• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Abstract
 Table of Contents
 List of Tables
 Introduction
 Methodology and data sources
 Costs and returns
 Summary and conclusions
 Reference
 Table A1: Tonnage and sucrose yields...
 Ordering information






Group Title: Economica information report EI 91-3
Title: Costs and returns for sugarcane production on muck soils in Florida, 1990-91
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00027240/00001
 Material Information
Title: Costs and returns for sugarcane production on muck soils in Florida, 1990-91
Series Title: Economic information report
Physical Description: 22 p. : ; 28 cm.
Language: English
Creator: Alvarez, Jose, 1940-
Schueneman, T. J ( Thomas Joseph )
Publisher: Food & Resource Economics Dept., Agricultural Experiment Stations, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla
Publication Date: [1991]
 Subjects
Subject: Sugarcane -- Economic aspects -- Florida   ( lcsh )
Sugarcane -- Soils -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Includes bibliographical references (p. 19-20)
Statement of Responsibility: Jose Alvarez, Thomas J. Schueneman.
General Note: Cover title.
General Note: "June 1991."
Funding: Florida Historical Agriculture and Rural Life
 Record Information
Bibliographic ID: UF00027240
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 001639387
oclc - 24144769
notis - AHR4411

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Abstract
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page iii
    Introduction
        Page 1
    Methodology and data sources
        Page 2
        Management
            Page 3
        Farm characteristics
            Page 3
            Page 4
        Yields
            Page 5
        Machinery and equipment
            Page 5
            Page 6
        Labor
            Page 7
        Cultural practices
            Page 7
            Page 8
        Costs and prices
            Page 9
            Page 10
            Page 11
        Data sources
            Page 12
    Costs and returns
        Page 12
        Production costs
            Page 12
            Page 13
        Revenues and costs
            Page 14
        Returns to factors of production
            Page 14
            Page 15
            Page 16
            Page 17
        Costs and returns per unit
            Page 18
    Summary and conclusions
        Page 18
    Reference
        Page 19
        Page 20
    Table A1: Tonnage and sucrose yields for variety CP 72-1210 grown on seven commercial farms and four soil types in the Everglades agricultural area
        Page 21
    Ordering information
        Page 22
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida






i / :7V. I E' I I. '. 1. =

,ose Alvarez
Thomas J. Schueneman


Economic Information
Report El 91-3


C":s!ts and Returns for Sugarcane
Production on Muck Soils in
Florida, 1990-91










7'



~i I


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


June 1991











ABSTRACT


This study estimates the costs and returns on sugarcane
production using previously published and updated data. Assuming a
640-acre farm, the results show a cost per net ton of sugarcane of
$27.12 and of $21.89 per standard ton. Costs per gross, net, and
harvested acre are $883, $1,002, and $1,170, respectively. Net
returns to management and risk are $238 per gross acre. Although
cultural practices are rather uniform throughout the area,
estimates for individual farms would fluctuate due to variations in
some of the assumptions made in this study.


Key words:


Everglades, sugarcane, enterprise budget, production
costs, muck soils, costs and returns.


The mention of a trade name is solely for illustrative purposes.
UF-IFAS does not hereby endorse any trade name, warrant that a
trade name is registered, or approve a trade name to the exclusion
of other trade names.















TABLE OF CONTENTS 11


LIST OF TABLES . .

INTRODUCTION . .

METHODOLOGY AND DATA SOURCES


Management . . .
Farm Characteristics . .
Yields . .
Machinery and Equipment. .
Labor. . . . .
Cultural Practices . .
Costs and Prices . . .
Data Sources . . .


COSTS AND RETURNS. . . .


Production Costs . . .
Revenues and Costs . .
Returns to Factors of Production .
Costs and Returns per Unit .


SUMMARY AND CONCLUSIONS. . .


REFERENCES . . . .


APPENDIX
Table Al . . . .


ORDERING INFORMATION . . .


Page


. . . . iii


. . . . 1

. . . . 2


. . . 3
. . . 3
. . . 5
. . . 5



. . . 9
. . . 12


. . . 12


. . . 12
. . 14
. . . 14
. . . 18


. . . 18


. . . 1



. . . 21

. . . 22












LIST OF TABLES

Table Pace

1 Assumed land distribution and yields for a 640-
acre sugarcane farm on the muck soils of south-
thern Florida, 1990-91 . . . .. 4

2 Estimated initial investment and assumptions
for machinery and equipment used on a 640-acre
sugarcane farm on the muck soils of southern
Florida, 1990-91 ... ....... 6

3 Preharvest cultural practices performed by dif-
ferent machinery and equipment to produce 161
acres of plant cane on the muck soils of south-
ern Florida, 1990-91 . ..... .. 8

4 Preharvest cultural practices performed by dif-
ferent machinery and equipment to produce 322
acres of ratoon cane on the muck soils of south-
ern Florida, 1990-91 .. . 10

5 Summary of production cost estimates by activity
for a 640-acre sugarcane farm on the muck soils
of southern Florida, 1990-91 .......... 13

6 Estimated harvesting and overhead activities
costs for a 640-acre sugarcane farm on the muck
soils of southern Florida, 1990-91 ....... 15

7 Estimated revenues, costs, and margins for a
640-acre sugarcane farm on the muck soils of
southern Florida, 1990-91 . ... ... 16

8 Estimated total returns to factors of production
per gross acre for a 640-acre sugarcane farm on
the muck soils of southern Florida, 1990-91. 17

Al Tonnage and sucrose yields for variety CP 72-1210
grown on seven commercial farms and four soil
types in the Everglades Agricultural Area .. 21


iii











COSTS AND RETURNS FOR SUGARCANE PRODUCTION

ON MUCK BOILS IN FLORIDA, 1990-91

Jose Alvarez and Thomas J. Schueneman

INTRODUCTION

Sugarcane production in southern Florida takes place in the

area south of Lake Okeechobee. Although Palm Beach County accounts

for most of the acreage, the crop is also grown in Hendry, Glades,

and Martin counties.

