• TABLE OF CONTENTS
HIDE
 Front Cover
 Acknowledgement
 Table of Contents
 Introduction
 Basic assumptions of the analy...
 Fixed costs for a 20-acre chrysanthemum...
 Cash expenses for a 20-acre chrysanthemum...
 Alternative production systems
 The effect of the rate of land...
 Conclusion
 Reference
 Appendix














Group Title: Economics report - University of Florida Food and Resource Economics Dept. ; 63
Title: Economic effect of alternative production systems for chrysanthemums in Florida, 1973
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
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Permanent Link: http://ufdc.ufl.edu/UF00027709/00001
 Material Information
Title: Economic effect of alternative production systems for chrysanthemums in Florida, 1973
Series Title: Economics report - University of Florida Food and Resource Economics Dept. ; 63
Physical Description: Book
Language: English
Creator: Walker, Charles
Levins, Richard
Publisher: University of Florida Agricultural Experiment Station
Publication Date: 1974
 Record Information
Bibliographic ID: UF00027709
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 28451757

Table of Contents
    Front Cover
        Front Cover
    Acknowledgement
        Page i
    Table of Contents
        Page ii
        Page iii
        Page iv
        Page v
    Introduction
        Page 1
        Page 2
    Basic assumptions of the analysis
        Page 3
        Page 4
        Page 5
    Fixed costs for a 20-acre chrysanthemum farm
        Page 6
    Cash expenses for a 20-acre chrysanthemum farm
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
    Alternative production systems
        Page 15
        Page 16
        Page 17
        Page 18
        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
        Page 33
    The effect of the rate of land turnover on profits
        Page 34
    Conclusion
        Page 35
        Page 36
    Reference
        Page 37
    Appendix
        Page 38
        Page 39
        Page 40
        Page 41
Full Text
:April 1974


Economic


Production


Effect of Alternative


Systems


for


Chrysanthemums in Florida, 1973


-~ --.1 :


*-: .....-.
Food and Resource Eotntemi 'epartment
Agricultural Experiment Stations and
Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611


Charles Walker
Richard Levins


The


1 ~ _


Economics Report 63






















ACKNOWLEDGEMENT S


Much of the credit for the completion of this analysis must
go to the producers of chrysanthemums in Florida. They gave
freely of their time and their knowledge.
Others, such as the suppliers of inputs utilized in chrysan-
themum production, staff members of the Agricultural Research and
Education Center in Bradenton, and local personnel with the Cooper-
ative Extension Service made major contributions to this report.
Working with such a cordial and cooperative group of indivi-
duals made the task of completing this endeavor a very satisfying
experience for the authors.















TABLE OF CONTENTS


ACKNOWLEDGEMENTS .


TABLE OF CONTENTS . . . .

LIST OF TABLES . . . . .

LIST OF APPENDIX TABLES . . .

LIST OF FIGURES . . . . .

INTRODUCTION . . .. . . .

Sources of Data . ... ...

Method of Analysis . .

BASIC ASSUMPTIONS OF THE ANALYSIS . .

FIXED COSTS FOR A 20-ACRE CHRYSANTHEMUM FARM .

CASH EXPENSES FOR A 20-ACRE CHRYSANTHEMUM FARM .

ALTERNATIVE PRODUCTION SYSTEMS . .....


System I--Single-Stem Pompon Production (Turnover of 1.5)
from Cuttings Grown on the Farm . . . ..

System II--Single-Stem Pompon Production (Turnover of 1.5)
from Purchased Cuttings . . . . .

System Ill--Pinched Crop Pompon Production (Turnover of 1.5)
from Purchased Cuttings . . . . .

System IV--Pinched Crop Pompon Production (Turnover of 1.5)
from Cuttings Grown on the Farm . . . .

System V--Single-Stem Standard Chrysanthemum Production
from Purchased Cuttings . . . . .

THE EFFECT OF THE RATE OF LAND TURNOVERP ON PROFITS ... . .


Page
. . . . . . i


ii

iii

iv


. .. 1









. . 6



. . 15
1














. 15


*








TABLE OF CONTENTS--Continued


Page

CONCLUSION . . .. . .35

REFERENCES . . . . . . 37

APPENDIX . . . . . . . 38


LIST OF TABLES


Table

1 Estimated initial investment in the underground
drainage system for a 20-acre chrysanthemum farm
in Florida, 1973 . .. . . . 7

2 Estimated initial investment in the irrigation system
for a 20-acre chrysanthemum farm in Florida, 1973 . 8

3 Estimated initial investment in structures for a 20-acre
chrysanthemum farm in Florida, 1973 .. . . 9

4 Estimated initial investment in other equipment for a
20-acre chrysanthemum farm in Florida, 1973 . .. 11

5 Estimated annual fixed costs and repair charges for
drainage and irrigation systems, structures, and other
equipment on a 20-acre chrysanthemum farm in Florida,
1973 . . . . ....... 12

6 Description and estimated costs of equipment used on
a 20-acre chrysanthemum farm in Florida, 1973 ..... 13

7 Estimated cash expenses for production of chrysanthemums
(pompons) on a 20-acre farm in Florida, 1973 .... 16

8 Estimated cash expenses for production of chrysanthemum
stock cuttings on a 20-acre farm in Florida, 1973 .. 21

9 Estimated overhead cash expenses for production of
chrvytantheimums on a 20-acre farm in Florida, 1973 22

10 Estimated receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system I--Single Stem
pompon production (turnover of 1.5) from cuttings grown
on farm . . . . . 24


iii







LIST OF TABLES--Continued


Table Pag

11 Estimated receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system II--Single
stem pompon production (turnover of 1.5) from purchased
cuttings . . . ... ...... .26

12 Estimated receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system III--Pinched
crop pompon production (turnover of 1.5) from purchased
cuttings . . . . . ... ... 28

13 Estimated receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system IV--Pinched
crop pompon production (turnover of 1.5) from cuttings
grown on farm . . . .... ... 30

14 Estimated cash expenses for production of chrysanthemums
(standards) on a 20-acre farm in Florida, 1973 . .. 31

15 Estimated receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system V--Single stem
standard chrysanthemum production (turnover of 1.5) from
purchased cuttings . . . . ... 33

16 Receipts, expenses, and returns for a 20-acre chrysanthemum
farm in Florida, 1973--System III under different land
turnover rates . . . . ... 34


LIST OF APPENDIX TABLES


Appendix Table

1 Costs of spray materials for chrysanthemum
production in Florida, 1973 ............. 39

2 Spray schedule for chrysanthemum production in
Florida, 1973 . . . . 40














LIST OF FIGURES


Figure Page

1 Physical layout for a 20-acre chrysanthemum farm in
Florida, 1973 . ... . . . 4

2 Planting arrangement for single-stem production
of pompons . .. . . . 5

3 Planting arrangement for pinched-stem production
of pompons and stock cuttings . . ..... 5

4 Planting arrangement for single-stem production
of standards . .. .. . ......... 5













THE ECONOMIC EFFECT OF ALTERNATIVE
PRODUCTION SYSTEMS FOR CHRYSANTHEMUMS IN FLORIDA, 1973


Charles Walker and Richard Levins


INTRODUCTION


This report presents a thorough analysis of the costs and inputs
required to produce chrysanthemums. As the reader thumbs through this
rather lengthy report, he may be saying to himself, "So what? Why go
to such great pains just to estimate production costs?" This is a fair
question, and it deserves an answer before beginning the analysis.
Any grower with a reasonably good bookkeeper can look at his record
books and get a good estimate of the total costs and returns for his
individual operation. Knowing the costs and returns for an operation
is certainly, important, because low profit levels are an indication that
there are problems somewhere. What else does information on the past
profits of an operation tell one? Not much.
The point is that the jobs of managing a farm and keeping books
are different. This report is not written primarily for bookkeepers,
important as they are. The bookkeeper's concern is the past performance
of the operation; the farm manager's concern is the future performance
of the operation. Farm managers need to deal constantly with such
problems as how to increase returns from the operation and how to
use available labor most efficiently. For these kinds of decisions, the
detailed information in this report can be very helpful.



