- Permanent Link:
- Evaluation of a multi-vegetable freezing facility for the north Florida region a report
- Series Title:
- Industry report Florida Agricultural Market Research Center
- Degner, Robert L
- Place of Publication:
- Gainesville FL
- Florida Agricultural Market Research Center, a part of the Food and Resource Economics Dept., Institute of Food and Agricultural Sciences, University of Florida
- Publication Date:
- Physical Description:
- vii, 39 p. : ill. ; 28 cm.
- Subjects / Keywords:
- Vegetables -- Processing -- Florida ( lcsh )
Vegetables -- Marketing -- Florida ( lcsh )
Frozen vegetables ( lcsh )
- bibliography ( marcgt )
non-fiction ( marcgt )
- Bibliography: p. 39.
- General Note:
- "December 1985."
- Industry report (Florida Agricultural Market Research Center) ;
- Statement of Responsibility:
- by R.L. Degner ... [et al.].
- Source Institution:
- Marston Science Library, George A. Smathers Libraries, University of Florida
- Holding Location:
- Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
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- All applicable rights reserved by the source institution and holding location.
- Resource Identifier:
- 030587202 ( ALEPH )
17856047 ( OCLC )
AEW5968 ( NOTIS )
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site maintained by the Florida
Cooperative Extension Service.
Copyright 2005, Board of Trustees, University
INDUSTRY REPORT 85-3
i.F.A.S.- Univ. of Fior!,'
The study evaluated the feasibility of growing and
freeze processing selected vegetable crops in Northwest
Florida. Vegetable crops were selected on the basis of
production efficiency, processing suitability, and product
marketability. A large number of vegetable crops were
initially considered for processing. Broccoli, cauliflower,
lima beans, okra, and southern peas were selected for
detailed evaluation. An equipment list and cost estimates
were prepared for a dual line freezing facility with output
capacities of 3,800 pounds per hour for lima beans and
southern peas and 2,800 pounds per hour for broccoli,
cauliflower and okra.
Key Words: vegetables, processing, freezing
The Florida Agricultural Market Research Center
A Service of
the Food and Resource Economics Department
Institute of Food and Agricultural Sciences
The purpose of this Center is to provide timely, applied
research on current and emerging marketing problems affecting
Florida! s agricultural and marine industries. The Center
seeks to provide research and information to production,
marketing and processing: firms, and groups and. organizations
concerned with improving and. expanding. markets for Florida
agricultural and marine products.
The Center is staffed by a basic group of economists
trained in agriculture and marketing. In addition, cooperat-
ing personnel from other IFAS units provide a wide range of
expertise which can be applied as determined by the require-
ments of individual projects.
EVALUATION OF A MULTI-VEGETABLE FREEZING FACILITY
FOR THE NORTH FLORIDA REGION
A Report by
R. L. Degner, T. D. Hewitt, R. F. Matthews
S. Olsan, W. P. Smith and A. A. Teixeira
The Florida Agricultural Market Research Center
a part of
the Food and Resource Economics Department
Institute of Food and Agricultural Sciences
University of Florida
Gainesville, FL 32611
TABLE OF CONTENTS
LIST OF TABLES ..
LIST OF APPENDIX TABLES
LIST OF FIGURES .
SUMMARY . ..
INTRODUCTION . ..
VEGETABLE SELECTION .
THE MODEL PLANT .
PROCESSING COSTS .
RAW PRODUCT COSTS .
CONCLUSIONS . ..
APPENDIX . .
REFERENCES .. ..
. . . . 11
S . . iii
. . . . v
. . . . vi
. . . . 2
. . . . 2
. . . . 2
. . . 0 0 5 e 2
* 0 s S S 5 0 S S.
o 0 0 0. 0 0
* 5 0 5 0 5 C 0
* S C S S 5 0. 5 0 5 0 5 S S S
* S 5 5 5 5 5 5 5 5
O. . .
. . .
. O .
LIST OF TABLES
1 Equipment costs . . . .
2 General plant equipment . . .
3 Building space requirements . .
4 Initial investment and related annual
costs . . . . .
5 Operating capital for first season .
6 Processing costs by operating line .
7 Breakeven farm-level prices of selected
vegetables for processing, north Florida,
1985, and current prices paid to farmers
in other areas . . . .
8 Packout rates and current costs per. pound
of finished product, selected vegetables
9 Wholesale prices for selected frozen
vegetables, 1980-1984 . .
10 Estimates of net returns for selected
vegetables processed in'Florida . .
11 Operating time, output, and net revenue
generated by the processing plant under
two operating scenarios . .
12 Processing vegetable acreage require-
ments under two operating scenarios .
