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• • •.

LWYE COLLEGE
(University of London)

The United Kingdom Trade


in Imported Fresh Fruit
by

J. H. KIRK and P. G. ELLIS

WYE COLLEGE MARKETING SERIES: No. 6


March 1971
OTHER REPORTS IN THIS SERIES

No. 1 Market Price Intelligence for Dessert Apples, by J. CHIVERS


and J. H. KIRK
No. 2 The Catering Demand for Fruit and Vegetables, by
A. R. HUNT and Miss R.JAmisoN
No. 3 The Distribution of Fresh Fruit and Vegetables from
Markets to Shops, by P. G. Ews, C. S. HUNTER and
J. H. KIRK
No. 4 The Selling of Fruit and Vegetables: A Comparative Study
of Commission Trading, by P. G. Ews and J. H. KIRK
No. 5 Horticultural Marketing Co-operatives: the Scope for
Large Scale Organization, by J. H. KIRK and P. G. Ews

In addition, Wye College have been closely associated with the


writing of "Co-operation and the Potato Market", by Dr. E. T.
Gibbons, published by the University of Newcastle upon Tyne
(price 15s.).
MARKETING SERIES

REPORT No. 6

The United Kingdom Trade


in Imported Fresh Fruit
A mainly descriptive study of the organization of the import trade in
fresh fruit (73 per cent of all the fresh fruit bought in the United
Kingdom), from assembly in country of origin up to the point of
wholesale distribution within this country.

by

J. H. KIRK and P. G. ELLIS

Copies of this Report may be obtained, price 65p. post free


from the Secretary, Marketing Department, Wye College, near
Ashford, Kent

March 1971
FOREWORD

The importation of fresh fruit into the United Kingdom is a


trade worth some L120 millions a year at c.i.f. values, and this fruit
amounts to 73 per cent by value at first hand of all the fruit bought.
But so far as we have been able to discover this trade has never
before been systematically described.
There seems to us three or four particular reasons for singling
out the imported fruit trade as worthy of study.
First, fruit consumption in this country is at a lower level than
most other advanced countries and has increased by less;
Secondly, the trade is an interesting combination of small-scale
private trade and of monolithic State or semi-State oganizations,
collectively known as the Fruit Boards, which represent and sell on
behalf of the producers overseas;
Thirdly, it is worthy of enquiry whether this type of Board
organization successfully serves the interests of the producers it
represents and of consumers in this country;
Last, a substantial part of the wholesale trade in home-grown
and imported fruit and vegetables of all kinds has been acquired
by and is organized by banana importing firms, two of which are
subsidiaries of overseas firms or Boards.
At several points our comments have been critical ofsome of the
Marketing Boards. The passages in question have been shown in
draft to their representatives on the basis that while we have been
glad to make the corrections offact suggested to us, we maintain our
own opinions, including those that may be unwelcome.
If the United Kingdom accedes to the European Economic
Community much of what we have written will become past
history. The channels of trade in fruit will quite certainly change
substantially though it is not at present possible to predict how.
This would, however, have to be a separate study.
J. H. KIRK.

111
CONTENTS

PAGE

Foreword •• •• •• •• •• •• •• iii
Chapter I. Principal Statistics of the United Kingdom
Fresh Fruit Trade.. •• •• •• 1
Chapter II. Organizational Differences in Fruit Import-
ing.. •• •• •• •• •• 10
Chapter III. The Development of the United Kingdom
Fruit Import Trade •• •• •• 19
Chapter IV. The Selling Practices of the Boards on the
United Kingdom Market •• •• 32
Chapter V. Summary and Conclusions .. •• •• 39

Appendices
A. Imports of Fruit and Fruit Products into the United
Kingdom 1934-1966 .. • •• •• •• 46
B. Location and Number of Panel Salesmen • 48

Bibliography . .• •• •• •• •• •• 50
CHAPTER I
PRINCIPAL STATISTICS OF THE
UNITED KINGDOM FRESH FRUIT TRADE
Consumption of All Fresh Fruit
The importation of fresh fruit into the United Kingdom is a
trade worth some 120 millions a year at c.i.f. values*, which is
roughly 73 per cent of the total of all fresh fruit bought at wholesale.
Home-grown fruit accounts for the remaining 27 per cent and is
worth 4.45 millions at farm gate.t According to the National Food
Survey in 1968, average household purchases offresh fruit (excluding
tomatoes) was 55.4 lb. per head per annum, worth k4 is. 7d., while
total consumption (including garden supplies, etc.) amounted to
60.4-1b. Consumption outside the home, i.e. in institutions or
catering establishments, amounted to about 8 per cent of the whole.
For comparison, the 1968 figure for imports of dried, canned and
bottled fruit, and of fruit pulp and fruit juices, was L93 millions.
This Study does not directly embrace tomatoes, although these
are counted as fruit in the National Food Survey and certain other
statistical sources. Excluding tomatoes, 50 per cent of the fresh fruit
consumed in the United Kingdom consists of species not normally
grown at home,and 68 per cent ofa year's imports occurs during the
six months February—August, when marketings from the home crop,
except for berry fruit, are at their lowest.
The fruits with which this Study is mainly concerned, being the
staple lines ofimport, are oranges and other citrus, apples, pears and
bananas. We look at some aspects ofthe trade in peaches and grapes,
but pineapples, melons, avocados and the other more exotic species
are outside our scope.
Trends in the total consumption of fruit over the years are of
some relevance in this Study. In comparison with 60 lb. per head
per annum offresh fruit eaten in households in 1968, the 1954 figure
was 52 lb. This is not a large increase, being just over 1 per cent per
annum. On the other hand, there was a proportionately bigger
increase—from 5 lb. to 9 lb.—in the consumption offruits other than
fresh (in the canned and bottled fruit sector) and in fruit drinks.
The increase in canned fruit appears to be part of a continuing
* Possibly 10 per cent ofthis imported fresh fruit is used in the United Kingdom
for processing.
t It is difficult to translate the combined figure of £165 millions into retail
values, but these may amount to some £300 millions.
1
trend, largely because the canned article is available all the year
round and is convenient to handle. The consumption of fruit drinks
(in terms of fruit content) has increased even more rapidly, but
from a much lower base.
There are no comparable figures for total fruit consumption in
other European countries, partly owing to differences of statistical
definition. Their figures for fresh fruit, however, are much higher
than ours—even if this cannot be demonstrated in terms of all fruits,
the point is made clear by the figures to be given for the main fruits
taken separately. It is true thatfew ifany ofthe Continental countries
consume as much canned and bottled fruit as we do, and probably
all of them taken together consume rather less processed fruit (unless
perhaps we include fruit made into squashes in the home). But
whatever may be the statistics of these processed fruits, it is quite
clear that the United Kingdom is at or near the bottom of the
league table for fruit consumption as a whole,as well as for fresh fruit.
Moreover, as the statistics for the main individual fruits will
make clear, consumption on the Continent has increased much
faster than here. This is true of almost all the individual Continental
countries including those that have always been big fruit eaters, and
it is true equally of those which are big importers and big home
producers. This strong upward trend on the Continent appears to
apply to almost every individual kind of fruit, although in practice
it is the commercially important species—oranges, apples, pears,
peaches, and bananas—which account for most of the overall effect.
The higher consumption on the Continent reflects for some
fruits the warmer climates these countries enjoy, which enable an
interesting range of fruits to be grown quite cheaply, and have
created a tradition of fruit eating. Our climate puts more emphasis
on boiled vegetables and puddings. Other factors have been radical
technological developments in the growing of apples, and to a lesser
extent pears, in France, Italy and to some extent Germany, and the
freedom of Germany to buy (even under E.E.C. rules) bananas of
the preferred kinds from the cheapest source (e.g. Ecuador). Factors
of this kind will not, however, explain the big increase in orange
consumption on the Continent—so much in contrast to ours, which
has been stationary—since in this case all the countries considered
would appear to start on more or less level terms.
The main explanation of the different trends in consumption of
all fruit together is almost certainly to be found in differing rates of
national growth. The increase in fresh fruit consumption in the
United Kingdom of 1 .2 per cent per annum is rather less than
might be expected from the calculated income elasticity of demand
applied to an average growth in real disposable income per head of
2
2 per cent per annum. If economic growth in the Continental
countries, expressed in similar terms, has been 4-5 per cent, their
rate of growth of fruit consumption would for this reason alone be
at least double ours, even in the absence of the special factors
relating to apples, bananas, etc.*

Orangest
Consumption. This commodity displays an interesting reversal over
the years in the United Kingdom's position in the international
league table of consumption. In the 1930's imports into the United
Kingdom were running at an annual average of over 500,000 tons,
with a peak of 623,000 tons in 1937. We were by far the world's
largest importer, the total exceeding the imports of Germany,
France and the Scandinavian countries combined. In the 1960's,
however, our imports were no more than 400,000 tons, despite the
increase in population and standard of living. In Germany, on the
other hand, imports increased from 85,000 tons in 1938 to 809,000
tons in 1966, and in France over the same period from 183,000 to
602,000 tons.
Current United Kingdom consumption is 16 lb. per head,
which is less than in 1927 (19 lb.) and far less than the record 1938
figure of 25 lb. By contrast the German consumption per head
has now risen to 32 lb. which is a phenomenal increase compared
with any earlier date.
These statistics of orange consumption can, however, be a little
* The normal way of explaining or predicting the rate of change in the
consumption of fruit or any other kind of foodstuff is to analyse it into two com-
ponents: change in the size of the population, and change in consumption per
head in response to change in income per head. The United Kingdom population
has been increasing by about 0-6 per cent per annum, and for fruit the ratio for
change in consumption to change of income is about 0-55 (i.e. a 10 per cent
increase in income will result in a 5i per cent increase in consumption). Taking
the rate of increase in income as 2 per cent, these two factors together should
result in an increase in fruit consumption of about 1-7 per cent per annum, or
rather more than has in fact occurred (1-2 per cent). The probable explanation
of the discrepancy is that the 1-2 per cent represents the increase in weight of all
fruit and thus neglects the continuing substitution offiner and higher valued fruits
for the more customary kinds.
However that may be, the statistical evidence shows no sign that the con-
sumption offruit as a whole has been substantially modified in recent years either
by spontaneous changes in taste for fruit as compared with other foods, or changes
induced by promotional activities. At least the whole of the visible increase in
consumption can be explained by population and income, and this adds support
to the view that in any contrast made between the United Kingdom and other
European countries, it is our slow rate of income growth that has been the chief
factor in holding back our consumption.
t The figures in this section include types of fruit such as mandarins,
clementines, etc., which are usually grouped in the import statistics with oranges
proper. They also include small quantities of oranges imported as fresh and used
for processing.

3
misleading unless account is also taken of the consumption of orange
juice. In the United Kingdom the decline in the consumption per
head of whole oranges since pre-war has been partly offset by an
increase in orange juice, and the current consumption of this in
terms of oranges at original weight is 6 lb. In the United States the
substitution has been dramatic. The consumption per head of fresh
oranges as whole fruit has declined substantially, but so large has
been the growth in juice consumption that the latter now accounts
for more than half of the total consumption of the original fruit.
Sources of Supply. At the present time the main sources of supply
into the United Kingdom are:

TABLE 1

Percentage

Mediterranean countries
Israel .. •• .. 31
Spain .. •• .. 25
Morocco •• •• 9
Others •• •• •• 9
South Africa •• •• •• •. 20
Other, Northern Hemisphere •• 2
Other, Southern Hemisphere •• 4

100

As the total import into the United Kingdom has declined, the
increased supplies since pre-war coming from South Africa and
Morocco must have taken the place of supplies from other countries.
Those that have contracted (or been forced to contract) their trade
with the United Kingdom are the United States (Florida and
California), Spain, and to a lesser extent, Brazil. The growth in the
South African trade has of course extended the season for oranges in
the United Kingdom,so that there is now little difference among the
different months of the year. But in common with many other
countries supplying the United Kingdom, the South African trade
is at the moment below its previous peak. Contrary to customary
belief Israel has not become a more important source of supply than
it was before the war. Total orange production in Israel was then
lower, but the United Kingdom absorbed 60 per cent of the whole
Israel supply, compared with 30 per cent at present.
Other Outlets for Oranges from the Main Exporting Countries. The
United Kingdom is not the sole outlet, as can be seen from the
following tables:
It will be seen that the United Kingdom is the chief outlet for
Israeli and South African oranges, but that this is not the case for
4
TABLE 2
Percentage Distribution of Orange Exportsfrom Spain (1969)

U.K. •• •• •• 7
France •• •• •• •• .. 28
Germany .. .. .. .. .. 35
Other (mainly Western Europe) 30

