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Group Title: Circular
Title: Costs and returns from sugarcane in South Florida
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 Material Information
Title: Costs and returns from sugarcane in South Florida
Series Title: Circular
Physical Description: 31 p. : ill. ; 23 cm.
Language: English
Creator: Walker, Charles
Florida Cooperative Extension Service
Publisher: Florida Cooperative Extension Service
Place of Publication: Gainesville Fla
Publication Date: 1972
 Subjects
Subject: Sugarcane industry -- Florida   ( lcsh )
Sugarcane industry -- Costs -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Includes bibliographical references (p. 31).
Statement of Responsibility: Charles Walker.
General Note: Cover title.
General Note: "June 1972."
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Bibliographic ID: UF00014566
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
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ltuf - ALQ1278
oclc - 20516586
alephbibnum - 002298023
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Full Text
Circular 374


Costs and Returns from
SUGARCANE
in South Florida


Florida Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville


June 1972









TABLE OF CONTENTS Page
FOREWORD .................. .......... 3
INTRODUCTION .................. ..........4
What Are Decision-Making Tools? ................... 4
Why Are Decision-Making Tools Needed? . . . . . . . .. 4

OBJECTIVES . . . ... . . . ..............5
ASSUMPTIONS IN THE ANALYSIS .................. .5
Management ........................... .... 5
Farm Size and Other Characteristics . . . . . . . . ... 5
Equipment .. ... .. ... . .. . . . . . . . 7
Production Level ................ . ...7
Interest Rate and Capital Usage . . . . . . . . . . 8
Revenues .... .. .. .. .. .... .. .. . . ... ... 8

GENERATION OF DATA ............. ........ 8
Sources of Data .................. ....... .... 8
Estimating Quantities for Each Operation . . . . . . . .. 9
Equipment Requirements . . . ... ... . . . . 15
Fixed Costs . . . . . . . . . . . . . . . 15
Variable Costs .. ............... .. ........16
Revenue and Costs ......... . . . ......... . 16
Revenue .... .. ......... ............. 16
Costs . . . . . . . .... . . . . . . . 17

SUMMARY ........ . . . ... ......... 30

LITERATURE CITED ......... .............. 31
LIST OF TABLES
Table Page
1. Land use distribution on simulated 640-acre sugarcane
farm in south Florida, 1971 . . . . . . . . . . 7

2. Prices of selected materials used in sugarcane production
in south Florida, 1971 ......... ............... 9

3. Operations performed and estimated annual equipment
and labor requirements for sugarcane production in
south Florida, 1971 ......................... 10

4. Description and estimated costs of equipment utilized in
sugarcane production in south Florida, 1971 . . . . . .. 13

5. Estimated costs and returns for a 640-acre sugarcane
operation in south Florida, 1971 . . . . . . . . . .18

6. Summary of costs and returns for a 640-acre sugarcane
operation in south Florida, 1971 . . . . . . . ... .27

LIST OF FIGURES
Figure

1. Arrangement of ditches on simulated 640-acre sugarcane
farm in south Florida, 1971 ..................... 6
















FOREWORD


Much of the credit for the completion of this
analysis must go to the sugarcane growers, the
suppliers of inputs utilized in sugarcane produc-
tion, and other individuals who have knowledge
and are interested in sugarcane production in
south Florida. A more cooperative and cordial
group would be difficult to find.
Moreover, staff members of the Agricultural
Research and Education Center, Belle Glade, local
Extension personnel, and others with technical
knowledge of sugarcane production contributed
significantly to this analysis. Very special con-
sideration must go to Charles E. Freeman, Exten-
sion Sugarcane Specialist, not only for his helpful
comments and suggestions, but also for his fore-
sight in collecting and compiling a series of very
meaningful statistics that enhanced the comple-
tion of this endeavor.
The writer assumes responsibility for the pos-
sibility of errors.


3










Costs And Returns From Sugarcane In South Florida
Charles Walker'


INTRODUCTION
In sugarcane production, as in any other business, a manager
needs a set of decision-making tools. These decision-making tools
can be just as useful in increasing the effectiveness and efficiency of a
business operation as can the tools (wrenches, screwdrivers, etc.) of
a machine repairman.
What Are Decision-Making Tools?
Decision-making tools are inputs to a rational decision-making
process. They may take many different forms.
For example, placing a hand on a red-hot poker may be an irra-
tional (not well reasoned) decision. Rapidly drawing it away from the
red-hot poker may be an example of a rational (well-reasoned) deci-
sion. But what is the problem here? It seems the rational decision
making was too late. The damage was already done as a result of
the irrational decision. The hand should have been drawn away at
the sight of the red-hot poker.
Moreover, the preceding statement leads directly to the answer of
the question being asked what are decision-making tools? A
decision-making tool is a tool that tells one a red-hot poker is hot. It
tells whether a person should or should not take a specific action.
That is, one needs a signal, or an instruction, or a something-or-
other to help decide when and when not to place his hand on a poker.
Along the same lines, an exit sign in a large building is an ex-
ample of a decision-making tool. It helps a person get out of the build-
ing successfully. Traffic signs along a highway are decision-making
tools. They can be used in deciding upon alternative, or the best,
courses of action.
Why Are Decision-Making Tools Needed?
The answer to this question can be inferred from the preceding
discussion. Sugarcane producers, like other businessmen, want to
operate successfully (profitably). They want to make the best pos-
sible decisions decisions that will enable them to operate profitably.
They want the best solutions to complex operating problems. In
short, they want to reduce the risk inherent in a business operation.
Reducing such risks can be complemented through the use of well
thought out, systematically derived decision-making tools.
'Charles Walker is an assistant professor in the Food and Resource Econom-
ics Department at the University of Florida. An area economist with the Co-
operative Extension Service, he is currently stationed at the Agricultural Re-
search and Education Center at Belle Glade, Fla.