^, The Florida sugar industry is a major component of the state's

agricultural economy. About 1.4 million tons of raw sugar were

produced from 13.4 million tons of sugarcane grown on approximately

405,000 acres during the 1989-90 season (Florida Sugar Cane League,

1990). Sugar is a basic Florida industry because it channels

outside dollars into the area and generates direct, indirect, and

induced impacts on the regional and state economies. The figures

indicate that the value of Florida raw sugar processed in the 1985-

86 season surpassed $544 million. When the multiplier effect is

taken into account, the industry generates gross sales of $1.32

billion in the state and creates over 18 thousand full time

equivalent jobs in Florida, exclusive of offshore workers (Mulkey

and Clouser, 1988).




Jose Alvarez is Professor and Area Economist, Everglades Research
and Education Center, University of Florida, Belle Glade, FL.
Thomas J. Schueneman is Extension Agent II, Florida Cooperative
Extension Service, Belle Glade, FL.













The purpose of this study is to update the cost and return

figures for this important crop. The latest available budget was

developed for the 1984-85 season (Alvarez and Rohrmann, 1985) and,

although no major technological changes in production have occurred

since that time, factor and output prices have changed. Also,

growers, researchers, bankers, private consultants, and government

agencies have requested updated information.

The figures in this report were developed with a computerized

sugarcane budget generator (Rohrmann and Alvarez, 1985). The

software package works on the IBM PC, or compatible computers, with

a minimum configuration of 192K memory, two disk drives, and a

printer if printed reports are desired. Users must have a copy of

Lotus 1-2-3. Since this budget is not published every year, persons

and organizations interested in annual updates are encouraged to

use this software. Ordering information is provided at the end of

this report.

METHODOLOGY AND DATA SOURCES

Many variables influence sugarcane production in southern

Florida. Variations in farm size, soil type and depth, management,

distance from Lake Okeechobee, composition and age of the machinery

and equipment used, number of ratoon crops obtained, and many other

factors result in different systems of production with unequal

input and output levels. For that reason, several assumptions are

needed in developing this budget.











Management

This study assumes: (a) a high level of management; (b) the

manager is a profit maximizer; (c) use of the latest technology;

and (d) the grower is an independent producer but is not a grower-

processor.

Farm Characteristics

Sugarcane farms in southern Florida vary in size from small,

owner-operated farms to large, corporate-run farms. This study

assumes a 640-acre (usually referred to as "one section") farm.

Farms in the area are broken down by sections for management

decisions. Since the per acre cost and yield figures obtained are

considered representative of the best managed farms in the area,

larger operations can use multiples of the basic unit of production

to obtain gross estimates of the corresponding costs and returns

figures. However, some economies of scale are present in larger

units.

Since the hypothetical farm is established, there are no

development costs to defray. The soil is classified as muck and

subdivided into 16, 40-acre blocks. There are 14 one-half mile long

field ditches (7 miles total) and 2 one-mile long seepage canals.

The farm is assumed to be located within the free hauling zone

(less than 15 miles from the mill), thus no extra charges are made

for transporting the cane to the mill.

A three-crop cycle (one plant-cane crop and two ratoon crops),

and their corresponding acreages (Table 1), are based on the

findings of the variety census for the 1990-91 season. Coale and











Management

This study assumes: (a) a high level of management; (b) the

manager is a profit maximizer; (c) use of the latest technology;

and (d) the grower is an independent producer but is not a grower-

processor.

Farm Characteristics

Sugarcane farms in southern Florida vary in size from small,

owner-operated farms to large, corporate-run farms. This study

assumes a 640-acre (usually referred to as "one section") farm.

Farms in the area are broken down by sections for management

decisions. Since the per acre cost and yield figures obtained are

considered representative of the best managed farms in the area,

larger operations can use multiples of the basic unit of production

to obtain gross estimates of the corresponding costs and returns

figures. However, some economies of scale are present in larger

units.

Since the hypothetical farm is established, there are no

development costs to defray. The soil is classified as muck and

subdivided into 16, 40-acre blocks. There are 14 one-half mile long

field ditches (7 miles total) and 2 one-mile long seepage canals.

The farm is assumed to be located within the free hauling zone

(less than 15 miles from the mill), thus no extra charges are made

for transporting the cane to the mill.

A three-crop cycle (one plant-cane crop and two ratoon crops),

and their corresponding acreages (Table 1), are based on the

findings of the variety census for the 1990-91 season. Coale and













Table 1. Assumed land distribution and yields for a 640-acre
sugarcane farm on the muck soils of southern Florida,
1990-91.