CHARLES WALKER was formerly assistant professor of food and resource
economics and area economist at the Agricultural Research and Education
Center (AREC), Belle Glade. PICHARD LEVINS is assistant professor of
food and resource economics and area economist at the AREC, Bradenton,




2


Once the chrysanthemum production costs have been presented, several
alternative production systems are analyzed in order to compare estimated
returns for each system. Analysis of these systems will allow the grower
to compare them and select the alternative best suited to his current
production arrangement.
Individual growers will find that their production systems may differ
somewhat from the ones analyzed in this report. Also, the prices and
quantities for their farms may vary from those used here. By simply
changing the numbers in this report to reflect more closely their own
individual situations, such growers can still use the basic approach
and format as a powerful tool in farm planning.


Sources of Data


The numbers presented in this report represent estimates received
from reliable individuals who are active in some aspect of chrysanthemum
production.
The backbonee" of any cost analysis for a farm enterprise is a listing
of all the operations and the estimated hours of equipment and labor required
tp perform them. The growers themselves were the source of this information.
The costs of materials and equipment reflect prices charged by suppliers
in the area. These prices are those suggested for retail sale by distribu-
tors, but are not necessarily the specific ones any particular grower might
pay since it is possible that some growers pay lower prices if they purchase
in large quantities. It is also quite likely that price increases have
occurred between the time the price data for the study were collected and
the time this report was published.


Method of Analysis


The results of any cost study will naturally depend on the assumptions
made about farm size, planting patterns, and so forth. Therefore, the next
section is devoted to a description of the physical farm layout that was
assumed in this report.
Once the basic assumptions concerning the farm itself have been







discussed, the fixed expenses involved in operating such a farm will be
examined. The fixed costs per acre for chrysanthemum production are
exceptionally high as agricultural enterprises go, and they will be a
factor in determining the return on investment of the production systems
analyzed in this report.
Having examined the fixed expenses, the next order of business
will be to answer the question, "What are the cash expenses involved
in producing pompons and stock plants?" This will involve a detailed
listing of the physical.requirements for the operations involved in
growing a crop.
The report goes on to look at how profits change depending upon
which production system is used. Such problems as whether a producer
should grow his own stock cuttings and whether producing standards is
a profitable alternative to pompon production are investigated. It
turns out that once the detailed work of the previous sections is done,
the remaining analysis goes more quickly since it is only necessary to
identify the requirements that change from system to system.
Finally, the extent to which profits depend on the land turnover
rate, i.e., the number of crops harvested per acre in one season, is
examined.


BASIC ASSUMPTIONS OF THE ANALYSIS


Figure 1 shows the layout and dimensions of the 20-acre farm used
in this analysis; 16.17 acres are cultivated. The remaining acreage is
in parking space, buildings, ditches, and space for guidewires at the
ends of the houses. There are a total of 90 houses, each measuring 39
by 200 feet. Since there are six four-foot beds in each house, per acre
returns relate to the returns from roughly 5.6.houses and 33.5 beds.
Figures 2, 3, and 4 show the planting patterns for single-stem and
pinched crops used in this report. A single-stem planting with this
pattern will have 5,400 stems per bed and a pinched planting will have
1,800 stems per bed.
The details of the construction of the houses, drainage system,
irrigation system, and the types of equipment on hand are described in
Tables 1-4 and Table 6 at the end of the next section.






