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UF FLAG IFAS PALMM



Budgeting costs and returns
ALL VOLUMES CITATION SEARCH THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
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Permanent Link: http://ufdc.ufl.edu/UF00026156/00007
 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: 1980
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: UF00026156:00007

Table of Contents
    Front Cover
        Front cover
    Abstract
        Page i
    Acknowledgements
        Page i
    Table of Contents
        Page ii
        Page iii
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
    Reference
        Page 12
Full Text


Sif. Muraro


Economic Information
Report 146


Budgeting Costs and Returns:

Indian River Citrus Production,

1980-81


I,
-' i' : /;


CUT


1 7 1981


I.I


Food and Resource Economics Department
Agricultural Experiment Stations
institute of FFod1and Agricultural Sciences
University of Florida, Gainesville 32611


June 1981


-- ----- --i-. ---~


I_-*-ilr~i;ri~ -*l".xC -9n : 'rl ..;;..-;;:*I*L .i r ;;II."JYI1*r ` ;r--i; `' ;.111- -- ..r. I ` ; '; ,

















ABSTRACT


Estimated costs and returns of growing white seedless grapefruit in
the Indian River area of Florida are presented for the seventh 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.


ACKNOWLEDGEMENTS


Appreciation is expressed to Jim Todd, Florida Crop and Livestock
Reporting Service, for the pricing information (preliminary). Thanks are
extended to Mrs. Jane Wilson for typing the final draft.

















ABSTRACT


Estimated costs and returns of growing white seedless grapefruit in
the Indian River area of Florida are presented for the seventh 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.


ACKNOWLEDGEMENTS


Appreciation is expressed to Jim Todd, Florida Crop and Livestock
Reporting Service, for the pricing information (preliminary). Thanks are
extended to Mrs. Jane Wilson for typing the final draft.

















TABLE OF CONTENTS


ABSTRACT . . .

ACKNOWLEDGEMENTS. . .

INTRODUCTION. . . .

METHOD OF DATA COLLECTION ..

THE GROVE SITUATION . .

Age and Production Per Tree.

COST OF INPUTS . . .

SPRAY PROGRAM . . .

COSTS AND RETURNS . .

ADDITIONAL SOURCES OF INFORMATION

REFERENCES . . .


. . . . .
B Q O O I I OOe O Q I

II

e o o l oe o m e


LIST OF TABLES


Table

1 Calculation of production per acre . . .

2 Costs of inputs supplied on a custom basis used in calcu-
lating costs . . . . . .

3 Costs of chemicals used in calculating costs . .

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

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


Page

i

i

1

1

1

2

3

3

3

9

12


. . . . .


. . . . .









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, 1976-77--1980-81 . .. .. 8

7 Estimated annual per acre costs and returns and 5-year
average costs and returns (inflated to 1981 dollars) for
a mature, white seedless grapefruit grove producing citrus
for fresh fruit packing in Indian River area, 1976-77--
1980-81 . . . .... . . 9

8 Schedule of production practices in Indian River groves 10















BUDGETING COSTS AND RETURNS:
INDIAN RIVER CITRUS PRODUCTION, 1980-81


R. P. Muraro


INTRODUCTION


Current data on costs and returns are needed by citrus growers in
order to formulate realistic budgets for their operations. Budget analy-
sis provides the basis for many grower decisions. For example, budget
analysis can be used to calculate potential profits from an operation,
to determine 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 an analysis of 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 neces-
sary to state the assumptions under which a budget was constructed. The
assumptions made as to a particular grove situation are thought to be


R. P. MURARO is Area Farm Management Economist, Food and Resource
Economics Department, University of Florida, AREC, Lake Alfred, FL 33850.









typical of a healthy, mature, sour orange-rooted, white seedless grape-
fruit grove in the Indian River area of the state.
Specific production practices vary from grove to grove. Many combi-
nations 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:


1. A 20-year-old irrigated grove;
2. Variety is white seedless on sour orange rootstock;
3. Tree loss is 3 percent annually;
4. Trees are pulled and replaced when production falls below 50
percent of expected yield;
5. 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 1.0
3% 4 years old 1.7
57% 5-19 years old 4.9
3% producing 50% of expected yield 4.0
25% mature producing 8.0









Table l.--Calculation of production per tree

Boxes Total
Age of tree Trees /tree boxes

Total no. Proportion No. ea.
all ages ea. agea age ------No-----

3 yrs. 70 x 0.03 = 2.1 x 1.0 = 2.10
4 yrs. 70 x 0.03 = 2.1 x 1.7 = 3.57
5-19 yrs. 70 x 0.57 = 39.9 x 4.9 = 195.51
Prod. 50% of
Prod. 50 of 70 x 0.03 = 2.1 x 4.0 = 8.40
exp. yield
20 yrs. 70 x 0.25 = 17.5 x 8.0 = 140.00
Total boxes = 349.58


proportion adds up to 0.91 (91 percent) as 9 percent of the trees
were non-bearing (see page 2).