OBJECTIVES
The preceding discussion leads to the objective of this publica-
tion. It is an attempt at deriving a comprehensive set of decision-
making tools a decision-making model for use in sugarcane
production in South Florida. As mentioned earlier, decision-making
tools may take many different forms. In this particular model, the
emphasis is on numerical symbols (figures) the quantities of
physical inputs inherent in sugarcane production.
Moreover, while every attempt was made to have the values
contained in the analysis reflect reasonable estimates of costs and
returns, it is the writer's desire that the model be more useful as a
framework for rational decision-making.
In addition, the analysis is of such a format that almost any
anticipated alternative and its resulting impact on costs and revenues
can be easily evaluated. It can be of significant help in budgeting
resources for a production period. It can also be an invaluable aid to
growers attempting to secure working capital or long-term capital.
Another feature of this analysis is that it can be used as a guide
to sugarcane production in that all of the major operations and the
individual tasks comprising them are presented later1 in the order in
which they are most likely to occur.
Furthermore, it was the intent of the author to develop an
analysis useful to a broad spectrum of people with interests in sugar-
cane. In addition to growers, it is hoped that those doing research
in sugarcane may find it useful as well as Extension personnel, finan-
cial institutions, prospective producers, and public agencies.
ASSUMPTIONS IN THE ANALYSIS
There is no one figure, or estimate, of the cost of producing
sugarcane in south Florida. Production levels and costs vary signifi-
cantly due to differences in soils, climate, size of farm, and manage-
ment.
Therefore, certain assumptions must be made with respect to
systems of production and levels of output.
Management
For this analysis advanced management is assumed a manage-
ment that is innovative, receptive to adapting recommendations by
specialists in the area of sugarcane production, and which readily ac-
cepts practices followed by other good operators in the area.
It is also assumed that the manager is an owner-operator who
employs two fulltime laborers.
Farm Size and Other Characteristics
In order that an appropriate machinery complement can be chosen,
'See Table 3.









a farm size and its characteristics must be assumed. For the pur-
pose of this analysis it is assumed that the farm producing sugarcane
is 640 acres (one square mile) in size. Ditches are arranged as de-
picted in the figure.








c -- seepage ditch




b -_ major canal
b Owl-, "




a pump ditch




Arrangement of ditches on simulated 640-acre sugarcane farm in south
Florida, 1971.

The farm analyzed in this report is assumed to have 12 miles of
ditches. For the purpose of estimating ditch cleaning costs, it is
further assumed that only 50 percent of ditches a, b, and c are as-
signed to the section described. Therefore, a total of 10.5 miles of
ditches is assigned the above described section. Moreover, assuming
that 25 percent of ditches are cleaned each year, ditch cleaning ex-
penses will be based on (.25) x (10.5 miles), or 2.625 miles.
The inventory of land use shows 149 acres lying fallow (136 for
plant cane and 13 for seed cane), 149 acres under plant cane (136
which will be harvested for the mill and 13 which will be cut as plant
cane), and 272 acres in first and second stubble (Table 1). Thus,
sugarcane from 408 acres (3 x 136) will be harvested and delivered
to the mill. These assumptions of land use imply a four-year cycle
for sugarcane production.
Although the cropping system presented is static in nature, it is
realized that sugarcane production is a dynamic operation. In a real
life situation the proportion of acreage lying fallow, under plant cane,


6









under stubble cane, etc., varies according to the particular needs and
desires of an individual grower as he adjusts his acreage in keeping
with allowable quotas and other production constraints.
For the purpose of this analysis the operation under consideration
is assumed to be a going concern. Thus, land development costs and
the time value of money incurred in such development are not treated
here. However, such costs will be reflected in the market value of
the land.2
Table 1.-Land use distribution on simulated 640-acre sugarcane farm in south
Florida, 1971.
Land use Acres Distribution
No. Percent
Land in roads, ditches and canals 70 11.00
Land lying fallow for seed cane 13 2.00
Land lying fallow for plant cane 136 21.25
Land under plant cane to be used for seed 13 2.00
Land under plant cane 136 21.25
Land under first stubble cane 136 21.25
Land under second stubble cane 136 21.25
Total 640 100.00

Equipment
The machinery requirements assumed in this analysis were chosen
not only on the basis of their ability to get the job done in a realistic
time span, but also to reflect to a large degree the type of equipment
found on the sugarcane farms in south Florida.
Moreover, to enhance efficiency, it was assumed that all harvesting
equipment was owned by a six member growers' cooperative with
each member assumed to be identical in farm size (640 acres). This
assumption allows such equipment to be utilized much more fully,
thus resulting in decreased cost per unit. For example, the number
of hours a particular piece of equipment is used is six times greater
than if only one individual grower owns it. Therefore, the fixed cost
per hour is one-sixth the cost of what it would have been for indi-
vidual ownership.

Production Level
The rate of sugarcane production assumed for the purpose of this
analysis is based on production statistics for the 1968-69 production
processing year. The rate, while above the average, is not considered
to be unrealistic and may serve as a goal for individual growers with
production figures below this.
The rate assumed was derived through plotting a frequency dis-
tribution, utilizing 1968-69 grower statistics, of production levels.
The weighted average production level (34.7 tons per acre), as well
as the dispersion about the weighted average, was computed. Then
2See Tables 5 and 6.








the probability of a 40-ton per acre production rate was calculated
to be .31.
Interest Rate and Capital Usage
The interest rate on capital used throughout this analysis was
assumed to be 8 percent. In each case where interest was applied to
capital, it was assumed that the capital was used at a constant rate
over a period of one year. Thus, if $100 of capital is used at a
constant rate over a full year, the average investment in capital is
$50. Applying an interest rate of 8 percent to this amount (.08 x $50)
yields an annual interest rate charge of $4.
Revenues
Revenues were calculated on the basis of the grower being an in-
dependent producer selling to an independent processor who pro-
duces sugarcane or else that the sugarcane produced was purchased
by a cooperative processor from a nonmember [5, p. 3]. It was also
assumed that all sugarcane was produced within 14.9 miles of the
processing mill, thus eliminating any transportation costs to the
growers [5, p. 2-3]. Payments for hundredweights of sugar produced
are described in The United States Sugar Program [6, p. 67].
These assumptions about returns to growers do not reflect any
gain or loss in revenue that may accrue to a grower who is a member
of a processing cooperative. Such a grower member is also a part
owner he has invested in plant and equipment of the coopera-
tive and, in essence, is a sugarcane processor as well as a producer.
Therefore, the revenue he receives depends on the performance not
only of his sugarcane production, but also of the processing coopera-
tive.
Since this analysis is concerned with costs and returns for sugar-
cane production, the assumptions stated were made and followed.

GENERATION OF DATA
Sources of Data
Generally speaking, the numerical quantities presented in the
tables included in this report represent estimates received from in-
dividuals with knowledge of sugarcane production. For example, in-
formation related to kinds and sizes of equipment requirements,
different operations, and the rates of equipment usage and labor per
acre was obtained from growers.3
Moreover, the costs of materials and equipment (Table 2) reflect
values charged by suppliers in the area. However, the prices pre-
sented generally reflect suggested retail prices and are not necessarily
indicative of those a particular grower might pay. For example, the
larger quantity an individual purchases, the more likely he is able to
-See Table 3.









