Dan L. Gunter

Economic Information
Report 130

Business Analysis of Container
Nurseries in Florida, 1978

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

March 1980

ABSTRACT

This report presents average sales, costs
for 7 wholesale container nurseries in Florida
The value of plant sales averaged $405,897 and
$401,863. After adjusting for inventory value
income, return to capital was $95,311 or 19.44

and returns information
for the 1978 tax year.
production costs averaged
changes and miscellaneous
percent.

Key words: Container nurseries, value of own plants sold, cash
costs, non-cash costs, net nursery income and return to capital.

ACKNOWLEDGEMENTS

This report is made possible by the 7 cooperating container nursery-
men who made their production and accounting records available. Addition-
ally, various county extension agents, provided invaluable assistance
during the data collection process. Carolyn Almeter tabulated the data
for this report and Shirley Harris typed this report. As always, any
errors in the data or interpretation of the information remain the re-
sponsibility of the author.

TABLE OF CONTENTS

Page

ABSTRACT . . ........... .......... i

ACKNOWLEDGEMENTS . . . . ... ..... ii

LIST OF TABLES . . . . ... ..... iii

INTRODUCTION . . . ... .. .... 1.

PROCEDURE . . . . ... ....... 1.

DEFINITIONS . . . . .. ..... 2

RESULTS AND DATA PRESENTATION . . . . 3

LIST OF TABLES

Table

1 Size of business, three large and four smaller volume
wholesale ornamental container nurseries in Florida,
1978 . . . . . . 5

2 Rates of production, three large and.four smaller
volume wholesale ornamental container nurseries in
Florida, 1978 . . . . ... .. 6

3 Labor efficiency, three large and four smaller volume
wholesale ornamental container nurseries in Florida,
1978 . . . . . . 7

4 Efficiency in use of capital, three large and four
smaller volume wholesale ornamental container
nurseries in Florida, 1978 . . . 8

5 Average dollar costs per nursery for various cate-
gories of expense, three large and four smaller volume
wholesale ornamental container nurseries in Florida,
1978 . . . . . . 9

LIST OF TABLES--Continued

Table Pagi

6 Percent of total costs for various categories of
expense, three large and four smaller volume whole-
sale ornamental container nurseries in Florida,
1978 . . . . ... . 10

7 Average costs per square foot of production area,
three large and four smaller volume wholesale
ornamental container nurseries in Florida, 1978 11

8 Average costs per dollar of sales with plant
inventory increase added to sales, three large
and four smaller volume wholesale ornamental
container nurseries in Florida, 1978 . ... 12

9 Average costs per dollar of sales without plant
inventory increase added to sales, three large
and four smaller volume wholesale ornamental con-
tainer nurseries in Florida, 1978 . ... 13

10 Income summary, three large and four smaller volume
wholesale ornamental container nurseries in Florida,
1978 . . . . .. .. .. .. .14

11 Factors associated with level of profit, three high
and four lower profit wholesale ornamental container
nurseries in Florida, 1978 . . ... 15

12 Range of figures on profits and five factors asso-
ciated with profits, wholesale ornamental container
nurseries in Florida, 1978 . . ... 16

BUSINESS ANALYSIS OF CONTAINER NURSERIES IN FLORIDA, 1978

Dan L. Gunter

INTRODUCTION

This business analysis report presents information on sales,
costs, returns and production efficiency of container nurseries in
Florida for 1978. For this report, a container nursery is defined
as a nursery producing primarily woody landscape plants in containers.
The purpose of the business analysis report is: (1) to furnish
nurserymen various physical and economic measures that may be used in
evaluating the efficiency of individual container nurseries; (2) to
supply cooperating nurserymen data so that they may make more informed
management decisions; (3) to provide individuals considering entering
the wholesale container plant production business an estimate of the
input requirements and revenue; and (4) to provide the Florida extension
personnel data which may be used in educational programs with nurserymen.

PROCEDURE

Information presented in this report is based on data collected
from the accounting and production records of 7 nurserymen. Nursery-
men supplying the information are located in north, central and south
Florida. They provided the data voluntarily and do not represent a
statistically selected sample. However, the container nurserymen par-
ticipating in the business analysis program are thought to represent
some of the more efficient nurseries in the state.
The data collected pertained to the individual nurseryman's 1978
tax year which, in some cases, does not conform to the 1978 calendar

DAN L. GUNTER is an extension production economist.

