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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/UF00026156/00011
 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: 1984
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: UF00026156:00011

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

R. P. Mraro
R. P. Muraro


Economic Information
Report 208


Budgeting Costs and Returns:
Indian River Citrus Production,
1984-85


LII1. 1.


*- 'I 'i !' ]







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


June 1985

















ABSTRACT


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


1

















ABSTRACT


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


1



















TABLE OF CONTENTS


ABSTRACT . .


ACKNOWLEDGEMENT . .


INTRODUCTION . .


METHOD OF DATA COLLECTION .


THE GROVE SITUATION .


COST OF INPUTS. . .


SPRAY PROGRAM . .


COSTS AND RETURNS .. ..


HISTORICAL COST TRENDS. .


REFERENCES . .


Page


. . . . i


. . . . i


. . . . 1


. . . . 1


. . . . 1


. . . . 4


. . . . 4


. . . . 7


. . . . 7
S 11
4

4


7




11


LIST OF TABLES


Table


1 Schedule of production practices for an Indian River
Florida grapefruit grove . . . ...


2 Calculation of normal production per tree. . .

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


4 Costs of chemicals used in calculating costs . .


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


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









7 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, 1980-81--1984-85. ... 10

8 Estimated annual per acre costs and returns and 5-year
average costs and returns (inflated to 1985 dollars) for
a mature, white seedless grapefruit grove producing
citrus for fresh fruit packing in Indian River area,
1980-81--1984-85. . . . . ... 10


iii
















BUDGETING COSTS AND RETURNS:
INDIAN RIVER CITRUS PRODUCTION, 1984-85


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 anal-

ysis 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 Citrus Research and

Education Center in Lake Alfred. This annual survey is conducted in

February and March.


THE GROVE SITUATION


Shown in Table 1 are production practices for an Indian River grape-

fruit grove and times during the year when they would likely be performed.

There are two benefits to developing such a table for an individual grove.


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


___


~










Table I.--Schedule of production practices for an Indian River Florida grapefruit grove

IIM TH ANNUAL
JAN FEB MW AP MIAY JUN JUL AUG SEP OCT NOV DEC TOTAL
......... -..................................------------- ---------------------------------------------------- -- -------------------------

Total Revenue: 20% Final
AR2i ------- ----------ina -------------- --------------------------------------------------------------------
Less: Pick & Haul Cost I _........................................-... ...-------... .. .. .. ..-----.
C AdvLesseriee P ick au... ... ,--------------------- ----- -------- ..-----------------------------------








Labor, Soeneral Grtove
W i-ivertsewt Tax------- ---------------------1---------------- -------------------------"----------------------------------


_i L -------------------------------------------------------------------------------------------"-------"--'--------------------------------------

Disc----------------------------- ---------------

-------------------------------------------------- ----------------------- ------------ ----------------------
Labor, General Grove
Nok.l Pull Vines I
.,.L. v s_ .._.....................j.......................................... .... .... ...... .. .. .. -
Herbicide (1/2 Grove Acre P
.j5ivalent) I ....-----.------- ---------- .--------------- -- ------------ Tret t ------ ---...............


Sursy i Sog.iS.-t2 .----- -------- --------- ----------------- --- -----------

Frall .iticide .----------------------------------------------------------- ---- ---------------- --- ------
F. ...-- -.--..----------------------------------------..-----------------------------------
DusL.-st ---------------------------------- ------------------------------- --------- -------------------------- ---------------- --
........................... 3 .................. ...... ........... ........ ....... ... --.----- ------
S-- -- -------.----=--.------------------ --.


Tree Reoval -..-...-.. ..--.....---...--------------------- ----
?''"* *- -! -e---- ....I......-.... ra- 0...........- -..... .. .. .... .....----------
'-! a-; .--. --.-. .---.. -. -.........---.......-..... ----------------..-.------
'' I--------------------------- ----------
I --- ----- ---------------- -------------------------------- ------------
(Ci, ,n "0 si -- --- --- -- --- --- --- --- --- ---- --- --- --- --- --- --- --- --- --- --- --- --- ---
ove Tas r:i i --------------------- ------------------

------------- -------------------------------------------------------
ISi L JC-m l SPom -k -------------------------------------------------------------------------------- --"- ------------ --"------"---- --- -- -- --
te ~ iiH ~ 'L---------------------------------------------------------- -----------------------------------------
Net Returns (Lots) ---- ---- -------- ----- ---- ---- ---- ---- --


.....te s ................-------------------------------------------------------------------------------------------------------------

a This is a suggested schedule of practices. Actual practices would not necessarily be done on the exact schedule shomm here.
.. .. ... .. .. I, I IIl II










First, it shews what work is nteedc1d and when, so that operation- c-;,-, bf
pla-ined well in advance. Second, it can be helpfl.3 if an annIual cash
flow analysis is developed to plan financing. The individual grower can
achieve benefits by developing a plan for a particular grove.
Specific production practices vary from grove to grove making it
difficult to define a "typical" grove. Many combinations of practices
and various tree combinations accomplish production of acceptable yields
and returns. Although the example represents a white seedless grapefruit
grove, the cost and return data is designed to be applicable to most grove
situations. A grower, realtor, or land appraiser can substitute indivi-
dual grove costs and expected returns into the budget format and develop
a budget for a particular grove. A "your cost" column is provided for
this purpose.

