University of California
College of Agriculture
Agricultural Experiment Station
Berkeley, California
WHAT DETERMINES CALTFCRMTA RAISIN SAIJIS
A preliminary report based on
an analysis of data for the crop years, 1921-1929
S, W, Shear and R. M, Howe
November, 1930
Contribution from the
Giannini Foundation of Agricultural Economics
SJi^IVERSrXY OF CALIFOSSHA
DAVIS
Forevjord and Acknowledgements
This preliminary analysis of the factors affecting
California raisin sales was made by the Giannini Foundation at
the request of the Federal Farm Board and with its financial
cooperation. Its purpose is to make available and to inter-
pret certain fundamental facts needed by the California Grape
Control Board and its subsidiary, the California Raisin Pool,
and others interested in, and responsible for California's
raisin marketing program. The major facts and conclusions
were presented to the Directors of the California Raisin Pool
in Fresno on July 31, 1930.
It has been possible to present many of the most im-
portant California data included only because of the generous -
cooperation of the Sun-Maid Raisin Growers Association and the
independent packers acting through the Dried Fruit Association
of California, The authors are also indebted to the following
persons for generous assistance in the preparation of this re-
port: Dr. Holbrook Working and Dr. Alonzo S. Taylor of the
Food Research Institute at Stanford University, Dr. 3. W.
Gaumnitz of the Division of Markets of the California State
Department of Agriculture, Professor Donald Sham of Santa
Clara University, and Messrs, L. A. 'lil/heeler of the U.S. Bureau
of Agricultural Economics, R, S. Hollingshead of the U.S.
Bureau of Foreign and Domestic Commerce, M, E. Brooding of
the California Packing Corporation, K, R. Richardson, formerly
with the Sun-Maid Raisin Growers Association.
The study was made under the general supervision of
Professor K. R, Tolley, Assistant Director of the Giannini
Foundation. Other 'member s of the staff of the Foundation and
of the Division of Agricultural Economics who have been helpful
in its preparation are Dr. H. R, Wellman, Dr. H. E. Srdman,
and Messrs. E. Vd'. Braun, L. D. Mallory and S. R. Smith.
«
WHAT DETERMINES
CALIFORNIA RAISIN
SALES
A preliininary report based on
an analysis of data for the crop years, 1921-1929
1/ 2/
S, W, ShesLT and R. M. Howe
How many California raisins have been sold annually during the last nine
years in the domestic and in foreign markets and at what prices? T!:irough the co-
operation of the independent packers and of the Sun-Maid Raisin Growers Association
these data are herev/ith made available to the industry for the first time. To-
gether v/ith other data, they have been used as the basis for the present analysis of
the factors that have determined the quantities of California raisins sold in the
domestic and in foreign markets in recent years. Although this analysis explains
only what has occurred in the past, much of its value lies in the help it can give
the industry in judging how many thousands of tons of raisins California can reason-
ably expect to sell in the future in the domestic and foreign markets at different
prices,
AIMJAL CALIFORNIA RAISIN SALES
The big increase in California raisin production since the war was accom-
panied until 1929 by a rapid and steady growth in the tonnage sold for domestic and
foreign consumption. During the same period, as figure 1 indicates, the industry
experienced drastic price declines. Between 1921 and 1928 California raisin sales
to the trade nearly doubled, rising from 155,000 short tons to 290,000. The carry-
over as given in table 3, together with the fact that about 100,000 tons, mostly of
the 1923 crop, were utilized as by'-products, shows why the annual changes in the
raisin tonnage sold for human consumption indicated in figure 1 have not corres-
ponded with the variations in production shown in figure 2.
Ihomp_son and Muscat Supply and Price Changes.- Since . adequate data are not
available on annual sales by variety, the percentage of production by varieties, as
shown in table 2, gives the best clue to changes in their relative importance. How-
ever, in order to visualize changes in the quantity sold by varieties, the carryover
data by varieties, shown in table 3, must also be considered, as well as the fact
that a majority of the by-products made from the 1923 crop surplus utilized
Thompson Seedless, The rapid increase in the proportion of Thompson Seedless
raisins from 49 per cent in 1921 to 74 per cent in 1929 and the corresponding de-
cline in Muscat production from 39 to 20 per cent of total dried output of the
state, helps to explain the fact that since 1925 the f.o.b. price of Muscats, as
shown in table 4, has been higher than for Thompson Seedless. For at least fifteen
years previous to 1925, prices and returns per acre for Thompson Seedless raisins
were usually substantially higher than for Muscats. The greater returns from
Thompson Seedless raisins during that period largely accounts for the tremendous
increase in the production of this variety in California during the last twenty
years, finally resulting in its adverse price differential as compared with Muscat
prices.
\J Assistant Agricultural Economist in the Experiment Station and Assistant
Agricultural Economist on the Giannini Foundation.