LIST OF APPENDIX TABLES
1 U.S. pack of collards, kale, turnip
greens and squash, 1973-1984 . . 30
2 Estimated costs of producing one acre of
broccoli for processing, north Florida,
1985 . . . . .. 31
3 Estimated costs of producing one acre of
cauliflower for processing, north
Florida, 1985 . . . . 32
4 Estimated costs of producing one acre of
lima beans (shelled) for processing,
north Florida, 1985 . . .. 33
5 Estimated costs of producing one acre of
okra for processing, north Florida, 1985 34
6- Estimated.costs of producing one acre of.
southern peas (shelled) for-processing,
north Florida, 1985 . .. .. 35
7 Per capital consumption of selected fro-
zen and canned vegetables, 1963-1983 . 36
8 Packout rates and current costs per
pound of finished product, selected
vegetables . . . . 37
9 U.S. pack of selected frozen vegetables,
1973-1984 . . . . 38
LIST OF FIGURES
1 Growing seasons for selected vegetables,
north Florida . . ....... 4
2 Vegetable freezing plant process flow
diagram . . . . 6
Special thanks go to Frigoscandia Contracting, Inc. and
Key Technology, Inc. for providing cost estimates of pro-
cessing equipment. Appreciation is also expressed to the
American Frozen Food Institute and The Food Institute for
providing secondary data, and to Dr. Cecil Smith for
assistance in collecting primary data.
Thanks also go to Renelle Kiddy for typing the manu-
script and to Kevin Parrish for his help in preparing the
* This study examines the economic feasibility of growing
and freeze processing vegetables in north Florida.
Freezing was selected as the processing method because
frozen vegetables are gaining in popularity while canned
vegetables are declining.
Researchers representing Agricultural Engineering, Food
Science, Vegetable Crops and Food and Resource Economics
participated in this study.
Vegetable selection criteria included both physical and
economic constraints. Soil and climate, growing,
harvesting, and processing costs, trends in per capital
consumption and competing imports were all considered.
Vegetables were also selected to maximize season length
so that fixed costs could be allocated over greater
* Broccoli, "cauliflower, baby lima- beans, southern peas
and okra were selected for detailed-evaluation. Various
combinations of vegetables' could- be processed from mid-
April through November.
* A model plant was designed with dual preparation lines,
feeding into one- freezer which utilizes the. individual
quick freezing- process. Line 1, designed for peas and
beans, has an output.capacity of 3,800 pounds per hour.
Line- 2, for broccoli, cauliflower- and okra, has a
finished product capacity of-. 2,800 pounds per hour.
These capacities are for the smallest commercial
freezing equipment currently available. All vegetables
are packed in 1,000 pound bulk bins.
*The initial investment was estimated at $3,165,000. The
major cost components were land ($40,000), plant
building ($564,000), equipment ($1,130,000), engineering
($678,000) and operating capital for the first season
* Total processing costs were estimated at 20 cents per
pound for line 1 and 30 cents per pound for line 2.
Total finished product costs for broccoli, cauliflower,
lima beans, okra and southern peas were 52.2, 56.4,
43.5, 45.9 and 42.3 cents per pound, respectively.
* At prevailing wholesale market prices for the five
crops, cauliflower and southern peas would provide net
returns of only 3 and 4 cents per pound, respectively.
Lima beans, at 18 cents per pound, had the greatest
estimated net return. Broccoli would result in
estimated losses of 4 cents and okra would return only 2
cents per pound.
* Production of cauliflower, southern peas and lima beans
would result in maximum net plant revenues of $479,000,
if the additional quantities of product would not reduce
wholesale market prices.
* The estimated return on investment would be
approximately 15 percent. This assumes breakeven prices
to growers. Thus, the rate of return is relatively low
for a commercial venture.
*Stability of market prices and the competitive stance of
existing processing firms is of major concern. Specific
contractural arrangements should be explored prior to
investing in a processing facility.
EVALUATION OF A MULTI-VEGETABLE FREEZING FACILITY
FOR THE NORTH FLORIDA REGION
R. L. Degner, T. D. Hewitt, R. F. Matthews,
S. Olson, W. P. Smith and A. A.- Teixeira
Adverse economic conditions are causing farmers and
others in the agribusiness sector to search for more profit-
able agricultural enterprises. There is considerable
interest in growing vegetables for the processing market in
many areas. This paper examines the economic feasibility of
growing and freeze processing vegetables in north Florida.
Freezing was selected as the processing method because
of-the increasing popularity of frozen-vegetables, largely at
the expense of the canning industry. Annual per capital
consumption of frozen vegetables has risen steadily for the
past three decades, and in 1980-83 averaged 11.0 pounds, an
increase of 11 percent over the 1970-74 period (2). In
contrast, annual per capital consumption of canned vegetables
declined by 30 percent during the same period (1). Canning
of tomatoes and pickling of cucumbers were not considered in
this study because previous research indicated that these
enterprises would not be profitable because of Florida's
relatively high growing costs (7, 4).
A task force of researchers representing the Agricultu-
ral Engineering, Food Science, Vegetable Crops and Food and
Resource Economics departments considered a large number of
vegetable crops for the model freezing plant. Data required
by this study were obtained from equipment manufacturers,
trade associations, extension specialists and vegetable
processors in other states, and published secondary sources.
Vegetable selection criteria included physical produc-
tion constraints such as soil and climate, corroborated by
production research in the north Florida and south Georgia
growing region. Growing and harvesting costs for a number of
vegetable crops were estimated- and compared with those in
other growing areas where possible. Marketing aspects were
also analyzed, particularly trends in the quantities packed
by the U.S. freezing industry, trends in per capital consump-
tion and competing imports. Vegetables were also selected to
maximize season length so that fixed costs could be allocated
over greater product volume.