Tonnage yield Sucrose yield

Land use Gross Net Stand.
tons/ % tons/ % tons/
Status Acres % acre trash acre sucrose acre


Fallow 81 12.6 -

Plant cane 161 25.2 50.91a 5 48.36 14.48 57.98

1st. ratoon 161 25.2 46.77 5 44.43 15.15 56.25

2nd. ratoon 161 25.2 38.54 5 36.61 15.09 46.13

Other 76 11.8 -

Total 640 100.0


"Half is from fallow land and half from successive planting.
Eighty-one acres at 53.89 gross tons, and 80 acres at 47.89 gross
tons, respectively, average 50.91 gross tons per acre.
bIncludes roads, canals, and ditches.











Glaz (1991) reported 30% in plant cane, 30% in first ratoon, and

22.3% in second ratoon, for a total of 82.3% in the three-year

cycle. Third-ratoon acreage accounted for less than 12%, while land

on a fourth ratoon or older represented only 6.5% of the total

sugarcane acreage in southern Florida.

Yields

The farm is not among the highest- or lowest-yielding farms in

the area. The yields assumed are for variety CP 72-1210 (Table 1).

CP 72-1210 is the dominant variety in the area with a combined

plant and ratoon cane acreage of 31.8% in the 1990-91 season (Coale

and Glaz, 1991, p. 22). The source of data and the methodology used

are explained in Table Al. Gross tons are the tons harvested. A 5%

trash is assumed from hand-cut cane; mechanically-harvested cane

would show a higher trash content. Net tons do not include trash.

Sucrose is expressed in terms of percent sucrose in normal juice.

Standard tons are calculated with the following formula appearing

in Rohrmann and Alvarez (1985):

Standard tons =(Net tons)*(((% sucrose 11.57)/10) + 0.9079).

About 6.2 gallons of molasses are produced from every net ton of

sugarcane.

Machinery and Equipment

The machinery and equipment assumed for the 640-acre farm

(Table 2) can perform all necessary operations in the time required

when used efficiently. A typical working day for a machine is

assumed to be 8.5 hours; i.e., machinery and equipment usage

represents 85% of labor time (10 hours), allowing for the time











Glaz (1991) reported 30% in plant cane, 30% in first ratoon, and

22.3% in second ratoon, for a total of 82.3% in the three-year

cycle. Third-ratoon acreage accounted for less than 12%, while land

on a fourth ratoon or older represented only 6.5% of the total

sugarcane acreage in southern Florida.

Yields

The farm is not among the highest- or lowest-yielding farms in

the area. The yields assumed are for variety CP 72-1210 (Table 1).

CP 72-1210 is the dominant variety in the area with a combined

plant and ratoon cane acreage of 31.8% in the 1990-91 season (Coale

and Glaz, 1991, p. 22). The source of data and the methodology used

are explained in Table Al. Gross tons are the tons harvested. A 5%

trash is assumed from hand-cut cane; mechanically-harvested cane

would show a higher trash content. Net tons do not include trash.

Sucrose is expressed in terms of percent sucrose in normal juice.

Standard tons are calculated with the following formula appearing

in Rohrmann and Alvarez (1985):

Standard tons =(Net tons)*(((% sucrose 11.57)/10) + 0.9079).

About 6.2 gallons of molasses are produced from every net ton of

sugarcane.

Machinery and Equipment

The machinery and equipment assumed for the 640-acre farm

(Table 2) can perform all necessary operations in the time required

when used efficiently. A typical working day for a machine is

assumed to be 8.5 hours; i.e., machinery and equipment usage

represents 85% of labor time (10 hours), allowing for the time










Table 2. Estimated initial investment and assumptions for machinery and equipment used on
a 640-acre sugarcane farm on the muck soils of southern Florida, 1990-91.



Fixed costs


No. of New Fuel/ Depre- Tx. &
Item units cost Life hour ciation Inter. Repair insr.


$ Yrs. Gal. ---------------$---------------

Tractor, 110-115 HP 2 48,000 12 5.2 7,200 6,336 2,880 960
Tractor, 60 HP 1 24,000 12 4.0 1,800 1,584 720 240
Disk, offset, 12', 24" 1 5,800 10 522 383 174 58
Disk, harrow, 21', 21" 2 10,000 10 1,800 1,320 600 200
Disk, 8', 24" 1 3,000 10 270 198 90 30
Chisel plow, 12', 20" 1 3,300 10 297 218 99 33
Land leveler, 8-row, 30" 1 6,300 10 567 416 189 63
Mole drain, 2-row 1 3,000 10 270 198 90 30
Furrow plow, 3-row 1 2,500 10 225 165 75 25
Covering rig 1 3,600 10 324 238 108 36
Scratcher, 3-row 2 2,600 10 468 343 156 52
Rolling cultivator 2 2,570 10 463 339 154 51
Rotary mower, 7' 1 1,800 10 162 119 54 18
Pick-up truck 1 11,650 5 2,097 769 350 117
Pump, 36" pipe, 92 HP 1 24,600 10 7.0 2,214 1,624 738 246

Total 215,890 18,679 14,250 6,477 2,159








employed in activities such as refueling, operator's breaks, etc.

