• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Abstract
 Table of Contents
 List of Tables
 Introduction
 Rice production in the evergla...
 Methodology data sources
 Costs and returns for the plant...
 Partial budgeting for ratoon...
 Total returns to factors of...
 Conclusion
 Reference






Group Title: Economic information report - Food and Resource Economics Department - 202
Title: Costs and returns for rice production on muck soils in Florida, 1984
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00027317/00001
 Material Information
Title: Costs and returns for rice production on muck soils in Florida, 1984
Series Title: Economic information report
Physical Description: iii, 21 p. : ill. ; 28 cm.
Language: English
Creator: Rohrmann, Francisco
Alvarez, Jose, 1940-
Publisher: Food & Resource Economics Dept., Agricultural Experiment Stations, College of Agriculture, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla
Publication Date: 1984
 Subjects
Subject: Rice -- Economic aspects -- Florida   ( lcsh )
Rice -- Soils -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: Francisco Rohrmann, Jose Alvarez.
General Note: Cover title.
General Note: "November 1984."
Funding: Economic information report (Gainesville, Fla.) ;
 Record Information
Bibliographic ID: UF00027317
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 - 001548250
oclc - 22599446
notis - AHG1804

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
    Rice production in the everglades
        Page 2
        Page 3
    Methodology data sources
        Page 4
        Management
            Page 4
        Farm characteristics
            Page 5
        Machinery and equipment
            Page 5
            Page 6
        Cultural practices
            Page 7
            Page 8
        Labor
            Page 9
        Yields and prices
            Page 9
        Costs and returns for the plant crop
            Page 10
    Costs and returns for the plant crop
        Page 10
        Pre-harvest costs
            Page 10
            Page 11
        Total costs
            Page 12
            Page 13
        Returns to factors of production
            Page 14
        Sensitivity analysis
            Page 14
            Page 15
    Partial budgeting for ratoon rice
        Page 16
        Page 17
    Total returns to factors of production
        Page 18
    Conclusion
        Page 18
        Page 19
        Page 20
    Reference
        Page 21
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





Francisco Rohrmann


Jose Alvarez


Economic Information
Report 202


and Returns for


Production on Muck
in Florida, 1984


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


Rice


Soils


November 1984


Costs



















An enterpr i se budget for rice production .in the Everglades

Agricultural Area (EAA) during the 1984 season was developed from

data provided by loca p dd y 1 producers. An ef fici ent 500-acre farm was

assumed., Resu] ts show a not return to land, management and risk

of $7:1 per acre for the plant crop,. The combined plant and ratoon

crops no:t returns amount to f$17 per acre,.




Key words: Everglades, rice, enterprise budget, production costs.











The authors thank David Dodson., David Jones, George Snyder, Tom
Sp r een and P.cJ. van B lockl 1and f or their valuab le comments and
suggestions on early drafts of this manuscript,, The contributions
of several rice growers are greatly appreciated.

The use of trade names in this publication is solely for the
purpose of providing speci ic informant ion. It is not a guarantee
or a warranty of the products named and does .nt signify that
1 hey are approved to t he ex c fusion of others of su. i.tab e
composition.

TBM PC is a trademark of International Bus:i.ness Machines Corp.
Lotus 1-2--3 is a trademark of Lotus Development Corporat:i. on.


ABSTRACT




















TABLE OF CONTENTS

Page

LIST OF TABLES ....... ......... .......... ...... ..... ......... i:ii

INTRODUCT! ON ........ ........ ... ............. ....... 1

RIC HERODUCTION IN EVERGLADEFS .. .. .. .. .. ... ...... 2

METHODOLOGY AND DATA SOURCE S., ,.. ... ...... ,. .............. 4

Management ................. ............................ 4
Farm Characteristi. c s .... ............. ............ 5
Machi nery and Equipment ...... .... ........... ...... 5
Cu ltural. Practices .......... ... .... ........... 7
L a b o r ....... .. ..... ... .. .. .. .. .. .. .. 9
Yields and F:'rices ...., ,,. ........ .................. 9
Data Sources .. .,, ,. ... ...... .... ............. ... '1

COSTS AND RETURNS FOR THE PLANT CROP ................. 10

Pre --harvest Costs; ,t .... ... ......... ............... ... 10
Total Costs . ... .. ... .. .. .. .. .. .. .. ... ... 12
Returns u to r F actors o-f Production .... ... .. ..... 14
Sensi ti vity Anal ysis ................ ....... ......... 14

PARTIAL. BUDGETING FOR RATOON PRICE ........................ 16

TOTAL. RETURNS TO FACTORS OF PRODUCTION ................ 13

CONCL.US ION1 ........ ...... .... ... ...................... 18

rEFERENCES ...... ... ... ............ .... .. .......... 21


















LIST OF TAB.LE...