r10' Perimeter
---- ---874'
S- 20' -4-16' Ro' d (3) Page
~~~C ~ 5 1 Ra SPlace


S Fe- 2O""1'


-m-


~-~- --------'~-~-


_r


Nitch

























96.42

I-


-T--1~--7C -~--i.r- .~--


Figure ].--Physical layout for a 2Q-acre chrysanthemum farm in Florida, ]973.


Sr. r 7 2/. ,-r -r r "r-1 '





t>-OfficE Stqraope Shelter, a Pockinghouse.
2>-Houses
3- Par king


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--~-- -----------------------


ur~L1~;*s~;;L;-LI---















00 0o

0 OO n


-- --4 ft. bed-

'Figure 2.--Planting arrangement for single-stem
production of pompons


o 0 0 0 0



Figure 3.--Planting arrangement for pinched-stem
production of pompons and stock cuttings.
Each plant is pruned to three stems.


8" O


Figure 4.--Planting arrangement for single-stem
production of standards


I III II


__~_ __~


BLl..^,l...ll... -*I^ .^ ^.|I,,,,1 ^. B)^^ BB .







FIXED COSTS FOR A 20-ACRE CHRYSANTHEMIUM FARM


Fixed costs are the costs one incurs by simply owning a farm. In
contrast to cash costs--the costs involved in operating a farm--fixed
costs remain the same whether or not crops are produced on the farm.
Depreciation, taxes, and insurance are examples of fixed costs and
employees' wages are an example of a cash cost.
When it comes time to compare the costs and returns of the alternative
production systems, the job will be considerably easier once the fixed costs
have been separated from the cash costs. The fixed costs will remain about
the same from system to system, even though the cash costs will not. This
is not unreasonable, since a producer is not going to make any major changes
in his equipment on hand, irrigation system, lighting system, or structures
if he should decide to grow standards instead of pompons, for example.
Before the fixed cost of an item can be estimated, it is necessary to
know its initial cost. The estimated initial costs of the drainage and
irrigation system, structures, and other equipment are shown in Tables 1-4.
Once these numbers are known appropriate charges for depreciation, taxes,
and insurance can be assigned to them (Table 5). The operating and repair
charges for these items are also listed in Table 5. Operating costs
are not fixed costs; they were included in Table 5 for convenience only.
The fixed costs of tractors, sprayers, and similar implements are
shown in Table 6. As was the case with Table 5, the operating costs for
this equipment are also shown in Table 6. It should be noted that, while
operating costs are figured on a per hour basis, fixed costs are not. This
is because fixed costs, unlike cash costs, do not change with hourly use.
The total fixed cost for the farm is $28,222 (Table 5) plus $6,045
(Table 6), or $34,267.


CASH EXPENSES FOR A 20-ACRE CHRYSAWTHEMNU FARM


A detailed outline of the labor, machinery, and materials required
to produce pompons using a single-stem planting pattern is given in
Table 71. These input requirements are combined with 1973 prices to



1Tables 7, 8, and 9 appear at the end of this section.







FIXED COSTS FOR A 20-ACRE CHRYSANTHEMIUM FARM


Fixed costs are the costs one incurs by simply owning a farm. In
contrast to cash costs--the costs involved in operating a farm--fixed
costs remain the same whether or not crops are produced on the farm.
Depreciation, taxes, and insurance are examples of fixed costs and
employees' wages are an example of a cash cost.
When it comes time to compare the costs and returns of the alternative
production systems, the job will be considerably easier once the fixed costs
have been separated from the cash costs. The fixed costs will remain about
the same from system to system, even though the cash costs will not. This
is not unreasonable, since a producer is not going to make any major changes
in his equipment on hand, irrigation system, lighting system, or structures
if he should decide to grow standards instead of pompons, for example.
Before the fixed cost of an item can be estimated, it is necessary to
know its initial cost. The estimated initial costs of the drainage and
irrigation system, structures, and other equipment are shown in Tables 1-4.
Once these numbers are known appropriate charges for depreciation, taxes,
and insurance can be assigned to them (Table 5). The operating and repair
charges for these items are also listed in Table 5. Operating costs
are not fixed costs; they were included in Table 5 for convenience only.
The fixed costs of tractors, sprayers, and similar implements are
shown in Table 6. As was the case with Table 5, the operating costs for
this equipment are also shown in Table 6. It should be noted that, while
operating costs are figured on a per hour basis, fixed costs are not. This
is because fixed costs, unlike cash costs, do not change with hourly use.
The total fixed cost for the farm is $28,222 (Table 5) plus $6,045
(Table 6), or $34,267.


CASH EXPENSES FOR A 20-ACRE CHRYSAWTHEMNU FARM


A detailed outline of the labor, machinery, and materials required
to produce pompons using a single-stem planting pattern is given in
Table 71. These input requirements are combined with 1973 prices to



1Tables 7, 8, and 9 appear at the end of this section.







Table 1.--Estimated initial investment in the underground drainage system
for a 20-acre chrysanthemum farm in Florida, 1973

Item and description Requirements Total cost

Dollars

Dig two drainage ditches, 899 ft. 1,789' at $.20/ft. 360
long, 4 ft. wide, 6 ft. deep,
custom hire dragline

Dig two tile trenches per house,
874 ft. long, 23 house widths

a. Rent trencher to dig
trenches, 12" x 24",
2,000 ft. per 9 hr.
day, $55 per day 40,204' at $.2075/ft. 1,106
b. Operating cost of
40 h.p. tractor to
pull trencher 180.92 hrs. at $.82/hr. 148
c. Drainage tile, plastic,a
4" diameter with nylon
netting 40,204' at $.25/ft. 10,051
d. Labor for digging trenches
and installing pipe, 72
hrs. per 2,000 ft. 1,447.34 hrs. at $2.23/hr. 3_228
Total 14,893

aThe use of plastic tile with nylon netting is new. Most existing
drainage systems were constructed with clay or transit tile. With clay
or transit tile, initial investment would be considerably more (about
$1.00 versus 37 cents per foot) than with the plastic tile, nylon netting
system described here. This is due to (1) the plastic tile, nylon net-
ting costs less than clay or transit tile, (2) the plastic tile, nylon
netting requires less material, and (3) the plastic tile, nylon netting
is easier to install and requires less labor.









Table 2.--Estimated initial investment in the irrigation system for
a 20-acre chrysanthemum farm in Florida, 1973

Item and description ; Requirements Total cost


Dig wells, custom hire, 8" diameter,
126 ft. deep, with stainless steel
screen 2 wells at $7,000 each

Turbine pump and 40 h.p. electric
engine 2 pumps at $2,500 each

Electrical installations for
engines 2 at $2,000 each

Irrigation pipea


Dollars

14,000


5,000


4,000


a. 1 l/4"diameter, galvanized
steel

b, 1" diameter, galvanized
steel

c. 3/4" diameter, galvanized
steel

Labor for installing irrigation
pipe, 72 hrs. per acre

Irrigation heads, 10 per 200 ft.
row, 5/32" hole, 360 degree
rotation

Sprinkler tees for each irrigation
head, 1 1/4 x 1 1/4 x 1/2"

Labor for installing irrigation
heads and sprinkler tees,
8 hrs. per acre


7,820' at $.46/ft.


7,820' at $.43/ft.


7,820' at $,24/ft.


1,164.24 hrs. at $2.23/hr.



960 at $3.18 each


960 at $1.28 each



129.36 hrs. at $2.23/hr.


Total 39,003

aSize of irrigation pipe used is evenly distributed between 1 1/2",
1", and 3/4" diameter. The pipe diameter is diminished to hold an
adequate level of pressure as the distance away from the pump (pumping
distance) increases.


3,597


3,363


1,877


2,596



3,053


1,229



288








Table 3.--Estimated initial investment in structures for a 20-acre
chrysanthemum farm in Florida, 1973


Item and description Requirements Total cost

Dollars


Creosote posts
One post per 18 ft., or 11
per 200 ft. bed length, top
diameter of 4", 12 ft. length

Digging post holes
a. 40 h.p. tractor (operating
cost), one min. per post
b. Auger
c. Labor

Installing posts
Labor for installing posts,
10 mins. per post

Guide wire
12.1 ft. per post on outer peri-
meter, or 88 posts, 6 gauge
Labor for installing guide
wire, 5 hrs. per acre

Support wire
To support saran, 6 gauge, tied
from post to post across each
house, 43 ft. each tie
Labor for installing support
wire, 8 hrs. per acre

Buildings
Office, packing house, shelter,
storage, etc., 1,250 sq. ft.
per acre

Lighting system
Wirec for bulbs, 12 TV stranded
copper, one strand along each
post row, and one strand in
middle of each house


1,056 posts at $6.45 ea.




17.6 hrs. at $.82/hr.
1 at $400 ea.
17.6 hrs. at $2.23/hr.


176 hrs. at $2.23/hr.




1,074' at $18.15/1,000 ft.


80.85 hrs. at $2.23/hr.


6,811




14
400
39


392




19


180


41,492' at $18.15/1,000 ft. 753


133.36 hrs. at $2.23/hr. 297




20,215.5 sq. ft. at $2.00/
sq. ft. 40,425





41,152' at $34.02/
1000 ft. 1,400


See--U nex page- for- fototsCnine


Continued


See next page for footnotes.








