . . ■ - -■ 4. TABLE 1 Statistical Analysis of the Annual Average F.O.B, Prices of Canned Clingstone Peaches Variables Used in the Analysis Year F.O.B. price Domestic Index of Adjusted index of June canned shipments nonagr i cul tural prices of c ompeting through clingstone of California income canned fruxts May peaches canned peaches (1935-1939=100) (19 35-19 3£ )=iop) dollars thousand per case casep per cent per cent 1 2 3 4 1924-25 4.21 5,637 103.9 149.2 1925-26 3.78 8,511 112.7 124.2 1926-27 3.66 9,046 115.3 118.0 1927-28 3.17 11,163 116.2 125.6 1928-29 3.22 10,800 120,7 106.0 1929-30 4.08 7,845 120.2 117,3 1930-31 2.88 9,402 104.4 109.2 1931-32 2.55 6,058 85.5 102.9 1932-33 1.97 8,188 68.1 126.3 1933-34 2.31 7,480 75,5 124.5 1934-35 2.69 8,006 82.1 127.9 1935-36 2.51 8^72d yi.u 109,9 1936-37 2.66 9,876 106.5 93.0 1937-38 2.96 7^531 103.3 101.6 1938-39 2.30 10,669 101.0 92.1 1939-40 2.44 9,551 109.6 93.1 1940-41 2.30 12,666 122.1 84.4 1946-47 4.87 16,880 264.4 66.6 1947-48§/ 4.82 15,155 291.8 63,1 a/ Preliminary — subject to revision. Sources of data*. Col. 1: Compiled from reports by canners. Prices are vreighted average prices of canned clingstone peaches received by canners, F.O.B. cannery dock, for all grades and sizes of cans on an unadvertized basis. Regular brokerage, cash discount, swell allowance, label allowance, and case allowance are included. Col. 2: Total shipments minus exports. Total shipments compiled by the Canners League of California and the Canning Peach Industry Board. Figures in- clude both clingstones and freestones on a No. &g- basis. See tabic 2, Exports from U.S. Dept. of Commerce, Monthly Summary of Foreign Commerce of the United States. ! Col, 3: Simple average of the pack-year monthly indices of national income, ex- cluding agricultural income, 1935-1939 average equals 100, Index for May 1948 was assumed to be the same as for April 1948. Monthly income data compiled from U.S. Dept. of Commerce, Survey of Current Business. Unrevised figures used for months prior to June 1939 and revised income figures used for June 1939 and following months. The revised income data obtained from July 1947 Supplement to Survey of Current Business and later monthly issues. Col, 4: For sources and method of construction see table 3, I.RC id'otrrJ'artoo 1o b- Figure 1< — California Cannod Poachos: Average F,0,B, Prices Received by Canners Related to (A) Domestic Shipments of Canned Shipments, (b) Index of Nonagricultural Income, and (C) Adjusted Index of Prices of Competing Canned Fruits, 1924-25 through 1947-48 (ex- cluding ].941-42~1945-46), (Based on equation No, 4, table 5) 5 7.5 10 12.5 15 17.5 : Domestic Shipments of California Canned Poaches ( 1,000,000 cases ) 0 1 1 1 1 ! 1 1 1 ' 1- 50 100 150 200 250 300 X3: Index of Nonagricultural Income ( 1935-39 = 100 ) 0.5 Jo Figure 1 (continued) 6. .3- TABLE 2 Shipments of California Canned Clingstone and Freestone Peaches and United States Exports of Canned Peaches California United States California Year June Canned Canned Canned Domestic ship- through clingstone freestone peach ments of canned May shipments shipments shipments Exports peaches thousand cases, No, 2^ basis 1 2 3 . 4 5 337 8, 511 9,1 346 Xyc f— (CO 12,907 296 13,203 2,040 11, L63 12,652 310 12,962 2,162 10, i 300 9,204 362 9,566 1,721 7,« 345 j.y ou— oi 10,881 145 11,026 1,624 9, 402 7,445 82 7,527 1,469 6, 358 9,881 40 9,921 1,733 8, 7 188 1933-34 9,214 65 9,279 1,799 480 1934-35 8,811 321 9,132 1,126 8, 006 10,757 274 11,031 2,305 8, 726 10,667 518 11,185 1,309 3 lb X17 O f ""CO 8^125 677 Q O AO o,oU,< 1, 551 1940-41 11,520 1,233 12,753 87 12, 666 1941-42 10,568 2,161 12,729 1942-43 12,926 1,191 14,117 1943-44 10,739 598 11,337 1944-45 12,285 337 12,622 1945-46 12,236 510 12,746 1946-47 . 17,046 997 18,043 1,163 16, B80 1947-48a/ 14,518 1,291 15,809 654 15, 155 a/ Preliminary — subject to revision. Sotirces of data: Cols. 1 and 2: Compiled by the Canners League of California and the Canning Peach Industry Board, Col. 3 : Col. 1 plus col. 2, Col. 4 : United States Department of Commerce, Monthly Summary of Foreign Commerce of the United States. May 1948 exports estimated. Col, 5 : Col. 3 minus col, 4. 1 — .... . , — — 1 ■ ! ■'■ ' •--*.-l-Vai;<. f i ■. ■■■; y Q T"> 1 fi p n n "I p a n T 1 n+ a n 1 npFLDol PS ^ -i. 1 1 <«f L--^ V' ^ w prices income prices doll do! T arR dpt ^ Vw- X CX c j^' C 1 w ^ o ^ 1Q35-1939 =100 1935-1939=100 X o C. ■I ^4 1 2 3 4 5 6 7 8 9 iU 1 ^1 -0.95044 -0.11692 (2.03894) ■»0 .02272 (9.25726) +0.02297 (3.90117] 0.9282 2 ^1 -2.95430 -0.164106 (5.53488) +0.05798 (10.78629) -0.09177 (6.73955) +0.02138 (7.20292) 0.9824 3 -9.54139 -4.18233 (5.53488) •»0. 26352 (6.05506) +0.41785 (4.79715) +0»07325 (2.82398) 0.9568 4 h -16.05793 -0.14220 (4.27835) +8.86376 (16.99875) +0.02225 (6.58501) 0.9768 5 X2 -64.39531 -3.86496 (4.27835) +38.76011 (7.04213) +0.06213 (2.01607) 0.9390 a/ Xj_ = the annual average F.O.B. price of canned clingstone peaches (in dollars per case). X^ ^the domestic shipments of California canned peaches, including both clingstones and freestones (in uhrt¥ of 1,000,000 cases) . = the index of nonagricultural income in the United States, 1935-1939=100 (in percentage points). = the adjusted index of prices of competing canned fruits, 1935-1939=100 (in percentage points). , .-■-■» -■ H ^. „ . . ^ t ■ ■ .■ ! - 1..: • . i ■ : : 1 1 i 1 r ■. ■ I ■ : ' ( ? — J . . - - v:^ j 1