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UF FLAG IFAS PALMM



Budgeting costs and returns
ALL VOLUMES CITATION SEARCH THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00026156/00010
 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: 1983
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: UF00026156:00010

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

. P. Muraro


Economic Information


Pf0 Report 198




Budgeting Costs and Returns:
Indian River Citrus Production,
1983-84


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


June 1984















ABSTRACT


Estimated costs and returns of growing white seedless grapefruit
in the Indian River area of Florida are presented for the tenth
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 acre" represents
"gross grove acres" and not "net tree acres."

The budget cost teamss have been revised to reflect current
applications being used by growers--e.g., dilute tank is now
2X (modified dilute). The previous years' budget costs
presented in this report have also been revised to reflect
the changes.




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 tenth
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 acre" represents
"gross grove acres" and not "net tree acres."

The budget cost teamss have been revised to reflect current
applications being used by growers--e.g., dilute tank is now
2X (modified dilute). The previous years' budget costs
presented in this report have also been revised to reflect
the changes.




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

COST OF INPUTS. . .

SPRAY PROGRAM . ..

COSTS AND RETURNS . .

REFERENCES. . .


* a * *. .. '. '. a '.* *.


Tree.


. '. ." .5 .. .. 6 5 *


S .. S I 6 *6


LIST OF TABLES


Table

1 Calculation of production per tree. . ... .

2 Costs of inputs supplied on a custom basis used in cal-
culating costs. . .. .. . .

3 Costs of chemicals used in calculating costs. . .

4 Spray program used in budget based on custom rates and
application of one 500-gallon tank (2X) per acre .. .

5 Estimated annual per acre costs and returns for a
mature white seedless grapefruit on sour orange root-
stock, 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, 1979-80--1983-84. . 8

7 Estimated annual per acre costs and returns and 5-year
average costs and returns (inflated to 1984 dollars)
for a mature, white seedless grapefruit grove pro-
ducing citrus for fresh fruit packing in Indian River
area, 1979-80--1983-84. . . .. . 9

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
















BUDGETING COSTS AND RETURNS:
INDIAN RIVER CITRUS PRODUCTION, 1983-84


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
analysis 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
necessary to state the assumptions under which a budget was
constructed. The assumptions made as to a particular grove situation


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









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 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 whtte 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 1.--Calculation of production per tree


3 yrs.
4 yrs.
5-19 yrs.
Prod. 50% of
exp. yield
20 yrs.


Total no. Proportion No. ea.
all ages ea. agea age --- No. ----
70 x 0.03 = 2.1 x 1.0 = 2.10
70 x 0.03 = 2.1 x 1.7 = 3.57
70 x 0.45 = 31.5 x 4.9 = 154.35


x 0.03
x 0.37


S 2.1
S 25.9


x 4.0
x 8.0
Total boxes


8.40
207.20
375.62


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


S 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 1984, 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











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


Item Unit Low High Average Your cost

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

Labor Hour 5.60 7.95 6.77
Mowing (9'-10' rotary) Hour 16.00 22.39 18.72
Mowing (sickle) Hour 16.00 22.39 19.10
Herbiciding Hour 15.00 20.39 18.58
Topping Hour 68.00 81.50 73.17
Hedging (2-side) tractor drawn Hour 60.00 81.50 72.17
Hedging (2-side) self propelled Hour 150.00 180.00 165.00
Chop brush Hour 21.50 23.29 22.96
Mowing brush Hour 25.00 33.60 29.30
Removing trees
(front-end loader) Hour 35.00 41.50 38.00
Power saw w o operator Hour 4.00 7.25 6.17
Tractor and driver Hour 14.00 24.60 16.93
Truck and driver Hour 14.00 20.00 17.21
Water truck Hour 19.00 24.60 21.12
Rotary ditcher Hour 16.00 17.00 16.25
Fertilize, bulk Acre 4.00 6.25 5.42
Spray, dilute Tank 25.00 36.00 28.57
Spray, aerial (15 GPA) Acre -- 4.75
Dust, aerial Lb. -- -- 7.0


_i____l_ __~ _~_~~~~~~__^_ __~li~










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


Item Unit Cost Your cost


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

Copper, tri-basic Lb. 0.94
Zinc Lb. 0.40
Manganese Lb. 0.17
Chlorobenzilate Pint 3.42
Difolatan 4F Pint 3.37
Ethion Pint 2.35
Vendex 4L Pint 16.78
Kelthane MF Pint 3.42
Benlate Lb. 12.30
Oil, 97% Gal. 2.28
Sticker Pint 0.98
Sulphur dust Lb. 0.14
Krovar II Lb. 7.48
12-2-15 MgO fertilizer Ton 149.64
16-0-16-4 MgO fertilizer Ton 157.45
8-2-8 fertilizer plus minors Ton 115.95
Aragonite (delivered) Ton 17.00









Table 4.--Spray program used in budget based on custom rates and application of one 500-gallon tank (2X) per
acre