Table 3.--Estimated initial investment in structures for a 20-acre
chrysanthemum farm in Florida,1973--Continued


Item and description Requirements Total cost

Dollars
Lighting system (Continued)
Labor for installing wire, 6 hrs.
per mile 46.74 hrs. at $2.23/hr. 104
Pin-sockets for each bulb, one
bulb per 8 ft., or 25 per 200
ft. strand 4,700 at $.20 each 940
Labor for installing sockets,
5 mins. per socket 392 hrs. at $2.23/hr. 874
Bulbs, silver neck reflector,d
150 watts 4,700 at $.87 each 4,089
Labor for installing bulbs,
2 mins. per bulb 157 hrs. at $2.23/hr. 350
Labor (electrician) for installing
lead-in wire, fuse boxes, and
timers, 24 hrs. per acre 388.08 hrs. at $8.00/hr. 3,105

Total 60,192


aOne post per 18 feet is considered typical. Post spacing and post
size used varies depending on personal preferences.

Building space and quality vary considerably from grower to grower.

cSome growers only use two strands of wire and therefore only two
rows of light bulbs per bed. Here three rows of lights are used to
insure adequate light control.

dSilver neck reflector bulbs are more expensive (87 cents) than
the clear neck bulbs (54 cents). Silver neck reflector bulbs are said
to give better light control.







Table 4.--Estimated initial investment in other equipment
chrysanthemum farm in Florida, 1973


for a 20-acre


Item and description Requirements Total cost

Dollars
Saran
(polypropylene), 25% shadea 703,395 sq. ft. at
$.055/sq. ft. 38,687
S-hooksb
To fasten saran to support wire 12,600 at $.05 each 630
Metal stakes
52 ft. length, lipped to hold bed
wire, 2 stakes per bed per 15
feet 14,040 at $1.00 each 14,040
Bed wirec
4 ft. width, 6" x 8" mesh, 12
gauge, used to space and 1,080 sq. ft. at$9.75/
support stalks sq. ft. 10,530
Office equipment
Calculators, typewriters, filing
cabinets, office furniture and
Supplies, etc. 3,234

Total 67,121


aThe use and the intensity of shade of plastic saran is dependent
upon individual management preferences and quality objectives. Its use
is said to produce better quality as it protects plants from the full
intensity of the sun. Workers also prefers to work under a saran
covering. Costs per square foot of saran increase as the percent shade
increases.

Some growers prefer the use of nylon cord for fastening saran to
support wire. S-hooks are cheaper in terms of labor for installation,
whereas nylon cord is said to result in fewer tears to saran. Also, the
use of nylon cord facilitates taking down the saran on occasions when
hurricanes threaten.

cBed wire of 48" and 42" width and of differing gauges is available.

dRough estimate of requirements and cost.







Table 5.--Estimated annual fixed costs and repair charges for drainage
and irrigation systems, structures, and other equipment on a
20-acre chrysanthemum farm in Florida, 1973

Initial Depreciable Annual Annual
Item cost life fixed operating
cost cost


Underground drainage
system, includes labor
(Table 1)
Wells, electric engines,
electrical installation,
and turbine pumps
(Table 2)
Irrigation pipe, heads and
sprinkler 'teas, includes
labor (Table 2)
Creosote posts, guide wire,
and support wire, includes
labor (Table 3)
Lighting system, includes
labor (Table 3)
Buildings (Table 3)
Saran and s-hooks (Table 4)
Stakes (Table 4)
Bed wire (Table 4)
Office equipment (Table 4)


Total


Dollars



14,893




23,000



16,003



8,905

1C,862
40,425
39,317
14,040
10,530
3 234

181,209


Years ------Dollars------


1,638 .1,489




2,530 2,300



3,361 3,201


5
20
4
8
5
5


2,281 2,172
2,425 2,021


10,222
1,895


9,829
1,755


2,211 2,106


679


647


28,222 26,411


aAnnual fixed cost is the sum of annual depreciation and
and insurance. Depreciation is calculated on a straight-line
Annual taxes and insurance are calculated at 2 percent of the
undepreciated value.


annual taxes
basis.
average


bAnnual operating post includes repairs and maintenance (plus
labor) and electricity, and is calculated as the reciprocal of the
depreciable life times the initial cost for each item.


- -- ~--------~----~






Table 6.--Description and estimated costs of equipment used on a 20-
acre chrysanthemum farm in Florida, 1973

New Salvage Years Annual Hourly
Item and description cost value on fixed operating
farm cost cost


----Dollars----


Years ----- Dollars-----


Tractore, 40 h.p. diesel,
3-point hitch
Tractor, 25 h.p.gasoline,
4 cycle, 3 speed, 1-point
fast hitch

Fertilizer spreader ,
ground pull type,
8-ft.width (wedge
shaped), 900 lb.
capacity
Disk harrow, 6 ft. width,
used on 3-point hitch
Mechanical fumigator,
11 ft. width


Mechanical plastic
puller
Rototiller (or rotovator),
70" cut, used with 3-
point hitch

Bedder 4 ft. width with
tool bar, forming press,
and disk blades

Sprayer tri-cycle, 3-
wheel, hi-clearance
Planting platform


f
Farm (or Cobey) trailer ,
used for hauling flowers

Pickupe, 1/2 ton, 2 WD,
power lock rear axle, V-8,
power steering, and
automatic transmission


17 1,011g


59 10


4,600



2,299





375


1,600



1,000



1,075



400

4,800
300


235


74 20


63 18



63 10


37 10


3,700 1,067


Se nex paefo oonts.Cntne


172



144



121


58


2.27
.12


136h


2.15


Continued


See next page for footnotes.







Table 6.--Description and estimated costs of equipment used on a
20-acre chrysanthemum farm in Florida, 1973--Continued


New Salvage Years Annual Hourly
Item and description cost value on b fixed operating
farm cost cost

----Dollars---- Years ----Dollars----
Hand-tillere, 16" cut 610 166 6 111 .56
Mower, rotary type, heavy
duty, 5 ft. cut 1,675 183 13 215 1,02
Farm wagon 300 18 18 34 .13
Stapling machine plus
compressor 4,500, 1,211 5 928 1.09
Scrapper for tying
boxes 1,500 404 5 309 .36
Total 40,773 -- 6,045


aSalvage value was calculated according to the "remaining farm value"
equations [1, p. 289]. Once the salvage value is determined, it is
subtracted from "new cost" to yield an estimate of total depreciation
for each individual piece of equipment.

"Years on farm" is calculated by dividing the estimated wear-out
life in hours, as given in [l,p. 294], by the hours of annual usage.

c"Fixed costs" include depreciation and a charge for interest,
taxes, housing, and insurance. Annual depreciation is derived by divid-
ing the difference between "new cost" and "salvage value" by "years on
farm." Interest, taxes, housing, and insurance are charged at a rate
of 6 percent of "new cost," as suggested in [1, p. 289].

dourly operating costs include charges for repairs and maintenance,
fuel consumption, and lubrication. Estimates of these charges, except
as noted, are based on suggestions in [1, pp. 280-82].

For these items, oil and lubrication were calculated at 15 percent
of fuel cost. For all other items, oil and lubrication were calculated
at 0.4 percent of new cost, as given in [2, pp. 278-294].

Annual usage of these items in relation to their estimated wear-
out life is small. Thus, a "years on farm" value was just assumed.

gwjo such pickups are used on the farm. The fixed cost for one
of these would be one half of the amount indicated.

hFour trailers are used on the tarm. The fixed cost for one
them would be one fourth of the amount indicated.








estimate the cash costs for growing pompons under this system.
As an example of how the costs in Table 7 were derived, item 2,
"disk under stubble (3 times)", on the first page of the table should
be examined. It was estimated that to disk under the stubble from a
previous flower crop three times would take four hours. The hourly
operating costs of the disk and tractor are taken from Table 6 and
the labor cost used in this report is $2.23 per hour, which includes
payments for Social Security and Workmen's Compensation. The sum of
the costs for four hours use of the disk, tractor, and labor is $13.12,
the number which appears in the right-hand column of the table.
An important consideration in pompon production is that the land
will usually be used for more than one crop per season. However, certain
operations, such as applying dolomite, are performed only once per season,
regardless of the crop turnover. These operations are marked with an
asterisk (*) in the tables.
The total cash cost of $4,876.21 shown on the last page of Table 7
does not include costs for buying cuttings, because the particular pom-
pon production system analyzed in Table 7 is one in which cuttings are
produced on the farm. In the discussion of the economic aspects of
producing stock cuttings in the next section of this report, reference
will be made to the cash costs of producing stock cuttings, which are
listed in Table 8.
The "overhead cash expenses" involved in operating a 20 acre
chrysanthemum farm are shown in Table 9. Overhead cash expenses are
not fixed costs, since they are associated with farm operation rather
than farm ownership. However, they are similar to fixed costs in so far
as they will probably remain about the same regardless of what
chrysanthemum production system is chosen.


ALTERNATIVE PRODUCTION SYSTEMS


System I--Single-Stem Pompon Production
(Turnover of 1.5) from Cuttings Grown on the Farm


