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Budgeting costs and returns
ALL VOLUMES CITATION SEARCH THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
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Permanent Link: http://ufdc.ufl.edu/UF00026157/00010
 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: 1984
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: UF00026157:00010

Table of Contents
    Front Cover
        Front cover
    Abstract
        Page i
    Acknowledgement
        Page i
    Table of Contents
        Page ii
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
    Reference
        Page 12
Full Text










ABSTRACT


Estimated costs and returns of growing round oranges in the Central
Florida citrus area are presented for the eleventh consecutive year.
Central Florida citrus area is defined as those counties having exper-
ienced limited citrus tree damage or loss which is generally from Polk
County south. 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.



NOTE: Several of the budget costs items have been revised to reflect
current applications being used by growers--e.g., dilute tank is
now 2X (modified dilute). The previous years' 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 round oranges in the Central
Florida citrus area are presented for the eleventh consecutive year.
Central Florida citrus area is defined as those counties having exper-
ienced limited citrus tree damage or loss which is generally from Polk
County south. 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.



NOTE: Several of the budget costs items have been revised to reflect
current applications being used by growers--e.g., dilute tank is
now 2X (modified dilute). The previous years' 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


Page

ABSTRACT. . . . . . . i

ACKNOWLEDGEMENT . . . . ... ..... i

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

METHOD OF DATA COLLECTION . . . .... .. 2

THE GROVE SITUATION . . . . ... . 2

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

SPRAY PROGRAM . . . . ... . . 5

COSTS AND RETURNS . . . . ... . 5

HISTORICAL COST TRENDS. . . . . ... .. 10

REFERENCES. . . . . ... . .... .. 12



LIST OF TABLES

Table

1 Schedule of production practices for a Central Florida
citrus grove . . . . ... . 3

2 Calculation of normal production per tree. . 4

3 Costs of inputs supplied on a custom basis used in cal-
culating costs . . . . ... .. 6

4 Costs of chemicals used in calculating costs . 7

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, Valencia round orange grove producing citrus
for processing in Central Florida. . . 9















BUDGETING COSTS AND RETURNS:
CENTRAL FLORIDA CITRUS PRODUCTION, 1984-85


Ronald P. Muraro


INTRODUCTION

Due to the manner in which data become available, there is always
a time lag between the collection of production cost and return infor-
mation 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.
Due to the December, 1983 and January, 1985 freezes, the character
of the Central Florida citrus production area has changed. Thus, Central
Florida in this report refers to those counties having experienced
limited citrus tree damage or loss which is generally from Polk County
south. Budgets for rehabilitating or replanting citrus groves where
extensive tree damage or loss has occurred are presented and discussed
in a separate report.




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










METHOD OF DATA COLLECTION


The data presented here were developed from surveying custom oper-
ators, input suppliers, and from discussions with 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 a Central Florida
citrus 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 the production of acceptable
yields and returns. Although the example represents a Valencia orange
grove, the cost and return data is designed to be applicable to most
grove situations. A grower can substitute his individual grove costs and
expected returns into the budget format and develop a budget for a parti-
cular grove. A "your cost" column is provided for this purpose.
In the following budget, good management and cultural practices are

assumed. Beyond these general assumptions, 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;
6. Tree density is 70 trees per acre;
7. Custom-caretaker providing grove management; and
8. Normal average yield reduced by 20% due to freeze
damage.







Table l.--Schedule of production practices for a Central Florida citrus grovea

NONTH ANNUAL
JAN FEB JAR APR NMY JUN JUL AU6 SEP OCT NOV DEC TOTAL
-------- ------------------------------------------------------------.------- ---------- --------------- ------ ----- --- ------


Total Revenue: 201 Partial Final
S- .......sit....... ._imt --....--t_ .......................................................- E .t. ....-......
Less: Pick & Haul Cost I .. .... ... -------..-...-...--

tReven ---------------------------------------------------------------------------------------------------------------------------
.justj..R ... ............................................................................................................................... ..........