Annual fixed costs include depreciation, interest, repairs,

and taxes and insurance. Depreciation is calculated using the

straight line method with a salvage value of 10% of the purchase

cost. Interest on machinery loans is calculated at 12% of the

average value of the machine, where average value is defined as the

average of the purchase cost and the salvage value. Repairs are

estimated at 3% of purchase cost. Taxes and insurance represent 1%

of the initial investment of the machine or equipment.

Variable costs are the dollar amount of fuel directly consumed

by the power machinery, estimated at $1.25 per gallon of regular

gasoline and $1.20 per gallon of diesel fuel, plus the operator's

wage rate. For non-power equipment, repairs are included under

machinery ownership costs.

Labor

The farm has one full-time employee. Outside labor, as well as

custom services, are assumed to be available in the area when

needed.

Labor cost per hour of work is estimated at $6.50, while

machinery operator's cost is $7.80. Both include fringe benefits.

The time in a typical working day is 10 hours.

Cultural Practices

Preharvest cultural practices for plant cane include those

activities associated with land preparation, planting, and

cultivation (Table 3). Those for ratoon cane include spreading

fodder, disk and rolling cultivation, fertilization, herbicide








employed in activities such as refueling, operator's breaks, etc.

Annual fixed costs include depreciation, interest, repairs,

and taxes and insurance. Depreciation is calculated using the

straight line method with a salvage value of 10% of the purchase

cost. Interest on machinery loans is calculated at 12% of the

average value of the machine, where average value is defined as the

average of the purchase cost and the salvage value. Repairs are

estimated at 3% of purchase cost. Taxes and insurance represent 1%

of the initial investment of the machine or equipment.

Variable costs are the dollar amount of fuel directly consumed

by the power machinery, estimated at $1.25 per gallon of regular

gasoline and $1.20 per gallon of diesel fuel, plus the operator's

wage rate. For non-power equipment, repairs are included under

machinery ownership costs.

Labor

The farm has one full-time employee. Outside labor, as well as

custom services, are assumed to be available in the area when

needed.

Labor cost per hour of work is estimated at $6.50, while

machinery operator's cost is $7.80. Both include fringe benefits.

The time in a typical working day is 10 hours.

Cultural Practices

Preharvest cultural practices for plant cane include those

activities associated with land preparation, planting, and

cultivation (Table 3). Those for ratoon cane include spreading

fodder, disk and rolling cultivation, fertilization, herbicide











Table 3. Preharvest cultural practices performed by different machinery and equipment to produce 161 acres of plant cane
on the muck soils of southern Florida, 1990-91.


Times over


Operator
Tractor, 110-115 HP
Tractor, 60 HP
Labor
Crew size (#)


Custom hired
Materials


Land preparation


Planting


Cultivation


Heavy Light Chisel- Ditch Lev- Mole Ferti- Furrow- Cut. Hand- Seed Scratch- Mech. Herb.
dskg. dskg. inga clean.b eling drain.c lizingd ing canee lingf cover. ing cultv. appl.h

3 9 0.3 1 2 0.5 1 1 1 1 1 12 3 1


30
30
0
0
0


45
45
0
0
0


45
45
0
0
0


0
0
0
0
0


40
40
0
0
0


36
36
0
0
0


-Acres/day- -
0 55
0 55
0 0
0 0
0 0


0
0
0
0
0


0
0
0
0
0


40
40
0
40
1


50
0
50
0
0


40
40
0
0
0


0
0
0
0
0


- ------ -- ---- - --$/acre --- -
0 0 0 7.45 0 0 5.25 0 27.00 88.00 0 0 0 3.00
0 0 0 0 0 0 40.00 0 175.00 0 25.549 0 0 11.00


"About one-third of the land is assumed to be chiseled due to variations in soil depth.

bTwo miles are cleaned at $600/mile and includes soil spreading.

COne 10" diameter mole plow is pulled 2' deep every 20'.
d500 Ib of 0-10-40 plus micronutrients at $160/ton.

eFive tons of cane at $35/ton plus a cutting cost of $27/acre.

fIncludes $6 for loading, $40 for hauling, and $42 for dropping.

g19.5 lb of Phorate 20G at $1.71/lb.
h1 gal of Atrazine 4L at $11/gal plus $3 for custom ground application.










application, and chiseling (Table 4).

Times over represents the number of times a cultural practice

is carried out. The efficiency measure or performance rates of the

operation are stated in acres per day, given the type of machinery

and equipment employed. That measure of efficiency was used to

calculate variable production costs on a per acre basis.

Costs and Prices

The costs assumed for the different materials applied are

shown and explained in the appropriate sections of this budget. The

interest rate used for operating loans was 12%. Since the producer

in this budget is an independent grower, a $12 per gross ton for

hand harvesting, loading, and hauling the cane to the mill is used.

This charge would be lower if the cane is harvested with machines

and/or the producer is a member of a cooperative mill.

Total land taxes are $35.06 per acre and include $12.48 for

the municipal millage tax (average of five production belts around

the Lake), $17.58 for drainage (average of all drainage districts),

and a self-imposed tax of $5 for producers in the Everglades

Agricultural Area.