Table 2.-Prices of selected materials used in sugarcane production in south
Florida.
Item Description Unit Price
Dollars
Fertilizerb
0-6-45 With 0.7% CuO, 1.5% MnO, ton 64.87
0.7% ZnO, & 0.7% B2Os
0-6-45 ton 50.00
0-0-50 ton 48.00
0-0-20 ton 29.00
ton 32.00
Nitrogen (N) lb. .0675
Copper oxide ((CuO) lb. .70
Manganese oxide (MnO) lb. .075
Zinc oxide (ZnO) lb. .121
Borate (B203) lb. .105
Magnesium (MnO) lb. .075
Sulfur ton 55.00
Insecticides
Diazinon 14%, granules lb. .33
Diazinon 50W, wettable powder,
in 50 lb. quantities lb. 1.75
Parathion 10%, granules lb. .10
Herbicidese
AAtrex 80W, 80% wettable powder,
in 50 lb. quantities lb. 2.87
Randox gal. 9.90
2, 4-D amine 4 lb. of active ingredients
per gal. in 55 gal.
quantities gal. 2.65
Triton X-114 (or 100) A surfactant, in 30 gal.
quantities gal. 2.51
Fuels & lubricants
Diesel gal. .173
Gasoline gal. .309
Grease lb. .15
Crankcase oil gal. 1.09
Hydraulic oil gal. .77
aThis is not a listing of all materials that may be used in sugarcane pro-
duction.
bThe type and amount of fertilizer used will most likely depend upon type
of soil, soil tests, and individual desires. However, by using the prices of listed
fertilizer constituents, an individual can estimate the price of the fertilizer
desired with a high degree of accuracy.
cUse of trade names does not imply a recommendation or endorsement of
these products over other products.


purchase it at a lower price. In the case of items on which very little
information was available, estimates were usually arrived at through
reference to technical papers related to the area under consideration.

Estimating Quantities for Each Operation

The major operations involved in producing sugarcane are shown
in Table 3. Each is then broken down into the requisite individual
activities. Equipment hours per acre, tractor hours per acre, and
labor hours per acre incurred in operating equipment and tractors are








Table 3.-Operations performed and estimated annual equipment and
ida, 1971.


labor requirements for sugarcane production in south Flor-


Requirements per acre
Operation Equipment used Datea No. of Equip. Tractor Tractor Man
times hours (crawler) (100 h.p.) hours
hours hours
No. No. No. No.


Land preparation
Disking



Chiseling

Spreading soil


Mole draining

Leveling
Total
Planting
Furrowing & fert.
application


Dropping plant
cane


Disk, wheel type off set
12' wide, equipped with
roller bearings, hydraulic
cylinders and depth guage
Chisel plow, or subsoiler
12-24 inch depth
Crawler type tractor with
blade used to spread soil
from ditch cleaning
6-inch diameter mole, one
every 20 feet, 30" deep
Land leveler




Furrowing rig with fertilizer
attachment

In the field:
1) 1 dumping cart chassis
2) 1 conveyor body
3) 1 towing dolly
For hauling:
1) 1 dumping cart chassis


S-Fa

Mar.


Apr.

Apr.
Sept.


11


1.83


.90


.25


1.83


1.83

.90


.90


.22

.25


.22


.25


.17 .17 .17
- 1.37 2.00 3.37


.25


Oct.

Oct.


.783
.783
.783


.25


.783


.783


.783 .783 .783


-A
0








Table 3.-Operations performed and estimated annual equipment and labor requirements for sugarcane production in south Flor-
ida, 1971 Continued.
Requirements per acre
Operation Equipment used Datea No. of Equip. Tractor Tractor Man
times hours (crawler) (100 h.p.) hours
hours hours
No. No. No. No.


Covering plant
cane
Pick up plant
cane
Putting out
fires

Total
Cultivation of plant cane
Scratching
Applying herbicide

Cultivating
Applying herbicide
Total
Cultivation of stubble cane
Distributing field
refuse left from
harvesting
Subsoiler

Applying herbicide
Distributing fert.
Cultivating
Total


2) 1 conveyor body
3) 1 towing dolly
Cane covering rig with
granule hopper

Continuous loader
1) Tractor 32 h.p.
type
2) Water wagon



Spring tooth scratcher
Spray rig, pre-emergence
application
Rolling cultivator
Spray rig, late applic.




Chopper
Chisel plow, or sub-
soiler 16 inch depth
Spray rig
Fertilizer distributor
Rolling cultivator


Oct.

Oct.

Oct.
Oct.


Wa

Nov.
S-Sa
July




Wa

Wa
May
May
M-J


1

1

1
1


1

1
4
1




1

1
3
1
3


.783
.783

.25

.783

.783
.783


.25


.25

.783

.783


1.283 .783 3.882

.225 .225 .225

.06 .06
.36 .36 .36
.06 .06
.585 .705



.225 .225 .225

.225 .225 .225
.18 .18
.225 .225 .450c
.27 .27 .27
.225 .72 1.35








Table 3.-Operations performed and estimated annual equipment and labor requirements for sugarcane production in south Flor-
ida, 1971 Continued.
Requirements per acre
Operation Equipment used IDatea No. of Equip. Tractor Tractor Man
times hours (crawler) (100 h.p.) hours
hours hours
No. No. No. No.
Harvesting
Pick up cut cane 1) Continuous loader W 1 .32d .32
2) 4 field towing units 1 1.28 1.28
3) 4 towing dollys 1 1.28
4) 16 side dump carts 1 5.12
Transferring cane
to mill trucks 1) Portable ramp W 1 .32
2) Portable drag conveyor 1 .32 .64e
Extinguishing muck
fires 1) 1 tractor, 32 h.p. W 1 .32 .32
2) 1 water wagon, tank
and pump 1 .32
Total 2.56

Overhead
Mowing 1) 1 tractor, 100 h.p. Sum. 1 .16 .16
2) Mower 1 .16
Pumping Stationary pump YR. 1 .78
Pickup For general use YR. 1 .625
Total .16


aS-F (Spring to Fall), W (Winter), S-S (Spring to
Round).


Summer), M-J (May through June), Sum. (Summer), and YR (Year


bit is assumed that one man helps with fertilizer handling.
c200 bags/day x 100 lbs./bag, or 20,000 lbs./day; 272 acres x 500 lbs./acre, or 136,000 lbs.; (136,000 lbs.) / (20,000 lbs. per day),
or 6.8 days x 9 hrs./day, or 61.2 hrs. One man helps handle the fertilizer.
dBased on 98 processing days, 125 tons/hr. loading rate (or 1,000 tons per day), and a 40 ton per acre yield, it is assumed
there is a six member harvesters' cooperative, in which each member has equal acreage, and harvesting equipment is pooled.
eOne man operates the conveyor and one is a ticket writer.








