FACTORS THAT AFFECTED THE AVERAGE PRICE OF PACIFIC COAST CANNED PEARS IN 1931-32 H. R. Wellmani/ The average price which Pacific Coast canners received for canned Bartlett pears in 1931-32 was the lowest in many years. This low price was chiefly the re- sult of a decline in the general price level and a decrease in the buying power of consumers. Pr ices of Canned Pears . As shown in table 1, the average price per case f.o.b, cannery received for both domestic and foreign shipments of canned pears in 1931-32 was |2,82 a case, 20.1 per cent below the 1930-31 price and 31.7 per cent below the 1928-29 price. As compared with 1930-31, prices in the domestic market in 1931-32 were relatively more favorable than prices in the export markets. Chiefly as a result of the decline in the value of the English pound sterling in terms of United States dollars, the average price, f.o.b. Pacific Coast dock, re- ceived for canned pears exported to the United Kingdom in 1931-32 was 25.4 per cent below the 1930-31 average price; whereas the average price received for goods sold in the United States in 1931-32 was only 15.1 per cent below the 1930-31 average price. Shipments of Canned Pears. Total shipments of Pacific Coast canned pears in 1931-32 amounted to 3,672,000 cases, 12.9 per cent smaller than in 1930-31 and 8.2 per cent smaller than in 1923-29, (table 2), All of this decline was in domestic shipments, which amounted to 1,877,000 cases in 1931-32 as against 2,621,000 cases in 1930-31, a decrease of 28.4 per cent. Exports were about 12.5 per cent larger in 1931-32 than in 1930-31. Domestic Situatio n. If there had been no change in the general price level or in demand conditions in this country between 1930-31 and 1931-32, the smaller volume of domestic shipments this past year would have resulted in a higher price than was received, or at the same price a larger volume could have been moved. As a matter of fact, however, there was a substantial decrease in both the general price level and demand conditions. The depressing influence of these factors upon the price of canned peaches was considerably greater than the lifting influence of the smaller shipments. From 1921 to 1929 there was virtually no change in the general level of prices in this country. During those nine years money maintained a uniform value, and prices of a commodity were an accurate measure of their value. Since 1929, however. \J Extension Specialist in Agricultural Economics and Associate on the Giannini Foundation of Agricultural Economics, Z/ F.o.b, prices per case are weighted average prices for all grades and sizes of cans. Regular brokerage, cash discount, swell allowance and label allowance are included. Special or other trade discounts and prepaid items such as prepaid freight are not included. Prices which canners received for No. Z\ Choice Bartlett pears in both 1930-31 and 1931-32 were approximately 10 per cent higher than the average price of all grades and sizes of cans. Thus the average price received for both domestic and foreign sales of No. Z\ Choice in 1931-32 was about |l,55 per dozen cans while the average price received for domestic sales of No. Z\ Choice was about |1.65 per dozen cans. 4 ( 4 there has been a pronounced decline in the general price level and, therefore, an equivalent increase in the value of money. While it is not possible, with the data now available, to obtain a precise measure of the decline in the general price level, a rough approximation may be obtained from the indexes given in columns 1 and 2, table 3. For the yea-T June, 1931 to May, 1932 the index of wholesale prices of all commodities v;ill probably average around 100, while the index of general prices will probably average around 142. As compared with 1928-29 the former index will shov; a decline of about 30 per cent, while the latter will show a decline of about 20 per cent. The actual decline in the general price level has probably been between 20 and 30 per cent, perhaps around 25 per cent. With the general price level in 1931- 32 about 75 per cent as high as in 1928-29 and about 87 per cent as high as in 1930- 31, the $2,99 a case which canners received for domestic shipments in 1931-32 would be equivalent to about |4,00 a case in terras of the value of money in 1928-29 and to about $3,45 a case in terms of the value of money in 1930-31, In April, 1932 the index of wholesale prices of all commodities was 4 per cent below the 1931-32 aver- age, while the index of general prices was 5 per cent below. The buying power of consumers, which decreased greatly between 1928-29 and 1930-31, was further reduced in 1931-32, During 1931-32 the Federal Reserve Board Index of Factory Employment averaged around 70 as against 80 in 1930-31 and 100 in 1928-29 (table 3, column 3). In April, 1932 the index of factory employment was at 64. The buying power of people engaged in agriculture experienced an even greater reduction than factory workers. Prices of farm products in 1931-32 were 54 per cent lower than in 1929, while the gross income from agricultural production in 1931 was 42 per cent below that of 1929.