• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Half Title
 Prologue
 Abstract
 Acknowledgement
 Table of Contents
 List of Tables
 Introduction
 Florida's orange industry
 Sao Paulo's orange industry
 Comparitive historical costs and...
 Florida's costs and returns
 Net interest costs in a high inflationary...
 Summary






Group Title: Economic information report - University of Florida. Agricultural Experiment Station ; no. 274
Title: An overview of Florida (U.S.A.) and São Paulo (Brazil) processed orange industries
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00027335/00001
 Material Information
Title: An overview of Florida (U.S.A.) and São Paulo (Brazil) processed orange industries with comparative costs and returns 1979-80 through 1987-88 seasons
Series Title: Economic information report
Physical Description: vii, 49 p. : maps ; 28 cm.
Language: English
Creator: Muraro, R. P
Amaro, Antonio Ambrosio
University of Florida -- Food and Resource Economics Dept
Publisher: Food & Resource Economics Dept., Agricultural Experiment Station and Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Publication Date: 1990
 Subjects
Subject: Citrus fruit industry -- Florida   ( lcsh )
Citrus fruit industry -- Brazil -- São Paulo   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Includes bibliographical references (p. 48-49).
Statement of Responsibility: Ronald P. Muraro and Antonio Ambrosio Amaro.
General Note: "June 1990."
Funding: Economic information report (Gainesville, Fla.)
 Record Information
Bibliographic ID: UF00027335
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 by the source institution and holding location.
Resource Identifier: aleph - 001585632
oclc - 22236932
notis - AHK9581

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Half Title
        Half Title
    Prologue
        Page i
        Page ii
    Abstract
        Page iii
    Acknowledgement
        Page iii
    Table of Contents
        Page iv
    List of Tables
        Page v
        Page vi
        Page vii
    Introduction
        Page 1
    Florida's orange industry
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
    Sao Paulo's orange industry
        Page 10
        Page 11
        Page 12
        Page 13
    Comparitive historical costs and returns - 1979-80 through 1987-88
        Page 14
    Florida's costs and returns
        Page 14
        Page 15
        Page 16
        Sao Paulo's costs and returns
            Page 17
            Page 18
        Comparitive analysis of costs and returns
            Page 19
            Page 20
            Page 21
            Page 22
            Page 23
            Page 24
            Page 25
            Page 26
            Page 27
            Page 28
            Page 29
            Page 30
            Page 31
            Page 32
        Capital investment costs for an orange planting
            Page 33
            Page 34
            Page 35
    Net interest costs in a high inflationary economy
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
    Summary
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
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





Ronald P. Muraro
Antonio Ambrosio Amaro


ECONOMIC
INFORMATION
REPORT
274


a An Overview of
) and Sao Paulo (Brazil)
-ssed Orange Industries
vith Comparative Costs
and Returns,
1979-80
through
1987-88
Seasons


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


June 1990>





















AN OVERVIEW OF FLORIDA (U.S.A.) AND SAO PAULO BRAZILL)

PROCESSED ORANGE INDUSTRIES WITH COMPARATIVE COSTS AND RETURNS

1979-80 THROUGH 1987-88 SEASONS












Ronald P. Muraro and Antonio Ambrosio Amaro
















PROLOGUE


The discussion in the text of this report covers the time period
between the 1979-80 and 1988-89 production seasons with costs and
returns comparisons from 1979-80 through 1987-88. However, a few
comments are in order with respect to the 1989-90 production season in
both Florida and Sao Paulo.
Two frost/freezes occurred in Florida during 1989. The first
freeze came on February 24th and 25th which could be classified as a
moderate freeze due to the minimum temperatures of 25 degrees Fahrenheit
and the relatively short time durations below freezing. However, citrus
trees were in full or near-full bloom. Much of the bloom and tender new
growth was lost. There was minimal damage to fruit on trees and no loss
was reported. The affect of the February freeze was reflected in the
October 1989 crop forecast which indicated only 130 million boxes of
oranges would be harvested; an approximate 16 million box reduction over
the total 1988-89 orange production (8,9).
Ten months after the first 1989 freeze, a second freeze occurred on
December 24th and 25th. The second freeze can be classified as a severe
freeze with temperatures in the upper teens and low-twenties throughout
most of the citrus industry. Duration of freezing temperatures were as
long as 15 to 18 hours in the north central production area. Tree
losses again occurred in this area. Extensive fruit loss occurred
through most of the Central Florida (ridge) production area. The result
was a reduction in the Florida round orange forecast to 108 million
boxes (8). With the reduction in orange juice supplies, the declining
producer price prior to the freeze ($1.20 per pound solids delivered to
processing plant) increased to historic highs after the freeze ($1.80 to
$2.00 per pound solids).
Whereas Florida's 1989-90 orange crop was being affected by adverse
weather, Sao Paulo's orange crop was experiencing more favorable weather
conditions than had been experienced in a number of years. There was an
almost complete absence of winter drought. The 1989-90 orange crop in











Sao Paulo is forecast to be a record 295 million boxes of which 255
million boxes are expected to be processed. The remaining 40 million
boxes will be utilized in the fresh market outlets (2,3).
The increased fruit production for the 1989-90 season can be
contributed to several factors. Favorable rain during bloom resulted in
an 8% increase in the number of fruit per tree as well as an increase in
fruit size. Also, contributing to the increased production is a 6%
increase in the number of bearing trees. The last factor which
contributed to the increased orange crop is an improved financial
condition of the producers. Cultural care was increased resulting in an
overall improvement in the health and productivity of citrus trees
(2,3).
As indicated earlier, due to the substantial increase in world
orange juice supplies, orange juice prices were declining prior to
Florida's December 1989 freeze. In October 1989, Brazil's export price
was $1.37 per pound solids (includes all transportation, taxes, etc.,
delivered into United States). By February 1990, Brazil's export price
had risen to $2.12 per pound solids; a 54.7% increase above the pre-
freeze level (4,5).

















ABSTRACT


Florida (U.S.A.) and Sao Paulo (Brazil) are the world's largest
producers of oranges. An overview of both round orange acreage and
production are presented over nine seasons (1979-80 through 1987-88).
Comparative costs and returns are also presented for both Florida and
Sao Paulo. The nine-year average per acre total revenue, total cultural
costs and net returns over cultural costs were $1,709.87, $614.89 and
$1,092.83 for Florida and $339.62, $170.22 and $169.40 for Sao Paulo,
respectively. The nine-year average capital investment cost per acre
for a citrus planting was $6,951 for Florida and $1,410 for Sao Paulo
with nine-year average overall annual return on investment of 15.72% for
Florida and 12.02% for Sao Paulo. However, when interest costs were
adjusted for Brazil's high inflation.rate during the 1980's, Sao Paulo's
nine-year average overall annual return on investment increased to
16.33%.

Key words: capital investment, citrus, costs and returns, Florida
(U.S.A.), net interest cost, overall annual return on investment, round
oranges, Sao Paulo (Brazil).










ACKNOWLEDGEMENTS


Appreciation is extended to Mrs. Jane Wilson for typing the final
manuscript and for technical assistance with compiling the information
tables presented in the report.

The authors also appreciate the assistance which Mr. Edmond
Missiaen, Dr. Carlos Blazquez, Dr. Luiz C. Vasconcellos and Mr. Luiz
Irias provided with translating the documents referenced in the report.

















ABSTRACT


Florida (U.S.A.) and Sao Paulo (Brazil) are the world's largest
producers of oranges. An overview of both round orange acreage and
production are presented over nine seasons (1979-80 through 1987-88).
Comparative costs and returns are also presented for both Florida and
Sao Paulo. The nine-year average per acre total revenue, total cultural
costs and net returns over cultural costs were $1,709.87, $614.89 and
$1,092.83 for Florida and $339.62, $170.22 and $169.40 for Sao Paulo,
respectively. The nine-year average capital investment cost per acre
for a citrus planting was $6,951 for Florida and $1,410 for Sao Paulo
with nine-year average overall annual return on investment of 15.72% for
Florida and 12.02% for Sao Paulo. However, when interest costs were
adjusted for Brazil's high inflation.rate during the 1980's, Sao Paulo's
nine-year average overall annual return on investment increased to
16.33%.

Key words: capital investment, citrus, costs and returns, Florida
(U.S.A.), net interest cost, overall annual return on investment, round
oranges, Sao Paulo (Brazil).










ACKNOWLEDGEMENTS


Appreciation is extended to Mrs. Jane Wilson for typing the final
manuscript and for technical assistance with compiling the information
tables presented in the report.

The authors also appreciate the assistance which Mr. Edmond
Missiaen, Dr. Carlos Blazquez, Dr. Luiz C. Vasconcellos and Mr. Luiz
Irias provided with translating the documents referenced in the report.


















TABLE OF CONTENTS


Page


PROLOGUE . . . . . .

ABSTRACT . . . . . .

ACKNOWLEDGEMENTS . . . . .

LIST OF TABLES . . . . . .

INTRODUCTION . . . . . .

FLORIDA'S ORANGE INDUSTRY. . . . .

SAO PAULO'S ORANGE INDUSTRY . . . .

COMPARATIVE HISTORICAL COSTS AND RETURNS--1979-80 THROUGH

Florida's Costs and Returns . . .
Sao Paulo's Costs and Returns ...........
Comparative Analysis of Costs and Returns .. ..
Capital Investment Costs for an Orange Planting .
Annual Overall Rate of Return. . . .

NET INTEREST COSTS IN A HIGH INFLATIONARY ECONOMY. .

SUMMARY. . . . . . .

REFERENCES . . . . . .


987-88.


. .
















LIST OF TABLES



Table Page

1 Florida (U.S.A.) acres of round oranges and tree numbers
by commercial inventory, 1966 to 1988. . . 3

2 Florida (U.S.A.) regional and state total bearing acres
for round oranges . . . . . 5

3 Florida (U.S.A.) round orange bearing and non-bearing tree
population, 1966 to 1988 . . . . 6

4 Florida (U.S.A.) round orange production, utilization and
yields for the 1979-80 through 1988-89 seasons . 7

5 Florida (U.S.A.) regional and state total production of
round oranges, 1979-80 through 1988-89 . . 8

6 Florida (U.S.A.) regional and state total production per
acre for round oranges, 1979-80 through 1988-89. . 9

7 Orange production, utilization and yields in Sao Paulo
(Brazil) for the 1979-80 through 1988-89 seasons .... 12

8 Brazilian FCOJ production and utilization. . ... 13

9 Bearing and non-bearing orange tree population in Sao
Paulo (Brazil) for the 1979-80 through 1988-89 seasons 15

10 Brazilian currency units per U.S. dollars. . ... 18

11 Schedule of expenses for orange production practices in
the State of Sao Paulo (Brazil), 1987-88 season . 20

12 Annual weighted average and July Brazilian currency units
per U.S. dollars by production seasons--1979-80 through
1987-88 . . . . 21

13 Orange production costs per acre in the State of Sao Paulo
(Brazil)--1979-80 through 1987-88, Brazilian CZ$ . 22

14 Comparative orange yields per acre for Florida (U.S.A.)
and Sao Paulo (Brazil)--1979-80 through 1987-88. ... 23











LIST OF TABLES (cont'd.)