The first production system to be analyzed is one in which a single-
stem pompon crop is grown from stock cuttings produced on the farm. A








Table 7.--Estimated cash expenses for production of chrysanthemums
(pompons) on a 20-acre farm in Florida, 1973

Operation and cash requirements per acre Cost per acre
for one crop turnover

Dollars

Prepare land and plant cover crop (sorghum)
1. -lot down flower stubble
Mower, 2 hrs. at $1.02 hr.
40 h.p. tractor, 2 hrs. at $.82/hr.
Labor 2 hrs, at $2.23/hr 8.14

2. Disk under stubble (3 times)
Disk, 4 hrs. at $.23/hr.
40 h.p. tractor, 4 hrs. at $.82/hr.
Labor, 4 hrs. at $2.23/hr. 13.12
3. Till, to finish and level land
Rototiller, 1.75 hrs. at $.54/hr.
Tractor, 1.75 hrs. at $.82/hr.
Labor, 1.75 hrs. at $2.23/hr 6.28
4. Plant sorghum (2 times)
Labor, 2 hrs. at $2.23/hr.
Seed, 100 Ibs. at $16.50/cwt 20.96
5. Till, to cover sorghum
Rototiller, 1.75 hrs. at $.54/hr.
Tractor, 1.75 hrs. at $.82/hr.
Labor, 1.75 hrs. at $2.23/hr. 6.28
6. Fertilizer (3 applications)
20-20-20-liquid (+ minors), 450 Ibs. at .15/lb.
Labor, for fertilizing & irrigating, 4.5 hrs. at
$2.23/hr. 77.54
Total cash expenses for 16 hrs. labor 35.68
preparing land and Machinery 12.64
planting cover crop Materials 84.00
132.32


Prepare land for planting cuttings
1. Mow down sorghum (3 times)
Mower, 6 hrs. at $1.02/hr.
Tractor, 6 hrs. at $.82/hr.
Labor, 6 hrs. at $2.23/hr. 24.42


See page 20 for footnotes. Continued







Table 7.--Estimated cash expenses for production of chrysanthemums
(pompons) on a 20-acre farm in Florida, 1973--Continued

Operation and cash requirements per acre Cost per acre
for one crop turnover

Prepare land for planting cuttings (Continued) Dollars
2. Disk under sorghum (10 times)
Disk, 30 hrs. at $.23/hr.
Tractor, 30 hrs. at $.82/hr.
Labor, 30 hrs. at $2.23/hr. 98.40
3. Apply dolomite
Fertilizer spreader, 1.50 hrs. at $.26/hr.
Tractor, 1.50 hrs. at $.82/hr.
Labor, 1.50 hrs. at $2.23/hr.
Dolomite ton at $24.00/ton 16.97
4. Till (2 times)
Rototiller, 3.5 hrs. at $.54/hr.
Tractor, 3.5 hrs. at $.82/hr.
Labor, 3.5 hrs. at $2.23/hr. 12.57
5. Fumigate (includes removing plastic ground cover)
Fumigator, 5.5hrs. at $.81/hr.
Tractor, 7.5 hrs. at $.82/hr.
Labor, 22.5 hrs. at $2.23/hr.
Plastic, 43,500 sq. ft. at 1.85/1,000 sq. ft.
Methyl bromide (2.0 lb/100 sq. ft.)
871.2 Ibs. at $.48/lb.
Mechanical polyethylene puller, 2.0 hrs.
at $.39/hr. 560.22
6. Till
Rototiller, 1.75 hrs. at $.54/hr.
40 h.p. tractor, 1.75 hrs. at $.82/hr.
Labor, 1.75 hr. at $2.23/hr. 6.28
7. Make beds
Bedder, 4 hrs. at $.17/hr.
25 h.p. tractor, 4 hrs. at $.65/hr.
Labor, 4 hrs. at $2.23/hr. 12.20
8. Lay bed wire
Labor, 12 hrs. at $2.23/hr. 26.76
9. Drive end posts
Labor, 6.0 hrs. at $2.23/hr. 13.38
10. Put up saran
Labor, 54 hrs. at $2.23/hr. 120.42

See page20 for footnotes. Continued







Table 7.--Estimated cash expenses for production of chrysanthemums
(pompons) on a 20-acre farm in Florida, 1973--Continued

Operation and cash requirements per acre Cost per acre
for one crop turnover

Prepare land for planting cuttings (Continued) Dollars
11. Take down saran at end of season
Labor, 18 hrs. at $2.23/hr. 40.14
Total cash expenses for
preparing land and 159.25 hrs. labor 355.13
planting cuttings Machinery 65.97
Materials 510.66
931.76


Plant and cultivate
1. Take cuttings from stock plants and
haul to production field
Labor, 42 hrs. at $2.23/hr. 93.66
2, Plant 5,400 non-rooted cuttings per bed
Planting platform, 16 hrs. at $.12/hr.
40 h.p. tractor, 16 hrs. at $.82/hr.
Labor, 112 hrs. at $2.23/hr. 264.80
3. Drive stakes
Planting platform, 2.30 hrs. at $.12/hr.
25 h.p. tractor, 2.30 hrs. at $.65/hr.
Labor, 11.5 hrs.,at $2.23/hr. 27.42
4. Irrigate, twice initially, then twice per
week, for 16 weeks
Labor, 8.5 hrs. at $2.23/hr. 18.96
5. Fertilize, twice per week for 12 weeks
Labor, 36 hrs. at $2.23/hr.
Ammonium nitrate, 720 Ibs. at $.039/lb.
Potassium nitrate, 768 Ibs. at $.072/lb. 163.66
6. Spray program
Sprayer ,3 hrs. at $2.23/hr.
Labor, 3 hrs. at $2.23/hr.
Pesticide and fungicides, $447.18 (see
Appendix Tables 1 and 2) b
Labor to apply granular insecticides,
2.25 hrs. at $2.23/hr. 465.70
7. Raise bLd wire, once per week, 16 weeks
Labor, 5 hrs. at $2.23/hr. 11.15


See page 20 for footnotes.


Continued







Table 7.--Estimated cash expenses for production of chrysanthemums
(pompons) on a 20-acre farm in Florida, 1973--Continued

Operation and cash requirements per acre Cost per acre
for one crop turnover

Plant and cultivate (Continued) Dollars
8. Till between beds (two times)
Hand tiller, 16 hrs. at $.56/hr.
Labor, 16 hrs. at $2.23/hr. 44.64
9. Disbudding
Labor, 100 hrs. at $2.23/hr. 223.00
10. Remove stakes at end of crop
Farm wagon, 4.83 hrs. at $.13/hr.
25 h.p. tractor, 4.83 hrs. at $.65/hr.
Labor, 14.5 hrs. at $2.23/hr. 36.10
11. Remove bedwire
Labor, 16.7 hrs. at $2.23/hr. 37.24
Total cash expenses for 367.45 hrs, labor 819.41
planting and cultivating Machinery 36.35
Materials 530.56
1,386.32

Harvest
1. Cutting and bunching, 45 bunches per man hr.
Labor, 530.6 hrs. at $2.23/hr.
Plastic buckets, 4 at $.90 each
Rubber bands, 23,877 at .40/1,000
Plastic sleeves, 23,877 at $11.50/1,000 1,470.97
2. Haul flowers to packinghouse
Farm trailer, 16.88 hrs. at $.08/hr.
25 h.p. tractor, 16.88 hrs. at $.65/hr.
Labor, 16.88 hrs. at $2.23/hr. 49.96
Total cash expenses 547.48 hrs. labor 1,220.88
for harvesting Machinery 12.32
material 287.74

1,520.94

Pack
1. Make boxes
Stapling machine, 16.0 hrs. at $1.09/hr.
Labor, 16.0 hrs. at $2.23/hr.
Boxes with lids, 955 at $635/1,000
Staples, 23,877 at $1.50/1,000 695.36


See page 20 for footnotes.


Continued







Table 7.--Estimated cash expenses for production of chrysanthemums
(pompons) on a 20-acre farm in Florida, 1973--Continued


Operation and cash requirements per acre


Cost per acre
for one crop turnover


Pach (Continued)
2. Pack flowers in boxes
Labor, 47.8 hrs. at $2.23/hr.
Green wax tissue, 1,910 sheets at .01 each
3. Tie boxes
Strapper, 16.0 hrs. at $.36/hr.
Labor, 16.0 hrs. at $2.23/hr.
4. Label, load boxes,and haul flowers
Labor, 19 hrs. at $2.23/hr.


Total cash expenses
for packing


Total cash expenses
for all operations


98.8 hrs. labor
Machinery
Materials


1,188.98 hrs.
labor
Machinery
Materials


220.32
23.20
661.34

904.86



2,651.43
150.48
2,2t1A,.J.


4,876.21



Operations marked with an asterisk are performed only once per
season, regardless of the crop turnover.

15 applications at 12 minutes per application.

bTemik and Di-Syston are granular materials which are not applied
with a sprayer. The labor figure here represents 3 applications at
45 minutes per application.


Dollars


125.69



41.44

42.37


- -"~- II---~~---~---







Table 8.--Estimated cash expenses for production of chrysanthemum
stock cuttings on a 20-acre farm in Florida, 1973


Operation and cash requirements per acre


Cost per acre
for one crop turnover


Prepare land and plant cover crop (sorghum)a
Prepare land for planting cuttingsb
Plant and cultivate
1. Plant 1,800 non-rooted cuttings per bed
Planting platform, 10 hrs. at $.12/hr.
40 h.p. tractor, 10 hrs. at $.82/hr.
Labor, 70 hrs. at $2.23/hr.
Non-rooted cuttings, 60,228 at 3.2 each
2. Drive stakes
3. Irrigatea
4. Fertilizer
5. Raise bed wire
6, Spray program
Sprayer 6.4 hrs. at $2.27/hr.
Labor, 6.4 hrs. at $2.23/hr.
Pesticides and fungicides, $598.92 (see
Appendix Tables 1 and 2) d
Labor to apply granular insecticides,
2.25 hrs. at $2.23/hr.
7. Pinch
Planting platform, 2.80 hrs. at $.12/hr.
40 h.p. tractor, 2.80 hrs. at $.82/hr.
Labor, 19.6 hrs. at $2.23/hr.
8. Remove stakes at end of crop
9. Remove bed wirea
Total cash expenses for
planting and 201.45 hrs. labor
cultivating Machinery
Materials


Dollars
132.32
1,035.58






2,092.80
27.42
18.96
163.66
35.68







632.74




46.34
36.10
37.24

449.23
32.10
2 609.60
3,090.93


Se pag 22--~ fo foonoes Cotiue


_ __ --- 7- ----LICU


See page 22 for footnotes.


Continued








Table 8.--Estimated cash expenses for production of chrysanthemum
stock cuttings on a 20-acre farm in Florida, 1973--Continued


Cost per acre
Operation and cash requirements per acre o
for one crop turnover

Dollars
Total cash expenses 376.7 hrs. labor 840.04
for all operations Machinery 110.71
SMacerials 3,308.08
4,258.83


aThe operations and costs are identical with the corresponding
operations and costs in Table 7.

bThe operations and costs are identical with the corresponding
operations and costs in Table 7 with the exception that stock plants
are fumigated with 2.5 pounds of methyl bromide per 100 square feet.
This increases the costs to prepare land and plant cuttings by $103.82.

c32 applications at 12 minutes per application.

dTemik and Di-Syston are granular materials which are not applied
with a sprayer. The labor figure here represents 3 applications at
45 minutes per application.


Table 9.--Estimated overhead cash expenses
chrysanthemums on a 20-acre farm


Item


Pick-up truck use, 800 hrs. at $2.15/hr.
General expenses
Accountant-secretary
Packinghouse foreman
Field foi-emani
Operat ing expenses (Table 5)


for production of
in Florida, 1973


Total cost


Dollars
1,720
40,000

7,765a
13,000a
