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men, who are only too glad to take advantage of an opportunity to secure employment for a few months during the year that they may help to pay off the mortgage, buy their own clothes, or pay for an education, and in such a place there is usually enough floating labor to keep the plant supplied with the necessary male help.

Transportation facilities should be of the best, both for the receiving of green produce, factory supplies and materials and for the shipping of the finished product. Locations should be favored having spur-track connections with roads serving the best agricultural and horticultural districts within two hundred miles of the plant and, if possible, where terminal rates are in effect.

There should be an adequate supply of pure water from deep wells and where connections can be made with the mains of a public service corporation to insure a plentiful supply of pure water at all times, for it is sometimes the case that well water is not suitable for either drinking or sirup making but is good for all other factory purposes. The water should be clear and pure and particularly free from iron, lime and sulphur. The site and plant should have perfect drainage facilities and should be so located that connections can be made with a main-line sewer.

Proximity to sources of supply of raw material should be considered, not only green produce, but sugar, salt, fuel oil, cans, box shook, caustic soda, etc.

An unfailing supply of light and power is an important consideration in the selection of a site, which should be in close proximity to an electric power line and to gas mains.

Taxes and good roads are two considerations worthy of careful thought in the selection of a factory site.

Co-operative Cannery Organizations

Co-operative canning, that is, co-operative between the grower and the canner, is becoming firmly established on the Pacific Coast. The growers' organizations of Southern California and Northern California own and operate their own plants, while one of the large associations of peach growers in Northern California has entered into a five-year contract with a $5,000,000 canning company whereby the canning company agrees to furnish the plants and equipment and all the finances required in the packing and distribution of the

fruit, charging the growers with the actual cost of packing and returning to them the difference between these costs and the net returns from the sales after a further deduction of a stated amount per case as rental for the use of the plants and equipment. The costs as deducted include all material and supplies used in operating and packing, such as sugar, cans, box shook, labels, repair material for machinery and equipment, etc., all interest on money borrowed, insurance of all kinds, fuel oil, water, gas, electric power, the direct labor, indirect labor and all warehouse expense, as well as all administrative expenses and salaries, sales expenses, salaries, and brokerage, advertising, etc., but do not include such charges as taxes, insurance and depreciation on real estate, buildings, machinery and equipment owned by the canning company. At this time this agreement has been effective for two seasons besides a third season when the operations were carried on under the same terms and conditions but without the control of the written contract at present effective. During these three years of cooperative effort the grower has not benefited by the agreement but has sustained actual losses in comparison with the returns he would have received for his crops from the commercial canners, and in addition to these actual losses in profit must be considered a very important factor, viz., the fact that the grower cannot, under this system, receive payment for his fruit until such time as his finished product has been sold and payment made therefor.

This is important to the grower, as he must have funds to meet his growing obligations and expenses exactly as the canner must have funds to meet his obligations and his

expenses.

The grower must realize that a profit of fifty cents per case to a commercial canner, year in and year out, would be a bonanza, and when he enters into competition with the commercial canner and immediately builds a brick wall around himself with the handicap of an expense greater than the net profit the old-established, experienced, efficient canner expects to make on his operations and then agrees to wait six months longer for his money his chances of success are not going to be rosy red. Another thing the grower must keep in mind when considering entering into an agreement

of this kind is that of his future welfare. What after the expiration of the contract? Who owns the labels and brands the advertising of which he has been paying for? After five years of operations and advertising, the canner should have a ready market created for the distribution of his brands and then these brands under attractive labels are among the most valuable assets of the business and there should be no question as to their ownership.

In the co-operative organizations where the growers own the plants and operate them through growers' committees, or through a board of directors composed of grower members, the chances of success in achieving the desired end are somewhat better than in the case of growers entering into a contract such as the one just discussed, but here we have the greatest trouble of all and that is finances. To the present time the co-operative organizations have been handicapped through the lack of operating capital, and no one problem could be picked out in the canning industry the solution of which is more vital than that of finances.

