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UF FLAG IFAS PALMM



Budgeting costs and returns
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Permanent Link: http://ufdc.ufl.edu/UF00026156/00005
 Material Information
Title: Budgeting costs and returns
Series Title: Economic information report
Portion of title: Budgeting costs and returns for Indian River citrus production
Budgeting costs and returns for for <sic> Indian river citrus production
Physical Description: v. : ; 27 cm.
Language: English
Creator: University of Florida -- Food and Resource Economics Dept
Publisher: Food and Resource Economics Dept., Agricultural Experiment Stations and Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Creation Date: 1978
Frequency: annual
regular
 Subjects
Subjects / Keywords: Citrus fruit industry -- Economic aspects -- Periodicals -- Florida -- Indian River County   ( lcsh )
Citrus fruits -- Periodicals -- Florida -- Indian River County   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
serial   ( sobekcm )
 Notes
General Note: Title varies slightly: <1992-93>- Budgeting costs and returns for Indian River citrus production.
General Note: Description based on: 1978-79; title from cover.
Funding: This collection includes items related to Florida’s environments, ecosystems, and species. It includes the subcollections of Florida Cooperative Fish and Wildlife Research Unit project documents, the Sea Grant technical series, the Florida Geological Survey series, the Coastal Engineering Department series, the Howard T. Odum Center for Wetland technical reports, and other entities devoted to the study and preservation of Florida's natural resources.
 Record Information
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 000313321
oclc - 08042665
notis - ABU0054
lccn - sn 82000632
System ID: UF00026156:00005

Table of Contents
    Front Cover
        Front cover
    Abstract
        Abstract
    Acknowledgement
        Acknowledgement
    Table of Contents
        Table of contents
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
    Reference
        Page 11
Full Text
Ben Abbitt


Muraro


Budgeting


6e1


Costs and Returns:


Indian River
Citrus Production, 1978-79


Food and Resource Economics Department
Agricultural Experiment Stations and
Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville


June 1979


Economic Information
Report 114


R. P.











ABSTRACT


Estimated costs and returns of growing white seedless
grapefruit in the Indian River area of Florida are presented
for the fifth consecutive year. The format presented may
be used by individual growers to budget costs and returns
utilizing individual data on specific groves.

Key words: citrus, Indian River, budgeting, costs and
returns.













ACKNOWLEDGEMENT


Appreciation is expressed to Mark Belcher, Statistical
Analyst, Florida Citrus Mutual, for the pricing information
(preliminary). Thanks is extended to Mrs. Jane Wilson for
typing the final draft











TABLE OF CONTENTS

Page
INTRODUCTION .o . 1

METHOD OF DATA COLLECTION . o 1

THE GROVE SITUATION 0 0 0 0 0 0 0 0 1
Age and Production Per Tree. o 2

COST OF INPUTS. ooo .. O OOO, 3

SPRAY PROGRAM o o o 3

COSTS AND RETURNS 00 .00,0 0 3

ADDITIONAL SOURCES OF INFORMATION . .o 10

REFERENCES, ... o..o o o 11



LIST OF TABLES

Table

1 Calculation of production per acre o ....... 3

2 Costs of inputs supplied on a custom basis used
in calculating costs ............ 4

3 Costs of chemicals used in calculating costs oo 5

4 Spray program used in budget based on custom
rates and application of two 500-gallon tanks
per acre .......... .. o 6

5 Estimated annual per acre costs and returns for
a mature white seedless grapefruit on sour
orange rootstock, Indian River area, Florida o 7

6 Estimated annual per acre costs and returns and
5-year average costs and returns for a mature,
white seedless grapefruit grove producing citrus
for fresh fruit packing in Indian River area,
1974-75--1978-79 . . 8

7 Schedule of production practices in Indian River
groves .0 0 0 .0 .. .. 0 0 9














BUDGETING COSTS AND RETURNS:
INDIAN RIVER CITRUS PRODUCTION, 1978-79


Ben Abbitt and Ro Po Muraro


INTRODUCTION


Current data on costs and returns are needed by citrus
growers in order to formulate realistic budgets for their
operations, Budget analysis provides the basis for many
grower decisions For example, budget analysis can be used
to calculate potential profits from an operation, to deter-
mine cash requirements for an operation, and to determine
break-even prices.
This paper presents a budget constructed from current
data and will serve as a format for growers to develop costs
and returns from their individual records.


