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Budgeting costs and returns
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Permanent Link: http://ufdc.ufl.edu/UF00026157/00007
 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: 1981
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: UF00026157:00007

Table of Contents
    Front Cover
        Front cover
    Abstract
        Page i
    Acknowledgement
        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
















ABSTRACT


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


ACKNOWLEDGEMENT


Appreciation is extended to Mrs. Jane Wilson for typing the final
draft.

















ABSTRACT


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


ACKNOWLEDGEMENT


Appreciation is extended to Mrs. Jane Wilson for typing the final
draft.

















TABLE OF CONTENTS


Page

ABSTRACT. . . . . . . .. i

ACKNOWLEDGEMENT . . . . . ... i

INTRODUCTION . . . .. . . 1

METHOD OF DATA COLLECTION . . ... .. . 1

THE GROVE SITUATION . . . . . 1

Age and Production Per Tree. .. . . . 2

COSTS OF INPUTS . . . . . . 3

SPRAY PROGRAM . . . ... . . 3

COSTS AND RETURNS . .. . .. . . 7

REFERENCES. . . .. . . . 11



LIST OF TABLES


Table

1 Calculation of production per tree . . .. 3

2 Costs of inputs supplied on a custom basis used in calcu-
lating costs. . . . . . 4

3 Costs of chemicals used in calculating costs . . 5

4 Spray program used in budget based on custom rates and
application of two 500-gallon tanks per acre . . 6

5 Estimated annual per acre costs and returns for a mature,
round orange grove producing citrus for processing in
central Florida. ... .. . . .. 8










6 Estimated annual per acre costs and returns and 5-year
average costs and returns for a mature, round orange
grove producing citrus for processing in central Florida,
1977-78--1981-82 . . . . ... 9

7 Estimated annual per acre costs and returns and 5-year
average costs and returns (inflated to 1982 dollars) for
a mature, round orange grove producing citrus for pro-
cessing in central Florida, 1977-78--1981-82. . 9

8 Schedule of production practices in central Florida citrus
groves, ............. . ..... 10


iii
















BUDGETING COSTS AND RETURNS:
CENTRAL FLORIDA CITRUS PRODUCTION, 1981-82


Ron Muraro


INTRODUCTION


Due to the manner in which data become available, there is always a
time lag between the collection of production costs and returns informa-
tion 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 poten-
tial profits from an operation, to determine cash requirements for an
operation, and to determine break-even prices These data can then be
used as a basis for management decision making


METHOD OF DATA COLLECTION


The data presented here were developed from surveying custom opera-
tors, input suppliers, and from discussions with colleagues at the Agri-
cultural 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 nec-
essary to state the assumptions under which a budget was constructed.

RON MURARO is Area Farm Management Economist, Food and Resource
Economics Department, University of Florida, AREC, Lake Alfred, FL 33850.










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 combi-
nations of practices and various tree combinations accomplish the produc-
tion 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:


1. A 25-year-old grove, irrigated;
2. Type is round orange on rough lemon rootstock;
3. Tree loss is 2 percent annually;
4. Trees are pulled and replaced when production falls below 50
percent of expected yield;
5. Production is for processing only; and
6. Tree spacing is 70 trees per acre.


Age and Production Per Tree


Situation Boxes/tree


2% pulled and replanted 0.0
2% 1 year old 0.0
2% 2 years old 0.0
2% 3 years old 0.6
2% 4 years old 0,9
38% 5-24 years old 4.4
2% producing 50% of expected yield 4.0
50% 25 years old 8.0










Table l.--Calculation of production per tree

Boxes Total
Age of tree Trees /tree boxes

Total no. Proportion No. ea.
all ages eao agea age ------No ----
3 yrs. 70 x 0.02 = 1.4 x 0.6 = 0.84
4 yrs. 70 x 0.02 = 1.4 x 0.9 = 1.26
5-24 yrs. 70 x 0.38 = 26.6 x 4.4 = 117.04
Prod. 50% of
exp. yield 70 x 0.02 = 1.4 x 4.0 = 5.60
25 yrs. 70 x 0.50 = 35.0 x 8.0 = 280.00
Total boxes = 404.74

proportion adds up to 0.94 (94 percent) as 6 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 this survey. These average costs are shown in Tables 2
and 3.
This table, as do the others, has 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 hypothe-
tical case presented.


SPRAY PROGRAM


The spray program presented here is believed to Tbe of the type
followed by a majority of growers. It is not the exact program outlined
in the Florida Citrus Spray Guide 1982, 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 pro-
grams. 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 c:o;trol for rust
mite is needed.














