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Group Title: Circular - University of Florida Institute of Food and Agricultural Sciences ; 437
Title: Factors to consider in purchasing a citrus grove
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STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00067163/00001
 Material Information
Title: Factors to consider in purchasing a citrus grove
Series Title: Circular (Florida Cooperative Extension Service)
Physical Description: 15 p. : tables ; 23 cm.
Language: English
Creator: Brooke, Donald Lloyd, 1915-
Abbitt, Ben, 1940-
Publisher: Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla
Publication Date: 1978
 Subjects
Subject: Fruit trees -- Purchasing -- Florida   ( lcsh )
Orchards -- Purchasing -- Florida   ( lcsh )
Citrus fruit industry -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
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Statement of Responsibility: D.L. Brooke and B. Abbitt.
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Bibliographic ID: UF00067163
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 29895256

Table of Contents
    Historic note
        Unnumbered ( 1 )
    Front Cover
        Page 1
        Page 2
    Main
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
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        Page 12
        Page 13
        Page 14
        Page 15
    Back Cover
        Page 16
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







Circular 437


Factors to Consider
in Purchasing
a Citrus Grove


D. L. Brooke and B. Abbitt


Florida Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville
John T. Woeste, Dean for Extension












Factors To Consider In Purchasing A Citrus Grove
D. L. Brooke and B. Abbitt*

Introduction
Entering a business as another means of realizing a profit is
quite different from entering a business as the sole means of
realizing a profit. Over the past 45 years the corporate citrus
grove investor has realized income comparable with returns
from alternative investments. On the other hand, the individual
investor must earn his living from grove production. Therefore,
he is very concerned with annual returns to his citrus operation.
This publication is designed to assist the prospective individual
grove investor in his decision making.
Investors who commit their total assets in grove acreage,
equipment, and materials expect to realize a profit. If partial
payment is made on the grove and a mortgage arranged, income
from fruit sales must cover operating costs, interest payments
on the loan, and debt amortization.
Measured in relation to previous sale prices, groves in the
past 10 years have been selling at elevated prices. Prior to 1940,
a grove selling for $1,000 per acre was an exception. Should a
grove currently sell for $4,000 per acre and the investor paid 50
percent in cash, he could owe more on the mortgage than the full
sale price of the same grove 20 years earlier.
The earning power of citrus groves in the short run (1-5
years) is an indication of the returns expected to meet produc-
tion costs, living expenses, and debt amortization. Earning
power in the long run (over 5 years) is an indication of the in-
vestment potential of citrus grove ownership over many years.
The individual grove owner must also concern himself with the
stability of returns in future years. Low prices from an over-
supply of fruit and tree losses from disease and weather can
reduce returns; particularly when inflation causes production
costs to rise.
Citrus Grove Costs And Returns
Since 1931, through the cooperation of Florida citrus
growers, the Florida Agricultural Experiment Station and the
*D. L. Brooke is Economist with the Florida Agricultural Experiment
Stations, Gainesville. B. Abbitt is Area Economist with the Florida Co-
operative Extension Service, AREC, Lake Alfred. Both are members of
the Department of Food and Resource Economics, IFAS.








