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 Points to remember
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Group Title: Economic information report 59
Title: Calculating costs and breakeven prices for full bed plastic mulch staked tomatoes, 1976
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 Material Information
Title: Calculating costs and breakeven prices for full bed plastic mulch staked tomatoes, 1976
Series Title: Economic information report
Physical Description: i, 9 p. : ; 27 cm.
Language: English
Creator: Otte, John A
Publisher: Food and Resources Economics Dept., Agricultural Experiment Stations and Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Publication Date: 1976
 Subjects
Subject: Tomatoes -- Economic aspects -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
statistics   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: p. 9.
Statement of Responsibility: John A. Otte.
General Note: Cover title.
Funding: Economic information report (Gainesville, Fla.) ;
 Record Information
Bibliographic ID: UF00027258
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 - 000307879
oclc - 06580789
notis - ABT4527
lccn - 77620852

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Abstract
        Abstract
    Table of Contents
        Page i
    Introduction
        Page 1
    Method
        Page 1
        Fixed costs on machinery
            Page 2
            Page 3
        Per acre growing costs
            Page 4
            Page 5
            Page 6
        Harvest costs
            Page 7
        Per carton growing, harvest, and packing costs
            Page 7
    Points to remember
        Page 8
    Bibliography
        Page 9
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





'ji John A. Otte


Economic Information
Report 59


Calculating Costs and Breakeven
Prices for Full Bed Plastic Mulch
Staked Tomatoes, 1976


r
V .
N)'


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


August 1976

















ABSTRACT


Estimated costs for growing full bed plastic mulch staked tomatoes
in the Manatee-Hillsborough county area are presented. Breakeven prices
are calculated. The format may be used by individual growers to determine
costs and breakeven prices for their own growing methods.

Key words: Tomatoes, Southwest Florida, budgeting, costs, breakeven
prices.















TABLE OF CONTENTS


Page


INTRODUCTION .. ... .. . .. .

METHOD . . ... ..

Fixed Costs on Machinery . . . .
Per Acre Growing Costs . . . .
Harvest Costs . . ..
Per Carton Growing, Harvest, and Packing Costs .

POINTS TO REMEMBER .... . . ..


BIBLIOGRAPHY


. . 0 # . 0 0 .


LIST OF TABLES


Table


1 Investment and depreciation for tomato growing
equipment. .... . . ... .

2 Machinery fixed cost, first year of.ownership .


3 Growing cost per net acre for one crop of full bed
plastic mulch, staked tomatoes on a 200 acre tract
with 170 net growing acres, 1976 . .


4 Total growing and harvest cost per-net acre for
various yields . . .. . ...

5 Breakeven F. 0. B. tomato prices for various yields
and cull rates .. .... . .


Page


. .














CALCULATING COSTS AND BREAKEVEN PRICES FOR
FULL BED PLASTIC MULCH STAKED TOMATOES, 1976


John A. Otte


INTRODUCTION


Current data on costs are needed by tomato growers to develop real-

istic budgets and calculate breakeven prices for their production. Growing

costs are often derived from standard accounting procedures as in Brooke

[1]. Much data is aggragated depriving management from useful information.

Walker and Hunt used a task approach to estimate tomato growing costs on

South Florida Rockdale soils in [9]. The task approach ties individual

costs to specific management practices. This link allows the manager to

better evaluate returns from each step in the growing process because he

knows its cost.

Fixed costs presented in this budget were developed using standard

accounting procedures. Variable or growing costs were estimated using

the task approach. Growers can use this format as a guide to develop

their own costs from their own records.


METHOD


Information obtained from several Manatee and Hillsborough County

tomato growers using the full bed plastic mulch system, a number of pro-

duction input suppliers, and researchers with the University of Florida


JOHN A. OTTE is the area farm management extension economist stationed.
at the Agricultural Research and Education Center in Bradenton Florida.