[able Page


1 Estimated initiall investment and annual and hourly
operating costs of machinery and equipment for
cultivating 500 acres of rice in the Everglades
agri culturall area,, 1984 .............. ......................... ....... 6

2 Cult..ral practices performed by di ff erent
machinery and equ:i..pinent to produce 500 acres o.f rice
in the Ever glades; agri .cu ltural area:, 1 984 ......... ...... 8

3 Estimated pre-harvest costs per acre or 500 ace 5 acres of
rice grown in the Everglades agricultural area, 1984 ... 11

4 Estimated total costs per acre, assuming 35, 40 and
45 cwt yields,, for 500 acres of rice grown in
the Everglades agricultural area, 1984 ........ ......... 13

5 Estimated returns to .- factors o-f production for a plant
crop w:i.th a 40 c:wt yield, for 500 acres of rice grown
in the Everglades agricultural area, 1984 .................. 15

6 Sensitivity analysis using 5 cwt above and below the
expected yield a $2 per .w above and b below the
expected price ....... .. .. .. ... ... .. .................... 15

7 Partial budget showing net change in farm :income
per acr e from .harvesting a ra-toon rice crop in the
Ever l ades agri cul tu.ral area, 19 84 .. ..... ... ... ........ 17

8 Total ret..rns to factors of production .for plant and
ratoon rice grown in 500 acres :in the Everglades
agricultural area ,, 1984 ........... .. .......... ... .. 19













COSTS i:, RETURNS FP: RICE PRODUCTION ON MUCK SOILS

IN FLORIDA, 1984


Francisco Rohrmann and Jose Alvarez


INTRODUCTION

In 1977, rice was gr own for grain in the Everglades

Agricultural Area (EAA) f or the firs.: time in 20 years. A

f eas i b ility stud .i v, ot I i i. nin the historical background d the

status of rice production at that time, the area's production

potential, and preliminary costs and returns information, was

published the following year (Alvarez 1978)..

Since that time, what was thought to be a promising new

alternative has become a viable industry., Harvested acreage has

approached 10,000 acres, two drying. and milling facilities have

been estab listed, and a sound r research and extension program at

the Everglades Research and Education Center has provided growers

w ith continuou i s updated local resea- rch.:

The 1978 rice enterpri se budget (Alvarez 1978) reflected the

cultural practices and level of technology existing at that time.

Changes in both, as well as requests from actual and potential

growers, make it necessary to develop a current budget. The

objective 'of this pub1 i cation is to fill that vo:i.



Fr.ancisco Rohrmann and Jose Alvarez are Director of IBM Grant and
Are a Economist, respectively, Food and Resourc e Economics
Department. University of Florida, Everglades Research and
Education Center, Belle Glade, F' 33430.

















The figures in this report were developed with a

computer ized rice budget generator designed by the authors. The

software package e is intended for on--farm use with an IBM Personal

Computer having a minimum memory of 192 Kilobytes of RAM, two

disk drivIs, a priinte'-r, and either version 1 or 1A of the Lotus

1.--2-3 electronic spreadsheet.



RICE PRODUCTION IN THE EVERGLADES

Several f actors combine to make the EAA most suitable for

rice culture: vast expanses of *flat, high-nitrogen muck soils, a

well-developed diIke and canal system, an abundance of water, and

a climate during the summer closely approaching the optimum for

the crop (Green 1953) Another contributing factor is the

existence of idle land during the rice-growing period, which

allows growing rice without taking la~:nd away -from other crops.

Snyder et al. (1.977) have documented the possibilities for

incorpor a ing r ice in the normal vegetab 1 e production cycle.

Although some rice has been planted on vegetable land that would

oth erwi se li e fal 1ow dur i ng the summer months, most ri ce

production :is taking place on sugar cane land.

About 370,000 acres of land in the EAA are devoted to sugar

cane production. Sugar cane is harvested during the fall and

winter and must be replanted in the fall approxi mately every four

years. Thus about 95,000 acres of land are idle during the spring















and summer, .

Fitting rice into the sugar cane production cycle has been

outlined by Alvarez et al. (1978):

Sugarcane is generally h arrested from November
through March. Plantings may start in September and
end in late Ja.nuary. Fallow time will thus range
from a minimum of 5 months to a ma -:imum of 12
months, wit h 9 months being thE : mode.

Rice can be planted from March through July and
harvested through December,. Very short-season
var ieties (L..abelle andc Lebonnet), requiring 110 to
120 days to mature, have already been planted with
success in the area. Assuming 1 month is needed for
land preparati on and 4 months to grow and harvest
the crop, there are still 4 months left to obtain a
ratoon crop., It is therefore possible e to f it at
least one rice crop, and perhaps a plant crop and
its rat oon crop, into the sugarcane production
cycle (p..13).


General and speci f ic gui. del ines f or rice production in the

EAA have been developed by Shuler et al. (1981). They are based

on research results and growers' experience.

The importance of destroying cane stubble and trash during

land preparation is emphasized. Crop residue will interfere with

drilling r-:ice and may physically injure emerging seedlings..

Good irrigation and drainage are a must for several reasons,,

Fields must be leveled so as to achieve. a variation in elevation

f ro'm three to six inches to eliminate water l jogging and dead

areas. Raoid drainage is necessary after seedling rice is f loaded

F following herb i cide applicant ion or to leach salts if sal i nity

becomes a problem. At harvest time, fields must be drained














quickly to avoid delays duec to excessive rains. The size of

fields (usually of 40 acres or less) and location of levees

depend upon the levelness of the field, pump capacity and

harvesting schedule. Several shal low, six to ten inches deep

"shovel ditches" are plowed across the width of the field to

improvee irrigation and drain,.-...