Florida Cooperative Extension Service have conducted annual
studies of citrus grove costs and returns. Data have been sum-
marized annually and averaged in varying time spans. These
data are one indicator of the economic health of the individual
Florida grove owner and the total industry. Following are the
compilations of this data summary and a brief analysis of their
worth as a decision making tool.
A summary of costs and returns for 149 groves averaging
29 years of age for the five growing seasons, 1971-76, indicated
an average return of $305 per acre per year after deducting
operating costs.' These returns would normally cover living ex-
penses, interest on debt, and debt repayment. During the 45
years that records have been summarized, 12 growing seasons
had returns equal to or exceeding the five-year, 1971-76 average.
The distribution of average annual returns per acre, ex-
pressed in percentage of the number of groves studied by five-
year periods, and for the 45-year period (1931-76) after de-
ducting operating costs, is shown in Table 1. The per acre range
in returns has widened and a smaller proportion of the groves
experienced negative returns by five-year periods from 1931-
1961. As trees mature, increasing yields affect per acre returns.
The 1961-66 average return reflects the extensive loss of bearing
surface resulting from the 1962 freeze. Due to grove location
and tree condition, wood and tree loss varied among growers.
Higher prices associated with reduced fruit supplies increased
the range in profits per acre the following year.
In each year of the 45-year study period one or more groves
failed to return operating costs (Table 2). In two seasons more
than one-half, and in one season nearly two-thirds of the groves
did not return operating costs. In such seasons, meeting debt
obligations from fruit sales alone would be difficult.
In 13 seasons, per acre returns on over one-half of the
groves, after deducting operating costs, were less than $100 per
acre. In seven seasons 75 percent or more of the groves returned
over $200 per acre after operating costs were deducted.
Over the study period 17 percent of the. groves did not re-
turn annual per acre operating costs. After deducting operating
costs; 23 percent returned from $0 to $99 per acre; 17 percent
returned $100 to $199 per acre; and 43 percent returned over
$200 per acre. The reader may make more detailed comparisons
from Table 2.
Operating costs include expenses for labor, power and equipment, fertilizer, spray
and dust materials, state and county taxes and miscellaneous items used in production,
including irrigation and frost protection expense, if any.














Table 1. Percentage Frequency Distribution of Returns after Deducting Operating Costs by 5-year Averages and 45-year
Average, 1931-76.

Returns above 5-year Average 1931-76
Returns above
Operating Costs 1931-36 1936-41 1941-46 1946-51 1951-56 1956-61 1961-66 1966-71 1971-76 Cumula-
per Acre Percent Percent Percent Percent Percent Percent Percent Percent Percent Percent tive

$-400 to $-301 0.4 0.1 1.9 0.2 0.2
-300to -201 1.7 0.8 0.1 0.9 0.3 0.7 0.5 0.7
-200 to -101 0.4 0.2 0.2 4.2 2.9 3.0 6.7 4.7 3.0 2.5 3.2
--100 to -1 30.9 22.5 1.8 13.8 11.3 7.7 13.3 13.0 7.5 13.8 17.0
Oto 99 47.6 51.7 10.2 17.1 15.9 11.7 11.1 17.1 10.5 23.6 40.6
100to 199 14.1 18.0 15.4 16.4 22.9 15.0 12.9 18.7 14.0 16.7 57.3
200 to 299 4.7 5.4 17.0 13.3 19.2 13.6 13.0 13.7 19.0 13.0 70.3
300 to 399 1.9 1.5 15.1 9.9 10.8 11.5 8.8 10.9 13.6 8.8 79.1
400 to 499 0.3 0.5 11.6 7.6 6.6 10.1 9.2 8.4 11.3 6.8 85.9
500 to 599 0.1 0.1 9.7 5.0 3.5 7.8 4.9 3.9 7.3 4.4 90.3
600 to 699 7.3 4.1 3.2 6.5 3.4 3.4 3.5 3.3 93.6
700 to 799 0.1 5.6 2.8 1.6 4.6 3.1 1.7 3.1 2.4 96.0
800 to 899 2.5 2.0 0.5 3.0 2.8 2.0 2.5 1.5 97.5
900 to 999 1.9 0.8 0.6 1.4 1.2 0.9 1.5 0.9 98.4
1000 to above 1.7 0.9 0.1 4.0 6.8 1.3 2.5 1.6 100.0

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0










Table 2. Percent of Groves Returning Stipulated Amounts after De-
ducting Operating Costs, 1931-76 Seasons.

Percent of Groves with Returns after Deducting
Percent Operating Cost of:
Failed to
Return $100 to $200 and


Operating
Season Cost


1931-32
1932-33
1933-34
1934-35
1935-36
1931-36
Average


.............................. 2 0 .0
.............................. 5 5 .4
.............................. 24 .7
.............................. 3 5 .5
.............................. 2 0 .9

.............................. 3 1.3


1936-37 .....................
193 7-38 .............................
1938-39 .....................
1939-40 .....................
1940-41 ......................
1936-41
Average ......................
1941-42 .....................
1942-43 .....................
1943-44 .....................
1944-45 ......................
1945-46 .....................
1941-46
Average ......................