1














CALCULATING COSTS AND BREAKEVEN PRICES FOR
FULL BED PLASTIC MULCH STAKED TOMATOES, 1976


John A. Otte


INTRODUCTION


Current data on costs are needed by tomato growers to develop real-

istic budgets and calculate breakeven prices for their production. Growing

costs are often derived from standard accounting procedures as in Brooke

[1]. Much data is aggragated depriving management from useful information.

Walker and Hunt used a task approach to estimate tomato growing costs on

South Florida Rockdale soils in [9]. The task approach ties individual

costs to specific management practices. This link allows the manager to

better evaluate returns from each step in the growing process because he

knows its cost.

Fixed costs presented in this budget were developed using standard

accounting procedures. Variable or growing costs were estimated using

the task approach. Growers can use this format as a guide to develop

their own costs from their own records.


METHOD


Information obtained from several Manatee and Hillsborough County

tomato growers using the full bed plastic mulch system, a number of pro-

duction input suppliers, and researchers with the University of Florida


JOHN A. OTTE is the area farm management extension economist stationed.
at the Agricultural Research and Education Center in Bradenton Florida.

1









was used to estimate costs to grow staked tomatoes. Widespread use

of full-bed plastic mulch concentrates showing costs at the beginning of

the season because all fertilizer as well as the plastic must be put down

when beds are made. Maintenance of an established nutrient environ-

ment ground rot prevention-and moisture control are primary advantages of

plastic mulch. Geraldson showed a 66 percent increase in yields with

plastic mulch over unmulched in [4]. The results of this limited survey

are summarized in Table 2 and show the growing costs to be $570 .37per

net acre plus $1.20 per bushel for picking and hauling.


Fixed Costs on iMchinerv


A 200 acre farm with 170 net growing acres is used as a representative

farm situation. Thirty acres of the farm are used for non-productive pur-

poses such as roadways and storage acres.

Table 1 shows initial equipment investment at current prices, straight:

line method depreciation, and year end value at the end of the first year.

Growers using older equipment will have lower total investment. Growers

may elect to use accelerated depreciation methods resulting in higher

depreciation in early years and lower depreciation in the later years of

an item's life.

Table 2 summarizes fixed costs for other items such as interest,

personal property taxes, insurance, and repairs on the equipment. Initial

value and year end value are averaged to obtain average yearly investment.

Interest is charged at 7.5.percent on the average investment. The $9269

represents the return a grower could have earned on his equipment money

in an alternative investment earning 7.5 percent. 'The grower's records

provide actual repairs, taxes, and insurance costs for his most recent










season.. Adjusting this data will provide a better estimate than applying

"thumb rule" percentages.



Table l,--Investment and depreciation for tomato growing equipment


Cost or Salvage Life Year
Item asis value years Depreziation end
Salute

125 HP tractor $ 21,400 $ 2000 10 $ 2140 $ 19,260
125 HP tractor 21,400 2000 10 2140 19,260
110 HP tractor 19,200 1900. 10 1920 17,280
110 HP tractor 19,200 1900 10 1920 17,280
Disc harrow 3,400 340 10 340 3,060
Disc harrow 2,800 280 10 280 2,520
4-row sprayer 5,800 500 8 725 5,075
Air sprayer 7,100 600 8. 888 6,212
Transplanter 1,600 150 10 160 1,440
Plastic layer 540. 50. 10 54 486
Ditch plow 540 50' 10M 54: 486
Fertilizer spreader 5,000 500 8 625 4,375
4-air hammers 950 90 10 95 855
Com-ressor' : 2,500 200 10 250 2,250
Stake wagon 750 75 10 75 675
80" rotovator 9,000 900 8 1125 7,875
Land leveler 3,000 300 10 300. 2,700
Pickup truck ,6,500 300 6 1083 5,417.
TOTALS $130,680 $12135 $14174 $116,506





-Tabld 2.--Machinery fixed costs, first year of ownership


Item Cost


Depreciation (Table 1) $14,174
Interest [$130,i $116,506] 9,269
2 x .075
Taxes $130,680 (.7 assessment) $16.597/1000 1,518
Insurance [$130,680 + $116,506] x 003 371
2
Repairs ($130,680) x .03 3,920
Truck tag and insurance 340
Total fixed cost $29,592
Fixed cost per net acre $174.07'










Per Acre Growing Costs


Distance between rows varies from 4 1/2 to 15 feet among growers.