Item Amount/acre Costa Your cost

------------- Dollars --------------
Dormant application (April)
Copper (fungicide) 8 Ibs. 8.27
Manganese 10 lbs. 1.87
Zinc 10 Ibs. 4.40
Sticker 1 pint 1.08
Application (2X) 1 tank 28.57
Total 44.19
Post bloom application (May)
Vendex 4L 1.25 pints 23.08
Sticker 1 pint 1.08
Application (2X) 1 tank 28.57
Total 52.73
Summer oil application
Oil 5 gals. 12.54
Ethion 7.5 pints 19.39
Copper 3 lbs. 3.10
Application (2X) 1 tank 28.57
Total 63.60
Miticide application
Kelthane MF 6 pints 22.56
Sticker 1 pint 1.08
Application (aerial) 15 gals. 4.75
Total 28.39
Grand Total 188.91


is added to


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


- --- -- I~ ~~~~...-.-~---~-~-b-~-- ----~I--- I-r ~- r-ir~~

























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 @ $3.98a 1,492.50

II. Expenses
Weed control
Mow middles 5 times per year 42.90
Clean ditches 4.77
General grove work By hand 10.36
Herbicide (2 applications plus
spot treatment) Krovar II, incl. appl. 69.78 123.04
Spray programb From Table 4 188.91
Fertilizer
Material 12-2-15-4 MgO, 1085 1bs. 89.11
Application 2 @ $5.42/acre 10.84 99.95
Aragonite
Material 1/3 ton @ $17.00 5.67
Application 1 ton every third year
$5.70 ton @ 1/3 1.90 7.57
Pruning (maintenance)
Topping ($73.17/hr. 4 2.0 A/hr.) t 3 yrs. 12.20
Hedging ($72.17/hr. 3.5 A/hr.) 2 yrs. 10.31
Removing brush 4.89 27.40
Tree replacement and care (1 through 4 years)
Remove trees 2.1 trees per acre 16.97
Prepare sites 12.95
Plant resets Including 2.1 trees per acre 13.48
Water (Average 10 waterings) 12.60
Fertilizer Including application 15.02 71.02
Irrigation (flood) Total 18 in./year 72.50
Management 5% of gross salesc 74.63

III. Total specified costs 665.02

IV. Return to land and trees 827.48


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.









will allow a comparison of the grower's costs and returns with those of
the hypothetical case presented.
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, 1983-84, and a 5-year average are
presented in Table 6. These same cost and returns, inflated to 1984
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, 1979-80--1983-84


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

1979-80 $3.35 375 1,256.25 486.26 769.99
1980-81 3.88 375 1,455.00 586.07 868.93
1981-82 2.51 323b 848.38 601.36 247.02
1982-83 2.26 375 847.50 606.00 241.50
1983-84 3.98a 375 1,492.50 665.02 827.48

5-yr. avg. 3.20 368 1,177.60 588.94 588.66

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

Yield reduced due to January, 1982 freeze.

CFixed costs such as taxes, debt service, and insurance are not
included.










Table 7.--Estimated annual per acre costs and returns and 5-year average
costs and returns (inflated to 1984 dollars) for a mature,
white seedless grapefruit grove producing citrus for fresh
fruit packing in Indian River area, 1979-80--1983-84


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

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

1979-80 127.5 $4.27 375 1,601.25 619.98 981.27
1980-81 115.5 4.48 375 1,680.00 676.91 1,003.09
1981-82 108.8 2.73 338 922.74 654.28 268.46
1982-83 105.4 2.38 375 892.50 638.72 253.78
1983-84 100.0 3.98 375 1,492.50 665.02 827.48

5-yr. avg. -- 3.57 368 1,313.76 650.98 662.78

aConsumer price index for each year inflated to 1984 prices (1984 =
100), with 1984 consumer price index estimated to be 314.6.


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 8.--Schedule of production practices in Indian River groves'


Grove practice Date performed Comments


Mowing middles Five times each year One-way mowing
General grove work Throughout year Primarily winter months
Herbicide Two applications plus spot Late winter, spring
treatment and fall
Topping February thru June After fruit is harvested
Hedging and remove brush February thru June After fruit is harvested
Remove trees Winter months When other grove practices are not
being performed
Flood Irrigation Throughout year Average six irrigation applica-
tions per year (18.0 inches/yr.)
Clean ditches Throughout year As needed
Young trees Throughout year As needed
Fertilize Twice each year At least 130 pounds of nitrogen
(February & July) applied per acre each year
Dust (sulphur) September or October As needed
Spray (2X) Post bloom (April & May), One tank per acre; 500 gallons
summer oil, and fall per tank
miticide


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 (1971), pp. 48-52.

Florida Citrus Spray Guide 1984. Univ. of Fla. Coop. Ext. Svc. Cir.
393-J. Gainesville: Jan. 1984.

Muraro, Ronald P. "Comparative Citrus Budgets." Lake Alfred
Agricultural Research and Education Center (AREC) Report. Lake
Alfred, FL: Apr. 1984.

"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.

"Summary Custom Rate Survey for Sixteen Indian River Citrus
Caretakers." Lake Alfred AREC Report. Lake Alfred, FL: Apr.
1984.

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 $321.51 or
25.7 per copy to furnish the citrus industry with current data on cost
of production.