Table 4.-Description and estimated costs of equipment utilized in sugarcane production in south Florida, 1971.
Newa New cost Annual Costs
Item & description cost less salvage usage
value Fixed Variable Total
----- Dollarss Hours -----Dollars per hour


Tractor, crawler type, 68 h.p., includes
blade, hydraulic cylinders, tool bars,
brake and arm
Tractor, wheel type, 100 h.p., equipped
with PTO, 3-point hitch, tool bar, and
power steering
Chisel plow, 12 feet wide
Disk, wheel type offset, 12 feet wide,
equipped with roller bearings, hy-
draulic cylinders, & depth guage
Mole drain cutter, with 6 inch diameter
bullet, 30 inch coulter in front
Land leveler, 12 feet wide
C' Furrowing rig with fertilizer attachment
Conveyor body, hydraulically controlled,
used on dumping cart chassis
Covering rig with granule hopper
Scratcher, spring tooth type, 3 row
Spray rig, tricycle type, 7 rows or 8
middles
Rolling cultivator, 6 gang unit
Chopper, 3 row
Fertilizer distributor, 12' wide
Field towing unit, 125 drawbar h.p.,
all wheel drive, all wheel steer
Continuous loader, 165 h.p.
Towing dolly
Side dump (cane) cart, 390 cu. ft. cap.
Portable ramp
Portable drag conveyor, 60 h.p.


21,050


l,000b
1,500


3,400c

700
2,800
2,000

2,900
2,000d
300

9,000
800
800
600e

21,500
43,500
700
3,180
11,500
22,800


18,945


9,900
1,350


3,060

630
2,520
1,800

2,610
1,800
270

8,100
720
720
540,

19,350
39,150
630
2,862
10,350
20,500


456


798
195


273

37
25
37

117
37
34

67
127
61
61

786
1,488f
1,134g
870h
786
786


6.81


2.03
1.13


1.83

.76
16.44
8.05

3.65
8.05
1.29

19.76
.92
1.94
1.44

4.03
4.30
.09
.54
2.16
4.27


2.63


1.52
.50


.31

.49
2.80
1.35

.63
1.35
.24

5.77
.16
.33
.25

2.30
2.57
.02
.09
.07
1.76


9.44


3.55
1.63


2.14

1.25
19.24
9.40

4.28
9.40
1.53

25.53
1.08
2.27
1.69

6.33
6.87
.11
.63
.223
6.03


- -- - K- - - -- -








Table 4.-Description and estimated costs of equipment utilized in sugarcane production in south Florida, 1971 Continued.
Newa New cost Annual Costs
Item & description cost less salvage usage
value Fixed Variable Total
Dollars Hours ----- Dollars per hour-
Water wagon, pump and tank 2,000 1,800 1,488 .19 .03 .22
Tractor, wheel type, 32 h.p. PTO 4,400 3,960 1,488 .44 .54 .98
Pump, 92 h.p. engine, stationary
type, 6' lift, 36" diameter pipe,
25,000 gpm capacity 9,000 8,100 500 2.65 1.52 4.17
Pickup truck, 1/2 ton, 2-wheel drive,
4-speed, 6 cylinder, with power lock
rear axle 3,350i 3,015 400 1.39i 1.05 2.44
Mower, rotary type, 6' blade 800 720 100 1.17 .33 1.50
Total cost of new equipment 298,780k .--.--
p aNew costs are F.O.B. prices.
S bIf dual tires are used, add approximately $1,150.
cIf large tires are used, add $50. Also, in sandy type soils wear plates may be desirable, and are an added cost.
dWhether pull type or hydraulic type, cost is the same.
eFor growers who prefer bulk fertilizer application (broadcasting), custom charges are based on pounds applied per acre.
For 200 pounds per acre, the charge is $10 per ton; for 250 pounds per acre, $8 per ton; for 300 pounds per acre, $6 per ton;
for 400 to 500 pounds per acre, $5 per ton; for 600, 700, and 800 pounds per acre, $3.50 per ton. Also, in sandy type soils where
late fertilizer application may be the case, airplane application (broadcast) may be used for approximately $1.00 per acre.
fIncludes hours used in planting as well as harvesting.
g-Total number of towing dollys used is four. Annual usage includes hours used in planting and harvesting allocated evenly
over the four dollys.
hTotal number of side dump carts used is 16. Two of them, or at least the chassis from two of them, are used during planting
as well as harvesting. Therefore, hours of annual usage are allocated over 16 carts.
ilf 4-wheel drive is desired, add approximately $750 to new cost. Also, add $30.25 for Florida license tag and $0.75 for each
50 pounds increment increase in weight above 3,001 pounds up to a maximum of $45.25.
iIncluded in fixed cost is $76.00 for liability insurance $36 for bodily injury, $14 for property damage, $4 for medical, and
$7 for comprehensive.
kSince harvesting equipment is shared by the six members of the growers' co-operative, total new cost of equipment to each
member would be $112,213 for his individual operations.








listed for each activity. For example, it was estimated that the ac-
tivity of cutting mole drains could be done at a rate of 4 acres per
hour. This means, of course, that it takes .25 hours to cut one acre.
Therefore, for this activity .25 hours of equipment time (the 6-inch
mole), 0.25 hours of tractor time (the crawler), and .25 hours of labor
are shown per acre. The total hours for each activity is obtained by
multiplying the input hours per acre by the total number of acres
subjected to the activity under consideration.

Equipment Requirements
Having completed the table of major operations and the input
requirements for each, an itemization of equipment and equipment
costs was developed (Table 4). The new cost, new cost less salvage
value, and hours of annual usage were estimated for each piece of
equipment. All equipment is assumed to have an expected life of 10
years, and a salvage value of 10 percent of new cost. The annual
hours of usage is computed by summing the total hours of each ac-
tivity shown earlier in Table 3. Information previously established
now permits the development of total cost on a per hour basis. Total
cost per hour is the sum of total fixed cost per hour and total variable
cost per hour. After these costs are established, the total number of
hours of usage may be multiplied by the total cost per hour to obtain
the total annual cost for owning and operating each piece of equip-
ment.
Fixed Costs
First, the development of total fixed cost per hour will be con-
sidered. It consists of four components annual tax per hour,
annual insurance per hour, annual depreciation per hour, and annual
interest per hour.
For annual taxes.on equipment, the cost figures in Table 4 reflect
the rates charged in Palm Beach County in the Lake Okeechobee
area. To arrive at the annual charge, 50 percent of the new cost is
multiplied by the applicable tax rate, in this case .023162. This an-
nual tax charge can be divided by the annual hours of usage to arrive
at the tax per hour.
The data on costs for insurance on equipment reflect approximate
rates charged in the Palm Beach County area. Such charges are $1.00
per $100 of value. Therefore, assuming the average investment in a
machine, allowing a 10 percent salvage value, is 55 percent of its
initial cost, the annual charge for insurance would be $100 x .55, or
$.55 per $100 of value of its initial cost. Thus, .0055 times the new
cost of the machinery item gives the annual cost of insurance. The
annual cost of insurance per hour is then derived by dividing the
annual cost by annual hours of usage.
Since straight-line depreciation is assumed, annual depreciation is
simply the new cost less salvage value, divided by the expected life of