METHOD OF DATA COLLECTION


The data presented here were developed by surveying
custom operators, input suppliers, growers, and colleagues
at the Agricultural Research and Education Center in Lake
Alfred. This annual survey is conducted in January,


THE GROVE SITUATION


It is difficult to define a "typical" grove; therefore,
it is necessary to state the assumptions under which a budget


BEN ABBITT is Area Economist, Food and Resource Economics
Department, University of Florida, AREC, Lake Alfred, FL 33850,
R. P. MURARO is President, FACTS-AG, Inco, Lakeland, FL 33801.








was constructed, The assumptions made as to a particular
grove situation are thought to be typical of a healthy, mature,
sour orange-rooted, white seedless grapefruit grove in the
Indian River area of the state,
Specific production practices vary from grove to grove,
Many combinations of practices and various tree combinations
seem to accomplish production of acceptable yields and returns,
The generation of costs and returns procedure is designed to
be applicable to any grove situation, A grower, realtor, or
land appraiser can substitute individual grove costs and
expected returns into the budget format and develop a budget
for a particular grove,
In the following budget, good management and cultural
practices are assumed. Beyond this general assumption, the
following specifics are assumed:


o1 A 20-year-old irrigated grove;
2. Variety is white seedless on sour orange rootstock;
3. Tree loss is 3 percent annually;
4o Trees are pulled and replaced when production falls
below 50 percent of expected yield;
5o Production is for fresh use; and
6, Tree spacing is 70 trees per acre.


Age and Production Per Tree


Situation Boxes/tree

3% pulled and reset 0.0
3% 1 year old 0,0
3% 2 years old 0,0
3% 3 years old 0,5
3% 4 years old 1,1
57% 5-19 years old 404
3% producing 50% of expected yield 3,75
25% mature producing 7,5


I








Table 1,--Calculation of production per acre


Trees Percentage age Boxes/tree Total boxes


70 0,03 0,50 1,05
70 0.03 1,10 2,31
70 0.57 4,40 175,56
70 0,03 3,75 7,88
70 0,25 7.50 131.25
Total boxes/acre 318,05



COSTS OF INPUTS


Costs for various production inputs are the average of
the data obtained from the survey. These average costs are
shown in Tables 2 and 3,


SPRAY PROGRAM


The spray program presented here is believed to be of
the type followed by a majority of growers, It is not the
exact program outlined in the Florida Citrus Spray Guide 1979,
nor is it necessarily the most economical spray program. Most
growers in the Indian River area produce grapefruit for the
fresh market and their spray program is formulated to produce
a fruit of this quality. Table 4 outlines the spray program
which is used for calculations in the budget which follows,


COSTS AND RETURNS


Table 5 shows the estimated costs and returns based on
data presented earlier and with a custom-caretaker providing
grove management. This table, as do the others, has a column
reserved for the individual grower to insert data from a
particular grove. This will allow a comparison of the grower's
costs and returns with those of the hypothetical case presented,









Table 2,--Costs of inputs supplied on a custom basis used in calculating costs

Cost
Item Unit Low High Avg, Your cost
------------------Dollars-----------------

Labor Hr, 3,92 5.50 4,45
Mowing (9'-10' rotary) Hr, 8,75 11,50 10,19
Mowing (sickle) Hr, 8,00 15,00 11,14
Herbiciding Hro 9,50 15,50 11,68
Topping Hr, -- -- 42,00

Hedging (2-side) Hr, -- -- 48,00
Chopping Hr. -- -- 12o11
Removing trees (plus driver)
(front end loader) Hr, 15,00 26,00 20,50
Power saw w/o operator Hr, -- -- 12.00
Tractor and driver Hr, 7,50 13,00 11,88