100

TABLE 3
Percentage Distribution of Orange Exportsfrom Israel (1969)

U.K. •• •• •• •• 29
France •• •• •• .. 4
Germany .. .. .. .. .. 26
Other (mainly Holland and Scandinavia) 41

100

TABLE 4
Percentage Distribution of Orange Exportsfrom South Africa (1969)

U.K. •• •• •• •• •. 34
France .. •• •• •• .. 18
Germany .. .. .. .. .. 13
Others (mainly Holland and Scandinavia) 35
100

Spanish; and that the E.E.C. (European Economic Community)


countries are more important to this group of three exporters taken
together than is the United Kingdom.
Tariffs. There are no duties on South African or Commonwealth
oranges (e.g. Cyprus) entering the United Kingdom, but for other
oranges they are:
1st April-30th November 3s. 6d. per cwt.
1st December-31st March 10 per cent
The E.E.C. tariffs are 15 per cent from 1st April to 15th October
and 20 per cent from 16th October to 31st March. These higher
E.E.C. tariffs make it all the more remarkable that the E.E.C.
enjoys a much higher consumption per head than does the United
Kingdom.
5
Grapefruit, Lemons, Mandarins, Clementines, etc.
Grapefruit. Imports at 80,000 tons in 1969 amounted to about
one-fifth of the orange total, and have been on a rising curve. The
United Kingdom is the chief importer of grapefruit, having passed
Canada in 1963, though we are not unlikely to be overtaken by
Germany soon.
The main sources of supply are in order of importance, Israel,
South Africa, Cyprus and the British West Indies. This is an interest-
ing contrast with pre-war, when the United States was our major
supplier. United Kingdom grapefruit supplies during the average
of 1963-67 were about the same as in 1938. Although more grape-
fruit are seen in the shops than then, total consumption per head
cannot have increased.
Lemons. United Kingdom consumption per head is only about
one-half per head of what it was in 1938 (almost all other countries
except Canada have increased). We are one of the world's smallest
importers, ranking even after Poland. Italy accounts for more than
half our supplies.
Mandarins, Clementines, etc. Mandarins and clementines were
imported in large quantities for a while after the 1939-45 war.
Thus in 1948 imports amounted to 41,000 tons. After 1969 they fell
away rapidly and in 1952 only 5,000 tons were imported. In 1948
and 1949 Italy and Spain between them supplied more than 90 per
cent of the total, but after 1949 imports from Italy fell away rapidly.
From 1951 until 1955 the average annual imports amounted to
11,000 tons, of which Spain accounted for more than 80 per cent.
The average was only slightly up at 12,000 tons in the ensuing 5
years, but since 1961 a definite upward tendency has been estab-
lished, a result not only of increased sendings from Spain but also
the appearance of Morocco as an important source of supply. Thus
in 1969 imports of mandarins and clementines totalled 31,000 tons
of which approximately two-thirds were from Spain and nearly one-
third from Morocco.
In the United Kingdom consumption is still concentrated in the
Christmas period whereas on the Continent the marketing of this
group extends from October until May.

Apples
Consumption. United Kingdom consumption per head during the
mid and late 1960s was about 26 lb. per head per annum.* This
might have been rather larger but for a succession of poor harvests
at home, but even so there could have been no great increase
* This includes apples used by manufacturers. Before the war these were not
recorded separately.
6
over the 25 lb. recorded at various dates between 1924 and 1938.
The 26 lb. per head in the United Kingdom can be compared
with 47 lb. in France and 52 lb. in Germany. These figures represent
a big increase over the last ten years, brought about mainly by the
increase and cheapening of supplies grown in France, Italy and
Germany, and a concurrent improvement in quality.
Sources of Imported Supplies. These are indirectly regulated by a
quota system for apples coming from countries other than the
Commonwealth (apart from Canada) and other than South Africa.
They are particularly intended to give priority to home-grown
apples in their season. The quotas are:
July—December 15,200 tons
January—June 68,750 tons
Quotas of this degree of stringency have of course very much
curtailed imports from Northern Hemisphere countries, most of
whose supplies would reach us during the July—December period.
In the 1920's Canada and the U.S.A. together supplied nearly
250,000 tons: this has now fallen to 13,000.* Moreover, France and
Italy have captured most of the trade of the Northern Hemisphere
countries by virtue of low production and transport costs. Among
the main exporters to the United Kingdom during the year as a
whole are South Africa (28 per cent of our imports), Australia, 27
per cent, and New Zealand, 10 per cent. These, together with France
and Italy, account for 92 per cent of our imported supplies.f
The United Kingdom is still one of the main apple importing
countries but has been surpassed by Germany, which imports more
than twice as much. The Soviet Union and France come next.
France, of course, has relatively little need of imports, because of
her vast home production. Apple imports into the Soviet Union
come almost wholly from Hungary and Poland.
Exporting Countries' Other Outlets. For Australia the main outlets
are the United Kingdom (70,000 tons) and West Germany (42,000).
For New Zealand, the United Kingdom at 32,000 tons is dominant.
The same is true for South Africa (71,000 tons). France and Italy
have a greater range of destinations, with Germany heading the list
in both cases (90,000 and 311,000 tons respectively). These figures,
which relate to 1966, can be compared with total exports from the
five countries, in the order in which they are named, of 145,000,
51,000, 107,000, 153,000 and 483,000 tons. For completeness it can
* Much of the decline in supplies from the U.S.A. came about before the war
as a result of the preference given to Commonwealth countries. Quotas were
introduced after the war, and these affect Canada as well as the U.S.A.
t Five per cent of our apple imports are of cider varieties. Imports of culinary
apples are too small to be recorded separately.
7
be mentioned that the Argentine which is unimportant as a source
of supply to the United Kingdom, is important in supplying
Germany and Holland.

Fresh Pears
Pear consumption in the United Kingdom, at a little less than
5 lb. per head per annum,is higher than pre-war, but by little more
than can be explained by population increase. Imports are 8 per
cent greater than pre-war. In France and Germany consumption is
12 lb. and 14 lb. respectively, having greatly increased in recent
years.
As in the case of apples, sources of imports have radically
changed as a result of Commonwealth preference and the quota
system. Before the war the United States and Canada contributed
52 per cent. This is now 3-4 per cent. The countries that have taken
their place are, in the Northern Hemisphere, Italy (31 per cent),
and from the Southern Hemisphere, South Africa and Australia,
respectively 31 and 23 per cent.
West Germany heads the list of importing countries (167,000
tons) with the United Kingdom second at 66,000. Italy has Germany
for its main market. Australia and New Zealand have the United
Kingdom. The Netherlands and the U.S.A. are also important as
pear exporters, but not to the United Kingdom.

Bananas
Consumption. Imports and consumption (the two are virtually
identical) have remained almost constant per head compared with
pre-war, though the actual quantity has increased 18 per cent. By
contrast, total consumption has risen nearly four times in West
Germany, nearly three times in France, five times in Spain, and no
less than twelve times in Italy. All these countries will, however,
have started from a lower base, but present consumption per head
in each of them except Italy surpasses that of the United Kingdom.
The figures are: West Germany, 23 lb. per head, France 20, Spain,
17, United Kingdom, 15, and Italy, 13.
Sources of Supply. Ninety-seven per cent of our bananas comes
from Jamaica and the Windward Islands, and in roughly the same
quantities from each. Before the war (1934-8) their combined
proportion had been only 77 per cent, and if one goes further back
still to 1909-14, our main suppliers in these years were Colombia,
Central America and Canary Islands.
Sources of banana imports into many countries, not only the
United Kingdom, are governed not by relative costs but by a
network of preferential agreements and arrangements. Germany,
8
for instance, obtains 65 per cent of its bananas from two low-cost
countries, Ecaudor and Colombia, under arrangements which
exempt it from giving a preference to the E.E.C. associates in
Africa and the Caribbean. France, on the other hand, buys almost
exclusively from her Caribbean dependencies and the Africa franc
zone. Italy discriminates in favour of Somalia, where bananas are
grown largely by Italian expatriate planters.
The dominance of Jamaica and the Windward Islands in the
United Kingdom market is mainly the result of the limitation of
4,000 tons on bananas imported from the "dollar area". In addition
there is an import duty of 17 10s. per ton on bananas imported
from non-Commonwealth countries. The quota of 4,000 tons may
be increased from time to time if supplies from the West Indies are
reduced by hurricanes.
There are three firms engaged in this trade from the Caribbean:
Geest Industries Ltd., from the Windward Islands;
The Fyffes Group Ltd., from Jamaica;
Jamaica Producers' Marketing Co., Ltd., from Jamaica.
It is acknowledged by all concerned that bananas from Jamaica
and the Windward Islands are high-cost fruit. Central and South
America could compete with them despite the greater distances.*

Other Fresh Fruit


Peaches and grapes are mentioned here because they are
handled by the South African Deciduous Fruit Board.
Peaches. The poor transportability of fresh peaches results in a
pattern of consumption among various countries which in the main
reflects their growing conditions. France, for instance, consumes
fifteen times more peaches than the United Kingdom, and Italy
sixty times. Germany, however,is quite a large consumer of peaches,
importing eight times as much as the United Kingdom, mainly from
Italy. United Kingdom imports, although four times higher than
pre-war, are still modest.
Grapes. Imports into the United Kingdom have increased about
30 per cent since pre-war and consumption per caput is thus rather
higher. However, we only import about a quarter as much as West
Germany does, and this latter country clearly dominates the trade
in grapes.

* The above relates to the position at the time of writing. It has, however,
become known subsequently that Messrs. Fyffes would like partly to disengage
themselves from Jamaica and develop alternative sources of supply on the
grounds of dissatisfaction with the quality of part of the Jamaican supply.
These possible new developments could also affect to a small extent what is said
about bananas in Chapter 11(E) and in Chapter V.

9
CHAPTER II
ORGANIZATIONAL DIFFERENCES IN
FRUIT IMPORTING
(A) Three Citrus Boards: South Africa (Outspan),
Israel (Jaffa) and O.C.E. (Maroc)
These are the foremost examples of the exportation of fruit from
the respective countries being organized by bodies acting virtually
as single buyers at home and single sellers in the countries of
'destination.* The Moroccan Board is, however, on a much smaller
scale in the United Kingdom than the others. All three Boards
handle grapefruit, lemons, etc., but it will be sufficient here to
consider their operations in oranges.
In this Chapter, and the remainder of this Report, the word
"panellist" is used many times. It refers to a wholesaler of fruit in
the United Kingdom, usually located in or near a public market,
who is one of a number ofsimilar wholesalers selected by a Board to
sell their produce. Wholesalers not so selected have to buy from
those who are.
South African Citrus Board. This was set up in 1940, being the
oldest of the Citrus Boards especially concerned with the United
Kingdom market, but not the oldest fruit board. It was preceded
by a Federal co-operative formed in 1926 and controlling more than
80 per cent of the crop. At the South African end it is in effect a
compulsory co-operative. It has complete control of the marketing
of citrus fruit whether for the internal market or for export, growers
being paid grade for grade on a system of"pool" prices. The fruit is
received from the growers or from the packhouses (both private and
co-operative) already graded and packed. If it cannot be shipped
immediately it is held in one of the pre-cooling stores belonging to
the Perishable Products Export Control Board at the port of ship-
ment. The P.P.E.C.B. negotiates for shipping space and freight
rates; then the Citrus Board organizes shipments, receives delivery
in the European port of destination, and finally resells in the
country concerned. Except in Holland and Belgium where imported
fruit is sold by auction, the Board places the oranges with panellists,