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 1981, 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 growers 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.


------~-L-----










a custom basis used in calculating costs


Cost
Item Unit Low High Avg. Your cost

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

Labor Hour 4.50 6.75 5.73
Mowing (9'-10' rotary) Hour 12.50 21.46 19.15
Mowing (sickle) Hour 12.50 21.46 15.35
Herbiciding Hour 13.00 19.50 14.79
Topping Hour 61.33
Hedging (2-side) Hour 48.00 100.00 71.00
Chop Brush Hour 15.00 15.50 15.25
Mowing Brush Hour 15.00 22.00 18.23
Removing trees
(front-end loader) Hour 25.00 32.50 28.50
Power saw w/o operator Hour 3.00 6.50 4.95
Tractor and driver Hour 12.50 17.00 13.91
Truck and driver Hour 11.50 17.50 13.91
Water truck Hour 9.00 15.00 12.37
Rotary ditcher Hour 13.00 17.50 14.50
Irrigation, flood In. -- -- 3.95
Fertilize, bulk Acre -- 3.15
Spray,.dilute Tank 12.00 17.50 14.50
Dust, aerial Lb. -- -- 6.0


-- --- 1


Table 2.--Costs of inputs supplied on










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


Item Unit Cost Your cost


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

Copper, tri-basic Lb. 1.02
Zinc, 36% zn Lb. 0.33
Manganese-sulfate Lb. 0.14
Chlorobenzilate Pint 3.09
Difolatan Gal. 27.33
Ethion Pint 2.00
Vendex Lb. 15.32
Kelthane Pint 1.33
Benlate Lb. 10.40
Oil, 97% Gal. 2.15
Sticker Pint 0.90
Sulphur dust Ton 243.13
Krovar II Lb. 6.58
16-0-16 fertilizer Ton 128.34
16-0-16-4 MgO fertilizer Ton 145.17
8-2-8 fertilizer Ton 95.47
Dolomite (delivered) Ton 23.28


__ __ I ____ ~_ ~ __











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
Manganese
Zinc
Sticker
Application
Total

Post bloom application
Kelthane
Sticker
Application
Total

Summer oil application
Oil
Copper
Application
Total

Miticide application
Kelthane
Sticker
Application
Total

Grand Total


6 Ibs.
14 lbs.
14 lbs.
1 pint
2 tanks


16 pints
1 pint
2 tanks


8 gals.
3 lbs.
2 tanks


6 pints
1 pint
2 tanks


6.73
2.16
5.08
0.99
29.00
43.96



23.41
0.99
29.00
53.40



18.92
3.37
29.00
51.29



10.45
0.99
29.00
40.44

189.09








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

I. Revenue 350 boxes @ $3.42 1,197.00
II. Expenses
Weed control
Mow middles 5 times per year 40.98
Mow under trees 4 times per year 30.70
Pull vines By hand 8.77
Herbicide Krovar II, incl. appl. 20.40 100.85
Spray program From Table 4 189.09
Fertilizer
Material 16-0-16, 820 Ibs. 57.84
Application 2 @ $3.15/acre 6.30 64.14
Dolomite
Material 1/3 ton @ $23.28 7.76
Application 1 ton every third year
$5.63/ton @ 1/3 1.88 9.64
Pruning (maintenance)
Topping ($61.33/hr. + 2.0 A/hr.) + 3 yrs. 10.22
Hedging ($71.00/hr. + 3.5 A/hr.) + 2 yrs. 10.15
Removing brush 12.20 32.57
Tree replacement and care (1 through 4 years)
Remove trees 2.1 trees per acre 25.41
Prepare site 9.17
Plant resets Including 2.1 trees per acre 12.97
Water 6.00
Fertilizer Including application 10.39 63.94
Irrigation (flood) Total 18 in./year 71.17
Management 5% of gross salesb 59.85
III. Total specified costs 591.25
IV. Return to land and trees 605.75


aAssumes material custom applied; therefore, a 10 percent handling and supervision charge is added to
material cost.

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


__


I










Other cost items which are not included in the budget are ad valorem
taxes, interest on grove investment, insurance,and promotion. These costs
vary from grove to grove depending on age, location, soil, and time of
purchase or establishment. However, as guidelines, ad valorem taxes in
the Indian River citrus area average $35 per acre. Annual debt payment
may cost as high as $400 per acre ($3,000 average debt per acre @ 12 per
cent interest). These costs should 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 five years. Estimated cost and return
histories for these years, 1980-81, and a 5-year average are presented in
Table 6. These same cost and returns, inflated to 1981 dollars, are
presented in Table 7.