Physical characteristics of the vegetables were also
considered, with preference given to those that did not
require highly specialized processing line equipment. Also,
a conscious effort was made to keep the total number of
vegetable crops to a minimum to reduce changeover time.
After considering the foregoing factors, five vegetables
were selected for more detailed evaluation, namely broccoli,
cauliflower, baby lima beans, southern peas and okra. In
north Florida, broccoli and cauliflower can be harvested from
mid-April through May and also in October and November. Lima
beans can be harvested from June through August, and southern
peas from June through September. The harvest season for
okra is July through October. These five vegetables result
in a total processing season of 30 weeks or 1,440 hours
Other vegetables initially examined but later rejected
included sweet corn, squash, snap beans and greens such as
kale, turnip and mustard greens.:and collards. Sweet corn was
eliminated. because production costs- in north. Florida were
much. higher than in other major- U.S. producing areas.
Farm-level. breakeven costs. in Florida. were. estimated at 12.8
cents, per. pound, but the prevailing price paid to Minnesota
sweet corn producers was 2.6 cents per pound in 1985. Thus,
it appears that Florida producers have a substantial cost
disadvantage, even after considering transportation. Squash
was ruled out because it does not freeze well; for satis-
factory processing, it would probably have to be breaded,
which would require additional equipment. Snap beans were
also eliminated because of preparation line equipment needs.
Greens were eliminated for several reasons. They
require specialized handling equipment and yields of finished
product are relatively low, approximately 60 percent, of
L u t h n a Bs- ... .t.. .. '''.... ..." *..... ,'.. .....o,
Southern Peas ...,. .'.'... ..:, ;*;:. ...:, .:,
APR |MAY JUN JUL AUG SEPIOCTINOV
Figure 1.--Growing seasons for selected vegetables, north Florida.
farm weight. However, the most important consideration was
the declining market for greens. In the past decade, the
U.S. pack of kale, turnip greens and collards has decreased
by 25, 45 and 40 percent, respectively. Similarly, from 1978
until 1983, the pack of mustard greens declined by 25 percent
(3, Appendix Table 1).
THE MODEL PLANT
The model plant was designed with dual preparation
lines, feeding into one freezer which utilizes the individual
quick freezing process (IQF). Line 1, designed for peas and
beans, has an output capacity of 3,800 pounds per hour. Line
2, for broccoli, cauliflower and okra, has a finished product
capacity of 2,800 pounds-per hour. These capacities are for
the smallest commercial freezing equipment currently avail-
able (5, 6). Larger plants have: been shown to be more
efficient, but a small plant was selected as the model
because of the lack of a processing industry in the study
area (9). All products are to be packed in poly-lined bulk
bins (1,000 pound "tote bins" on pallets) prior to entering
frozen storage (Figure 2).
Total equipment costs for the plant were estimated at
$1,130,000. This includes $183,000 for a pea/bean harvester
combine, $300,000 for the two processing lines, and $272,000
for the freezer and refrigeration plant (Table 1). The plant
requires a building of 14,100 square feet; at $40 per square
foot, the estimated cost is $564,000. The detailed general
Line 41 (3,800 Ibs./hr.):
Line #2 (2,800 Ibs./hr.):
Brocol i, Caul i flower, Okra
Figure 2.--Vegetable freezing plant process flow diagram.
Table 1.--Equipment costs.
Pea/bean harvester combine
Preparation line #1
Preparation line #2
General plant equipment
Freezer and refrigeration plant
plant equipment and building space requirements shown in
Tables 2 and 3 are based largely on research conducted by
USDA (8). Land and site work costs are estimated at
approximately $40,000, and engineering services at about 40
percent of plant and equipment costs, or $678,000 (Table 4).
The initial year's operating capital requirements (Table 5)
would add another $753,000, resulting in a total initial
investment of $3,165,000. Depreciation, taxes, insurance,
maintenance, repair and interest on the initial investment
result in annual overhead costs of $597,940 (Table 4).
Because of. the differences in the lengths of growing
seasons for the various crops, it was assumed that beans and
peas would be processed on Line 1 for 16 weeks or a total of
768 hours and broccoli, cauliflower or okra would be pro-
cessed on Line 2 for 14 weeks or 672 hours. Line 1 requires
only half the labor of Line 2. Further, Line 1 has a greater
production capacity, 3,800 pounds per hour as compared with
2,800 pounds. Thus, variable costs are 8 cents per pound of
finished product for Line 1 and 13 cents for Line 2. When
supervisory costs and other overhead (fixed) costs are added,
total processing costs are estimated at 20 cents per pound
for Line 1 and 30 cents per pound for Line 2 (Table 6).
Table 2.--General plant equipment.
Fork lift truck
Truck weigh scale
Air compressor system
Total general equipment cost
Table 3.--Building space requirements.
Preparation line #1
Preparation line #2
Freezer warehouse storage
Total building area
Building cost @ $40/ft.
Table 4.-Initial investment and related annual costs.
maintenance, Interest Annual
Item Initial cost Depreciation repair* (12%) cost
land and site work
(5 acres @ $8,000/acre) $ 40,000 $ 0 $ 2,000 $ 4,800 $ 6,800
Plant building (30-yr.)