year. In those nurseries which do not pay the operator a salary, an
estimate of the value of the operator's time is collected and used in
the analysis.
To provide an equitable basis for comparisons, any interest paid
by the individual nurseryman is excluded from the costs shown in this
report. However, an interest cost of 8 percent is charged on the owned
capital investment.
The owned capital investment reflects the depreciated book value
of buildings, improvements, and machinery and equipment. The growing
plants are usually valued at a price lower than the wholesale price
since not all plants are of saleable size. Each nurseryman partici-
pating in the analysis may value plants differently. However, a common
price used to value each plant is 50 to 60 percent of the wholesale
price. The land is valued at the original purchase price.
The data from individual nurseries are averaged and presented in
tabular form. The tables depict average values for all 7 nurseries,
three "large" and four "smaller" nurseries. For this report, smaller
nurseries are those that have plant sales of less than $375,000 while
large nurseries are defined as those with a value of plant sales
greater than $375,000.

DEFINITIONS

Most of the terms used in the tables are self-explanatory. Defi-
nitions of the terms used in this report, which may be less familiar,
are as follows:
Value of own plants sold.--This value represents the total plant
sales minus the cost of plants purchased for immediate resale. (Plants
purchased for growing-on are not deducted.)
Full-time equivalent employee.--This value represent 2,080 annual
manhours or 40 hours for 52 weeks. A convenient way to calculate the
number of full-time equivalent employees is to divide the total annual
payroll hours by 2,080 and then add any unpaid family or management.
Percent turnover of capital.--A ratio derived by dividing the
value of own plants sold by the total capital employed in the enter-
prise.

Total gain.--This value represents total nursery income from plant
sales, value of plant inventory changes, supply inventory increases and
miscellaneous cash income.
Net nursery income.--Total gain less cash costs (except operator's
salary), depreciation costs and value of supply inventory decreases.
Return to capital.--Net nursery income less operator's salary.
Percent return to capital.--Return to capital divided by total
owned capital.

RESULTS AND DATA PRESENTATION

The data in Tables 1 through 9 relate to the size of the business,
rate of production, labor efficiency, capital efficiency, production
space efficiency and other efficiency factors. Analyses relating to
container nursery profitability are presented in Tables 10, 11, and 12.
Where information in the tables is rounded to the nearest whole number,
arithmetic errors due to rounding may be noted.
During 1978, the 7 nurseries that participated in the nursery
business analysis program had average plant sales (value of own plants
sold) of $405,897 (Table 1). The nurseries had an average of 16.6 acres
in production. The production area is net growing space. Roads, aisles
and non-productive areas have been excluded. The nurseries had an av-
erage of just over 17 full-time employees. Office employees, the man-
ager (owner) and any unpaid family members are included as employees.
The average capital investment for 7 nurseries was $490,394. How-
ever, the managed capital averaged $513,442. Managed capital reflects
the owned capital investment plus an estimated market value of buildings,
equipment or land rented.
Total production costs averaged $401,863 (Table 5). This value in-
cludes the cash expenses incurred during the year, the depreciation costs
and an interest cost of 8 percent of the value of the investment. Note
also that an operator's salary averaging $21,555 is included as a cash
cost. Labor is the single largest expense for the container nurseries,
accounting for almost 37 percent of the total costs (Table 6). Little
variation in labor costs is detected between the large and smaller
nursery, operations. Cash costs accounted for about 85 percent of the
costs of production.

Another useful basis for efficiency comparisons is the costs per
square foot. The large nurseries costs per square foot were 48 cents
while the smaller nurseries expended 127 cents (Table 7).
Return to capital was $95,311 for the 7 nurseries which was slightly
over 19 percent of the capital investment (Table 10). The larger nurseries
had a 25 percent return to capital while the return to capital was slightly
over 6 percent for the smaller nurseries. Other differences between the
large and smaller nurseries can be seen by examination of the various
efficiency factors presented in the tables.
Employing the definitions provided above, nursery managers can utilize
this report by completing the column--"Your nursery." By doing so, managers
may be able to locate areas in their own operation where production effi-
ciency can be improved.

Table l.--Size of business, three large and four smaller volume whole-
sale ornamental container nurseries in Florida, 1978

Average Average Average
Item Unit all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery

One best measure
Value of own
plants sold

Other useful
indicators
Value of own plants
sold adjusted for
plant inventory
change
Average sq. ft. of
own plants in pro-
duction
Average acre equiv-
alent of own plants
in production
Average number of
full-time equiv.
employees

Capital owned:
Growing plants
Land
Machinery & equip.
Bldgs., fences,
wells, etc.
Supplies
Total owned cap.

Capital managed:
Growing plants
Land
Machinery & equip.
Bldgs., fences,
wells, etc.
Supplies
Total managed cap.