The land charge deserves special consideration. Brooke (1977)

described three different methods that could be used depending upon

the purpose for which the estimate was computed: (a) interest on

the current market value of land (for long-run costs projections to

evaluate land as an investment); (b) the opportunity cost; i.e.,

the expected earnings from the use of the land for other crops

(appropriate for purposes such as studying short-run supply













Table 4. Preharvest cultural practices performed by different
machinery and equipment to produce 322 acres of ratoon
cane on the muck soils of southern Florida, 1990-91.


Spread. Disk
fodder cult.


Rol. Ferti- Herb. Chisel-
cult. lizing' appl.b ingc


Times over


2 0.5


Operator
Tractor, 110-115 HP
Tractor, 60 HP


- -Acres/day
36
0
36


0 0
0 0
0 0


Custom hired
Materials


- - - -$/acre- - - -
0 0 0 3.50 3.00 0
0 0 0 28.00 25.23 0


a400 lb of 0-10-40 without micronutrients at $140/ton.

bOne application of 1 gal of Atrazine 4L at $11/gal, plus 0.125 gal
of Evik at $9.70/gal. Another application of 0.75 gal of Atrazine,
plus 0.75 gal of Asulox at $40/gal. A charge of $3/acre is made
for custom ground application.

cAbout only one-half of the land is assumed to be chiseled.


40
40
0











response); and (c) the landlord's net cash rent (for estimating

costs of production). The first two methods are somewhat irrelevant

at present because of the crop's continued support from the sugar

program. The last method seems the most appropriate for the purpose

of this study. Yet, as in the previous budgets, it was difficult to

identify a "typical" cash rent for sugarcane land for two main

reasons. First, renting land for sugarcane production is a very

rare phenomenon in the area. Second, a lease cost depends on a

large number of factors. The previous budget chose $125 as the

midpoint in the $100 to $150 range suggested by several growers.

The current budget keeps that charge. In the survey conducted by

the Economic Research Service of USDA for the 1989 cane crop, a

land charge of $187.73 includes irrigation water, fees, and

irrigation equipment (Clauson et al., 1991). A land rent of $200

was used for area vegetables in the 1989-90 season (Taylor and

Smith, 1990). Data from the Division of State Lands (published in

The Palm Beach Post edition of May 20, 1991, p. 6A) reveal that the

state is currently leasing 14,670 acres of agricultural land in the

area for a total annual rent of $3,111,993, or an average of

$212.13 per acre.

The price of sugar is determined by the Secretary of

Agriculture under the Sugar Program. It is assumed at 22.50 cents

per pound of raw sugar, or about 2.5% higher than the Market

Stabilization Price (MSP) of 21.95 cents per pound set by USDA for

the 1989-90 season and maintained for the 1990-91 season. The MSP

is the minimum price at which mills can sell their sugar to avoid













forfeitures to the Commodity Credit Corporation (CCC). The current

MSP was calculated as follows:

Loan rate: 18.00 cents
Freight charge: 3.04
Interest: 0.71
Incentive factor: 0.20

The price per standard ton of cane is set at $25.88. It is arrived

at by multiplying the 22.50 cents per pound by 1.15 (the fair price

determination factor), intended to ensure an equitable distribution

of the mill's returns between independent producers and processors.

Although this method was stated in the Sugar Act, which expired at

the end of 1974, it is still used in the settlement between mills

and cooperative members and independent growers. The price of

molasses was assumed at $65 per ton, or $0.38 per gallon.

Data Sources

Data for cultural activities, equipment used, and their

corresponding efficiencies were obtained through personal

interviews with producers and remain unchanged from the previous

budget. The yield data were developed with the methodology shown in

Table Al. Information on land taxes was provided by the Property

Appraiser's Office of Palm Beach County. Updated information on

costs and prices was obtained from local producers. Additional

information was provided by local firms servicing the growers.
COSTS AND RETURNS

Production Costs

The computer program generated a summary break-down of

production cost estimates by activity (Table 5). Land preparation,

planting, plant-cane cultivation, and ratoon cultivation show
12













forfeitures to the Commodity Credit Corporation (CCC). The current

MSP was calculated as follows:

Loan rate: 18.00 cents
Freight charge: 3.04
Interest: 0.71
Incentive factor: 0.20

The price per standard ton of cane is set at $25.88. It is arrived

at by multiplying the 22.50 cents per pound by 1.15 (the fair price

determination factor), intended to ensure an equitable distribution

of the mill's returns between independent producers and processors.

Although this method was stated in the Sugar Act, which expired at

the end of 1974, it is still used in the settlement between mills

and cooperative members and independent growers. The price of

molasses was assumed at $65 per ton, or $0.38 per gallon.

Data Sources

Data for cultural activities, equipment used, and their

corresponding efficiencies were obtained through personal

interviews with producers and remain unchanged from the previous

budget. The yield data were developed with the methodology shown in

Table Al. Information on land taxes was provided by the Property

Appraiser's Office of Palm Beach County. Updated information on

costs and prices was obtained from local producers. Additional

information was provided by local firms servicing the growers.
COSTS AND RETURNS

Production Costs

The computer program generated a summary break-down of

production cost estimates by activity (Table 5). Land preparation,

planting, plant-cane cultivation, and ratoon cultivation show
12













forfeitures to the Commodity Credit Corporation (CCC). The current

MSP was calculated as follows:

Loan rate: 18.00 cents
Freight charge: 3.04
Interest: 0.71
Incentive factor: 0.20

The price per standard ton of cane is set at $25.88. It is arrived

at by multiplying the 22.50 cents per pound by 1.15 (the fair price

determination factor), intended to ensure an equitable distribution

of the mill's returns between independent producers and processors.

