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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
Francisco Rohrmann
Jose Alvarez
Economic Information
Report 202
and Returns for
Production on Muck
in Florida, 1984
Food and Resource Economics Department
Agricultural Experiment Stations
College of Agriculture
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611
Rice
Soils
November 1984
Costs
An enterpr i se budget for rice production .in the Everglades
Agricultural Area (EAA) during the 1984 season was developed from
data provided by loca p dd y 1 producers. An ef fici ent 500-acre farm was
assumed., Resu] ts show a not return to land, management and risk
of $7:1 per acre for the plant crop,. The combined plant and ratoon
crops no:t returns amount to f$17 per acre,.
Key words: Everglades, rice, enterprise budget, production costs.
The authors thank David Dodson., David Jones, George Snyder, Tom
Sp r een and P.cJ. van B lockl 1and f or their valuab le comments and
suggestions on early drafts of this manuscript,, The contributions
of several rice growers are greatly appreciated.
The use of trade names in this publication is solely for the
purpose of providing speci ic informant ion. It is not a guarantee
or a warranty of the products named and does .nt signify that
1 hey are approved to t he ex c fusion of others of su. i.tab e
composition.
TBM PC is a trademark of International Bus:i.ness Machines Corp.
Lotus 1-2--3 is a trademark of Lotus Development Corporat:i. on.
ABSTRACT
TABLE OF CONTENTS
Page
LIST OF TABLES ....... ......... .......... ...... ..... ......... i:ii
INTRODUCT! ON ........ ........ ... ............. ....... 1
RIC HERODUCTION IN EVERGLADEFS .. .. .. .. .. ... ...... 2
METHODOLOGY AND DATA SOURCE S., ,.. ... ...... ,. .............. 4
Management ................. ............................ 4
Farm Characteristi. c s .... ............. ............ 5
Machi nery and Equipment ...... .... ........... ...... 5
Cu ltural. Practices .......... ... .... ........... 7
L a b o r ....... .. ..... ... .. .. .. .. .. .. .. 9
Yields and F:'rices ...., ,,. ........ .................. 9
Data Sources .. .,, ,. ... ...... .... ............. ... '1
COSTS AND RETURNS FOR THE PLANT CROP ................. 10
Pre --harvest Costs; ,t .... ... ......... ............... ... 10
Total Costs . ... .. ... .. .. .. .. .. .. .. ... ... 12
Returns u to r F actors o-f Production .... ... .. ..... 14
Sensi ti vity Anal ysis ................ ....... ......... 14
PARTIAL. BUDGETING FOR RATOON PRICE ........................ 16
TOTAL. RETURNS TO FACTORS OF PRODUCTION ................ 13
CONCL.US ION1 ........ ...... .... ... ...................... 18
rEFERENCES ...... ... ... ............ .... .. .......... 21
LIST OF TAB.LE...
[able Page
1 Estimated initiall investment and annual and hourly
operating costs of machinery and equipment for
cultivating 500 acres of rice in the Everglades
agri culturall area,, 1984 .............. ......................... ....... 6
2 Cult..ral practices performed by di ff erent
machinery and equ:i..pinent to produce 500 acres o.f rice
in the Ever glades; agri .cu ltural area:, 1 984 ......... ...... 8
3 Estimated pre-harvest costs per acre or 500 ace 5 acres of
rice grown in the Everglades agricultural area, 1984 ... 11
4 Estimated total costs per acre, assuming 35, 40 and
45 cwt yields,, for 500 acres of rice grown in
the Everglades agricultural area, 1984 ........ ......... 13
5 Estimated returns to .- factors o-f production for a plant
crop w:i.th a 40 c:wt yield, for 500 acres of rice grown
in the Everglades agricultural area, 1984 .................. 15
6 Sensitivity analysis using 5 cwt above and below the
expected yield a $2 per .w above and b below the
expected price ....... .. .. .. ... ... .. .................... 15
7 Partial budget showing net change in farm :income
per acr e from .harvesting a ra-toon rice crop in the
Ever l ades agri cul tu.ral area, 19 84 .. ..... ... ... ........ 17
8 Total ret..rns to factors of production .for plant and
ratoon rice grown in 500 acres :in the Everglades
agricultural area ,, 1984 ........... .. .......... ... .. 19
COSTS i:, RETURNS FP: RICE PRODUCTION ON MUCK SOILS
IN FLORIDA, 1984
Francisco Rohrmann and Jose Alvarez
INTRODUCTION
In 1977, rice was gr own for grain in the Everglades
Agricultural Area (EAA) f or the firs.: time in 20 years. A
f eas i b ility stud .i v, ot I i i. nin the historical background d the
status of rice production at that time, the area's production
potential, and preliminary costs and returns information, was
published the following year (Alvarez 1978)..
Since that time, what was thought to be a promising new
alternative has become a viable industry., Harvested acreage has
approached 10,000 acres, two drying. and milling facilities have
been estab listed, and a sound r research and extension program at
the Everglades Research and Education Center has provided growers
w ith continuou i s updated local resea- rch.:
The 1978 rice enterpri se budget (Alvarez 1978) reflected the
cultural practices and level of technology existing at that time.