-Disc X ----- ---------- ---------
Jff ----------.-.------------------------------------------------------------------ -------- X -------- -- I--.-------------------- ----------- ---- -----
Now
Labor, General Grove
Mark Pull Vines I i
--cimimtL -"---------------------------------------------------------------------------------------------------------------------
Herbicide (1/2 Grove Acre

Spray: Post Bloe/Nutrition ------------------------------------------------------------------------------------------
S rli Oil/Greasy Spot IiK- --,- - - -
Fall Niticide I
supplemental niticide
Dust
p q n n9 -09 -- -- -- -- -- -- ---------140---------.--------------------------N/--------------.------------W^ J l t---------------------------------"
a ---------- ------------------------ ----------------------------------------------------------------

Tree Removal I. .-.... .................... ...........................---------------K---------
Young Tree Care I oK ..... X.. ...... ....I....... .. .....I.. .... ......... ....... ..... .... ...
Grove Talizers i j90 N/A N/A Doloait






__!al Pric P tgg I----------------------------------------------------------------------------------------- ------------
Intee st-Exlpense -I------------ ------------------------------------------------------------ I ---------------------------------------------------
AInilPrincipJl- aymen on ortja I
It-e~ylrls l I-- sjj _k---------------------- ------------------------------------------------------------------------------------------
Total r ove Expenses




Clative t Returns----------------------------------------------------- ---
Ik .o r~,_n..T .L .L_L,. u_Y !, L .L* ....................................................... !,, .......................,,,,,,,,,
..t ..r .. xpt.! I ________ E. __________ ...__________ ................................................ .... .... !,,,,,,,,,,,,, .......... ................... .........

_R m~. !_ o._ o. t ._ .. .. ...... .... ... .. ....... ... ... .. .... .. .. .. ....... .. .. ....... .
.___l;~r T _~n__o~t ; r.r ;;.........................................................................


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











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


Situation


pulled and replanted
1 year old
2 years old
3 years old
4 years old
5-24 years old
producing 50% of expected yield
25 years old


Boxes/tree


0.0

, 0
0.0


0.9
4.4
4.0
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 94 percent
since 6 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 0.02 = 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


aProportion adds up to 0.94 (94 percent) as 6 percent of the trees
were non-bearing (see page 4).


COSTS OF INPUTS


Costs for various production inputs are the average of the data
obtained from the custom rate survey. 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
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 1985, 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 5 outlines this program as a post bloom, a summer oil, and a
fall miticide application. The first two are modified dilute (2X) sprays
while the third is a ground application of sulphur. Table 5 also shows
a supplemental miticide application that may be used when additional
control for rust mite is needed.


COSTS AND RETURNS


Table 6 shows the estimated costs and returns based on the fore-
going assumptions and data.
Total revenue ($2,564.62) is based on preliminary estimated on-tree
price per box (price net of picking and hauling costs). Normal average
production was decreased by 20% to reflect the fruit loss due to the
January, 1985 freeze. Total specified costs ($696.84) is comprised of
grove care costs ($568.79) plus a management cost ($128.33). Return to
land and trees ($1,867.78) represents net return above fixed costs.
An individual grower may have other cost items which were not in
Table 6. For instance, a supplemental miticide (Table 5) would add
$54.69 to operating costs. Freeze protection--the use of heaters or
microsprinklers--is another cost item which could be included.
Fixed costs were not included in the budgeted costs since these
costs vary from one grove operation to another. However, for guidelines,










Table 3.--Costs of inputs supplied on a custom


Item


Unit


Low


High


Spray (2X)
Dusting, ground

Fertilizing (bulk)

Dolomite application

Chopping

Discing (9'-10')

Topping (single boom)
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
Ac re

Ton

Acre

Acre

Hour
Hour

Hour

Hour

Hour

Hour

Hour

Hour

Hour

Hour

Hour


25.00

5.)00
4.50

7.00

5.50

5.50

200.00


47.50(

200.00

35.00

35.00
15.00

15.00

4.00

5.50

18.00


40.00

8.75

7.75

10.00

10 .00

1 0. O0
10.00

265.00


62.00

240.00
50.00

45.00

22.50

25.00

8.00

9.50

30.00


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

30.14

6.55

6.22
6.31

8.67

7.54

238.00

365.00
55.39'

220.00

42.01

38.90

18.81

18.28

5.08

7.06

20.64


Average


Your cost


_ _


__ _~
_ I ___ __ __1~_~1


_ ___ __ __ __ ___ ___ ____


_I_~_~IU_ ~W I~-----DI-U------ YI -U11


_ --------~--- I_-- .----rrl~--LII ----~----~i------ 1~..~ -134~- UT ~YE


I I


--I -


basis used in calculating costs










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


Item Unit Cost Your cost


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


Chlorobenzilate

Copper, TriBasic

Zinc

Borates

Manganese

Ethion

Vendex, 4L
Oil

Kelthane, MF

Sulphur

Sticker

Roundup

Krovar II

16-0-16 fertilizer

8-2-8 fertilizer plus minors

Dolomite (delivered)


Pint

Lb.