Table Page

15 Comparative costs and returns per acre for Florida (U.S.A.)
and Sao Paulo (Brazil)--1979-80 through 1987-88, U.S.
dollars (U.S.$) . . . . . 24

16 Orange production costs and returns per acre in the State
of Florida (U.S.A.)--1979-80 through 1987-88, U.S. dollars
(U.S.$) . . . . . . 25

17 Orange production costs and returns per acre in the State
of Sao Paulo (Brazil)--1979-80 through 1987-88, U.S.
dollars (U.S.$). . . . . .... 27

18 Comparative costs and returns per box for Florida (U.S.A.)
and Sao Paulo (Brazil)--1979-80 through 1987-88, U.S.
dollars (U.S.$) . . . . 28

19 Orange production costs and returns per box in the State
of Florida (U.S.A.)--1979-80 through 1987-88, U.S. dollars
(U.S.$) . . . . . . 29

20 Orange production costs and returns per box in the State
of Sao Paulo (Brazil)--1979-80 through 1987-88, U.S.
dollars (U.S.$) .. . . . . 30

21 Orange production costs as a percentage of total costs in
the State of Florida (U.S.A.)--1979-80 through 1987-88 31

22 Orange production costs as a percentage of total costs in
the State of Sao Paulo (Brazil)--1979-80 through 1987-88 32

23 Orange cultural costs as a percentage of total cultural
costs in Florida (U.S.A.) and Sao Paulo (Brazil)--1979-80
through 1987-88. . .. . . . 34

24 Capital investment per acre for a four-year-old orange
planting in Florida (U.S.A.) and Sao Paulo (Brazil)--
1979-80 through 1987-88, U.S. dollars (U.S.$) . 35

25 Average overall annual return on investment for an orange
planting in Florida (U.S.A.) and Sao Paulo (Brazil)--
1979-80 through 1987-88, U.S. dollars (U.S.$) . 37

26 Net revenue per acre over cultural and interest costs and
average overall rate of return on investment in the State
of Florida (U.S.A.)--1979-80 through 1987-88, U.S. dollars
(U.S.$) . . . . . . 39

27 Net interest costs per acre on borrowed cultural costs in
the State of Sao Paulo (Brazil)--1979-80 through 1987-88,
U.S. dollars (U.S.$) .. . . . 40










LIST OF TABLES (cont'd.)


Table Page

28 Net revenue over cultural and net interest costs per acre
for an orange planting in the State of Sao Paulo (Brazil)
--1979-80 through 1987-88, U.S. dollars (U.S.$) ..... 41

29 Net interest costs per acre on borrowed tree value capital
costs for an orange planting in the State of Sao Paulo
(Brazil)--1979-80 through 1987-88, U.S. dollars (U.S.$). 43

30 Capital investment per acre for an orange planting in the
State of Sao Paulo (Brazil)--1979-80 through 1987-88, U.S.
dollars (U.S.$) (Adjusted for net interest costs.). .. 44

31 Average overall annual return on investment for an orange
planting in Florida (U.S.A.) and Sao Paulo (Brazil)--
1979-80 through 1987-88, U.S. dollars (U.S.$) (Adjusted
for net interest costs.) . . . .. .. 45










AN OVERVIEW OF FLORIDA (U.S.A.) AND SAO PAULO BRAZILL)
FROCE:3ED ORANGE INDUSTRIES WITH COMPARATIVE COSTS AND FET'RNS
1979-80 THROUGH 1987-88 SEASONS

Ronald P. Muraro and Antonio Ambrosio Amaro


INTPODUCTION


Florida (U.S.A.) and Sao Paulo (Brazil) are the world's largest
producers of oranges. Orange production in both states is primarily for
the processed juice market. Sao Paulo is located in a developing
country where labor availability is more abundant and labor costs much
less than in Florida. However, costs of production inputs such as
fertilizer and chemical pesticides are often more costly than in
Florida. Unlike Florida, few citrus plantings in Sao Paulo are
irrigated. Citrus producers in Sao Paulo have experienced high internal
inflation and lower on-tree prices as compared to Florida. Due to the
higher cost of production inputs and relatively low fruit prices,
fertilization and chemical pest control are often used less by Sao Paulo
producers than by Florida producers. The result has been lower per tree
and per acre fruit yields in Sao Paulo. This paper presents an overview
of the round orange industry along with comparative costs and returns
and capital investment costs from Florida and Sao Paulo for the
production seasons 1979-80 through 1987-88. The intention of this
report is to provide a better understanding of the costs and returns
from the world's two largest producing states of oranges and processed
orange juice products.


FLORIDA'S ORANGE INDUSTRY


The Florida citrus industry sustained a record four freezes in five
years between 1980-81 and 1984-85 (13). The result of the early 1980's


RONALD P. MURARO is extension farm management economist and
associate professor of Food and Resource Economics Department, Institute
of Food and Agricultural Sciences (IFAS), University of Florida. He is
stationed at the Citrus Research and Education Center, Lake Alfred,
Florida 33850, U.S.A. ANTONIO AMBROSIO AMARO is economist at the
Institute de Economia Agricola (IEA), Secretaria de Agricultura e
Abastecimento, Rua Gomes Nogueria, 359, CEP 04265 Sao Paulo, Brazil.










AN OVERVIEW OF FLORIDA (U.S.A.) AND SAO PAULO BRAZILL)
FROCE:3ED ORANGE INDUSTRIES WITH COMPARATIVE COSTS AND FET'RNS
1979-80 THROUGH 1987-88 SEASONS

Ronald P. Muraro and Antonio Ambrosio Amaro


INTPODUCTION


Florida (U.S.A.) and Sao Paulo (Brazil) are the world's largest
producers of oranges. Orange production in both states is primarily for
the processed juice market. Sao Paulo is located in a developing
country where labor availability is more abundant and labor costs much
less than in Florida. However, costs of production inputs such as
fertilizer and chemical pesticides are often more costly than in
Florida. Unlike Florida, few citrus plantings in Sao Paulo are
irrigated. Citrus producers in Sao Paulo have experienced high internal
inflation and lower on-tree prices as compared to Florida. Due to the
higher cost of production inputs and relatively low fruit prices,
fertilization and chemical pest control are often used less by Sao Paulo
producers than by Florida producers. The result has been lower per tree
and per acre fruit yields in Sao Paulo. This paper presents an overview
of the round orange industry along with comparative costs and returns
and capital investment costs from Florida and Sao Paulo for the
production seasons 1979-80 through 1987-88. The intention of this
report is to provide a better understanding of the costs and returns
from the world's two largest producing states of oranges and processed
orange juice products.


FLORIDA'S ORANGE INDUSTRY


The Florida citrus industry sustained a record four freezes in five
years between 1980-81 and 1984-85 (13). The result of the early 1980's


RONALD P. MURARO is extension farm management economist and
associate professor of Food and Resource Economics Department, Institute
of Food and Agricultural Sciences (IFAS), University of Florida. He is
stationed at the Citrus Research and Education Center, Lake Alfred,
Florida 33850, U.S.A. ANTONIO AMBROSIO AMARO is economist at the
Institute de Economia Agricola (IEA), Secretaria de Agricultura e
Abastecimento, Rua Gomes Nogueria, 359, CEP 04265 Sao Paulo, Brazil.









freezes was a reduction in Florida's round orange acreage from 636,900
acres in 1982 to 466,300 acres in 1986 (Table 1). Nearly all the losses
occurred in Florida's north central citrus production region (Figure 1)
where 68.8% of the total round orange bearing acreage was located (Table
2). By 1988, the round orange bearing acreage in Central Florida
represented only 47.9% with the East Coast and South Florida
representing 27.4% and 24.7%, respectively.
During this same time period (1980 to 1986), total number of orange
trees was reduced 18.7% from 53.5 million trees (1982) to 43.5 million
trees (1986). Since 1986, replanting has occurred in the north central
region as well as extensive new plantings in the southern production
region. By 1988, total round orange acreage increased to 536,700 acres
and 54.5 million trees. Along with the new plantings came a different
percentage relationship between non-bearing and bearing trees. In 1980,
there were 5.1 million (8.1%) non-bearing trees as compared to 57.7
million (91.9%) bearing trees (Table 3). Due to the affects of the
early 1980 freezes and the new plantings that followed, by 1988 the non-
bearing trees had increased to 19.0 million (34.8%) with the bearing
trees decreasing to 35.5 million (65.2%).
In the 1979-80 season, Florida produced a record 206.7 million
boxes of round oranges (Table 4). The production decreased rapidly due
to the freezes with a low of 103.9 million boxes in the 1984-85 season.
Florida's orange production rebounded to 146.6 million boxes produced in
the 1988-89 season. Also, the 1980's resulted in a shift in where
oranges were produced in Florida. In the 1979-80 season, the Central
ridge (sandhill) region produced 72.5% of the total round oranges in
Florida (Table 5). The 1979-80 production of oranges in the East Coast
and South Florida production regions was only 13.7% and 13.8%,
respectively. By the 1988-89 season, round orange production in Central
Florida represented only 51.8% whereas the East Coast and South Florida
production increased to 22.2% and 26.0%, respectively. The state
average production per bearing acreage varied each season from 1979-80
through 1988-89 (Table 6). However, except for fruit loss due to the
freeze years, Central Florida's average per acre production was slightly
higher than South Florida and substantially higher than the East Coast.
Due to the severity of the tree damage caused by the December 1989










Table 1.--Florida (U.S.A.) acres of round oranges and
commercial inventory, 1966 to 1988


tree numbers by


Number Percent change Number Percent change
Year of of from previous of from previous
inventory acres inventory trees inventory


1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988


thousand

695.8

713.4

715.8

659.4

642.4

628.6

616.0

627.2

636.9

574.0

466.3

536.7


2.5

0.3

-7.9

-2.6

-2.1

-2.0

1.8

1.5

-9.9

-18.8

15.1


million

53.8

56.6

57.8

53.7

52.5

51.6

50.8

52.0

53.5

49.9

43.5

54.5


5.2

2.1

-7.0

-2.3

-1.8

-1.5

2.2

2.9

-6.8

-12.9

25.5


SOURCE: Florida Agricultural Statistics
Inventory, various issues (10).


Service, Commercial Citrus

















CENTRAL
FLORIDA





SOUTH
FLORIDA


0v~wt 0


Figure 1. Citrus production regions in Florida (U.S.A.).