* If one of these bodies is a selling agent on behalf of the growers it is, strictly
speaking, not a seller, but it will still have complete discretion as to method, time
and place of sale. Similarly a body acting as selling agent abroad cannot be, in
the strict sense, a buyer at home, but the effect is the same if the growers have no
other outlet.
10
who as agents for the Board sell on commission to other wholesalers
and to retailers. Uniquely, this Board instructs its panellists not to
sell below a minimum price. The main Board office outside South
Africa is in London, and it would appear that the principal function
of the General Manager is to allocate supplies among outlets,-.
treating every market on its own footing as an alternative to each
other, including the Continental countries as an alternative to the
United Kingdom. From Table 4 in Chapter I it will have been seen,
that France and Germany together are normally as an important
•a, market for South African oranges as is the United Kingdom, and
the whole of Europe is more important. The main.ports of entry in
the United Kingdom are Southampton and Cardiff. .
Israel Citrus Marketing Board. This was set up in 1948 to concen-
trate the citrus exporting interests of Israel. Here again the United
Kingdom is Israel's largest single market, but we nevertheless take
less than a third of all the oranges exported to Europe. The Israeli
crop being a Northern Hemisphere crop is in the main non-
competitive with the South African, but faces competition from
Spain and Morocco.
Virtually all horticultural produce leaving Israel is in the hands
of monopoly organizations, and the Board under consideration
deals with citrus, leaving vegetables, flowers and other fruit to a
concern called Agrexco. The Board receives fruit from individual
growers and co-operatives in Israel and organizes all aspects of
grading, shipping, etc., as in the case of the South African Board.
It sells in the United Kingdom through panellists, also on com-
mission, but, unlike the South African Board, does not fix minimum.
prices, contenting itself with the issue of guide prices to its salesmen.
In this case,too,the major decisions concern the allocation ofsupplies
among alternative countries and to alternative markets within each:
Using smaller vessels than the New Zealand and South African
Boards, it brings them into a far greater number of ports, including
London, Southampton, Newcastle and Glasgow, but Sheerness,
Hull, Cardiff and Liverpool are the main ones.-.
O.C.E. (Morocco). The Moroccan organization while operating
like a Board in having exclusive control of marketing for export, is
constituted in a different manner. As O.C.E. (which means the
Office for Commerce and Export) it came into existence in 1965
when certain important exports—citrus, cotton, canned goods and
wine were nationalized. The cause of this move was perhaps less
to bring about better marketing—it was acknowledged that a
number of private enterprises in the export trade had been highly
efficient—than ,to ensure that the bulk of the foreign currency
earned by the export trade would flow back to Morocco.
11
Apart from being a State organization, unlike the other Boards
which are controlled by producers, O.C.E. differs in the methods
by which it operates in the countries of importation. Instead of
having a central office in London, which controls all the European
sales, it works through separate offices in each country—in fact
there are two in Germany. These offices are known as O.C.A.(Office
for the Citrus Trade) and are simply agencies which have been
chosen by O.C.E. and appointed to act on its behalf in exactly the
same way as the London offices of the Boards.
The official title Of the United Kingdom organization is O.C.A.
(Great Britain, Ltd.). It is in fact a firm of London importers with
offices in Covent Garden and which carries on its own private trade
as well as acting for O.C.E. All major matters of policy (such as the
selection of panel salesmen) are the responsibility of a joint com-
mittee of O.C.A. and O.C.E. in the person of the London repre-
sentative of the latter, who is the Commercial Counsellor at the
Moroccan Embassy. During the four years since O.C.E. was
established, the importation of Moroccan oranges into the United
Kingdom has increased by 65 per cent.

(B) Spanish Oranges


This is not an example of large-scale organization, but it is
described at this point for the sake of contrast. The assembly of
oranges in Spain and their shipment to the United Kingdom and
elsewhere is in the hands of some six hundred private merchants,
although no doubt the larger part of the trade is handled by far
fewer. At the United Kingdom end there is a large number of
United Kingdom merchants, and some Spanish ones with long-
standing connections with Spain, who are glad to accept a wide
range of Spanish produce—melons, tomatoes, onions, etc., as well
as citrus.
By far the greater part of the Spanish export trade is to the
Continent of Europe and most of this travels overland, by train or
road. Some Spanish oranges reach the United Kingdom by these
means and the rest by small steamers, an increasing proportion of
which are container-carrying vessels.
The importers of Spanish oranges into the United Kingdom
(whether or not they be Spanish exporters as well) place their
oranges on our public markets for sale on commission. There is no
panel of preferred salesmen, merely a selection among the market
men by the different importers: to create a panel implies a Central
organization.
This picture of atomistic free enterprise, which makes Spanish
oranges resemble vegetables and minor fruits rather than oranges.
12
and imported apples in general, is mitigated by some effort at
central organization. The acknowledged high standard of the fruit
is guaranteed by inspection and grading imposed in Spain by the
Ministry of Commerce; the ownership of the large refrigerated road
and rail containers which take out most of the Spanish crop is in
the hands of one transport organization, TRANSFESA, while the
Spanish Fruit Syndicate undertakes some collective publicity on
behalf of Spanish oranges as a whole. Although at the time of
writing the Spanish orange export trade nevertheless presents a
predominant pattern of fragmentation, we understand that the
Spanish Government are now more actively considering ways and
means of achieving a higher degree of concentration and collective
effort.

(C) Apple and Pear Boards, New Zealand and South Africa
These two have been bracketed together because both are
monolithic and monopolistic organizations, standing in contrast to
Australia.
New Zealand. Of the New Zealand production of about 100,000
tons of apples, a little over a half is exported, three-fifths of which
comes to the United Kingdom. Production for export dates from
about 1920, and very early on exports were subject to control.
Thus the New Zealand Fruit Export Control Board was set up in
1926 at the instigation of the Fruit Growers' Federation. This had
no hand in marketing operations in New Zealand until in 1948 the
present New Zealand Apple and Pear Marketing Board was
established at the request of growers to stabilize marketing. The
present Board controls internal marketing as well as exports. It took
over the war-time arrangements of the New Zealand Government,
which had been necessary because of the loss of all export markets.
The difference between the present Board and the pre-war
Board is that under the existing scheme the Board owns the fruit,
whereas in the pre-war years the fruit was sold on behalf of the
growers. Growers are paid a guaranteed price said to be based on a
number of policy objectives together with estimates of average costs
of production.* Although there is no rule compelling growers to sell
* Growers are guaranteed an average price for fruit submitted to the Board.
This average price is set annually by the Apple and Pear Prices Authority made
up of two members nominated by the New Zealand Fruitgrowers' Federation,
two nominated by the Government and an independent chairman appointed after
agreement between the Government and the Fruitgrowers' Federation. In
determining the average price the Authority is required to take into account the
following matters:
(i) "The necessity, in the public interest, of maintaining stability and
efficiency of the apple and pear industry";
Continued on page 14
13
to the Board, in fact many are obliged to do exactly that, because
they cannot sell to wholesalers or retailers, and can only sell up to
two cases at a time to consumers. They are allowed to sell to factories
but the factory has to apply for a licence to the Board to purchase
specified fruit up to a limit.
Within New Zealand the Board fixes wholesale prices according
to the various grades and sizes (it has no competitionfrom importers).
For export it negotiates freight rates and organizes shipments after
inspection of the fruit received, packed and graded by growers and
packhouses. The London office supervises the unloading and
organizes the distribution to the panel salesmen, all sales being on
commission in the United Kingdom, and also for the most part in
Europe, control being exercised by the General Manager and his
staff in London. Main ports of entry in the United Kingdom are
London, Hull and sometimes Leith.
It will have been noticed that this Board buys the fruit outright
from growers and then handles it as principal. This can be regarded
as an extreme case, where the other extreme is that each parcel of
fruit retains its own identity and the producer or packer ofit receives
what it fetches.* This latter harks back to the practice originally
initiated by the California Fruit Growers' Exchange in 1905, and
which remains common in co-operatively organized internal market-
ing. But it is clumsy because of the vast amount of small-scale
* There can in fact be four main methods:
(a) The Board or other centralized agency buys outright from the growers,
and the prices they receive do not depend on what their own fruit fetches.
a(i)—the price is virtually the same to all growers within broad grades only;
a(ii)—there is rather more differentiation of price among growers accord-
ing to grade, count, apparent condition, time of purchase, etc.;
(b) The Board does not buy from growers but acts as their selling agent:
b(i)—the produce is put into categories and each grower receives the
same poolor average pricefor all hisfruitfalling into any one ofthe categories;
b(ii)—the grower is given the price that his particular fruit happens to
make, according to the place, method and time of sale that the Board
chooses for him.
All four ofthese methods can be operated whether the Board places the produce
for sale on commission, or sells it outright either by auction or private treaty.
Method b(ii) can be considered as rather primitive; a(i) is the easiest to operate,
but may not be fair to the best growers. The commonest methods are a(ii) and
b(i), particularly the latter.

Continuedfrom page 13
(ii) Movements in the costs of producing and marketing apples and pears;
(iii) Current market realizations for fresh and processed apples and pears,
market prospects for the season and other marketing trends known or
anticipated;
(iv) The state of the Board's accounts;
(v) The current and future requirements of the Board for finance, capital
expenditure or other purposes•
(vi) Submissions made by the Board ' or the Fruitgrowers' Federation;
(vii) Any other matters the Authority may consider relevant.
14
accountancy to which it gives rise, and the commonest practice
among Boards as a whole is the pooling of receipts, grade by grade.
The New Zealand Apple and Pear Board, however, by buying
outright is committed to a price before the final disposal is known.
This price is said to be based on "the necessity in the public interest
of maintaining stability and efficiency of the apple and pear
industry". Nevertheless the Board can do no other than sell fruit
that would otherwise deteriorate for the best price it can obtain. We
suspect that the price paid to the growers is in fact based on the
Board's anticipation of the resale price, plus or minus some allow-
ance for the profits or losses carried over from previous years.
South African Deciduous Fruit Board. The term "deciduous" covers
a range of fruits, but those we are concerned with here are apples
and pears. The Board which regulates these was set up in 1946,
having been preceded by the setting up ofa Co-operative Deciduous
Fruit Exchange in 1931. The Board does not have jurisdiction over
internal marketing within the Republic but like the New Zealand
Board is sole buyer for export. The United Kingdom is by far the
largest external market. The local, shipping and other arrangements
are similar to those of the New Zealand Board. The Board receives
fruit from growers and co-operatives' packhouses in the growing
districts and organizes shipments mainly from Cape Town. Sales in
the United Kingdom are made through panellists, using the trade
name "Cape". Chief ports of entry are Southampton, London and
occasionally Sheerness.