2/ Research Assistant in Agricultural Economics.
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Table 2, Percentage of California Raisin Production by Varieties,
1921-1929
Gv OX)
Years
Total
TVi rsYTi Ti c! r\Y\
Seedless
Muscat
Sultana
Others*
1921
100.0
49.1
38.8
8.9
3.2
1922
100.0
55.6
34.8
7.4
2.2
1923
100.0
60.7
30.6
7.5
1.2
1924
100.0
64.8
27.4
7.0
0.8
1925
100.0
77.0
14.9
6.4
1.7
1926
100.0
69.3
22.8
5.8
2.1
1927
100.0
71.4
22.0
5.2
1.4
1928
100.0
79.5
13.0
5.3
2.2
1929
100.0
73.7
20.3
4.3
1.7
* "Others" may include some soda and oil-dipped Sultanas and Thompson
Seedless.
Source of data:
Computed from the total of Sun-Maid and packer receipts by variety
as reported to the Giannini Foundation.
Digitized by the Internet Archive
in 2014
https://archive.org/details/whatdeternninesca01shea
Table 3o Unshipped Stocks of California Raisins in the Hands of Sun-Maid and
Independent Packers on September First, Sold and Unsold,
Short Tons, Sweat-Box Basis, 1921-1930*.
Year
ioxai
Thomps on
Seedless
MU S C SlZ
uxnez
varieties
1921
36,000
5,200
22,600
8,200
1922
34,000
9,400
19,500
5,100
1923
86,000
40,900
40,300
4,800
1924
186,000
107,300
64, 500
16,200
1925
67,000
37,400
20,600
9,000
1926
59,000
48,500
3,600
6,900
1927
108,000
81,400
15,400
11,200
1928
124,000
91', 700
28,700
3,600
1929
92,000
73,800
11,000
7,200
1930*
92.000*
67,000*
15.000*
5,000*
1 — e.
Source of data:
Compiled from records of the Sun-Maid Raisin Growers Association and summarized
data of other raisin packers furnished by the Dried Fruit Association through
the cooperation of its members. Ninety-five per cent or more of the stocks of
California raisins are accounted for by this table,
*An actual inventory of 117,000 tons of raisins on May 31, 1930 was reported of
which about 85,300 tons (73 per cent) were Thompson Seedless, 23,000 tons (20
per cent) Muscats, and 8,700 tons (7 per cent) other varieties, largely
Sultanas. The inventory total as given for September first, 1930 was calcu-
lated as explained below and by varieties by applying the May 31 percentage
variety distribution to this total.
The carryover from the 1928 crop on September 1, 1929 was 92,000 tons. Mimeo-
graphed release No. 1245, June 7, 1930 of the Dried Fruit Association of
California shows actual receipts of 1929 crop raisins from growers by Sun-Maid
and the independent packers up to about the last of April of 215,000 tons. Com-
pleted and shipped sales from September 1, 1929 to August 31, 1930, were 215,000
tons, the same as receipts. Hence unshipped stocks in the hands of the packing
industry on September 1, 1930, appear to have been at least 92,000 tons. They
may have been slightly larger, since packers estimate that growers held between
five and ten thousand tons of unsold raisins at the time the packing industry
reported receipts of 215,000 tons this spring.
Figure 1. Net F.O.B. Price and Quantity, Sweat
Box Basis, of California Raisin Sales,
1921-1929
16-
14
12
'510
o
Q)
ft
CO 5
CD
o 4
1
\
\
\.
1
1
\
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- \ ^
VH
Sales
/
Price
1
1
, 1
1
1
320
280
240 g
200 1
A
m
160ch
o
120g
05
80 2
40
0
1921 22 23 24 25 26 27 28 29 30 31
Years beginning September first
2*
PRICE CHAM3ES
Figure 1 shows not only the "big increase in California raisin sales since the
war but the great decline in f.o.fc. prices. The extreme decline fron 14 cents in
1921 to 7.3 cents in 1923 reflects the artificially high raisin prices of 1921, the
moderately adverse business conditions of 1923, the tremendous state crop of that
year, and the competition of low foreign prices.
Expansion of the total tonnage sold between 1923 and 1926, while average
prices remained practically on a level, reflects our increased export sales which
were stimulated by rising prices of raisins from other countries, particularly in
1925 and 1926, v/hile our export prices were declining. Increased foreign demand,
resulting largely from Sun-Maid's foreign sales campaign, has also helped to expand
export tonnage since 1923. To maintain the average level of prices from 1923 to
1926, however, required considerable by-product utilization, largely from the bumper
crop of 1923, and resulted in undesirably large carryovers (see table 3).