Truck and driver Hr, 9,00 13,00 11,00
Water truck Hr, 8,00 10,50 9,94
Mound builder Hr, -- -- 10,00
Rotary ditcher Hr, 9,00 9,25 9,13
Irrigation, flood In, -- -- 1,94

Fertilize, bulk Acre -- -- 2,50
Spray, dilute Tank 9,50 10,00 9,83
Dust, aerial Lbo -- -- 0035











Table 3.--Costs of chemicals used in calculating costs


Item Unit Cost Your cost

---------Dollars--------

Copper, tri-basic Lbo 0.96
Zinc, 36% zn Lb, 0,33
Manganese-sulfate Lbo 0,10
Chlorobenzilate Galo 16.91
Ethion Gal, 14,79

Kelthane Gal, 9001
Benlate Lb, 8,52
Oil, 97% Gal, 1,17
Sticker Galo 6.78
Sulphur dust Ton 124,87

Krovar II Lb, 5,76
16-0-16 fertilizer Ton 103,61
16-0-16-4 MgO fertilizer Ton 113,71
8-2-8 fertilizer Ton 73,97









Table 4.--Spray program used in budget based on custom rates and application
of two 500-gallon tanks per acre

Item Amount/acre Cost Your cost
---------Dollars---------

Dormant application
Copper 3 Ibso 2,88
Manganese 7 lbs. 0,70
Zinc 7 Ibs, 2,31
Sticker 1 pint 0.85
Application 2 tanks 19,66
Total 26,40

Post bloom application
Chlorobenzilate 2,5 pints 5.28
Application 2 tanks 19,66
Total 24,94

Summer oil application
Oil 8 galso 9,36
Copper 3 Ibs. 2,88
Application 2 tanks 19,66
Total 31,90

Miticide application
Kelthane 5 pints 5,65
Sticker 1 pint 0,85
Application 2 tanks 19,66
Total 26,16
Grand Total 109 40








Table 5,--Estimated annual per acre costs and returns for a mature white seedless grapefruit on
sour orange rootstock, Indian River area, Florida


Item Description Amount Your cost

I. Revenue 318 boxes @ 29.' R5 On qn 8:


II. Expenses
Spray Program
Fertilizer
Material
Application
Weed Control
Mow Middles
Mow Under Trees
Pull Vines
Herbicide
Pruning (Maintenance)
Topping
Hedging
Removing Brush
Irrigation (Flood)
Tree Replacement and Care
Remove Trees
Prepare Site
Plant Resets
Water
Fertilizer
Management

III, Total Specified Costs

IV, Return to Land and Trees


From Table 4

16-0-16, 625 Ibso
2 @ $2050

5 times per year
4 times per year
By hand
Krovar II, incl, applo




6 appl,, total 18 in./year

2l1 trees per acre
Use of mound builders
Including 2,1 trees per acre

Including application
5% of gross sales


$31,25
5.00

$27,25
22,28
6,81
15,41

$14,00
12,00
15,64


25,54
6,00
10,44
3,48
6.43


109.40


36.25




71,75



41,64
34,92





51,89
45,32

$391,17

$515o13


Other methods to estimate a management cost are used in the industry, Other selected methods
will give different return to land and trees than reported here,


,


l*/f\v 0c ^ l








Two items of cost which are not included in the budget
are ad valorem taxes and interest on grove investment. These
costs vary from grove to grove depending on age, location,
soil, and time of purchase or establishment, They should
both be considered in arriving at a net return to land and
trees (total return minus costs).
Estimated annual costs and returns for mature, fresh,
white seedless grapefruit on sour orange rootstock in the
Indian River area have been collected and published the past
four years. Estimated cost and return histories for these
years, 1978-79, and a 5-year average are presented in Table 6.