1946-47 .....................
1947-48 ............ ..........
1948-49 .....................
1949-50 ....................
1950-51 ......................
1946-51
Average .......................

1951-52 .....................
1952-53 .....................
1953-54 .....................
1954-55 ......................
1955-56 .....................
1951-56
Average ......................


22.7


2.0


20.1

30.2
8.6
10.1
14.2
12.7

15.1


1956-57 .............................. 18.3
1957-58 .............................. 9.4
1958-59 ...................... 6.7
1959-60 .............................. 12.3
1960-6 1 .............................. 6.4
1956-61
Average .................... 10.8

196 1-62 .............................. 14.1
1962-63 .............................. 22.6
1963-64 .............................. 29.4
1964-65 .............................. 22.4
1965-66 ............................. 26.0
1961-66
Average ...................... 22.8


$0 to $99
per acre
42.2
39.6
64.9
48.4
42.9

47.6

42.6
53.0
58.6
44.3
60.1

51.7

35.1
7.5
0.5
4.1
3.9

10.2

31.5
26.5
14.0
6.0
16.1

17.1
26.2
17.7
13.4
16.5
5.7

15.9

16.6
16.3
5.3
9.0
10.0

11.7

14.1
17.3
2.8
8.2
13.8

11.1


$199 over
per acre per acre


26.7
4.0
7.7
10.4
22.0

14.1

28.7
13.3
11.9
11.0
25.2

18.0
32.1
17.5
6.3
10.9
10.2

15.4

25.6
5.1
20.5
14.6
17.7

16.4
22.1
28.8
25.7
22.3
15.2

22.9
26.0
15.0
8.0
15.6
8.6

15.0

15.5
15.0
6.3
12.0
16.3

12.9


11.1
1.0
2.7
5.7
14.2

7.0

23.9
2.6
0.4
6.5
4.5

7.6
29.0
73.8
92.7
81.4
84.9

72.4

16.0
2.8
63.0
76.9
56.3

46.4

21.5
44.9
50.8
47.0
66.4

46.1
39.1
59.3
80.0
63.1
75.0

62.5

56.3
45.1
61.5
57.4
43.9

53.2


Total

100.0
100.0
100.0
100.0
100.o

100.0

100.0
100.0
100.0
100.0
100.0

100.0
100.0
100.0
100.0
100.0
100.0

100.0

100.0
100.0
100.0
100.0
100.0

100.0

100.0
100.0
100.0
100.0
100.0

100.0
100.0
100.0
100.0
100.0
100.0

100.0

100.0
100.0
100.0
100.0
100.0

100.0









Table 2. (continued)


1966-67 ............................. 29.2 25.6 21.2 24.0 100.0
1967-68 ............................ 15.8 12.5 21.0 50.7 100.0
1968-69 ........................ 13.5 13.5 18.9 54.1 100.0
1969-70 ............................. 17.9 20.5 19.9 41.7 100.0
1970-71 ......................... 13.3 13.3 12.7 60.7 100.0
1966-71
Average ........................ 18.0 17.1 18.7 46.2 100.0
1971-72 ......................... 7.9 4.3 7.9 79.9 100.0
1972-73 ........................ 12.0 6.0 12.0 70.0 100.0
1973-74 ............................ 6.6 12.4 16.3 64.7 100.0
1974-75 ............................ 16.2 14.3 16.9 52.6 100.0
1975-76 ............................. 13.0 15.1 16.5 54.9 100.0
1971-76
Average .......................... 11.2 10.5 14.0 64.3 100.0
1931-76
Average .............................. 17.0 23.6 16.7 42.7 100.0