Depending on the variety, harvesting takes place between 110

to 120 days after planting. The 4 fields are then flooded again and

a ratoon crop can usually be harvested within 65 to 70 days,

yielding L::etween 35 to 50 :, of the first crop.,


METHODOLOGY AND DATA SOURCES

Many variables :influence rice production in the EAA,,

Variations in management, size of farm, soils, etc., result in

different systems of product ion with corrresponding input and

output levels. For this reason, it is required to state several

assumpt:i ons used to develop this budget, which analyzes first the

costs and returns associated with the p ant crop, then the

economic feasibility of a ratoon crop, and finally, the whole

operate on,,


Management

This study assumes: a) a high level of farm management, b)

the manager is a profit maximizer, c) use of the latest

technology, and d) the rice grower is an independent producer,

but is not a grower-processor.














quickly to avoid delays duec to excessive rains. The size of

fields (usually of 40 acres or less) and location of levees

depend upon the levelness of the field, pump capacity and

harvesting schedule. Several shal low, six to ten inches deep

"shovel ditches" are plowed across the width of the field to

improvee irrigation and drain,.-...

Depending on the variety, harvesting takes place between 110

to 120 days after planting. The 4 fields are then flooded again and

a ratoon crop can usually be harvested within 65 to 70 days,

yielding L::etween 35 to 50 :, of the first crop.,


METHODOLOGY AND DATA SOURCES

Many variables :influence rice production in the EAA,,

Variations in management, size of farm, soils, etc., result in

different systems of product ion with corrresponding input and

output levels. For this reason, it is required to state several

assumpt:i ons used to develop this budget, which analyzes first the

costs and returns associated with the p ant crop, then the

economic feasibility of a ratoon crop, and finally, the whole

operate on,,


Management

This study assumes: a) a high level of farm management, b)

the manager is a profit maximizer, c) use of the latest

technology, and d) the rice grower is an independent producer,

but is not a grower-processor.














Farm Character :i. st :i.sics

This study assumes a sugar cane farm growing 500 acres of

rice in land that would otherwise lie fallow during the summer

period. The 500-acre figure is assumed because there are some

economic es of scale in owning machinery sp eci f ic for ri ce

production, mainly the self-propelled combine. The soil type,

where most ric is i. .*n is classified as muck, The farm is

assumed to be located at a distance of ten miles from the dryer.


Machinery and Equipment

The machinery and equipment assumed (Table 1) can perform

all necessary operations in the time required and is used

efficiently. Annual fixed cost includes depreciation, repairs,

interests, taxes and insurance. Depreciation is calculated using

the straight line method, assuming machinery life at ten years

and a salvage value of ten percent of the purchase cost., This

method is used :because it taklesi into account the useful life of

the machinery thus spreading machinery ownership costs over the

entire period. Recent depreciation methods would distort the

costs and returns results, which would vary depending on the year

bei ng considered.

Repairs are estimated at three percent of purchase cost.

Interest on machinery loans was calculated at 13 percent of the

average value of the machine. Average value is defined as the

average of purchase cost and salvage value. Taxes and insurance














Farm Character :i. st :i.sics

This study assumes a sugar cane farm growing 500 acres of

rice in land that would otherwise lie fallow during the summer

period. The 500-acre figure is assumed because there are some

economic es of scale in owning machinery sp eci f ic for ri ce

production, mainly the self-propelled combine. The soil type,

where most ric is i. .*n is classified as muck, The farm is

assumed to be located at a distance of ten miles from the dryer.


Machinery and Equipment

The machinery and equipment assumed (Table 1) can perform

all necessary operations in the time required and is used

efficiently. Annual fixed cost includes depreciation, repairs,

interests, taxes and insurance. Depreciation is calculated using

the straight line method, assuming machinery life at ten years

and a salvage value of ten percent of the purchase cost., This

method is used :because it taklesi into account the useful life of

the machinery thus spreading machinery ownership costs over the

entire period. Recent depreciation methods would distort the

costs and returns results, which would vary depending on the year

bei ng considered.

Repairs are estimated at three percent of purchase cost.

Interest on machinery loans was calculated at 13 percent of the

average value of the machine. Average value is defined as the

average of purchase cost and salvage value. Taxes and insurance


















Table 1.-Estimated initial investment and annual and hourly operating costs of machinery
and equipment for cultivating 500 acres of rice in the Everglades agricultural
area, 1984.


MACHINERY & EQUIPMENT


ITEM

Tractor 1, 185 HP
Tractor 2, 140 HPF
Tractor 3, 120 HP
Disk offset, 9'
Disk offset, 11'
Disk harrow, 21'
Laser plane
Roller, 10'
Grain drill, 10'
Hopper trailer
SP combine, 16'
Bull dozer
Levee disc


New Cost

60, 000
45,000
35, 000
4,000
5, 000
9,000
30,000
1,530
2, 880
7,200
73:, 500
39, 600
10, 000


Fuel
gal/hr.

8.0
4.5









4.5
5. 1


Annual
Use (Hr-s)

2000
1500
1500
500
500
500
1500
150
150
300
300
600
40


TOTAL 322,710r


Annual

12,090
9,068
7, 053
806
1,008
1,814
6,045
308
580
1,451
14,810
7,979
2,0 15


65,026


$/A

13. 03
4. 76
3.48
0.73
1. 04
1. 09
7.25
0.69
1.16
2.90
29.62
0.75
2.83


69.33


Variab le
Cost/Hr

9.. 00
5.50
4 ,,80
0.00
0.00
0.00
0,,.00
0.00
0.00
0.00
5.50
6. 10
0.00


aIncludes time not used on rice enterprise.


--Fixed cost.---













represent one percent of the initial investment of the machine.