Some growers have an irrigation ditch on each side of each bed. Others

use two, four, or as manyas seven rows between ditches. This analysis

uses a 12 1/2 foot row spacing with a ditch centered between all beds.

Individual growers should adjust per acre plastic, plant and other costs

to more accurately represent their systems.

Table 3 lists each operation involved in growing the crop and esti-

mates the requirements and costs for these operations. For example, the

operation "destroy plants from previous crop" was estimated to require

one-half hour of a driver, tractor, and herbicide sprayer. The $6.67

hourly charge includes the driver's time at $2.50 per hour and a charge

for gas, oil, and other lubricants on the equipment. The herbicide cost

is listed separately. All labor and tractor driver costs include both

employer's and employee's contribution to Social Security plus workmen's

compensation insurance.

Land .clearing and plastic pipe expenditures are spread over two

production crops. Growers using the same land longer can spread these

costs over more crops. However, third and fourth year tomatoes may

require fumigation to control diseases and pests.







5


Table 3.--Growing cost per net acre for one crop of full bed plastic
mulch, staked tomatoes on a 200 acre tract with 170 net
growing acres, 1976


Growing Cost per
cost items net acre


Land clearing
Clearing 200 acres will cost $64/acre for bulldozing,
$70/acre for palmetto plow, and $20/acre for fences.
Total $30,800 for 2 years & $15,400 for 1 year. $ 90.59
PVC pipe
Installed to carry water from well to field ditches will
cost $100/net acre for 2 yrs or $50/net acre for 1 yr. 50.00
Destroy plants from previous crop, one time
Tractor + driver + sprayer, 30 min at $6.67/hr 3.34
Paraquat, 1/2 qt. at $35/gal 4.38
Burn off plastic mulch and string, one time
Tractor + driver + burner, 30 min at $5.12.hr 2.56
55 gallons propane at 36/gal 19.80
Remove unburned plastic
Labor, 8 hrs at $2.50/hr 20.00
Remove and stack stakes, one time
Labor, 8 hrs at $2.50/hr 20.00
Lime
Four tons of hi cal at $12/ton spread and 3 tons of
dolomite at $15/ton spread are applied per acre in 2
years. The lime will cost $18,600 or $9,300/yr 54.71
Rotovate, one time
tractor + rotovator + driver, 1 hr. at $7.09/hr 7.09
Disk, three times
tractor + driver + disk, 1/2 hr each time at $6.58/hr 9.87
Level land, one time
tractor + land leveler + driver, 1/2 hr at $6.60/hr 3.,30
Mark off field, make initial beds, and apply superphosphate
and frit, one time
tractor + driver, 1 hr at $5.12/hr 5.12
500 lb superphosphate at $95/ton 23.75
20 Ib frit at $0.20/lb 4.00
Make ditches, one time
Tractor + driver + ditch plow, 1 hr at $5.12/hr 5.12
Apply starter fertilizer and press beds, one time
tractor + driver + fertilizer spreader, 1 hr. at $6.57/hr 6.57
900 Ib 4-13-8 at $118/ton 53.10
Mole cricket and cut worm bait 30.00
Apply banded fertilizer and lay plastic, one time
tractor + driver + fertilizer spreader + plastic 6.90
layer, 1 hr at $6.90/hr
Plastic, 4840 feet at $51.50/66" x 2400' x 1 1/4 mil roll 103.86
1500 lbs 18-0-25 at $230/ton 172.50
1 helper, 1 hr at $2.50/hr 2.50
Planting, one time 28" between plants
tractor + driver + transplanter, 45 mins at $5.12/hr 3.84










Table 3.--Growing cost per net acre for one crop of full bed plastic
mulch, staked tomatoes on a 200 acre tract with 170 net
growing acres, 1976--Continued


