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
    Reference
        Page 11

R. P. Mra
R. P. Muraro


Economic Information
Report 161


Budgeting Costs and Returns:
Indian River Citrus Production,
1981-82


Food and Resource Economics Department
Agricultural Experiment Stations and
Cdoperative Extenslon Service
Institute of Food and Agricultural Sciences
University of Floride, Gaineeville 32611


June 1982


~I~ ~ ~ ~


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ABSTRACT


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


NOTE: Whenever mentioned in the manuscript, "per
grove acres" and not "net tree acres."


acre" represents "gross


ACKNOWLEDGEMENT


Appreciation is 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 eighth 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.


NOTE: Whenever mentioned in the manuscript, "per
grove acres" and not "net tree acres."


acre" represents "gross


ACKNOWLEDGEMENT


Appreciation is extended to Mrs. Jane Wilson for typing the final
draft.


















TABLE OF CONTENTS


Page

ABSTRACT. . . .. ... . . i

ACKNOWLEDGEMENT . . . . ... i

INTRODUCTION . . . .. . . .. 1

METHOD OF DATA COLLECTION . .. .... . . .. 1

THE GROVE SITUATION . . . . . .. 1

Age and Production Per Tree. .. . . ... 2

COST OF INPUTS. . . . ... ... .. 3

SPRAY PROGRAM . . . .. . . 3

COSTS AND RETURNS . . ...... . . ... 3

ADDITIONAL SOURCES OF INFORMATION . . . . 9

REFERENCES. . . . . .. . ..... 11


LIST OF TABLES


Table

1 Calculation of production per tree . . .. 3

2 Costs of inputs supplied on a custom basis used in calcu-
lating costs . . . . . 4

3 Costs of chemicals used in calculating costs . . 5

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

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










6 Estimated annual per acre costs and returns and 5-year
average costs and returns for a mature, white seedless
grapefruit grove producing pitrus for fresh fruit packing
in Indian River area, 1977-78--1981-82 . . .. 8

7 Estimated annual per acre costs and returns and 5-year
average costs and returns (inflated to 1982 dollars) for
a mature, white seedless grapefruit grove producing citrus
for fresh fruit packing in Indian River area, 1977-78--
1981-82 . .. . . .. 9

8 Schedule of production practices in Indian River groves 10


iii

















BUDGETING COSTS AND RETURNS:
INDIAN RIVER CITRUS PRODUCTION, 1981-82


Ron 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
February and March.


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


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







2



typical of a healthy, mature, sour orange-rooted, white seedless grape-
fruit grove in the Indian River area of the state.
Specific production practice" 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 data 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
45% 5-19 years old 4.9
3% producing 50% of expected yield 4.0
37% 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 0.45 = 31.50 x 4.9 = 154.35
Prod. 50% of
exp. yield 70 x 0.03 = 2.1 x 4.0 = 8.40
20 yrs. 70 x 0.37 = 25.90 x 8.0 = 207.20
Total boxes = 375.62


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 1982, 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.











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


Cost
Item Unit Low High Avg. Your cost

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

Labor Hour 4.50 7.25 5.92
Mowing (9'-10' rotary) Hour 13,75 23.00 17.63
Mowing (sickle) Hour 13.50 16.50 16,08
Herbiciding Hour 13,75 19,50 16.01
Topping Hour 60.00 70,00 65.00
Hedging (2-side) Hour 55.00 100o00 74.50
Chop brush Hour 15,00 16.00 15.50
Mowing brush Hour 15.00 22.00 18.23
Removing trees
(front-end loader) Hour 33.00 34.00 33.50
Power saw w/o operator Hour 4.75 7.25 6.00
Tractor and driver Hour 12.00 18.00 14.95
Truck and driver Hour 12,00 19.00 14.41
Water truck Hour 14.00 19,00 15.22
Rotary ditcher Hour 14.00 15,50 14,50
Fertilize, bulk Acre -- 3,00
Spray, dilute Tank 12.00 18.00 15,33
Dust, aerial Lb. -- 6.5C










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


Item Unit Cost Your cost


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


Copper, tri-basic
Zinc, 36% zn
Manganese-sulfate
Chlorobenzilate

Difolatan
l-thion
Vendex
Kelthane
Benlate

Oil, 97%
Sticker
Sulphur dust

Krovar II
16-0-16 fertilizer
16-0-16-4 MgO fertilizer
8-2-8 fertilizer

Dolomite (delivered)


Lb.

Lb.
Lb.

Pint

Gal,
Pint
Lb.
Pint
Lb.
Gal.
Pint
Ton
Lb.

