Title: Groves of high and low ranking in returns above operating cost for three seasons, 1945-48
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Title: Groves of high and low ranking in returns above operating cost for three seasons, 1945-48
Physical Description: Book
Creator: Savage, Zach.
Publisher: Agricultural Extension Service, University of Florida
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Bibliographic ID: UF00074503
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Source Institution: University of Florida
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Resource Identifier: oclc - 123348435

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Ii Issued by
'AGiICULTURAL EXTENSION SERVICE, UNIVERSITY OF FLORIDA
Gainesville, Florida
IN COOPERATION WITH YOUR COUNTY AGENT




GROVES OF HIGH AND LOW RANKING
IN RETURNS ABOVE OPERATING COST FOR THREE SEASONS, 1945-48


By
Zach Savage
Associate Agricultural Economist
Florida Agricultural Experiment Station


Operating costs in this study by the Florida Agricultural Extension
Service include costs of labor, power, and equipment, fertilizer materials, spray
and dust materials, state and county taxes, and miscellaneous cash costs such as
city taxes, fuel for grove heating, overhead, trees for replacement, and drainage
district assessments. These costs include all cash costs other than interest on
borrowed money, and include depreciation on equipment and grove buildings, and
interest on investment in equipment and grove buildings. Interest on the estimated
*value of investment in land and trees is not considered anoperating cost but it is
considered a cost in fruit production. Total cost figures, which include total
operating costs and interest on grove valuation, are given in Table 1 as well as the
total operating costs figure. Likewise, the returns above each of these two cost
S figures are given.

An average of 213 groves per season were arrayed on the basis of returns
above operating costs for each of 3 seasons, 1945-48, These groves were over 10
years of age and were mixed as to kind and variety of citrus. Twenty-five percent
of the grove records with the highest returns above operating costs were grouped
together and designated as the high group. A like percentage of records with the
lowest returns above operating costs were grouped and designated the low group. The
number of groves per group varied from 50 to 55 per season and averaged 53.

The average age of trees per group varied somewhat by seasons and the low
group averaged 3 years older, The proportion of the trees that were grapefruit was
consistently higher in the low group which had more than twice the number of grape-
fruit trees in the high group. In 2 of the 3 seasons more groves were irrigated in
the low group than in the high and averaged 39 percent more. The amount of nitrogen
added annually per box of fruit harvested was consistently higher in the low group
and averaged 93 percent more. Also more nitrogen was added per acre on the low
group in 2 of the seasons and averaged 16 percent more. This nitrogen was added in
the form of commercial fertilizers.

All the factors enumerated, age of trees, the proportion of trees that
were grapefruit, proportion of groves irrigated, and the amount of nitrogen added
per acre and per box of fruit, were more favorable to higher production of fruit for
the low group. Yet the low group consistently had the lower yield. The average
number of boxes of fruit harvested was 67 percent higher in the high group. It
should be pointed out, however, that the number of boxes harvested successively
dcreased in the high group during these seasons, whereas, there were successive
increases in the low group. Fruit harvested per acre in the high group was only 17
percent higher than the low group in 1947-48. In 1945-46 148 percent more fruit was
harvested in the high group.

Of the 5 items of operating costs only one was consistently in favor of
the same group each of the three seasons. This item was miscellaneous costs and was
lower in the high group. In 2 of the seasons the labor, power, and equipment cost
was considerably higher in the low group on a per-acre basis and was higher in each
season on a per-box basis. This cost averaged 61 percent higher in the low group
on a per-acre basis and 167 percent higher per box,


~'-.--~ y


January 1950


AE Series No, 50-2





FGroves of High an Low'Ranking in
Returns Above Ope ating Costs, 1945-48 Page 2


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Groves of High and Low Ranking in
Returns Above Operating Costs, 145-48 Page 3

In 2 seasons the money spent for fertilizer material was slightly more in
the high group on a per-acre basis but was consistently less per box. Such per-acre
costs averaged only 3 percent higher for the high group but was 67 percent higher
per box for the low group. These figures demonstrate that the tendency on these
groves for this period was to fertilize them without regard to anticipated yield.
This is further demonstrated in that in 2 of the 3 seasons more nitrogen was applied
per acre on the low group of groves, and an average of 16 percent more nitrogen was
added on the low group. The usual recommendations for nitrogen are to apply annually
from to 1/3 of a pound for each box of fruit anticipated.

More money was spent per acre for spray and dust materials on the low
group in 2 of these 3 seasons and averaged slightly more on the low group. These
costs were 67 percent higher per box in the low group.