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


Item Unit Low High Average Your cost


Dilute spray
Dusting, ground
Fertilizing (bulk)
Dolomite application
Chopping
Discing (9'-10')
Topping
Topping (double boom)
Hedging, 2-sides--tractor drawn

Hedging, 2-sides--self propelled
Front-end loader
Bulldozer
Truck and driver
Tractor and driver
Power saw without operator
Labor
Herbicide


Tank
Acre

Acre
Ton

Acre
Acre
Hour
Hour

Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour

Hour


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

12.00 18.00 13,87
4.00 8.75 5,72
4.00 9.50 5,85
4.00 7,30 5.62

5,00 9.00 6.69
5.00 9.00 6.79
205.00 225.00 215.00
335,00

40.00 75.00 51,57
160,00 215000 189o00
25.00 40.25 36.88
25.00 40.00 32.33
10.00 18.75 14,95
10.00 22.75 15,88
3.50 10,00 5.15
5.00 7.50 6.12
14.50 25,00 17.61


-- ------~


--









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


Item Unit Cost Your cost

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

Chlorobenzilate Pint 3.24
Neutral copper, 53% cu Lb. 1.00
Zinc, 36% zn Lbo 0,34
Borates Lb, 0.42
Manganese, 24-27% mg Lbo 0.15
Ethion Pint 2.01
Vendex Lb, 15.38
Oil Gal, 2.19
Kelthane Pint 1,34
Sulphur Lb. 0,13
Sticker Pint 0,95
Paraquat Gal, 43.18
Krovar II Lb, 7.04
16-0-16 Ton 142.52
8-2-8 Ton 99.86
Dolomite (delivered) Ton 19.46











Table 4.--Spray program used in budget based on custom rates and i-rlication of two 500-gallon tanks per acre


Amount/acre


Cost


Your cost


Post bloom application
Kelthane
Zinc
Borates
Manganese
Sticker
Application (Dilute)
Total

Summer oil application

Ethion
Oil
Copper, 53% cu
Application (Dilute)
Total

Fall miticide application

Sulphur
Application, ground
Total


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


16 pints
15 Ibs.
1,25 Ibs.
15 lbs.
1 pint
2 tanks


6 pints
6 gals.
3 lbs.
2 tanks


70 Ibs.
$5.85/acre


Grand total


Supplemental miticide application
Kelthane
Sticker
Application (Dilute)
Total


6 pints
1 pint
2 tanks


Item


23.58
5o61
0,58
2.48
1,05
27.74
61.04


13,27
14,45
3.30
27.74
58.76


10.01
5.72
15o73
135.53


8.84
1.05
27.74
37.63


__


-I-- --~-~I---


----------- ^--~---`-`










COSTS AND ReTURNS


Table 5 shows the estimated cpsts 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 $37.63 to operating costs.
Costs for freeze protection were not included. A crew standing by
to light heaters one night in one season would result in an extra cost of
approximately $25.00 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 of production;
hence, if known, they should be included in the expense column in Table 5.
Fixed costs were not included in the budgeted costs since these costs
would vary from one grove operation to another. However, for guidelines,
ad valorem taxes in Polk County last year would have added another $25-
$35 per acre Annual debt payment may cost as high as $400 per acre
($3,000 average debt per acre @ 12 percent interest). Promotion and
insurance are other costs not included and will vary widely among different
grove operations.
Estimated annual costs and returns for processed, round oranges in
central Florida have been collected and published the past four years.
Estimated cost and return histories for these years, 1981-82, and a five-
year average are presented in Table 6. These same costs and returns,
inflated to 1982 dollars, are presented in Table 7.
Shown in Table 8 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 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
---------------Dollars-------------
I. Revenue 323 boxes @ $5,03a 1,624.69
II. Expenses
Weed control
Material 2 lbs. of Krovar II 15.49
Application 1/3 treated acre 7.12 22.61
Discing Twice/year 13.58
Chopping Twice/year 13.38 49.57
Spray programb From Table 4 135.53
Fertilizer
Materialb 16-0-16, 1,125 Ibs. 88.19
Application 2 @ $5.85 11.70 99.89
Dolomite
Material 1/3 ton @ $19.46 6.49
Application $5.62/ton @ 1/3 1.87 8.36
Pruning (maintenance)
Topping ($215/hr. + 8.0 A/hr. $26.87) + 3 yrs. 8.96
Hedging ($189/hr. + 11.0 A/hr. = $17.18) 4 2 yrs. 8.59
Chopping brush Custom rate 5,50 23,05
Tree replacement and care
Pull trees and remove 1.4 trees/acre 15.74
Prepare site, plant and ring (Includes trees) 12.25
Water (Avg. 14 waterings) 13.23
Fertilizer (Includes application) 13.24
Tree wraps, sprout, etc. (Year of planting) 8.01 62.47
Irrigation (operating costs) 13.2 inches/year 108.12c
Management 5% of gross sales 81.23
III. Total specified costs 568.22
IV. Return to land and trees A1,56.47