Changes in both, as well as requests from actual and potential
growers, make it necessary to develop a current budget. The
objective 'of this pub1 i cation is to fill that vo:i.
Fr.ancisco Rohrmann and Jose Alvarez are Director of IBM Grant and
Are a Economist, respectively, Food and Resourc e Economics
Department. University of Florida, Everglades Research and
Education Center, Belle Glade, F' 33430.
The figures in this report were developed with a
computer ized rice budget generator designed by the authors. The
software package e is intended for on--farm use with an IBM Personal
Computer having a minimum memory of 192 Kilobytes of RAM, two
disk drivIs, a priinte'-r, and either version 1 or 1A of the Lotus
1.--2-3 electronic spreadsheet.
RICE PRODUCTION IN THE EVERGLADES
Several f actors combine to make the EAA most suitable for
rice culture: vast expanses of *flat, high-nitrogen muck soils, a
well-developed diIke and canal system, an abundance of water, and
a climate during the summer closely approaching the optimum for
the crop (Green 1953) Another contributing factor is the
existence of idle land during the rice-growing period, which
allows growing rice without taking la~:nd away -from other crops.
Snyder et al. (1.977) have documented the possibilities for
incorpor a ing r ice in the normal vegetab 1 e production cycle.
Although some rice has been planted on vegetable land that would
oth erwi se li e fal 1ow dur i ng the summer months, most ri ce
production :is taking place on sugar cane land.
About 370,000 acres of land in the EAA are devoted to sugar
cane production. Sugar cane is harvested during the fall and
winter and must be replanted in the fall approxi mately every four
years. Thus about 95,000 acres of land are idle during the spring
and summer, .
Fitting rice into the sugar cane production cycle has been
outlined by Alvarez et al. (1978):
Sugarcane is generally h arrested from November
through March. Plantings may start in September and
end in late Ja.nuary. Fallow time will thus range
from a minimum of 5 months to a ma -:imum of 12
months, wit h 9 months being thE : mode.
Rice can be planted from March through July and
harvested through December,. Very short-season
var ieties (L..abelle andc Lebonnet), requiring 110 to
120 days to mature, have already been planted with
success in the area. Assuming 1 month is needed for
land preparati on and 4 months to grow and harvest
the crop, there are still 4 months left to obtain a
ratoon crop., It is therefore possible e to f it at
least one rice crop, and perhaps a plant crop and
its rat oon crop, into the sugarcane production
cycle (p..13).
General and speci f ic gui. del ines f or rice production in the
EAA have been developed by Shuler et al. (1981). They are based
on research results and growers' experience.
The importance of destroying cane stubble and trash during
land preparation is emphasized. Crop residue will interfere with
drilling r-:ice and may physically injure emerging seedlings..
Good irrigation and drainage are a must for several reasons,,
Fields must be leveled so as to achieve. a variation in elevation
f ro'm three to six inches to eliminate water l jogging and dead
areas. Raoid drainage is necessary after seedling rice is f loaded
F following herb i cide applicant ion or to leach salts if sal i nity
becomes a problem. At harvest time, fields must be drained
quickly to avoid delays duec to excessive rains. The size of
fields (usually of 40 acres or less) and location of levees
depend upon the levelness of the field, pump capacity and
harvesting schedule. Several shal low, six to ten inches deep
"shovel ditches" are plowed across the width of the field to
improvee irrigation and drain,.-...
Depending on the variety, harvesting takes place between 110
to 120 days after planting. The 4 fields are then flooded again and
a ratoon crop can usually be harvested within 65 to 70 days,
yielding L::etween 35 to 50 :, of the first crop.,
METHODOLOGY AND DATA SOURCES
Many variables :influence rice production in the EAA,,
Variations in management, size of farm, soils, etc., result in
different systems of product ion with corrresponding input and
output levels. For this reason, it is required to state several
assumpt:i ons used to develop this budget, which analyzes first the
costs and returns associated with the p ant crop, then the
economic feasibility of a ratoon crop, and finally, the whole
operate on,,
Management
This study assumes: a) a high level of farm management, b)
the manager is a profit maximizer, c) use of the latest
technology, and d) the rice grower is an independent producer,
but is not a grower-processor.
quickly to avoid delays duec to excessive rains. The size of
fields (usually of 40 acres or less) and location of levees
depend upon the levelness of the field, pump capacity and
harvesting schedule. Several shal low, six to ten inches deep
"shovel ditches" are plowed across the width of the field to
improvee irrigation and drain,.-...
Depending on the variety, harvesting takes place between 110
to 120 days after planting. The 4 fields are then flooded again and
a ratoon crop can usually be harvested within 65 to 70 days,
yielding L::etween 35 to 50 :, of the first crop.,
METHODOLOGY AND DATA SOURCES
Many variables :influence rice production in the EAA,,
Variations in management, size of farm, soils, etc., result in
different systems of product ion with corrresponding input and
output levels. For this reason, it is required to state several
assumpt:i ons used to develop this budget, which analyzes first the
costs and returns associated with the p ant crop, then the
economic feasibility of a ratoon crop, and finally, the whole
operate on,,
Management
This study assumes: a) a high level of farm management, b)
the manager is a profit maximizer, c) use of the latest
technology, and d) the rice grower is an independent producer,
but is not a grower-processor.
