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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/UF00026156/00012
 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: 1985
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: UF00026156:00012

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

22 4P
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Economic Information
Report 226


Budgeting Costs and Returns:
Indian River Citrus Production,
1985-86


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


June 1986


Oluraro












ABSTRACT


Estimated costs and returns of growing white seedless grapefruit in
the Indian River area of Florida are presented for the twelfth consecu-
tive 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 of this manuscript.












ABSTRACT


Estimated costs and returns of growing white seedless grapefruit in
the Indian River area of Florida are presented for the twelfth consecu-
tive 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 of this manuscript.












TABLE OF CONTENTS


Page

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

ACKNOWLEDGEMENT . . . .. . . i

LIST OF TABLES . . . . . .. ii

INTRODUCTION. . . . ..... . 1

METHOD OF DATA COLLECTION . . . .. 1

THE GROVE SITUATION . . . .. . 1

COSTS OF INPUTS. .. . . . .. . .. 4

SPRAY PROGRAM. . . . . . . 4

COSTS AND RETURNS . . . . . 7

HISTORICAL COST TRENDS. . . . .. . 7

REFERENCES. . . . . . . .. 11


LIST OF TABLES


Table

1 Schedule of production practices for an Indian River
Florida grapefruit grove . . . . 2

2 Calculation of normal production per tree .. .... 4

3 Costs of inputs supplied on a custom basis used in cal-
culating costs. . . . . .. 5

4 Costs of chemicals used in calculating costs . 6

5 Spray program used in budget based on custom rates and
application of one 500-gallon tank (2X) per acre .. 8

6 Estimated annual per acre costs and returns for a mature
white seedless grapefruit on sour orange rootstock,
Indian River area, Florida. .. . . . 9








7 Estimated annual per acre costs and returns for 5-year
average costs and returns for a mature, white seedless
grapefruit grove producing citrus for fresh fruit
packing in Indian River area, 1981-82--1985-86. ... 10

8 Estimated annual per acre costs and returns and 5-year
average costs and returns (inflated to 1986 dollars) for
a mature, white seedless grapefruit grove producing
citrus for fresh fruit packing in Indian River area,
1981-82--1985-86. . . .... .. .... 10


iii








BUDGETING COSTS AND RETURNS:
INDIAN RIVER CITRUS PRODUCTION, 1985-86


Ronald P. Muraro


INTRODUCTION


Budget analysis provides the basis for many grower decisions.
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 opera-
tors, 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.
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.
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 grape-


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 1.-Schedule of production practices and budget items for an Indian River Florida grapefruit grove

Month Annual
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec total


Total revenue: 20% Final
deposit payment
Less: Pick & haul cost X
DOC advertisement tax X
Adjusted revenue

Grove expenses:
Disc
Chop
Mow X X X X X
Labor, general grove
work, pull vinesX X
Herbicide (1/2 grove acre Spot
equivalent) _X X Treatment
Spray: Post bloom/nutritional X
Summer oil/greasy spot X
Fall miticide X
Supplemental miticide
Dust
Fertilizer 65# N/A 65# N/A Dolomite
Hedging and topping Hedge
Brush removal/chop brush Chop brush
Tree removal X
Young tree care X X X X X
Irrigation (times/month) 2 2 2 1 1 1
Miscellaneous (clean ditches) X
Grove taxes including water management
Interest expense X
Annual principal payment on mortgage X
Total grove expenses

Net returns (loss)

Cumulative net returns

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












fruit grove, the cost and return data is designed to be applicable to
most grove situations. A grower, realtor, or land appraiser can substi-
tute individual 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, above average 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.
a
all ages ea. age age ----No.---
3 years 70 x 0.03 = 2.1 x 1.0 = 2.10
4 years 70 x 0.03 = 2.1 x 1.7 = 3.57
5-19 years 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 years 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 annual custom rate and chemical and fertilizer surveys.
The custom rate costs are shown in Table 3 and the various chemical and
fertilizer costs are shown in Table 4.
Both tables, as do the others, have a column reserved for the
individual grower 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.

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 1986, 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
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, lime, or aragonite


Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Acre
Tank
Acre
Lb.
Each
Ton


6.00
17.50
17.00
16.50
76.00
71.00
180.00
19.00
32.00
4.00
15.50
15.00
16.50
16.00
4.00
26.00



1.15
--


8.00
24.00
25.00
25.00
82.75
82.75
220.00
23.00
38.25
8.00
28.50
28.50
28.50
23.00
6.75
40.00



1.50


7.23
21.52
20.63
21.05
79.58
77.19
200.00
21.58
35.31
6.18
18.16
18.29
20.75
18.42
5.33
28.08
5.00
8.0
1.30
7.38


ars-------------------- -


- ------- -


1












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


Item Unit Cost Your cost


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


Copper, tri-basic
Zinc
Manganese
Chlorobenzilate
Difolatan 80 Sprills
Ethion
Vendex 50W
Kelthane MF
Benlate
Oil, 97%
Sticker
Sulphur dust
Krovar II
12-2-15-2.4 MgO fertilizer
16-0-16-4 MgO fertilizer
8-2-8 fertilizer plus minors
Aragonite (delivered)


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


0.95
0.37
0.20
3.41
5.02
2.51
17.93
3.33
13.12
2.13
0.94
0.14
7.90
140.01
144.72
104.93
18.00











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

COSTS AND RETURNS


The estimated costs and returns based on the foregoing assumptions
and data are shown in Table 6. Total revenue ($1,458.75) is based on
preliminary estimated on-tree price per box (price net of picking and
hauling costs). Total specified costs ($672.07) is comprised of grove
care costs ($599.13) plus a management cost ($72.94). Return to land and
trees ($786.68) 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 other grower 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
seedless grapefruit in the Indian River area have been developed and
published the past four years. Estimated cost and return histories for
1981-82 through 1984-85 along with 1985-86, 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.
However, even with increasing operating costs, annual net return to land
and trees has increased over the five-year period. To allow comparisons
in current values, these same costs and returns, inflated to 1986
dollars, are presented in Table 8.