^/ Net farm income unquestionably declined proportion- ately more than the gross farm income. Taken as a group farm people had very little money to spend in 1931-32, and undoubtedly their purchases of semi-luxury products such as canned fruits were greatly curtailed. The total volume of fruit marketed in the United States in 1931-32 was larger than in any recent year mrith the single exception of 1926-27, The index of fruit production in 1931-32 was 124 as against 109 in 1930-31 and 115 in 1928-29 (table 3, column 4), The increases in production in 1931-32 as compared with 1930-31 were largely in fresh peaches, fresh apples, and dried apricots. The combined pack of canned peaches, apricots, cherries, and pineapples was slightly smaller. The larger total fruit production in 1931-32 as compared with 1930-31 does not fully reflect the increased competition to canned pears, hov/ever, because of the large amount of home canning and the relatively low prices of other canned fruits. The available information indicates that the quantity of fruit canned in the home in 1931 was considerably larger than in other recent years. In many instances home canned fruit was substituted for commercially canned fruits. The combined effect of the decline in the general price level and the buying power of consumers and the increases in total fruit production and home canning upon the prices of canned pears, peaches, apricots, and pineapples is shown in table 4. Between 1930-31 and 1931-32 the decline in the price quotations of canned pears was relatively greater than the decline in canned peach quoto,tions, but was relative- ly smaller than the decline in canned apricot and canned pineapple quotations. Domestic shipments of canned pears, canned apricots, and canned peaches in _3/ U. S. Dept. of Agriculture. Yearbook of Agriculture. 1932. Page 201 -3- 1930- 31 and 1931-32 are given in table 5. With each of these three canned fruits, domestic shipments were much smaller in 1931-32 than in 1930-31, The percentage decrease in shipments however was considerably greater in the case of canned peaches than in the case of either canned pears or canned apricots. The principal reason for the greater percentage decrease in canned peach shipments was the relatively high price of canned peaches in comparison with the prices of other canned fruits. Average domestic prices of canned peaches in 1931-32 were only 9,4 per cent lower than in 1930-31, whereas average domestic prices of canned pears were 15.1 per cent lower, and average domestic prices of canned apricots were 18,1 per cent lower. Relation Between F«0,B. Prices and Shipment s. In figure 1 the annual domestic shipments of canned pears are measured along the horizontal scale, the annual f,o.b. prices received along the vertical scale. The diagonal line repre- sents the average relation that has existed between domestic shipments and prices during the past eleven years, adjusted to the situation in 1931-32. This past year domestic shipments amounted to 1,877,000 cases, the average domestic f.o.b. price was -^2.99 a case. If the average f.o.b, price had been ^12. 60 a case instead of |2.99 a case and all other conditions had remained the same, it is probable that domestic shipments would have been around 2,300,000 cases instead of 1,877,000 cases. On the other hand if the f.o.b. price had averaged ^^3.20 a case, domestic shipments would probably have been reduced to about 1,640,000 cases. In figure 2 the diagonal line shows the average relation that has existed between total shipments, (including both domestic shipments and exports) and aver- age f.o.b. prices of all canned pears during the past eleven years, adjusted to the situation in 1931-32. Export Situation . Total exports of canned pears from the United States in 1931- 32 were 12.5 per cent higher than in 1930-31, but 1,4 per cent lower than in 1928-29, (table 7), The United Kingdom, which has always been our