Although this method was stated in the Sugar Act, which expired at

the end of 1974, it is still used in the settlement between mills

and cooperative members and independent growers. The price of

molasses was assumed at $65 per ton, or $0.38 per gallon.

Data Sources

Data for cultural activities, equipment used, and their

corresponding efficiencies were obtained through personal

interviews with producers and remain unchanged from the previous

budget. The yield data were developed with the methodology shown in

Table Al. Information on land taxes was provided by the Property

Appraiser's Office of Palm Beach County. Updated information on

costs and prices was obtained from local producers. Additional

information was provided by local firms servicing the growers.
COSTS AND RETURNS

Production Costs

The computer program generated a summary break-down of

production cost estimates by activity (Table 5). Land preparation,

planting, plant-cane cultivation, and ratoon cultivation show
12









Table 5. Summary of production cost estimates by activity for a 640-acre sugarcane farm on
the muck soils of southern Florida, 1990-91.




Activity Total $ $/acre Activity Total $ $/acre


LAND PREPARATIONa RATOON CULTIVATIONb
Heavy disking 2,145 13.33 Spreading fodder 1,078 3.35
Light disking 4,291 26.65 Disk cultivation 2,587 8.03
Chiseling 143 0.89 Rolling cultivation 6,467 20.08
Ditch cleaning 1,199 7.45 Fertilization 10,143 31.50
Land leveling 1,073 6.66 Herbicide application 18,180 56.46
Mole draining 298 1.85 Chiseling 536 1.67
Fertilization 7.285 45.25 Subtotal 38,991 121.09
Subtotal 16,434 102.08

PLANTINGa HARVESTING
Furrowing 390 2.42 Plant cane 98,358 610.92
Cutting cane 32,522 202.00 First ratoon 90,360 561.24
Seed cost & handling 14,168 88.00 Second ratoon 74,459 462.48
Seed covering and Subtotal 263,177 544.88
insecticide 4.910 30.50
Subtotal 51,990 322.92
OVERHEAD ACTIVITIESd
PLANT CANE CULTIVATIONa Edging 640 1.00
Scratching 4,656 28.92 Pest control 5,804 9.07
Mechanic. cultivation 1,455 9.04 Water control 4,200 6.56
Herbicide application 2.254 14.00 Ripener application 1.723 2.69
Subtotal 8,365 51.96 Subtotal 12,367 19.32


"To the 161 acres in plant cane.
bTo the 322 acres in first and second ratoon cane.
cTo the 483 acres in plant, first, and second ratoon cane. The $544.88 is an average per
acre.
dSee Table 6 for a description of the activities.













summary numbers from Tables 3 and 4. The figures for harvesting and

overhead activities are from Table 6.

Revenues and Costs

On the revenue side, plant- and first-ratoon canes account for

about 66% of total revenues, while second-ratoon cane represents

almost 27% (Table 7). The contribution of molasses is close to 7%

of total revenues.

Planting shows the highest percentage of all preharvest

variable costs with 9.2%, followed by ratoon-cane cultivation with

6.9%. Harvesting costs represent more than 46% of total costs,

while the figure for fixed costs is 25.6%.

Estimated variable costs represent 58.7% of estimated total

revenues, while fixed costs account for 20.1%. A net margin of

21.2% is a residual to the producer and includes management and

risk.

Returns to Factors of Production

The bread-down of the returns to various factors of production

facilitates the estimation of the value of the resources used in

sugarcane production and is designed to test the economic

profitability of the sugarcane operation as an economic unit (Table

8). Total revenue amounts to an estimated $1,121 per acre.

Deducting variable and fixed costs (excluding land) leaves $363 as

the return to land, management, and risk. With the land charge of

$125 per acre, the return to management and risk is $238 per acre.













summary numbers from Tables 3 and 4. The figures for harvesting and

overhead activities are from Table 6.

Revenues and Costs

On the revenue side, plant- and first-ratoon canes account for

about 66% of total revenues, while second-ratoon cane represents

almost 27% (Table 7). The contribution of molasses is close to 7%

of total revenues.

Planting shows the highest percentage of all preharvest

variable costs with 9.2%, followed by ratoon-cane cultivation with

6.9%. Harvesting costs represent more than 46% of total costs,

while the figure for fixed costs is 25.6%.

Estimated variable costs represent 58.7% of estimated total

revenues, while fixed costs account for 20.1%. A net margin of

21.2% is a residual to the producer and includes management and

risk.

Returns to Factors of Production

The bread-down of the returns to various factors of production

facilitates the estimation of the value of the resources used in

sugarcane production and is designed to test the economic

profitability of the sugarcane operation as an economic unit (Table

8). Total revenue amounts to an estimated $1,121 per acre.

Deducting variable and fixed costs (excluding land) leaves $363 as

the return to land, management, and risk. With the land charge of

$125 per acre, the return to management and risk is $238 per acre.











Table 6. Estimated harvesting and overhead activities costs for a
640-acre sugarcane farm on the muck soils of southern
Florida, 1990-91.