In spite of the bumper crop of 1926, California prices were maintained and
sales as a result expanded but slightly. With a very large carryover at the end of
the season and another bumper crop in 1927 prices were reduced to a 5.9 cent average
for the season, Tlie price-cut, however, was not drastic enough to sell the available
raisin tonnage, for when the large 1928 crop was dried a huge tonnage of the 1927
harvest was still on hand. When these facts and their possible effect on the Sun-
Maid Raisin Growers Association became generally known, California raisin prices de-
clined to a very low level averaging about 4.7 cents for the season of 1928 as a
whole. The low prices stimulated the sale of the largest tonnage of California
raisins ever sold in a single year.
In spite of this fact, hov^ever, the carryover of 1928 raisins on September
first, 1929 was so large that even with a small 1929 crop, available supplies were
greater than the large tonnage sold in the 1928 marketing year. In the face of
these supplies, however, and the large foreign crop, which brought about drastic
reductions in Australian prices in the United Kingdom, and generally depressed busi-
ness conditions both at home and abroad, the price of California raisins was raised
in the summer of 1929 averaging about 5,4 for the season as a whole. Although the
price was relatively low, the tonnage sold was indeed very discouraging. Only
215,000 tons were disposed of, or practically the equivalent of the 1929 crop, still
leaving an inventory of about 92,000 tons of old raisins on hand in the state on
September first, 1930, to handicap the present marketing season.*
RELATION OF DOMESTIC SALES TO PRICES
Figure 1 has already shown that prices of California raisins have been low
when the tonnage sold was large. Figure 3 gives a more direct picture of the fact
that high prices are associated with small consumption and low prices v;ith large
consumption, or in other words, that price is normally one of the most important
factors determining the quantity of raisins consumed in the domestic market (United
States and Canada), This chart, knovm as a scatter diagram, is used because it is
the simplest way to show how much prices have had to be reduced in the past in order
to increase the tonnage sold by any given amount. Each black dot in this figure
indicates the relation between the tonnage of California raisins sold in the
domestic market and the average f.o.b. price at which it was sold during the crop
See table 3 and footnote for details regarding the carryover situation on
September first, 1930.
Table 4. California F.O.B.-Rail Raisin Prices, 1921-1929
(Dollars per net packed short ton)
Year
beginning
Sept. 1
Total, domestic and foreign sales
i Total, all varieties
Grand tota]
Thompson
Seedless
(natural )
Muscats
Domestic
sales
Foreign
sales
' ' ' •-" '
Dollars
Dollars
Dollars
Dollars
Dollars
1
2
3
4
5
1921
280
280
270
1922
210
210
200
1923
146
144
160
1924
142
148
136
142
142
1925
146
146
153
147
143
1926
144
136
150
147
137
1927
118
112
123
117
119
1928
94
87
99
94
91
1929
108
98
125
[ 108
108
* Data prior to 1924 were too incomplete to compute average prices for
individual varieties but are sufficient to indicate that Thompson
Seedless prices were higher than Muscat prices in the years 1921-1923.
Source of data:
Compiled from the data reported on completed sales to the trade of
Sun-Maid and other packers by dividing money received (net, excluding
cash discounts and brokerage) f.o.b. Gal i f or ni a rail shipping points
by the corresponding tonnage of completed sales as reported on a net-
weight basis. Sales through by-products' channels and to other pack-
ers are excluded from these averages.
Col. 1. Average of all varieties, types, grades and packs, including
bleached and soda and oil dipped Thompson Seedless and Sultana.
Col. 2. Average of all grades and packs of natural Thompson Seedless,
excludes bleached, soda and oil dipped.
Col, 3. Average of all grades and packs of Muscats,
Col, 4. Average of all varieties, types, grades and packs sold in the
United States and Canada,
Col. 5. Average of all varieties, types, grades and packs sold in
foreign markets , excluding Canada,
1.
Figure 3. Relation Between Quantity and F.O.B. Price of
romestic Sales of California Raisins
Figure 4. Monthly United Kingdom Import Values Per Pound of California
and Australia Raisins, Duty Added, September 1926 to Date
18 1 i \ .18
16
14
§
12
(D
P^IO
-P
q
(D Q
O
I V
\l V
0 ! t I I i
Australia
California/
I ^ I ' I ' ' I ■ ' t I ' i ■ ' * ' ' ' I ' ' I ' ' ' > '
' ' ■ ' I 1 i I i t
16
14
12
10
I I I l_J L_i.
10
+3
CO
•-5
CD
CO
t-5
^3
CO
1926
1927
1928
1929
1930
1931
3.
year indicated. The quantity is measured along the bottom scale and the price along
the scale at the side. Each dot is placed far enough to the right to correspond to
the domestic consumption for a given year and high enough to correspond to the aver-
age price received. To illustrate, in 1922 about 154,000 tons of raisins were sold
in the domestic market at an f.o.b. price of about 10,5 cents. The black dot marked
22 is located on the chart by the light dash c - 22 (domestic sales in 1922) and
p - 22 (doriestic price in 1922). All the other dots are located in a similar manner.