$ 405,897 764,997

$ 443,188 834,505

Sq.ft. 722,526 1,523,175

Acre

16.59

17.24

319,399
33,722
50,774

62,891
23,608
490,394

319,399
48,250
50,774

71,410
23,608
513,442

34.97

30.78

542,361
53,215
96,045

46,776
47,541
785,939

542,361
78,781
96,045

65,109
47,541
829,839

aNurseries with annual sales of own plants exceeding $375,000.

136,571

149,701

122,039

2.80

7.07

152,178
19,102
16,821

74,977
5,658
268,735

152,178
25,352
16,821

76,136
5,658
276,144

Table 2.--Rates of production, three large and four smaller volume
wholesale ornamental container nurseries in Florida, 1978

Average Averagea Average
Item Unit all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery

One best measure

Sq. ft. equiva-
lent of own plants
sold per acre in
production Sq.ft. 24,471 21,878 48,747

Other useful
indicators

Value of own plants
sold per acre in
production $ 26,719 23,865 53,434

Value of own plants
sold adjusted for
plant inventory
change per acre
in production $ 19,256 15,511 54,318

aNurseries with annual sales of own plants exceeding $375,000.

Table 3.--Labor efficiency, three large and four smaller volume
wholesale ornamental container nurseries in Florida,
1978

Average Average Average
Item Unit all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery

One best measure
Value of own
plants sold per
employee $ 23,544 24,854 19,317

Other useful
indicators
Value of own
plants sold
adjusted for
plant inven-
tory change
per employee $ 25,707 27,112 21,174
Average sq. ft.
in production
per employee Sq.ft. 41,910 49,486 17,261

aNurseries with annual sales of own plants exceeding $375,000.

Table 4.--Efficiency in use of capital, three large and four smaller
volume wholesale ornamental container nurseries in Florida,
1978

Average Average Average
Item Unit all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery

One best measure
Percent turnover of
owned capital annu-
ally

Other useful
indicators
Percent turnover of
managed capital
annually

Capital owned:
Per employee
Per acre

Capital managed:
Per employee
Per acre

Capital managed
per employee in:
Plants
Land
Machinery & equipment

Percent of capital
managed in:
Plants
Land
Machinery & equipment

Percent of capital
managed in:
Plants
Land
Machinery & equipment
Bldgs., wells,
fences, etc.
Supplies

Total

82.77

79.05

28,445
29,565

29,782
30,955

18,527
2,799
2,945

19,256
2,909
3,061

% 62.21
% 9.40
% 9.89

% 13.91
% 4.60

% 100.00

97.34

92.19

25,534
22,476

26,960
23,732

17,621
2,559
3,120

15,511
2,253
2,747

65.36
9.49
11.57

7.85
5.73

100.00

50.82

49.46

38,011
95,921

39,059
98,566

21,524
3,586
2,379

54,318
9,049
6,004

55.11
9.18
6.09

27.57
2.05

100.00

aNurseries with annual sales of own plants exceeding $375,000.

--

Table 5.--Average dollar costs per nursery for various categories of
expense, three large and four smaller volume wholesale orna-
mental container nurseries in Florida, 1978

Average Averagea Average
Item all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery
------------------Dollars----------------

Cash costs
Operator's salary
Others wages & salaries
Plants & seeds to grow on
Cans & other growing
containers
Peat, soil, shavings, etc.

Fertilizer & lime
Pesticides & other chem.
Other production supplies
Repairs & maintenance
Equipment operating costs

Travel & entertainment
Insurance
Telephone
Electricity
Taxes, licenses & bonds

Advertising
Rent; land and/or buildings
Other cash expenses

Total cash costs

Non-cash costs
Depreciation machinery
& equipment
Depreciation buildings
Inventory decrease on supp.
Interest on capital @ 8%

Total non-cash costs

Total all costs

21,555
148,506
15,603

35,730
20,795

7,188
8,007
10,120
13,647
9,461

3,154
11,542
3,595
4,811
8,221

2,651
6,351
9,151

340,089

15,934
6,608
0
39,232

61,774

401,863

39,206
274,851
27,428

69,776
39,260

14,209
16,184
16,372
24,821
19,161

6,081
21,340
4,066
8,707
18,109

4,770
11,903
17,079

633,326

29,791
6,358
0
62,875

99,024

732,349

8,316
53,748
6,734

10,196
6,946

1,923
1,875
5,430
5,267
2,185

959
4,194
3,242
1,889
805

1,062
2,188
3,205

120,162

5,542
6,796
619
21,499

34,456

154,618

aNurseries with annual sales of own plants exceeding $375,000.