Farm Character :i. st :i.sics
This study assumes a sugar cane farm growing 500 acres of
rice in land that would otherwise lie fallow during the summer
period. The 500-acre figure is assumed because there are some
economic es of scale in owning machinery sp eci f ic for ri ce
production, mainly the self-propelled combine. The soil type,
where most ric is i. .*n is classified as muck, The farm is
assumed to be located at a distance of ten miles from the dryer.
Machinery and Equipment
The machinery and equipment assumed (Table 1) can perform
all necessary operations in the time required and is used
efficiently. Annual fixed cost includes depreciation, repairs,
interests, taxes and insurance. Depreciation is calculated using
the straight line method, assuming machinery life at ten years
and a salvage value of ten percent of the purchase cost., This
method is used :because it taklesi into account the useful life of
the machinery thus spreading machinery ownership costs over the
entire period. Recent depreciation methods would distort the
costs and returns results, which would vary depending on the year
bei ng considered.
Repairs are estimated at three percent of purchase cost.
Interest on machinery loans was calculated at 13 percent of the
average value of the machine. Average value is defined as the
average of purchase cost and salvage value. Taxes and insurance
Farm Character :i. st :i.sics
This study assumes a sugar cane farm growing 500 acres of
rice in land that would otherwise lie fallow during the summer
period. The 500-acre figure is assumed because there are some
economic es of scale in owning machinery sp eci f ic for ri ce
production, mainly the self-propelled combine. The soil type,
where most ric is i. .*n is classified as muck, The farm is
assumed to be located at a distance of ten miles from the dryer.
Machinery and Equipment
The machinery and equipment assumed (Table 1) can perform
all necessary operations in the time required and is used
efficiently. Annual fixed cost includes depreciation, repairs,
interests, taxes and insurance. Depreciation is calculated using
the straight line method, assuming machinery life at ten years
and a salvage value of ten percent of the purchase cost., This
method is used :because it taklesi into account the useful life of
the machinery thus spreading machinery ownership costs over the
entire period. Recent depreciation methods would distort the
costs and returns results, which would vary depending on the year
bei ng considered.
Repairs are estimated at three percent of purchase cost.
Interest on machinery loans was calculated at 13 percent of the
average value of the machine. Average value is defined as the
average of purchase cost and salvage value. Taxes and insurance
Table 1.-Estimated initial investment and annual and hourly operating costs of machinery
and equipment for cultivating 500 acres of rice in the Everglades agricultural
area, 1984.
MACHINERY & EQUIPMENT
ITEM
Tractor 1, 185 HP
Tractor 2, 140 HPF
Tractor 3, 120 HP
Disk offset, 9'
Disk offset, 11'
Disk harrow, 21'
Laser plane
Roller, 10'
Grain drill, 10'
Hopper trailer
SP combine, 16'
Bull dozer
Levee disc
New Cost
60, 000
45,000
35, 000
4,000
5, 000
9,000
30,000
1,530
2, 880
7,200
73:, 500
39, 600
10, 000
Fuel
gal/hr.
8.0
4.5
4.5
5. 1
Annual
Use (Hr-s)
2000
1500
1500
500
500
500
1500
150
150
300
300
600
40
TOTAL 322,710r
Annual
12,090
9,068
7, 053
806
1,008
1,814
6,045
308
580
1,451
14,810
7,979
2,0 15
65,026
$/A
13. 03
4. 76
3.48
0.73
1. 04
1. 09
7.25
0.69
1.16
2.90
29.62
0.75
2.83
69.33
Variab le
Cost/Hr
9.. 00
5.50
4 ,,80
0.00
0.00
0.00
0,,.00
0.00
0.00
0.00
5.50
6. 10
0.00
aIncludes time not used on rice enterprise.
--Fixed cost.---
represent one percent of the initial investment of the machine.
Machinery fixed cost per acre is a prorated figure, which
relates the annual fixed cost per hour to the total number of
hours per acre a particular machine or piece of equipment is
employed in the rice production process. The prorated approach is
used due to the fact that, in the Evergl ades Area, most of the
rice machinery is also used for growing sugar cane. The
ex ceptions are the self-propel led combine, the grain drill and
the hopper trailer, which are specific for rice production. Their
corresponding figures are not prorated by their hourly use per
acre, but simply the result of dividing total fixed cost by the
500 acres planted to rice.
Variable cost per hour is the dollar amount of fuel directly
consumed by power machinery (at 1. 00/gallon) plus one doll ar
per hour for maintenance. For this reason, non-power equipment
does not show a variable cost per hour, although repairs were
included under machinery ownership costs.
Cultural Practices
Table 2 shows most cultural practices performed, in a
sequence of machinery operations associated with growing rice in
the area. The machinery list is identical to the one shown in
Table 1. Times over represents the number of times a cultural
practice is performed. The efficiency measures or performance
rates of the operation are stated in acres per day given the type
of machinery employed. A typical working day for a machine is
Table 2.- Cultural practices performed by different machinery and equipment to produce 500 acres of rice in the
Everglades agricultural area, 1984.