Table 6,--Estimated annual per acre costs and returns and
5-year average costs and returns for a mature, white
seedless grapefruit grove producing citrus for fresh
fruit packing in Indian River area, 1974-75--1978-79

Total Net return
Price Gross specified to land
Year /boxa Yield revenue costs and trees
-------------Dollars-------------
1974-75 1.90 318 604.20 331,05 273,15
1975-76 1,41 318 448,38 341,07 107,31
1976-77 2,00 318 636,00 364.11 271.89
1977-78 1.75 318 556,50 358,91 197,59
1978-79 2,85 318 906,30 391.17 515,13
5-yr, avg. 1.98 318 630,28 357.26 273,01

aEstimated at time of printing and are not published prices.


Shown in Table 7 are production practices for Indian
River citrus and a range of times during the year when they
would likely be performed, There are two benefits to develop-
ing such a table for an individual grove, First, it shows
what work is needed and when, so that operations can be planned
well in advance, Second, it can be helpful if an annual cash
flow analysis is developed to plan financing. The individual
grower can achieve benefits by developing a plan for a partic-
ular grove.







Table 7.--Schedule of production practices in Indian River groves
Grove practice Date performed Comments

Mowing middles Five times each year One-way mowing

Mowing under trees Four times each year One-way mowing

Pull vines and
general grove work Throughout year Primarily winter months

Herbicide (vine control) After pulling vines

Topping February thru June After fruit is harvested

Hedging & remove brush February thru June After fruit is harvested

Remove trees Winter months When other grove practices
are not being performed

Irrigation Throughout year Average six irrigation applica-
tions per year (18.0 inches/yr.)

Clean ditches Twice each year Fall and summer

Young trees Throughout year As needed

Fertilize Twice each year At least 130 pounds of nitrogen
(February & August) applied per acre each year

Dust (sulphur) September or October As needed

Spray (dilute) Dormant, Post bloom
Summer oil, and Fall Two tanks per acre;
miticide 500 gallons per tank
a This is a suggested schedule of practices. Actual practices would not necessarily
be carried out on the exact schedule shown here.








ADDITIONAL SOURCES OF INFORMATION


Since 1931, through the cooperation of Florida citrus
growers, the Florida Agricultural Experiment Station and the
Florida Cooperative Extension Service have conducted annual
studies of citrus grove costs and returns. These data have
been summarized annually and averaged in varying time spans
Annual cost and return histories can be made available upon
request.
The most recent time span (consecutive years) that these
annual cost and return figures have been averaged is the five
growing seasons 1971-76, These annual cost and return
histories and preceding histories are recorded in Factors to
Consider in Purchasing a Citrus Grove. Copies of this circular
can be obtained at your County Extension Service Office or by
writing either author.





























1Dr, Donald L. Brooke, Professor in the Food and Resource
Economics Department, University of Florida, IFAS, Gainesville,
has conducted this annual study in recent years.








REFERENCES


Brooke, Donald L. and Ben Abbitt. Factors to Consider
in Purchasing a Citrus Grove. Florida Cooperative
Extension Service Circular 437. University of
Florida, IFAS, Gainesville, Florida. 1978.


DuCharme, E. P. "Tree Loss in Relation to Young Tree
Decline and Sand Hill Decline of Citrus in Florida."
Proc. Fla. State Hort. Soc. 84:48-52. (October 1970).


Florida Citrus Spray Guide 1979. University of Florida
Cooperative Extension Service Circular 393-E,
January 1979.


Muraro, Ronald P. "Comparative Citrus Budgets." Bartow:
Polk County Extension Service. March 1976.


Muraro, Ronald P. "Summary Custom Rate Survey for Nine
Indian River Citrus Caretakers." Bartow: Polk
County Extension Service. March 1978.


Muraro, Ronald P. "Cost of Resetting a Citrus Grove."
Bartow: Polk County Extension Service. September 1976.


Reitz, H. J., C. D. Leonard, et. al. Recommended
Fertilizers and Nutritional Sprays for Citrus.
University of Florida Agricultural Experiment
Stations Bulletin 536C. December 1972.












This public document was promulgated at an annual
cost of $372 or $.34 per copy to furnish the
citrus industry with current data on cost of
production for the Food and Resource Economics
Department, Institute of Food and Agricultural
Sciences, and the University of Florida.