Machinery fixed cost per acre is a prorated figure, which

relates the annual fixed cost per hour to the total number of

hours per acre a particular machine or piece of equipment is

employed in the rice production process. The prorated approach is

used due to the fact that, in the Evergl ades Area, most of the

rice machinery is also used for growing sugar cane. The

ex ceptions are the self-propel led combine, the grain drill and

the hopper trailer, which are specific for rice production. Their

corresponding figures are not prorated by their hourly use per

acre, but simply the result of dividing total fixed cost by the

500 acres planted to rice.

Variable cost per hour is the dollar amount of fuel directly

consumed by power machinery (at 1. 00/gallon) plus one doll ar

per hour for maintenance. For this reason, non-power equipment

does not show a variable cost per hour, although repairs were

included under machinery ownership costs.


Cultural Practices

Table 2 shows most cultural practices performed, in a

sequence of machinery operations associated with growing rice in

the area. The machinery list is identical to the one shown in

Table 1. Times over represents the number of times a cultural

practice is performed. The efficiency measures or performance

rates of the operation are stated in acres per day given the type

of machinery employed. A typical working day for a machine is
















Table 2.- Cultural practices performed by different machinery and equipment to produce 500 acres of rice in the
Everglades agricultural area, 1984.


MACHINERY USE


Times Over

Tractor 1., 185 HP
Tractor 2, 140 HP
Tractor 3, 120 HPF
Disk offset, 9'
Disk offset, 11'
Disk harrow, 21'
Laser plane
Roller-, 10'
Grain drill, 10'
Hopper trailer
SP combine, 16'
Bull dozer
Levee disc


Ld L aLnd Land Land
Brealk:ing Disking Level Disking PlantingRolling

2 2 1 21 3
..-----.--...-----..---Acres/Day---------------------


0 0 0
0 0 0
0 0 0


Bui ld
Levees


Destruc..
Levees Harvesting


.--------------- Acres/Day----.

0 O 0
0 C)0 0'
0 0
0 0 0
C0 (' 0

f) ) ,

0 0 12

0 0 12
0 160 0
160 0 0
(*) ltZ(.
:L 61~I ()


--














assumed to be nine hours. In other words, equipment usage time is

assumed to be 90% of labor time;, allowing for the time lost in

activities such as ref fueling etc..

The efficiency in terms of acres per day is utsed to obtain

the total number of hours per acre a machine is employed. This

information is used to calculate fixed costs and variable costs

on a per acre basis.


Labor

Labor cost per hour of work is estimated to be $5.50,

:i.nclu ding f ringe benef its The number of hours of work in a

typical working day is assumed to be 10. Together with machinery

eff iciency:, this information is used to calculate labor cost per

acre,,


Yields and Prices

Rice is assumed to be harve-sted at 21% moisture content and

dried down to 12.5% A vield of 40 cwt of dry rice per acre and a

price of *$10/cwt (higher than the average domestic price due to

high quality No. 2 rice) are assumed for the plant crop,, For the

ratoon rice, the yield assumed is of 20 cwt. and the price is

$9,,50 (a lower price is the result of a lower quality rice). The

cost of hauling the rice to the dryer is set at $0.05/cwt/mile.,

The drying cost is $11.40 per cwt of wet rice.














assumed to be nine hours. In other words, equipment usage time is

assumed to be 90% of labor time;, allowing for the time lost in

activities such as ref fueling etc..

The efficiency in terms of acres per day is utsed to obtain

the total number of hours per acre a machine is employed. This

information is used to calculate fixed costs and variable costs

on a per acre basis.


Labor

Labor cost per hour of work is estimated to be $5.50,

:i.nclu ding f ringe benef its The number of hours of work in a

typical working day is assumed to be 10. Together with machinery

eff iciency:, this information is used to calculate labor cost per

acre,,


Yields and Prices

Rice is assumed to be harve-sted at 21% moisture content and

dried down to 12.5% A vield of 40 cwt of dry rice per acre and a

price of *$10/cwt (higher than the average domestic price due to

high quality No. 2 rice) are assumed for the plant crop,, For the

ratoon rice, the yield assumed is of 20 cwt. and the price is

$9,,50 (a lower price is the result of a lower quality rice). The

cost of hauling the rice to the dryer is set at $0.05/cwt/mile.,

The drying cost is $11.40 per cwt of wet rice.















Data Solurces

Data f for activity performed, equ:i meantt used and their

corresponding e f i ci ri c:s were obtained thr og..gh personal

intervi ws with producer'::. -:"co: fo ." r inpu'.its were obtained from

local firs rs :: nd rice grower' .


COSTS iAND RETURN.Ji I FOR THI-E PI..LANT CROP

Pre-harvest Cast.

Pre--h t arv-;t cost are divide d into variable and .fixe :d costs

(Table 3). Detailed d:i. sc.s: i on o-f Table 3 is omitted because it

is self -ex;planatory. ReFit..:iEs r..e providedd in costs :: per acre and

the corresponding proper t:i on .:i th respect to either var:i able or

fix ed costs. Variable cost::- a're the c:::osts that mav vary with

production levels ';and with changing inputt levels.. Notic:::e that the

three most si ni.f i cant variable costs a:re mac:hi nery and equipment

(16.30%), labor ( 13.63%) C. nd seed (12.,,98%). Besides the costs

incu.rre ad i.n di f event activities., i rrigat i. on mni si. el 1 aneous (at

10% of a]:l pre-"harvest variableC: co sta ) and interest on opFerat:i.ng

:ap:ital at 13%) are o 1lso.:. included., Toltal pre--.harvest variable

costs for the ex ample farm are $:1.69.53 per acre..