15









the piece of equipment (10 years in each case). From this, annual
depreciation per hour for each item can easily be computed by divid-
ing annual depreciation by annual hours of usage. For the last com-
ponent of total fixed cost, an average investment in each piece of
equipment equal to 50 percent of its new cost is assumed. The re-
sulting value, multiplied by the assumed interest rate of .08, yields
the annual interest charge. Interest charge per hour is then derived
by dividing by total hours of usage. Having computed the four pre-
ceding components on a per hour basis, their sum is calculated to
arrive at total fixed cost per hour (Table 4).
Variable Cost
The components of total variable cost per hour will now be con-
sidered. It is also made up of four components fuel cost per hour,
oil cost per hour, grease and hydraulic oil cost per hour, and repair
cost per hour.
First, fuel cost per hour will be examined. These costs were de-
rived through use of an equation [1] that gives average gasoline
consumption in gallons per hour as follows:
Average gasoline consumption (in gals./hr) =
0.06 x (PTO h.p. Max)
That is, average gasoline consumption per hour is equal to .06 times
the maximum PTO4 horsepower. On items where PTO horsepower
was not known or was not given, an estimate was derived from dis-
cussions with knowledgeable people or from the values of engine or
drawbar horsepower available. However, all equipment except the
pickup, listed in this analysis, consume diesel fuel, which is 27 percent
more efficient than gasoline. Therefore, the gallons per hour figure
derived from the above equation should be multiplied by .73 to arrive
at the more correct figure. Once gallons per hour consumed are
known, price data can be utilized to derive the cost per hour.
The other components of total variable cost were derived through
the use of suggestions contained in a Kansas State University report
[3]. An oil utilization rate of one-half gallon per day was assumed.
The price of one-half gallon divided by nine gives the oil cost per hour.
Also, annual cost for grease and hydraulic oil was assumed to be .3
percent of initial cost for expensive machinery and .5 percent of initial
cost for field machinery. These percentages include labor. Once the
annual cost of repairs is obtained, the cost per hour can be derived by
dividing by the annual hours of usage.
Revenue and Costs
Revenue
Revenue values were generated on the basis of a production level
of 40 tons of sugarcane per acre and a sugar yield of 10.3 percent.
This yield corresponds to 2.06 hundredweights of sugar per short ton
'Power take-off.
16








of net cane and a percent sucrose in normal juice of 13.82. Such a
normal juice corresponds to a quality factor of 1.164 [5]. From these
values, and assuming a percent trash in cane of 5, the necessary
values can be derived. The product of the quality factor (1.164) and
net tons of cane (38) yields 44.23 standard tons of cane. Based on
the simple average price of sugar per pound over the last 12 months
(August 1970 July 1971) of 8.29 cents, a price per ton of standard
cane of $9.28 is derived [5, p. 2]. This value times 44.23 yields reve-
nue of $410.45 per acre.
Another factor is that grower sugar payments are based on the
hundredweights of sugar produced per acre; payments are graduated
downward as total farm production increases [6, p. 67]. Thus, a
weighted average price over the entire tonnage produced from the
assumed size farm yields $0.487941 per hundredweight. This value
times hundredweights per acre (78.28) yields $38.20. Further, mo-
lasses prices over the past year ranged from 14.48 to 14.64 cents per
gallon on the Florida Molasses Exchange. Therefore, a price of 14.5
cents per gallon was assumed, thus resulting in a molasses payment
of $.2876 per net ton of sugarcane [5, p. 2]. This value times the net
tons of cane per acre (38) yields a value of $10.93 per acre. Adding
the revenue from the three preceding factors, a gross revenue of
$459.58 per acre and $187,506.45 over the entire farm is generated
(Table 5).
Costs
Moving on from revenues, all inputs and their costs for each
major operation on a per acre as well as a gross basis are treated in
Table 5. Most of the values are self explanatory from tables, but an
indication of how they were derived, along with several clarifying
comments and assumptions, may be helpful.
Expenses for each major operation have been classified into two
groups or headings cash expenses and other expenses. This is an
important consideration, for while both are important and can have
significant effects on profits and return on investment, cash expenses
are more related to the short-term survival of the business operation,
while other expenses are more related to the longer-term survival of
the business. In other words, cash expenses are direct out of pocket
expenses, i.e., those which must be met during the course of the
annual operation under consideration. They must be met during the
period of production say, the 1970-71 growing season. On the other
hand, other expenses (in this analysis) are the analogue to fixed ex-
penses they are expenses that do not vary with the level of opera-
tion (once a particular level is chosen), they are not direct out of
pocket expenses, and they do not necessarily have to be met during
the current period of production.
The examination of a particular expense serves to provide an
understanding of how the values in Table 5 were derived. For ex-
ample, one of the land preparation expenses to be determined is the
17








Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars
Revenues
Sugarcane ton 9.28 44.23 410.45 408 167,463.60
Sugarcane act payment cwt. .487941 78.28 38.20 408 15,583.85
Molasses payments ton .2876 38.00 10.93 408 4,459.00
Gross revenue 459.58 187,560.45

Land preparation expenses
Cash expenses
Variable equipment costs:
1) Disk hr. .31 1.83 .57 149 84.93
2) Chisel hr. .50 .90 .45 149 67.05
3) Mole drain hr. .49 .25 .12 149 17.88
4) Leveler hr. 2.80 .17 .48 149 71.52
5) Tractor :
a) Crawler type hr. 2.63 1.37 3.60 149 536.40
b) 100 h.p. type hr. 1.52 2.00 3.04 149 452.96
Labor for operating equipment hr. 2.18 3.37 7.35 149 1,095.15
Hired labor & equipment drag-
line for cleaning ditches at
$200 per mile (x 2.625 miles
yields $525) acre 3.52 1.00 3.52 149 524.48
Total cash expenses 19.13 2,850.37
Other expenses
Fixed equipment costs:
1) Disk hr. 1.83 1.83 3.35 149 499.15
2) Chisel hr. 1.13 .90 1.02 149 151.98
3) Mole drain hr. 2.79 .25 .70 149 104.30
4) Leveler hr. 16.44 .17 2.79 149 415.71
5) Tractor:
a) Crawler type hr. 6.81 1.37 9.33 149 1,390.17
b) 100 h.p. type hr. 2.03 2.00 4.06 149 604.94







Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971-Continued.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars


Interest on cash expenses
(.5 x 19.13 x .08)
Total other expenses
Total land preparation

Planting expenses
Cash expenses
Variable equipment costs:
1) Furrowing rig with fertilizer
attachment .
S 2) Side dump cart chassis
S 3) Hydraulically controlled
conveyor body
4) Towing dolly
5) Covering rig with granule
hopper
6) Continuous loader
7) Tractor, 32 h.p.
8) Water wagon, pump &
tank
9) Tractor usage:
a) Crawler type
b) 100 h.p. type
Labor for cutting planting cane
Labor for operating equipment
Other labor, includes 3 droppers
and one clean-up man, .783 hours
per man per acre; therefore, 4 x
.783 = 3.132 total hours per acre
Waterboy (assume all cane cut in
3 days)


- .77 149 114.73
- 22.02 149 3,280.98
- 41.15 149 6,131.35


hr.
hr.

hr.
hr.

hr.
hr.
hr.

hr.

hr.
hr.
hr.
hr.


hr.

hr.


