VM-IR-09 UNIVERSITY OF CALIFORNIA COOPERATIVE EXTENSION 2009 SAMPLE COSTS TO PRODUCE MIXED VEGETABLES Tomatoes, Winter Squash, Melons Small Farm SIERRA NEVADA FOOTHILLS Placer & Nevada Counties Prepared by: Cindy Fake UCCE Farm Advisor, Placer and Nevada Counties Karen M. Klonsky UCCE Extension Specialist, Department of Agricultural and Resource Economics, UC Davis Richard L. De Moura Research Associate, Department of Agricultural and Resource Economics, UC Davis
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VM-IR-09
UNIVERSITY OF CALIFORNIA COOPERATIVE EXTENSION
2009
SAMPLE COSTS TO PRODUCE
MIXED VEGETABLES Tomatoes, Winter Squash, Melons
Small Farm
SIERRA NEVADA FOOTHILLS Placer & Nevada Counties
Prepared by: Cindy Fake UCCE Farm Advisor, Placer and Nevada Counties Karen M. Klonsky UCCE Extension Specialist, Department of Agricultural and Resource
Economics, UC Davis Richard L. De Moura Research Associate, Department of Agricultural and Resource Economics,
UC Davis
2009 Mixed Vegetables Costs and Returns Study Sierra Nevada UC Cooperative Extension 2
UNIVERSITY OF CALIFORNIA COOPERATIVE EXTENSION
SAMPLE COSTS TO PRODUCE MIXED VEGETABLES Sierra Nevada Foothills, Placer/Nevada Counties 2009
CONTENTS ACKNOWLEDGEMENTS..............................................................................................................................2 INTRODUCTION............................................................................................................................................3 ASSUMPTIONS ..............................................................................................................................................4 Tomato Production and Material Inputs ..........................................................................................................4 Winter Squash Production and Material Inputs ...............................................................................................6 Melon Production and Material Inputs............................................................................................................8 Labor, Equipment and Interest ........................................................................................................................9 Cash Overhead ............................................................................................................................................. 10 Non-Cash Overhead ..................................................................................................................................... 11 REFERENCES............................................................................................................................................... 13 Table 1. COSTS PER ACRE TO PRODUCE TOMATOES .......................................................................... 14 Table 2. COSTS AND RETURNS PER ACRE TO PRODUCE TOMATOES .............................................. 16 Table 3. MONTHLY CASH COSTS PER ACRE TO PRODUCE TOMATOES........................................... 18 Table 4. RANGING ANALYSIS - TOMATOES .......................................................................................... 20 Table 5. TOMATO GREENHOUSE OPERATIONS WITH EQUIPMENT & MATERIALS ....................... 21 Table 6. TOMATO OPERATIONS WITH EQUIPMENT & MATERIALS.................................................. 22 Table 7. COSTS PER ACRE TO PRODUCE WINTER SQUASH................................................................ 23 Table 8. COSTS AND RETURNS PER ACRE TO PRODUCE WINTER SQUASH.................................... 24 Table 9. MONTHLY CASH COSTS PER ACRE TO PRODUCE WINTER SQUASH ................................ 25 Table 10. RANGING ANALYSIS – WINTER SQUASH.............................................................................. 26 Table 11. WINTER SQUASH OPERATIONS WITH EQUIPMENT & MATERIALS.................................. 27 Table 12. COSTS PER ACRE TO PRODUCE MELONS ............................................................................. 28 Table 13. COSTS AND RETURNS PER ACRE TO PRODUCE MELONS.................................................. 29 Table 14. MONTHLY CASH COSTS PER ACRE TO PRODUCE MELONS............................................... 31 Table 15. RANGING ANALYSIS - MELONS............................................................................................... 32 Table 16. MELON OPERATIONS WITH EQUIPMENT & MATERIALS.................................................... 33 Table 17. WHOLE FARM EQUIPMENT, INVESTMENT, AND BUSINESS OVERHEAD COSTS............ 34 Table 18. HOURLY EQUIPMENT COSTS ................................................................................................... 35
ACKNOWLEDGEMENTS
The authors thank the many researchers, agricultural associates, and Placer County growers who provided input into the study. Special thanks to Alan Haight, Riverhill Farm; Jim Muck, Jim’s Produce; Claudia Smith, Blossom Hill Farm; Bob Roan & Teri Ueki, Ueki Garden Flowers; and Lisa Pilz, Pilz Produce.
2009 Mixed Vegetables Costs and Returns Study Sierra Nevada UC Cooperative Extension 3
INTRODUCTION
Sample costs to produce mixed vegetables in the Sierra Nevada Foothills, Placer and Nevada Counties are presented in this study. The study is intended as a guide only, and can be used to make production decisions, determine potential returns, prepare budgets, and evaluate production loans. Practices described are based on production practices considered typical for the crop and area, but will not apply to every situation. Sample costs for labor, materials, equipment, and custom services are based on current figures. Blank columns, “Your Costs”, in the Costs Per Acre to Produce and the Costs and Returns Per Acre To Produce Tables are provided for entering your farm costs. The hypothetical farm operation, production practices, overhead, and calculations are described under the assumptions. For additional information or an explanation of the calculations used in the study call the Department of Agricultural and Resource Economics, University of California, Davis, (530) 752-3589 or your local UC Cooperative Extension office. Sample Cost of Production Studies for many commodities (current and archived) can be downloaded from the Department of Agricultural and Resource Economics’ website at http://coststudies.ucdavis.edu. Studies can also be requested through Agricultural and Resource Economics, UC Davis, (530) 752-1515 or obtained from selected county UC Cooperative Extension offices.