Fixed costs are those that cannot be changed during the

production periodd, Typ:ical. fi:;.;ad costs in rice production are

those associated wit. o wnirg machinery and equi .pment, land

charges, and irrigation systems. Note that the absence ::f a land

charge and zero fixed coat for irrigation are due to the .fact















Data Solurces

Data f for activity performed, equ:i meantt used and their

corresponding e f i ci ri c:s were obtained thr og..gh personal

intervi ws with producer'::. -:"co: fo ." r inpu'.its were obtained from

local firs rs :: nd rice grower' .


COSTS iAND RETURN.Ji I FOR THI-E PI..LANT CROP

Pre-harvest Cast.

Pre--h t arv-;t cost are divide d into variable and .fixe :d costs

(Table 3). Detailed d:i. sc.s: i on o-f Table 3 is omitted because it

is self -ex;planatory. ReFit..:iEs r..e providedd in costs :: per acre and

the corresponding proper t:i on .:i th respect to either var:i able or

fix ed costs. Variable cost::- a're the c:::osts that mav vary with

production levels ';and with changing inputt levels.. Notic:::e that the

three most si ni.f i cant variable costs a:re mac:hi nery and equipment

(16.30%), labor ( 13.63%) C. nd seed (12.,,98%). Besides the costs

incu.rre ad i.n di f event activities., i rrigat i. on mni si. el 1 aneous (at

10% of a]:l pre-"harvest variableC: co sta ) and interest on opFerat:i.ng

:ap:ital at 13%) are o 1lso.:. included., Toltal pre--.harvest variable

costs for the ex ample farm are $:1.69.53 per acre..

Fixed costs are those that cannot be changed during the

production periodd, Typ:ical. fi:;.;ad costs in rice production are

those associated wit. o wnirg machinery and equi .pment, land

charges, and irrigation systems. Note that the absence ::f a land

charge and zero fixed coat for irrigation are due to the .fact















Data Solurces

Data f for activity performed, equ:i meantt used and their

corresponding e f i ci ri c:s were obtained thr og..gh personal

intervi ws with producer'::. -:"co: fo ." r inpu'.its were obtained from

local firs rs :: nd rice grower' .


COSTS iAND RETURN.Ji I FOR THI-E PI..LANT CROP

Pre-harvest Cast.

Pre--h t arv-;t cost are divide d into variable and .fixe :d costs

(Table 3). Detailed d:i. sc.s: i on o-f Table 3 is omitted because it

is self -ex;planatory. ReFit..:iEs r..e providedd in costs :: per acre and

the corresponding proper t:i on .:i th respect to either var:i able or

fix ed costs. Variable cost::- a're the c:::osts that mav vary with

production levels ';and with changing inputt levels.. Notic:::e that the

three most si ni.f i cant variable costs a:re mac:hi nery and equipment

(16.30%), labor ( 13.63%) C. nd seed (12.,,98%). Besides the costs

incu.rre ad i.n di f event activities., i rrigat i. on mni si. el 1 aneous (at

10% of a]:l pre-"harvest variableC: co sta ) and interest on opFerat:i.ng

:ap:ital at 13%) are o 1lso.:. included., Toltal pre--.harvest variable

costs for the ex ample farm are $:1.69.53 per acre..

Fixed costs are those that cannot be changed during the

production periodd, Typ:ical. fi:;.;ad costs in rice production are

those associated wit. o wnirg machinery and equi .pment, land

charges, and irrigation systems. Note that the absence ::f a land

charge and zero fixed coat for irrigation are due to the .fact










11


Table 3.- Estimated pre-harvest costs per acre for 500 acres of rice grown in the
Everglades agricultural area, 1984.


PRE-H1ARVEST COST

I. VARIABLE COSTS
,Seed a
r: erti lizer
IHrbicide
Fungi ci de
T isecti ci cde
: rcraft.
La..bor"
Mch,, & Equip.
Ir rigati on
Mi scel 1 aneous
Interest


UNIT



lb,.
t on
ga 1..
I b ,1

Acre.
Hours

Ac, re--inch

$


Quanti ty


Ti mes
Over
... .. ........ ..


100
0..05
0.5
1
0. 125
1.
4. 21 '7

32
10. .00
13. 00%


Price

0. 22
24 0.00
9.75
8.25
10.56
3.00
5. 50

0.50


TOT.AL VAR I ABLE COSTS :=======:::..-.=:.-==- ====.......==-=:=


Cost/Acre Percent
----------- ----------
22.00 12.98%
12.00 7.08%
9.75 5.75%
16.50 9.73%
2.,64 1.56%
15. 00 8 8.5%
23.19 13.68%
27.63 16.30%
1.6 ,,00 9.44%
14 ,,47 8.,54%
10.35 6.10%

:1. 9 53 100.00%


II.F:[XED COSTS


Mac h .5' Equi p. Frr-om M"lachi ner'y 8,: EI:qui pment Se:c t :ion
Lnd ac re 500 1 0.00
Irr i gat i on system b
Other

TOTAL F IXED COSTS : === =....... "-= =:::::===.===== = =


III. PRE-.HARVEST TOTAL COST SI I '!,' 'Y

VARIABLE COSTS
FIXED COSTS

PRE-HARVEST TOTAL :CO:ST .=-.:===....= ===:=:


69 ,, :
0. 00
0,,00
0.00

69.33


169,.53

6923.337
23a. 87


100.00%
0,,00%
0.007.
0.00%

100 .,00%


70 ,,977%
29 ,, 03%

100. 00%


aAn iron sulfate compound applied in areas where seedling chlorosis is a problem.

bNo charge is made to land since it lies idle during this period; or to the irrigation
system because flooding is generally practiced whether rice is grown or not.





















that Florida ri-ce is mostly .:.r own on sugar cane l and that

otherwise. lies fallow during the- summer period when riCe i s

grown.