aDue to the freeze of January 12, 1982, box yield was reduced 20 percent (404 boxes @ 80 percent = 323 boxes);
price per box is preliminary.

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

cDoes not include $59.54 per acre of fixed depreciation 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 6.--Estimated annual per acrp coqts and returns and 5-year average
costs and returns for a patqre, round orange grove producing
citrus for processing in central Florida, 1977-78--1981-82


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

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

1977-78 $4.40 404 1,777.60 394.10 1,383.50
1978-79 4.95 404 1,999.80 435.14 1,564.66
1979-80 3,87 404 1,563.48 494.30 1,069.18
1980-81 5.20 323b 1,679.60 539.53 1,140.07
1981-82 5.03a 323b 1,624.69 568.22 1,027.02

5-yr. avg. 4.69 372 1,744.68 486.26 1,258.42


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

byield reduced due to January freeze during 1981 and 1982.

cFixed costs such as taxes, debt payment, and insurance are not
included.


Table 7.--Estimated annual per acre costs and returns and 5-year average
costs and returns (inflated to 1982 dollars) for a mature,
round orange grove producing citrus for processing in central
Florida, 1977-78--1981-82


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

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

1977-78 150.2 $6.61 404 2,670.44 591.94 2,078.50
1978-79 135.0 6.68 404 2,698.72 587.44 2,111.28
1979-80 118.9 4.60 404 1,858,40 587.72 1,270,68
1980-81 107,7 5,60 323 1,808.80 581,07 1,227.73
1981-82 100.0 5.03 323 1,624.69 568.22 1,027.02

5-yr. avg. -- 5.70 372 2,120.40 583.28 1,537.12


aConsumer price index for each year inflated to 1982 price (1982 -
100). 1982 consumer price index estimated to be 293,5,











Table 8.--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
Summer oil X
Fall X X
Fertilizer (custom) X' X X
Dolomite (custom) X or X
Weed control
Chemical X or X
Mechanical X X X X
Hand (pulling vines) X X
Pruning
Hedging (custom) X or X
Topping (custom) X or X
Irrigation X X X X X X
Tree replacement
Pull trees X
Prepare sites X X
Plant resets X X
Ring X X
Water X X
Fertilizer X X X X X X
Weed control X X X X


aThis is a suggested schedule of practices.
schedule shown here.


Actual practices would not necessarily be done on the exact


__ j









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 (Oct. 1970), pp. 48-52.

Florida Citrus Spray Guide 1982. Univ. of Fla. Coop. Ext. Svc. Cir.
393-H, Gainesville: Jan. 1982.

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

Muraro, Ronald P. "Comparative Citrus Budgets." Lake Alfred Agricultural
Research and Education Center, Lake Alfred, FL: Apr. 1982.

Muraro, Ronald P. "Summary Custom Rate Survey for Interior Citrus Care-
takers," Lake Alfred Agricultural Research and Education Center.
Lake Alfred, FL: Apr. 1982.

Muraro, Ronald P. "Cost for Establishing, Planting, and Maintaining a
Citrus Grove through Four Years of Age," Mimeo Handout, Lake Alfred
AREC, December 1981.

Muraro, Ronald P. "Cost of Planting and Maintaining Reset Citrus Trees
through Four Years," Mimeo Handout, Lake Alfred AREC, December 1981.

Muraro, Ronald Po and J. Fred Kurras. "Estimating the Damage to Citrus
Trees and Resulting Value Loss Due to the January, 1982 Freeze,"
Florida Food and Resource Economics, No. 39, March-April, 1982,
University of Florida: Gainesville.

Reitz, H. J., Co D, Leonard, et al. Recommended Fertilizer and Nutri-
tional 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. Report 112. Gainesville: Apr. 1979.






This public document was promulgated at an annual cost of $ 845.79or 53,6.
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.