At the head of some of the largest co-operative canning movements are individuals of the highest character who have dedicated their lives to a principle and who have lived through the most bitter disappointments, and the growers who are backing these men must realize that only by furnishing the capital to carry on operations can they expect results from the management in face of the competition of the well-financed commercial organizations. Anyone who has a desire to experience a whole heart full of grief should engage in the canning business with about forty per cent of the capital he should have at his command with no other source of supply.

There should be no difference in the amount of capital to be raised by the co-operative corporation and the commercial corporation when planning the organization, and as already stated this should be not less than $1.50 for every case of finished-product capacity.

Growers should seek the advice of conservative men who know the canning business before they engage in it and not take the word of the man whose sole object is to promote his own interests. Two years ago the writer saw figures compiled, under instructions, showing a return to a growers'

organization of $115 per ton at a time when the books showed that it would be impossible to return $30. Finally the payments were made at $30 per ton, and before the pack was disposed of the growers' organization was in debt to the canner and the $30 was insufficient to pay the cost of picking the olives, which happened to be the crop in question.

The writer has also witnessed cases arising in co-operative canning where the co-operators were unable to make return to grower members for two years, and when conditions get to this point it becomes necessary to steal from Peter to pay Paul-to take the finances of one year to pay off the obligations of former years-and then the crash and the whole industry suffers because someone probably represented the possibilities of making money in the canning business to be so easy that the mere trifle of lack of capital was a little joke. "We will go into debt and in one season will pay for the plants, machinery and equipment with the profits we have been letting the commercial canners rob us of in the past.

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Growers must not construe this as an attack on cooperative canning. The producer is always entitled to all he can get for his production, and it is just as legitimate for the grower to can his fruit as it is for the canner to buy land and grow his fruit; but always keep in mind that canning is not a selling or a marketing organization but a manufacturing business the operation of which requires enormous quantities of materials the grower knows nothing about and in the production of which he takes no part, and the purchase of this material - requires an enormous capital, an amount that no canner would attempt to keep in an operating reserve, but which can be borrowed from any legitimate banker on warehouse receipts after the company's own operating fund has become exhausted.

The United States Government has come to the assistance of the co-operators to a considerable extent within the past year and this very fact has probably saved or, at least, averted the entire collapse of some of the largest co-operative canning organizations in the country. The relief is afforded through the Federal Intermediate Loan Bank, one branch of which has been established by the Government at

Berkeley, California. This bank loans money at a nominal rate of interest to co-operative agricultural organizations, requiring the usual warehouse receipts as security. There are some minor details to the system which must be worked out before it is a complete success and one of these is the cost of inspection necessary before the warehouse receipt is accepted as collateral. As the bank has operated less than a year these small, minor faults must be expected, and the future results obtained will be wonderfully beneficial to the grower and producer of agricultural products, though it seems almost too bad that the benefits of the bank cannot be extended to all agricultural interests whether co-operative or commercial.

There are some of the commercial canners who are working out a system of semi-co-operation whereby the fruit is sent in by the grower under a guarantee that he will be paid an amount equal to that paid by the commercial canner for like fruit grown in the same location, and then, at the close of the canner's fiscal year when the profits have been determined, the canner reserves an agreed rate of interest on the capital invested in the business, and all over this requirement is shared equally between the grower and the canner. Such an agreement is, on the surface, fair enough, but again there enters the danger from lack of capital and the element of speculation; for in good selling years this system will prove beneficial to both parties, but what will happen in poor selling years when a heavy carry-over into the next year must take place? What is the proper inventory valuation or the proper reserve to create in order to protect the canner against loss in a declining market?

Another handicap in the way of the co-operative cannery organization, and quite a serious one too, is the increased cost of administrative and of factory operations. The operative systems become very complicated under the cooperative method of operation, and this is especially true of those organizations packing a full line of products where an accounting must be rendered to each set of growers separately. This requires a mass of factory reports and accounting reports unheard of in the commercial cannery. Direct and indirect labor must be separated and apportioned to the various varieties, requiring a great deal of red-taped detail wholly unnecessary.

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