MACHINERY USE
Times Over
Tractor 1., 185 HP
Tractor 2, 140 HP
Tractor 3, 120 HPF
Disk offset, 9'
Disk offset, 11'
Disk harrow, 21'
Laser plane
Roller-, 10'
Grain drill, 10'
Hopper trailer
SP combine, 16'
Bull dozer
Levee disc
Ld L aLnd Land Land
Brealk:ing Disking Level Disking PlantingRolling
2 2 1 21 3
..-----.--...-----..---Acres/Day---------------------
0 0 0
0 0 0
0 0 0
Bui ld
Levees
Destruc..
Levees Harvesting
.--------------- Acres/Day----.
0 O 0
0 C)0 0'
0 0
0 0 0
C0 (' 0
f) ) ,
0 0 12
0 0 12
0 160 0
160 0 0
(*) ltZ(.
:L 61~I ()
--
assumed to be nine hours. In other words, equipment usage time is
assumed to be 90% of labor time;, allowing for the time lost in
activities such as ref fueling etc..
The efficiency in terms of acres per day is utsed to obtain
the total number of hours per acre a machine is employed. This
information is used to calculate fixed costs and variable costs
on a per acre basis.
Labor
Labor cost per hour of work is estimated to be $5.50,
:i.nclu ding f ringe benef its The number of hours of work in a
typical working day is assumed to be 10. Together with machinery
eff iciency:, this information is used to calculate labor cost per
acre,,
Yields and Prices
Rice is assumed to be harve-sted at 21% moisture content and
dried down to 12.5% A vield of 40 cwt of dry rice per acre and a
price of *$10/cwt (higher than the average domestic price due to
high quality No. 2 rice) are assumed for the plant crop,, For the
ratoon rice, the yield assumed is of 20 cwt. and the price is
$9,,50 (a lower price is the result of a lower quality rice). The
cost of hauling the rice to the dryer is set at $0.05/cwt/mile.,
The drying cost is $11.40 per cwt of wet rice.
assumed to be nine hours. In other words, equipment usage time is
assumed to be 90% of labor time;, allowing for the time lost in
activities such as ref fueling etc..
The efficiency in terms of acres per day is utsed to obtain
the total number of hours per acre a machine is employed. This
information is used to calculate fixed costs and variable costs
on a per acre basis.
Labor
Labor cost per hour of work is estimated to be $5.50,
:i.nclu ding f ringe benef its The number of hours of work in a
typical working day is assumed to be 10. Together with machinery
eff iciency:, this information is used to calculate labor cost per
acre,,
Yields and Prices
Rice is assumed to be harve-sted at 21% moisture content and
dried down to 12.5% A vield of 40 cwt of dry rice per acre and a
price of *$10/cwt (higher than the average domestic price due to
high quality No. 2 rice) are assumed for the plant crop,, For the
ratoon rice, the yield assumed is of 20 cwt. and the price is
$9,,50 (a lower price is the result of a lower quality rice). The
cost of hauling the rice to the dryer is set at $0.05/cwt/mile.,
The drying cost is $11.40 per cwt of wet rice.
Data Solurces
Data f for activity performed, equ:i meantt used and their
corresponding e f i ci ri c:s were obtained thr og..gh personal
intervi ws with producer'::. -:"co: fo ." r inpu'.its were obtained from
local firs rs :: nd rice grower' .
COSTS iAND RETURN.Ji I FOR THI-E PI..LANT CROP
Pre-harvest Cast.
Pre--h t arv-;t cost are divide d into variable and .fixe :d costs
(Table 3). Detailed d:i. sc.s: i on o-f Table 3 is omitted because it
is self -ex;planatory. ReFit..:iEs r..e providedd in costs :: per acre and
the corresponding proper t:i on .:i th respect to either var:i able or
fix ed costs. Variable cost::- a're the c:::osts that mav vary with
production levels ';and with changing inputt levels.. Notic:::e that the
three most si ni.f i cant variable costs a:re mac:hi nery and equipment
(16.30%), labor ( 13.63%) C. nd seed (12.,,98%). Besides the costs
incu.rre ad i.n di f event activities., i rrigat i. on mni si. el 1 aneous (at
10% of a]:l pre-"harvest variableC: co sta ) and interest on opFerat:i.ng
:ap:ital at 13%) are o 1lso.:. included., Toltal pre--.harvest variable
costs for the ex ample farm are $:1.69.53 per acre..
Fixed costs are those that cannot be changed during the
production periodd, Typ:ical. fi:;.;ad costs in rice production are
those associated wit. o wnirg machinery and equi .pment, land
charges, and irrigation systems. Note that the absence ::f a land
charge and zero fixed coat for irrigation are due to the .fact
Data Solurces
Data f for activity performed, equ:i meantt used and their
corresponding e f i ci ri c:s were obtained thr og..gh personal
intervi ws with producer'::. -:"co: fo ." r inpu'.its were obtained from
local firs rs :: nd rice grower' .
COSTS iAND RETURN.Ji I FOR THI-E PI..LANT CROP
Pre-harvest Cast.