Overh.
Tons harvested Harv. activ.
Item Gross Net Stand. cost cost
S-Tons- - -- --
Harvesting
Plant cane 8,197 7,787 9,335 98,358
First ratoon 7,530 7,153 9,056 90,360
Second ratoon 6,205 5,895 7,427 74,459

Total 21,932 20,835 25,818 263,177


Overhead activities
Edging' 640
Rodent control 2,294
Borer controlc 3,510
Water control 4,200
Ripener application 1,723
Total 12,367



aEstimate based on a cost of $1/acre.
bTwo applications of 5 lb of Rodenticide AG 2% zinc phosphite per
acre to 75% of the ratoon cane (241.5 acres) at $0.85/lb and
$1/acre for application cost.
CCharges for scouting at $3.50/acre for the season for 322 acres.
Includes two insecticide applications to 161 acres at a cost of
$7.41/acre for 0.1875 gal of Guthion 2L at $23.50/gal and $3/acre
for the aircraft.
dAssumes 500 hours of operation with a fuel consumption of 7 gal/hr
at $1.20/gal of diesel fuel.

*One application of 9 oz of Polado at $0.80/oz and $3.50/acre for
the aircraft, to 161 acres of second ratoon cane.













Table 7. Estimated revenues, costs, and margins for a 640-acre
sugarcane farm on the muck soils of southern Florida,
1990-91.



Revenues and costs
Per Per
Item acre st. ton Total Percent
---------------------S---- ---
Total revenues
Plant cane 1,501 241,602 33.7
First ratoon 1,456 234,358 32.7
Second ratoon 1,194 192,204 26.7
Molasses payment 77 49,087 6.9

Total 1,121 27.78 717,251 100.0

Total variable costs
Land preparation 25.7 0.64 16,434 2.9
Planting 81.2 2.01 51,990 9.2
Plant cane cultivation 13.1 0.32 8,365 1.5
Ratoon cane cultivation 60.9 1.51 38,991 6.9
Overhead activities 19.3 0.48 12,367 2.2
Miscellaneousb 20.0 0.50 12,815 2.3
Interest 26.4 0.66 16,915 3.0
Harvesting 411.2 10.19 263,177 46.6

Total 657.7 16.31 421,054 74.6

Total fixed costs
Machinery and equipment 64.9 1.61 41,563 7.4
Land charge 125.0 3.10 80,000 14.2
Taxes: land and drainage 35.1 0.87 22,438 4.0

Total 225.0 5.58 144,001 25.6

Summary of revenues and costs

Revenues 1,120.7 27.78 717,251 100.0
Variable costs 657.9 16.31 421,054 58.7
Gross margin 462.8 11.47 296,197 41.3
Fixed costs 225.0 5.58 144,001 20.1
Net margin 237.8 5.89 152,196 21.2


"Total revenues are divided by 161 acres in plant cane and in the
two ratoons, and by 640 acres in molasses. The remaining
calculations are based on 640 acres.
bAt 12% of previous variable costs and include pick-up truck use,
office supplies, telephone, accounting services, dues, etc.










Table 8. Estimated total returns to factors of production per
gross acre for a 640-acre sugarcane farm on the muck
soils of southern Florida, 1990-91.



Item Charge Return
$/qross acre- -
Total revenues 1,12'

Variable costs 658

Return to fixed costs, land, and
management and risk 463

Fixed costs 100

Return to land, and management and risk 363

Land charge 125

Return to management and risk 238












Costs and Returns per Unit

The previous results allow the computation of costs and

returns for the different units of production. The total cost is

obtained by adding total variable and total fixed costs ($421,054

+ $144,001 = $565,055). The total net return equals total revenues

minus total variable costs minus total fixed costs ($717,251 -

$421,054 $144,001 = $152,196) (Table 7).

Gross acreage is the total farm acreage, or 640 acres. Net

acreage is the total acreage minus roads, ditches, and canals (640

- 76 = 564). Harvested acreage is net acreage minus fallowed

acreage (564 81 = 483) (Table 1).

Gross tons produced amount to 21,932. Net tons are 20,835,

while the number of standard tons is 25,818 (Table 6).

Dividing total costs and total net returns by the

corresponding unit measures provides the following results:
Total cost ($) Net return ($)
Gross acre 882.90 237.81
Net acre 1,001.87 269.85
Harvested acre 1,169.89 315.11
Gross ton 25.76 6.94
Net ton 27.12 7.30
Standard ton 21.89 5.89
SUMMARY AND CONCLUSIONS

Costs and returns figures for sugarcane production on muck

soils in Florida were updated for the 1990-91 season. A 640-acre

farm for an independent producer was assumed. Under the assumptions

of this study, the production cost was $25.76 per gross ton, $27.12

per net ton, and $21.89 per standard ton of cane produced. These

figures represented a total cost of $882.90 per gross acre,












Costs and Returns per Unit

The previous results allow the computation of costs and

returns for the different units of production. The total cost is

obtained by adding total variable and total fixed costs ($421,054

+ $144,001 = $565,055). The total net return equals total revenues

minus total variable costs minus total fixed costs ($717,251 -

$421,054 $144,001 = $152,196) (Table 7).

Gross acreage is the total farm acreage, or 640 acres. Net

acreage is the total acreage minus roads, ditches, and canals (640

- 76 = 564). Harvested acreage is net acreage minus fallowed

acreage (564 81 = 483) (Table 1).