1.35
.09

.63
.02

1.35
2.57
.54

.03

2.63
1.61
2.18
2.18


2.18

2.18


.25
1.566

1.566
1.566

.25
.783
.783

.783

1.283
.783
5.60
3.882


3.132

.161


.34
.14

.99
.03

.34
2.01
.42

.02

3.37
1.26
12.20
8.46


6.83

.35


149
149

149
149

149
149
149

149

149
149
149
149


149

149


50.66
20.86

147.51
4.47

50.66
299.49
62.58

2.98

502.13
187.74
1,817.80
1,260.54


1,017.67

52.32









Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971-Continued.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars
Fertilizer, 50 lb. 0-6-45, con-
taining .7% CuO, 1.5% MnO, 1.7%
ZnO, 1.7% B203. ton 64.87 .25 16.22 149 2,416.78
Insecticideb, 42 pounds per acre
of Diazinon 14G for 6 lbs. of
active ingredients. For wire-
worm control lb. .33 42.00 13.86 149 2,065.14
Total cash expenses 66.84 149 9,959.33
Other expenses
Fixed equipment cost:
1) Furrowing rig with ferti-
lizer attachment hr. 8.05 .25 2.01 149 299.49
t 2) Side dump cart chassis hr. .54 1.566 .85 149 126.65
0 3) Hydraulically controlled
conveyor body hr. 3.65 1.566 5.72 149 852.28
4) Towing dolly hr. .09 1.566 .14 149 20.86
5) Covering rig with granule
hopper hr. 8.05 .25 2.01 149 299.49
6) Continuous loader hr. 4.30 .783 3.37 149 502.13
7) Tractor, 32 h.p. hr. .44 .783 .34 149 50.66
8) Water wagon, pump & tank hr. .19 .783 .15 149 22.35
9) Tractor usage:
a) Crawler type hr. 6.81 1.033 7.04 149 1,048.96
b) 100 h.p. type hr. 2.03 .783 1.59 149 236.91
Interest on cash expenses
(.5 x 66.84 x .08) 2.67 149 397.83
Total other expenses 25.89 149 3,857.61
Total planting expenses 92.73 149 13,816.94
aFor a comprehensive coverage of fertilizer recommendations to use on sand and mucky sand soils, for both plant and stubble
cane, see [2]. Once the type of fertilizer and the rate to apply is selected, cost of such can be estimated by applying the prices
given in Table 2.
bFor a comprehensive outline of herbicide recommendations, see [4].








Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971-Continued.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars
Cultivate plant cane expenses


Cash expenses
Variable equipment costs:
1) Scratcher
2) Spray rig
3) Rolling cultivator
4) 100 h.p. tractor
Labor for operating equipment
Herbicide, pre-emergence appli-
cation. A mixture of 2 gals.
Randox + 2 qts. 2.4-D Amine per
acre
^s Herbicide, late application, 1
lb. per acre of AAtrex + 1/2
lb. per acre of 2,4-D Amine, +
1/2 % by volume surfacant
Total cash expenses

Other expenses
Fixed equipment costs:
1) Scratcher
2) Spray rig
3) Rolling cultivator
4) 100 h.p. tractor
Interest on cash expenses
(.5 x 28.06 x .08)
Total other expenses
Total cultivate plant cane
expenses


hr.
hr.
hr.
hr.
hr.


acre


acre




hr.
hr.
hr.
hr.


.24
5.77
.16
1.52
2.18


21.13


.225
.12
.36
.585
.705


1.00


.05
.69
.06
.89
1.54


21.13


149
149
149
149
149


149


7.45
102.81
8.94
132.61
229.46


3,148.37


3.70 1.00 3.70 149 551.3C
-_- 28.06 149 4,180.94



1.29 .225 .29 149 43.21
19.76 .12 2.37 149 353.13
.92 .36 .33 149 49.17
2.03 .585 1.19 149 177.31

1.12 149 166.88
5.30 149 789.70


33.56


149


4,970.64


This would increase cash cost


clf sugarcane borer is a problem, 18 pounds of diazinon 14G at a price of $.33 may be applied.
per acre by $5.94.









Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971-Continued.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars


Cultivate stubble cane expenses
Cash expenses
Variable equipment costs:
1) Chopper
2) Chisel, or subsoiler
3) Spray rig
4) Fertilizer distributor
5) Rolling cultivator
6) Tractor usage:
a) Crawler Type
b) 100 h.p. type
Labor for operating equipment
ND Fertilizer, 500 lb. 0-6-45
S Herbicide, three applications
of Dalapon spaced approximately
10-14 days apart, 2 lbs. per
treatment
Total cash expenses

Other expenses
Fixed equipment costs:
1) Chopper
2) Chisel, or subsoiler
3) Spray rig
4) Fertilizer distributor
5) Rolling cultivator
6) Tractor usage:
a) Crawler Type
b) 100 h.p. type


hr.
hr.
hr.
hr.
hr.

hr.
hr.
hr.
ton


lb.




hr.
hr.
hr.
hr.
hr.

hr.
hr.


.33
.50
5.77
.25
.16

2.63
1.52
2.18
50.00


.225
.225
.18
.225
.27

.225
.72
1.35
.25


.07
.11
1.04
.06
.04

.59
1.09
2.94
12.50


272
272
272
272
272

272
272
272
272


19.04
29.92
282.88
16.32
10.88

160.48
296.49
799.68
3,400.00


.75 6.00 4.00 272 1,088.00
- 22.44 272 6,103.68


1.94
1.13
19.76
1.44
.92

6.81
2.03


.225
.225
.18
.225
.27

.225
.72


.44
.25
3.56
.32
.25

1.53
1.49


272
272
272
272
272

272
272


1.19.68
68.00
968.32
87.04
68.00

416.16
405.28


dlf sucking type insects (such as sugarcane aphids) are a problem, then 1 lb. of diazinon 50W (to get 1/2 Ib. of active ingre-
dients) may be applied at a cost of $1.75 per pound, plus $1.00 per acre for airplane application, to make a total cost per acre
of $2.75.







Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971-Continued.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars


Interest on cash expenses
(.501x 22.33 x .08)
Total other expenses
Total cultivate stubble cane
expenses

Harvesting expenses
Cash expenses
Variable equipment costs:
1) Continuous loader hr.
2) Towing dolly hr.
t 3) Side dump cart hr.
W 4) Field Towing unit hr.
5) Portable ramp hr.
6) Conveyor hr.
7) Tractor, 32 h.p. hr.
8) Water wagon, pump & tank hr.
Labor for operating equipment hr.
Other labor (domestic):
1) Field foreman hr.
2) Waterboy hr.
Other labor (offshore):
1) Cutters (125) hr.
2) Ticket writers (2) hr.
3) Lead men (2) hr.
4) Burners hr.
Labor camp overhead costs for
off-shore workers (includes
supervisor, cook, transportation
to and from town, etc.) acr<


- .90 272 244.80
- 8.74 272 2,377.28

- 31.18 272 8,480.96




2.57 .32 .82 408 334.56
.02 1.28 .03 408 12.24
.09 5.12 .46 408 187.68
2.30 1.28 2.94 408 1,199.52
.07 .32 .56 408 8.16
1.76 .32 .17 408 228.48
.54 .32 .17 408 69.36
.03 .32 .01 408 4.08
2.18 2.56 5.58 408 2,276.64

2.71 .256 .69 408 281.52
2.18 .256 .56 408 228.48

2.72 32.00 87.04 408 35,512.32
2.39 .256 .61 408 248.88
2.42 .256 .62 408 252.96
2.18 .10 .22 408 89.76


10.5 1.0 10.0 40 4,24.0


Pe1.0100


10.5040842 .0








Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971- Continued.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars
Transportation, to & from U.S.
for off-shore workers at $100
per man. (129 men, expenses
evenly distributed over 6 x
408 = 2,448 acres) acre 5.27 1.00 5.27 408 2,150.16
Bond, for each individual off-
shore worker, $115 must be
posted (also distributed over
2,448 acres) acre 6.06 1.00 6.06 408 2,472.48
Cane cutting equipment, $5
per individual cutter acre .26 1.00 .26 408 106.08
0t Burning pots used in burning
cane (two pots at $15 each) acre .073 1.00 .073 408 30.00
Fuel used in burning cane
fields, 50% diesel + 50%
gasoline (8 gal. per 40 acres) gal. .241 .20 .048 408 19.58
FFVA membership fee (2 cents ton .02 40.00 .80 408 326.40
per ton)
Insurance, personal
liability acre .05 1.00 .05 408 20.40
Total cash expenses 123.40 408 50,347.61

Other expenses
Fixed equipment costs:
1) Continuous loader hr. 4.30 .32 1.38 408 563.04
2) Towing dolly hr. .09 1.28 .12 408 48.96
3) Side dump cart hr. .54 5.12 2.77 408 1,130.16
4) Field towing unit hr. 4.03 1.28 5.16 408 2,105.28
5) Portable ramp hr. 2.16 .32 .60 408 281.52
6) Conveyor hr 4.27 .32 1.37 408 558.96








Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971-Continued.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars


7) Tractor, 32 h.p.
8) Water wagon, pump & tank
Interest on cash expenses
(.5 x 123.40 x .08)
Total other expenses
Total harvesting expenses
Overhead expenses
Cash expenses
Variable machinery costs:
1) Pickup
^t 2) Tractor, 100 h.p.
CA 3) Mower
4) Pump
Labor for operating equipment
Rodenticides
Electricity
Communications
Other labor (one full-time laborer
5 days per week x 9.5 hrs. per
day x 52 weeks per year, or
2,470 hours)
Building maintenance, spraying
ditch banks, disking around
fields, etc.
Total cash expenses

Other expenses
Fixed machinery costs:
1) Pickup
2) Tractor, 100 h.p.


hr.
hr.


hr.
hr.
hr.
hr.
hr.
acre
acre
acre



hr.


acre




hr.
hr.


.44
.19


.32
.32


.14
.06


408
408


57.12
24.48


- 4.94 408 2,015.52
- 16.63 408 6,785.04
- 140.03 408 57,132.65



1.05 .625 .6562 640 419.97
1.52 .16 .24 640 153.60
.33 .16 .05 640 32.00
1.52 .78 1.19 640 761.60
2.18 .16 .35 640 224.00
2.00 1.00 2.00 640 1,280.00
.10 1.00 .10 640 64.00
.25 1.00 .25 640 160.00



2.18 3.86 8.42 640 5,388.80


5.00 1.00 5.00 640 3,200.00
- 18.25 640 11,683.97


1.39
2.03


.625
.16


.8687
.32


640;
640


555.97
204.80













Table 5.-Estimated costs and returns for a 640-acre sugarcane operation in south Florida, 1971-Continued.
Price or Value or
Item Unit cost per Quan. cost per Acres Gross value
unit per acre acre or cost
Dollars Dollars No. Dollars


3) Mower
4) Pump
Interest on cash expenses
Total other expenses
Total overhead expenses
Summary
Gross cash expenses
Gross other expenses
Gross expenses

ts Net revenue over cash expenses
O Net revenue over gross expenses

Drainage taxes
Land taxes (.023162 x 300)
Gross taxes

Net revenue over gross expenses
and gross taxes
Annual cost of land (.06 x $1,400)

Net revenue over gross expenses,
gross taxes and cost of land


hr.
hr.


acre
acre
acre

acre
acre

acre
acre
acre


acre
acre


1.17
2.65


133.01
29.64


.16
.78


1.00
1.00


.19
2.07
.72
4.17
21.66

133.01
29.64


640
640
640
640
640

640
640


121.60
1,324.80
460.80
2,667.97
14,351.94

85,125.77
18,968.77


162.65 1.00 162.65 640 104,094.54

159.97 1.00 159.97 640 102,380.68
130.33 1.00 130.33 640 83,411.91


5.00
6.95
11.95


118.38
84.00


1.00
1.00
1.00


1.00
1.00


5.00
6.95
11.95


118.38
84.00


640 3,200.00
640 4,448.00
640 7,648.00


640
640


75,763.91
53,760.00


acre 34.38 1.00 34.38 640 22,003.91


acre ~ 34.38 10


34.38 602)0.-







Table 6.-Summary of costs and returns for a 640-acre sugarcane operation in south Florida, 1971.
Per acre under Per acre of Per
Operation Total each operation cultivation gross acre


Land preparation expenses
Cash
Other
Total

Planting expenses
Cash
Other
Total

Cultivate plant cane expenses
Cash
bt Other
Total

Cultivate stubble cane expenses
Cash
Other
Total

Harvesting expenses
Cash
Other
Total

Overhead expenses
Cash
Other
Total


uoilars

2,850.37 19.13 5.00' 4.45
3,280.98 22.02 5.76 5.13
6,131.35 41.15 10.76 9.58


9,959.33 66.84 17.47 15.56
3,857.61 25.89 6.77 6.03
13,816.94 92.73 24.24 21.59


4,180.94 28.06 7.33 6.53
789.70 5.30 1.39 1.23
4,970.96 33.36 8.72 7.76


6,105.68 22.44 10.71 9.54
2,377.28 8.74 4.17 3.71
8,480.96 31.18 14.88 13.25


50,347.61 123.40 88.33 78.67
6,785.04 16.63 11.90 10.60
57,132.65 140.03 100.23 89.27