Pre--h t arv-;t cost are divide d into variable and .fixe :d costs
(Table 3). Detailed d:i. sc.s: i on o-f Table 3 is omitted because it
is self -ex;planatory. ReFit..:iEs r..e providedd in costs :: per acre and
the corresponding proper t:i on .:i th respect to either var:i able or
fix ed costs. Variable cost::- a're the c:::osts that mav vary with
production levels ';and with changing inputt levels.. Notic:::e that the
three most si ni.f i cant variable costs a:re mac:hi nery and equipment
(16.30%), labor ( 13.63%) C. nd seed (12.,,98%). Besides the costs
incu.rre ad i.n di f event activities., i rrigat i. on mni si. el 1 aneous (at
10% of a]:l pre-"harvest variableC: co sta ) and interest on opFerat:i.ng
:ap:ital at 13%) are o 1lso.:. included., Toltal pre--.harvest variable
costs for the ex ample farm are $:1.69.53 per acre..
Fixed costs are those that cannot be changed during the
production periodd, Typ:ical. fi:;.;ad costs in rice production are
those associated wit. o wnirg machinery and equi .pment, land
charges, and irrigation systems. Note that the absence ::f a land
charge and zero fixed coat for irrigation are due to the .fact
Data Solurces
Data f for activity performed, equ:i meantt used and their
corresponding e f i ci ri c:s were obtained thr og..gh personal
intervi ws with producer'::. -:"co: fo ." r inpu'.its were obtained from
local firs rs :: nd rice grower' .
COSTS iAND RETURN.Ji I FOR THI-E PI..LANT CROP
Pre-harvest Cast.
Pre--h t arv-;t cost are divide d into variable and .fixe :d costs
(Table 3). Detailed d:i. sc.s: i on o-f Table 3 is omitted because it
is self -ex;planatory. ReFit..:iEs r..e providedd in costs :: per acre and
the corresponding proper t:i on .:i th respect to either var:i able or
fix ed costs. Variable cost::- a're the c:::osts that mav vary with
production levels ';and with changing inputt levels.. Notic:::e that the
three most si ni.f i cant variable costs a:re mac:hi nery and equipment
(16.30%), labor ( 13.63%) C. nd seed (12.,,98%). Besides the costs
incu.rre ad i.n di f event activities., i rrigat i. on mni si. el 1 aneous (at
10% of a]:l pre-"harvest variableC: co sta ) and interest on opFerat:i.ng
:ap:ital at 13%) are o 1lso.:. included., Toltal pre--.harvest variable
costs for the ex ample farm are $:1.69.53 per acre..
Fixed costs are those that cannot be changed during the
production periodd, Typ:ical. fi:;.;ad costs in rice production are
those associated wit. o wnirg machinery and equi .pment, land
charges, and irrigation systems. Note that the absence ::f a land
charge and zero fixed coat for irrigation are due to the .fact
11
Table 3.- Estimated pre-harvest costs per acre for 500 acres of rice grown in the
Everglades agricultural area, 1984.
PRE-H1ARVEST COST
I. VARIABLE COSTS
,Seed a
r: erti lizer
IHrbicide
Fungi ci de
T isecti ci cde
: rcraft.
La..bor"
Mch,, & Equip.
Ir rigati on
Mi scel 1 aneous
Interest
UNIT
lb,.
t on
ga 1..
I b ,1
Acre.
Hours
Ac, re--inch
$
Quanti ty
Ti mes
Over
... .. ........ ..
100
0..05
0.5
1
0. 125
1.
4. 21 '7
32
10. .00
13. 00%
Price
0. 22
24 0.00
9.75
8.25
10.56
3.00
5. 50
0.50
TOT.AL VAR I ABLE COSTS :=======:::..-.=:.-==- ====.......==-=:=
Cost/Acre Percent
----------- ----------
22.00 12.98%
12.00 7.08%
9.75 5.75%
16.50 9.73%
2.,64 1.56%
15. 00 8 8.5%
23.19 13.68%
27.63 16.30%
1.6 ,,00 9.44%
14 ,,47 8.,54%
10.35 6.10%
:1. 9 53 100.00%
II.F:[XED COSTS
Mac h .5' Equi p. Frr-om M"lachi ner'y 8,: EI:qui pment Se:c t :ion
Lnd ac re 500 1 0.00
Irr i gat i on system b
Other
TOTAL F IXED COSTS : === =....... "-= =:::::===.===== = =
III. PRE-.HARVEST TOTAL COST SI I '!,' 'Y
VARIABLE COSTS
FIXED COSTS
PRE-HARVEST TOTAL :CO:ST .=-.:===....= ===:=:
69 ,, :
0. 00
0,,00
0.00
69.33
169,.53
6923.337
23a. 87
100.00%
0,,00%
0.007.
0.00%
100 .,00%
70 ,,977%
29 ,, 03%
100. 00%
aAn iron sulfate compound applied in areas where seedling chlorosis is a problem.
bNo charge is made to land since it lies idle during this period; or to the irrigation
system because flooding is generally practiced whether rice is grown or not.
that Florida ri-ce is mostly .:.r own on sugar cane l and that
otherwise. lies fallow during the- summer period when riCe i s
grown.