(14,100 ft. 0 $40) 564,000 18,800 28,200 67,680 114,680
Equipment (10-yr.) 1,130,000 114,000 56,500 135,600 305,100
Engineering (40% plant
and equipment) 678,000 Q 0 81,360 81,360
Operating capital 753.000 0 90,000 90.000
Total $3,165,000 $131,890 $86,700 $379,440 $597,940
*Based upon 5 percent of plant and equipment.
Table 5.--Operating capital for first season.
Direct labor 211
Supervisory personnel (3 @ $15,000;
1 @ $30,000) 75
Energy and utilities ($71.50/hour x 1,440) 103
Taxes, insurance, maintenance and repair 87
Interest on investment (12%) 277
aBased upon $5.00 per man hour with 20 personnel on
Line #1 and 40 on Line #2 for 768 and 672 hours,
based upon 5 percent of plant and equipment.
Table 6.--Processing costs by operating 14ne.
Lina 1 Line 12
Peas, beans Broccoli, cauliflower, okra
(768 hrs. 0 3,800 lbs./hr.) (672 hrs. 0 2,800 lbs./hr.)
Cost Item Cost basis Unit cost Cost basis Unit cost
labor $100/hr. 0.03 $200/hr. 0.07
Utilitiesb $72/hr. 0.02 $72/hr. 0.03
Packaging $30/1,000 lbs. 00/ $30/1,000 1be. 0.03
Total variable costs 0.08 0.13
(0 $75,000/yr.) $52./hr. 0.01 $52/hr. 0.02
annual) $415/hr. .1 $415/hr. 01
Total fixed costs 0.1
Total processing costs 0.20 0.30
aBased on $5.00 per man hour with 20 personnel on Line 11 and 40 on Line |2.
bBased on: 620 kwh. electricity @ $0.08/kwh.,
10 gal./hr. fuel oil 0 $1.25/gal. and
6,000 gal./hr. water and sewage @ $1.50/1,000 gal.
RAW PRODUCT COSTS
Detailed estimates of production costs were developed
for broccoli, cauliflower, lima beans, okra and southern
peas. Breakeven prices were calculated for average produc-
tion levels in north Florida and also for a range of possible
yields (Appendix Tables 2-6). The breakeven price per pound
at average yields, delivered to the processing plant, was
18.9 cents for broccoli. Interestingly, the prevailing
prices paid to growers in California and Tennessee were 19.4
and 18.5 cents per pound, respectively, in early 1985 (Table
7). Florida's breakeven price for cauliflower was 13.2
cents, slightly below the 14.6 cents per pound received by
Florida's breakeven price on lima beans was estimated to
be about 22.3 cents per pound. During the spring of 1985,
growers in Georgia were being paid 17.8 cents and growers in
Tennessee were receiving 19 cents (Table 7). Growers in
north Florida can produce okra for about 13.2 cents per
pound, and during the summer of 1985, growers in Georgia and
Tennessee were receiving 15 and 18 cents per pound, respec-
tively. Finally, the breakeven price for southern peas
produced in north Florida was estimated at 21.2 cents per
pound. The prices paid to Georgia producers this year varied
from about 18 to 24 cents per pound, depending on maturity
and whether or not the processor harvested the crop. The
average price received by Georgia growers was estimated to be
Table 7.--Breakeven farm-level prices of selected vegetables for
processing, north Florida, 1985, and current prices paid
to farmers in other areas.
Florida Prices paid
Crop breakeven price in other areas
--------Cents per pound----------
Broccoli 18.9 19.4, 18.5a
Cauliflower 13.2 14.6b
Lima beans 22.3 17.8, 19.0c
Okra 13.2 15.0, 18.0c
Southern peas 21.2 22.0b
aPrices paid in California and west Tennessee, respectively.
price paid in California.
CPricas paid in Georgia and west Tennessee, respectively.
about 22 cents. In Tennessee, growers received 18 to 20
cents per pound with the processor harvesting (Table 7).
Unfortunately, production costs for these vegetables
could not be accurately determined for other growing areas,
with the exception of southern peas in Georgia. However, it
is reasonable to assume that prices paid to farmers for
processing vegetables do not greatly exceed costs of produc-
tion in most areas. Thus, a simple comparison of the
foregoing breakeven prices and prices paid to growers in
other areas indicates that north Florida growers can probably
Breakeven prices at the farm level and packout rates of
85, 50, 95, 83 and 95 percent for broccoli, cauliflower, lima
beans, okra and southern peas, respectively were used to
determine the raw product cost per pound of finished
product. Because of trim and cull losses in the processing
plant, finished raw product costs range from about 5 to 100
percent greater than the farm-level breakeven prices (Table
8). When processing costs of 30 cents per pound for broc-
coli, cauliflower and okra are added to the finished raw
product cost, the total costs of the processed products were
52.2, 56.4 and 45.9 cents per pound, respectively. The total
finished product costs for lima beans and southern peas were
43.5 and 42.3 cents per pound, respectively (Table 8).