11,683.97 18.25 20.50 18.25
2,667.97 4.17 4.68 4.17
14,351.94 22.42 25.18 22.42












Table 6.-Summary of costs and returns for a 640-acre sugarcane operation in south Florida, 1971 Continued.
Per acre under Per acre of Per
Operation Total each operation cultivation gross acre
Dollars


Gross revenue
Gross cash expenses
Net revenue over cash
expenses

Gross other expenses
Net revenue over all expenses

Taxes
a) Drainage
b) Land (.023162 x 300)
Gross taxes
tl Net revenue to land, opera-
00o tor's labor & management
Annual cost of land (.06 x $1,400)
Net revenue to operator's
labor & management


187,506.45
85,125.77


382.96
149.34


292.98
133.01


102,380.68 179.62 159.97

18,968.77 33.27 29.64
83,411.91 -146.35 130.33

3,200.00 5.61 5.00
4,448.00 7.80 6.95
7,648.00 13.41 11.95

75,763.91 132.94 118.38
53,760.00 94.32 84.00


22,003.91


38.62


34.38








variable and fixed cost of disking. From Table 4 it is seen that the
variable cost per hour of operating the disk was $.31. Reference to
Table 3 notes that 1.83 hours of disk time per acre are used. The
product of ($.31 x 1.83) gives the total variable cost per acre ($.57) ;
when this value is multiplied by the number of acres under consid-
eration, the gross variable cost of disking is derived. The cost of the
remaining inputs is determined in a similar manner.
But what about the price of labor ? For this analysis, all domestic
labor, except for labor involving special kinds of tasks, was assumed
to be $2.00 per hour. However, added to this was 5.2 percent for
Social Security and 3.64 percent for workmen's compensation pay-
ments. Thus, a price of $2.18 per hour for labor is charged.
For cane cutters, who are imported from the British West Indies
(BWI), a basic labor cost of $2.51 per hour is used. This cost was
arrived at by assuming a minimum wage of $2.00 per hour and
weighting it in accordance with factors developed in a 1968 survey
performed by a BWI representative. Additionally, 1 percent for BWI
welfare and 7.42 percent for BWI workmen's compensation must be
added to the $2.51, making a total per hour cost of $2.72. The two
ticket writers and the two lead men, who are also off-shore workers,
are paid $2.39 and $2.42 per hour, respectively. Since their tasks are
considered to be very essential, they are usually paid a wage above
the minimum level for cutters. The field foreman also receives a
wage above the minimum.
In this analysis overhead expenses have been listed separately.
Some individual producers may desire to allocate them on some sort
of proportionate basis to each of the specific operations in order to
arrive at a more comprehensive cost per acre for each individual
operation.
At the end of Table 5 gross cash expenses and gross other ex-
penses have been calculated in order to arrive at net revenue. From
this gross taxes, which are composed of drainage taxes and land
taxes, are deducted to arrive at net revenue over gross expenses and
gross taxes. The annual cost of land is deducted from this figure to
arrive at a final net revenue figure of $34.38 per acre.
It should be pointed out that drainage taxes vary widely across
the many drainage districts in south Florida. Nevertheless, it is felt
that the assumed value of $5.00 per acre is quite realistic. The tax
on land is the rate charged in the Belle Glade and South Bay areas of
Palm Beach County. The tax rate was applied to the assessed value
of the land. Land used for growing sugarcane generally has an as-
sesed value ranging from $100 per acre to $400 per acre. An arbi-
trary value of $300 per acre was used in this analysis (Tables 5 and
6).
Furthermore, an annual cost of land was calculated by assuming
an investment rate of 6 percent and a market value of land of
$1,400 per acre (Tables 5 and 6). Discussions with knowledgeable
people in the local tax office, in real estate, and in financial institu-


29








tions revealed that market values of land used for sugarcane produc-
tion range from $350 to $2,500 per acre. Thus, the median value of
$1,400 per acre was used.
In conclusion, a summary of costs and revenues is given in Table
6. For each major operation, it reflects in a concise manner total
cash expenses, total other expenses, and total cash and other ex-
penses, as well as individual expense items on a per acre basis. It
reveals, likewise, analogous information for gross revenue, gross
costs, net revenues, etc.


SUMMARY
A framework for rational decision making in sugarcane production
has been presented. In deriving such a framework, major emphasis
was placed on the hourly requirements for performing the specific
activities under each major operation and on the likely rates of ap-
plication of required inputs. Once these requirements and their prices
are known, not only can the precision of production decisions be en-
hanced, thereby resulting in monetary savings for the grower, but
the ease with which such decisions can be made is also enhanced,
resulting in time savings.
Such a framework is also flexible and allows one to look at the
production process from almost any angle. For example, the producer
can consider the cost impact of various alternatives. The producer
can look at cost per ton, man hours per acre, equipment hours per
ton, etc.
The framework presented here is not the only approach to rational
production decisions. But it is certainly one which merits serious
consideration.









LITERATURE CITED



[1] "Farm Machinery Costs and Use," Agricultural Engineers Yearbook, 1969.
St. Joseph, Michigan: American Society of Agricultural Engineers, 1969,
pp. 278-283.


[2] Gascho, G. J. and C. E. Freeman. Soil Sampling and Fertilizer Recom-
mendations for Sugarcane Grown for Sugar in South Florida. Fla. Agr.
Exp. Sta. Mimeo. Report 71-2. Belle Glade: 1970, pp. 5.


[3] Larson, G. H., G. E. Fairbanks and F. C. Fenton. What It Costs To Use
Farm Machinery. Kansas Agr. Exp. Sta. Bul. 417. Manhattan: April
1960, pp. 48.


[4] Orsenigo, J. R. Sugarcane Herbicides for the Florida Everglades. Fla.
Agr. Exp. Sta. Mimeo. Report EES70-1. Belle Glade: November 1968,
pp. 8.


[5] "Sugarcane: Florida. Fair and Reasonable Prices for 1969 Crop" [Con-
tained in Subchapter I Determination of Prices. Part 873 of document
relating to Title 7 Agriculture], in U. S. National Archives, Federal
Register, Vol. 34, No. 204. Washington: U. S. Government Printing
Office, October 23, 1969, pp. 17159-17161. (Also available as reprint;
references to page numbers cited in the text refer to pages, i.e., 1 to 4,
in the reprint.)


[6] U. S. Congress. House. The United States Sugar Program. Committee
Print, 91st Congress, 2d Session. Washington: U. S. Government Print-
ing Office, 1971, pp. 72.


31





























































COOPERATIVE EXTENSION WORK IN AGRICULTURE AND HOME ECONOMICS
(Acts of May 8 and June 30, 1914)
Cooperative Extension Service, IFAS, University of Florida
and United States Department of Agriculture, Cooperating
Joe N. Busby, Dean




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