At the bottom :oft the table,, a pre-harve'st total cost summary

is presented. Pre-harveLst variable costs represent 70. ': of

total pre-harvest cosi-ts. Pre -har.vest fi xed costs a:dd to $69.33

and represent 29..03% ::of total :pre--harvest costs., Est:imated pre-

harvest costs total $238.07 per acre.


Total Costs

Total costs per acre are estimated for a yield o-f 40 ,cwt of

dry rice (Table 4). They include :e the costs i ncurr ed in growi ng,

harvesting,haarve g ruling to dryer and drying. T"hese total costs are

-'.''40 per acre., The growing cost is the pre--harvest cost shown

in Table 3,, Harvesting costss ar highly dependent on yield, field

efficiencyc, fuel co:ns:.umLpti on iof the c::ombinOe, etc, The variable

cost of harvesting is $3.67 per acre, given that 3 acres are

harvested in one hour. Hauling and drying costs are based on the

assumptions made and dir ect ly r fl ect the amount of rice.

harvested.

At the bottom of ts his table, brea'kven prices are presented.

The .. price of $.,,23 per Owt is required to. cover the total costs

given the yield acs's.um.ed.

In addition, Table 4 adjusts total costs per acre to 5 cwt

below and above the assumed yi el d. Note the ef fect of these

variations on the correspond-ing costs and breakeven prices,.








Table 4.- Estimatedtotal costs per acre, assuming 35, 40 and 45 cwt yields, for 500 acres of rice grown in the
Everglades agricultural area, 1984.


Expected yield (cwt/Acre)
35 40 45
Cost/
Activity Unit unit Quantity Cost/A Quantity Cost/A Quantity Cost/A

Growing acre 238.87 1.00 238.87 1.00 238.87 1.00 238.87

Harvesting hour 0.303 3.33 0.333 3.67 0.37 4.07

Hauling to dryers cwt 0.50 1.00 20.00 1.00 22.86 1.00 25.72

Dryingd cwt 1.40 1.00 56.01 1.00 64.00 1.00 72.01

Total Cost $/acre 318.21 329.40 340.67

Break-even price $/cwt -9.09 8.23 7.57

aFrom Table 3. Includes building and destroying levees.
blncludes both machinery and labor costs. The assumed efficiency measures for the combine are, 3.3, 3, and 2.7
acres per hour for the 35, 40 and 45 cwt yields, respectively.
CThe custom hired cost is based on the assumption that rice is harvested at 21% moisture and dried down to 12.5%.
Custom hired.
















Returns to Factors of Productiotn.

The returns to various r. -factors of production for the plant

crop are presented ini Table 5. The break--down f acilitates the

estimation of. t the value Df the resource. s used in rice production

and is designed to test the economic profitability of the plant

rice operation as an economic unit. Note that variable costs

account 1for gr oiing, hauling, drying a.nd destroying levees. Fixed

costs acco unt only for machinery and equipment. The returns to

management and ri:.sk are $35,300 for the plant crop operation,

whi ch is $70.60 per acre and $1.77 pe-r cwt of rice produced,, For

each dollar of revenue generated, approx- imately 65 cents are paid

to the variable inputs and 17 cents to fixed costs, leaving a

residual to the rice grower of 18 cents. In other words, net

returns represent 17.65% of total revenues,,


Sensitivity Analysis

The sensitivity analysis shown in Table 6 assumes prices

ranging from $8 to i$12 per cwt,. i" v.. Cwt above and below the

expected 40 cwt yield are cons i derv to acc on..tn t for yield

variability. Net revenue per acre is -$49,,40 when rice sells for

$8 per cwt and the yield is 35 cwt,, It increases to $199.33 per

acre when the price is $12 and 45 cwt of dry rice per acre are

obtained, It should be noticed that by increasing yield by 5 cwt

per acre, net return in creasc:s fromm $70.60 to I$09.,33, given the

expected price of $ 10,,
















Returns to Factors of Productiotn.

The returns to various r. -factors of production for the plant

crop are presented ini Table 5. The break--down f acilitates the

estimation of. t the value Df the resource. s used in rice production

and is designed to test the economic profitability of the plant

rice operation as an economic unit. Note that variable costs

account 1for gr oiing, hauling, drying a.nd destroying levees. Fixed

costs acco unt only for machinery and equipment. The returns to

management and ri:.sk are $35,300 for the plant crop operation,

whi ch is $70.60 per acre and $1.77 pe-r cwt of rice produced,, For

each dollar of revenue generated, approx- imately 65 cents are paid

to the variable inputs and 17 cents to fixed costs, leaving a

residual to the rice grower of 18 cents. In other words, net

returns represent 17.65% of total revenues,,


Sensitivity Analysis

The sensitivity analysis shown in Table 6 assumes prices

ranging from $8 to i$12 per cwt,. i" v.. Cwt above and below the

expected 40 cwt yield are cons i derv to acc on..tn t for yield

variability. Net revenue per acre is -$49,,40 when rice sells for

$8 per cwt and the yield is 35 cwt,, It increases to $199.33 per

acre when the price is $12 and 45 cwt of dry rice per acre are

obtained, It should be noticed that by increasing yield by 5 cwt

per acre, net return in creasc:s fromm $70.60 to I$09.,33, given the

expected price of $ 10,,










Table 5.- Estimated returns to factors of production for a plant crop with a 40 cwt
yield, for 500 acres of rice grown in the Everglades agricultural area,
1984.