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,
1976-77--1980-81


Total Net return
Price Gross specified to land
Year /box Yield revenue costs and trees

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

1976-77 $1.73 350 605.50 364.11 241.39
1977-78 1.59 350 556.50 358.91 197.59
1978-79 2.42 350 847.00 391.17 455.83
1979-80 3.29 350 1,151.50 490.54 660.96
1980-81 3.42a 350 1,197.00 591.25 605.75

5-yr. avg. 2.49 350 871.50 439.20 432.30


aEstimated at time of printing and is not a published price.


Shown in Table 8 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 developing 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 particular grove.


Table 7.--Estimated annual per acre costs and returns and 5-year average
costs and returns (inflated to 1981 dollars) for a mature,
white seedless grapefruit grove producing citrus for fresh
fruit packing in Indian River area, 1976-77--1980-81


Total Net return
Consumer Price Gross specified to land
Year price index /box Yield revenue costs and trees

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

1976-77 148.9 $2.58 350 903.00 542.16 360.84
1977-78 138.3 2.20 350 770.00 496.37 273.63
1978-79 124.3 3.01 350 1,053.50 486.22 567.28
1979-80 109.5 3.60 350 1,260.00 537.14 722.86
1980-81 100.0 3.42 350 1,197.00 591.25 605.75

5-yr. avg. -- 2.96 350 1,036.00 530.63 505.37

a
Consumer price index for each year inflated to 1981 prices (1981 =
100), with 1981 consumer price index estimated to be 270.2.


ADDITIONAL SOURCES OF INFORMATION


Since 1931, through the cooperation of Florida citrus growers, the
Florida Agricultural Experiment Stations 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.




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








a
Table 8.--Schedule of production practices in Indian River groves


Grove practice Date performed Comments


Mowing middles
Mowing under trees
Pull vines and general
grove work
Herbicide (vine control)
Topping
Hedging & remove brish
Remove trees


Irrigation


Clean ditches
Young trees
Fertilize


Dust (sulphur)
Spray (dilute)


Five times each year
Four times each year


Throughout year


February thru June
February thru June
Winter months


Throughout year


Twice each year
Throughout year
Twice each year
(February & August)
September or October
Dormant, post bloom
summer oil, and fall
miticide


One-way mowing
One-way mowing


Primarily winter months
After pulling vines
After fruit is harvested
After fruit is harvested
When other grove practices are
not being performed
Average six irrigation applica-
tions per year (18.0 inches/yr.)
Fall and summer
As needed
At least 130 pounds of nitrogen
applied per acre each year
As needed
Two tanks per acre; 500 gallons
per tank


aThis is a suggested schedule of practices. Actual practices would not necessarily be carried out on
the exact schedule shown here.






11



The most recent time span (consecutive years) that these annual cost
and return figures have been reported is the growing season 1978-79 in
Economic Information Report 138. Annual cost and return histories are
recorded as five-year averages in Factors to Consider in Purchasing a
Citrus Grove. Copies of these, and other references listed, can be
obtained at your County Cooperative Extension Service Office or by
writing the author.




A '


12



REFERENCES


Brooke, D. L. and R. Clegg Hooks.
Season 1978-79 with Comparison


Citrus Costs and Returns in Florida,
is. IFAS Econ. Info. Report 138.


Gainesville:


Aug. 1980.


Brooke, Donald L. and Ben Abbitt. Factors to Consider in Purchasing a
Citrus Grove. Univ. of Fla. Coop. Ext. Svc. Cir. 437. Gainesville:
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 (Oct. 1970), pp. 48-59.

Florida Citrus Spray Guide 1981. Univ. of Fla. Coop. Ext. Svc. Cir.
393-F. Gainesville: Jan. 1981.

Muraro, Ronald P. "Comparative Citrus Budgets." Lake Alfred Agricultural
Research and Education Center. Lake Alfred, FL: Apr. 1981.

Muraro, Ronald P. "Summary Custom Rate Survey for Twelve Indian River
Citrus Caretakers." Lake Alfred Agricultural Research and Education
Center. Lake Alfred, FL: Apr. 1981.

Muraro, Ronald P. "Cost of Resetting a Citrus Grove." Bartow: Polk
County Ext. Svc., Sept. 1976.

Reitz, H. J., C. D. Leonard, et al. Recommended Fertilizers and
Nutritional Sprays for Citrus. Univ. of Fla. Agr. Exp. Sta. Bull.
536C. Gainesville: Dec. 1972.

Tilley, Daniel S. and Richard L. Kilmer. Growers' Returns and Marketing
Costs at Each Stage of the Vertical Marketing System for Citrus.


IFAS Econ. Info. Report 112.


Gainesville: Apr. 1979.


1,000 copies









This public document was promulgated at an annual cost of $668.70 or 66.9,
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.