Growing
cost items


2 helpers, 45 mins each at $2.50/hr
2075 2" x 2" transplants at 3.8( each
Replacement stakes
200 stakes at $110/1000
Set stakes, one time
tractor + driver + stake rack, 30 mins at $6.05/hr
4 helpers, 30 min each at $2.50/hr
Drive stakes, one time
tractor + driver + stake driver, 30 mins at $6.67/hr
4 helpers, 30 mins each at $2.50/hr
Apply herbicide to row middles, two times
tractor + sprayer + driver, 30 mins at $6.67/hr each time
paraquat, 1/2 qt. each time at $35/gallon
Tieing, four times
labor, $.30/100', 19,360' total for four times
plastic string, 20 Ib at $0.94/lb (2000 ft string/lb)
Clean ditches, 4 times
tractor + driver + ditch plow, 30 mins each time at $5.12/hr
Spraying, 20 times
tractor + driver + sprayer, 15 min each time at $6.67/hr
insecticides & fungicides
Irrigation
diesel fuel, 30 gallon at $0.36/gallon
Supervisory labor
one production supervisor at $14,000/yr and one foreman
at $9,500/yr. (Labor charge for 6 mos, total of $11,750)
Miscellaneous expense
truck operating expense
advertising
freight
light & power
office expense
supplies
telephone
Total expenses
Interest on above expenses, 9% for 4 months
Total growing costs per net acre


Cost per
net acre


$ 3.75


$ 3.75
78.85

22.00

3.03
5.00

3.34
5.00

6.67
8.75

58.08
18.80

10.24

33.35
275.00

10.80


69.12

15.75
.75
1.65
1.50
1.75
12.75
6.80
$1355.63
40.67
$1396.30







Harvest Costs


Tomatoes are picked and hauled on a contract basis at $0.02 per

pound. This cost includes all picking supplies, labor, employee's and

employer's contribution to Social Security and workmen's compensation.

Table 4 summarizes growing and harvest cost per net acre for various

yields.



Table 4.--Total growing and harvest cost per net acre for various yields


Yield delivered to packing house
Costs 500 bu. per 650 bu. per 800 bu. per
net acre net acre net acre


Machinery fixed costs (Table 2) $ 174.07 $ 174.0Z $ 174.07

Growing costs (Table 3) 1396.30 1396.30 1396.30

Picking & Hauling at $0.02/lb.a 600.00 780.00 960.00

Total harvest and non-harvest costs $2170.37 $2350.37 $2530.37


a
Contract basis of $0.02/lb. includes labor, employer's
contribution to Social Security and workmen's compensation.


and employee's


Per Carton Growing, Harvest, and Packing Costs


The "breakeven price" at the F. 0. B. level depends on yield, cull

rate, and the packing house charge. Breakeven prices are shown in Table

5 for a packinghouse charge of $1.70 per 30 pound carton.

As an example of how the numbers in Table 5 were calculated, consider

the price for a 500 bushel yield with 10 percent non-saleable. First,

since 10 percent are non-saleable, only 450 bushels are saleable. However,

thegrower must pay $1.20 per bushel to get even the culls picked. He had







Harvest Costs


Tomatoes are picked and hauled on a contract basis at $0.02 per

pound. This cost includes all picking supplies, labor, employee's and

employer's contribution to Social Security and workmen's compensation.

Table 4 summarizes growing and harvest cost per net acre for various

yields.



Table 4.--Total growing and harvest cost per net acre for various yields


Yield delivered to packing house
Costs 500 bu. per 650 bu. per 800 bu. per
net acre net acre net acre


Machinery fixed costs (Table 2) $ 174.07 $ 174.0Z $ 174.07

Growing costs (Table 3) 1396.30 1396.30 1396.30

Picking & Hauling at $0.02/lb.a 600.00 780.00 960.00

Total harvest and non-harvest costs $2170.37 $2350.37 $2530.37


a
Contract basis of $0.02/lb. includes labor, employer's
contribution to Social Security and workmen's compensation.


and employee's


Per Carton Growing, Harvest, and Packing Costs


The "breakeven price" at the F. 0. B. level depends on yield, cull

rate, and the packing house charge. Breakeven prices are shown in Table

5 for a packinghouse charge of $1.70 per 30 pound carton.