Examination of wholesale prices for the five types of
frozen vegetables revealed that most have been relatively
stable over the past five years, although there have been a
Table 8.-Packout rates and current costs per pound of finished product, selected
Farm Ral Raw
breakeven Packout product price product Total coat of
Item cost rate adjustment factor cost processed product
pound --- ercent------ ---Cents per pound--
Broccoli 18.9 85 1.1765 22.2 52.2
Cauliflower 13.2 50 2.0000 26.4 56.4
ima beans 22.3 95b 1.054f 23.5 43.5
Okra 13.2 83 1.20 8 15.9 45.9
Southern peas 21.2 95b 1.0526 22.3 42.3
aIncludes processing costs of 30 cents per pouna for broccoli, cauliflower and okra
and 20 cents per pound for lima beans and southern peas.
bBased upon shelled farm weight.
few abberations which probably resulted from fluctuations in
supplies (Table 9). For most vegetables, there have been
gradual price increases over the past several years.
Wholesale prices for 1984, shown in Table 9, were compared
with the estimated finished product costs shown in Table 8.
However, most published prices had to be adjusted for
location and packaging to make them comparable.
A New York destination was assumed for all finished bulk
products. A west coast origin was assumed for broccoli,
cauliflower and lima beans, and a southeastern origin, 1,000
miles from New York, assumed for okra and southern peas.
Transportation costs were estimated to be $1.17 per mile. It
was further assumed that all deliveries were made in 1,000
lb. tote bins at 36,000 lbs. per trailer load. On this
basis, Florida's transportation advantage over product
originating on the west coast was estimated to be about 6.5
cents per pound of finished product.
Where wholesale prices were reported for 2.5-pound
foodservice packages, the wholesale prices were reduced by
6.3 cents per pounds for peas and beans and 6.9 cents per
pound for broccoli, cauliflower and okra to reflect reduced
costs associated with bulk packaging. After the required
price adjustments were made, estimated costs of Florida
produced products were compared with estimated wholesale
prices from other areas. These comparisons indicate that
Florida's production, processing and transportation costs for
broccoli would be about 4 cents per pound greater than the
Table 9.--Wholesale prices for selected frozen vegetables,
Item 1984 1983 1982 1981 1980
----------Cents per pounda------....
spears 54.5 52.5 54.5 56.5 54.0
cut 43.5 41.5 43.0 45.5 N.A.
chopped 41.0 385 40. 42.5 A.
averagec 48.5 46.4 48.15 50.4 N.A.
Lima beans 62.0 61.5 61.0 56.5 48.0
Cauliflower 60.5 58.0 65.0 62.5 53.5
Whole okrad 58.5 58.5 58.5 53.5 49.0
Southern pease 57.5 56.5 55.5 51.5 48.5
aAll prices were observed in October.
bp.O.B west coast basis in 2.5-pound foodservice
pack for October.
CThe average price for broccoli is a weighted average
based upon the midpoint of the reported prices weighted
by 0.5, 0.3 and 0.2 for spears, cut and chopped, respec-
dDelivered basis in 2.5-pound foodservice pack.
eBlack-eyed peas in 2.5-pound-foodservice-pack; deli-
vered basis, 38,000-pound or more truckloads.
estimated delivered price in New York of product shipped from
the west coast (Table 10). However, Florida's costs for
cauliflower and lima beans appear to be 3 and 18 cents per
pound below the delivered wholesale price of these items
shipped from California. Florida's respective costs for okra
and southern peas are only 2 and 4 cents per pound under the
delivered wholesale price of product shipped from the
southeast (Table 10).
Based upon the differences between estimated costs of
vegetables grown and processed in north Florida and estimated
market prices, it appears that broccoli should not be grown
for processing. However, frozen and fresh broccoli consump-
tion has increased dramatically in the past decade and
further increases in consumer demand are expected (11, Table
7). If production does not keep pace with consumer demand,
upward pressure on prices may eventually make broccoli an
attractive crop for processing. It should be noted, however,
that broccoli production has increased with the eastern and
southern areas of the U.S. in recent years, and imports
increased by 117 percent from 1979 to 1983 (Appendix Table
The small price differential for cauliflower makes it a
marginal crop at the present time. However, by processing a
spring and a fall crop, a total of 672 hours of plant time
could be devoted to it, resulting in production of roughly
Table 10.-Estimates of net returns tor selected vegetables processed in north Florida.
Estimated Estimated Difference between
Florida costs( market prices, estimated Florida
delivered to delivered to costs and
Item New York New Yorka market prices
C--ents per pound-------
Broccoli 56 52 -4
Cauliflower 60 63 3
Lima beans 47 65 18
Okra 50 52 2
Southern peas 46 50 4
aBased upon 1984 wholesale prices as repor"e by the Food Institute. Assumes west
coast origin for broccoli, cauliflower and lima beans, and southeastern origin for okra
and southern peas. Assumes bulk delivery. F,O.B. west coast prices for spears, cut and
chopped broccoli were weighted by 0.5, 0.4 pad 0.2, respectively.