Lb.

Lb.

Lb.
Pint

P int
ial.

Pint

Lb.
Pint

Jal.

Lb.

Ton

Ton

Ton


3.57
0.96

0.43

0.64

0.18

2.43

16.78

2.27

3.26

0.14

1.34

82.58

7.60

137.]4

117.81

24.25


_ I_


~ -'--~-"--









~~"""`T


- ------ -------------------------"Y-"~"U~"-"" ~"~I~Y~I- ""~-~ ~'









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


Kelthane, MF
Zinc
Borates
Manganese
Sticker
Application (2X)
Total


Summer oil application

Ethion
Oil
Copper
Application (2X)
Total

Fall miticide application


6 pints
15 lbs.
1.25 lbs.
1' Ibs.
1 int
1 tank


7.5 pints
3 ri.s,
3 lbs.


70 lbs.
$6.55 acre


Sulphur
Application, groundL
Total

Grand total


21.54
7.10
0.88
2.97
1.48
30.14
64.11



20.04
12.49
3.17
30.14
65, 34



10.83
6.55
17.33

147.33


Supplemental fall miticide application

Vendex, 4L
Sticker
Application (2X)
Total


1.2:, pints
1 pint
1 tank


aAssumes all materials are custom ., pli3; therefore, a 10 percent handling and supervision
added to the material cost.


23.07
1.48
30.14
54.69


I


---------------------- '--~~ ~I~-----


~ I


---- I---~-
1-~1011111



~s~--.--








-O-- -~ILI--
11---sl----a
i~-~-~-------~-m-



-I~----
~----~ U1\--Y -
I~-~-X -_WII--


~IU'"~

~Y~-"~
-II1 C~---P----
~--IY-------i-- I~-~OI-~OIPL-M- -Ui-- ~--










Table 6.--Estimated annual per acre costs and returns for a mature, Valencia round orange grove producing citrus for
processing in Central Florida


Item Description Amount Your cost


323 boxes @ $7.94a


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

2,564.62


II. Expenses
Weed control
General grove work
Herbicide (2 applications)

Discing
Chopping
Spray program
Fertilizer
Material (Based on 180 Ibs N/acre
Application
Dolomite
Material
Application
Pruning (maintenance)
Topping
Hedging
Chopping brush
Tree replacement and care (1 thru i
Pull trees and remove
Prepare site, plant and ring
Water
Fertilizer
Tree wraps, sprout, etc.
Irrigation (operating costs for
overhead sprinklers)
Managemen!


1/2 grove acre, Krovar II
includes application
Twice/year
Twice/year
From Table 5


16-0-16, 1,125 lbs.
2 @ $6.22

1/3 ton @ $24.25
$8.67/ton a 1/3


($238/hr, + 8.0 A/hr. $29.75) 3 yrs.
($220/hr. + 11.0 A/hr. $20.00: 4 yrs.
Custom rate


1.4 treesiacre
(Includes trees)
(Avg. 10 waterings)
(Includes application
(Year of planting)

13.2 inches!year
53 of gross sales'


68.28
15.08
14.72


84.86
12.44

3.08
2.89


9.92
: ,0


103. 69
147.33


97.30


10.97 _













120.',7


12.1C
19.98
9.46
11.27
7.0


II1. Total spei.jfied costs


1 HhI .0


IV. Return to land and trees


aDue to the freeze of January 1985, box yield was reduced O"' (404 boxes o'
preliminary.


bAssume, all material custom applied; therefore, a 10 percent m.andl ing nd .i ~iiprvsison harg., ~o, -Jd tn iat .ia
cost.

c'Dos not include $59.54 per acre of fixed depreciation cost.


... methiO to estimate a management cost are used in the industry whih M.av give a
trees than reporrte: hrre.


different return


I. Revenue


_1 r ) _


>nd and










ad valorem taxes in Polk Couiintv wiouIld ,idr ann'r I4d ? S:( i< ::<

Annual debt payment may cost ; s high as $S4i per :'m're (. 3, Nr00 avera ,e
debt per acre ( 12 p, recent intet st) Florida Dei:rpartment F Citrus

assessments and crop insurance are other costs not inclined and will
vary widely among different grnvp operations.


