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UF FLAG IFAS PALMM



Budgeting costs and returns
ALL VOLUMES CITATION SEARCH THUMBNAILS PAGE IMAGE ZOOMABLE
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Permanent Link: http://ufdc.ufl.edu/UF00026156/00009
 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: 1982
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: UF00026156:00009

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
    Reference
        Page 11
Full Text
HR.--


Economic Information


Report 184





Budgeting Costs and Returns:
Indian River Citrus Production,
1982-83


Food and Resource Economics Department
Agricultural Experiment Stations and
Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611


June 1983


P. Muraro
















ABSTRACT


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


ABSTRACT . . .

ACKNOWLEDGEMENT . . .

INTRODUCTION . . .

METHOD OF DATA COLLECTION .

THE GROVE SITUATION . .

Age and Production Per Tree.

COST OF INPUTS . . .

SPRAY PROGRAM .. . .

COSTS AND RETURNS . .

REFERENCES . ..


o 9

C

* 9 r

o 9 9 . . ..


* 9 9

* .


0


. 9 .


. . . .


LIST OF TABLES


Table


1 Calculation of production per tree . . .

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

11









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, 1978-79--1982-83. . . 8

7 Estimated annual per acre cpsts and returns and 5-year
average costs and returns (inflated to 1983 dollars) for
a mature, white seedless grapefruit grove producing citrus
for fresh fruit packing in Indian River area, 1978-79--
1982-83 . . . . . 9

8 Schedule of production practices in Indian River groves .. 10


iii
















BUDGETING COSTS AND RETURNS:
INDIAN RIVER CITRUS PRODUCTION, 1982-83


Ronald 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
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


RONALD P. MURARO is assistant professor of food and resource economics
and area farm management economist. He is stationed at the Agricultural Re-
search and Education Center, Lake Alfred.









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 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


Age of tree


Boxes
/tree


Trees


Total
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 1983, 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 7.65 6.33
Mowing (9'-10' rotary) Hour 16.80 19.25 17.88
Mowing (sickle) Hour 14.50 23.00 17.58
Herbiciding Hour 14.80 23.00 17.97
Topping Hour 65.00 70.00 68.33
Hedging (2-side) tractor drawn Hour 70.00 75.00 73.33
Hedging (2-side) self propelled Hour 150.00 205.00 177.50
Chop brush Hour 16.50 21.00 18.58
Mowing brush Hour 24.00 28.00 26.00
Removing trees
(front-end loader) Hour 35.00 42.00 36.40
Power saw w/o operator Hour 4.50 7.25 6.13
Tractor and driver Hour 12.00 20.00 15.48
Truck and driver Hour 13.35 19.00 16.29
Water truck Hour 15.00 16.25 15.42
Rotary ditcher Hour 15.00 15.50 15.33
Fertilize, bulk Acre -- 5.17
Spray, dilute Tank 14.00 20.00 15.00
Dust, aerial Lb. -- -- 7.5


I










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


Item Unit Cost Your cost


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

Copper, tri-basic Lb. 0.92
Zinc, 36% Zn Lb. 0.32
Manganese-sulfate Lb. 0.15
Chlorobenzilate Pint 3.11
Difolatan Gal. 26.26
Ethion Pint 2.19
Vendex Lb. 17.21
Kelthane Pint 1.35
Benlate Lb. 11.10
Oil, 97% Gal. 2.22
Sticker Pint 1.17
Sulphur dust Lb. 0.14
Krovar II Lb. 7.00
16-0-16 fertilizer Ton 137.48
16-0-16-4 MgO fertilizer Ton 153.40
8-2-8 fertilizer Ton 96.93
Dolomite (delivered) Ton 23.63


~









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 6 Ibs. 6.07
Manganese 14 lbs. 2.31
Zinc 14 lbs. 4.93
Sticker 1 pint 1.17
Application (dilute) 2 tanks 30.00
Total 44.48
Post bloom application
Kelthane 16 pints 23.76
Sticker 1 pint 1.17
Application (dilute) 2 tanks 30.00
Total 54.93
Summer oil application
Oil 8 gals. 19.54
Copper 3 Ibs. 3.04
Application (dilute) 2 tanks 30.00
Total 52.58
Miticide application
Kelthane 6 pints 8.91
Sticker 1 pint 1.17
Application (dilute) 2 tanks 30.00
Total 40.08
Grand Total 192.07