--

10

Table 6.--Percent of total costs for various categories of expense,
three large and four smaller volume wholesale ornamental
container nurseries in Florida, 1978

Average Averagea Average
Item Unit all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery

----------------Percent--------------

Cash costs
Operator's salary
Other wages & salaries
Plants & seeds to grow on
Cans & other growing
containers
Peat, soil, shavings, etc.

Fertilizer & lime
Pesticides & other chem.
Other production supplies
Repairs & maintenance
Equipment operating costs

Travel & entertainment
Insurance
Telephone
Electricity
Taxes, licenses, & bonds

Advertising
Rent; land and/or buildings
Other cash expenses
Total cash costs

Non-cash costs
Depreciation machinery
& equipment
Depreciation buildings
Inventory decrease on supp.
Interest on capital @ 8%
Total non-cash costs

Total all costs

5.36
36.95
3.88

8.89
5.17

1.79
1.99
2.52
3.40
2.35

.78
2.87
.89
1.20
2.05

.66
1.58
2.28
84.63

3.97
1.64
0
9.76
15.37

100.00

5.35
37.53
3.75

9.53
5.36

1.94
2.21
2.24
3.39
2.62

.83
2.91
.56
1.19
2.47

.65
1.63
2.33
86.48

4.07
.87
0
8.59
13.52

100.00

5.38
34.76
4.36

6.59
4.49

1.24
1.21
3.51
3.41
1.41

.62
2.71
2.10
1.22
.52

.69
1.41
2.07
7717-

3.58
4.40
.40
13.90
22.28

100.00

aNurseries with annual sales of own plants exceeding $375,000.

--

11

Table 7.--Average costs per square foot of production area, three large
and four smaller volume wholesale ornamental container nurseries
in Florida, 1978

Average Average Average
Item all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery
--------------------Cents--------------

Cash costs
Operator's salary 2.98 2.57 6.81
Other wages & salaries 20.55 18.04 44.04
Plants & seeds to grow on 2.16 1.80 5.52
Cans & other growing
containers 4.95 4.58 8.35
Peat, soil, shavings, etc. 2.88 2.58 5.69

Fertilizer & lime .99 .93 1.58
Pesticides & other chem. 1.11 1.06 1.54
Other production supplies 1.40 1.07 4.45
Repairs & maintenance 1.89 1.63 4.32
Equipment operating costs 1.31 1.26 1.79

Travel & entertainment .44 .40 .79
Insurance 1.60 1.40 3.44
Telephone .50 .27 2.66
Electricity .67 .57 1.55
Taxes, licenses, & bonds 1.14 1.19 .66

Advertising .37 .31 .87
Rent; land and/or buildings .88 .78 1.79
Other cash expenses 1.27 1.12 2.63

Total cash costs 47.07 41.58 98.46

Non-cash costs
Depreciation machinery
& equipment 2.21 1.96 4.54
Depreciation buildings .91 .42 5.57
Inventory decrease on supp. 0 0 .51
Interest on capital @ 8% 5.43 4.13 17.62

Total non-cash costs 8.55 6.50 28.23

Total all costs 55.62 48.08 126.70

aNurseries with annual sales of own plants exceeding $375,000.

Table 8.--Average costs per dollar of sales with plant inventory increase
added to sales, three large and four smaller volume wholesale
ornamental container nurseries in Florida, 1978

Average Average Average
Item Unit all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery

------------------Cents----------------

Cash costs
Operator's salary
Other wages & salaries
Plants & seeds to grow on
Cans & other growing
containers
Peat, soil, shavings, etc.

Fertilizer & lime
Pesticides & other chem.
Other production supplies
Repairs & maintenance
Equipment operating costs

Travel & entertainment
Insurance
Telephone
Electricity
Taxes, licenses, & bonds

Advertising
Rent; land and/or buildings
Other cash expenses
Total cash costs

Non-cash costs
Depreciation machinery
& equipment
Depreciation buildings
Inventory decrease on supp.
Interest on capital @ 8%

Total non-cash costs
Total all costs

4.86
33.51
3.52

8.06
4.69

1.62
1.81
2.28
3.08
2.13

.71
2.60
.81
1.09
1.86

.60
1.43
2.06
76.74

3.60
1.49
0
8.85

13.94
90.68

4.70
32.94
3.29

8.36
4.70

1.70
1.94
1.96
2.97
2.30

.73
2.56
.49
1.04
2.17

.57
1.43
2.05
75.89

3.57
.76
0
7.53

11.87
87.76

5.55
35.90
4.50

6.81
4.64

1.28
1.25
3.63
3.52
1.46

.64
2.80
2.17
1.26
.54

.71
1.46
2.14
80.27

3.70
4.54
.41
14.36

23.02
103.28

aNurseries with annual sales of own plants exceeding $375,000.