Table 5.-Spray program used in budget based on custom
acre


rates and application of one 500-gallon tank (2X) per


Item Amount/acre Costa Your cost


Post bloom application (April)
Copper (fungicide)
Manganese
Zinc
Sticker
Application (2X)
Total


Supplemental post bloom application (May)
Vendex 4L
Sticker
Application (2X)
Total
Summer oil application
Oil
Ethion
Copper
Application (2X)
Total


Fall miticide application
Kelthane
Sticker
Application (aerial)
Total
Grand total


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


8 Ibs.
10 lbs.
10 lbs.
1 pint
1 tank


1.25 lbs.
1 pint
1 tank


5 gals.
7.5 pints
7.0 lbs.
1 tank


6 pints
1 pint
15 gals.


8.36
2.20
4.07
1.03
28.08
43.74


24.65
1.03
28.08
53.76


11.05
20.07
7.32
28.08
66.52


21.96
1.03
5.00
27.99
192.01


a
Assumes material is custom applied; therefore, a 10 percent
to the material cost.


handling and supervision charge is added










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.' 1,458.75

II. Expenses
Weed control
Mow middles 5 times per year 48.75
Clean ditches 4.98
General grove work By hand 11.01
Herbicide (2 l. : r
plus spot '. Krovar II, incl. apple. 63.4E 128.22
.r program From Table L 192.01
Fertilizer
Materialc 12-2-15-2.4 MgO, 1085 lbs. 83.25
Application 2 @ $5.25/acre 10.50 93.75
Aragonite
Material0 1/3 ton @ $18.00 6.00
Application 1 ton every third year
$7.38 ton @ 1/3 2.46 8.46
Pruning (maintenance)
Topping ($79.58/hr. 2.0 A/hr.) + 3 yrs. 13.26
Hedging ($77.19/hr. + 3.5 A/hr.) + 2 yrs. 11.03
Removing brush 5.12 29.41
Tree replacement and care (1 through 4 years)
Remove tree 2.1 trees per acre 18.04
Prepare and plant resets Including 2.1 trees per acre 24.5?
Water (Average 10 waterings) 15.5S
Fertilizer Including application 75.31
Irrigation (flood) Total 18 in./year 71.97
Management 5% of gross sales 72.94

III. Total specified costs 672.07

IV. Return to land and trees 786.68

On-tree price per box is preliminary; assumes average of all methods of sale (fresh and pocessed .

The herbicide costs shoim represent the cost for an existing program. Te Initial cost for beginning a herbicide program
would be $23.03 for application and $57.83 for material.

CAssumes material custom applied; therefore, a 10 percent -- 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.










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
area, 1981-82--1985-86


fresh fruit packing in Indian River


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


$2.23a
1.86a
2.28a
2,70a
3.89b


323c
375
375
375
375


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

720.29 586.75 133.54


697.50
855.00
1,012.50
1,458.75


589.75
625.34
655.941
672.07


107.75
229.66
356.56
786.68


5-yr. avg.


2.59


945.35


605.97 339.38


a
On-tree prices for


all sales


methods as reported by the Florida


Crop and Livestock Reporting Service.

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

Yield reduced due to January 1982 freeze.

d
Fixed costs such as taxes, debt service, and crop insurance are
not included. A management cost of 5% of gross revenue is included.


Table 8.-Estimated annual per acre costs and returns and 5-year average
costs and returns (inflated to 1986 dollars) for a mature,


white seedless grapefruit grov
fruit packing in Indian River


e producing citrus for fresh
area, 1981-82--1985-86


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

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

1981-82 113.0 $2.52 338 851.76 663.03 188.73
1982-83 109.5 2.04 375 765.00 645.78 119.22
1983-84 105.0 2.39 375 896.25 656.61 239.64
1984-85 101.4 2.74 375 1,027.50 665.12 362.38
1985-86 100.0 3.89 375 1,458.75 672.07 786.68

5-yr. avg. -- 2.72 365 992.80 660.52 332.28

aConsumer price index for each year inflated to 1986 prices (1986
100), with 1986 consumer price index estimated to be 326.8.


1981-82
1982-83
1983-84
1984-85
1985-86











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.

Citrus Summary 1985. Florida Crop and Livestock Reporting Service.
Florida Agricultural Statistics. Jan. 1986.

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 1986. Univ. of Fla. Coop. Ext. Svc. Cir.
393-L. Gainesville: Jan. 1986.

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. 1986.

"Cost for Establishing, Planting, and Maintaining a Citrus
Grove through Four Years of Age." Lake Alfred CREC Report. Lake
Alfred, FL: Nov. 1985.

"Cost of Planting and Maintaining Reset Citrus Trees through
Four Years." Lake Alfred CREC Report. Lake Alfred, FL: Aug.
1985.

"Summary Custom Rate Survey for Twenty Indian River Citrus
Caretakers." Lake Alfred CREC Report. Lake Alfred, FL: Apr.
1986.

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