L~










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 375 boxes @ $1.88a 705.00
II. Expenses
Weed control
Mow middles 5 times per year 44.68
How under trees & ditch banks 4 times per year 35.16
Pull vines By hand 9.69
Herbicide Krovar II, incl. appl. 22.58 112.11
Spray program From Table 4 192.07
Fertilizer
Material 16-0-16, 820 Ibs. 62.01
Application 2 @ $5.17/acre 10.34 72.35
Dolomite
Material 1/3 ton @ $23.63 7.88
Application 1 ton every third year
$5.66/ton @ 1/3 1.89 9.77
Pruning (maintenance)
Topping' ($68.33/hr. + 2.0 A/hr.) + 3 yrs. 11.39
Hedging ($73.33/hr. + 3.5 A/hr.) 4 2 yrs. 10.48
Removing brush 13.86 35.73
Tree replacement and care (1 through 4 years)
Remove trees 2.1 trees per acre 29.19
Prepare site 10.49
Plant resets Including 2.1 trees per acre 14.84
Water 7.16
Fertilizer Including application 11.44 73.12
Irrigation (flood) Total 18 in./year 80.95
Management 5% of gross sales 35.25
III. Total specified costs 611.35
IV. Return to land and trees 93.65


aPrice per box is preliminary.

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

COther 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 $40 to $50 per acre. Annual debt
payment may cost as high as $400 per acre ($3,000 average debt per acre @
12 percent 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, 1982-83, and a 5-year average are presented in
Table 6. These same cost and returns, inflated to 1983 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,
1978-79--1982-83


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

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

1978-79 $2.42 375 907.50 391.17 516.33
1979-80 3.35 375 1,256.25 490.54 765.71
1980-81 3.88 375 1,455.00 591.25 863.75
1981-82 2.51 338b 848.38 607.01 241.37
1982-83 1.88a 375 705.00 611.35 93.65

5-yr. avg. 2.81 368 1,034.08 538.26 495.82

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 1983 dollars) for a mature,
white seedless grapefruit grove producing citrus for fresh
fruit packing in Indian River area, 1978-79--1982-83


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

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

1978-79 137.1 $3.32 375 1,245.00 536.29 536.29
1979-80 120.8 4.05 375 1,518.75 592.57 926.18
1980-81 109.4 4.24 375 1,590.00 646.83 943.17
1981-82 103.1 2.59 338 875.42 625.83 249.59
1982-83 100.0 1.88 375 705.00 611.35 93.65

5-yr. avg. -- 3.22 368 1,184.96 602.57 582.39


aConsumer price index for
100), with 1983 consumer price


each year inflated to 1983 prices (1983 =
index estimated to be 298.1.







Table 8.--Schedule of production practices in Indian River grovesa


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 incheslyr.)
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.


_ __ _














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 (1971), pp. 48-52.

Florida Citrus Spray Guide 1983. Univ. of Fla. Coop. Ext. Svc. Cir.
393-H. Gainesville: Jan. 1983.

Muraro, Ronald P. "Comparative Citrus Budgets." Lake Alfred Agricultural
Research and Education Center (AREC) report. Lake Alfred, FL: Apr. 1983.

"Cost for Establishing, Planting, and Maintaining a Citrus
Grove through Four Years of Age." Lake Alfred AREC report. Lake Alfred
FL: Dec. 1981.

"Cost of Planting and Maintaining Reset Citrus Trees through
Four Years." Lake Alfred AREC report. Lake Alfred, FL: Dec. 1981.

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

S_"Summary Custom Rate Survey for Seventeen Indian River Citrus
Caretakers." Lake Alfred AREC report. Lake Alfred, FL: Apr. 1983.

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. Rpt. 112. Gainesville: Univ. of Fla., Apr. 1979.









This public document was promulgated at an annual cost of $412.51 or 27.5C
per copy to furnish the citrus industry with current data on cost of pro-
duction.