(D) Australian Apples and Pears


Australian apples and pears contrast in marketing organization
with South Africa and New Zealand in much the same way, though
not to the same extent, that Spanish oranges contrast with South
African and Israeli. There is an Australian Apple and Pear Board,
but it does not trade nor to any great extent take control of exports.
Its functions are to make regulations designed to ease the links
between exports in the various Australian States and the importing
firms in the receiving countries, and in carrying out these functions it
acts as a source of market information to be transmitted back to
Australia; licenses exporters in Australia; negotiates for shipping
space and terms; and fixes, in consultation with all the parties
concerned, the total number of cases of fruit to be exported each
season in relation to shipping space available. The Board also
determines minimum export prices at Australian ports for fruit sold
forward against letters of credit. (The proportion so sold has, how-
ever, shown a marked fall in recent years and now amounts to
about one-third of the total exported.)
15
Although all these functions are useful and some are substantial,
there is a clear contrast between this and a Board which trades, and
which is, moreover, a monopoly trader. The South African and New
Zealand Boards unquestionably exercise more control over the
growers and have all stages of the export marketing process under
their direct first-hand surveillance. The Australian Board does not
directly interfere with the trade, which is carried on as between
Australian exporting firms and importers in the countries to which
the fruit is consigned.
Although the Australian Board does not exercise control on the
quantity of fruit shipped to each market it does have the power to
do so. In fact, the maximum quantity permitted for export to the
United Kingdom is fixed each season and allocated on a basis of
past performance to exporters in the six States. There is of course
no system of panellists, but a list of first-hand salesmen is drawn
up each year and only firms on this list are permitted to handle
consignment fruit. The list, which is an extensive one, cannot be
considered as a restrictive panel.
The basic reason why Australia took rather a different course
from New Zealand and South Africa is because after the war, during
which the Board handled all fruit under requisition, it was the wish
of the Australian apple and pear industry as a whole to return to the
private enterprise system of exporter/importer trading such as
existed before the war. Traditionally the production and marketing
of fruit in Australia and on export markets has been a matter for
private enterprise, with the State Governments setting minimum
standards for fruit permitted for sale on the domestic markets and the
Commonwealth Government doing thesame for exports.The require-
ments for export are amended when considered necessary and on the
recommendations made to the Government by the Australian Board.
Among English traders the relatively more fragmented market-
ing of Australian apples and pears is sometimes thought to be a
disadvantage. For one thing, there seems to be less control over
arrivals, which is a matter of some consequence since the tail end
of the Australian exports are apt to find themselves in competition
with the beginning of the English crop. There will be even readier
agreement that the lack of centralized control in Australia permits
of haphazard methods in the marketing of the Tasmanian crop,
which does not command the prices that its intrinsic merits deserve.
For instance some of this crop is moved in inferior containers and
in odd sizes and shapes that make for inefficient and insecure
storage on board ship.
(E) Bananas
As already indicated, virtually the whole of this crop is shipped
16
to the United Kingdom by three large firms. These are registered
companies but can be likened to Boards because of the scale and
tight-knit nature of their businesses, and their overseas origins or
affiliations.
Messrs. Geest Industries of Spalding, Lincolnshire, started
business importing tomatoes, cucumbers, etc., from the Netherlands,
but has developed the importation of bananas so successfully as to
have become the largest importer. This firm operates its banana
business from the Windward Islands. It arranges the distribution
of the fruit from its own ships, sending a considerable proportion
to its own ripening rooms and to those of its subsidiaries, and the
remainder to other wholesalers with ripening facilities. Through its
subsidiary firms the Geest Organization also has a large place in the
wholesaling offruit other than bananas, together with most types of
vegetables, both home-grown and imported. It also grows and
markets bulbs, pot plants and flowers.
The second largest banana firm is Fyffes Group Ltd., a United
Kingdom subsidiary of the huge international firm formerly called
the United Fruit Company and now United Brands Ltd. The third
is the Jamaica Producers' Marketing Co. Ltd., a subsidiary of the
Jamaica Banana Producers' Association Ltd. Like Geest Industries
these two have gone in quite a big way into general horticultural
wholesaling, partly under their own names and partly through
various subsidiaries.
All Jamaica bananas fit for export must be sold in Jamaica to
the Jamaica Banana Board, a statutory body set up by the Govern-
ment. This Board formerly sold all its bananas for the United King-
dom market through two agencies—the Fyffes Group Ltd. and the
Jamaica Producers' Marketing Co. Ltd. During the last year the
Jamaica Government has created a United Kingdom company
called Jamco, whose function is to oversee marketing in this country.
At the time of writing,Jamco continues to arrange sales through the
aforementioned firms.
Bananas are sold each week at what is known as the "green boat"
price. This includes the cost of inland transport to the railhead
nearest to the various ripening rooms. A little over 50 per cent of the
bananas exported from Jamaica are ripened at branches owned by
Fyffes and the Jamaica Producers' Marketing Co., the balance being
sold to independent ripeners who are chiefly general fruit and
vegetable wholesalers operating both inside and outside the main
markets. The "green boat" prices and the quantities to be sold are
negotiated each week with Jamco, representing the Jamaica Banana
Board.
It is of interest that this Board (a State organization) should
17
operate in the United Kingdom through firms who are in the general
horticultural trade as well as the banana trade, and who carry on
business in a complex fashion with which hardly any Jamaican
farmers could be expected to be familiar. This link between Jamaica
and the two firms, especially J.P. as a subsidiary of a Jamaican
enterprise, must not be underestimated. The United Kingdom is
virtually the only outlet for Jamaican bananas, and the economy
of the island depends heavily on the efficiency and enterprise of
Messrs. J.P. and Fyffes.
The reasons why all three banana importing firms have gone
into the general horticultural trade in a big way are ofsome interest
in themselves. Messrs. Geest and its subsidiaries are reported to be
the biggest single horticultural wholesaler in the United Kingdom.
With the other two firms added (which is not to imply that all three
are anything but strictly competitive) the banana group has gained
a very prominent place in the market as a whole.
Anomalous as this may appear, it can be explained by the
convergence of several reasons. First, the banana firms desire some
measure of diversification. The sale of bananas is pretty regular
throughout the year, but has shown little growth and would be
vulnerable to a change in tastes. Secondly, the banana importers
have desired to establish captive outlets—wholesaling firms that
would be obliged to accept their fruit—and to obtain places in the
public markets which, often enough, could be secured only by
buying the firms that had those places. Third, the nature of bananas
is such that there is merit in undertaking one's own distribution down
to shop level, so as to guarantee condition and freshness, and the
lorries that transport these bananas are conveniently used for
potatoes, greenstuffs and apples as well. It thus comes about that
the banana firms, prominent as they may be as market wholesalers,
have become perhaps even more so as travelling wholesalers,
operating retail rounds.

18
CHAPTER III
THE DEVELOPMENT OF THE
UNITED KINGDOM FRUIT IMPORT TRADE
Historical Evolution
The import offruit did not reach a significant size until the latter
part of the nineteenth century. The most rapid period of growth
came after 1900. It is said that before 1885 hardly anyone in this
country had seen a banana. The story has been written of the
pioneers of the last century, men like Baker, Keith and Preston who
built up the banana trade between Central America and the U.S.A.,
which resulted in the formation of the United Fruit Company at the
turn of the century, but little is known outside the private records of
the firms of the many thousands of small traders who built up the
fruit trade as it now operates.
In the United Kingdom at the present time there are probably
between four and five hundred firms concerned in the importation
offruit, including those that serve as panellists for the big importing
organizations. Many of these importers are also wholesalers with
premises in the main markets and dealing in home produce as well.
Those who confine themselves to importing often manage with one
or two rooms, and apart from clerks, their main items of expense are
rent and telephone.
The private importers developed in one of two ways. One was
that a member of an English firm (usually one of the family) would
go out perhaps to Spain and buy produce which he sent back to his
firm to sell. Or he may have persuaded Spanish merchants or
Spanish growers to allow his firm to sell their produce for them on
commission. The point is that he had to go to the country to seek
out the trade and develop it. He did this by building up confidence
in himself among those from whom he was seeking business. They
had to believe that he was a man they could trust, not only in the
financial sense but also in his capacity (or in his firm's capacity) to
handle produce successfully. On his part he had to seek out producers
or merchants whom he could trust. He needed to find people on
whom he could depend for regular supplies of produce. Moreover, it
had to be a kind that could stand up to transport and of a quality
that justified sending it to a distant market where it would be likely
to command a price high enough to cover the risks and expenses.
All this required a great deal of time, more time in most cases
than could be devoted to it from an occasional visit. Consequently
19
some of these men settled in the countries with which they were
doing business (as is the case in the wine trade for example). They
then might marry into local families, which would give more
permanence and stability to the trading connections which had
been established and which, by then, had firm feet in both the
exporting and importing country. In this manner trust and con-
fidence developed on both sides, without which it would have been
impossible for the trade to have grown.
The initiative was not, however, confined to English firms,
foreign—especially Spanish—merchants sent representatives to this
country (often sons) to establish a foothold here from which they
could conduct their business. Hence the many foreign-sounding
names of firms established here perhaps three generations ago, and
which are now in outlook and practice indistinguishable from those
which have purely native origins.
The great bulk of the fruit, vegetables and flowers imported
into the United Kingdom is handled on a commission basis in the
same way as the internal trade conducted in the main markets of
the country. It is true that a proportion is handled on the basis of
guaranteed advances by the importers here to the exporters abroad.
This has long been the custom in the trade with Spain and had
also been the practice with imports of Australian fruit.
Essentially the system of guaranteed advances is no different
from the pure commission system. There is no firm commitment to
a price in either case. The guaranteed advance gives some security
to the exporter that at least some of his expenses will be covered
whatever the final outcome of price. It also has a deterrent effect
on reckless importing by firms without thought to the marketing
possibilities. Perhaps it might be best described as a system by which
the importer shows his good faith, but it is also a means by which he
can take part in financing trade which might not otherwise take
place owing to lack of working capital by the exporter. It might also
represent the first stage in relations between importers and exporters,
when the former especially have to develop the confidence of the
latter.
The most advanced form of trade relationship exists when the
trade takes place with entire trust on both sides. When this stage
is reached importers and exporters are working as almost a single
firm with the minimum number of documents passing between
them.. Obviously such a close . relationship takes time to grow and
there are limits to the extent to which these ties between firms exist
in the trade at any particular period. Distance is obviously the
main barrier ,to such relationships although air travel is now making
them easier.
20
So flexible, however, are conditions in the fruit trade that
specialist firms have arisen whose job it is to bring exporters and
importers together. These firms are usually described as "shippers'
agents". They are most often family concerns with perhaps a few
partners whose main qualification is an ability to speak several
languages, as well of course as a thorough knowledge of the trade.
They travel in all parts of the world looking for suppliers. The key
to their success lies in their power to find reliable men on both sides
and to bring them together, for which service they receive a small
commission.
Another section of the trade which is not always clearly disting-
guishable from the one just described is that of the forwarding and
clearance agencies. These specialize in arranging transport (they
may,in fact, own some) and in clearing goods through the customs.
In France they are known as "transitaires", a word by which they
are becoming increasingly known in this country. They are situated
at both sending and receiving ends, especially at the ports and
airports, but also at the main railway stations, and make it un-
necessary for the exporters and importers to be at these places. In
order to increase their business some of them undertake work
similar to that of the shippers' agents. Quite obviously they require
a great deal of knowledge of the trades for which they are acting—
not least among which is their up-to-date information on the
market situation.
From what has already been described, the reader will perhaps
have grasped the strength of the competitive forces operating in the
traditional fruit trade. It is a very keen business. A man cannot
survive in it unless he devotes to it a great deal of time and energy.
It therefore tends to draw to it men who absorb themselves in their
work and who find satisfaction in the strong personal relationships
which they develop with those with whom they do business.
The commodities with which they deal are many, with varying
characteristics. Much knowledge is required of the production areas
and ofindividual packers and producers, because in spite ofadvances
ofstandardization, the inherent qualities offruit are very dependent
on local conditions ofsoil and climate and on the skills ofindividual
growers. These are the kinds of knowledge which importing firms
are forced to acquire if they are to remain in business and prosper,
because everything depends on reputation. They are known for the
quality and dependability of the produce they supply and to ensure
that this is maintained they must constantly look to their sources.
There is, therefore, a very strong force at work separating the sheep
from the goats, operating through the activities of the importing
firms, constantly looking for better supplies.
21
This then is a summary of what we have called the traditional
trade. By and large it remains an accurate account for vegetables,
salads, flowers and minor and exotic fruits. But it has had super-
imposed on it, in successive stages, a large-scale type of trading
organization for the main types offruit, ofa kind briefly described in
the previous Chapter. This has by now so far developed as to account
for 96 per cent of our bananas, 66 per cent of our oranges, and 33
per cent of our imported apples and pears (excluding Australian
apples and pears which, despite the existence of a Board, are still
handled by private traders at their own risk). In no other non-
Communist country is the fruit import trade so largely in the hands
of large-scale organizations. In the two other main fruit importing
countries, Germany and France, the shares of the import boards
are only 10 and 15 per cent respectively.
The Arrival of the Boards
Although organizations such as the Californian Fruit Growers'
Exchange were set up as early as 1905, as institutions backed by
statutory powers, marketing boards of the type considered here are
comparatively recent, one of the first being the New Zealand Fruit
Export Control Board, established in 1926. This was followed by
others in Canada and Australia soon after. New ones came in one
after another as a result of the depression of the 1930's, mainly in the
English-speaking countries and their dependencies but later in the
French territories overseas. In other words they were conceived in an
atmosphere of reaction against the normal operations of markets
which suddenly seemed incapable of putting themselves into order
again. For Governments pressed on all sides for economic relief, the
concept of the marketing board which promised to rectify the
instability of the agricultural markets, made a strong appeal,
particularly as it involved little public expenditure.
On their side, farmers, normally a very independent class of
people, were in the very depressed conditions of the time, ready to
submit to the rule of the Boards, as promising a number of advan-
tages. These included the power to:
(a) raise the bargaining power of producers on the markets at
home or abroad;
(b) make regulations to improve marketing practices, e.g. by the
standardization ofquality and packages;
(c) collect and disseminate market intelligence—both short- and
long-term;
(d) seek out the special requirements of different outlets so as to
spread sales to the best effect;
(e) set up processing plants if necessary;
22
(f) secure economies of scale in organization and transport;
(g) shelter producers from sharply fluctuating prices.
We shall endeavour to consider how far these advantages have
been realized in fact. But before doing so, it will be as well to repeat
that the Board type oforganization has been superimposed on, rather
than replaced, the traditional fruit import trade. No Board through
its own employed staff deals direct with retailers. They employ
wholesalers, mainly on commission, and these are the same types of
wholesaler, often the same firms, as were doing a thriving business
before the advent of the Boards, and which are usually doing the
traditional type of wholesaling business in other lines of produce.
The Boards have, however, eliminated the former importer, so
far as he can be distinguished from the wholesaler, and similarly
have eliminated the overseas exporter.* The Boards are also a new
type of organization in so far as they have been set up under
statutory powers, operate in the United Kingdom as agents or
branch offices of parent organizations in South Africa, etc.; operate
avowedly for the exclusive benefit of their constituents, the fruit
growers abroad, who ultimately control them, and have the legal
status of being non-profit makers.
One circumstance common to the Boards is that they operate
from a distance, involving a substantial sea passage. One could not
easily imagine the creation of a Board for importing from France or
Holland although both these countries have experience with and no
apparent distaste for large organizations. If the distance is not great,
there is much to be said for traditional private enterprise with its
capacity for seeking out bargains and seizing fleeting opportunities.
Moreover, trade with nearby countries is commonly carried out
through a variety of exit and entry points, all of which are used
simultaneously. The United Kingdom horticultural import trade
from our near neighbours on the Continent takes place through at
least a dozen ports and there is no ready means of effecting control
of so many.
Practical Advantages of Boards
Shipping. But where a distance of some thousands of miles is
involved there is likely to be only a small number of ports suitable
for large ships, so that the produce necessarily passes through a
smallish number of bottlenecks. This creates the opportunity for
centralized inspection and grading, uniform packing, etc. But the
major effect of distance is that it creates the need for a central
organization to negotiate shipping arrangements and rates, and so
organize the produce that it is ready for particular ships at particular
* These statements are only completely true of the Boards that trade.
23
3
ports at particular times. One can concede that much of this task
can be successfully accomplished by forwarding agents, and if the
Boards did not exist it would be achieved somehow. There are,
however, various aspects of this shipping job and its charges which
need to be considered separately, and a Board is not necegsarily at
an advantage for all of them.
First, on freight rates, a Board would appear to have a good
deal of bargaining strength, because of the quantities it can com-
mand and its possible power to switch a bulk shipping contract from
one line to another. Similarly, the Boards can offer the shipowners
virtually full ship loads of uniform cargo, to be collected at a given
place or a known date, to be taken to one or two places of destina-
tion, with a minimum ofintermediate calls and no scouring of minor
ports for the topping-up of loads. This assurance, moreover, goes
beyond the loading of the individual ship. A Board can estimate the
approximate size of the crop to be exported during the season and
negotiate on that. An arrangement for the exclusive right to a large
minimum quantity would be attractive .to any shipowner, and it
would be even more attractive if a maximum quantity were to be
stated as well. In practice a Board will negotiate terms for sub-
stantial quantities—perhaps of the order of 50,000 tons—falling
within a certain range. The details of these contracts are not as a
rule public knowledge, but we know of one comparison between
freight rates to England from New Zealand and from Australia,
which showed much lower rates in the former case, and one reason
will be that the New Zealand Board has closer control over quantities
and shipments than the Australian Board has.*
The shipowners also get the benefit of a massive reduction in
documentation if a ship is filled with a cargo from one consignment.
For instance one consigment of mixed fruitfrom Cape Town may have
a value of perhaps L500,000 all contained in one bill of lading.t In
other circumstances a cargo of this size might generate a hundred
bills of lading and other supporting documents.
Nevertheless a Board in negotiating a shipping contract may
face one disadvantage. The large quantities it has to dispose of will
reduce the number of shipping lines competing for the trade. It
may find itself faced with a Shipping Conference which can be a