Note that many of the groves in the past 45 seasons did not
have adequate returns (after deducting operating costs) to con-
tribute toward the owner's living expenses. The $370 average
return per acre over 45 seasons would have paid annual oper-
ating costs plus $207 per acre for principal, interest and living
expenses.
Average returns per acre after deducting operating costs
were $40 for the 10-year period 1931-41. During those years,
nearly all fruit was sold for fresh consumption, supply was
greater than demand and retail prices were low. Hence, growers
received small returns on their investments. It is difficult to
imagine that history will repeat itself. It is reasonable to assume
however, that returns could drop considerably below present
levels. Weather or disease could reduce yields, or a declining
economic base could reduce demand and, consequently, prices.
A $40 net return per acre would enable the grower to make an
interest payment of 5 percent and a $20 principal payment on a
$400 per acre 20-year loan, with no provisions for living ex-
penses and production costs for succeeding years. If a grower
were to remain in production his debt ceiling would have to in-
crease.
In 20 seasons average returns for all groves in the 45-year
period (1931-76) increased when returns after deducting oper-
ating costs exceeded $250 per acre. The combination of good
yields and stable prices in relation to production costs for 14 of
the past 20 seasons contributed to favorable net returns and to
increases in grove prices.








The 1946-47 and 1947-48 seasons were unfavorable for the
Florida citrus grower. After World War II military demand for
fruit decreased; domestic employment was somewhat curtailed;
single strength and concentrate processing was an infant in-
dustry, and since fruit supply exceeded demand growers re-
ceived low prices. The 1947-48 season was the worst of the 45
seasons recorded. Returns from fruit failed to cover operating
costs on groves in only two of the past 45 seasons (1947-48)
and 1932-33).
Conversely, only the poorest groves failed to pay production
costs during the 1942-46, 1949-51, 1958-62, 1971-74 and 1975-76
seasons. If the financial returns of those seasons were main-
tained in the future some justification- for the current prices
for many groves would be warranted. For example, a 27-year-
old 'Valencia'-grapefruit (59 percent 'Valencia', 41 percent
grapefruit) grove averaged netting (gross returns minus costs)
$542 per acre in two consecutive seasons. This $542 net income
would pay a 9 percent interest charge and principal on a $4,900
per acre 20-year loan. It could also service a $2,200 per acre
debt and annually provide $300 toward living expenses.
For a grove to return a high net income, yield must be high,
costs reasonable, and the fruit sold for a good price at reliable
markets. These favorable factors have occurred simultaneously
during 14 of the past 20 seasons. Among the reasons for these
higher returns is that demand for frozen concentrate (devel-
oped in the late 40's) has increased substantially. Since 1960,
over 80 percent of the orange crop has been processed. Less
than 10 percent was processed prior to 1940. Per capital con-
sumption of fresh form citrus fruits declined from 50 pounds in
1949 to less than 29 pounds in 1975. Conversely,.per capital con-
sumption of all canned juices, including citrus concentrate con-
verted to a single strength basis, increased from 14 pounds in
1959 to 20 pounds in 1975.2

Estimated Citrus Acreage Necessary To Net $6,000
A question often asked by prospective investors is: How
much citrus acreage is required to supply a living for a family?
This question is difficult to answer with accuracy. No two groves
are alike, grower production practices are dissimilar, and family
lifestyles differ. Hence, earning power and income spending
from different groves vary. In 1975-76 returns per acre after
2USDA Agricultural Statistics, 1976, p. 251.









deducting operating costs for 146 groves over 10 years of age
ranged from a $184 loss to a $1,093 profit (average $1.70/box
on tree).3
In addition, wide variation in earnings for the same grove
in different seasons are common. To show variations in returns
after deducting operating costs 10 groves were selected (Table
3). Only one of the 10 groves did not return operating costs in
four of the 10 seasons from 1967-76. Three failed in one season
and six groves returned operating costs every season. All groves
showed a return above operating costs in four years.

