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Budgeting costs and returns
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Permanent Link: http://ufdc.ufl.edu/UF00026157/00003
 Material Information
Title: Budgeting costs and returns
Series Title: Economic information report
Portion of title: Budgeting costs and returns for Central Florida citrus production
Budgeting costs and returns for for <sic> Central Florida 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: 1977
Frequency: annual
regular
 Subjects
Subjects / Keywords: Citrus fruit industry -- Economic aspects -- Periodicals -- Florida   ( lcsh )
Citrus fruits -- Marketing -- Periodicals -- Florida   ( lcsh )
Genre: governmental publication   ( marcgt )
serial   ( sobekcm )
 Notes
General Note: Title varies slightly: <1992-93>- Budgeting costs and returns for Central Florida Citrus Production.
General Note: Description based on: 1978-79; cover title.
 Record Information
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 000313320
oclc - 08042638
notis - ABU0053
lccn - sn 82000631 /g
System ID: UF00026157:00003

Table of Contents
    Front Cover
        Front cover
    Abstract
        Abstract
    Table of Contents
        Page i
    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












ABSTRACT


Estimated costs and returns of growing round oranges
in the central Florida citrus area are presented for the
fourth 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, central Florida, budgeting,
costs and returns.















TABLE OF CONTENTS


INTRODUCTION. . . .

METHOD OF DATA COLLECTION .

THE GROVE SITUATION . .
Age and Production Per Tree .

COSTS OF INPUTS . . .

SPRAY PROGRAM . . .

COSTS AND RETURNS . .

ADDITIONAL SOURCES OF INFORMATION

REFERENCES. . . .


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LIST OF TABLES
Table

1 Calculation of production per acre. . .

2 Costs of inputs supplied on a custom basis
used in calculating 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, round orange grove producing
citrus for processing in central Florida. .

6 Estimated annual per acre costs and returns
for a mature, round orange grove producing
citrus for processing in central Florida,
1974-75--1977-78. . . . .

7 Schedule of production practices in central
Florida citrus groves . . .













BUDGETING COSTS AND RETURNS:
CENTRAL FLORIDA CITRUS PRODUCTION, 1977-78


R. P. Muraro and Ben Abbitt


INTRODUCTION


Due to the manner in which data become available,

there is always a time lag between the collection of

production costs and returns information and when they are

analyzed and published. Hence, production costs in one

year are understood to relate to the crop which is harvested

the following season.

In order to obtain current data for various decision

making purposes, a budget may be constructed by developing

a list of production practices and their costs. 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 data can then be used as a basis for management

decision making.



R. P. MURARO, Farm Management Extension Agent, Polk
County, Bartow, FL 33830. BEN ABBITT, Area Economist,
Food and Resource Economics Department, University of
Florida, AREC, Lake Alfred, FL 33850.








METHOD OF DATA COLLECTION


The data presented here were developed from surveying

custom operators, input suppliers, and from discussions

with colleagues at the Agricultural Research and Education

Center in Lake Alfred. This annual survey is conducted in

January.


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 are thought to be typical of

a healthy, mature, rough lemon-rooted round orange grove

in the ridge area, or central part of the state.

Specific production practices vary from grove to

grove. Many combinations of practices and various tree

combinations accomplish the production of acceptable

yields and returns. The generation of costs and returns

data is designed to be applicable to any grove situation.

A grower can substitute his 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, good management and cultural

practices are assumed. Beyond this general assumption,

the following specifics are assumed:







A 20-year-old grove, irrigated;
Type is round orange on rough lemon rootstock;
Tree loss is 2 percent annually;
Trees are pulled and replaced when production
falls below 50 percent of expected yield;
Production is for processing only; and
Tree spacing is 70 trees per acre.


Age and Producation Per Tree


Situation
2% pulled and replanted
2% 1 year old
2% 2 years old
2% 3 years old
2% 4 years old
28% 5-19 years old
2% producing 50% of expected yield
60% 20 years old


Boxes/tree
0.0
0.0
0.0
0.6
0.9
3.6
3.0
6.1


Table l.--Calculation of production .per acre..

Trees Percentage age Boxes/tree Total boxes

70 0.02 0.6 0.84
70 0.02 0.9 1.26
70 0.28 3.6 70.56
70 0.02 3.0 4.20
70 0.60 6.1 256.20
Total boxes/acre 333.06


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.

This table, as do the others, has 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.