* In addition, New Zealand operates from only two or three ports, whereas
Australia must export from fourteen ports around a much longer coastline. The
very much larger quantity shipped from Australia also requires that some ships
have to go out to that country in ballast.
t The expression "one bill of lading" conveys the true sense of this arrange-
ment. A more accurate expression would be "conveyed to one consignee with a
separate bill of lading for each compartment of the hold". But these separate bills
of lading are handled as one.
24
monopoly as complete as itself, and perhaps more ruthless. On the
other side of this argument, however, it can be contended that if,
for example, a country has 50,000 tons of apples to be shifted over a
short season, only Conference Lines could handle that quantity, and
that a collection ofindependent exporters would be at an even greater
disadvantage in dealing with that Conference than the Board is.*
On the face of things a Board is clearly at an advantage over
unorganized exporters in respect of forcing the shipping companies
to provide specialized vessels and a frequency and regularity of
sailings which they might otherwise think too good for the trade. So
far as we can discover Conference rules are less prohibitive of
competition among the various lines in these respects than in respect
offreight rates as such. The kind ofships and frequency and regular-
ity of voyages can, of course, be just as important as freight rates, or
in the case of perishable produce, even more so.
Even granted the kind of shipping service, and the freight rate,
there nevertheless remain many advantages of detail in the organiza-
tion of shipments by the Boards. A Board will discuss with the
shipping line the best way of spreading the total of exports over
the marketing season and the selection of ports at both ends of the
voyage. The season's programme is then broken down into monthly
or weekly periods, which gives a detailed target timetable, and
which can be further elaborated into an allocation system, concerned
with particular varieties, local variations in the crop, and the
requirements of particular markets. Clearly these timetables plus
allocation systems, known in outline for up to six months ahead, are
of major importance in securing that the vessels have full cargoes
and that stocks held in cold store are kept to a minimum.
If a Board is in being and organizes shipping services, it can also
procure for its constituents and customers other advantages in the
field of transportation. It may, for example, be able to negotiate
favourable rates for road or rail haulage to shipping point in
country of origin, reduced port handling charges at either end or
both ends of the sea voyage, and again, reduced road or rail charges
for distribution in country of destination. For various reasons a
fair amount of space has been given here to the sea voyage, but if it
were possible to add together all the economies in transportation
Capable of being secured by the Board type of operation, those
arising on the water would not necessarily be the largest, and all the
movement economies need to be considered together as part of a
substantial combined economy.
* In 1970 the New Zealand Apple and Pear Marketing Board withdrew from
the British Conference Lines and made a contract with Danish and Israeli shipping
companies.
25
Organization, Standardization, etc. We have mentioned the simplifi-
cation and reduction ofshipping documents. The Boards, too, obtain
the benefits of this for their constituents, and save the considerable
administrative costs associated with a multiplicity of small trans-
actions. This saving may well offset the administrative cost of a
large centralized organization, paying salaries and occupying
premises that would be unnecessary in ordinary private trade.
We would surmise also, though we have no evidence on it, that a
Board can negotiate better marine insurance rates than private
shippers can do.
Another practical benefit that Boards can bring their members
is that of negotiating reduced rates of commission on sale in the
United Kingdom or other country of destination. In the general,
horticultural trade in the United Kingdom the standard whole-
saler's commission is about 10 per cent. A Board, able to offer large
quantities of uniform produce, can expect to be granted nearer
5 per cent.
The Boards can also exert a strong influence, and indeed com-
pulsion, in setting up and enforcing standardization in the quality
and grading of fruit, the sizes and types of pack, the use of pallets
and containers, and so on. In the conditions in which fruit is grown
in several of the overseas countries, it lends itself more readily to
standardization than is the case in the United Kingdom, but even
so, the Boards have found it worthwhile to establish very precise
standards. Relatively inferior fruit, e.g. that corresponding to Grade
III in the United Kingdom, is rarely if ever despatched. It would,
weaken the commercial image that the Boards endeavour to create
and would probably not bear the costs of a sea voyage. Standardiza-
tion of size of pack and strength of packing material is of course an
obvious need when a ship has to be loaded economically and a more
or less perishable article exposed to a possible rough journey of
several thousand miles. Even where it is practicable to use the more
advanced handling methods, such as the use of pallets which hold
forty-two cases, or containers (metal bins) which enclose some
hundreds, which are then moved as one unit, the use of these systems
can be completely defeated unless there are several thousands (or
tens of thousands) of cases all ready for the same treatment at the
same time.
A fair amount of use of pallet and container (road container)
systems has developed in recent years in the short-haul trade from
the Continent, but even so, there is a profusion of systems still in
use in this trade that would be profoundly uneconomic if used in
(say) the New Zealand trade.
Standardization offruit for quality is a subject deserving further
26
attention because it is one of the major features of the operations of
most of the Boards. Not only do they eliminate the inferior fruit as
not worth dispatching and as tending to tarnish the Board's reputa-
tion; many of them have seen as one of their main functions the
establishment, by selection and tight quality control, of distinctive
categories offruit, recognizable by the public as characteristic of the
country of origin, and dependable in the sense of being always the
same, and within its season, always available. Thus Outspan, Cape
and Jaffa have become household names; and housewives who ask
for oranges or apples under these names can have a very exact idea
of what they will get.
It follows that if quality control and standardization can be
taken to these lengths, the foundation has been laid for promotional
campaigns which have good chances of success. The article is lifted
out of the category of generic sales promotion (or advertising) and
transferred to that of branded goods promotion: this latter is
invariably easier to organize and produces quicker and bigger
results for a given outlay. One need only contrast the sales promo-
tion techniques that have been applied to, e.g. Outspan oranges,
with those applied to Spanish oranges. Anyone who has seen Out-
span advertised will know exactly to what type and quality of
orange the advertisement relates and where to find it. Spanish
oranges are also advertised, but it is almost impossible for anyone
to have a clear idea of a Spanish orange, except that it comes from
Spain, or have any confidence in being able to find Spanish oranges
in any particular shop.
The Boards are,in our opinion, entirely justified in claiming that
modern methods of advertising and sales promotion are important
for their products, and that they would not be capable ofapplication
unless the Boards were there, not merely to organize these cam-
paigns but make sure that the fruit could always match the claims
being made for it.

Other Advantages
Within the limits of the perishability of the fruit the Boards can
engage in a certain amount of storage. Some storage is in any event
imposed on them while they are awaiting the arrival of ships. But
centralized organizations are better placed than private traders to
store in anticipation of a stronger market, or extend the marketing
season. Private traders are apt to be short of working capital for
storage, and in any case it is the tradition of their kind of business
to achieve maximum speed of throughput, not to act as ware-
housemen.
Similar considerations apply to the choice ofalternative markets,
27
where the alternatives are different countries. We have already seen
that most of the countries that operate Boards are selling in several
simultaneously. Here, too, the choices that arise, and the means of
giving effect to them, are outside the scope of all but the largest
private traders. These are well accustomed to shift produce about
among the several markets of a single country, and what is more
important, to have the knowledge and speed of decision which
enables them to know what to shift, when, how far and to what
extent. To shift between countries is a more formidable undertaking
as it calls for a wider range of contacts, a more comprehensive
network of market intelligence and the ability to operateIn several
languages according to the customs of different countries. The
Boards have set themselves out to meet these conditions, and it is not
uncommon for them to divert cargoes on the water, in consequence
of changes in prices and other market conditions that developed
since the fruit was loaded. •
Allied to the above is the question ofacquiring and disseminating
information on competing supplies, demand, prices, etc., both at the
moment and in prospect, and market by market. Where a Board
exists this is a centralized function, aided by an up-to-date network
oftelephone and telex calls and a battery of modern office machinery.
The corresponding arrangements for securing and passing on
information in ordinary trade may or may not be as effective but
are bound to be more expensive. In the orange trade, for instance,
it may require several hundred calls between England and Spain to
do as much business as one call between England and Israel.
The next practical benefit that can be claimed for the Board
type of organization is its ability to find funds for and to organize
experimental and developmental work. This begins in the growers'
orchards and packhouses and extends into packs, packing materials,
fruit storage, mechanical handling, refrigeration, etc. Most of the
Boards also organize advisory services for the benefit of their
members in the orchards and local packhouses.
Finally, it would be the normal practice of any Board that had
concerned itself with standard packs, to place bulk contracts at
reduced prices for the purchase of packaging material conforming
to its specification.