15,052a
26,411
103,948


aIncludes Social Security calculated at 5,85 percent of the first
$10,800 of annual salary and Workmen's Compensation calculated at 2
percent of annual salary for inside employees and 3 percent of annual
salary for outside employees.


-~I--------`----"--~111-`~--"--
- --11---1 --







turnover of 1.5 for pompon production is assumed.
The first order of business in analyzing system I is to determine
how many of the farm's 540 beds must be set aside for stock plant pro-
duction. As noted previously, 1,800 stock plants are planted in each stock
bed. If each stock plant is assumed to yield 20 cuttings, then each stock
bed will produce 36,000 cuttings. A single-stem planting for pompons is
5,400 plants per bed, so a production turnover of 1.5 will require 8,100
cuttings per bed.
Dividing 8,100 by 36,000 indicates that for each bed planted to
pompons, .225 stock beds are required. Since one bed of pompons requires
one bed to grow the pompons and .225 beds to grow the stock cuttings, the
total number of beds (540) is divided by 1.225 to get 440.82, the number
of beds which will be available for pompon production. The remaining 99.18
beds will be set aside for stock plant production.
In acre terms, the 16.17 acres available for cultivation will be
divided into 13.21 acres of pompons and 2.96 acres of stock plants.
The only other matter that needs attention before calculating the
net returns from system I is the number of bunches which will be produced.
Under the planting system used in this analysis, 100 percent production
efficiency with a turnover of 1.5 would yield 38,720 bunches per acre,
assuming 7 stems per bunch. Assuming that 7.5 percent of the flowers
produced will not be bunched and shipped, 35,816 bunches per acre are left.
Out of the total of 38,720 bunches, another 7.5.percent will be spoiled or
damaged in transit and will not be sold, thus leaving 32,912 bunches as
saleable.
The net receipts, expenses and'returns for the farm under system I
are shown in Table 10.
The first item is net receipts. The price of 70 cents per bunch is
the price after freight and wholesale commissions have been paid.
The cash expenses to produce pompons are taken from Table 7. Since
Table 7 gives the cash expenses for one turnover, this figure has to be
adjusted to reflect the expenses for 1,5 turnovers. This can be done
quite easily by first adding all of the costs which do not change with
the turnover rate (these are marked with an asterisk in the table).
The resulting amount of $405.13 is subtracted from the total cost of








Table 10.--Estimated receipts, expenses, and returns for a 20-adre
chrysanthemum farm in Florida, 1973, system I--Single stem
pompon production (turnover of 1.5) from cuttings grown
on farm


Itm Price or cost Gross value
per bunch or cost

--------Dollars------
Net receipts .70 304,337

Expenses
Cash expenses to produce pompons 93,946
Cash expenses to produce stock cuttings 12,606
Overhead cash expenses 103,948
Interest on cash expenses (3 mos. at 9.5%) 4,988
Annual fixed cost 34,267
Interest on average investment at 8% 8,879
Annual cost of land (8%, $10,000 per acre) 16,000

Total expenses .63 276,634

Net returns .07 29,703


aBased on 32,912 saleable bunches per acre and 13.21 acres in
pompon production.


$4,876.21 to get $4,471.08, the amount which does change with the turn-
over rate. Then $4,471.08 is multiplied by 1.5 to get $6,706.62 and
$405.13 is added to this number to get the cash expenses for 1.5 turn-
overs. The resulting cost is $7,111.75 per acre or $93,946 for the
13.21 acres in pompon production.
The cash expenses to produce stock cuttings are obtained directly
by multiplying 2.96 acres times the $4,258.83 per acre cost shown in
Table 8.
The remainder of the expenses will not vary from system to system.
Therefore, they will be explained here but not in the discussion of the
other systems.
Overhe-.iAd cash expenses are obtained directly from Table 9.
Interest on cash expenses, although it may change from system to
system.depending on the actual amount of cash expenses, will always
be charged at 9.5 percent for three months.








Annual fixed cost was discussed in the third section of this report
and is obtained from Tables 5 and 6.
Interest on average investment is the cost incurred through pur-
chasing all of the buildings and equipment on the farm. The total in-
vestment in buildings and equipment is $221,982 (Tables 5 and 6). The
interest charge of 8 percent is figured on only half of this amount to
reflect the fact that interest costs are reduced as the principal on a loan
is paid off.
Annual cost of land is figured at 8 percent of $200,000, the value of
the farm assuming land prices of $10,000 per acre. The 8 percent interest
rate here and on average investment is lower than the 9.5 percent charged
on the cash expenses because 8 percent is a long-term rather than a short-
term rate.
Total expenses come to $274,634, which leaves a net return of $29,703
for the farm under system I.


System II--Single-Stem Pompon Production
(Turnover of 1.5) from Purchased Cuttings


System II is analyzed primarily to look at the economic advantages of
growing cuttings on the farm. In system II, unrooted cuttings are purchased
from off the farm and planted single-stem for pompon production.
System II has immediate economic advantages over system I. In addition
to there being no cash expenses for producing cuttings, 2.96 additional
acres are available for pompon production. The problem here is to determine
whether or not these advantages will offset the cost of buying cuttings.
In analyzing system I, the cash costs for producing pompons with a
turnover of 1.5 were estimated at $7,111.75. In system II, this cost will
change in two ways.
The first is that the cost of taking cuttings and hauling them to the
field ($93.66 for one crop turnover) will be eliminated. Thus, costs will
be reduced by 1.5 times $93.66,or $140.49.
On the other hand, the cost of purchasing cuttings must be added to the
production costs. Since each bed requires 8,100 cuttings for 1.5 turnovers
and there are 540 beds on the farm, 4,374,000 cuttings are needed. If the
price per cutting is 3.2 cents, purchasing cuttings will cost $139,968








for the entire farm or, dividing by 16.17, $8,656.03 per acre.
The calculations involved in deriving the system II production
costs from the system I production costs are shown below:
Per acre production costs, system I $7,111.75
Less cost to take cuttings -140.49
Plus cost of cuttings 8,66.03
Per acre production costs, system II $15,627.29
The estimated receipts, expenses, and returns for system II are
shown in Table 11. This system, in which all unrooted cuttings are
purchased, results in a loss of $51,712. The increase in revenue due
to more acres in pompon production is not enough to offset the
increase in cost due to purchasing unrooted cuttings.


Table ll.--Estimated receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system II--Single
stem pompon production (turnover of 1.5) from purchased
cuttings


Purchased price Gross value
Item or cost per or cost
bunch

---------Dollars---- ----
Net receipts .70 372,531

Expens es
Cash expenses to produce pompons 252,693
Overhead cash expenses 103,948
Interest on cash expenses (3 mos. at 9.5%) 8,456
Annual fixed cost 34,267
Interest on average investment at 8% 8,879
Annual cost of land (8%, $10,000 per acre) I6000(
Total e::penses .80 424,243

Net returns -.10 -51,712


Based on 32,912 saleable bunches per acre and 16.17 acres in
production.








System III--Pinched Crop Pompon Production
(Turnover of 1.5) from Purchased Cuttings


Growing cuttings requires precise timing to insure that they will
be available when needed. Also, extreme care must be taken in growing
the cuttings to insure that they do not become a source of disease for
the pompon crop. For these and other reasons, some Florida growers
prefer not to grow their own cuttings. System III may provide a better
alternative than system II for these growers.
In system III, a pinched crop of pompons is grown on all of the
available 16.17 acres. As in system II, unrooted cuttings are pur-
chased from off the farm at 3.2 cents each and a turnover of 1.5 is
assumed.
To figure the cash production costs for system III, it should first
be noted that, as in system II, there is a savings of $140.49 over the
$7,111,75 per acre production cost of system I, since there is no need to
take cuttings.
Only one-third as many cuttings are needed for a pinched crop as for
a single-stem crop. Therefore, instead of the $8,656.03 per acre charge
for cuttings in system II, the cuttings in system III will cost $2,885.34.
The machinery and labor cost to plant an acre of a pinched crop is
estimated at $165.54 per acre in Table 8, as opposed to $264.80 for a
single-stem crop. This is a savings of $99.26 for one turnover or $148.89
for 1.5 turnovers.
Finally, the operation of pinching and pruning a pompon crop requires
large amounts of labor. At 150 hours per acre and 1.5 turnovers, this
operation will require 225 hours of labor per acre. Since the wage rate