The black dot 28, for exairiple, was located as indicated by the light dash lines
s - 28 and p - 28. About 193,000 tons of California raisins were sold in the
domestic market in 1928 at about 4.V cents a pounds In order to induce consumers to
buy such a large tonnage the price obviously had to be much lower than in 1922 j when
only 154,000 tons were consum.ed.
The larger tonnages have usually sold at the lower prices so that the dots
form a downward slope to the right. The curve dd' has been drawn to indicate the
approximate relation bet?/een the quantities sold in the domestic market in the years
1922, 1924, 1925, 1926, and 1927, in which demand conditions affecting California's
raisin markets v/ere more favorable than in 1923, 1928, and 1929 and probably more
favorable than they can be expected to average for several years considering the
prospects of large crops and low prices for raisins from Australia and other foreign
countries. This line indicates that the domestic demand for raisins is inelastic
as it takes a relatively drastic cut in price to induce any substantial increase in
the amount consumed. Large crops of raisins are, therefore, extremely serious since
prices must be set very low in order to move them into consumption. The line dd'
indicates the approximate tonnage of California raisins that may be sold in the
domestic market at different prices in any year in which consumer purchasing power,-
demand, and other factors affecting the raisin market were as good as the average of
the years 1922, 1924, 1925, 1926, and 1927. Under such favorable conditions, this
curve indicates, for example, that at 6 cents f.o.b, California might expect to
sell in the neighborhood of 195,000 tons in the domestic market.
The curve just below dd' passing through the 1923 and 1928 points indicates
the quantities that might be sold under demand conditions less favorable for raisin
prices than the average for the years which dd' reflects. Under such moderately ad-
verse conditions, for example, one might expect at 6 cents to sell about 180,000
tons of raisins in the domestic market. Generally adverse business conditions ap-
parently account to a considerable extent for the lov/er level of raisin prices in
1923. In 1928, however, trade uncertainty was probably the most important depressive
factor.
The lov/est curve passing through the 1929 point indicates approximately the
tonnage one might expect to sell in years in which general business conditions were
as adverse as in 1929. Under such conditions one would expect to sell only about
155,000 tons of raisins at 6.5 cents in the domestic market, but about 185,000 tons
at 4 cents. Tonnage sales indicated by this curve, at half cent price intervals
are shown in table 10, Similar schedules of the relation of domestic sales to
f.o.b. prices can easily be compiled from each of the other two curves pictured in
figure 3.
EXPORT TO FOREIGN FlARKETS
Much of the increase in California raisin production and shipments since
the war has been absorbed by "foreign exports", by which is meant United States
exports to all countries other than Canada. Table 1 shows that the proportion ex-
ported to overseas markets rose from about 10 per cent in 1921 to over 33 per cent
(1)
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in 1928, the peak year of post-war exports. Only about 15,000 tons (sweat box basis)
moved to foreign countries in 1921, compared with over 96,000 tons in 1928.
United Kingdom, Our Chief Export, Market.- In recent years the United
Kingdom has been the largest market for California export raisins, absorbing over
40 per cent of our total overseas exports. This one market has imported an average
of nearly 31,000 short tons (equivalent sweat-box weight) of our raisins during the
last three years, or nearly one-eighth of the state's total sales tonnage (see
table 6) and over one-third of the total raisin imports of the United Kingdom. Be-
cause of its importance and representativeness, special study of this foreign market
has been made in an endeavor to explain what determines the price of California
raisins in European markets.
Until about 1924 Smyrna was the chief source of United Kingdom raisins im-
ports. Australian production previous to that time was small and largely consumed
at home. Therefore, it affected the world market but slightly. Since then, however,
California and Australia have become the two most important sources, Smyrna declining
to about half its former importance. In recent years Australia has supplied about
30 per cent of United Kingdom imports, sending over two-thirds of her total raisin
output to this one market.
For the purpose of analyzing the factors affecting our exports, California
f.o.b, export prices have been compared with United Kingdom prices, since these are
fairly representative of prices prevailing in overseas markets for foreign raisins.