1.9 million pounds of finished product and net returns of
$56,000 at 1984 prices (Table 11). All net returns are
reported on a pre-tax basis. About 2.4 million pounds of
farm-level cauliflower production would be needed. At
average yields, this would require approximately 170 acres
(Table 12). The market situation and outlook for cauliflower
is very similar to that for broccoli. Consumer demand has
been increasing rapidly and is likely to continue, but so has
production. Yields in other growing areas have also been
improving, and imports more than doubled from 1979 to 1983
(11, Appendix Table 8). Another concern is the stability of
the wholesale price level at current levels, particularly as
affected by increased production in north Florida. Examina-
tion of industry data shows a total frozen pack in recent
years of approximately 100 million pounds per year (Appendix
Table 9). Florida's increased production would increase
total supplies by about 1.8 percent. Precise estimates of
the effects of additional quantities on wholesale prices are
not available, but the effects would likely be small.
During the June-September period, there is a great deal
of overlap in the growing seasons for lima beans, southern
peas and okra. Thus, the rational approach is to select
those crops that will provide the maximum net revenue to the
processing plant. Assuming that the basic wholesale price
relationships will continue, lima beans should be the
predominant crop. Because lima beans have the highest net
return, the plant should process them exclusively during the
Table 11.-Operating time, output, and
two operating scenarios.
pet revenue generated by the processing plant under
Percent of Net revenue at
Product Houra Eppd U.S. packI current prices
1,000 1,000 dollars
Cauliflower 672 1,882 1.8 56
Baby lima beansb
Scenario A 576 2,189 2.9 394
Scenario B 288 1,094 1.4 197
Scenario A 192 739 2.8 29
Scenario B 480 1,824 7.0 73
Total net revenue:
Scenario A 479
Scenario B 326
aPercentage shown is based upon
1978-1983, except for lima beans and
average annual U.S. pack for the six-year period
southern peas, which are based upon 1983 only.
bro maximize revenue, the plant would process lima beans for 576 hours and southern
peas for 192 hours (Scenario A). Scenario B shows the result of processing equal quanti
ties of lima beans and southern peas for 192 hours (Scenario A). Scenario B shows the
result of processing equal quantities of lima beans and southern peas when both are in
season and southern peas only during September.
June-August period and process southern peas only during
Okra does not appear to be an attractive crop at present
because of the relatively low profit margin. Although the
industry pack of okra has been increasing in recent years,
wholesale prices have remained virtually unchanged. This has
probably been caused by the large increases in okra imports
(Table 9, Appendix Table 8).
The maximum profit scenario, "Scenario A," results in
576 hours of processing time devoted to lima beans, during
which time approximately 2.9 million pounds would be pro-
cessed. At present prices, net revenue would be $394,000.
Under Scenario A, the plant would operate 192 hours to
produce 730,000 pounds of southern peas, and net returns
would amount of $29,000. The production of lima beans and
southern peas would amount to about 2.9 percent and 2.8
percent of the respective 1983 U.S. packs of these items
(Table 11, Appendix Table 9). Net revenue from Scenario A
would be about $479,000 per year. This would yield a net
return on the initial investment of about 21 percent.
Assuming average yields, Scenario A would require about
1,150 acres of lima beans and about 440 acres of southern
peas to operate at capacity for the June through September
period. The combined acreage of cauliflower, lima beans. and
southern peas would be approximately 1,760 acres (Table 12).
Scenario B assumes that equal quantities of lima beans
and southern peas would be processed in the June through
Table 12.--Processipg vegetable acreage reP irements under two operating scenarios.
Product total product output Raw product required Acreagea
Cauliflower 1,882 2,352 168
Baby lims beansi
Scenario A 2,189 2,304 1,152
Scenario B 1,094 1,152 575
Scenario A 730 768 439
Scenario B 1,824 1,920 1,097
Total acreage requWreds
Scenario A 1,759
Scenario B 1,840
aAcreage at average yields of 7 tons, 1 toq, and 0.875 ton for cauliflower, baby liua
beans and southern peas, respectively.
August period, and only southern peas would be processed in
September. This scenario was developed because many growers
have traditionally grown this crop in the north Florida-south
Georgia region, and some growers in the study area may have
had experience with growing southern peas for the processing
Under Scenario B, the plant would process lima beans for
288 hours, producing roughly 1.1 million pounds of product.
This would amount to 1.4 percent of the 1983 U.S. pack, and
net returns to the plant would be 197,000 from lima beans.
Southern peas would be processed for 480 hours, producing 1.-8
million pounds and net revenues of $73,000 at 1984 prices.
Total net revenue under Scenario B at 1984 prices was
estimated at $326,000, which is a 10 percent return on the
initial investment. However, the quantity of southern peas
packed under Scenario B represents 7 percent of the 1983
U.S. pack. This volume may result in a significant reduction
in the wholesale price level (Table 11). Total acreage
required to operate the plant under Scenario B would be
1,840. This would include 168 acres of cauliflower, 575
acres of lima beans, and 1,097 acres of southern peas (Table
Scenario A is the most rational alternative from the
standpoint of net returns at present price levels, and it
appears likely that potential impact on wholesale prices
would be less as well.