EAST
COAST






5


Table 2.--Florida (U.S.A.) regional and state total bearing acres for
round oranges


1980 1982 1984 1986 1988


-------------------- acres ------------------------


East Coast

Subtotal 103,079 98,449

% of total 17.9% 17.6%


South Florida

Subtotal 76,586 75,728

% of total 13.3% 13.6%


Central Florida

Subtotal 395,119 384,298

% of total 68.8% 68.8%


State total 574,784 558,475


SOURCE: Florida Agricultural Statistics
Inventory, various issues (10).


100,436

26.0%




75,323

19.5%




210,859

54.5%


386,618


Service,


104,240

28.4%




81,467

22.2%


103,821

27.4%




93,631

24.7%


181,414 181,971

49.4% 47.9%


367,121 379,423


Commercial Citrus











Table 3.--Florida (U.S.A.) round orange tea-ri and non-bear.i-n tree
population, 1966 to 1988


Year of Non-bearing
inventory trees Bearing trees Total
%-'~" of' % of


1966

1968

1970

1972

1974



1978

1980





1986
I ? ,


millions

17.931

14.823

8.3-"

3.055

3.945



3.23

5.056

7. 4:_

10. i'7

10.753

18.g'; ?


% of
total

33.3

26,2

14.5

5.8

7.3

6.:

6.7

8,1

13.9

20.3

24.7

34.8


millions

35.912

41.809



49.467

49.787

48.

47.455

57.662

46. 72 '

39.778

32.708

35.5_ 7


% of
total

66.7

73.8

85.5

94.2

92.7

93.

93.3

91.9

86.1

79.7

75.3

65,2


millions

53.8143

56.632

57.801

52.-.22

53.732

51 .B

50.844

62.718

53. ^ ,

49.885

43.461

54 .57


SUR:E: Florida Agricultural Statistics
Inventory, various issues (10),


Service, Cc7mer-ial Citrus


~~"' ~ ~










Table 4.--Florida (U.S.A.) round orange production, utilization and
1988-89 seasons


yields for the 1979-80 through


420 Brix Yields
Production and utilization FCOJ Per 42u Brix
Season Fresh Processed Total production tree FCOJ Solidsa


million 90-lb boxes mil. gal. boxes gal./box Ibs./box

1979-80 11.0 195.7 206.7 272.02 3.58 1.39 5.78

1980-81 8.3 164.1 172.4 206.77 2.99 1.26 5.24

1981-82 7.6 118.2 125.8 151.30 2.73 1.28 5.32

1982-83 10.3 129.3 139.6 191.36 3.03 1.48 6.15

1983-84 7.6 109.1 116.7 140.74 2.93 1.29 5.36

1984-85 6.7 97.2 103.9 134.14 2.61 1.38 5.74

1985-86 9.0 110.2 119.2 152.08 3.64 1.38 5.74

1986-87 8.9 110.8 119.7 167.31 3.66 1.51 6.28

1987-88 9.5 128.5 138.0 199.18 3.88 1.55 6.44

1988-89 8.5 138.1 146.6 211.29 4.13 1.53 6.36


a4.156 pounds solids per gallon of 42 Brix FCOJ.


SOURCE: Annual Citrus Summary, Florida Agricultural Statistics Service (9).











Table 5.--Florida (U.S.A.) regional
1988-89


and state total production of round oranges, 1979-80 through


East Coast South Florida Central Florida State
Total % of Total % of Total % of total
Season production state production state production state million
mil. bxs totil. blt. bx s' total mil. bxsa total boxes


1979-80 28.193 13.69 28.416 13.79 149.379 72.52 205.988

1980-81 29.365 17.08 24.993 14.54 117.547 68.38 171.905

1981-82 21.000 16.72 17.284 13.76 87.350 69.53 125.634

1982-83 23.759 17.09 14.580 10.49 100.672 72.42 139.011

1983-84 24.300 20.90 22.760 19.58 69.200 59.52 116.260

1984-85 28.100 27.05 28.050 27.00 47.750 45.96 103.900

1985-86 26.965 22.67 36.615 30.79 55.351 46.54 118.931

1986-87 29.879 24.98 31.878 26.65 57.876 48.38 119.633

1987-88 31.852 23.11 35.484 25.75 70.490 51.14 137.826

1988-89 32.508 22.21 37.974 25.95 75.854 51.84 146.336


a90-lb boxes.

SOURCE: Florida Agricultural
seasons (9).


Statistics Service, Annual Citrus Summary 1979-80 through 1988-89









Table 6.--Florida (U.S.A.) regional and state total production per acre
for round oranges, 1979-80 through 1988-89


East Coast South Florida Central Florida State Total
Production Production Production Production
per bearing per bearing per bearing per bearing
Season acreage acreage acreage acreage
(boxes)a (boxes)a (boxes)a (boxes)a


1979-80 274 371 378 358

1980-81 285 326 297 299

1981-82 213 228 227 225

1982-83 241 193 262 249

1983-84 242 302 328 301

1984-85 280 372 226 269

1985-86 259 449 305 324

1986-87 287 391 319 326

1987-88 307 379 387 363

1988-89 313 406 417 386


a90-lb boxes. The per
(season) in which the
(season) in which the


acre yields correspond to the production year
crop was harvested and not to the production year
cultural costs were expended to produce the crop.


S:UP:E: Florida Agricultural Statistics Service, Annual Citrus Summary
1979-80 through 1988-89 seasons (9).











freeze, Central Florida's average per acre production is expected to
decrease below South Florida's average production.
Prior to the 1980 freezes, Florida generally supplied about 85-90%
of the orange juice marketed in the United States. However, as a result
of freeze damage there have been higher prices and sharply reduced
orange juice supplies. During most of the 1980's, Florida has supplied
only about two-thirds of the U.S. orange juice market (6,7,13).
U.S. orange juice imports, primarily from Brazil, have become a
major factor in recent seasons, increasing five-fold since 1980. U.S.
imports have generally filled the supply void caused by the devastating
freezes in Florida. Furthermore, the U.S. fixed-rate import tariff on
citrus juice imports has been eroded due to higher prices, as well as
federal government policies such as the Caribbean Basin Initiative. The
combination of Florida's decreased production, increased Brazilian
imports, increased chilled orange juice sales, higher prices and
Brazil's lower production costs has enabled foreign competition to gain
a solid foothold in the U.S. orange juice market (6,7,13).


SAO PAULO'S ORANGE INDUSTRY


The citrus industry in Sao Paulo is located in the north-northeast
region of the State (Figure 2). Despite recent production problems, Sao
Paulo continues to be the world's largest producer of oranges and orange
juice (2,3). Sao Paulo's orange production surpassed Florida's in the
1981-82 season and has remained the world leader in orange production.
Total orange production in 1985-86 season was 239 million boxes (Table
7) and was not surpassed until the 1989-90 harvest of 295 million boxes.
In recent years, Sao Paulo's orange production has been limited by
drought conditions, disease and poor cultural care.
Most of Sao Paulo's orange production is processed into FCOJ which
produces over 95% of all Brazilian FCOJ. In 1988-89 Brazil processed
175 million boxes of oranges, producing 245.8 million 420 Brix gallons
of FCOJ (Table 8). This amount was down from the historic high of 301.7
million 420 Brix gallons of FCOJ in the 1985-86 season. More than 97%
of Brazil's FCOJ production is exported. Brazil's major export markets
include the U.S., Europe and Canada. It is estimated that Brazil




















































Figure 2. Citrus production region in Sao Paulo (Brazil).











Table 7.--Orange production, utilization and yields in Sao Paulo (Brazil)
1988-89 seasons


for the 1979-80 through


420 Brix Yields
Production and utilization FCOJ Per 427 Brix
Season Fresh Processed Total production tree FCOJ Solidsa


million 90-lb boxes mil. gal. boxes gal./box Ibs./box

1979-80 31 124 155 149.90 2.08 1.21 5.03

130O-31 32 138 170 169.64 2.14 1.23 5.11

1981-82 25 155 180 205.85 2.18 1.33 5.53

1982-83 34 161 195 194.47 2.00 1.21 5.03

19 3-84 35 165 200 210.33 2.16 1.27 5.32

1984-85 20 185 205 264.81 2.17 1.43 5.94

1985-86 19 220 239 296.53 2.37 1.35 5.61

1965-87 50 170 220 204.12 2.02 1.23 5.11

1987-88 40 180 220 237.91 1.91 1.32 5.49

1988-89 35 175 210 237.91 1.67 1.34 5.57


a4.156 pounds solids per gallon of 420 Brix FCOJ.

SOURCE: Instituto de Economia Agricola (IEA) and


Agricultural Attache, Sao Paulo, Brazil (1).









Table 8.--Brazilian FCOJ production and utilization


Beginning Domestic Ending
Season stocks Production consumption Exports stocks


--------------- million 420 Brix gallons ---------------
1979-80 10.3 150.0 3.8 132.1 24.5

1980-81 24.5 170.0 4.1 171.4 19.0

1981-82 19.0 207.6 4.5 204.8 17.2

1982-83 17.2 195.8 4.5 174.8 33.8

1983-84 33.8 214.1 4.5 231.4 12.1

1984-85 12.1 270.3 3.4 263.8 15.2

1985-86 15.2 301.7 5.2 242.0 69.6

1986-87 69.6 207.9 6.9 241.0 29.7

1987-88 29.7 244.8 6.9 254.5 13.1

1988-89 13.1 245.8 6.9 243.8 8.3


aIncludes Brazilian states other than Sao Paulo.
produces over 95% of all Brazilian FCOJ.

SOURCE: Agricultural Officer, Sao Paulo, Brazil


However, Sao Paulo


(3).










accounts for more than 85% of all world exports of FCOJ. Consequently,
Brazil plays an important role in FCOJ pricing in world orange-juice
markets (2,3).
Sao Paulo has about three times the number of orange trees planted
than Florida. The total estimated orange trees planted in 1988-89 was
157.3 million trees (Table 9). Approximately 80% (125.8 million trees)
were bearing and the remaining 20% (31.5 million trees) were
non-bearing. The number of bearing trees in Sao Paulo is over three
times more than in Florida. Therefore, production could be much greater
in Sao Paulo than in Florida if it were not that Florida's yield per
tree (Table 4) average is 60% higher than in Sao Paulo (Table 7).


COMPARATIVE HISTORICAL COSTS AND RETURNS--1979-80 THROUGH 1987-88


This section of the report will present and discuss Florida's and
Sao Paulo's historic costs and returns for their respective round orange
industries. The discussion will initially focus on Florida and Sao
Paulo costs and returns information and then a comparative analysis.
The time period will be the 1979-80 through the 1987-88 production
seasons.