Wider Objectives of the Boards


Impressive as these practical achievements of the Boards may be, -
they were not the sole, and probably not the principal, motive for
their creation. Others were to raise the bargaining power of producers
on the markets at home or abroad, and shelter them from sharply
fluctuating prices.
28
The literature of economics includes a good deal of material on
the operations, of marketing boards and agreements for cocoa,
coffee, rubber, tin, and other export commodities. Most of this has
been critical. The Boards are generally held to have overreached
themselves or to have accomplished little that private enterprise
could not have done more cheaply. There does not seem to be any
corresponding literature on the Fruit Boards, and although the
present authors do not desire to make a full-scale philosophical
study of the subject, some reflections seem to be called for..
It would seem that the Boards have been able to increase the
bargaining power of their members vis-a-vis three classes of trader—
the shipping lines and other transportation agencies (freight rates
and facilities), marine insurance rates and the wholesale merchants
(commission rates). In all three cases they have been able to bargain
more effectively than individual traders, or even a loose consortium
of them, could have done. But if, as seems likely, one of the original
objectives was to raise the bargaining power of producers against
consumers, or even against middlemen generally, we can see little
evidence ofsuccess. Some ofthese objectives are in principle virtually
unattainable. All imported fruit is a luxury, more or less, and most
fruits are competing against other fruits.- A major shift of bargaining
power could only have occurred if all the relevant fruits, of which-
ever species and from whatever country, could have come under the
same ownership or control, and if the resulting monopoly were
prepared to be ruthless in starving the market until the price was
what it considered right.
At this point we have to ask to what extent this can and does
occur, and no one answer is equally true of all Boards. Common to
virtually all of them, though this is scarcely an example of starving
the market, is a withholding of supplies from export unless the price
realized abroad is appreciably higher than the cost of exporting. In
some circumstances it would even pay to dump the fruit already
grown or sell it at very low prices on the internal market. Some of
the citrus Boards are in a stronger position here than the apple and
pear boards because, if there is a local processing outlet for citrus,
this may be reasonably remunerative, even if less so than the export
of fresh fruit normally is. But these possibilities of withholding or
diverting some fruit from export, which do not extend beyond the
produce of one harvest, and only a small part of that, do not and
cannot amount to a planned and deliberate regulation of supplies
to force up prices appreciably beyond what ordinary market forces
would produce. To do this would run counter to the expansion of
production and export to which the fruit growers and their Govern-
ments are dedicated. Put more briefly, once the fruit has been grown
29
or is in prospect, price is basically determined by supply and demand,
and the parties to a bargain obtain their bargaining positions from
this statistical situation, not from the particular way in which they
are organized, unless the organization is so tight that the supply
itself can be closely regulated, and competing supplies can be
completely excluded.
Some beliefs to the contrary spring from a confusion between
power as such and the economies ofscale. Naturally an organization
operating on a large scale can secure better terms. It can offer more
economical operating procedures to those with whom it deals and
eliminate many of the uncertainties that would otherwise face them.
But most traders would be prepared to offer better terms for these
advantages, whether presented by Boards or anyone else. The
argument that a Board simply as a source of sheer power can secure
better terms from the trade probably has only two elements of truth
in it—first, that a trader may be prepared to cut his profit to the
bone on transactions with a Board (because the loss of them would
damage him too much and because the handling of this business
attracts to him other and more profitable business of other kinds),
and second, that a Board can and may be prepared to dispense with
the marginal fringe of unprofitable sales.
Whatever may be the general arguments in favour of Boards as
a means of securing price stability—i.e. stability as between one
year and the next—they are virtually inapplicable to perishable
commodities. The best that a Board can hope to do—apart from the
minor relief ofeliminating the most unprofitable sales in bad trading
seasons—is to put to reserve some of the receipts of a good year and
distribute them to growers in a lean year.
There remains, however, one funetion of the Boards, which falls
between the practice and policy, and that is the power to allocate
supplies between countries. We have suggested that this is a function
not easy for private traders to undertake. The Boards are entitled to
credit for what they do in their producers' interests in directing
supplies so as to exploit the favourable factors in these alternative
countries as they change from time to time.
In the main, however, our conclusion must be that it is in the
practical sphere that the Boards have accomplished most, and this
is chiefly by obtaining for their constituents the benefits of operating
on a much vaster scale than they could severally command. We
would assum,- and nothing in our investigation has contradicted
this,.that the - Boards operate efficiently within the rules they set
themselves. In: practice they will only operate efficiently if tow
conditions are met, as is usually the case. The first is resistance to
quasi-political pressures from the growers, which might be aimed at -
30
reducing the discretion of the -Board in such matters as minimum
acceptable grade standards for exported fruit. The second is that the
top management in the country of origin must either be fully
conversant with marketing conditions in the countries of destination
or be prepared to give almost unlimited authority to marketing
management who are. The marketing of fruit over thousands of
miles is a case in which remote control can be nearly fatal.

31
CHAPTER IV
THE SELLING PRACTICES OF THE BOARDS
ON THE UNITED KINGDOM MARKET
Description
In their earlier days the Boards tended to follow the established
practice of the larger fruit importers, which was to sell part of their
supplies through commission traders on the public markets and part
at the fruit auctions established at what were then the main fruit
importing ports—London, Liverpool, Manchester, Hull and
Glasgow. This auction system, which depended on the willingness of
wholesalers from various parts of the country to assemble at the
auctions, has been in decline since World War II and is no longer
of much significance. In point of fact the decline has been very
largely a consequence of the Boards' own policies. Having come to
dominate the trade, they then switched their patronage from the
auctions in favour of the development of alternative systems of
distribution of their own.
Appointment of Selling Agents. The main system at present in use
is that of the selection of firms situated in the main public markets
to act as the Boards' selling agents. These agents (or panellists as
they are commonly known) operate on commission. Almost all
conduct a general wholesaling business in the same market in which
they operate as panellists, also doing it on commission. The sales
they effect are to secondary wholesalers (in the same or different
markets) to retailers, institutions and caterers, but as compared with
other kinds of primary wholesaler, the panellists do the main part
of their business with secondary wholesalers.
The Boards emphasize that their general policy is not to sell
direct to large retailers, such as chain stores and supermarkets. This is
certainly true, but the extent ofthe self-denial seems to be a matter of
controversy, or at least uncertainty. Two of the Boards have created
subsidiary companies which look as if they were in fact selling part
of the Board's supplies direct (i.e. not through the panellists). If the
Boards do in fact increase their direct sales they will be behaving no
differently from many home growers and co-operatives, but, as we
have said, at the moment the Boards are putting their main emphasis
on panel selling.
The Boards are in any event likely to be wary in attempting to
meet the stated demands of the supermarkets and chains. These
apparently include the negotiation, before the marketing season
32
starts, of a programme of deliveries for stated quantities by variety,
grade and count, at known prices, in addition, the produce is to be
palletized at source, with a segregation of the different descriptions,
and preferably pre-packed as well. The Boards may well reckon that
if they met these requirements, the supermarkets would be taking
the cream of their supplies, leaving them with much difficulty in
disposing of the remainder, and that they would be shouldering an
undue share of the risks of poor harvests, etc.
It has not been possible to discover what proportions of the sales
made through the panellists physically pass through the markets.
Imported fruit, being well standardized, lends itself to direct con-
signment from port to any place designated by the panellist. But if
the transaction is effected by the panellist it will count as a market
transaction and enter into the formation of the price as if it had
physically passed through the market.
The commissions paid to the panellists vary between 41--- per cent
and 7 per cent, according to the Board concerned. If the panellist
sells to another wholesaler in the market, as is common,the latter will
require a profit too, on his resale to a retailer, or possibly a third
wholesaler. The sum total of these charges is, therefore, likely to
exceed the 10 per cent which is common in non-Board trade.
Number and Location of Panellists. It is remarkable that the
three Citrus Boards, the New Zealand Apple and Pear Board,
and the South African Deciduous Fruit Board, whose combined
market sales must be of the order of L50 millions a year, have
together less than 200 firms on their panel lists. More than two-
thirds of these are situated in the eight main port markets (London,
Liverpool, Hull, Bristol, Southampton, Cardiff, Leith and Glasgow)
and almost exactly one-half of this two-thirds are in London. To
this extent the Boards have not departed so much from the original
pattern of selling at port auctions, since although the method is
different, the venues are much the same.
Three of the Boards have no panellists outside the eight port
markets (named above) and four other primary markets (Man-
chester, Leeds, Newcastle, Birmingham). That is to say they do all
their sales in twelve markets out of a possible of (about) forty. On
the other hand the South African Citrus Board and O.C.A. have
a by no means insignificant number of panellists in the small
(secondary) markets, and even some in places hardly to be con-
sidered as markets. Moreover, O.C.A. although handling in the
United Kingdom less than a third of the volume of fruit imported
by any of the other Boards,* has the largest number of panellists.
* U.K. only. Total O.C.E. sales in Europe exceed those of any Board in
the U.K.
33
If a Board were to sell or be prepared to sell through all the
wholesalers in all the markets, the number capable of handling some
part of their business would be about 1,600. Even in London no
single Board has on its panel as many as 5 per cent of all the whole-
sale firms in the trade, although of course not all of these are
handlers of fruit.
In making their selections the Boards have obviously been
guided by a number of considerations:
(a) too big a selection increases the number of firms with
which the Board has to deal, and as it might argue, probably
wrongly, promote excessive competition and weak selling. On
the other hand too small a number will result in insufficient
coverage of the total market, and perhaps appear to give some
panellists a position of undue strength vis-a-vis the Board;
(b) the location ofthe panellists, granted the number decided
upon, must reflect the main centres of trade, with some pre-
ference given, as it would appear, to locations at or near the
main receiving ports;
(c) preference is given to the larger firms and particularly
those with branches in several primary markets. The firm must
have sufficient warehouse space to be able to hold fruit for
some days; the capacity to receive and handle large lorry and
wagon loads; a reputation within the trade as a whole for sound
and honest dealing and an impeccable financial status;
(d) the panellists must be willing and able to act as the eyes
and ears of the Board in collecting and transmitting market
information.
It will have been seen that the receiving ofone of these franchises
(the average value of which in terms of guaranteed throughput
must be of the order of £250,000 per firm) confers a considerable
advantage on those selected to receive them. What is the quid
pro quo?
(a) As we have seen, the panellists have to trim, and indeed
substantially reduce, their normal rates of commission;
(b) They are put into competition with one another. Not
only do they compete with one another in the ordinary course
of business but in order to hold the franchise have to satisfy the
Board that they are keen and efficient. Panellists who for any
length of time return less than average prices, or a declining
share of the business, will lose their places (contrariwise the staff
of the more successful ones may be given prizes);
(c) The panellists, being agents of Boards which are in some
respects monopolists, have on occasions to be prepared to sink
34
their own commercial judgement. As agents they may find
themselves acting in ways which, if they were importers, they
might regard as unwise. This applies inter alia, to implementing
the price policies of the South African Citrus Board, to which
we refer in more detail below;
(d) So far as we have been able to discover, all panellists
have to go to some trouble to feed back information to the
Boards, on receipts,sales, prices, market conditions and prospects,
etc., which they do either through telex or by telephone. An
ordinary importer or wholesaler is under no obligation to do
these things, though up to a point both those for whom he sells
or from whom he buys, will expect such a service. We should
expect the service demanded by the Boards to be much fuller
and more detailed, regular and speedy. The cost and trouble may
be considerable.
The Allocation of Supplies among Panellists. The existence of these
necessarily entails some system of allocation among them. They are
not of course issued with pro rata shares based on past performance:
this would be too mechanical and would lead rapidly to an
ossification ofthe distributive system. The Boards instead allocate the
supplies among the several panellists in accordance with the market
information available to them, subject to some preference for
maintaining a steady flow to all of them, unless there is some
reason to the contrary.
In so far as this information is sound this would appear at first
sight to be a good system. But one needs to consider the possibility
of errors due to incorrect or out-of-date information. These errors
would express themselves in some panellists obtaining less than they
could easily dispose ofand others finding themselves overloaded with
fruit that has to be sold cheap in order to get rid ofit, or put in store.
There is, regrettably, a fallacy in the common argument that if
centralized decisions by a single body were to result in errors of the
same frequency as those made by independent merchants procuring
supplies when and to the extent that they wanted them, then the
total error would be the same in both cases. This view overlooks the
fact that the errors made by large numbers of persons taking deci-
sions independently of one another tend to a considerable extent to
cancel out.* But large errors by a central body cannot: if there is
any error it will not be neutralized. Naturally the same line of
argument will tell against centralized decisions made in any branch
* This passage refers to errors ofjudgement on the part ofindependent traders
in assessing their particular day-to-day circumstances. The cancelling out theory
is less applicable to misjudgements on the part of traders of overall supply and
demand: it is not unknown for all to be affected by waves of misinformation in the
same way and at the same time.

35
of commerce. But in this case we are considering perishable com-
modities, and a main feature of a perishable commodity is that
errors of supply allocation are virtually irretrievable.
There are, however, some factors on the other side. First, as we
have seen, the risk of error is much diminished if a Board (and this is
true only of some Boards) can regulate allocations on the basis of a
daily feed-back of information from its panellists, and for this
purpose the information must include daily sales. Ifsuch information
is available and put to good use, the errors should be short-lived.
Secondly, the allocation of supplies to panellists must be seen in the
context of being a combined operation along with regulating the
flow of fruit from the ships, so as to maintain steady supplies to
the shops.