Gross tons produced amount to 21,932. Net tons are 20,835,

while the number of standard tons is 25,818 (Table 6).

Dividing total costs and total net returns by the

corresponding unit measures provides the following results:
Total cost ($) Net return ($)
Gross acre 882.90 237.81
Net acre 1,001.87 269.85
Harvested acre 1,169.89 315.11
Gross ton 25.76 6.94
Net ton 27.12 7.30
Standard ton 21.89 5.89
SUMMARY AND CONCLUSIONS

Costs and returns figures for sugarcane production on muck

soils in Florida were updated for the 1990-91 season. A 640-acre

farm for an independent producer was assumed. Under the assumptions

of this study, the production cost was $25.76 per gross ton, $27.12

per net ton, and $21.89 per standard ton of cane produced. These

figures represented a total cost of $882.90 per gross acre,











$1,001.87 per net acre, and $1,169.89 per harvested acre.

Assuming a $125 land charge per acre, net returns to

management and risk amounted to $237.81 per gross acre, $7.30 per

net ton, and $5.89 per standard ton.

Estimates for individual farms in the area would fluctuate

from the representative farm due to factors varying from the

assumptions of this study. Among these factors, yields

(particularly sucrose), years in crop cycle, method of harvesting,

and farm ownership structure (corporate or cooperative instead of

independent cane), are the most important ones. In addition, some

economies of scale are present in larger operations.
REFERENCES

Alvarez, Jose and Francisco Rohrmann. Costs and Returns for
Sugarcane Production on Muck Soils in Florida. 1983-84, Economic
Information Report 204, Food and Resource Economics Department,
University of Florida, Gainesville, Florida, January 1985.

Alvarez, Jose and Francisco Rohrmann. "Relationships Among
Various Measures of Sugar Quality," Belle Glade EREC Research
Report EV-1984-10, Everglades Research and Education Center,
University of Florida, Belle Glade, Florida, September 1984.

Brooke, D.L. Cost of Producing Sugarcane and Processing Raw
Sugar in South Florida, 1975-76, Economics Report 84, Food and
Resource Economics Department, University of Florida, Gainesville,
Florida, March 1977.

Clauson, Annette L., Ron Lord and Frederic L. Hoff. "1989 Crop
Sugarbeet and Sugarcane Production and Processing Costs," Sugar and
Sweetener Situation and Outlook Report, Washington, DC: Economic
Research Service, U.S. Department of Agriculture, March 1991, pp.
36-42.

Coale, Frank J. and Barry Glaz. "Florida's 1990 Sugarcane
Variety Census," Sugar v Azucar 86:1 (January 1991), pp. 20-26.

Florida Sugar Cane League. "Florida Sugar News," Vol. 27, No.
1, Clewiston, Florida, Summer 1990.













Glaz, Barry et al. Evaluation of New Canal Point Sugarcane
Clones. Washington, DC: Agricultural Research Service, United
States Department of Agriculture. Annual Issues.

Mulkey, D. and R. Clouser. The Economic Impact of the Florida
Sugar Industry, Staff Paper #341, Food and Resource Economics
Department, University of Florida, Gainesville, Florida, November
1988.

Rohrmann, Francisco and Jose Alvarez. Sugar Cane Budget
Generator, Circular 687, Florida Cooperative Extension Service,
Institute of Food and Agricultural Sciences, University of Florida,
Gainesville, Florida, September 1985.

Taylor, Timothy G. and Scott A. Smith. Production Costs for
Selected Vegetables. 1989-90, Economic Information Report 273, Food
and Resource Economics Department, University of Florida,
Gainesville, June 1990.











APPENDIX


Table Al. Tonnage and sucrose yields for variety CP 72-1210 grown
on seven commercial farms and four soil types in the
Everglades Agricultural Area."

Tonnage Sucrose
Season PC 1R 2R PC 1R 2R

- mt/ha- - - -kg/mt- -
1989-90 110.98 106.65 79.24 99.21 106.85 111.33
1988-89 123.60 99.93 76.41 117.24 124.01 122.53
1987-88 115.56 96.85 97.97 111.16 125.21 117.71
1986-87 127.36 113.82 92.08 114.76 114.33 116.31
1985-86 126.59 107.06 113.67 117.37 -
Mean 120.82 104.86 86.42 111.21 117.55 116.97

-- -t/acre- - -% suc. in normal juice-
Meanb 53.89 46.77 38.54 14.48 15.15 15.09


aExperiments on Lauderhill muck were conducted on the following
locations: A. Duda and Sons' Farm, New Farm Inc., Knight's Farm,
and Okeelanta Corporation. Experiments on Pahokee muck, Terra Ceia
muck and Torry muck were conducted on South Florida Industries,
Wedgworth Farms, and Eastgate Farm, respectively.
bMetric tons per ha were multiplied times 0.446 to obtain tons per
acre. Kg of sugar per metric ton of cane were converted to pounds
of sugar per ton by multiplying them by 1.9687, and to percent
sucrose in normal juice using the equation Y=2.68299 + 0.053878*X,
where Y=% sucrose in normal juice, and X=lb of sugar per ton, as
shown in Alvarez and Rohrman (1984).

Source: Glaz et al.















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