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;
6. Tree density is 70 trees per acre; and
7. Custom-caretaker providing grove management.

As a result of tree losses and replacement, the tree ages will vary.
The budget reflects the following age distribution:

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









Calculation of normal production per tree is shown in Table 2.
Note that the proportion of trees by age column only adds to 91 percent
since 9 percent of the trees are non-bearing.


Table 2.--Calculation of normal 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 = 31.5 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 = 25.9 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 3).


COSTS OF INPUTS


Costs for various production inputs are the average of the data
obtained from the surveys. These custom costs are shown in Table 3. The
various input costs are shown in Table 4.
Both tables, as do the others, have a column reserved for the indivi-
dual grower to insert data from a particular grove. This will allow a
comparison of the grower's costs and returns with those of the hypothet-
ical case presented.


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 1985, nor is it necessarily the most
economical spray program. Most growers of fruit for fresh packing use at
least four sprays in their insect and disease control programs. These
costs are presented in the budget.










Table 3.--Costs of inputs supplied on a custom basis used in calculating costs


Item Unit Low High Average Your cost


Labor

Mowing (9'-10' rotary)

Mowing (sickle)
Herbiciding

Topping

Hedging (2-side) tractor drawn

Hedging (2-side) self propelled

Chop brush

Mowing brush
Removing trees
(front-end loader)
Power saw w/out operator

Tractor and driver

Truck and driver

Water truck
Rotary ditcher

Fertilize, bulk

Spray, 2X

Spray, aerial (15 GPA)
Dust, aerial

Plant trees
Dolomite or lime


Hour
Hour

Hour

Hour
Hour

Hour

Hour

Hour

Hour


Hour
Hour

Hour
Hour

Hour

Hour

Acre
Tank

Acre

Lb.

Each
Ton


-----------------------

6.00 8.00

17.00 24.00

18.00 24.00
17.50 24.00

70.00 75.00

70.00 80.00

150.00 180.00

21.50 25.00
25.00 33.60


31.50

4.00

15.50

15.00

15.00
16.75

4.00
25.00




1.15


37.50

8.25

25.00

25.00

21.00
28.50

6.75
36.00




1.50


Dollars ----------------------
6.92

21.41

21.29
20.58

74.00

74.00

165.00

23.83

29.30


34.71

6.38

18.38

17.80

17.14

21.13

5.25
28.67

4.50

7.0C

1.30

7.10


- t-~____ C-


----











Table 4.--Costs of chemicals used in calculating costs


Item Unit Cost Your cost


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

Copper, tri-basic Lb. 0.96
Zinc Lb. 0.43
Manganese Lb. 0.18
Chlorobenzilate Pint 3.57
Difolatan 80 Sprills Lb. 4.75
Ethion Pint 2.43
Vendex 4L Pint 16.78
Kelthane MF Pint 3.26
Benlate Lb. 12.76
Oil, 97% Gal. 2.27
Sticker Pint 1.34
Sulphur dust Lb. 0.14
Krovar II Lb. 7.60
12-2-15-2.4 MgO fertilizer Ton 144.30
16-0-16-4 MgO fertilizer Ton 154.24
8-2-8 fertilizer plus minors Ton 117.81
Aragonite (delivered) Ton 18.00


_ .e









Table 5 outlines this program as a post bloom, a supplemental post
liloom miticidee), a summer oil, and a fall miticide application. Each
spray application is a modified dilute (2X) spray.


COSTS AND RETURNS


Table 6 shows the estimated costs and returns based on the fore-

going assumptions and data. 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.
Total revenue ($1,323.75) is based on preliminary estimated on-tree
price per box (price net of picking and hauling costs). Total specified
costs ($680.95) is comprised of grove care costs ($614.77) plus a manage-
ment cost ($66.18). Return to land and trees ($642.80) represents net
return above fixed costs.
Other cost items which are not included in the budget are ad valorem
taxes, water drainage district taxes, interest on grove investment, crop
insurance, and Florida Department of Citrus Assessments. 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).


HISTORICAL COST TRENDS


Annual budgets of costs and returns for mature, fresh, white seed-
less grapefruit in the Indian River area have been developed and published
the past four years. Estimated cost and return histories for 1980-81
through 1983-84 along with 1984-85, and a five-year average are presented
in Table 7. The affects of recent freezes on Florida's annual grapefruit
supply has resulted in a fluctuating on-tree price per box. With
increasing operating costs, annual net return to land and trees have
"roller coastered". To allow comparisons in current values, these same
costs and returns, inflated to 1985 dollars, are presented in Table 8.