State and county taxes were higher per acre on the low group in 2 of these
seasons and averaged 4 percent higher. Taxes were higher per box each season on the
low group.

Miscellaneous costs were higher each season on the low group. They
averaged 150 percent higher per acre and were 6 times as high per box.

Total operating costs were higher per acre on the low group in 2 seasons
and averaged 30 percent higher. The majority of this difference was due to the
higher cost of labor, power, and equipment on the low group. Operating costs per
box in the low group averaged more than twice that of the high group.

Interest on grove valuation indicates the groves of the high group to have
been thought more valuable by the grove operators. The average was 23 percent
higher in the high group.

Interest on grove valuation offset in part the spread between the operat-
ing costs of the 2 groups in 2 seasons. It widened this spread in the 1945-46 sea-
son. However, the total cost without owner supervision averaged 19 percent more in
the low group on a per-acre basis and 100 percent more per box.

It is recognized that every citrus grove is different from every other
grove. General principles will apply to all, but the variations must be taken into
account for the most efficient operation.. Some of the factors that should be taken
into account are rate of tree growth, age, size of tree, kind and variety, rootstock,
rainfall, frost damage, wind damage, water damage, insect pests, and diseases.
Trees of the younger ages or that otherwise have a low productive capacity require
special consideration and are usually less efficient producers than older and better
groves. The most efficient trees are those producing the most fruit for the plant
food available and care given. It is to the best interests of the grower to see
that the highest efficiency possible is attained. It behooves each grower to study
all factors concerning each of his groves to see that ample nutrients and care are
supplied insofar as anticipated yields and fruit prices will permit.

During recent seasons of high fruit prices many growers spared no expense
for their groves. This luxurious care that most groves received was not curtailed
as quickly as fruit prices dropped. The result was that the least efficient groves
encountered difficulty (red ink) quickly after fruit prices began to drop. The most
efficient groves were slower to reach the red ink stage, but careful planning and
study of each grove should result in more economical production on many of the
groves of all groups. Some general considerations for lowering production costs are:

1. Increase yield,
a. Application of correctly constituted fertilizers at
the right time in amounts necessary for productive
capacity of trees.
b. Maintain soil within proper pH range and see that
adequate available calcium is present.
C. Remove low-yielding or nonbearing trees of bearing
age and replace with trees of good strain and proven
quality.
d. Maintain adequate moisture and humus in soil.
2. Hold costs, particularly for fertilizer materials, in line
with productive capacity of trees.







Groves of High and Low Ranking in
Returns Above Operating Costs, 1945-48 Page 4

3. Perform necessary cultural operations only.
4. Prune only as necessary.
5. Where irrigation is practiced, apply the correct amount
of water as efficiently as possible at the proper time.

The returns from fruit in the high group were more than 3 times the low
group on the per-acre basis and averaged more than twice as much per box. Portions
of the differences in price between the two groups are attributable to higher per-
centages of oranges making up the high groups. Not all these spreads, however, are
attributable to this cause. It appears that the growers of the high groups did a
better job of selling their fruit than did those of the low groups.

There are many problems in citrus production and the average grower is
prone to spend the most of his time on production problems, Yet it is entirely
likely that the average grower would realize more per hour of time expended in
solving marketing problems than on production problems. The grower must accept
responsibility for the problems of marketing as well as production. A good job of
selling fruit could easily mean 5 cents more received per box than otherwise would
be obtained. In many cases this would be an easier job than lowering production
costs 5 cents per box, yet either would mean the same added advantage to the grower
for the year's operations. In any case, the grower should expend the effort neces-
sary, individually and/or cooperatively, to realize the maximum price for his fruit
that conditions justify. At the same time production costs should be held to a
minimum.

Returns above operating costs is the amount left, after paying operating
costs, for interest on grove investment and payment of grower for his supervision.
In 2 of these seasons, each grove of the low group failed to return its operating
costs. In all 3 seasons each grove of the high group returned operating costs.
S However, in the 1947-48 season 65 percent of the 215 groves over 10-years of age
failed to return operating costs. Therefore there were only 10 percent of the
groves that season, other than the 25 percent in the high group, that returned
operating costs.

Net returns is the amount left after paying operating costs and 6 percent
interest on the investment in the grove. Net returns are for payment of owner
supervision, interest on borrowed money, and profit. All high groups had net
returns, but only the low group in 1945-46 showed net returns.





ZS:ia
AgriEconExt
12/22/49 400




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