Moreover, it is the only country importing raisins from Australia in large quantities
and, as tables 5 and 6 show, Australian raisins now constitute a substantial propor-
tion of the world's commercial supplies. Import values per pound have been used
primarily because no other more satisfactory current price series for California
raisins in the United Kingdom was found, ^ The import values per pound also have the
* In comparing the United Kingdom import values per pound, duty added, of raisins
from different countries as shown in table 8 and figure 5, it must be remembered
that each is a weighted average of all varieties, types, grades, and packs of
raisins imported from the designated country. The relative importance of the dif-
ferent classes of raisins determining the average for each country may differ appre-
ciably. Trade literature gives the impression that a larger proportion of United
Kingdom raisin imports from Australia than from California may be of the bleached
and dipped types. If this be true one would expect the price of imports from
Australia to average higher, as a whole, than imports from California since, because
of English preference, bleached raising normally command a higher price than un-
bleached in that market. Moreover, because of the greater cost of processing
bleached and dipped raisins they should in the long run bring higher prices than
the natural product, but not necessarily greater returns. The possible limitations
in the comparability of United Kingdom import values per pound of Australian and
California raisins, suggest that the differences between the prices of raisins from
these two sources may be relative, rather than absolute. Moreover, their comparabil-
ity will of necessity vary if non-compensating changes in the proportion of high
and low-priced raisin imports occur.
Table 6, United Kingdom Raisin Imports by Chief Countries of Origin,
1921-1929
Years
beginning
Sept, 1
Net weight, short tons
Total
States
Australia
Smyrna
All but
United
States
1921
49,200
7,200
4,800
17,100
42,000
1922
70,600
19,800
9,700
14,000
50,800
1923
52,700
9,700
15,400
21,400
53 , 000
1924
71 , 000
13,800
25,700
19,900
57,200
1925
58 , 500
21 , 500
12,100
7,500
37,000
1926
74,200
25,000
20,300
13,300
49,200
1927
86,400
33,000
23.400
11,900
53,400
1928
96,800
34,400
35,900
13,000
62,400
1929
80,100
19.100
35,400
10,200
61 , 000
1930
Percentage of total
1921
100
14,6
9,8
34,8
85.4
1922
100
28.0
13.7
19.8
72.0
1923
100
15.5
24.6
34.1
84.5
1924
100
19.4
36.2
28.0
80.6
1925
100
36.8
20.7
12.8
63.2
1926
100
33.7
27.4
17.9
66.3
1927
100
38.2
27.1
13.8
61.8
1928
100
35.5
37.1
13.4
64.5
1929
100
23.8
44.2
12.7
76.2
1930
Source of data:
Basic data compiled from Great Britain, Parliamentary Papers, Monthly
Statement of United Kingdom Trade, English hundredweights of 112 pounds
converted to nearest hundred short tons.
5.
merit of "being based upon data compiled and issued regularly and promptly each
month by a reliable official agency.
Prices of Australian raisins are shown by figure 5 to be fairly representa-
tive of raisins from all foreign countries. The Australian prices, therefore, have
been used since they are more readily compiled than the average of all foreign
countries and since the price at which each crop of Australian raisins is moving
is known for several months in advance of California's harvest. It therefore serves
as an important indication of about what prices California may expect to compete
with in foreign markets.-^ In using the price of Australia's new crop of raisins in
the summer, however, as an indication of the probable level of price competition in
the fall, caution must be exercised in years in which the Australian crop is unusual
ly small and the outlook for that of other countries average or greater. In such
years Australian raisin prices are likely to be higher above the prices of raisins
from other foreign countries than usual. For this reason, it is desirable to be
particularly well informed regarding the condition of Smyrna's crop in judging
whether Australia's suiraner price is likely to be representative of the fall harvest
of raisins from north of the equator.
Fore ign Competition in l_9j2j„ 19 and 1924.- In 1922 the English import
price of raisins from Smyrna, then our chief foreign competitor, was unduly high
retarding her sales and enabling California with lower prices to expand its exports
substantially. Although foreign production in 1923 exceeded that of 1922 but slight
ly, prices of foreign raisins were drastically reduced, probably because their sales
had dragged so badly the preceding season. California's export prices were also
drastically cut in 1923 and still further reduced in 1924. United Kingdom import
prices of Australian and of other foreign raisins, however, were so low in both of
these years that they undersold California's, reducing our exports both in 1923 and
1924 to considerably below the movement in 1922. A decrease in the United Kingdom
preferential import duty in August, 1924, was also responsible, to a slight degree,
for depressing Australian prices in that market.
Rel i e f Measur e s_._f or Aji_sjT^^ - Inasmuch as the Australian govern
ment had actively encouraged returned soldiers to plant vineyards after the war, it
took definite steps to help its raisin industry when the serious prospects of con-
tinued lov<^ prices became evident about 1924, Its first important Act, October 20,
1924, was the establishment of a Dried Fruits Export Control Board, the aim of v/hich
was to secure optimum returns for the Australian industry largely by restricting the
quantity exported, by establishing a domestic price higher than the possible export
level, and by consigning a portion of the domestic retention to industrial
(distillery) use. By means of funds from the export levy and from contributions of
the Commonwealth Government itself, the Board has also carried on a successful
* Monthly Australian prices weighted by the quantity of California raisins imported
into the United Kingdom have been used in getting an average price for our crop
years beginiiing September first because it is the quantity of California raisins
exported in any given month that presumably is most directly influenced by the
foreign prices prevailing during that particular month. Such an average therefore
tends to give more weight to the prices of foreign raisins with which California
raisins actively compete at any particular time. Compared v;ith an Australian price
weighted by the quantities of Australian raisins imported into the United Kingdom,
it gives heavier weight to Australian prices during the fall and winter months when
the majority of our export sales are completed and much less v/eight to Australian
prices in the follov/ing spring and summer when Australian exports are greatest and
California's relatively the smallest.