South African Citrus


Matters are somewhat different in the case of the South African
Citrus Board, and to a lesser extent the Israeli Citrus Board. It
cannot in these cases be said that their selling systems do not differ
significantly from normal commission selling, because the essence
of that is that prices are discovered in the market, not determined or
controlled in advance. The Israeli Board in seeking this latter aim
goes no further than to issue guide prices to its panellists, but the
South African Board sets minimum prices below which they are
not permitted to sell.
It can be argued, both by economists and by upholders of the
traditional systems of wholesale trading in British horticultural
marketing, that these minimum prices are either redundant or a
mistake. They would be redundant if they did no more than closely
follow the market, and mistaken if they were out of line, since that
would mean that the fruit would move slowly and in some cases
deteriorate. But even if one takes the view that the minimum price
policy is mistaken, it would appear that there is little chance of the
mistakes becoming quantitatively serious. The Board have a con-
tinuous flow of market information reaching them from panellists,
including information on daily sales, so that minimum prices can
be, and commonly are, continuously revised in the light of that.
The number of times during the Outspan season when the general
level of prices is altered is about 12-15, and the number of times
when the price of some particular variety or count is altered can be
about 50. It is also the case that the apparent uniformity of minimum
prices throughout the United Kingdom is in practice mitigated by
setting different prices for different counts: thus ifa particular district
is a big consumer of a particular count of oranges, and oranges are
moving slowly there, the price of that count may be lowered.
36
In any case even if one or more of the minimum prices turned
out to be higher than the market would take, the Board would
demur to the expression "mistake". It sees the chances of tem-
poralily excessive prices and slow sales as a calculated risk it is
prepared to take for the sake of other objectives. In other words the
minimum price system is the product of a conscious selling policy
intended to be in some respects the antithesis of normal commission
selling, and which must be.regarded as a package deal of another
kind.
One effect of it is to discourage speculation since it becomes
more risky to buy fruit for resale later or in a different market if
there is a minimum price which is liable to be reduced before the
produce has been resold. The Board argues that the traditional
function of secondary wholesalers in speculating at their own risk
is redundant and ill-conceived where a large importing Board is
operating: it is the proper function of the Board to bear the risk,
which it can do better and cheaper because its resources of capital
and information are far greater than any collection of speculators
can have.
Secondly, the Board would say that only by exercising some
control over wholesale prices can they effectively control retail
prices. The objective of this latter control is to assist sales promotion
by creating in the consuming public's mind certain associations
between price, cost, variety and quality, but that the retail trade
could not be expected to respond to influence or pressure from the
Board if the prices they paid at wholesale fluctuated too rapidly
and varied from one market to another.
These specific effects and objects of the minimum price system
may appear to some readers to be comparatively unimportant either
for good or ill. It is, however, difficult to dojustice simply by quoting
specific examples to the general concept of centralized control as
visualized by the South African Citrus Board. The Board has had
to make use of the traditional wholesaling system because none
other exists. But it is basically a system which grew up for the purpose
of handling and forming the price for vegetables and other highly
perishable produce: it has therefore the well-known features of
great flexibility and opportunism of outlook, and it is organized
mostly in small units, many of which are family firms. Oranges and
grapefruit, however, and to some extent other citrus and other fruit,
have many of the characteristics associated with manufactured
foods. They are not highly perishable, and an almost complete
uniformity can be obtained without great expense. They can be
branded and endowed with an image, and thus lend themselves to
mass promotion campaigns. Above all, the fruit we are mainly
37
concerned with here, the South African orange and grapefruit,
arrives in England in large shiploads, in the hands of a large
organization, and faces no great degree of competition within its
own season. It is therefore no matter for surprise that a Board
trading in such a situation tends to regard the traditional wholesale
market as well organized to handle cabbages and such like, coming
in day by day from a variety of sources; and in a profusion of
sizes and grades, but as obsolescent for the handling of their product.
The Board would argue that starting with complete control of the
product up to the point of unloading the ship—a control which,
moreover, is supported by complete knowledge both of present and
prospective supplies and of current trading opportunities—it would
be sacrificing a position of strength if its produce were to be passively
placed on the market to sell just for what it would fetch.
Whatever may be the strength of these arguments, it is evident
that they cannot appeal to many of the wholesalers, since implicitly
their function and even existence are brought into question.
Although the South African Citrus Board has no shortage of
would-be panellists, since Outspan fruit is too important for them
to be without it, they do not care for the position of being agents
and almost servants of the Board, deprived of the exercise of their
own commercial judgement. Many of them claim that in their own
local circumstances their judgement will be superior to the Board's,
and perhaps in those particular circumstances—that is to say, their
assessment of the needs of their own particular customers—that
claim could be justified. But even if it were not, loss of status and
loss of discretion would rankle. It has, therefore, to be reported as a
fact that the South African Citrus Board is a target for criticisms
from large sectors of the wholesale trade, who accept neither its
philosophy nor its methods. And equally the Board is entitled to
reply that it has its own objectives, and is to be judged by its
success in achieving these, not by its popularity.

38
CHAPTER V
SUMMARY AND CONCLUSIONS
This Report has examined the organization of the fresh fruit
import trade into the United Kingdom in the light of several
distinguishing factors.
It has been noticed, for instance, that the fruit import trade has
been rather static. This is of course largely an outcome of the
absence of any strong upward trend in fresh fruit consumption.
In the cases of apples, pears and bananas the relative stagnation
can be explained by the fairly high price policy we maintain in the
United Kingdom, in the case of apples and pears in the interests of
the home producer, and in the case of bananas, in the interests of
Jamaica and the Windward Islands. There is a clear contrast here
with Germany in which consumption—and imports—of these fruits
has forged ahead on the basis of cheap imports. But the more
general explanation, applying to fruits as a whole, is that Germany
and the other Continental countries have experienced more rapid
rates of economic growth than we have, and this is reflected in their
fruit consumption.
We have considered the possibility, though without being able
to reach a clear conclusion on it, that the particular structure of the
import trades in the United Kingdom may have contributed to our
poorer showing. The Boards which dominate the United Kingdom
trade have clearly put less money into advertising and promotional
expenditure than have business concerns of equal size selling con-
fectionery, soft drinks, etc. But there are few instances in which
generic promotions—on behalf of a commodity as a whole—are as
large or successful as those devoted to selling a particular branded
article; and, moreover, in the absence of the Boards, total sales
promotion of fresh fruit in the United Kingdom would probably
be even lower than it is today. Probably the only point at which
the Board structure can be said to have contributed to the rather
static picture of the United Kingdom fruit market is that nearly
all large-scale organizations of an administrative type are more
successful in allocating supplies than in active selling, and are likely
to regard surpluses as a nuisance rather than an opportunity.
However, the net effect of the Boards' operations is likely to have
been beneficial to the consumer in the United Kingdom because of
the economies they have brought about in organizing and dispatch-
ing the fruit from the several countries of origin.
39
4
The United Kingdom remains a major market for imported
fruit, and in Europe is second only to Germany. The staple lines are
apples, pears, citrus fruit and bananas, of which all but the last
reach us from a variety of countries, in both the Northern and
Southern Hemispheres. Our banana imports come almost exclusively
at present from Jamaica and the Windward Islands; oranges sub-
stantially from South Africa, Spain, Israel and Morocco; apples and
pears mainly from South Africa, Australia, New Zealand, France
and Italy. These sources of supply have undergone a good deal of
change through the decline of the United States and Canada, and
the increased prominence of France, Italy and some of the Mediter-
ranean countries. Except in the case of bananas, the United
Kingdom is far from being the sole outlet for any of these countries;
all have important outlets on the Continent of Europe or elsewhere,
as well as their internal trade, but it remains the case that the
United Kingdom is an outlet which South Africa, New Zealand,
Israel, and, to a lesser extent, Australia could ill afford to lose.
For each of the commodities we have particularly singled out
much of the trade is in the hands of a monopoly Board, or a small
group of large firms. The proportions of imports so handled are:
bananas 96 per cent, citrus 66 per cent, apples and pears 33 per cent
(excluding Australia). The Boards were created and are run by the
exporting countries, and the three banana firms who between them
do virtually all the trade, are either subsidiaries of foreign firms or
organizations, or have substantial overseas connections. Of the
important countries and commodities not organized in that pattern,
the most conspicuous case is that of Spanish citrus, which has
mostly remained in the hands of small-scale private trade.
The dominance of organized overseas interests cannot be
regarded as particularly welcome, but is natural enough. Granted
that large-scale organization in this trade has some particular merits,
it would not have arisen except on the initiative of the exporting
countries. The United Kingdom end of the trade is handled by a
multiplicity of firms who find difficulty in co-operating in even
small matters and are only achieving some measure ofconcentration
by the process of mergers and take-overs. In any case no one in the
United Kingdom has had the same motivation to seek the advan-
tages of large-scale organization, as compared with those producers
abroad, separated from their main markets by some thousands of
miles, and faced with a sea voyage which in itself must be organized
as a large-scale operation to be economic. It is no doubt the absence
of this factor of a long sea voyage which goes far to explain why the
Anglo-Spanish trade remainsin the province ofsmall-scale enterprise.
Most of the Boards were born during years of depression before
40
the war, when prices to producers were unsatisfactory and it was
thought that producer-controlled Boards could exert substantial
countervailing power so as to jack up the prices received. But in the
main these hopes were probably unrealizable at the time and have
remained unrealized. In the fruit world little can be done by the
exercise of power unless that is backed up by a restriction ofsupplies.
It is, however, still the aim of the Boards to market as much fruit
as the United Kingdom will absorb at reasonable prices, with the
emphasis put on the quantities as well as the prices. In these
circumstances the Boards must find their main justification, and
plenty is to be found, in the practical services they can give their
members, by organizing exportation for them more efficiently than
they can do severally, and promoting the sales of their fruit as well
recognized names.
There may, however, be one substantial exception to what has
been said about the illusion of countervailing power. The relations
between the shipping companies and the Fruit Boards are not
public knowledge, but we must regard as a real possibility that the
shipping companies may have been induced—and even pressurized
—to provide better, more frequent and more regular services than
even the offer of guaranteed large cargoes would have tempted
them to agree to. In addition, the reductions that private merchants
in the United Kingdom have made in their commission charges,
and the parallel successes of the Boards in negotiating for the bulk
purchase of packing material and marine insurance, have been
useful economies, even if they have not gone much beyond the
reductions which larger scale of operation would have in any case
have justified.
Although most of our study of the trade in fruit in the United
Kingdom, after it has been landed, has been in terms of fruit
imported by Boards, it will be as well to summarize first the state of
affairs in the banana trade, which is handled by three companies.
In this case the degree ofintegration of all stages of marketing,from
plantation or smallholding in the Caribbean to shop counter in
England, is even greater than in the case of oranges, apples, etc.
Owing to technical features of this commodity it is kept in the same
hands through the various stages ofassembly,inspection,loading,sea
transport, receipt, internal transport, ripening, and wholesaling.
So much so that distribution right down to retail level in this
country tends to be virtually a forwards extension of the production
stage, itself carried out thousands of miles away.
Even more intriguing is the way in which these three banana
firms have extended and diversified into the ownership of many
general wholesaling businesses in the horticultural trade, not
41
necessarily connected with bananas. Even their commercial rivals
would concede that much of the initiative and enterprise in the
sphere of horticultural trade of all kinds in the United Kingdom has
stemmed from these three firms.
The arrangements the Boards make for disposing of their
produce on the United Kingdom market are no doubt the chief
interest of the British readers of this Study. By and large they can
be regarded as having been superimposed on existing selling
methods and not as having transformed these. Had the Boards
decided to auction most of their fruit, this would have prolonged the
life of the fruit auctions, but the major decision of the Boards so far
has been to abstain from direct selling, e.g. to large retailers (or
even to most of the secondary wholesalers). This remark is not true
of bananas, since a substantial proportion of this commodity under-
goes distribution in the hands of the importers, and small quantities
of some other .fruits are directly distributed; but he main bulk of
the citrus, apples, pears, etc., is sold through the markets by whole-
salers acting as commission agents.
In the cases of imported oranges, apples, etc., there is probably
not a strong commercial case for direct sale. For many other kinds
of horticultural produce the large retailers have decided to by-pass
the wholesale markets largely because these cannot provide them
with sufficiently large quantities of uniform produce. This difficulty
should not,however, apply to the well-standardized lines ofimported
fruit which arrive by the shipload. Nevertheless it is worth reflecting
that if the Boards were to change their minds on this matter, the
wholesale trade would be forced to undergo a further and serious
contraction, and that some of the expensive facilities provided at
new markets would become redundant.
Some of the Boards have to their credit successful promotional
campaigns and the creation of brand images for their fruit—without,
however, having been conspicuously successful in raising demand for
fruit as a whole. Much could be said, at the risk of going far beyond
the terms of reference of this Report, on the extent to which prices
and volume of consumption offruit are determined fairly exactly by
the statistical position of supply and demand, or respond to sales-
manship and other aspects of merchandizing. There is, however, one
extension of the merchandizing concept to which we are bound to
refer, and that is movement control and allocation of supplies.
• Whatever may be the statistical position in the United Kingdom
market as a whole,- what makes the price in any particular town is
the amount offruit; together with its qualities, grades, etc., available
in that town in particular shops on particular days. There is there-
fore considerable scope for enlightened merchandizing in the sense
42
of controlling supplies so as to make the best, not of the United
Kingdom market as a whole, which is a rather meaningless concept
anyway, but the best of the market in Leeds, Cheltenham or any-
where else for apples or oranges of a particular variety, grade and
count, in the kinds of shops most patronized by consumers, on the
days of the week on which they are most likely to buy fruit.
Some of the Boards have very deliberate policies towards these
objectives. Their first unit ofsupply is the ship arriving at a particular
port, and that is a large indivisible unit. For instance, one shipload
of Outspan oranges arriving at Southampton would be enough to
satisfy not far short of the whole United Kingdom demand for a
week. Bulk has to be broken and dispatch organized to a variety of
particular outlets over a period. The fruit can if necessary be held
some days in quayside warehouses, or if need be, moved out rapidly
by overtime working. And of course it is a regular part of merchan-
dizing in the sense in which we are considering it that the fruit can
also be moved to a variety of alternative destinations in almost
infinitely flexible proportions.
It is not easy to speculate how these matters would turn out if
the import trade were totally lacking in organization. If it were
being handled in many small ships frequently arriving at many
small ports, probably the uncoordinated efforts of many traders
would produce an acceptable result. None would have any decisions
to make which he could not adequately match with his resources.
But large and infrequent arrivals do seem to us to present problems
of dispatch and allocation which it is reasonable to suppose are best
suited to large-scale centralized control.
We have already alluded to one particular aspect of merchan-
dizing, which is the allocation of supplies among alternative
countries. This is a major preoccupation of several of the Boards
and in our view only the Board type of organization could
accomplish it.
At the present time all the Boards operate through selected
wholesalers, known as panellists, who sell for them on commission.
As this is substantially the same system as applies to the bulk ofhome-
produced horticultural produce, and other lines of imported, one
can say,in general, that the existing system has been left undisturbed.
Nevertheless there are some important aspects in which the panel
system does differ from normal commission trading in the markets.
In the first place the panellists are remarkably few in number
for the amount of trade they do. Indeed the larger Boards seem to
prefer the smaller numbers. In so far as this smallness of numbers
reflects the Boards' desire for rigorous selectivity among wholesalers
according to the amount of business they can conduct efficiently,
43
their financial standing, etc., this may be a sound commercial
judgement. We would feel less acquiescent, however, over any
restriction on panel appointments motivated by a desire to restrict
competition. Most panellists do not have sufficient retail customers
of their own to buy all the produce they handle but re-sell to other
wholesalers. The result in double profit puts up the cost of distribu-
tion beyond what it would be if the Boards used larger panels with a
view to reaching more retailers in a first-stage transaction. On the
other hand, the excess is not very large, perhaps only 1 or 2 per cent
of the wholesale price.
Whatever the number of panellists may be, the existence of a
panel forces the Board into some system of deciding what quantities
of fruit will be consigned to them, from whatever ship has arrived.
The Boards make these decisions on the basis of a system of market
intelligence, largely fed back to them by their panellists. If this
information reaches them at very short intervals, say twenty-four
hours, and is fully comprehensive, probably the allocations will be
made as efficiently, in the sense of responding to market needs, as
could happen under any system—for instance, by each commission
trader seeking out whatever supplies he reckoned to be able to sell.
But some Boards operate less than complete systems of market
intelligence, so that they are liable to make mistakes of a kind which,
if there were hundreds of decision-making points in the trade, would
be likely to be self-cancelling. Moreover, any errors ofjudgement in
dealing with perishable commodities can be serious.
Naturally we must accept that once a Board exists, which
monopolises importation, then sale through some sort of panel
system becomes inevitable. Even if a Board were to sell through any
reasonably well-qualified wholesaler there would still be a sort of
panel, even if it were not called that, because there are plenty of
so-called wholesalers whose qualifications any prudent Board would
reject. Nevertheless we feel that the number of panellists serving
several of the Boards is too small to achieve adequate coverage and
penetration of the market, and that the conferring of very large
franchises on an unnecessarily small number of panellists is in
principle undesirable.
It may appear at first sight as if there is some contradiction
between praising the highly. centralized operations of most of the
Boards before the fruit arrives in the United Kingdom and recom-
mending more decentralization of selling methods within this
country. The distinction arises from the fact that operations in the
first group are basically materials handling operations, highly
susceptible to the economies of scale, while the latter are essentially
commercial, calling for flexibility and even opportunism. And for
44
these same reasons the United Kingdom marketing managers need
the maximum of delegated authority from their home managements.
Although for the purposes of this study much space has been
allocated to the selling operations of the Boards, we must repeat
that we find their main justification and success in the many
functions the South African, New Zealand, Israeli and Moroccan
Boards perform before the fruit is put on sale in the United Kingdom.
These are valuable in their own right, having both reduced the cost
and raised the quality of the fruit arriving here. They are also
essential preliminaries to the merchandizing policies that have
made the produce of these Boards into household names.