---

--

Table 9.--Average costs per dollar of sales without plant inventory
increase added to sales, three large and four smaller
volume wholesale ornamental container nurseries in Florida,
1978

Average Averagea Average
Item all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery

-----------------Cents-----------------

Cash costs
Operator's salary 5.31
Other wages & salaries 36.59
Plants & seeds to grow on 3.84
Cans & other growing containers 8.80
Peat, soil, shavings, etc. 5.12

Fertilizer & lime 1.77
Pesticides & other chem. 1.97
Other production supplies 2.49
Repairs & maintenance 3.36
Equipment operating costs 2.33

Travel & entertainment .78
Insurance 2.84
Telephone .89
Electricity 1.19
Taxes, licenses, & bonds 2.03

Advertising .65
Rent; land and/or buildings 1.56
Other cash expenses 2.25

Total cash costs 83.79

Non-cash costs
Depreciation machinery
& equipment 3.93
Depreciation buildings 1.63
Inventory decrease on supp. 0
Interest on capital @ 8% 9.67

Total non-cash costs 15.22

Total all costs 99.01

5.13
35.93
3.59
9.12
5.13

1.86
2.12
2.14
3.24
2.50

.79
2.79
.53
1.14
2.37

.62
1.56
2.23

82.79

3.89
.83
0
8.22

12.94

95.73

6.09
39.36
4.93
7.47
5.09

1.41
1.37
3.98
3.86
1.60

.70
3.07
2.37
1.38
.59

.78
1.60
2.35

87.99

4.06
4.98
.45
15.74

25.23

113.21

aNurseries with annual sales of own plants exceeding $375,000.

___

Table 10.--Income summary, three large and four smaller volume
ornamental container nurseries in Florida, 1978

wholesale

Average Average Average
Item Unit all 7 3 large 4 smaller Your
nurseries nurseries nurseries nursery

Value of production
& other gain

Value of own
plants sold
Inventory change
own plants
Inventory increase
for supplies
Miscellaneous
cash income

Total gain

Cash costs less
operator's salary
Non-cash costs less
interest cost @ 8%
Total gross costs
less operator's
salary & inter-
est costs
Net nursery income

Operator's salary
Return to capital
Percent return to
capital

$ 405,897 764,997 136,571

37,292

6,722

$ 8,033

$ 457,943

69,508

16,510

17,962

868,976

$ 318,535 594,119 111,846

22,543

341,077
116,866

36,149 12,957

630,268
238,708

21,555 39,206
95,311 199,502

19.44

aNurseries with annual sales of own plants exceeding $375,000.

13,130

0

587

150,288

124,804
25,484

8,316
17,169

6.39

25.38

Table ll.--Factors associated with level of profit, three high and four
lower profit wholesale ornamental container nurseries in
Florida, 1978

Average 3 high 4 lower
Item Unit all 7 profit profit Your
nurseries nurseries nurseries nursery

Profit
Net nursery income

Size of business
Value of own
plants sold

Level of cost
Cost per $ of sales
and plant inventory
value increase

Labor efficiency
Value of own plants
sold per employee

Sales & inventory
gain
Gain in sales &
plant inventory
value from pre-
vious year (item
2 in Table 1 com-
pared with same
item the previous
year)

Capital use effic-
iency
Percent of capital
turnover

$ 116,866

$ 405,897

$ 23,544

$ 83,219

82.77 97.34

238,708

764,997

24,854

205,499

25,484

136,571

113

19,317

-8,491

50.82

Table 12.--Range of figures on profits and five factors associated with
profits, wholesale ornamental container nurseries in Florida,
1978

Average figures for the
3 best and the 3 poorest
nurseries on each factor
Item Unit
Average for Average for Your
3 best 3 poorest nursery

Profit
Net nursery income

Size of business
Value of own
plants sold

Level of cost
Cost per $ of sales
and plant inventory
value increase

Labor efficiency
Value of own plants
sold per employee

Sales & inventory gain
Gain in sales and
plant inventory value
from previous year

Capital use efficiency
Percent of capital
turnover

$ 236,349

$ 766,891

t 91

$ 28,898

$ 200,620

100.14- 41.7

14,505

80,075

117

17,322

-14,753

41.74

% 100.14

	Front Cover
	Abstract
	Acknowledgement
	Table of Contents
	Main
	Tables