Table 7. Production and United Kingdom Imports and Declared Import Value per
Pound, Duty Added, of Australian Raisins, 1921-1929
1 c cLI O I
harvest or
import year
beginning
April first
1
iA.Ufa 01 diidXl
production,
sweat-box
basis,
short tons
United Kingdom imports from
Australia
Declared
import
value per
pound, duty
added, cents
Exchange
rate per
pound
Sterling,
in cents
Net packed
weight ,
short tons
Per cent
of
Australian
production
Per cent of
United
Kingdom
total
imports
1
2
3
4 5
6
1921
9,400
2,282
26
5.6
17.9
397
1922
15,100
5,023
36
7.3
20.4
452
1923
20,900
10,990
57
18.6
16.5
448
1924
33,100
21,934
72
33.7
12.6
454
1925
28, 600
18,446
70
27.8
13.2
485
1926
25,100
12,950
56
20.2
14.8
486
1927
49,000
33.541
74
3 5.5
13.5
487
1928
27,600
14, 591
57
19.0
12.1
486
1929
55,700
42,392
81
46.9
9.2
486
1930
42,600
29,400^
8.3-^
486*
1931
- — 1
* Data for the six months April to September, inclusive, 1930.
Sources of data:
Col. 1. Data given to the nearest hundred tons are for crops harvested in the
calendar year indicated, years 1921-1928 from Squire, E. C, Australian
Raisin and Currant Industry, U. S. Dept. Com. Trade Information Bui . 699:
6, 1930. Data for 1930 are preliminary estimates.
Cols, 2, 4, & 5. Data for years beginning April first compiled from Great
Britain, Parliairientary Papers, Monthly Statement of United Kingdom Trade.
Conversions to cents per pound computed as follows: pounds sterling {£,)
per English hundredweight divided by 112, times the exchange rates in
Col. 6, The preferential duties added to the declared import value per
pound are for 1921, 1.46 cents; 1922, 1,66 cents; 1923, 1.65 cents; 1924,
1,36 cents; 1925, 0,6 cents. All Australian raisins have entered the
United Kingdom duty free since July, 1925 and hence nothing was added to
the declared import value per pound for crops years 1926 to date.
Col. 3. Based upon Col, 1 and items in Col. 2 increased by 7 per cent to convert
to an approximate sweat-box equivalent of the net import weight.
Col. 6. Simple average of monthly exchange rates for years beginning April first,
compiled from Federal Reserve Bulletin.
6
publicity campaign for about five years, stimulating the demand for Australian
raisins particularly in the United Kingdom. Similar efforts by the Empire Market-
ing Board to create "Empire Consciousness" have also helped to increase the demand
for Australian raisins in English markets.
Preference for Australian raisins in the Canadian and the United Kingdom
markets has also been gained by tariff provisions admitting their raisins free or
at greatly reduced rates of duty, whereas other countries (with the partial excep-
tion of Greece) pay substantial import duties. Previous to Julys 1925, the
Australian preference in the United Kingdom was less than half a cent per pound.
At that time, however, the preference was increased to 1.5 cents, Australian raisins
being admitted duty free, (See table 8.)
Foreign Competition in 1925 and 192_6_.- Australian and Smyrna raisin crops
and exports of 1925 and 1926 were considerably smaller than in 1924, and hence they
were able to raise their prices in 1925 and 1926, Probably because of the prefer-
ential duty and the activities of the Dried Fruit Control Board and the Empire
Marketing Board, Australia raised her 1926 prices even higher than Sm^Tna's,
California raisin prices in the United Kingdom, however, were lowered both years,
so that the import value of her raisins, duty added, averaged nearly 2 cents a
pound lower than Australia's in 1925 and over 4 cents belov; it in 1926. This large
price differential, along with the relatively small competitive tonnage from
Australia and Smyrna enabled California to substantially increase her foreign
exports in 1925 and 1926.
Gpmpetiti on from Australia in 1927 and 1928^.-, Raisin production both in
California and in foreign countries was large in 1927, causing United Kingdom import
prices to decline. In spite of the largest raisin crop in her history, however,
Australia tried to dispose of the bulk of it in the United Kingdom at a differential
over California prices nearly as wide as in 1926, This helped to increase
California exports.