At the bottom :oft the table,, a pre-harve'st total cost summary
is presented. Pre-harveLst variable costs represent 70. ': of
total pre-harvest cosi-ts. Pre -har.vest fi xed costs a:dd to $69.33
and represent 29..03% ::of total :pre--harvest costs., Est:imated pre-
harvest costs total $238.07 per acre.
Total Costs
Total costs per acre are estimated for a yield o-f 40 ,cwt of
dry rice (Table 4). They include :e the costs i ncurr ed in growi ng,
harvesting,haarve g ruling to dryer and drying. T"hese total costs are
-'.''40 per acre., The growing cost is the pre--harvest cost shown
in Table 3,, Harvesting costss ar highly dependent on yield, field
efficiencyc, fuel co:ns:.umLpti on iof the c::ombinOe, etc, The variable
cost of harvesting is $3.67 per acre, given that 3 acres are
harvested in one hour. Hauling and drying costs are based on the
assumptions made and dir ect ly r fl ect the amount of rice.
harvested.
At the bottom of ts his table, brea'kven prices are presented.
The .. price of $.,,23 per Owt is required to. cover the total costs
given the yield acs's.um.ed.
In addition, Table 4 adjusts total costs per acre to 5 cwt
below and above the assumed yi el d. Note the ef fect of these
variations on the correspond-ing costs and breakeven prices,.
Table 4.- Estimatedtotal costs per acre, assuming 35, 40 and 45 cwt yields, for 500 acres of rice grown in the
Everglades agricultural area, 1984.
Expected yield (cwt/Acre)
35 40 45
Cost/
Activity Unit unit Quantity Cost/A Quantity Cost/A Quantity Cost/A
Growing acre 238.87 1.00 238.87 1.00 238.87 1.00 238.87
Harvesting hour 0.303 3.33 0.333 3.67 0.37 4.07
Hauling to dryers cwt 0.50 1.00 20.00 1.00 22.86 1.00 25.72
Dryingd cwt 1.40 1.00 56.01 1.00 64.00 1.00 72.01
Total Cost $/acre 318.21 329.40 340.67
Break-even price $/cwt -9.09 8.23 7.57
aFrom Table 3. Includes building and destroying levees.
blncludes both machinery and labor costs. The assumed efficiency measures for the combine are, 3.3, 3, and 2.7
acres per hour for the 35, 40 and 45 cwt yields, respectively.
CThe custom hired cost is based on the assumption that rice is harvested at 21% moisture and dried down to 12.5%.
Custom hired.
Returns to Factors of Productiotn.
The returns to various r. -factors of production for the plant
crop are presented ini Table 5. The break--down f acilitates the
estimation of. t the value Df the resource. s used in rice production
and is designed to test the economic profitability of the plant
rice operation as an economic unit. Note that variable costs
account 1for gr oiing, hauling, drying a.nd destroying levees. Fixed
costs acco unt only for machinery and equipment. The returns to
management and ri:.sk are $35,300 for the plant crop operation,
whi ch is $70.60 per acre and $1.77 pe-r cwt of rice produced,, For
each dollar of revenue generated, approx- imately 65 cents are paid
to the variable inputs and 17 cents to fixed costs, leaving a
residual to the rice grower of 18 cents. In other words, net
returns represent 17.65% of total revenues,,
Sensitivity Analysis
The sensitivity analysis shown in Table 6 assumes prices
ranging from $8 to i$12 per cwt,. i" v.. Cwt above and below the
expected 40 cwt yield are cons i derv to acc on..tn t for yield
variability. Net revenue per acre is -$49,,40 when rice sells for
$8 per cwt and the yield is 35 cwt,, It increases to $199.33 per
acre when the price is $12 and 45 cwt of dry rice per acre are
obtained, It should be noticed that by increasing yield by 5 cwt
per acre, net return in creasc:s fromm $70.60 to I$09.,33, given the
expected price of $ 10,,
Returns to Factors of Productiotn.
The returns to various r. -factors of production for the plant
crop are presented ini Table 5. The break--down f acilitates the
estimation of. t the value Df the resource. s used in rice production
and is designed to test the economic profitability of the plant
rice operation as an economic unit. Note that variable costs
account 1for gr oiing, hauling, drying a.nd destroying levees. Fixed
costs acco unt only for machinery and equipment. The returns to
management and ri:.sk are $35,300 for the plant crop operation,
whi ch is $70.60 per acre and $1.77 pe-r cwt of rice produced,, For
each dollar of revenue generated, approx- imately 65 cents are paid
to the variable inputs and 17 cents to fixed costs, leaving a
residual to the rice grower of 18 cents. In other words, net
returns represent 17.65% of total revenues,,
Sensitivity Analysis
The sensitivity analysis shown in Table 6 assumes prices
ranging from $8 to i$12 per cwt,. i" v.. Cwt above and below the
expected 40 cwt yield are cons i derv to acc on..tn t for yield
variability. Net revenue per acre is -$49,,40 when rice sells for
$8 per cwt and the yield is 35 cwt,, It increases to $199.33 per
acre when the price is $12 and 45 cwt of dry rice per acre are
obtained, It should be noticed that by increasing yield by 5 cwt
per acre, net return in creasc:s fromm $70.60 to I$09.,33, given the
expected price of $ 10,,
Table 5.- Estimated returns to factors of production for a plant crop with a 40 cwt
yield, for 500 acres of rice grown in the Everglades agricultural area,
1984.