used in this report is $2.23 per hour, production costs will be increased
by $501.75 per acre.
The total production cost for system III can be now calculated:
Per acre production cost, system I $7,111.75
Less cost to take cuttings -140.49
Plus cost of cuttings 2,885.34
Less savings in planting costs -148.89
Plus cost to pinch and prune 501.75
Per acre production cost, system III $10,209.46








The returns for system III are analyzed in Table 12. Net returns
are much higher than in system II and about equal to what they were in
system I. Since returns from systems I and III are in the same ball
park, the grower must decide between the problems of growing stock
plants in system I or the difficulty in finding the necessary labor
for pinching and pruning in system III.


Table 12.--Estimated receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system Ill--Pinched
crop pompon production (turnover of 1.5) from purchased
cuttings


Price or cost Gross value
Item per bunch or cost

----------Dollars---------
Net receipts .70 372,531

Expenses
Cash expenses to produce pompons 165,087
Overhead cash expenses 103,948
Interest on cash expenses (3 mos. at 9.5%) 6,394
Annual fixed cost 34,267
Interest on average investment at 8% 8,879
Annual cost of land (8%, $10,000 per acre) 16,000
Total expenses .63 334,575

Net returns .07 37,956


aBased on 32,912 saleable bunches per acre and 16.17 acres in
production.


System TV--Pinched Crop Pompon Production (Turnover of 1.5)
fror Cuttings Grown on the Farm


The grower who does not mind g,-owing his own stock plants and who
feels that he can get an adequate labor force to grow a pinch crop may
want to try his luck with system IV. System IV is identical to system I
with the exception that the pompons are grown as a pinch rather than
single-stem crop.
Since fewer cuttings are required for system IV as compared with
system I, less land will need to be set aside for stock plant production.







A pinched crop with a turnover of 1.5 will require 2,700 cuttings per bed.
Since one bed of stock plants provides 36,000 cuttings, the number of stock
beds required per bed in pompon production is 2,700 divided by 36,000 or
,075. Once it is determined that each pompon bed requires an additional
.075 beds for stock plants, the total number of beds (540) can be divided
by 1.075 to get 502.33, the number of beds available for pompon production.
In acre terms, the farm will have 15.03 acres in pompon production and
1.15 acres in stock plant production.
Per acre production costs for the pompons are similar to those in
system III except there will be costs for taking cuttings and no costs for
purchasing cuttings. The production costs are figured below:
Per acre production costs, system I $7,111.75
Less savings in plants costs 148.89
Plus cost to pinch and prune 501.75
Per acre production cost, system IV 7,464.61
Therefore, the total cost to produce 15.03 acres of pompons is $112,193.
Per acre production costs for the cuttings are the same as in system I
($4,258.83), so the total cost for 1.14 acres is $4,855.
As is shown in Table 13, net returns for system IV are considerably
higher than those in any of the systems analyzed thus far. Net receipts
increase over those of system.I since more land is in pompon production.
Production costs are less than in system III since the cost of buying
cuttings is avoided.


System V--Single-Stem Standard Chrysanthemum
Production from Purchased Cuttings


In system V the entire farm is devoted to producing a single-stem
crop of standards, or "mums." Unrooted cuttings are purchased from off
the farm and planted according to the arrangement shpwn in Figure 4. A
turnover of 1.5 is assumed.
The first reaction a grower may have to this analysis is "Why go to
the trouble of such an analysis when there's no way to get enough labor
to run a farm entirely devoted to producing standards? And even if you
could prQduce them, where could you market so many standards?"








Table 13.--EEtimated'receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system IV--Pinched
crop pompon production (turnover of 1.5) from cuttings
grown on farm


Price or co:St Gross value
Item per buncha or cost

----------Dollars---------
Net receipts .70 346,267

Expenses
Cash expenses to produce pompons 112,193
Cash expenses to produce stock cuttings 4,855
Overhead cash expenses 103,948
Interest on cash expenses (3 mos. at 9.5%) 5,253
Annu 1 fixed cost 34,267
Interest on average investment at 8% 8,879
Annual cost of land (8%, $10,000 per acre) 16,000
Total expenses .58 285,395

Net returns .12 60,872


aBased on 32,912 saleable bunches per acre and 15.03 acres in
production.


These may be legitimate criticisms. Nevertheless, it is felt that
a comparison of costs and returns between a pompon and a standard system
will be of interest to growers. Furthermore, those pompon producers who
are thinking about growing a few acres of standards may be helped by the
estimates of per acre production requirements for standards outlined in
this section.
There are so many differences in the production costs of standards
and pompons that it is easier to list the production costs for standards
in a separate table (see Table 14). Converting the costs for one
turnover to the cost for 1.5 turnovers is done by using the method
described in the discussion of system I. The per acre cost for 1.5
turnovers of $17,570.41 is significantly higher than that for pompons in
system I mainly because the cuttings are purchased and standards require
much more careful handling, particularly during packing.
If a production efficiency of 100 percent was attained, each of the
180,684 cuttings planted per acre for one turnover would produce one flower.







Table 14.--Estimated cash expenses for production of chrysanthemums
(standards) on a 20-acre farm in Florida, 1973


Operation and cash requirements
per acre


Cost per acre
for one crop turnover


Prepare land and plant cover crop (sorghum)'
Prepare land for planting cuttings


Plant and cultivate
1. Plant 5,400 unrooted cuttings per
2. Unrooted cuttings, 180,684 @ 3.2
3. Drive stakes
4. Irrigate
5. Fertilizer


a
6. Spray program
7. Raise bed wire
8, Till between beds
9. Remove lateral and auxiliary
buds and strip
Labor, 600 hrs. at $2.23/hr.
10. Remove stakes at end of crop
11. Remove bedwirea

Total cash expenses for
planting and cultivating


beda
each


825.45 hrs. labor
Machinery
Materials


Harvest and pack
1. Cutting and stripping
Labor, 200 hrs. @ $2.23/hr.
Plastic buckets, 4 @ $.90 each
2. Haul flowers to packinghouse
Farm trailer, 23.63 hrs. @ $.08/hr.
25 h.p. tractor, 23.63 hrs. @ $.65/hr.
Labor, 23.63 hrs. @ $2.23/hr.
3. Make boxes
Stapling machine, 23.2 hrs. @ $1.09/hr.
Labor, 23.2 hrs. @ $2.23/hr.
Boxes with lids, 1,393 @ $635/1,000
Staples, 33,432 @ $1.50/1,000
4. Pack flowers in boxes
Labor, 278.5 hrs. @ $2.23/hr.
Small wax tissues, 13,930 @ $.01 each
Large wax tissues, 5,572 @ $.02 each
Cleats, 1,393 @ $.05 each


See 1 nex paefrfontsotne


Dollars
132.32
931.76


264.80
5,781.89
27.42
18.96
163.66

465.70
11.15
44.64

1,338.00

36.10
37.24

1,840.75
36.35
6,312.45
8,189.55


449,60


69.95




1,011.73





941,45


- -- I -1-- -I-


See next page for footnotes.


Continued







Table 14.--Estimated cash expenses for production of chrysanthemums
(standards on a 20-acre farm in Florida, 1973--Continued


Operation and cash requirements
per acre


Harvest and pack


(Continued)


Cost per acre
for one crop turnover


Dollars


5. Tie boxes
Strapper, 23.2 hrs. @ $.36/hr.
Labor, 23.2 hrs. @ $2.23/hr.
6. Label, load boxes, and haul flowers
Labor, 27.9 hrs, @ $2.23/hr.


Total cash expenses for
harvesting and picking


576.43 hrs.
Machinery
Materials


labor 1,285.44
50.89
1 253.69
2,595.02


Total cash expenses for 1,577.13 hrs. labor 3,517.00
all operations Machinery 165.85
Materials 8,165.65
11,848.65


The requirements and costs for these operations are identical to
the corresponding operations in Table 7,


60.09


62.22


- _I -------__ ___~~ -- ~--~-------- ---,







However, it is again assumed that 7.5 percent of these flowers will not be
harvested and another 7.5 percent will be damaged or spoiled in transit.
This leaves a saleable yield of 153,581 flowers per acre per crop turnover,
or 230,372 flowers for 1.5 turnovers.
As is shown in the summary of costs and returns in Table 15,
growing standards is potentially a highly profitable enterprise. Since
per acre returns for standards are so much higher than for pompons, pompon
producers might wish to give some serious thought to planting as many
standards as they feel they can market along with their pompons.


Table 15.--Estimated receipts, expenses, and returns for a 20-acre
chrysanthemum farm in Florida, 1973, system V--Single stem
standard chrysanthemum production (turnover of 1.5) from
purchased cuttings


Item Price or cost Gross value
per flower or cost
---------------- --------------------Dolr--------~-
----------Dollars ----------
Net receipts .15 588,767

Expenses
Cash expenses to produce standards 284,114
Overhead cash expenses 103,948
Interest on cash expenses ,(3 mos. at 9.5%) 9,202