In the face of this competition the Australian Export Control Board would
probably have been forced to lov/er their prices in the United Kingdom in the fall of
1927 had not a severe frost on September 24 cut their 1928 crop prospects by one-
half. Hie outlook for a short 1928 Australian crop strengthened the market of all
raisins. Although Australia exported unusually large quantities of her 1927 bumper
crop at high prices, at the end of the season, April 30, 1928, her London stocks
were greater than end-of-season stocks had ever been before. Within the year they
had risen from about 3,000 to 8,000 short tons. In addition Australian stocks at
home were large. Chiefly because of this situation all our foreign competitors
lowered their prices decidedly.-^ California, however, lowered her export prices
nearly as much as her competitors, underselling them by an average of 3 cents during
our 1928 crop year. As a result, Australian exports were small and California's
unusually large. Australia's total sales were only equivalent to her small 1928
crop, leaving the London stocks on April 30, 1929 still as large as the year before
and her inventory at home about 5,000 tons,-^*
^ Part of the lower average for Australian prices was due to an unusually large pro-
portion of low grade raisins,
^^Tae Fruit World of Australasia, Vol, 31, p. 200, May 1, 1930.
\
Table 8. United Kingdom Declared Import Value per Pound, Duty Added, of Raisins
by Chief Countries of Origin, 1922-1929
Year
begin-
ning
Sept, 1
Duty per pound
HjX change
rate
Import value per pound
General
Prefer-
ential
United
States
A.ustralia
Smyrna
All but
U.S.
All
countries
cents
cents
cents
cents
cents
cents
cents
cents
1
2
3
4
5
6
7
8
1922
2 0 2
1.7
458.7
17.2
19o0
20.8
19,1
18,5
1923
2.0
1.6
438cl
13.7
12,9
11.6
12,3
12,5
1924
1.4
1.2
465,1
12.6
12.5
12.1
12.5
12.5
1925
1.5
0
48 5.6
11.5
,,13.*,g,..„,
13.4
12.7
1926
1.5
0
48 5.4
10.5
14,7
13,7
13.8
12.7
1 927
1.5
0
487 ,3
9.4
12o9
11.9
12,5
11.4
1928
1.5
0
485.1
8,1
11«3
10.6
11,3
10.2
1929
1.5
0
486.6
8.8
8.8
9,7
9.7
9.5
1930
1.5
0
1931
Source of data:
Cols, 1 & 2, Compiled from official sources with conversions to cents per pound
as follows; Pounds sterling {£) per English hundredweight divided by 112,
times the exchange rates given in Col. 3. The general duty in Col. 1 is
added to the import value of all countries except Greece and British pos-
sessions. The preferential duty in Col. 2 applies to imports from
Australia, South Africa, and other British possessions.
Col. 3, Simple averages of monthly exchange rates for years beginning September
first, compiled from the Federal Reserve Bulletin,
Cols, 4-8. Tl-.e basic data from which these prices v/ere compiled appear in the
Monthly Statement of the Trade of the United Kingdom as imports in English
hundredweights of 112 pounds and declared import values in English pounds
sterling (£). Tlie average prices in Col. 5 are computed by weighting the
monthly United Kingdom import value per pound of Australian raisins by the
quantity of California raisins imported into the United Kingdom during the
corresponding months. The prices shown in Cols. 7 and 8 include the cor-
responding prices for Australia shown in Col. 5 weighted by the actual
quantity of Australian raisins imported into the United Kingdom during
the.yesLr beginning September first. The duties added for individual
countries and the method of converting to cents per pound are indicated
above in the footnote to Cols, 1 & 2.
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Figure 5, California F.C.B. Export Raisin
Prices and United Kingdom Import Prices
Per Pound, Duty Added, 1922-1929
20, , — 20
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Years beginning September first
31
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Figure 6. Relation of California Overseas Raisin Exports to (A)
F.O.B. Export Prices and to (b) the Differences
Between United Kingdom Import Values Per Pound of
California and Australian Rai'sins, Duty Added.
Years Beginning September First, 1921-1929
0'
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U.S. Exports, thousands of tons
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Export deviations from
dd' of Sec, A, thousands
of tons
The 1929 D eclin e of Australian Prices «- In addition to large unsold stocks
in the United Kingdom, the 1929 Australian crop was a record one. To favor the ex-
port of such a crop, the price was dropped in M^arch of that year about 3 cents and
has remained at a low level between 8 and 9 cents ever since. (See figure 4.) How-
ever, in spite of the fact that during the year the Australian price actually aver-
aged lower than California's, the April, 1930 stock of Australian raisins in London
was about 15,000 tons, nearly twice the amount ever before experienced. Moreover,
their stocks at home amounted to about 10,000 tons,* Such a large carryover has
helped to keep 1930 Australian raisin prices at a low level, thereby increasing the
competition California raisins are now meeting.