As an example of how the numbers in Table 5 were calculated, consider

the price for a 500 bushel yield with 10 percent non-saleable. First,

since 10 percent are non-saleable, only 450 bushels are saleable. However,

thegrower must pay $1.20 per bushel to get even the culls picked. He had








$1570.37. machinery and growing costs plus $600 picking costs, a total of

$2170.37 shown in Table 4 to spread out over 450 saleable bushels. This

comes to $4.82 per bushel. Figuring two 30 lb. cartons per saleable bushel

this gives him a growing and picking cost of $2.41 per carton. Adding the

$1.70 per carton packing house charge gives a breakeven price of $4.11 per

carton, the number.in the table.



Table 5.--Breakeven F. 0. B. tomato prices for various yields and cull
rates


Percent Yield delivered to packing house
non-saleable 500 bu. per 650 bu. per 800 bu per
net acre net acre net acre

Breakeven prices--dollars per 30 lb carton

10 $4.11 $3.71 $3.46
20 4.41 3.96 3.68
30 4.80 4.28 3.96
40 5.32 4.71 4.34


POINTS TO REMEMBER


Although an effort was made to assure that the numbers in Tables

2 and 3 are reasonably accurate, the fact remains that everyone does things

a little differently and costs are changing all the time.

Wide variations in row spacings, plant spacings, and number of rows

between ditches make per acre cost comparisons among different methods

very difficult. For example, an "acre" on a 6 foot row spacing may

require almost twice as much plastic and string as an "acre" on a 12 foot

row spacing. Yields may be comparable due to higher yield per plant on

the wider rows.

Following the procedure in Table 3 and adding and deleting cost items,








an individual grower can estimate his own growing costs.



BIBLIOGRAPHY


[1] Brooke, D. L. Costs and Returns from Vegetable Crops in Florida,
Season, 1974-75 with Comparisons. Food and Resource Economics
Department, Economics Information Report 49. Gainesville:
University of Florida. March 1976.
[2] Geraldson, C. M. "Changing Concepts in Nutrition Associated with
the Transition from Extensive to Intensive Crop Production,"
Proceedings of the Soil and Crop Science Society of Florida.
32: 84-86 (Dec. 1973).
[3] Geraldson, C. M. "Effects of Altered Ionic Ratios in Banded
Fertilizer on Resultant Nutrient Gradients and Associated
Crop Production," Proceedings of the Soil and Crop Science
Society of Fla. 33: 187-191 (Nov. 1974).
[4] Geraldson, C. M. Functional Design of the Gradient-Mulch Concept.
Bradenton AREC Research Report GC 1976. July 1976.
[5] Geraldson, C. M. "Growing Tomatoes and Cucumbers with High Analysis
Fertilizer and Plastic Mulch," Proceedings of the Florida State
Horticultural Society 75: 253-260 (1962).
[6] Herbst, J. H. Farm Management Principles Budgets, Plans, Stipes
Publishing Co., Champaign, Illinois 1974.
[7] Johnson, F. A., et al., Commercial Vegetable Insect, Disease and
Nematode Control Guide. Univ. of Fla. Coop. Ext. Serv. Cir.
193 H, March 1974.
[8] Levins, R. A. and C. M. Geraldson. Production Costs for Manatee-
Ruskin Staked Tomatoes, 1974. Bradenton AREC Research Report
GC 1974-10. Nov. 1974.
[9] Montelaro, J. Commercial Vegetable Fertilization Guide. Univ. of
Fla. Coop. Ext. Serv. Cir. 225-B, May 1975.
[10] Walker, Charles and R. M. Hunt. An Analysis of Costs for Tomato
Production on the Rockdale Soils of South Florida. Food and
Resource Economics Department, Economics Report 45. Gainesville:
Univ. of Fla. April 1973.




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