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

Item Unit Low High Average Your cost

------------- -Dol------ -------
Dilute spray Tank 8.50 13.50 9.23
Dusting, ground Acre 3.00 6.50 4.74
Fertilizing (bulk) Acre 3.00 6.00 3.89

Dolomite application Acre 2.50 5.00 3.73
Chopping Acre 3.50 5.30 4.35
Discing Acre 3.50 5.30 5.25
Topping Hr. 225.00
Hedging, 2-sides Hr. 33.00 150.00 70.17

Front-end loader Hr. 20.00 32.50 25.42
Bulldozer Hr. 15.00 22.00 19.00
Truck and driver Hr. 7.50 12.50 9.70
Tractor and driver Hr. 8.50 12.25 10.15
Chain saw Hr. 2.00 5.00 3.42
Labor Hr. 2.65 5.25 4.21


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

Item Unit Cost Your cost

------ -ottau ------
Chlorobenzilate Pint 2.05
Neutral copper, 53% cu Lb. 0.84
Zinc, 36% zn Lb. 0.35
Borates Lb. 0.36
Manganese, 24-27% mg Lb. 0.10
Ethion Pint 1.67

Oil Gal. 0.96
Kelthane Pint 2.00
Sulphur Lb. 0.06
Sticker Pint 0.76
Krovar II Lb. 5.08
16-0-16 Ton 97.20
Dolomite Ton 10.67



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 1978, nor is it necessarily the most







economical spray program. Most growers of fruit for

processing use at least two sprays and one dust in their

insect and disease control program. These costs are

presented in the budget.

Table 4 outlines this program as a post bloom, a

summer oil, and a fall miticide application. The first

two are dilute sprays while the third is a ground

application of sulphur. Table 4 shows a supplemental

miticide application that may be used when additional

control for rust mite is needed.


COSTS AND RETURNS


Table 5 shows the estimated costs and returns

based on data presented earlier, and with a custom-caretaker

providing grove management. Several items of cost were

not included in Table 5. For instance, a supplemental

miticide (Table 4) would add $27.57 to operating costs.

Ad valorem taxes in Polk County last year would have

added another $20-$30 per acre.

Costs for freeze protection were not included. A

crew standing by to light heaters two nights in one season

would result in an extra cost of approximately $12.00 per

acre. The cost of setting up and removing heaters and

the amount of fuel necessary for one or two nights is not

included in this cost. In addition, a wide variation may

exist in the cost of fuel from one area to another.

Individual growers are in a better position to estimate

these "firing" costs. Firing costs are a cost









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


rates and


Item Amount/acre Cost Your cost
------ Doloul ----
Post bloom application
Chlorobenzilate 2 pints 4.10
Zinc 15 Ibs. 5.25
Borates 1.25 lbs. 0.45
Manganese 15 Ibs. 1.50
Sticker 1 pint 0.76
Application 2 tanks 18.46
Total 30.52

Summer oil application
Ethion 6 pints 10.02
Oil 8 gals. 7.68
Copper, 53% cu 3 Ibs. 2.52
Application 2 tanks 18.46
Total 38.68

Fall miticide application
Sulphur 70 Ibs. 4.20
Application, ground $4.74/acre 4.74
Total 8.94
Grand total 78.14

Supplemental miticide application
Ethion 5 pints 8.35
Sticker 1 pint 0.76
Application 2 tanks 18.46
Total 27.57






Table 5.--Estimated annual per acre costs and returns for a mature, round orange grove producing citrus for
processing in central Florida

Item Description Amount Your cost

------------ DotaA -----------
I. Revenue 333 boxes @ $3.95 1,315.35

II. Expenses
Spray program From Table 4 78.14
Fertilizer
Material 16-0-16, 832 Ibs. 40.77
Application 2 @ $3.89 7.78 48.55
Dolomite
Material 1/3 ton @ $10.67 3.56
Application 1 ton every third year 1.24 4.80
Weed Control
Material Krovar II, 2 Ibs./acre 10.16
Application 3.67 13.83
Discing Twice/year 10.50
Chopping Twice/year 8.70
Pruning (maintenance)
Topping ($225/hr. + 8.5 acre/hr.) + 3 years 8.82
Hedging ($70.17/hr. + 4 acre/hr.) + 2 years 8.77
Chopping brush Custom rate 4.35
Irrigation 13.2 inches/year 101.05
Tree replacement and care
Pull trees and remove 1.4 trees/acre 10.65
Prepare site, plant and
ring (Includes trees) 9.00
Water (Avg. 14 waterings) 11.90
Fertilizer (Includes application) 5.10
Bank and unbank 4.17 40.82
;.L:. .;Ii:.-*-,-t 5% of gross sales 65.77

III. Total Specified Costs 394.10

IV. Return to Land and Trees 921.25

aIncludes $73.00 per acre of fixed costs; operating costs are $28.05 per acre.