I]ISTORICAL COST TRlEND,


Annual budgets of costs and returns for processed, round oranges in
Central Florida 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. Of the
past five production seasons, only during the 1982-83 season was fruit
yield not affected by a freeze. The recent freezes have reduced Florida's

round orange supply substantially resulting in higher on-tree prices per
box. Even with reduced fruit yields and operating costs averaging 5.1
percent increase per year, return to land and trees has been favorable.

To allow comparisons in current values, these same costs and returns,
inflated to 1985 dollars, are presented in Table 8.


MMW












Table 7.--Estimated annual per acre costs and returns and 5-year
average costs and returns for a mature. ':'jcncia round orange
grove producing citrus fir processFing in Central Florida,
1980-81--1 ]984-85


d ross
Yield revenue


Total
specified
cos tsc


Net return
to land
and trees


1980-81

1981-82

1982-83
1983-84
1984-85

5-yr. avg.


$4.54
4.15

5.48
6.37
7.94a

5.70


aEstimated at time

bYield reduced due


Do-------llars--------------

323h 1,466.42 572.16 894.26

323b 1,340.45 588.27 752.18

404 2,213.92 647.09 1,566.83
323b 2,057.51 646.87 1,410.64

323b 2,564.62 696.84 1,867.78

339 1,932.30 630.25 1,302.05

of printing and is not a published price.

to January or December freezes during 1981, 198:


1983, and 1985.

c
Fixed costs such as taxes, debt payment,
included.


and crop insurance are not


Table 8.--Estimated annual per acre costs and returns and 5-year average
costs and returns (inflated to 1985 dollars) for a mature,
Valencia round orange grove producing citrus for processing in
Central Florida, 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 $5.40 323 1,692.52 680.87 1,031.68

1981-82 112.4 4.66 323 1,459.96 661.22 819.92

1982-83 108.9 5.97 404 2,359.36 704.68 1,677.33

1983-84 104.5 6.66 323 2,018.75 675.98 1,371.88

1984-85 100.0 7.94 323 2,564.62 696.84 1,867.78

5-yr. avg. -- 6.13 339 2,078.07 683.92 1,394.15


Consumer price index for each year inflated to 1985 price (1985 =
100). 1985 consumer price index estimated to be 325.1.


Year


On-tree
price
/box


2,


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













PioLarne, E. P. re l. in r. l n. : .
Il.il Dec in -e o Ci trus 1' ori l r .
(Oct. )7(0), pp. 47-<..52.

Florida Citrus Spray CUd'u. d Iiv ol f Fld Coop 'x:., c.
393-K. Catinr esv le: Jan. 1.985.

Harrison, D. S. and R. C. Koo. S-,-.ini r r i igjn .. .
Citrus. Univ. of Fl.;i Agr. rxt. KRi, .1' 73-15 Iv, 15 in.,i i
Aug. 1974.

Koo, R. C. J., edit, Re, r.n (ied e ti izer ai iNutritic.ii 'iayv
for Citrus. Univ, Fa!a. Ag. Exp. Sta. B u 536D. Gai:-isv ile:
March 3984.

Muraro, Ronald P. "Comparative Citris Bud'Ics." L AlfreJd Citr s
Research and Edu.' at'in Conter (R: LR Report. Li,. Aifr-, FL:
Apr. 1985,

"Cost fur Esthal islini <, P1antin) ,, cnd Mhai inti .,Lniiu a Cit''is
Grove through Tour Ye-ars of Age" I.-l Alf-ret AR: EC Report. iaake
Alfred, FL: D .. 1981.

S"Cost of Planting and HMaina ining Re;cet Citrus rees through
Four Years" Lake Alfred A.-RC Peport. Lake Aifrc-d, FL: Der. 1981.

"Summary Custom Rate Survey for Inrerijo'- Citrus Care.akers."
Lake Alfred CREC: Report. Lake Alfred, i-L: Apr. 198,.

and John L. Jackson. Ten-Year An -Lvsis. for Reliabilitation of
Freeze Damaged Citrus Groves. Uiniv. of f'a., Food and Resource
Econ. Staff P'aper 2 70, .anuary 1985.

and J. Fred Kurras. "Estimatinfg he ataiiai to Citri to i Trees and
Resulting Value Loss Due to the Januarcy 19F. 2 Freeze ," Florida
Food and Resource EcinomJcs No. 39 (Mar.-Apr. 1.'-82). University
of Florida: Gainesville.

Savage, Zach. Citrus Yields PEr Tre'- Age. Agr. Ext. Ser. 60-8. Univ.
of Fla., Gainesville. 1960.