Table 3. Variations in Returns per Acre after Deducting Operating
Costs on Ten Individual Groves and Average per Grove
during the 10-year Period, 1967-76.
Returns after Deducting
Operating Cost Relative
Age in Position
Grove First Lowest Highest Average Average
Numbers Season Year Year 10 years as 100
Grove No. 1 22 $ 165.46 $ 717.92 $ 417.21 142
Grove No. 2 20 158.68 600.09 403.63 137
Grove No. 3 39 -57.90 474.31 159.77 54
Grove No. 4 20 2.12 359.69 198.36 67
Grove No. 5 18 .98 422.75 202.81 69
Grove No. 6 31 -48.24 411.82 183.70 62
Grove No. 7 26 -149.86 886.05 239.58 81
Grove No. 8 47 91.64 856.93 384.69 131
Grove No. 9 40 8.99 575.15 292.30 99
Grove No. 10 50 -137.75 1310.10 464.51 158
Average per
Grove 30 $ 3.41 $ 661.48 $ 294.66 100



Wide variations exist on the money amount necessary for
"family living." The approximate acreage necessary to return
$6,000 annually after deducting operating costs over the 1971-76
period is shown in Table 4. Age of trees and bearing capacity
affects returns because yields normally increase with increasing
tree age.4 Variety and price also affect the acreage required.
More grove acreage is required for grapefruit trees than for
orange trees, tangerine trees, or mixed citrus trees. This space
requirement reflects the lower return expected for grapefruit as


3Average packinghouse door prices minus pick and haul charges.
yield increases more rapidly to about 25 years of age. Beyond that age, increases
are less and yield levels off at 30 to 45 years of age depending upon variety, tree
vigor, soil moisture, temperature, etc.










maturing trees increase fruit supplies in the future. Domestic
and international consumer demand also has a direct effect on
return for different fruit varieties and methods of sale.



Table 4. Approximate Grove Acreage Required to net $6,000 An-
nually after Deducting Operating Costs during the 5-year
Period, 1971-76.

Kind Age of Trees
15 20 25 30 35 40
Oranges:
Early .......................... ............... ..... .... 26 25 23 20 20 21
M idseason .......................... ............. 28 26 25 23 22 22
Late ...... .... ........ .... ............ .... 2 1 18 15 15 17 17
M ixed .................. ....................................... 24 22 22 21 2 1 20
Tem ple .... ......... ................... ......... 25 2 1 18 18 17 17
Tangerines ............................ ................ 32 30 29 27 26 25
Grapefruit:
Seedy .. ................ .......... ............ 60 50 42 40 37 36
Seedless ........ ................................. 40 32 30 27 25 22
Mixed .... ........................ ... 47 40 36 33 32 30
Mixed Citrus
(/3 grapefruit) ....................................... 30 28 26 25 24 24


Deciding To Invest

In recent years, individuals have purchased and paid off
notes on groves with few crops of fruit. During the same period
groves increased in value. The general price and cost situation
and good yields were favorable for such events.
Productive groves in the hands of capable growers and/or
managers often prove to be good investments. Low producing
groves seldom prove to be good investments in the long run.
Groves purchased under favorable circumstances (high
prices, strong demand, etc.) can also be lost under unfavorable
conditions. One or two years of low yields or extremely low prices
would make payment of interest and principal on a mortgage
difficult. Similarly, severe, weather may reduce bearing surface
or cause heavy fruit losses. A hard freeze can reduce yields in
one or two succeeding crops due to wood and tree loss.
The grove you are contemplating purchasing will have a pro-
ductive life of many years. To help in your investment decision
making, you should project yearly return to land and trees into
the future. Future income from fruit production will help pay
for the acreage. Last year's production records can help in









making your investment decision. Since grove records are his-
tory, their use should be seasoned with common sense, experi-
ence and judgment of the effects that changes in technology
and inflation have had on production, income, and financing.
Using cost and return information for several seasons will
provide more representative return expectations than one year's
figures. Five-year average price and cost figures for fruit grown
on the ridge (interior part of the state) are given in Tables 5
and 6. With this information and yield data gleaned from grove
records or yield data from similar acreage located nearby, ex-
pected net returns to land and trees can be estimated. For ex-
ample, assume you are contemplating' purchasing 100 irrigated
acres of 'Valencia' oranges (marketed for processing) whose
average yield is 300 boxes. Estimated gross revenue would be
$57,000 (300 boxes x $1.90 x 100), Table 5. Estimated net re-
turn to land and trees would total $20,151 ($57,000 $36,849),
Table 6.