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


methods will give


--







of production; hence, if known, they should be included

in the expense column in Table 5.

Estimated annual costs and returns for processed,

round oranges in central Florida have been collected and

published the past three years. Estimated cost and

return histories for these years and 1977-78 are

presented in Table 6.


Table 6.--Estimated annual per acre costs and returns for a
mature, round orange grove producing citrus for
processing in central Florida, 1974-75--1977-78

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

------------- DoRafc -------------
1974-75 $1.50 333 499.50 324.32 175.18
1975-76 2.00 333 666.00 339.95 326.05
1976-77 1.90 333 632.70 346.19 286.51
1977-78 3.95 333 1,315.35 394.10 921.25

aEstimated at time of printing and are not published prices.


Shown in Table 7 are production practices for

Florida 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.--Schedule of production practices in central Florida citrus groves

Month
Practices Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

Spray program
Post bloom X X
Summer oil X X
Fall X X X
Fertilizer (custom) X X
Dolomite (custom) X X X X
Weed control
Chemical X X
Mechanical X X X X X X X X
Hand (pulling vines) X X X
Pruning
Hedging (custom) X
Topping (custom) X
Irrigation X X X X X
Tree replacement
Pull trees X X
Prepare sites X X
Plant resets X
Ring X
Water X
Fertilizer X X X X X X X X
Weed control X


aThis is a suggested schedule of
schedule shown here.


practices.


Actual practices would not necessarily be done on the exact







ADDITIONAL SOURCES OF INFORMATION


Since 1931, through the cooperation of Florida citrus

growers, the Florida Agricultural Experiment Station 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. Annual cost and return histories

can be made available upon request.

The most recent time span (consecutive years) that

these annual cost and return figures have been averaged

is the five growing seasons 1971-76. These annual cost

and return histories and preceding histories are recorded

in Factors to Consider in Purchasing a Citrus Grove.

Copies of this circular can be obtained at your County

Cooperative Extension Service Office or by writing

either author.




















Dr. Donald L. Brooke, Professor in the Food and
Resource Economics Department, University of Florida,
IFAS, Gainesville, has conducted this annual study in
recent years.







REFERENCES


Brooke, D. L. "Citrus Costs and Returns in Florida,
Season 1975-76 with Comparisons." Economic
Information Report 76. Food and Resource Economics
Department, IFAS, Gainesville, Florida. August 1977.


Brooke, Donald L. and Ben Abbitt. Factors to Consider in
Purchasing a Citrus Grove. Florida Cooperative
Extension Service Circular 437. University of
Florida, IFAS, Gainesville, Florida. 1978.


DuCharme, E. P. "Tree Loss in Relation to Young Tree
Decline and Sand Hill Decline of Citrus in Florida."
Proceedings of the Fla. State Hort. Soc. 84:48-62.
October 1970.


Florida Citrus Spray Guide 1978. University of Florida
Cooperative Extension Service Circular 393-D.
January 1978.


Harrison, D. S. and R. C. J. Koo. Sprinkler Irrigation
Systems for Citrus. University of Florida Agr. Ext.
Rpt. AE 73-15 (Rev.), Gainesville, Florida. August
1974.


Muraro, Ronald P. "Comparative Citrus Budgets." Bartow:
Polk County Extension Service. March 1976.


Muraro, Ronald P. "Summary Custom Rate Survey for
Interior Citrus Caretakers." Bartow: Polk County
Extension Service. March 1976.


Reitz, H. J., C. D. Leonard, et al. Recommended Fertilizers
and Nutritional Sprays for Citrus. University of
Florida Agr. Exp. Sta. Bull. 536C. December 1972.






This public document was promulgated at an annual cost of
$2,000 or $1.33 per copy to furnish the citrus industry
with current data on cost of production for the Food and
Resource Economics Department, Institute of Food and
Agricultural Sciences, and the University of Florida.