most important market for canned pears, took 95 per cent of our total exports in 1931-32 as against 92 per cent in 1930-31, whereas Canada took only 0.3 per cent last year as against 1.2 per cent the year before. In August, 1931 the Canadian general import duty on canned fruits was raised to 5 cents a pound, which rate practically prohibits us from exporting to that country. Table 8 shows the United Kingdom imports of canned pears and all canned fruits. Imports of canned pears from the United States were 12,5 per cent larger in 1931-32 than in 1930-31, but imports from Australia were 27 per cent smaller. Combined imports last year amounted to 1,835,000 cases as against 1,635,000 cases the year before, an increase of 12.2 per cent. Average prices which Pacific Coast canners received for canned pears, however, were 25,4 per cent lower. In addition to the increase in imports of canned pears the lower price in 1931-32 is accounted for by the increased competition of other canned fruits, the decrease in the buying power of consumers, a small decline in the general price level, and the break in the exchange rate. The combined effect of these four factors is reflected in the index of prices of canned fruits, table 9, column 1, which was at 70,0 in 1931-32 as against 90,2 in 1930-31, a decrease of 22 per cent. Total imports of canned fruits into the United Kingdom in 1931-32 amounted to 7,590,000 cases, about 9 per cent larger than in 1930-31, (table 8, column 4), The buying power of consumers in England was lower in 1931-32 than in 1930- 31. Among insured persons the percentage of unemployment averaged 21.7 per cent in ' -i'.S : -4- 1931-32 as against 19.6 per cent in 1930-31, an increase of 11 per cent (table 9, column 3), The index of wholesale prices in England, measured in pounds sterling, was only 5 per cent lower in 1931-32 than in 1930-31 (table 9, column 2), In September, 1931 England went off the gold basis with the resulting de- cline in the value of the pound sterling in terms of United States dollars (table 9, column 4), The average exchange rate in 1931-32 was 20 per cent below par. In May, 1932 the exchange rate was 24 per cent below par. Table 6 shows the changes in exports and export prices of canned pears, canned apricots, and canned peaches between 1930-31 and 1931-32, Export prices of canned pears in 1931-32 were 25.4 per cent lower than in 1930-31 and the export movement was 12.5 per cent larger; export prices of canned apricots 28.7 per cent lower and the export movement 13.5 per cent larger; export prices of canned peaches 19.7 per cent lower and export movement 11*0 per cent smaller. Thus, canned pears and canned apricots which were selling at relatively low prices experienced a relatively large movement, while canned peaches which were selling at relatively higher prices experienced a relatively small movement. -5- Figure 1 Average Relation Between F.O.B. Prices and Domestic Shipments of Canned Pears, Adjusted to the Situation in 1931-1932 !■ ■■ — •■" 1 ■ T- r — — — T 1 1 , , — P 4,00 - m o 3.60 P-^ 3 . 20 w ^*Vj-931-32 03 ^ 2.80 o ' 2.40 o 2.00 1.60 • ., -.1. , . 1 1 1 i 1 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 Domestic shipments - million cases 3.0 Figure 2 Average Relation Between F.O.B. Prices and Total (Domestic and Foreign) Shipments of Canned Pears, Adjusted to the CD 2.00- 1.60l- 1 1 ' ~» 1 1 1 1 ! 1 L_ 2.2 2.4 2.6 2.8 3.0 3.2 3.4 3.6 3.8 4.0 4.2 Total Shipments - million cases r Digitized by tlie Internet Arcliive in 2014 https ://arch i ve . o rg/detai I s/f acto rsth ataf f ec 1 3 we 1 1 -6- Table 1, Average Annual Prices Per Case Received for Pacific Coast Canned Pears All markets Domestic United Kingdom Year domestic and markets f .o.b. June - May foreign f .o.b. Pacific Coast f.o.lD. cannery cannery dock I 3 dollars dollars dollars 1928-29 4.13 4.17 4.08 1930-31 3.53 3.52 3.54 1931-32* 2.82 2.99 2.64 * Preliminary. Source of data: Compiled from records of canners. Prices are weighted average prices for all grades and sizes of cans. Regular brokerage, cash discount, swell allowance, and label allowance are included. Special or other trade discounts and prepaid items such as prepaid freight are not included. Table 2, Pack, Carryover, Shipments, and Exports of Pacific Coast Canned Pears Year, June - May 1928-29 1930-31 1931-32^/ 1.000 cases* 1.000 cases* 1.000 cases* Pack 4 , 124 4,175 3,652 Carryover from previous year 167 934 893 Available for shipments 4.291 5,109 4,545 Carryover into following year 293 893 873 Shipments 