Florida's Costs and Returns


Historical costs and returns budgets have been published for three
production regions in Florida--Central Florida, East Coast (Indian River
District) and South Florida (14,15,16). The reason that Florida's costs
and returns have been reported according to the production regions is
the differences in the cultural care and management among the regions.
Florida's costs and returns are based on cost and price data collected
through annual surveys to caretaker/producer managers as well as to
fertilizer and chemical suppliers. The budgets are reviewed annually by
both county citrus extension specialists and citrus producers in order
to incorporate the most current cultural practices.
In the Central Florida production region, citrus is grown on well
drained sandy soils. Mostly small (10-20 acres) to medium (several
hundred acres) in size citrus plantings are located in the Central










accounts for more than 85% of all world exports of FCOJ. Consequently,
Brazil plays an important role in FCOJ pricing in world orange-juice
markets (2,3).
Sao Paulo has about three times the number of orange trees planted
than Florida. The total estimated orange trees planted in 1988-89 was
157.3 million trees (Table 9). Approximately 80% (125.8 million trees)
were bearing and the remaining 20% (31.5 million trees) were
non-bearing. The number of bearing trees in Sao Paulo is over three
times more than in Florida. Therefore, production could be much greater
in Sao Paulo than in Florida if it were not that Florida's yield per
tree (Table 4) average is 60% higher than in Sao Paulo (Table 7).


COMPARATIVE HISTORICAL COSTS AND RETURNS--1979-80 THROUGH 1987-88


This section of the report will present and discuss Florida's and
Sao Paulo's historic costs and returns for their respective round orange
industries. The discussion will initially focus on Florida and Sao
Paulo costs and returns information and then a comparative analysis.
The time period will be the 1979-80 through the 1987-88 production
seasons.


Florida's Costs and Returns


Historical costs and returns budgets have been published for three
production regions in Florida--Central Florida, East Coast (Indian River
District) and South Florida (14,15,16). The reason that Florida's costs
and returns have been reported according to the production regions is
the differences in the cultural care and management among the regions.
Florida's costs and returns are based on cost and price data collected
through annual surveys to caretaker/producer managers as well as to
fertilizer and chemical suppliers. The budgets are reviewed annually by
both county citrus extension specialists and citrus producers in order
to incorporate the most current cultural practices.
In the Central Florida production region, citrus is grown on well
drained sandy soils. Mostly small (10-20 acres) to medium (several
hundred acres) in size citrus plantings are located in the Central










Table 9.--Bearing and non-bearing orange tree population in Sao Paulo
(Brazil) for the 1979-80 through 1988-89 seasons


Tree population
Season Non-bearing Bearing Total


% of % of
millions total millions total millions

1979-80 28.724 27.8 74.546 72.2 103.270

1980-81 26.819 25.3 79.271 74.7 106.090

1981-82 23.686 22.3 82.554 77.7 106.240

1982-83 14.396 13.4 93.184 86.6 107.580

1983-84 19.951 17.7 92.569 82.3 112.520

1984-85 20.717 18.0 94.663 82.0 115.380

1935-86 24.003 19.2 100.977 80.8 124.980

1986-87 25.726 19.1 109.144 80.9 134.870

1987-88 29.360 20.3 115.380 79.7 144.740

1988-89 31.452a 20.0 125.808a 80.0 157.260


aEstimated.

SOURCE: Instituto de Economia Agricola (IEA), Sao Paulo (Brazil) (1).










Florida region and are managed primarily by cooperatives and caretaking/
management firms. In the East Coast and South Florida regions, citrus
is grown on poorly drained soils which require bedding or mounding for
water drainage and promotion of tree root growth. The citrus plantings
in the East Coast region are primarily medium to large (1,000 plus
acres) in size and are managed by either caretaker/management firms or
producer operated management. The South Florida region consists
primarily of the large citrus plantings which are managed by producer
operated management. However, due to the similarities of the cultural
care and management of the East Coast and South Florida regions, the
costs and returns were combined until the 1985-86 production season.
With the rapid expansion of new acreage in the South Florida region,
costs and returns information is now reported for this region as well.
Although there are some cultural care and management differences
between the Central Florida and the East Coast/South Florida production
regions, the total annual per acre costs for each region have been
similar. Over the nine production seasons (1979-80 through 1987-88) the
East Coast costs averaged only 0.3% more (ranged from 96.4% to 104.5%)
than Central Florida costs. For the three production seasons 1985-86
through 1987-88, South Florida costs averaged only 4.2% more (ranged
from 104.1% to 104.4%) than Central Florida. Florida's average annual
per acre costs used in this report represent a weighted average of the
regional costs. The regional costs were weighted according to the
annual percentage of round orange bearing acreage in Table 2.
The annual crop yields (Table 6) used in the cost and returns
analysis corresponds with the seasonal cost data which was expended to
produce the crop. For example, the costs associated with producing the
orange crop harvested in 1988-89 were incurred during the 1987-88
season. Likewise, the annual on-tree fruit values represent the prices
received for the harvested crop--1988-89 prices with 1988-89 harvested
crop. The fruit prices were obtained from the annual Citrus Summary
reports published by the Florida Agricultural Statistics Service (9).









Sao Paulo's Costs and Returns


The costs and returns for round oranges are published annually by
the Institute de Economia Agricola (IEA) of the state of Sao Paulo (1).
The annual costs represent an average for the entire production region
in Sao Paulo. The costs are based on technical coefficients collected
through producer surveys and periodically revised. Costs of labor,
fertilizer, chemical and machinery inputs are collected and estimated
from surveys. Also, the annual orange production yields are based on
forecasted information collected from producers and researchers and
adjusted to reflect actual changes (increases/decreases) during the
production season. It should be noted that, generally speaking, Sao
Paulo costs and price statistics on production and yield of oranges and
orange juice products have been more difficult to collect than Florida
statistics.
Unlike Florida, the cultural and manBgeme.t practices are basically
the same throughout Sao Paulo. The soil type ranges from a reddish
loamy sand in the south to a sand similar to Central Florida in the
north. Most citrus plantings are very similar to Central Florida in
that the bedingM or mounding found in Florida's East Coast and :ut:
Florida citrus plantings is not required. Whereas irrigation is
utilized in 90% or more of Florida's citrus plantings, less than iC'; of
Sao Paulo's citrus plantirns are irrigated. Those plantings which are
irrigated depend upon rivers or lakes for water.
The commercial citrus plantings in Sao Paulo range in size from a
few acres to several thousand acres. The typical management size which
can utilize all the equipment necessary for a complete cultural program
is approximately 185 acres or 15,000 trees (81 trees per acre) (1). The
type of equipment used in this size operation includes a tractor,
sprayer, fertilizer spreader, mower and disk/plow, herbicide machine,
water wagon and a trailer or wagon to haul fertilizer and fruit from the
citrus planting.
The common monetary value which was selected to compare Florida and
Sao Paulo costs and returns was the U.S. dollar. As can be seen from
Table 10, the monthly inflation in Brazil increased rapidly from 1977
through 1988. The exception was the period between March and August










Table 10.--Brazilian currency units per U.S. dollars


Month 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988


------------------------------ cruzeiros -----------------------------][------- cruzadosb ---

Jan 21.790 43.890 68.440 134.440 275.280 1,080 3,585 11,310 15.660 77.955
Feb 22.250 45.310 71.870 141.150 381.440 1,213 3,951 13,029 18.136 90.841
Mar 23.130 46.800 76.530 148.210 417.540 1,335 4,450 13,840c 20.896 107.138
Apr 23.790 49.060 81.350 155.610 454.930 1,453 4,980 13,840c 23.722 125.686
May 25.655 50.810 86.230 164.170 493.610 1,582 5,480 13,840c 30.782 150.638
Jun 25.655 52.315 91.400 173.190 542.970 1,728 5,981 13,840c 39.440 178.303
Jul 26.115 53.880 96.880 182.710 611.920 1,905 6,440 13.840 44.934 215.830
Aug 27.775 55.854 102.690 193.670 671.000 2,107 6,970 13.840 47.130 267.410
Sep 29.825 57.590 108.640 207.230 738.000 2,329 7,825 13.840 49.866 326.240
Oct 30.415 60.690 114.830 221.730 842.000 2,622 8,560 13.970 53.407 411.700
Nov 32.040 62.515 121.140 237.250 914.000 2,881 9,350 14.107 59.289 526.150
Dec 42.530 65.500 127.800 252.670 984.000 3,184 10,490 14.576 67.481 0.671


aReflects end-of-the-month rate.

Reflects average rate for the month.

In March 1986, Brazil introduced a new currency unit, cruzados. Therefore, March-June 1986 reflects a
modification in currency units comparable with previous eight months; i.e. 13.840 multiplied by 1000.

In December 1988, Brazil introduced a new currency unit, new cruzados.


SOURCE: International Financial Statistics.










1986 when all prices were frozen. Therefore, based upon the monthly
schedule of cultural expenditures shown in Table 11, a weighted average
seasonal conversion rate, June through July, was developed to use in the
analysis. However, since borrowed operating funds are repaid in July,
the seasonal July conversion rate was used for all interest costs. A
summary of seasonal conversion rates is shown in Table 12. The seasonal
costs in Brazilian currency which were converted into U.S. dollars are
shown in Table 13.


Comparative Analysis of Costs and Returns


Orange yields per acre in Florida are substantially higher than in
Sao Paulo (Table 14). The use of irrigation and more consistent
management of nutrients and pest control by Florida producers are the
main contributors to the higher yields. Florida's nine-year average
orange yield from 1979-80 through 1987-88 was 305 boxes per acre. Sao
Paulo's average nine-year yield was only 163 boxes per acre for the same
period. The average Florida yield ranged from a low of 225 boxes per
acre in 1980-81 to a high of 386 boxes per acre in 1987-88. Sao Paulo's
yield ranged from a low of 146 boxes per acre in 1985-86 to a high of
174 boxes per acre in 1984-85.
The comparative costs and returns per acre are summarized in Table
15. While Florida's costs continually increased throughout the
nine-year analysis period, total on-tree revenue fluctuated from one
season to the next. The exception was 1986-87 and 1988-89 during which
total world supply of orange juice was relatively low as compared to the
demand and orange juice prices were at record highs. Total on-tree
revenue during the 1986-87 and 1987-88 seasons was over one-thousand
dollars above the nine-year average of $1,707.73 per acre. Similarly,
the net revenue over total cultural costs and over total specified costs
during the last two seasons were approximately one-thousand dollars
greater than the nine-year average of $1,092.83 per acre and $768.95 per
acre, respectively. Florida's nine-year average for cultural costs,
depreciation and interest costs and total all specified costs were
$614.89, $323.88 and $938.78 per acre, respectively. Table 16 presents
a more detailed listing of Florida's costs and returns per acre.