Ton
Ton
Ton
Ton


1.00
0.34
0.15
3.24

27.08
2,01
15.38
1.34
11.16
2.19
0.95
266.80
7.04
142.52
157.36

99.86

19.46


------


LI~











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 (dilute)
Total

Post bloom application
Kelthane
Sticker
Application (dilute)
Total

Summer oil application
Oil
Copper
Application (dilute)
Total

Miticide application
Kelthane
Sticker
Application (dilute)
Total


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



16 pints
1 pint
2 tanks


8 gals.
3 lbs.
2 tanks



6 pints
1 pint
2 tanks


Grand Total


6.60
2.31
5.24
1.05
30.66
45.86


23.58
1.05
30.66
55.29


19.27
3.30
30.66
53.23


8.84
1.05
30.66
40.55

194.93


~------










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 338 boxes @ $2.69a 909.22
II. Expenses
Weed control
Mow middles 5 times per year 44.08
Mow under trees 4 times per year 32.16
Pull vines By hand 9.06
Herbicide Krovar II, incl. appl. 21.89 107.19
Spray programb From Table 4 194.93
Fertilizer
Material 16-0-16, 820 Ibs. 64.27
Application 2 @ $3.00/acre 6.00 70.27
Dolomite
Material 1/3 ton @ $19.46 6.49
Application 1 ton every third year
$5.13/ton @ 1/3 1.71 8.20
Pruning (maintenance)
Topping ($65.00/hr. + 1.0 A/hr.) + 3 yrs. 10.83
Hedging ($74.50/hr. 3.5 A/hr.) + 2 yrs. 10.64
Removing brush 13.30 34.77
Tree replacement and care (1 through 4 years)
Remove trees 2.1 trees per acre 27.44
Prepare site 9.90
Plant resets Including 2.1 trees per acre 14.01
Water 6.75
Fertilizer Including application 11.23 69.33
Irrigation (flood) Total 18 in./year 76.86
Management 5% of gross salesc 45.46
III. Total specified costs 607.01
IV. Return to land and trees 302.21


aDue to the freeze of January 12,
per box is preliminary.

Assumes material custom applied;
material cost.


1982, box yield was reduced 10% (375 boxes @ 90% 338 boxes); price


therefore, a 10 percent handling and supervision charge is added to


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


Other selected methods will











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 $40 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 costs and return
histories for these years, 1981-82, and a 5-year average are presented in
Table 6. These same cost and returns, inflated to 1982 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,
1977-78--1981-82

Total Net return
Price Gross specified to land
Year /box Yield revenue costsc and trees
--------Dollars----------------

1977-78 $1.59 375 596.25 358.91 237.34
1978-79 2.42 375 907.50 391.17 516.33
1979-80 3.29 375 1,233.75 490.54 743.21
1980-81 3.94 375 1,477o50 591.25 886.25
1981-82 2.69a 338b 909.22 607.01 302.21

5-yr. avg. 2.79 368 1,026.72 487.78 538.94

aEstimated at time of printing and is not a published price.
bYield reduced due to January, 1982 freeze.
CFixed costs such as taxes, debt service, and insurance are not
included.

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 1982 dollars) for a mature,
white seedless grapefruit grove producing citrus for fresh
fruit packing in Indian River area, 1977-78--1981-82

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

1977-78 150.2 $2.39 375 896.25 539.08 357.17
1978-79 135,0 3.27 375 1,226.25 528.08 698.17
1979-80 118.9 3.91 375 1,466.25 583.25 883.00
1980-81 107.7 4.24 375 1,590.00 636.78 953.22
1981-82 100.0 2.69 338 909.22 607.01 302.21

5-yr. avg. -- 3.30 368 1,214.40 578.84 635.56


aConsumer price index for
100), with 1982 consumer price


each year inflated to 1982 prices (1982 =
index estimated to be 293.5.


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. Copies of these, and other references listed, can be obtained
at your County Cooperative Extension Service Office or by writing the
author.










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 brush
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
the exact schedule shown here.


practices. Actual practices would not necessarily be carried out on











REFERENCES


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. 48-52.

Florida Citrus Spray Guide 1982. Univ. of Fla. Coop. Ext. Svco Ciro
393-H. Gainesville: Jan. 1982.

Muraro, Ronald P. "Comparative Citrus Budgets." Lake Alfred Agricultural
Research and Education Center. Lake Alfred, FL: Apr. 1982.

Muraro, Ronald P. "Summary Custom Rate Survey for Seventeen Indian River
Citrus Caretakers." Lake Alfred Agricultural Research and Education
Center. Lake Alfred, FL: Apr. 1982.

Muraro, Ronald P. "Cost for Establishing, Planting, and Maintaining a
Citrus Grove through Four Years of Age," Mimeo Handout, Lake Alfred
AREC, December 1981.

Muraro, Ronald P. "Cost of Planting and Maintaining Reset Citrus Trees
through Four Years," Mimeo Handout, Lake Alfred AREC, December 1981.

Muraro, Ronald P. and Jo Fred Kurras. "Estimating the Damage to Citrus
Trees and Resulting Value Loss Due to the January, 1982 Freeze,"
Florida Food and Resource Economics, No. 39, March-April, 1982,
University of Florida: Gainesville.

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 Nutri-
tional 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. Rpt. 112. Gainesville: Apr. 1979.







This public document was promulgated at an annual cost of $668.70 or 66,x9
per copy to furnish the citrus industry with current data on cost of pro-
duction for the Food and Resource Economics Department, Institute of Food
and Agricultural Sciences, and the University of Florida.