3,998 4,216 3,672 Expo rts 1,821 1,595 1,795 Domestic shipments 2,177 2,621 1,877 * No. 2f can basis. Preliminary. Sources of data: Pack and carryover figures compiled by the Canners League of California and the Northwest Canners Association. Exports compiled from U, S. Monthly Summary of Foreign Commerce. Pounds were converted to cases on the basis of 45 pounds per case. Table 3. Indexes of Prices, Employment, and Fruit Production in the United States Index of Index of Index of Year wholesale price 5 general factory Index of and cf all coamodities prices employment fruit month oir IOTA lQl/<— lAr> av. ±yiu— iyi4(— iuu av» iy*cio- i92o==i00 production 1 2 3 4 Annual (June-May) 1928-29 142 178 100 115 1930-31 117 161 80 109 1931-32 100 142 70 124 Monthly June 105 150 76 July 105 149 75 August 105 149 74 September 104 147 73 October 103 t A A 144 70 November 103 144 69 December 100 140 69 1932 January 98 138 68 February 97 136 68 March 96 135 66 April 96 135 64 Sources of data: Col. 1. U, S, Dept. Labor, Bur, Labor Statistics, Col. 2. Standard Trade and Securities Service, Standard Statistical Bulletins. Index prepared by the Federal Reserve Bank of New York, Col, 3, Federal Reserve Board Index of Factory Employment, published in the Federal Reserve Bulletin. Table 4, Average Quotations on Specified Canned Fruits, F.O.B. California (Dollars per dozen No, 2-^ cans) ■ Per cent 1931-32 Canned fruit 1930-31 1931-32 of 1930-31 dollars dollars per cent Peaches (Choice halves) 1.65 1.47 89 Apricots (Choice halves) 1.85 1.50 81 Pears (Choice) 1.95 1.65 85 Pineapples (Fancy sliced) 2.05 1.50 73 Source of data: Compiled from the California Fruit News. -8- Table 5. Changes in Domestic Shipments and Average Prices (F.O.B. Cannery) of Specified Canned Fruits Between 1930-31 and 1931-32 Domestic Shipments Domestic Prices Per Case Canned fruit 1930-31 1931-32* Percentage change 1930-31 1931-32* Percentage , Qh^hg? 1 2 3 4 5 6 1,000 cases 1,000 cases per cent dollars dollars per cent Pears 2.621 1,877 -28.4 3.52 2.99 -15.1 Apricots 2,163 1,567 -28.2 3.31 2.71 -18.1 Peachfes 9,402 6,086 -35.3 2.86 2.59 - 9.4 * Preliminary Table 6. Changes in United States Exports and Average Prices (F.O.B. Pacific Coast Dock) of Specified Canned Fruits Between 1930-31 and 1931-32 Exports Export Prices Per Case Canned fruit 1930-31 1931-32* Percentage change 1930-31 1931-32* Percentage change 1 2 3 4 5 6 1,000 cases 1,000 cases per cent dollars dollars per cent Pears 1,595 1,795 + 12.5 3.54 2.64 -25.4 Apricots 414 470 + 13.5 3.42 2.44 -28.7 Peaches 1,618 1,140 -11.0 3.04 2,44 -19.7 * Preliminary -9- Table 7. United States Exports of Canned Pears Year United June-May Total Kingdom Canada Others 1 2 3 A 4 1.000 cases 1.000 cases 1.000 cases 1.000 cases 1928-29 1,821 1,630 31 160 1930-31 1,595 1,470 19 106 1931-32* 1.795 1,715 5 75 * Preliminary Source of data: U. S. Monthly Summary of Foreign Commerce Table 8, United Kingdom Imports of Canned Pears from the United States and Australia and Total Imports of All Canned Fruits C a nned Pear • s Year July- June United States Australia Total United States and Australia All canned fruits I 2 3 4 1,000 cases 1,000 cases 1,000 cases 1.000 cases 1928-29 1,630 74 1,704 6,814 1930-31 1,470 165 1,635 6,833 1931-32^2^ 1,715 120 1,335 7,590 * Preliminary Sources of data: Column 1. Compiled from U. S. Monthly Summary of Foreign Commerce. Pounds were converted to cases on the basis of 45 pounds per case. Column 2, Compiled by M. E. Brooding, Statistician, California Packing Corporation, Column 4. From Accounts Relating to Trade and Navigation of the United Kingdom, 9 Table 9. Indexes of Prices and Unemployment in England Index of index 01 prices wholesale Percentage Year of canned prices of all of insured Exchange rate and fruits commodities in persons of pound Month in dollars pounds sterling unemployed sterling 1 2 3 4 Annual (July- June) 1928-29 98.1 138 11.1 14.8665 1930-31 90.2 110 19.6 ' 4.8665 1931-32- 70.0 104 21.7 3.9080 Monthly 1931 July 102 22. 0 A o err* T 4 . 857 1 August 100 22. 0 4.8581 Septemher 99 22. 6 4 . 5535 Octo uer i04 «ci . y November 106 21.4 3.7201 iiecemoer jLUO 3779 1932 January 106 22.4 3.4336 February 105 22.0 3.4577 March 105 20.8 3.6425 April 21.4 3.7477 May 3.6778 June * Preliminary. ». Sources of data; Column 1. Based on import valuations compiled from Accounts Relating to Trade and Navigation of the United Kingdom. Column 2. Federal Reserve Bulletin. Column 3. London and Cambridge Economic Service. Monthly Bulletin, Column 4. The Annalist. ►