Table 11.--Schedule of expenses for orange production practices in the State of Sao Paulo (Brazil), 1987-88
season


Fertilization, Chemicals Machinery
dolomite and (spray/pest operating Total all
Month Labor nutritional spray program) costs expenses


% of % of % of % of Total % of
Cz$/acre Total Cz$/acre Total Cz$/acre Total Cz$/acre Total Cz$/acre Total

JUL 4 0.47% -- -- 43 2.10% 29 1.71% 76 0.91%
AUG 1 0.13% 588 15.99% -- -- 8 0.46% 597 7.16%
SEP 3 0.30% 1,456 39.61 -- -- 18 1.09% 1,477 17.73%
OCT -- -- -- -- -- -- -- -- -- --
NOV 342 36.41% -- -- 485 23.80% 408 24.32% 1,235 14.83%
DEC 2 0.17% 816 22.20% -- -- 11 0.63% 828 9.94%
JAN 15 1.55% -- -- 71 3.49% 96 5.72% 182 2.18%
FEB 356 37.92% -- -- 730 35.81% 502 29.94% 1,589 19.07%
MAR 12 1.29% 816 22.20% -- -- 81 4.83% 909 10.91%
APR 41 4.40% -- -- 406 19.91% 273 16.28% 721 8.65%
MAY 142 15.14% -- 173 8.50% 117 6.95% 432 5.18%
JUN 21 2.20% -- -- 130 6.39% 136 8.08% 287 3.44%

TOTAL 938 100.00% 3,675 100.00% 2,040 100.00% 1,678 100.00% 8,332 100.00%


aAssumes 85 trees per acre and a production of 220 boxes per acre.


SOURCE: Instituto de Economia Agricola (IEA), Sao Paulo, Brazil.












Table 12.--Annual weighted average and July Brazilian currency units per U.S. dollars by production seasons
--1979-80 through 1987-88


Fertilization
dolomite and Chemicals Machinery
nutritional (spray/pest operating Average for July
Season Labor spray program) costs all expenses (interest)


---------------------------------- (CZ$ = 1 U.S.$)--------------------------------

1979-80 (Cruzeiros) 41.46 36.09 43.36 43.04 39.87 53.88

1980-81 (Cruzeiros) 71.33 63.27 73.50 73.17 68.68 96.88

1981-82 (Cruzeiros) 138.30 120.72 142.10 141.41 132.11 182.71

1982-83 (Cruzeiros) 349.60 261.83 373.72 367.90 320.47 611.92

1983-84 (Cruzeiros) 1,176.03 914.40 1,236.59 1,225.54 1,085.42 1,905.00

1984-85 (Cruzeiros) 3,865.33 2,954.06 4,105.02 4,065.90 3,562.42 6,440.00

1985-86 (Cruzeiros) 11,790.38 9,614.90 12,236.94 12,116.07 11,005.64 13,840.00

1986-87 (Cruzados) 19.25 15.57 20.55 20.50 18.20 44.93

1987-88 (Cruzados) 91.44 66.05 99.52 98.54 83.65 215.83


SOURCE: International Financial Statistics.
















Table 13.--Orange production costs per acre in the State of Sao Paulo (Brazil)--1979-80 through 1987-88, Brazilian CZ$



Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88

..------------------------------------ CZ$ per acre -------------------------------------
Cultural costs

Labor 1.515 3,030 6,541 12.613 22,459 86,033 263,806 1,071 1,049
Fertilizer and dolomite 1,439 4,182 9,651 13,630 27.727 162,155 593,360 800 4.430
Chemicals 1,900 4,583 14.535 23,322 50,826 174,092 596,640 832 3.393
Machinery and irrigation
(operating cost) 1,137 1.886 4,913 10,513 33,061 92,176 291,741 938 2,243

Total cultural costs 5.991 13,681 35,640 60,079 134,072 514,456 1,745,547 3,640 11,115

Other costs

Depreciation (machinery
and orange trees) 812 2,173 4,811 10,588 28,593 138.534 489,393 824 2,174
Interest costs on total
cultural costs 349 1,38 8,910 16,221 82,45 560,736 1,902,591 488 500

Total depr. and interest 1,162 3,562 13,721 26,809 111,038 699,271 2,391,984 1,312 2,674

Total all specified costs 7,152 17,242 49,361 86,887 245,110 1,213,727 4,137,530 4951 3,789


SOURCE: Instituto de Economia Agricola (IEA), Sao Paulo, Brazil.









Table 14.--Comparative orange yields per acre for Florida (U.S.A.) and
Sao Paulo (Brazil)--1979-80 through 1987-88


Season Florida Sao Paulo


----------- boxes per acre

1979-80 299 162

1980-81 225 170

1981-82 249 162

1982-83 301 162

1983-84 269 170

1984-85 324 174

1985-86 326 146

1986-87 363 172

1987-88 386 150

9-year
average 305 163


a90-lb box. The per acre yields correspond with the seasonal cost data
which was expended to produce the crop. For example, the costs
associated with producing the orange crop harvested in 1988-89 was
incurred during the 1987-88 season.

SOURCE: Institute of Food and Agricultural Sciences (IFAS), University
of Florida, U.S.A. and Instituto de Economia Agricola (IEA),
Sao Paulo, Brazil.











Table 15.--Comparative costs and returns per acre for Florida (U.S.A.) and Sao
Paulo (Brazil)--1979-80 through 1987-88, U.S. dollars (U.S.$)


Net revenue Total
Total Total over total depreciation Net revenue Total all
on-tree cultural cultural and interest over all specified
revenue costs costs costs costs costs


--------------------------- $


Floridaa

1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
9-year
average

Sao Paulob


1,184.04
931.50
1,264.92
1,688.61
1,837.27
1,240.92
1,675.64
2,744.28
2,802.36


445.05
546.87
579.26
597.07
635.60
661.08
660.10
679.85
729.17


738.99
384.63
685.66
1,091.54
1,201.67
579.84
1,015.54
2,064.43
2,073.19


1,707.73 614.89 1,092.83


per acre-----------------------------



254.47 484.52 699.52
283.74 100.88 830.62
300.95 384.71 880.21
309.65 781.89 906.72
327.57 874.10 963.17
342.88 236.96 1,003.96
351.24 664.30 1,011.34
363.86 1,700.57 1,043.71
380.55 1,692.64 1,109.72

323.88 768.95 938.78


1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
9-year
average


267.21
360.49
205.67
157.09
357.09
609.31
168.08
369.94
561.74


146.64
196.70
264.27
179.12
117.50
142.23
156.92
193.19
135.40


339.62 170.22


120.56
163.79
(58.60)
(22.03)
239.59
467.08
11.15
176.75
426.35

169.40


26.85
45.97
85.18
59.55
69.62
125.96
181.94
56.13
28.31

75.50


93.71
117.81
(143.79)
(81.58)
169.97
341.12
(170.78)
120.62
398.04

93.90


173.50
242.67
349.45
238.66
187.12
268.19
338.86
249.31
163.70

245.72


aFrom Table 16.

bFrom Table 17.

SOURCE: Institute of Food and Agricultural Sciences (IFAS), University of
Florida, U.S.A. and Institute de Economia Agricola (IEA), Sao Paulo,
Brazil.

















Table 16.--Orange production costs and returns per acre in the State of Florida (U.S.A.)--1979-80 through 1987-88, U.S. dollars (U.S.$)

9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


Total on-tree revenue

Cultural costs
(variable/operating)

Labor
Fertilizer and dolomite
Chemicals
Machinery and irrigation
(operating cost)

Total cultural costs

Net revenue over
cultural costs

Other costs (fixed)

Depreciation (machinery
and orange planting)
Interest costs on total
cultural costs

Total depr. and interest

Net revenue over all costs

Total all specified costs
(cultural and other costs)

Yield (boxes/acre)


-...-----. --------------------------------- --- $ per acre---------------------------------------

$1,184.04 $ 931.50 $1,264.92 $1,688.61 $1,837.27 $1,240.92 $1,675.64 $2,744.28 $2,802.36 $1,707.73


$182.63
55.12
86.10

120.89

$445.05


$202.50
93.96
103.52

146.90

$546.87


$214.17
102.39
106.44

156.25

$579.26


$227.25
100.39
107.84

161.59

$597.07


$232.86
100.58
127.97

174.19

$635.60


$245.89
100.13
129.88

185.19

$661.08


$246.95
93.69
134.96

184.50

$660.10


$255.25
97.74
134.50

192.36

$679.85


$269.76
105.37
150.02

204.02

$729.17


$230.81
94.41
120.14

169.54

$614.89


$738.99 $384.63 $685.66 $1,091.54 $1,201.67 $579.84 $1,015.54 $2,064.43 $2,073.19 $1,092.83


$232.22

22.25

$254.47

$484.52


$699.52

299 bxs


$256.40

27.34

$283.74

$100.88


$830.62

225 bxs


$271.99

28.96

$300.95

$384.71


$880.21

249 bxs


$279.80

29.85

$309.65

$781.89


$906.72

301 bxs


$295.79

31.78

$327.57

$874.10


$963.17

269 bxs


$309.83

33.05

$342.88

$236.96


$1,003.96

324 bxs


$318.24

33.00

$351.24

$664.30


$1,011.34

326 bxs


$329.87

33.99

$363.86

$1,700.57


$1,043.71

363 bxs


$344.09

36.46

$380.55

$1,692.64


$1,109.72

386 bxs


$293.14

30.74

$323.88

$768.95


$938.78

305 bxs


SOURCE: Institute of Food and Agricultural Sciences (IFAS), University of Florida, U.S.A. (14,15,16).











Unlike Florida, costs for growing oranges in Sao Paulo fluctuated
from season to season. Two factors influenced the seasonal fluctuation.
First, due to a protectionist policy where most inputs, such as
chemicals and fertilizer, must be produced domestically, competition
from imports was restricted causing higher prices for these inputs.
Interest charges on borrowed operating funds (cultural costs) were also
very high during most of the nine seasons of the analysis. The second
factor which influenced fluctuating seasonal costs is the producer
annual returns. Unlike most Florida producers during low income years,
citrus producers in Sao Paulo have tended to use less inputs such as
fertilizer and pesticides in order to reduce annual costs. The lower
use of these cultural inputs has probably also been a factor for the
lower seasonal yields in Sao Paulo. The nine-year average on-tree
revenue, net revenue over cultural costs and over total specified costs
were $339.62, $169.40 and $93.90 per acre, respectively (Table 15). Sao
Paulo's nine-year average cultural costs, depreciation and interest
costs and total all specified costs were $170.22, $75.50 and $245.72 per
acre, respectively. Table 17 presents the detailed listing of Sao
Paulo's costs and returns per acre.
A comparative summary of costs and returns per box is shown in
Table 18. Florida's nine-year average per box on-tree revenue, net
revenue over cultural costs and over total specified costs were $5.65,
$3.62 and $2.55, respectively. The same three per box revenue values
for Sao Paulo were $2.08, $1.04 and $0.58, respectively. The Florida
costs per box were $2.04, $1.07 and $3.11 for the total cultural costs,
depreciation and interest costs, and total all specified costs,
respectively. The per box costs for Sao Paulo were $1.04, $0.46 and
$1.51 for the three respective costs. The detailed listing of the per
box costs and returns for Florida and Sao Paulo are shown in Tables 19
and 20, respectively.
The percentage of total costs for Florida's and Sao Paulo's orange
production are shown in Tables 21 and 22, respectively. Whereas the
percent of total costs for Florida's cultural costs were relatively
consistent from 1979-80 through 1987-88 seasons, Sao Paulo's cultural
cost percentage decreased until 1986-87. As indicated by the nine-year
average, Florida's cultural costs represented 65.45% of the total costs.


