Present market structure is another el maen to be
considered which can affect the likaly success of a process-
ing plant. The number of plants with annual sales of
$100,000 or more processing cauliflower was 20 in 1982, while
18 processed lima beans (2). Although the exact number
processing southern peas was not reported, it is estimated at
fever than 10. Larger numbers of firms generally result in a
more competitive business environment. If there are a very
few but large plants processing southern peas, it may be
difficult to compete with them.
Demand trends for lima beans and southern peas are
another serious concern. Both products have been suffering
long-term- declines. Per- capital consumption, which is
raeportd-only for lims bans=, has decreased from 0.7 pounds
pae year. in-the' 19 l sand 1970"' s t' only 0.3 pounds in-
1983. This- decline in popularity is also reflected in
industry pack statistics (Appendix Tables 7 and 9). The
average annual pack of southern peas has declined by nearly
20 percent from the 1973-79 to the 1980-84 period. In a
shrinking market environment, it could be more difficult to
become established. This will be particularly true where
existing firms have a lower-cost structure. Competing firms'
cost structure and pricing strategies can pose serious
barriers to entry for a new firm.
Wholesale price trends and estimated processing costs
for a new north Florida vegetable freezing plant indicate
that cauliflower, lima beans and southern peas would have a
modest profit potential at 1984 wholesale price levels. If
these prices prevail, the estimated return on investment
would be approximately 15 percent. It should be noted that
this return assumes that all vegetables are obtained at
breakaven prices. Thus, no profits accrue to producers.
However, the breakeven producer prices do include interest on
fixed assets used in production at 12 percent and interest on
operating capital at 12 percent. An overhead and management
charge is included, but costs include no land charges.
The stability of the wholesale prices is of primary
concern. Existing processing firms may make entry into this
market very difficult; at this point, it is virtually
impossible to predict other firms' reaction and the resultant
wholesale price levels for the three crops under considera-
tion. One recommended course of action is to explore the
market for these vegetables with potential buyers and discuss
possible contractural arrangements prior to investing in a
processing facility. If satisfactory contracts can be
arranged, a freezing plant may give north Florida an eco-
nomically viable alternative.
Apwendix Table 1.
pack of collarda,
turnip greens and Su)ash,
Year Colards Kale astard greens lmarnip greens Bsha
---- -----1,0oO pounds- ----------
1973 20,885 4,425 N.4. 18,630 26,343
1974 20,336 5,029 H.1. 11,120 31,330
1975 14,126 5,071 N.1. 15,545 27,906
1976 17,022 4,597 N.j. 14,457 35,377
1977 19,269 6,515 N.1. 17,168 41,598
1978 17;901 5,403 )q,595 13,735 43,826
1979 16,534 3,637 10,020 15,948 38,149
1980 13,206 4,292 7,465 10,705 36,737
1981 16,051 4,788 13.011 13,020 46,833
1982 18,031 4,727 8,516 9,799 65,179
1983 9,440 2,894 7,998 11,925 62,738
1984 12,968 3,335 N.1. 10,299 66,467
American Frozen Food Institute.
Append4x blate 2.*-tsatfiatd costs ot produuing one acre of breacol
wCta Ftorda, 1983.
It- Unit Qulnt Prie YValue Tour cost
CN ztumcs. ner.Narmnt,
Frtit LIzer, sixed
Stdedresa1 fr tlzer
Labore (tmfpt., hoeing)
Interes-t on op. c.
Tetal pre-harvst ucash expes
F.x e.asest. ar,-h.at-est
Ovrcteod and .nagemant
Totat premftrest fixed osets
Tetalt petarvuet eats
Total ltarvst costs
*reakeravn trceatf P
r k ~~ r
.r4ena at Variaus t$.ida
Apenlfx r ate 3.-ofatfatas casts o prod uiing one acre et cauiftI -r fur processing,
narta FtLorida, 198 .
tm unit Quant. Pric Valu Yaour ease
eaits *xaonsen. se harvnet
,ee, d lt d
Lar (trmMpe., haein )
tarest a o r.a ep.
prharest esas exspa
FixeS gaus. ne.Aarmnet
Ove dM .fl mnamwa
Tat l pneMrnvt flxed 5
tatl p cimarvetr cotst
fl4td b n (rorscatd)
TotaL haars-t casts
Uronc^ Cautfflour g4en
at v 4.au Y 'tds
Appendfx frabl 4.*5.stiated casts af producing one acre of Liae beans (sAeILtd)
cssing, narnn Florida, 1985.
Its Unit aurnt. Price Va(ue Tour cost
LI.., sIpt fed
Intlers a on
f aed casta. wrne- rvafst
Trutk (p< cu')
Overhead anm Inageflnt
Tota pre-farnt- fixed cost
Total prhervent csGta
Total harvest cass
9bn ,wrf en at v'1u
Appmnuix Table .--*satistnrt cats of producing ne a re of okr for processin,. nor.n
Itam Unit umnt. Price VelU Taur ea
LiS, ppl ied
SId@rive fnt tLtzer
erldti .d l
tmnmrus an oper. e~s.
Tota pnhTrv.nst casJ expenses
rld. easts. wrflrvntt
N-ft -if t
Ovel rtaed s fU at u
Total per *fvmt ftxs -st~U
Tetatl pfarvest o01 .