Table 5. Summary of Comparative Citrus Average On-Tree Prices per
Box from 1973-74 Season thru 1976-77 Season.
5-year
Fruit type 1972-73 1973-74 1974-75 1975-76 1976-77 average
Early and Midseason Oranges:
Processed $1.40 $1.32 $1.40 $1.80 $1.20 $1.42
Fresh 1.83 2.28 2.15 2.35 3.93 2.51
All methods 1.43 1.38 1.46 1.84 1.21 1.46
Late (Valencia) Oranges:
Processed 1.70 1.57 1.80 2.40 1.90 1.87
Fresh 1.88 1.88 2.05 2.50 3.95 2.45
All methods 1.71 1.59 1.82 2.41 2.11 1.93
White Seedless Grapefruit:
Processed 1.52 1.14 .82 .57 .65 .94
Fresh 2.85 2.20 2.55 2.08 2.60 2.46
All methods 2.06 1.58 1.55 1.17 1.07 1.49
Source: Ben Abbitt, John Otte and Ron Muraro, "A Method for Determining How Much
to Pay for a Citrus Grove Based Upon Its Fruit Production Potential," Economic
Information Report No. 81, FRED, IFAS, December 1977.



By using the above procedure, you can estimate net return
to land and trees for the citrus varieties in Table 5. Since pro-
duction costs for Indian River citrus (southeast part of the
state) may be higher than those for ridge fruit, adjustments in
your analysis should be made accordingly.









Table 6. Summary of Comparative Interior Citrus Production Costs per
Acre 1973-74 Season thru 1976-77 season.
Average
Fruit Type 1972-73 1973-74 1974-75 1975-76 1976-77 5-year
Processed Fruit $183.24 $226.63 $261.55 $250.84 $267.77 $238.01
Non-irrigated
Irrigated
Processed Fruit 246.02 311.38 357.60 350.23 368.49 326.74
Non-irrigated
Fresh Fruit 215.98 261.20 302.63 296.33 309.65 277.16
Irrigated
Fresh Fruit 278.76 345.95 398.68 395.72 410.37 365.90
aDoes not include ad valorem taxes or interest on investment. Does include a man-
agement charge (5% of gross sales). Based on custom rates.
Source: Ben Abbitt, John Otte and Ron Muraro, A Method for Determining How Much
to Pay for a Citrus Grove Based Upon Its Fruit Production Potential," Economic
Information Report 81, FRED, IFAS, December 1977.


Citrus Acreage Supply And Outlook
The bearing acreage of citrus reached a peak in the 1970-71
season and has declined for five consecutive years. Plantings of
new groves have fallen short of grove retirements despite eight
out of 10 good price years. This indicates that perhaps much of
the available prime agricultural land has been planted to citrus,
and future plantings will be on less desirable land.
Production, however, has not decreased. Yields are in-
creasing as younger trees mature but at a slower rate than
during the 1960's. From 1960-61 to 1966-67 production in-
creased 60 percent, while production increased only 25 percent
from 1970-71 to 1975-76.6 Estimates by the Economic Research
Department, Florida Department of Citrus, show a 23 percent
increase in round oranges and Temples and a 21 percent in-
crease in 'all grapefruit is expected between the 1976-77 and
1981-82 seasons.6 Long range estimates also indicate increasing
orange and grapefruit production into the early 1990's.
By comparing the production and value figures in Table 7,
it is apparent that supply and value have an inverse relation-
ship. That is, large crops are of less value than small crops. The
1966-67 crop (195 million boxes) was valued at $178 million

5USDA, Florida Crop and Livestock Reporting Service, "Florida Agricultural Statistics,
Citrus Summary," 1976 Issue pp. 3-5.
6G. F. Fairchild, "Estimated Florida Orange, Temple and Grapefruit Production,
1976-77 through 1981-82," Fla. Dept. Citrus, Econ. Res. Dept. CIR 77-1, June 1977.
TBen Abbitt, "Citrus Grove Mapping Can Enhance Your Grove Returns," The Citrus
Industry Magazine, Vol. 58 No. 10. October 1977.









while a smaller crop of 144 million boxes (1967-68) had a value
of nearly $309 million. Variations in supply and price in future
years are expected due to uncertain weather, fluctuations in de-
mand and the uncertainty of opening trade with foreign citrus
producing countries.