Table 17.--Orange production costs and returns per acre In the State of Sao Paulo (Brazil)--1979-80 through 1987-88, U.S. dollars (U.S.$)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


----------------------------------------------------- $ per acre ---------------------------------------------------


Total on-tree revenue

Cultural costs
(variable/operating)

Labor
Fertilizer
Chemicals
Machinery (operating cost)

Total cultural costs

Net revenue over
cultural costs

Other costs (fixed)

Depreciation (machinery
and orange planting)

Interest costs on total
cultural costs

Total depr. and interest

Net revenue over all costs

Total all specified costs
(cultural and other costs)

Yield (boxes/acre)


$267.21 $360.49 $205.67 $157.09 $357.09 $609.31 $168.08 $369.94 $561.74 $339.62


$36.53
39.88
43.81
26.42

$146.64


$42.48
66.09
62.35
25.77

$196.70


$ 47.30
79.94
102.29
34.75

$264.27


$36.08
52.05
62.41
28.58

$179.12


$19.10
30.32
41.10
26.98

$117.50


$22.26
54.89
42.41
22.67

$142.23


$22.37
61.71
48.76
24.08

$156.92


$55.63
51.35
10.47
45.74

$193.19


$11.47
67.08
34.09
22.76

$135.40


$120.56 $163.79 ($58.60) ($22.03) $239.59 $467.08 $11.15 $176.75 $426.35 $169.40


$20.37 $31.64 $36.42 $33.04 $26.34 $ 38.89 $ 44.47 $45.27 $25.99


6.48

$26.85

$93.71


$173.50

162 bxs


14.33

$45.97

$117.81


$242.67

170 bxs


18.77

$85.18

($143.79)


$349.45

16? bx.


26.51

$59.55

($81.58)


43.28

$69.62

$169.97


87.07

$125.96

$341.12


137.47

$181.94

($170.78)


10.86

$56.13

$120.62


2.32

$28.31

$398.01


$238.66 $187.12 $268.19 $338.86 $249.31 $163.70 $245.72

162 bxs 170 bxs 174 bxs 146 bxs 172 bxs 150 bxs 163 bxs


SOURCE: Instituto de Economla Agricola (IEA), Sao Paulo. Brazil (1).


$32.58
55.93
53.08
28.64

$170.22


$33.60


41.90

$75.50

$93.90











Table 18.--Comparative costs and returns per box for Florida (U.S.A.) and Sao
Paulo (Brazil)--1979-80 through 1987-88, U.S. dollars (U.S.$)


Net revenue Total
Total Total over total depreciation Net revenue Total al:
on-tree cultural cultural and interest over all specific
revenue costs costs costs costs costs


---------------------------- $


Floridaa


1979-80
1980-81
1981-82
19t2-13
1983-84
1984-85
1985-86
1986-87
1987-88
9-year
average

Sao Paulob


1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
9-year
average


3.96
4.14
5.08
5.61
6.83
3.83
5.14
7.56
7.26

5.65



1.65
2.12
1.27
0.97
2.10
3.50
1.15
2.15
3.74

2.08


1.49
2.43
2.33
1.98
2.36
2.04
2.02
1.87
1.89

2.04



0.91
1.16
1.63
1.11
0.69
0.82
1.07
1.12
0.90

1.04


2.47
1.71
2.75
3.63
4.47
1.79
3.12
5.69
5.37

3.62



0.74
0.96
(0.36)
(0.14)
1.41
2.68
0.08
1.03
2.84

1.04


per box----------------------------



0.85 1.62 2.34
1.26 0.45 3.69
1.21 1.55 3.53
1.03 2.60 3.01
1.22 3.25 3.58
1.06 0.73 3.10
1.08 2.04 3.10
1.00 4.68 2.88
0.99 4.39 2.87

1.07 2.55 3.11



0.17 0.58 1.07
0.27 0.69 1.43
0.53 (0.89) 2.16
0.37 (0.50) 1.47
0.41 1.00 1.10
0.72 1.96 1.54
1.25 (1.17) 2.32
0.33 0.70 1.45
0.19 2.65 1.09


0.58


1.51


aFrom Table 19.

bFrom Table 20.

SOURCE: Institute of Food and Agricultural Sciences (IFAS), University of
Florida, U.S.A. and Instituto de Economia Agricola (IEA), Sao Paulo,
Brazil.

















Table 19.--Orange production costs and returns per box in the State of Florida (U.S.A.)--1979-80 through 1987-88, U.S. dollars (U.S.$)

9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


----------------------------------------------------- $ per box ----------------------------------------------------


Total on-tree revenue

Cultural costs
(variable/operating)

Labor
Fertilizer and dolomite
Chemicals
Machinery and irrigation
(operating cost)

Total cultural costs

Net revenue over
cultural costs

Other costs (fixed)

Depreciation (machinery
and orange planting)
Interest costs on total
cultural costs

Total depr. and interest

Net revenue over all costs

Total all specified costs
(cultural and other costs)

Yield (boxes/acre)


$3.96




$0.61
0.19
0.29

0.40

$1.49


$0.78

0.07

$0.85

$1.62


$2.34

299 bxs


$4.14




$0.90
0.42
0.46

0.65

$2.43


$1.71




$1.14

0.12

$1.26

$0.45


$3.69

225 bxs


$5.08




$0.86
0.41
0.43

0.63

$2.33


$2.75




$1.09

0.12

$1.21

$1.55


$3.53

219 bxs


$5.61




$0.75
0.33
0.36

0.54

$1.98


$3.63




$0.93

0.10

$1.03

$2.60


$3.01

301 bxs


$6.83




$0.87
0.37
0.48

0.65

$2.36


$4.47




$1.10

0.12

$1.22

$3.25


$3.58

269 bxs


$3.83




$0.76
0.31
0.40

0.57

$2.04


$1.79




$0.96

0.10

$1.06

$0.73


$3.10


$5.14




$0.76
0.29
0.41

0.57

$2.02


$3.12




$0.98

0.10

$1.08

$2.04


$3.10


$7.56




$0.70
0.27
0.37

0.53

$1.87


$5.69




$0.91

0.09

$1.00

$4.68


$2.88


$7.26




$0.70
0.27
0.39

0.53

$1.89


$5.37




$0.89

0.09

$0.98

$4.39


$2.87


$5.65




$0.76
0.31
0.40

0.56

$2.04


$3.62




$0.97

0.10

$1.07

$2.55


$3.11


324 bxs 326 bxs 363 bxs 386 bxs 305 bxs


SOIIPCE: Institute- --- oFFo n giutrl cecs(FS.Uieriyo lrdUSA


SOURCE: Institute of Food and Agricultural


Sciences (IFAS), University of Florida. U.S.A.

















Table 20.--Orange production costs and returns per box in the State of Sao Paulo (Brazil)--1979-80 through 1987-88, U.S. dollars (U.S.$)


Item/season


Total on-tree revenue

Cultural costs
(variable/operating)

Labor
Fertilizer
Chemicals
Machinery (operating cost)

Total cultural costs

Net revenue over
cultural costs

Other costs (rixed)

Depreciation (machinery
and orange planting)

Interest costs on total
cultural costs

Total depr. and interest

Net revenue over all costs

Total all specified costs
(cultural and other costs)

Yield (boxes/acre)


SOURCE: Instituto de Economia


1979-80 1980-81 1981-82 1982-83 1983-84


----------------------------------$ per

$1.65 $2.12 $1.27 $0.97 $2.10


$0.23
0.25
0.27
0.16

$0.91


$0.74




$0.13


0.04

$0.17

$0.58


$1.07

162 bxs


Agricola


$0.25
0.39
0.37
0.15

$1.16


$0.96




$0.19


0.08

$0.27

$0.69


$1.43

170 bxs


(IEA), Sao


$0.29
0.49
0.63
0.21

$1.63


($0.36)




$0.22


0.30

$0.53

($0.89)


$2.16

162 bxs


Paulo, Brazil.


$0.22
0.32
0.39
0.18

$1.11


($0.14)




$0.20


0.16

$0.37

($0.50)


$1.47

16? bxs


$0.11
0.18
0.24
0.16

$0.69


$1.41




$0.15


0.25

$0.41

$1.00


$1.10

170 bxs


9-year
1984-85 1985-86 1986-87 1987-88 average


box-----------------------------------------------------

$3.50 $1.15 $2.15 $3.74 $2.08


$0.13
0.32
0.24
0.13

$0.82


$2.68




$0.22


0.50

$0.72

$1.96


$1.54

174 bxs


$0.15
0.42
0.33
0.16

$1.07


$0.08




$0.30


0.94

$1.25

($1.17)


$2.32

146 bxs


$0.32
0.30
0.24
0.27

$1.12


$1.03




$0.26


0.06

$0.33

$0.70


$1.45

172 bxs


$0.08
0.45
0.23
0.15

$0.90


$2.84




$0.17


0.02

$0.19

$2.65


$1.09

150 bxs


$0.20
0.34
0.33
0.18

$1.04


$1.04




$0.21


0.26

$0.46

$0.58


$1.51

163 bxs


------




















Table 21.--Orange production costs as a percentage of total costs in the State of Florida (U.S.A.)--1979-80 through 1987-88


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


Cultural costs
(variable/operating)

Labor 26.11% 24.385 24.33% 25.06% 24.18% 24.49% 24.42% 24.465 24.31% 24.64%
Fertilizer and dolomite 7.92% 11.31% 11.63% 11.07% 10.44% 9.97% 9.26% 9.36% 9.50% 10.05%
Chemicals 12.31% 12.46% 12.09% 11.89% 13.29% 12.94% 13.31% 12.89% 13.52% 12.75%
Machinery and irrigation
(operating cost) 17.28% 17.69% 17.75% 17.82% 18.09% 18.45% 18.24% 18.43% 18.38% 18.015

Total cultural costs 63.62% 65.84% 65.81% 65.85% 65.99% 65.85% 65.27% 65.14% 65.71% 65.45%

Other costs (fixed)

Depreciation (machinery
and orange trees) 33.20% 30.87% 30.90% 30.86% 30.71% 30.861 31.47% 31.61% 31.01% 31.27%
Interest costs on total
cultural costs 3.18% 3.29% 3.29% 3.29% 3.30% 3.29% 3.26% 3.26% 3.29% 3.27%

Total depr. and interest 36.38% 34.16% 34.19% 34.15% 34.01% 34.15% 34.73% 31.86% 34.29% 34.55%

Total all specified costs 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%


SOURCE: Institute of Food and Agricultural Sciences (IFAS), University of Florida, U.S.A.




