Ftled boxes (prantetl
Total ha rnet easts
Ireukeni Ocrs .egn at Various 4.(dm
ygp(d ..Lseierl. P9r40 ft/n)
Appendix Table 6.**-stsaated costs of producing one acre of southern peas (s l Led) for
proealfng, north fl orida, 1983.
Its Unit quant. Prfe, Value Your east
Pnt t llfe, a edl
Intmrnt on aper.
Total pre-farmst coats
Total harvest castsa
Br1-lwur Scutftorn Sqgp aPf en
at Vacfous Iet+id
.**-Per scaita onstaption of ste(ectd fromzen n4 and h t nrauotn,
Tear rotai eCaulifttno r Liae beamn Total froesn Trota cmnSa
1943 0.6 0.2 0.7 7.2 27.4
1944 0.7 0,2 0.7 7.6 27.4
1945 .7 0.2 0.7 8.! 28.0
1946 0.? 0.3 0.7 8.4 2.4
197 0. 0.5 0.3 0.7 9.0 29.4
1964 0.4 0.3 0.7 9.6 30.4
1969 04 0. 9.1 31.5
1970 0. .3 0.7 9.4 31.1
1971 0.9 O. 06.& 9.7 31.2
1972 1.0 0.6 0.7 9.9 32.1
197n 1.1 O.4 o.7 10.6 32.5
1974& 1.0 .4 0. 10. 1 31.3
1973 0;9 0.6 03 9.64 29.
1976 1.0 0.6 0.5 10.1 30,9
197 1.1 0.46 0S 10.2 30.4
1978 1.4 0.5 0.s 10.7 29.
1979 1.4 .53 0. 11.2 29.0
1980 1,4 0.. 0.3 10o. 28.7
1981 1.5 0. 0.3 11.6 26.0
1982 1.5 0.5 0.5 11.0 25.4
1983 1.5 0.5 0.5 11.1 25.5
al'xaude tmmco proa4uds.
aUreer- USOA (10).
Year Broccoli Cauliflower Okra
-----------1,, 1000 pounds ------------
1979 15,451 10,010 10,749
1980 23,898 9,720 11,598
19821 27,823 13,574 14,558
1982 31,870 20,570 24,175
1983 33,551 21,085 22,309
Appendix Table 9.--I.S.
pack of selecad frozen vegetables,
Year Broccoli caulifluer Baby lt beans Okra Southern peas
---------------1,00 pounds------------ -
1973 213,365 96,098 98,112 40,597 41,974
1974 245,285 93,754 97,163 42,992 30,881
1975 191,630 76,056 85,670 27,970 21,745
1976 201,513 67,807 43,854 27,489 31,368
1977 314,395 96,670 92,154 41,551 36,054
1978 276,519 127,513 81,145 16,295 36,981
1979 298,618 101,130 82,775 33,305 21,099
1980 290,657 84,766 52s,78 41,698 20,933
1981 306,755 105,161. 67,484 43,774 33,404
1982 335,516 111,644 91,781 54,339 23,821
1983 285,358 100,541 as,1#2 46,038 22,926
1984 365,764 102,106 82,985 54,579 28,207
American Frozen Food Institute.
1. American Instituta of Food Distribution. 1985. ?ocd
Markets in review. Vol. 1. 1985 Edition: Canned
VeYetables. .uitls. Juices. Fish and Meat Products.
Fairlawn, New Jersey.
2. American Institute of Food Distribution. 1985. Food
Markets in Review. Vol. II. 1985 Edition: Frozen
Vegetables. Fruits. Fish Concentrates. Edible Nuts.
Dried Fruits and Dry Beans. Fairlawn, New Jersey.
3. American Frozen Food Instituta. 1984. Frozen Food Pack
Statistics. McLean, Virginia.
4. Degner, Robert L. 1985. An Economic Analysis of
Cucumber Production for the Proaessin Markeat. Florida
Agricultural MarAet Research Canter Staff Report Number
13 Instituta of Food and Agricultural Sciences,
University of Florida, Gainesville, Florida.
5. Frigoscandia Contracting, Inc. 1985. Personal communi-
cation. Atlanta, Georgia..
6. eay Technology, Inc. 1985.. Personal communication.
7. Matthews, R. F; at-al. 1984. "VPtantial for the Expan-
sion of. the Tomato Processing. Industry in Florida."
Preaaedincrs of, the Frorda State Hortfcultural Societv
8. Pearson, James L. and John R. Brooker. 1969. Planning
Data foa Marketina Selected Fruits and Vegetables in the
South: Part II. Freezing. Handbook. Southern Coopera-
tive Series Bulletin Number 150.
9. USDA-ERS. 1971. Commercial Frazino of Six Veaetable
Crons in the South. Marketing Research Report Number
926. U.S. Government Printing Office. Washington, DC.
10. USDA-ERS. 1984. Food Consntion. Prices. and Exrendi-
tures: 1963-1983. Statistical Bulletin Number 713.
U.S. Government Printing Office. Washington, DC.
11. USDA-ERS-NED. 1985. Vecatable Outlook and Situation
Yearbook. Bulletin TVS-236. Washington, DC.