RETURNS TO FACTORS OF PRODUCTION FOR THE PLANT CROP


Total Revenue

Vari. able Cost


TOTAL. $

200,000


$/acre

400.00


$/cwt

10..00


6 ,, 5


Returns to F i xed Cost :.


Fi::ed (Costs except : t Land rchar ge).

Return to land and manageme nt & ris kI


I ..d Charge
. 3'... J: a ,.!:


Return to management &:. risl.:


Table 6.- Sensitivity analysis using 5 cwt above and below the expected yield and $2
per cwt above and below the expected price.


Revenue/Acre
-- -- -------- -
280,, 0()
315. O::)

385,0 00
420.( 00

320. 00:)


440., 00
48,)0., 00 )

360. 00
405,, 0f:
4 5 0,, 0 (..
495,, 00 )
540,, 00


Total CoIsts/Acrea Net Revenue/Acre'
-- ----Dol. r ..------ ---------...---------.....
31.,, 2 -49.40
318.21 14,, 40
31:. 21 20. 6
318. ,,21 55.60
318.. 21 90,, 60


329. 40
3 29. 40
329. 40
329,, 4W0
329,, 40:

340., 67
340 ,, 67
340,, 67
340.67
340). 67


-9. 40



150. 60

19 ,, ;3
64. 33
109. .33
154.33
1.99. 33


aTotal costs
hauling and


for the 35 and
drying costs.


45 cwt yields have


been adjusted to reflect different harvest


1 .
10.00
1 00,, 0()%


69.33

70.60


1. 73

1.77


34 98%

17.,33%

17.65%

0. 00%

17.65%


1 .77


Yim3ld
-Cwt. -
35
35
35
35
35

40
40
40.0

140

45
45
-15
Q5
05
,\ i1r


Pri ce
-' /cwt .. -
8 ,,.00
9.0. 0
10 00
1 1 00
12 00

8. 00
9.. 00
10. 00







11 00
12 00


69', 966 139.93


,0 0. 0


SENS :1 I V ITY ANALYST I S
















PARTIAL BUD'.': ; ING FOR RATION RICE

Partial budgeting is a systematic listing of the possible

changes in estima.:ting coats and returns, in a given time period

when production p racti ces ch a ng e.e Sugar cane growers in the

Everglades have the al terna ~tive of; g-r .owing two crops of: rice from

the same planting., In order to assess the economic feasibility of

obtaining the. ratoon crop., a partial budget is presented in this

study. A partial b:::.udget considers additional costs incurred,,

decreased revenues:, addit ion.al revenue and decreased costs

(Table 7), Because Tfixed cost s of :f machinery spec :i.f ic to rice

production are spread over an additional 500 acres, they are

considered as a decreased rcos!t, In other words, by using this

machinery in the ratoon rice the burden to the plant crop is

di mi nished in terms ofT dollars per acre, while the absol ute

.figure remains unchanged,,

By spending an additi onal $73,.55 per acre, an additional net

revenue of $132.71 may be o:bt:a:ine.d in a relatively short period

of time. The al. ternativei of f the ratoon rc r ice greatly enhances the

income potential of rice production in the Everglades.

A breakeven analysis for the r atoon crop is pr::sented to

complement the partial budget These esti mated minimum yield

required to cover all costs is 6,:03 cwt ::er acre, given the

expected price of 1'9,.50 per cwt. In addition, the estimated

breakeven price is $2.86 per cwt,.








Table 7.- Partial budget showing net change in farm income per acre from harvesting
a ratoon rice crop in the Everglades agricultural area, 1984.


PARTIAL BUDGE FOR RATOON RICE


INCREASED COSTS


Fung i ci de
Inr:n cti. i::de
Ai rcraf t
Labor
Irrig ation'
Mi scel I aneous!
In torest
Har vesting
Haul ing to dryer
Dryi ng


UNIT OLantity


Ibs
pt..

Hrs.
acre-:inch


clt .
cwt.
cW t.
c: wt,.


0
1.5
1
1

:0.00
13.00%
20
20
20


Price


1.32
3. 00
5.00
1.00


1 0.40
0.50
:1 1.40


TOTAL.
DECREASE ED REVENUE

Non ADDED COSTS
TOTAL.O ADDED COSTS (A)


ADDI T IONAL REVENUE:


Add t:i. onal Ri ce


UNIT

cwt.


OQuanti ty

20


Times
Over Price

1 9.50


DECREASED COST


Other
Fixed costs (Mach &: Equip)

TOTAL ADDED INCOME (B)


NET DIFFERENCE (B--A)



BREAKEVEN ANALYSIS FOR THE RATOON CROP::
*)!;*; ,K;K ;< t ** ** *'* *** *


A) Minimu..m Yi eld requ:i red to cover all costs =s:==


B) Minimum Frice required to cover all costs ====>


6.03 cwt/acre


$2.86 per cwt.