Table 22.--Orange production costs as a percentage of total costs In the State of Sao Paulo (Brazil)--1979-80 through 1987-88


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


Cultural costs
(variable/operating)

Labor 21,06% 17.51% 13.53% 15.12% 10.21% 8.30% 6.60% 22.31% 7.01% 13.52%
Fertilizer 22.99% 27.21% 22.88% 21.81% 16.20% 20.47% 18.21% 20.60% 40.97% 23.49%
Chemicals 25.25% 25.69% 29.27% 26.15% 21.97% 15.81% 14.39% 16.23% 20.83% 21.73%
Machinery (operating cost) 15.23% 10.62% 9.94% 11.97% 14.42% 8.45% 7.11% 18.35% 13-90% 12.22%

Total cultural costs 84.52% 81.06% 75.62% 75.055 62.79% 53.03% 46.31% 77.49% 82.71% 70.95%

Other costs (fixed)

Depreciation (machinery
and orange planting) 11.74% 13.0411 10.42% 13.81% 11.08% 14.50% 13.12% 18.16% 15.88% 13.86%
Interest costs on total
cultural costs 3.745 5.91% 13.96% 11.11% 23.13% 32.47% 40.57% 4.35% 1.42% 15.18%

Total depr. and interest 15.48% 18.94% 21.38$ 24.95% 37.21% 46.97% 53.69% 22.51% 17.291 29.05%

Total all specified costs 100.00% 100.00% 100.00% 100.00% 100.00 100.00% 100.00% 100.00% 100.00% 100.00

SOURCE: Instituto de Econola Agricola (IEA), Sao Paulo, Brazil.
SOURCE: Instituto de Economia Agricola (lEA), Sao Paulo, Brazil,









Due to the annual variation of interest costs, Sao Paulo's cultural
costs ranged from a low of 46.31% in 1985-86 to a high of 84.52% in
1979-80 with the nine-year average being 70.95%. Interest costs will be
analyzed in a later section. The high capital costs of Florida's orange
plantings is indicated by the nine-year average 31.27% which
depreciation represents of the total costs. Sao Paulo's depreciation
only represents 13.86% of the total costs. Table 23 presents the
percentage which each cultural cost category is to the total cultural
costs. Labor (37.65%) and machinery and irrigation operating costs
(27.52%) are the two highest cost categories in Florida representing a
combined 65.17% of the total cultural costs. Sao Paulo's two highest
cultural cost categories are chemicals (30.79%) and fertilizer (33.33%)
or 64.12% of the total cultural costs.


Capital Investment Costs for an Orange Planting


Florida's capital investment for a four-year-old orange planting is
substantially higher than Sao Paulo (Table 24). The nine-year average
of total capital investment in Florida was $6,951 per acre as compared
to $1,410 per acre in Sao Paulo. Tree value capital costs (cultural
costs Year 1 through Year 4) and land value account for 78.63% and
90.57% of the total capital costs for Florida and Sao Paulo,
respectively. A major cost category included in Florida's capital
investment value is irrigation ($1,084 per acre and 15.60% of total)
which is not included in Sao Paulo. Without the irrigation system cost,
Florida's total capital investment would be $5,867 per acre with the
tree value and land value cost categories accounting for 93.16% of the
total cost. Equipment and interest on the tree value capital cost are
the other cost categories of the orange capital investment costs. These
two costs represent 5.77% and 9.43% of the total investment costs for
Florida and Sao Paulo, respectively. Depreciation was not included with
the capital investment costs since this cost item is charged against
annual operating revenue.





















Table 23.--Orange cultural
through 1987-88


costs as a percentage of total cultural costs in Florida (U.S.A.) and Sao Paulo (Brazil)--1979-80


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


Florida

Labor 41.014 37.03% 36.97% 38.06% 36.64% 37.195 37.41% 37.51% 37.00% 37.65%
Fertilizer and dolomite 12.45% 17.18% 17.68% 16.81% 15.82% 15.15% 14.19% 14.38% 14.45% 15.35%
Chemicals 19.35% 18.93% 18.38% 18.06% 20.13% 19.65% 20.45% 19.78% 20.57% 19.48%
Machinery and irrigation
(operating cost) 27.16$ 26.86% 26.97% 27.06% 27.411 28.01% 27.95% 28.29% 27.98% 27.52%

Total cultural costs 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00 100.00% 100.00% 100.00


Sao Paulo

Labor 24.91$ 21.60% 17.90% 20.14% 16.25% 15.65% 1h.26% 28.79% 8.47% 18.66%
Fertilizer 27.20% 33.60% 30.25% 29.06% 25.81% 38.59% 39.33% 26.58% 49.54% 33.33%
Chemicals 29.87% 31.70% 38.70% 34.841 34.98% 29.82% 31.07% 20.95% 25.18% 30.79%
Machinery (operating cost) 18.02% 13.10% 13.15% 15.95% 22.96% 15.911 15.31% 23.68% 16.81% 17.22%

Total cultural costs 100.00% 100.00$ 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%


and Instituto de Economia Agricola


SOURCE: Institute of Food and Agricultural Sciences (IFAS), University of Florida, U.S.A.
(IEA), Sao Paulo, Brazil.


















Table 24.--Capital investment per acre for a rour-year-old orange planting in Florida (U.S.A.) and Sao Paulo (Brazil)--1979-80
through 1987-88, U.S. dollars (U.S.$)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


Florida

Tree value capital
costsa

Interest on borrowed
tree value capital
costs

Irrigation system

Equipment costs

Land value

Total capital
investment

Sao Paulo

Total value capital
costsa

Interest on borrowed
tree value capital
costs

Equipment costs

Land value

Total capital
investment


aAccumulative cultural


---------------------------------------------- $ per acre --------------------------- ------------


2,349 2,593 2,751


117

909

200

2,010


130

1,003

221

2,219


138

1,065

235

2,355


2,830 3,064 3,210 3.324 3.115 3,602 3,019


141

1,095

242

2,122


153

1,073

251

2,4139


160

1,124

263

2,555


166

1,122

269

2,579


172

1,163

279

2,673


180

1,201

290

2,774


151

1,081

250

2,1147


5,586 6,167 6,543 6,731 6,981 7,312 7,160 7,733 8,051 6,951


570



51

66

617


531 591 667 388 536 481 699 688 572


18

16

800


53

67

926


60

82

778


35

58

553


18

57

581


13

71

651


63

154

771


62

130

633


52

81

705


1,335 1,425 1,637 1,587 1,033 1.223 1,216 1,690 1,513 1,410


costs Year 1 through Year 4.


SOURCE: Institute of Food and Agricultural Sciences (IFAS), University of Florida, U.
(1,11,13).


S.A. and Instltuto de Economla Agricola (IEA)











Annual Overall Rate of Return


One final measure of comparison for a Florida and Sao Paulo orange
planting investment is the annual overall rate of return on an
investment. In order to estimate an annual overall rate which reflects
the investment worthiness of an orange planting, a cash-on-cash analysis
was used. In other words, potential advantage or disadvantage from a
leverage borrowed investment was not considered. To calculate the
average overall rate of return, the net revenue over total cultural
costs was divided by the total capital investment cost. The average
overall rates of return for a Florida and Sao Paulo orange planting are
shown in Table 25.
Florida's overall annual rate of return ranged from a low of 6.24%
in 1980-81 to a high of 26.70% in 1986-87. The nine-year average for
Florida was 15.72%. Sao Paulo had a wider variation than Florida with
two seasons, 1981-82 and 1982-83, indicating a negative annual overall
rate of return. The range for Sao Paulo was -3.58% in 1981-82 to a high
of 38.21% in 1984-85. The nine-year average for Sao Paulo was 12.02%.
A limited analysis of market sales of Florida citrus plantings has
indicated that overall rates of returns have ranged from 14.5% to 18.9%
(12). Therefore, considering the large capital outlay and the ownership
risks due to weather and possible disease, the 15.72% nine-year average
for Florida is probably close to a minimum overall rate which a
producer/investor would desire or expect from a citrus investment in
Florida. There was no data available to evaluate Sao Paulo's overall
rate.


NET INTEREST COSTS IN A HIGH INFLATIONARY ECONOMY


The discussion in the previous two sections compared Florida and
Sao Paulo citrus costs and returns and citrus capital investment costs
in nominal values (actual values). However, the affects of Brazil's
high inflationary economy during the 1980's on borrowed operating
(cultural) and capital investment costs must be addressed. The nominal
values are useful to the Sao Paulo citrus producer who transacts all his
citrus business in Brazilian currency. However, in a high inflationary






















Table 25.--Average overall annual return on investment for an orange planting In Florida (U.S.A.) and Sao Paulo (Brazil)--1979-80
through 1987-88, U.S. dollars (U.S.$)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


------------------------------------------------ $ per acre -----------------------------------------------

Florida

Net revenue over
cultural costs $738.99 $384.63 $685.66 $1,091.54 $1,201.67 $579.84 $1,015.54 $2,064.43 $2,073.19 $1,092.83

Average capital
investment $5,586 $6,167 $6,543 $6,731 $6,981 $7,312 $7,460 $7,733 $8,051 $6,951

Average overall
annual return
on investment 13.23% 6.24% 10.48% 16.22% 17.21% 7.93% 13.61% 26.70% 25.75% 15.72%

Sao Paulo

Net return over
cultural costs $120.56 $163.79 ($58.60) ($22.03) $239.59 $467.08 $11.15 $176.75 $426.35 $169.40

Average capital
investment $1,335 $1,425 $1,637 $1,587 $1,033 $1,223 $1,246 $1,690 $1,513 $1,410

Average overall
annual return
on investment 9.03% 11.50% -3.58% -1.39% 23.18% 38.21% 0.90% 10.46% 28.18% 12.02%


SOURCE: Institute of Food and Agricultural Sciences (IFAS), University of Florida, U.S.A. and Instituto de Economia Agricola (IEA),
Sao Paulo, Brazil.