RETURNS TO FACTORS OF PRODUCTION FOR THE PLANT CROP
Total Revenue
Vari. able Cost
TOTAL. $
200,000
$/acre
400.00
$/cwt
10..00
6 ,, 5
Returns to F i xed Cost :.
Fi::ed (Costs except : t Land rchar ge).
Return to land and manageme nt & ris kI
I ..d Charge
. 3'... J: a ,.!:
Return to management &:. risl.:
Table 6.- Sensitivity analysis using 5 cwt above and below the expected yield and $2
per cwt above and below the expected price.
Revenue/Acre
-- -- -------- -
280,, 0()
315. O::)
385,0 00
420.( 00
320. 00:)
440., 00
48,)0., 00 )
360. 00
405,, 0f:
4 5 0,, 0 (..
495,, 00 )
540,, 00
Total CoIsts/Acrea Net Revenue/Acre'
-- ----Dol. r ..------ ---------...---------.....
31.,, 2 -49.40
318.21 14,, 40
31:. 21 20. 6
318. ,,21 55.60
318.. 21 90,, 60
329. 40
3 29. 40
329. 40
329,, 4W0
329,, 40:
340., 67
340 ,, 67
340,, 67
340.67
340). 67
-9. 40
150. 60
19 ,, ;3
64. 33
109. .33
154.33
1.99. 33
aTotal costs
hauling and
for the 35 and
drying costs.
45 cwt yields have
been adjusted to reflect different harvest
1 .
10.00
1 00,, 0()%
69.33
70.60
1. 73
1.77
34 98%
17.,33%
17.65%
0. 00%
17.65%
1 .77
Yim3ld
-Cwt. -
35
35
35
35
35
40
40
40.0
140
45
45
-15
Q5
05
,\ i1r
Pri ce
-' /cwt .. -
8 ,,.00
9.0. 0
10 00
1 1 00
12 00
8. 00
9.. 00
10. 00
11 00
12 00
69', 966 139.93
,0 0. 0
SENS :1 I V ITY ANALYST I S
PARTIAL BUD'.': ; ING FOR RATION RICE
Partial budgeting is a systematic listing of the possible
changes in estima.:ting coats and returns, in a given time period
when production p racti ces ch a ng e.e Sugar cane growers in the
Everglades have the al terna ~tive of; g-r .owing two crops of: rice from
the same planting., In order to assess the economic feasibility of
obtaining the. ratoon crop., a partial budget is presented in this
study. A partial b:::.udget considers additional costs incurred,,
decreased revenues:, addit ion.al revenue and decreased costs
(Table 7), Because Tfixed cost s of :f machinery spec :i.f ic to rice
production are spread over an additional 500 acres, they are
considered as a decreased rcos!t, In other words, by using this
machinery in the ratoon rice the burden to the plant crop is
di mi nished in terms ofT dollars per acre, while the absol ute
.figure remains unchanged,,
By spending an additi onal $73,.55 per acre, an additional net
revenue of $132.71 may be o:bt:a:ine.d in a relatively short period
of time. The al. ternativei of f the ratoon rc r ice greatly enhances the
income potential of rice production in the Everglades.
A breakeven analysis for the r atoon crop is pr::sented to
complement the partial budget These esti mated minimum yield
required to cover all costs is 6,:03 cwt ::er acre, given the
expected price of 1'9,.50 per cwt. In addition, the estimated
breakeven price is $2.86 per cwt,.
Table 7.- Partial budget showing net change in farm income per acre from harvesting
a ratoon rice crop in the Everglades agricultural area, 1984.
PARTIAL BUDGE FOR RATOON RICE
INCREASED COSTS
Fung i ci de
Inr:n cti. i::de
Ai rcraf t
Labor
Irrig ation'
Mi scel I aneous!
In torest
Har vesting
Haul ing to dryer
Dryi ng
UNIT OLantity
Ibs
pt..
Hrs.
acre-:inch
clt .
cwt.
cW t.
c: wt,.
0
1.5
1
1
:0.00
13.00%
20
20
20
Price
1.32
3. 00
5.00
1.00
1 0.40
0.50
:1 1.40
TOTAL.
DECREASE ED REVENUE
Non ADDED COSTS
TOTAL.O ADDED COSTS (A)
ADDI T IONAL REVENUE:
Add t:i. onal Ri ce
UNIT
cwt.
OQuanti ty
20
Times
Over Price
1 9.50
DECREASED COST
Other
Fixed costs (Mach &: Equip)
TOTAL ADDED INCOME (B)
NET DIFFERENCE (B--A)
BREAKEVEN ANALYSIS FOR THE RATOON CROP::
*)!;*; ,K;K ;< t ** ** *'* *** *
A) Minimu..m Yi eld requ:i red to cover all costs =s:==
B) Minimum Frice required to cover all costs ====>
6.03 cwt/acre
$2.86 per cwt.