Table 7. Bearing Acreage, Total Production and Value of all Citrus in
Florida, 1966-67 to 1975-76.
Bearing Total On-tree
Season (000) Production Value
Acreage Million Million
Boxes Dollars
1966-67 653.0 195.0 178,075
1967-68 692.4 144.3 308,876
1968-69 746.1 182.1 286,769
1969-70 817.1 189.0 244,676
1970-71 866.7 199.6 315,882
1971-72 824.2 200.5 427,245
1972-73 820.2 230.6 394,645
1973-74 817.3 230.2 359,388
1974-75 812.7 235.7 397,066
1975-76 796.2 249.5 493,610
Source: USDA, Florida Crop and Livestock Reporting Service, "Florida Agricultural Sta-
tistics, Citrus Summary," 1976 Issue, pp. 3-5.

Points To Remember For Prospective Investors
To make the investment decision you should know where you
stand and what changes will be necessary to generate your de-
sired return. Before purchasing a grove knowledgeable investors
obtain an accurate tree count by variety, tree age and condi-
tion.7 Also desirable is yield, gross returns, production costs,
and net returns for each of the past five seasons. Grove records
are the best source for this information.
Check for unusual soil conditions and grove locations sus-
ceptible to cold damage. Aerial photos may show trouble spots
undiscernible from the ground.
Concerning quality and marketability, check with sellers
who have previously sold fruit from the grove. If possible seek
out the buyer who usually purchases the fruit each year. Ana-
lyzing their comments will give you additional insight into the
type fruit the grove has produced. Poor quality fruit is more
difficult to sell and usually brings lower prices than good quality
fruit.
7ien Abbitt, "Citrus Grove Mapping Can Enhance Your Grove Returns," The Citrus
Industry Magazine, Vol. 58 No. 10. October 1977.









If a caretaker or cooperative will be employed to perform
cultural practices, check the availability and reliability of those
in the vicinity. Information gained from visiting neighboring
growers can prove very valuable.
Acquire sufficient acreage to supply ample income to carry
the debt load, and to furnish a "living." Having a small equity
in a large, manageable grove is usually more advantageous than
having a large equity in a small grove.
Finally, if you are unable to perform a detailed analysis of a
prospective grove, hire a competent consultant to make the
study. Reducing the costs of evaluating a grove by "cutting
corners" may result in increased costs of correcting something
you overlooked while "cutting corners."



Conclusion
These factors to consider in purchasing a citrus grove are
presented to assist the prospective grove investor in his decision-
making. The costs, returns and prices in these analyses are
averages that may not reflect conditions in particular groves.
Prospective investors should insist on obtaining and analyzing
historical records on the grove under consideration to personally
determine its past yield performance and to project its potential
earning capacity.
Investment in citrus acreage is usually long term. Income is
earned from an annual crop harvested from a perennial tree.
Bona fide citrus growers are normally interested in earning a
living from yields the land and trees produce, and not just land
appreciation.
There are risks associated with any investment. Weather,
disease and the consequences of oversupply are currently the
three major risks associated with citrus production. The indi-
vidual owner has relatively little control over these risks. Citrus
is a perishable commodity, therefore, the grower is more of a
"price taker" and not a "price maker."
With the technological breakthrough in the late 1940's giving
consumers frozen concentrated citrus products, new markets
were created for an otherwise oversupplied, ill industry. Grove
ownership in most locations has proven a good investment over
the past 25 years. It may continue to be a profitable investment
opportunity given an increasing population, supply staying in
line with demand, and moderate inflation.





















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4-2.5M-78







COOPERATIVE EXTENSION WORK IN AGRICULTURE AND HOME ECONOMICS
(Acts of May 8 and June 30, 1914)
Cooperative Extension Service, IFAS, University of Florida
and United States Department of Agriculture, Cooperating
K. R. Tefertiller, Director


33292B


I TACHNG ESERCH EXTNS1




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