economy, the cost of borrowing tends to be overstated and, therefore,
must be adjusted in order to reflect a more accurate comparison of
returns when converting to the currency (U.S. dollars) of a very low
inflationary economy such as the United States.
When interest on borrowed cultural costs is subtracted from the net
revenue for a Florida orange planting, the result is a reduction in net
returns per acre (Table 26). The nine-year average returns was reduced
from $1,092.83 per acre before the interest costs were subtracted to
$1,062.09 per acre, or a $30.74 per acre decrease. In nominal values,
Florida's nine-year average interest costs is approximately 25% less
than Sao Paulo's interest costs of $41.90 (Refer to Table 18).
However, Sao Paulo's interest costs do not reflect the effects of
Brazil's high inflationary economy. In order to determine the net
interest cost for borrowed operating and capital investment costs in Sao
Paulo, the following methodology was used:
a) Take the cruzeiro/cruzados value of loan principal and the
cruzeiro/cruzados value of the interest payment and convert to
U.S. dollars at the July exchange rate. This equals total
repayment in U.S. dollars.
b) Convert dollar value of the principal to U.S. dollars at the
prevailing exchange rate at times the loan is received (season
average exchange rate). This equals principal in U.S.
dollars.
c) Subtract principal in U.S. dollars from repayments in U.S.
dollars. This equals total real interest or net interest.
As shown in Table 27, the nine-year average July repayment value of
the borrowed cultural costs (loan principal) plus interest costs was
$147.96 per acre. When the nine-year season average value of the
principal ($170.22 per acre) was subtracted from the July principal and
interest payment, the result was a negative $22.26 per acre net interest
cost. Subtracting (adding if negative value) the nine-year average net
interest cost from the nine-year average net revenue over cultural costs
($169.40 per acre) increased the nine-year average net returns to
$191.67 per acre (Table 28).
Referring back to Table 27, the high cost of interest in 1985-86
season shows the effects of high interest rates in a frozen currency
























Table 26.--Net revenue per acre over cultural and interest costs and average overall rate of return on investment in the State of
Florida (U.S.A.)--1979-80 through 1987-88, U.S. dollars (U.S.$)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


---------------------------------------------- $ per acre---------------------------------------------

Net revenue over
cultural costs 738.99 384.63 685.66 1,091.54 1,201.67 579.84 1,015.54 2,064.43 2.073.19 1,092.83

Less: interest on
cultural costsa 22.25 27.34 28.96 29.85 31.78 33.05 33.00 33.99 36.46 30.74


Net revenue over
cultural costs
and interest costs


aFrom Table 16.


716.74 357.28 656.70 1,061.69 1,169.89 546.78 982.54 2,030.44 2,036.73


1,062.09


I --- -























Table 27.--Net interest costs per acre on borrowed cultural costs in the State of Sao Paulo (Brazil)--1979-80 through 1987-88.
U.S. dollars (U.S.$)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


...............----------------------------------------------$ per acre ----------------------------------------------

Value at July Repayment Date:
Borrowed cultural
costs 111.19 141.21 195.06 98.18 70.38 79.88 126.12 81.00 51.50 106.06
Interest costs 6.48 14.33 48.77 26.51 43.28 87.07 137.47 10.86 2.32 41.90

Total value of
borrowed cultural
and interest costs 117.67 155.55 243.83 124.69 113.66 166.96 263.59 91.86 53.81 147.96

Less: average annual
value of borrowed
cultural costsb 146.64 196.70 264.27 179.12 117.50 142.23 156.92 193.19 135.40 170.22

Net interest costs
on borrowed
cultural costs (28.97) (41.15) (20.44) (54.43) (3.84) 24.73 106.67 (101.33) (81.58) (22.26)


aTotal cultural and interest costs (Table 13) divided by July average conversion factor (Table 12).

bTotal cultural costs (Table 13) divided by annual weighted average conversion factors (Table 12).























Table 28.--Net revenue over cultural and net interest costs per acre for an orange planting in the State of Sao Paulo (Brazil)--
1979-80 through 1987-88, U.S. dollars (U.S.$)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


---------------------------------------------- $ per acre ----------------------------------------------

Net revenue over
cultural costs 120.56 163.79 (58.60) (22.03) 239.59 467.08 11.15 176.75 426.35 169.40

Less: net interest
costs -28.97 -41.15 -20.44 -54.43 -3.84 24.73 106.67 -101.33 -81.58 (22.26)

Net revenue over
cultural and net
interest costs 149.54 204.94 (38.16) 32.40 243.43 442.36 (95.52) 278.08 507.93 191.67


aFrom Table 17.

bFrom Table 27.











economy. Brazil's currency was maintained at a constant price level
from March through June of 1986 resulting in a real or net interest cost
of $106.67 per acre to a Sao Paulo orange producer. Also, when
comparing Florida's nine-year average interest cost of $30.74 per acre
(Table 26) with Sao Paulo's nine-year average real or net interest costs
of a negative $22.26 per acre, the net affect was a $53.00 per acre
increase in net returns to a Sao Paulo orange planting investment over a
Florida orange planting investment.
The net interest included in the total capital investment of an
orange planting will also affect the total capital investment of an
orange planting. When interest was included in the capital investment
costs for a Florida orange planting, the result was increasing the total
capital cost of the investment (Refer to Table 25). However, as can be
seen from Table 29, the real or net interest costs for an orange
planting in Sao Paulo has been negative throughout the 1979-80 through
1987-88 seasons. The nine-year average net interest costs was a
negative $185.00 per acre. Including the negative interest cost with
the total capital investment costs results in reducing the nine-year
average nominal capital investment cost from $1,410 per acre (Table 25)
to $1,174 per acre (Table 30).
When the affects of net interest costs for both net returns per
acre and total capital investment costs are considered, the overall
annual return rate for both Florida's and Sao Paulo's orange planting
investment changes. Florida's nine-year average overall annual return
rate decreases from 15.72% (Table 25) to 15.20% (Table 31). However,
Sao Paulo's nine-year average overall return rate increases from 12.02%
(Table 25) to 16.33% (Table 31). The increased return rate to a Sao
Paulo citrus planting investment probably reflects more accurately the
reason that citrus plantings in Brazil have increased throughout the
1980's.


SUMMARY


This report has presented an overview of the orange industries
along with the cost and returns and total capital investment outlay
for the two leading orange producing states in the world--Florida






















Table 29.--Net interest costs per acre on borrowed tree value capital costs for an orange planting in the State of Sao Paulo
(Brazil)--1979-80 through 1987-88, U.S. dollars (U.S.$)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


---------------------------------------------- $ per acre ---------------------------------------------

Value at July repayment date:
Borrowed tree value
capital costs 422 376 427 349 221 296 383 283 267 336
Interest costs 51 48 53 60 35 48 43 63 62 52

Total value of borrowed
tree value capital
and interest costs 473 424 481 409 256 344 426 346 329 388

Less: average annual
value of borrowed
tree value
capital costs 570 531 591 667 388 536 481 699 688 572

Net interest costs on
borrowed tree value
capital costs -97 -107 -110 -258 -132 -191 -55 -353 -359 -185


aAccumulative cultural costs Year 1 through Year 4.
















Table 30.--Capital investment per acre for an orange planting In the State or Sao Paulo (Brazll)--1979-80 through 1987-88, U.S.
dollars (U.S.$) (Adjusted for net interest costs.)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


--------------------------------------------- $ per acre---------------------------------------------

Tree value capital
costs 570 531 591 667 388 536 481 699 688 572


Net interest costs on
borrowed tree value
capital costs -97

Equipment costsa 66

Land valuea 647

Total capital
investment 1 187


aAccumulatlve cultural costs Year

bFrom Table 29.


-107

46

800


1,270


1 through


-110

67

926


1,4714


Year 4.


-258

82

778


1,270


-132

58

553


867


-191

57

581


983


-55

71

651


1,147


-353

154

774


1,271


-359

130

633


1,092


-185

81

705


1 174

















Table 31.--Average overall annual return on investment for an orange planting in Florida (U.S.A.) and Sao Paulo (Brazil)--1979-80
through 1987-88, U.S. dollars (U.S.$) (Adjusted for net interest costs.)


9-year
Item/season 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 average


------------------------------------------------$peracre ---------------------------------.............

Florida

Net revenue over
cultural costs $716.74 $357.28 $656.70 $1,061.69 $1,169.89 $546.78 $982.54 $2,030.44 $2,036.73 $1,062.09

Average capital
investment $586 $6,167 $6,543 $6,731 $6,981 $7,312 $7 :60 $7733 $8,051 $6951

Average overall
annual return
on investment 12.83% 5.79% 10.04% 15.77% 16.76% 7.48% 13.17% 26.26% 25.30% 15.28%

Sao Paulo

Net return over
cultural costs $149.54 $204.94 ($38.16) $32.40 $243.43 $442.36 $(95.52) $278.08 $507.93 $191.67

Average capital
investment $1,187 $1,270 $1,474 $1,270 $867 $983 $1,147 $1274 $1,092 $17

Average overall
annual return
on investment 12.60% 16.13% -2.59% 2.55% 28.09% 44.99% -8.33% 21.83% 46.52% 16.33%


SOURCE: Institute of Food and Agricultural Sciences (IFAS), University of Florida, U.S.A. and Instituto de Economia Agricola (IEA),
Sao Paulo, Brazil.











(U.S.A.) and Sao Paulo (Brazil). The information presented indicated a
substantial difference in costs and returns and capital outlay between
Florida and Sao Paulo. Although the cultural costs for an orange
planting in Sao Paulo was much less than in Florida, both fruit yields
and prices were also much lower. Before 1986-87, the citrus producers
in Sao Paulo were not very organized. Therefore, the fruit prices
negotiated with the citrus processing firms were often not very
favorable. Since 1986-87 season, Sao Paulo's citrus fruit price has
been directly related to the FCOJ futures prices quoted on the New York
Cotton Exchange resulting in more favorable prices paid to citrus
producers. Florida capital investment outlay was higher than in Sao
Paulo due to the higher cost of land and the.four-year accumulative
cultural costs for developing a citrus planting in Florida. Also,
Florida citrus plantings were irrigated whereas Sao Paulo's were not
irrigated. Therefore, irrigation capital investment adds a substantial
cost to Florida's citrus capital outlay.
When comparing a Florida orange planting investment to one in Sao
Paulo using the nominal interest costs, Florida's average annual overall
return rate on investment was almost three percentage points higher than
in Sao Paulo. However, when the real or net interest costs were used,
Sao Paulo's average annual overall return rate was almost one percentage
point higher than Florida's. This higher annual return rate for Sao
Paulo probably reflects more accurately the reason for the increased
citrus plantings in Brazil during the 1980's.
Finally, a few comments on the current and near future situation of
Florida's and Sao Paulo's citrus industries. The December 1989 freeze
in Florida resulted in severe tree damage and tree loss in the Central
Florida citrus planting region. In the short run, Florida's round
orange production has been substantially reduced. However, with the
high density citrus plantings of the 1980's along with the intensive
management of cultural inputs, especially water, Florida's round orange
citrus production has the potential to rebound to the levels of the
1970's.
Sao Paulo's orange production is expected to continue to increase
into the foreseeable future. The relatively young age of total planted
orange trees along with improved cultural care due to better producer




fIARSTON SCIENCE LIBRARY'
? f TTT^ 1,,,,,,,,,,,,UNIVERSITY OF FLORIDA
D, OCUM EiNr, T I rlllllllll Rlllllllll IIIHIUr]Jii/ : l i
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Economics Department, IFAS, University of Florida.




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