$/Acre
0.00
1.98
3 ,, 00
3.00
5.00
10. 00
2.00
0.71
8.00
10.85
32.00
$73.55
0 0.00 $0.00
$73.55
$/Acre
190.00
0. 00
16.26
$206.26
$132.71
T- i mesi;
Over
TOTAL RETURNS TO FACTORS OF PRODUCTION
In order- to analyze the plant and ratoon crops, total returns
to factors of production For the whole operation are presented in
Table S. This is design ned to test the economic profitability of
the whole rice operation as an economic unit. Revenues and
variable costs of plant and ratoon crops are added. The fixed
costs are the same as for the rice plant crop. This is because the
ratoon crop does not use much mh machinery, except the hopper
trail er and the SP c:omb in:e. ,fe t returns to management and risk
for the whole operation are $:93,,527, $187.05 per acre and $3.12
per cwt. For each dollar of revenue generated, approx imately 56
cents are paid to the variable inputs and 12 cents to fixed costs,
leaving a residual to the: rice grower of 32 cents. In other
words, net returns represent 31.70% of total revenues.
CONCLUSIONS
This study has shown that rice can be grown profitably on
land that would otherwise lie fallow during the summer period in
the Everglades agricultural area. Net returns to land, management
and risk from the plant and rat oon crops amounted to $187.05 in
1984. The ratoon crop improves significantly the profitability of
the rice enterprise. While net returns represent 17.65% of total
plant crop revenues, they increase to 31.7% when a ratoon crop is
grown. The 14.405% positive dif ference translates into an extra
$1.35 per c!wJt of rice produced.
TOTAL RETURNS TO FACTORS OF PRODUCTION
In order- to analyze the plant and ratoon crops, total returns
to factors of production For the whole operation are presented in
Table S. This is design ned to test the economic profitability of
the whole rice operation as an economic unit. Revenues and
variable costs of plant and ratoon crops are added. The fixed
costs are the same as for the rice plant crop. This is because the
ratoon crop does not use much mh machinery, except the hopper
trail er and the SP c:omb in:e. ,fe t returns to management and risk
for the whole operation are $:93,,527, $187.05 per acre and $3.12
per cwt. For each dollar of revenue generated, approx imately 56
cents are paid to the variable inputs and 12 cents to fixed costs,
leaving a residual to the: rice grower of 32 cents. In other
words, net returns represent 31.70% of total revenues.
CONCLUSIONS
This study has shown that rice can be grown profitably on
land that would otherwise lie fallow during the summer period in
the Everglades agricultural area. Net returns to land, management
and risk from the plant and rat oon crops amounted to $187.05 in
1984. The ratoon crop improves significantly the profitability of
the rice enterprise. While net returns represent 17.65% of total
plant crop revenues, they increase to 31.7% when a ratoon crop is
grown. The 14.405% positive dif ference translates into an extra
$1.35 per c!wJt of rice produced.
Table 8.- Total returns to factors of production for plant and ratoon rice grown in
500 acres in the Everglades agricultural area, 1984.
TOTAL RFET:UFk;S TO FACTORS OF
TI OTAL.. $
Tot.: l F.'ever'i i... e 2 :?:5, 0
Var i a b 1 e C!ot s .s :.... 807
Returns to Fix e:ed Cost I. .93
F'i >'c.l Costs; (except La d c:h::hrge ) 34., 66
RFetur.-n to land annd (imaagemenr t & risk 93:;, 527
Iand Ch large 0
R::etu'L! :to management & risk 93,527
PRODUCE T I ON
./acre $/cwt
5? 90. C00 9.83
333. 61 5 ,56
256.39 4.27
69 ,,33 1. 1
187. 0,5 ,, 12
,,00 0.00
187.05 3.12
100. 00%
56. 54%
4.3.46%
11. 75%
31.70%
0.07%
31.,70"/.
20
Perhaps the mo.: important finding was the fact that, by
increasing plant crop y:ie:cld by 5 cwt per acre, net returns to
land., management a.nd risk increase by almost 55% at the assumed
price. Such increase may be atta:inabl:e in the near future since
research is being conducted in thi s are a and producers hIave
gained considerable experience i.n the past few years.
REFERENCES
Alvarez, Jose. Potential. 1or Commercial Rice Produl:tion in the
Everglades, Economic Information Report 98, Food and Resource
Economics Department, Uni. versi ty of Florida., Gainesvi le,
Florida,, October 1978, 37 pp.
Alvarez, Jose, Gerald Kidder and G(eorge H. Snyder. "The Economic
Potential for Growing Rice and Sugarcane in Rotation in the
Everglades," Soil and Crop Science Soc. of Florida 38
(1978): 12-15.
Green, V.E., Jr. "Ri ce-:r-owi ng is Added to Everglades
Agriculture, Crops and Soi ls 6 (:1953), p.,14 .
Shuler, Kenneth D., George H. Snydcer,, Joan A. Dusky and William G.
Genung. "Suggested Guideli nesi for Rice Production in the
Everglades Area of Florida," AREC Belle Glade, University of
Florida, Mimeo Report., February 1981.
Snyder, G..I,,, J., Alvarez, J.W. M:i.shoe, D,....,, Myhre, S.F. Shih and
V.E. Green, Jr. "The Economic Potential for Incorporating
Rice in Everglades Vegetable Production Systems," Proc.
Florida State Horticultural Society 90 (1977): 380-382.
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