Relation of Calif ornia jixjpj3rt_s_ to Prices.- The curve dd' in figure 6 is
drawn to indicate the average relation between export prices and the tonnage of
California raisins exported in crop years in v/hich the United Kingdom import prices
of California*-^ and of Australian raisins has been practically the same. The wide
scatter or divergence of the points from the line dd' suggests that factors other
than the California f.o.b, price have also had an important bearing on the tonnage
of our raisins bought in foreign markets. Chief among these factors are the supply
and price of raisins produced in foreign countries.
California has exported the greatest tonnage of raisins in those years in
which the prices of foreign-producing countries have averaged higher than hers,
particularly in important importing countries such as the United Kingdom, The ex-
tent of this competition has been measured in section B of figure 6, in which are
plotted the differentials between the United Kingdom iiriport prices cf Australian and
California raisins from figure 5 against the horizontal deviations from dd' of sec-
tion A of figure 6, These price differentials have proved a good measure of foreign
competition in overseas markets in recent years. As the curve cc' indicates,
California exports have tended to be about 10,000 tons greater for every cent that
Australia's price has exceeded ours. In the years 1923, 1924, and 1929 vdth little
difference between Australian and California prices, competition was keen and
California export sales small. The situation, hov/ever, was more favorable to
California in the years 1925, 1926, 1927, and 1928, in which the Australian price
averaged 2 to 4 cents above California's. As a result, California exported con-
siderably greater quantities than indicated by curve dd' in section A.
The apparent discrepancy in 1926 was largely due to the fact that Australia's
production was unusually small and her price somewhat too high xo be exactly repre-
sentative cf foreign production and prices of raisins produced in the northern
hemisphere. Had the smaller price differential between foreign raisins as a whole
and California's been used in figure 5, the 1926 deviation would be decreased.
APPLICATION
Upon the basis of curves in figures 3 and 6, the schedule of prices and
sales of California raisins given in table 10 has been prepared to illustrate the
method of using this analysis. It shows the approximate relation between the
* The Fruit World of Australasia, Vol, 31, p, 200, May 1, 1930.
**During the last few years the United Kingdom import price of California raisins,
duty added, has been approximately 3,5 cents higher than our f.o.b. -rail export
price, due to exporting costs and the English import duty.
8.
tonnage of California raisin sales and f.o.b.-rail prices, v/ith domestic demand con-
ditions as adverse as indicated by the lower curve in figure 3 and also as moderate-
ly favorable as indicated by the middle curve in the same figure. The foreign sales
are based on f.o.b.-rail prices with an allowance of a 3.5 cent margin to approxi-
mate the equivalent United Kingdom import value per pound, duty added, as given in
column 6, Moreover, the relation shown between the price and the tonnage exported
assumes the same level of United Kingdom average import values per pound, duty
added, for California, Australian, and other raisins. As shown by section B of
figure 6, in years in which the United Kingdom import value, duty added, of
California raisins has differed from that of raisins from other countries, an
allowance of about 10,000 tons should be made for each cent in the price differential.
The table indicates, for example, that 174,000 tons of California raisins
might be sold in the domestic market at an f.o.b. price of 5 cents under conditions
as unfavorable as in 1929, On the other hand, better conditions of demand, such as
the data in column 3 are* based upon, the same quantity could be sold*at a price of
about 6.7 cents. Our export sales at a 5 cent f.o.b.-rail price, equivalent to
about an 8.5 cent United Kingdom import value, duty added, should amount to about
52,000 tons with Australia's price at the same level as ours in that market. When
Australian raisins exceed our price in that market, California's exports have tended
to increase about 10,000 tons as indicated in section B of figure 6,
Although the greater part of the variations that have occurred in the crop-
year sales and prices of California raisins during the last nine years have been
accounted for in this analysis, there are probably several other factors, mostly
minor, that have exerted some influence, such as trend in demand, competition from
currants and other fruits, variations in variety, type, quality, and style of pack-
ages, advance or decline in prices during the year, the lag of retail prices,
changes in the general price level, S-nd the psychological attitude of the trade as
affected by facts or lack of dependable facts.
The foregoing analysis explains only what has occurred. It does not explain
what would have occurred if conditions had been different from what they were^ How-
ever, the analysis should give the industry a better basis than it previously had
for judging the probable price at which a given supply of California raisins can be
sold under conditions that are likely to exist. In using it as a partial basis for
deciding what is probably the best price policy to pursue, a trained judgment that
can ordinarily be acquired only as the result of close first-hand acquaintance with
the business of marketing raisins, is essential, coupled, of course, with an
intimate understanding of just what the current situation is and v/hat conditions are
likely to exist at any particular time in the future.
*
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