Table 5.--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 --------------

Post bloom application (April)
Copper (fungicide) 8 lbs. 8.45
Manganese 10 lbs. 1.98
Zinc 10 lbs. 4.73
Sticker 1 pint 1.48
Application (2X) 1 tank 28.67
Total 45.31
Supplemental post bloom application (May)
Vendex 4L 1.25 pints 23.07
Sticker 1 pint 1.48
Application (2X) 1 tank 28.67
Total 53.22
Summer oil application
Oil 5 gals. 12.49
Ethion 7.5 pints 20.04
Copper 3 Ibs. 3.17
Application (2X) 1 tank 28.67
Total 64.37
Fall miticide application

Kelthane MF 6 pints 21.54
Sticker 1 pint 1.48
Application (aerial) 15 gals. 4.50
Total 27.52
Grand Total 190.42


is added to


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


------------L-~l~llll














Table 6.--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 @ $3.53a 1,323.75

II. Expenses
Weed control
Mow middles 5 times per year 45.28
Clean ditches 4.98
General grove work By hand 10.59
Herbicide (2 applications plus
spot treatment) Krovar II, incl. appl. 78.09 138.94
Spray program From Table 4 190.42
Fertilizer
Material 12-2-15-2.4 MgO, 1085 Ibs. 86.11
Application 2 @ $5.25/acre 10.50 96.61
Aragonite
Material 1/3 ton @ $18.00 6.00
Application 1 ton every third year
$7.10 ton @ 1/3 2.37 8.37
Pruning (maintenance)
Topping ($74.00/hr. + 2.0 A/hr.) + 3 yrs. 12.33
Hedging ($74.00/hr. + 3.5 A/hr.) + 2 yrs. 10.57
Removing brush 5.07 27.97
Tree replacement and care (1 through 4 years)
Remove trees 2.1 trees per acre 16.89
Prepare sites 13.60
Plant resets Including 2.1 trees per acre 16.16
Water (Average 10 waterings) 14.20
Fertilizer Including application 15.85 76.70
Irrigation (flood) Total 18 in./year 75.76
Management 5% of gross sales 66.18

III. Total specified costs 680.95

IV. Return to land and trees 642.80


aOn-tree price per box is preliminary.


b
Assumes material custom applied; therefore, a 10 percent handling and supervision
material cost.


charge is added to


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









Table 7.--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,
1980-81--1984-85


On-tree Total Net return
price Gross specified to land
Year /box Yield revenue costsc and trees

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

1980-81 $3.88 375 1,455.00 586.07 868.93
1981-82 2.23 323b 720.29 594.95 125.34
1982-83 1.86 375 697.50 598.00 99.50
1983-84 2.33 375 873.75 634.08 239.67
1984-85 3.53a 375 1,323.75 680.95 642.80

5-yr. avg. 2.77 368 1,019.36 618.81 400.55

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 crop insurance are not
included.


Table 8.--Estimated annual per acre costs and returns and 5-year average
costs and returns (inflated to 1985 dollars) for a mature,
white seedless grapefruit grove producing citrus for fresh
fruit packing in Indian River area, 1980-81--1984-85


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

1980-81 119.3 $4.63 375 1,736.25 699.18 1,037.07
1981-82 112.4 2.50 338 845.00 668.72 176.28
1982-83 108.9 2.03 375 761.25 651.22 110.03
1983-84 104.5 2.43 375 911.25 662.61 248.64
1984-85 100.0 3.53 375 1,323.75 680.95 642.80

5-yr. avg. -- 3.02 368 1,111.36 672.54 438.82

aConsumer price index for each year inflated to 1985 prices (1985 =
100), with 1985 consumer price index estimated to be 325.1.










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 1985. Univ. of Fla. Coop. Ext. Svc. Cir.
393-K. Gainesville: Jan. 1985.

Koo, R. C. J., editor. Recommended Fertilizers and Nutritional Sprays
for Citrus. Univ. of Fla. Agr. Exp. Sta. Bull. 536D. Gainesville:
March 1984.

Muraro, Ronald P. "Comparative Citrus Budgets." Lake Alfred Citrus
Research and Education Center (CREC) Report. Lake Alfred, FL:
Apr. 1985.

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

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

S"Summary Custom Rate Survey for Twenty-one Indian River Citrus
Caretakers." Lake Alfred CREC Report. Lake Alfred, FL: Apr.
1985.

Savage, Zach. Citrus Yields Per Tree Age. Agr. Ext. Ser. 60-8. Univ.
of Fla., Gainesville. 1960.

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.