$/Acre

0.00
1.98
3 ,, 00
3.00
5.00
10. 00
2.00
0.71
8.00
10.85
32.00


$73.55

0 0.00 $0.00

$73.55


$/Acre

190.00


0. 00
16.26

$206.26

$132.71


T- i mesi;
Over














TOTAL RETURNS TO FACTORS OF PRODUCTION

In order- to analyze the plant and ratoon crops, total returns

to factors of production For the whole operation are presented in

Table S. This is design ned to test the economic profitability of

the whole rice operation as an economic unit. Revenues and

variable costs of plant and ratoon crops are added. The fixed

costs are the same as for the rice plant crop. This is because the

ratoon crop does not use much mh machinery, except the hopper

trail er and the SP c:omb in:e. ,fe t returns to management and risk

for the whole operation are $:93,,527, $187.05 per acre and $3.12

per cwt. For each dollar of revenue generated, approx imately 56

cents are paid to the variable inputs and 12 cents to fixed costs,

leaving a residual to the: rice grower of 32 cents. In other

words, net returns represent 31.70% of total revenues.


CONCLUSIONS

This study has shown that rice can be grown profitably on

land that would otherwise lie fallow during the summer period in

the Everglades agricultural area. Net returns to land, management

and risk from the plant and rat oon crops amounted to $187.05 in

1984. The ratoon crop improves significantly the profitability of

the rice enterprise. While net returns represent 17.65% of total

plant crop revenues, they increase to 31.7% when a ratoon crop is

grown. The 14.405% positive dif ference translates into an extra

$1.35 per c!wJt of rice produced.














TOTAL RETURNS TO FACTORS OF PRODUCTION

In order- to analyze the plant and ratoon crops, total returns

to factors of production For the whole operation are presented in

Table S. This is design ned to test the economic profitability of

the whole rice operation as an economic unit. Revenues and

variable costs of plant and ratoon crops are added. The fixed

costs are the same as for the rice plant crop. This is because the

ratoon crop does not use much mh machinery, except the hopper

trail er and the SP c:omb in:e. ,fe t returns to management and risk

for the whole operation are $:93,,527, $187.05 per acre and $3.12

per cwt. For each dollar of revenue generated, approx imately 56

cents are paid to the variable inputs and 12 cents to fixed costs,

leaving a residual to the: rice grower of 32 cents. In other

words, net returns represent 31.70% of total revenues.


CONCLUSIONS

This study has shown that rice can be grown profitably on

land that would otherwise lie fallow during the summer period in

the Everglades agricultural area. Net returns to land, management

and risk from the plant and rat oon crops amounted to $187.05 in

1984. The ratoon crop improves significantly the profitability of

the rice enterprise. While net returns represent 17.65% of total

plant crop revenues, they increase to 31.7% when a ratoon crop is

grown. The 14.405% positive dif ference translates into an extra

$1.35 per c!wJt of rice produced.















Table 8.- Total returns to factors of production for plant and ratoon rice grown in
500 acres in the Everglades agricultural area, 1984.


TOTAL RFET:UFk;S TO FACTORS OF

TI OTAL.. $

Tot.: l F.'ever'i i... e 2 :?:5, 0

Var i a b 1 e C!ot s .s :.... 807

Returns to Fix e:ed Cost I. .93

F'i >'c.l Costs; (except La d c:h::hrge ) 34., 66

RFetur.-n to land annd (imaagemenr t & risk 93:;, 527

Iand Ch large 0

R::etu'L! :to management & risk 93,527


PRODUCE T I ON

./acre $/cwt

5? 90. C00 9.83

333. 61 5 ,56

256.39 4.27

69 ,,33 1. 1

187. 0,5 ,, 12


,,00 0.00
187.05 3.12


100. 00%

56. 54%

4.3.46%

11. 75%

31.70%

0.07%

31.,70"/.









20





Perhaps the mo.: important finding was the fact that, by

increasing plant crop y:ie:cld by 5 cwt per acre, net returns to

land., management a.nd risk increase by almost 55% at the assumed

price. Such increase may be atta:inabl:e in the near future since

research is being conducted in thi s are a and producers hIave

gained considerable experience i.n the past few years.














REFERENCES

Alvarez, Jose. Potential. 1or Commercial Rice Produl:tion in the

Everglades, Economic Information Report 98, Food and Resource

Economics Department, Uni. versi ty of Florida., Gainesvi le,

Florida,, October 1978, 37 pp.


Alvarez, Jose, Gerald Kidder and G(eorge H. Snyder. "The Economic

Potential for Growing Rice and Sugarcane in Rotation in the

Everglades," Soil and Crop Science Soc. of Florida 38

(1978): 12-15.


Green, V.E., Jr. "Ri ce-:r-owi ng is Added to Everglades

Agriculture, Crops and Soi ls 6 (:1953), p.,14 .


Shuler, Kenneth D., George H. Snydcer,, Joan A. Dusky and William G.

Genung. "Suggested Guideli nesi for Rice Production in the

Everglades Area of Florida," AREC Belle Glade, University of

Florida, Mimeo Report., February 1981.


Snyder, G..I,,, J., Alvarez, J.W. M:i.shoe, D,....,, Myhre, S.F. Shih and

V.E. Green, Jr. "The Economic Potential for Incorporating

Rice in Everglades Vegetable Production Systems," Proc.

Florida State Horticultural Society 90 (1977): 380-382.




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