Annual fixed cost 34,267
Interest on average investment at 8% 8,879
Annual cost of land (8%, $10,000 per acre) 16,000
Total expenses .12 456,410

Net returns .03 102,357


Based on 16.17 acres in production and 230,372 saleable flowers
per acre.








THE EFFECT OF THE RATE OF LAND
TURNOVER ON PROFITS


It was assumed that the rate of land turnover was 1.5 for each of
the five systems analyzed in this report. To see what profits might
be like under different turnover rates, the costs and returns for
system III are shown for five turnover rates in Table 16.


Table 16.--Receipts, expenses, and returns for a 20-acre chrysanthemum
farm in Florida, 1973--System III under different land
turnover rates
--- .. .. -~

Turnover Net Cash expenses a All other Net
rate receipts to produce pompons expenses return

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

1.0 248,345 114,908 165,563 -32,126
1.25 310,442 141,957 165,563 2,922
1.5 372,531 169,012 165,563 37,956
1.75 434,619 196,058 165,563 72,998
2.0 496,712 223,212 165,563 107,937


alncludes interest at 9.5 percent for 3 months on production expenses
only.
blncludes interest on cash overhead expenses at 9.5 percent for 3
months.


The reader may be surprised to see that the profits.are very
sensitive to the rate of land turnover. For example, in going from a
turnover of 1.25 to a turnover of 1.5, net receipts increase by 20
percent while profits increase by 1,299 percent.
The reason why the profit increase is so much higher than the
increase in receipts in Table 16 is,that many of the costs involved
in producing chrysanthemums remain the same regardless of how many
flowers are produced. This is true of the fixed costs, the interest
on average investment, and the annual cost of land.

It was also assumed in TabhJ 16 that the cash overhead expenses

are the same for each turnover rate. Since these expenses are cash







expenses rather than fixed expenses, they may change somewhat with the rate
of production. However, these changes should be small.
While it may be physically possible to attain production turnovers of
1,75 and 2.0, growers attempting to do so will have to weigh carefully
twp drawbacks of these high turnover rates against the increased profit
potential.
The first is that the labor requirements will be higher and the
fluctuations in the daily labor requirements will be greater as the turnover
rate increases. While it maybe difficult to obtain the labor required for
a turnover of 2.0, one may still be able to meet the requirements by offering
a higher wage. And since net returns for a turnover of ?.0 are about $65,000
more than for a turnover of 1.5, there is quite a bit of room for offering
a higher wage while still being more profitable.
The second drawback of the higher turnover rates will be associated
with marketing the increased flower production. The net receipts figures
in Table 16 were calculated under the assumption that all of the flowers
produced could be marketed at an acceptable price (70 cents per bunch).
This may not be the case, since the highest demand and prices for flowers
occur during the holiday periods of the marketing season. Growers who
try to achieve a turnover rate of 1.75 or 2.0 may be faced with a problem
of not having enough flowers during these key marketing periods and having
too many flowers during the remainder of the marketing season.
In conclusion, this section has illustrated a very important point.
In chrysanthemum production, as well as in any other enterprise with high
fixed and overhead expenses, using fixed resources to their fullest extent
through high turnover rates is one way to reduce significantly per unit
production costs and therefore increase profits.


CONCLUSION


Estimates of the cost and returns for several systems which may be
used to produce chrysanthemums in Florida were developed in this report.
Hopefully, those readers who have followed the analysis will now be able
to develop their own estimates for other systems they may wish to consider.
The authors would like tp caution the reader against quoting any of
the derived figures in this report out of context. The basic data in this








report were collected from individuals with insight in their parti-
cular phase of chrysanthemum production and are believed to be reliable.
However, to make the analysis possible, many assuvnptions had to be
made. Therefore, the values derived in this report will coincide with
actual values to the extent that the assumptions coincide with the
conditions that actually exist in a production system.
This report is relevant for the entire chrysanthemum production
industry in Florida. Although some may question how it can account
for the wide variation in production strategies between geographical
areas, the authors found as much variation within the major production
areas as between them.
There are a number of unanswered questions relevant to chrysan-
themum production and marketing. These unanswered questions have
hampered the scope of this report. Some of them are:
(1) What is the relationship between the quality of flowers
produced and the price received for those flowers?
(2) Do buyers (wholesalers) prefer a bunch containing a small
number of large stems, or a bunch containing a large number of small
stems? Are they willing to pay a higher price, depending on their
preference?
(3) If a grower increases his land use intensity (production
turnover), would he be able to acquire the resources at prices that
would reward him for the increased intensity?
(4) If land use intensity is increased, would there be a
profitable market for the accompanying increase in production?
(5) Since a higher land use intensity requires that resources be
used in large lumps, rather than smoothly spread out over time, what
would this do to a grower's production and rmalketing system?
These are just some of the unanswered questions, but each one has
a serious impact on a grower's costs and returns. Therefore, growers
should carefully consider these questions, as well as the analysis of
this report, in planning a production system that will make the best
use of their resources.





37


REFERENCES


[1] American Society of Agricultural Engineers. "Agricultural
Machinery Management Data," Agricultural Engineers Yearbook,
1971.

[2] American Society of Agricultural Engineers. "Farm Machinery
Costs and Use," Agricultural Engineers Yearbook, 1969.



































APPENDIX






Appendix Table 1.--Costs of spray materials for chrysanthemum production
in Florida, 1973

Material and amount of Cost per pound of Cost per acre
active ingredient per acrea,b active ingredient per application
------------------- -----------------Dolar-----~---,--
---------Dollars---------
Fungicides
A. Captan or Orthocide
2 lb./A./application 1.20 2.40
B. Benlate
1 lb./A,/application 16.60 16.60
C. Daeonil or Bravo
3 lb,/A,/application 3.20 9.60
D. Dithane M-45 or Manzate 200
3.2 lb./A../applicatiqn .93 2.98
E. Tri-basic copper sulfate or Kocide
6 lb./A./application .60 3.60

Pesticides
F. Di-Syston
15 lb./A./application 2.47 37.00
G. Temik
10 lb./A./application 12.00 120.00
H. Methomyl (Lannate)
Alb./A./application 8.32 2.08
I. Phosdrin
lb./A./application 5.38 2.69
J. Thiodan
lb./A,/application 4.10 2.05
K. Pentac
1 Ib./A./application 24.00 12.00
L. Lindane
lb./A./application 4.56 1.14


'One unit of any of the products listed here does not represent one
unit of active ingredient. For example, one pound of a product sold as
a 50 percent wettable powder yields one-half pound of active ingredient.

The use of "trade" names is for purposes of clarification and does
not constitute endorsement of any product.








Appendix Table 2.--Spray schedule for chrysanthemum production in
Florida, 1973

Stock cuttings Pompons

Week Materialab Cost per acre Material'b Cost per acre
for materials for materials

Dollars Dollars

1 A + H 4.48 A + H 4.48
B + E 20.20 F 37.00
F 37.00
2 C + H 11.68 B + E 20.20
D+ E 6.58
3 A + H 4.48 C + H 11.68
B + E 20.20 G 120.00
G 120.00
4 C + H 11.68 D + E 6.58
D+ E 6.58
5 A + H 4.48 A + H 4.48
B 16.60
6 C + H 11.68 B 16.60
D+ E 6.58
7 A + H 4.48 C + H 11.68
B 16.60
8 C + H 11.68 D + E 6.58
D+ E 6.58
9 A + H 4.48 A + H 4.48
B 16.60
10 C + H 11.68 B 16.60
D + E 6,58 G 120.00
G 120,00
11 A + H 4.48 C + H 11.68
B 16.60
12 C + H 11.68 D + E 6.58
D + E 6.58
13 A + 1 4,48 A + H 4.48
B 16.60
14 C + H 11.68 B + K + L 29.74
D + E 6.58


See page 41 for footnotes.


Continued







Appendix Table 2.--Spray schedule for chrysanthemum production in
Florida, 1973--Continued

Stock cuttings Pompons

Week Materialab Cost per acre Materialab Cost per acre
for materials for materials

Dollars Dollars
15 A + H 4.48 C + I +J 14.34
B 16.60
16 C + H 11.68
D + E 6.68


Total 35 applications 598.92 18 applications 447.18

aLetters indicate corresponding materials in Appendix Table 1.

bEach line indicates a separate application. For example, in
week 7, materials A and H would be applied together on the stock cuttings.
Later in the week material B would applied on the stock cuttings,


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