45
APPENDIX A
Imports ofFruit and Fruit Products into the United Kingdom
(thousand tons)

Annual Averages 1934-1938 1948-1952 1953-1957 1958-1962 1963-1966


Fruit (Raw)
-kinds grown in U.K.
Apples .. .. 313.1 1294 161-8 207.7 239.6
Pears .. .. 59.0 75.2 58.0 64.1 63.8
Plums .. .. 14.6 10.6 6.2 7.8 9.6
Cherries .• .. 0-6 6.1 1.3 2.0 1.8
Strawberries •• 1.0 2-0 0.6 0.7 0.5
Currants .. •• 0.8 04 ••• •••

Gooseberries •• 0•6 1.3 0.-1 ••• •••

Total .. 389.7 225.0 228.0 282.3 315.2


Fruit (Other Raw)
Apricots .. .. 3.4 4.8 7•7 4.9 3.7
Bananas .. .. 299.6 154-0 297-0 343.8 360-5
. Bilberries .• •• - 3.0 2.1 2-2 1.6
Grapes .. .. 43.0 42-5 39.6 50-6 59-1
Grapefruit .. .. 60.0 46.5 49.4 54.2 68.9
Lemons,Limes, etc. 60-8 32.5 29-9 34.3 33-5
Melons .. . 2-0 5-7 11-2 25.5 39.2
Oranges .. 534-7 367.5 375.2 396.5 399.0
Peaches and
Nectarines .. 4.8 14.9 10.1 14.7 23-5
Pineapples .. 2.5 24 3.9 4.0 2-8
Other sorts 17-2 3.9 3-9 4.4 5.4
Total .. 1028.0 677.7 830.0 935.1 997.2
Total All Raw Fruits 1417.7 902.7 1058.0 1217.4 13124
Fruit (Dried)
Dates •• .. 17.7 33.9 11.1 15.2 13.5
Currants .. .. 54.7 37-9 50.8 48-9 46-9
Figs and Fig Cake.. 5.8 8-0 3.2 4-1 3.8
Plums,Prunes,etc... 20-3 9.5 10-3 11-8 9.5
Raisins and Sultanas 69.5 62.0 75.6 66-1 66.5
Apricots .. .. - 0.8 1.8 1.7 1.1
Apples, Pears,
Peaches, etc. .. 2.2 0.6 0.8 1.2 0-9
Other Sorts .. 0.6 4.0 2.3 0.8 0.5
Total Dried Fruits .. 170.8 156.7 155.9 149.8 142-7
Fruit canned or bottled
in syrup
Apricots •• •• 12.4 3-3 23.9 19.8 18.7
Peaches •• .• 404 13.9 49.2 89.7 101.1
Pears •• •• 40.7 11.5 34.6 55.4 64.1
46
Pineapples .. .. 47.6 6.2 51.0 63-0 56-7
Oranges .. .. 8.5 3-7 20.8 31.1 22.5
Fruit Salad.. .. 11.7 0-7 3•7 17-1 28-2
Grapefruit .. .. 7.0 0.9 8.4 16.2 23-3
Other Sorts .. 16.9 21-6 8.3 19-0 26.4
Total Fruit Canned or
bottled in syrup .. 185.2 61-8 1999. 311.3 341.0
Fruit and Fruit Pulp,
preserved without
sugar .. •• 45.7 23.5 34.1 39-7 56-9
Total Imports of Fruit
and Fruit Products .. 1819.4 1144'7 1447.9 1718-2 1853.0
Fruit Juices (million Imperial gallons)
Orange/Grapefruit 1.1 4.3 5-0 6.9 9.0
Lime/Lemon •• 1.2 1-9 2-3 3-8 3-4
Grape .. •• 1.1 1-1 0-8 1-1 1.4
Other kinds •• (a) 1-4 2.6 2-4 2.9
Total Fruit Juices 3.4 8.7 10.7 14-2 16.7
(a) Included with Orange/Grapefruit in this period
... indicates a negligible figure. -indicates not available

47
APPENDIX B
(i) Fruit Import Boards—
Location and Numbers ofPanel Salesmen—Summary

cl g
br) pq
0 4
)4

ca,pq
ra,
0,—.
•,-. 4:: < tv
a
..-. cu
a) cs a0s., "Ci'
:
a
4 -',
---, 0 LI
• w.%1 d

`4,spiz4
C(3
8c5 74 scl
4.) Z
,11
N 0 c-4 74 -5
t4- g "Pd
0 CL) '
,874
C. V 48.4
C 0 0 O EnA Za4 Z E-1

Port Markets .. .. 35 47 53 54 15 134 1054


Inland Primary Markets 9 7 15 11 1 31 355
Inland Secondary Markets 5 — 9 — — 14 252
Other Places .. .. 16 — 1 — — 16 —

, Total •• . 65 54 78 65 16 195 1661

(ii) Fruit Import Boards—


Location and Numbers ofPanel Salesmen

Port Markets
London .. .. 11 14 30 32 9 68 750
Liverpool •• •. 7 9 7 5 2 23 94
Hull .. •• .. 2 4 4 — — 7 44
Bristol .. •• .• 3 4 2 4 1 6 43
Southampton • • .. 3 6 4 8 1 11 20
Cardiff.. .. .. 5 6 3 2 1 8 31
Leith (and Edinburgh) 1 — 1 — 1 2 23
Glasgow •• •• 3 4 2 3 — 9 49
Total •• 35 47 53 54 15 134 1054

48
(iii) Fruit Import Boards—
Location and Numbers ofPanel Salesmen

7./.
8
ill
u c8
ra,g1
.... sa. .
<a ar) ....,
E
;-_-4,
cu $-. 0
g4 a
4:14 '
t 74 sc-4 d E 6.12.
0....... -. 0 N
0< t:E.
o cu
i:D cn A Z4

Inland Primary Markets


Manchester (a) 1 2 4 3 — 9 180
Leeds .. •• 3 — 2 2 — 5 35
Newcastle .. 3 4 3 3 — 9 31
Birmingham .. 1 1 4 3 1_ 5 63
Sheffield •. .. 1 — 2 — — 3 46
Total 9 7 15 11 1 31 355

(a) Although a port, Manchester has not been a major port for fruit imports in
recent years.

(iv) Fruit Import Boards—


Location and Numbers ofPanel Salesmen in the U.K.
"Ci o?Is
s.
al
o
to 1:4 Cl.p4
4... 0.
.5 .... 4
z .......
O.)
4)
cri a0
$.4 < r
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u s. s. GA t.) a a.) iii 1-4 0 fa
7.4 '
11 0 vs •-Nd a al
t)
Or' 4. 74 $,43 ci3 •
o74
''''
o U.
0 1
,....., <g ;:14
N)
2< 0 mu 173 4 —0
6
'
a
um°
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o0
O g es .
rn A
t,c.,41
Z rs,
.6 v
Z.54
..-..
E2

Inland Secondary Markets


Nottingham .. . 1 — — — — 1 29
Leicester •• .. — — 1 — — 1 10
Coventry •• .. — — 1 _ _ 1 20
Wolverhampton .. — 1 _ _ 1 11
Bradford •• .. 2 — 2 — — 3 40
Brighton •• •• 0 28
Barnsley .. — — 1 — — 1 3
Bolton .. •• .. — — 1 _ _ 1 17
Preston.. .. •• 0 13
Middlesbrough .. — — 2 — — 2 8
Swansea •• •• 0 12
Portsmouth • • •. 1 _ _ _ _ 1 12
Plymouth .. .. 1 _ _ _ _ 1 8
Total •• •• 5 9 13 211

49
ItVICTA PRES

HEADLEY BROTHERS LTD


zoo Kingsway London WC2
and Ashford Kent

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