The University of California is an affirmative action/equal opportunity employer The University of California and the United States Department of Agriculture, Risk Management Agency, cooperating
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ASSUMPTIONS
The assumptions refer to Tables 1 to 18 and pertain to sample costs to produce mixed vegetables (tomatoes, melons, winter squash) in the Sierra Nevada Foothills, Placer and Nevada Counties. The cultural practices described represent production operations and materials considered typical on a well-managed farm in the region. Costs, materials, and practices in this study will not apply to all farms. Timing and types of establishment and cultural practices will vary among growers within the region and from season to season due to variables such as weather, soil, and insect and disease pressure. The study does not represent a single farm and is intended as a guide only. The use of trade names and cultural practices in this report does not constitute an endorsement or recommendation by the University of California nor is any criticism implied by omission of other similar products or cultural practices.
Farm. The hypothetical farm consists of 10 contiguous acres purchased for a homesite and small farm. The homeowner grower is producing vegetables on four acres; three are budgeted in this study. The fourth cultivated acre may be planted to another vegetable or a mix of other vegetables. The remaining six acres consist of a home, shop, non-farmable land, and irrigation system. The vegetables are planted on land suitable for vegetable production and with no more than a 5% slope. Much of the farm production in the area is on lesser acreage; total farm production may be as small as an acre or less. This may result in less equipment and more hand labor. Costs in this study are based on one-acre fields; for smaller acreage, costs can be adjusted accordingly.
Tomato Production Practices and Material Inputs
Land Preparation. The field is disked in the fall and a cover crop planted. The field is ripped in two directions once every five years and one fifth of the cost is included each year. Soil amendments and fertilizers are applied and incorporated prior to planting. Cover Crop. A cover crop of mixed legumes and grasses for nutrients and erosion control is planted in the fall (October), mowed, and rototilled in separate operations in February. The ground is left untouched for the next month for the cover crop to decompose. Plant/Transplant. Plastic mulch is laid down the rows prior to planting. Mixed tomatoes (assorted standard and cherry) are transplanted on 2 x 4 foot spacing. Rows are 4 feet wide and 200 feet long, approximately 54 rows per acre. The seeds are planted in flats in the greenhouse starting in February and the transplants taken to the field in April or May. Planting is normally done over several weeks to extend the harvest season, except above 2,500 feet in elevation. Fertilizer/Soil Amendments. In April, compost at 10 tons per acre, blood meal (13-0-0) at 800 pounds per acre, and oyster shell lime at 400 pounds per acre are individually applied. Compost is not applied every year, but every other year on average; therefore, one-half of the cost is included each year. Potassium sulfate is hand applied at 50 pounds per acre. Rock phosphate at one ton per acre is hand applied once every three years. One third of the material/cost is shown as an expense each year.
String (string weaving). Seven-foot T-posts at eight foot spacing are placed in the row at planting and the labor is included in the planting cost. One month after planting, the first set of strings are woven around posts and plants down the row. String weaving is done weekly thereafter, taking 50 hours per acre for the first four weeks and 37.5 hours for the next three weeks.
2009 Mixed Vegetables Costs and Returns Study Sierra Nevada UC Cooperative Extension 5
Irrigation. T-Tape is laid down the rows prior to planting. The crop is irrigated every other day for one week beginning right after planting in April; thereafter the crop is irrigated once per week. Water is gravity-fed from the irrigation district canal through a drip system. Water in the district is sold by the miner’s inch, which is a continuous flow of water throughout the season through an approved measuring device, equivalent to 11.25 gallons per minute. The water cost is paid monthly or bimonthly by the grower regardless of the amount used on the crop. The water cost of $35 per acre is an average monthly cost based on the participating growers’ data. The district delivers water for 6 months, April 15 to October 15. Labor hours for irrigation are calculated at one hour per acre per irrigation. The irrigation hours include time to clean the water box twice a week, flush the filters and walk the irrigation lines. No assumption is made about effective rainfall, evaporation, or runoff.
Pest Management. The pesticides, rates, and application practices mentioned in this cost study are listed on the UC IPM website at www.ipm.ucdavis.edu. Pesticides mentioned in this study are not recommendations, but those commonly used in the region. For information and pesticide use permits, contact the local county Agricultural Commissioner’s office. For information on other pesticides available, pest identification, monitoring, and management, visit the UC IPM website or contact your county farm advisor. Pest control costs can vary considerably each year depending upon local conditions and pest populations in any given year. Adjuvants are recommended for many pesticides for effective control and are an added cost. The adjuvants are not included in this study.
Weeds. The field is hoed three times, twice in May and once in June at 50 hours per weeding. Insects. Tomato hornworms are the primary caterpillar pest, although tomato fruit worms occasionally
cause damage. Bacillus thuringiensis, commonly called Bt, is applied for tomato hornworm control. Commonly used brand names include Biobit, Dipel, Javelin, Safer, Thuricide, and others. It is applied with a backpack sprayer when there are signs of caterpillar damage. Application takes two hours and is typically made twice a season, usually in June or July. Other materials such as spinosad (Success or Entrust) may be more effective on fruit worms, but may be more expensive.
Diseases. No diseases are treated. Rodents. Gophers are controlled by trapping from the last week of April through May, and thereafter
periodically, as needed. It takes one-half hour per day to monitor the three traps in each crop.
Harvest. Tomatoes are picked two to three times per week (three times in this study) from mid-July to mid-October (12-14 weeks). The tomatoes are picked into five gallon buckets and dumped into boxes for sorting. Picking during peak yield takes approximately 120 man-hours per acre; early and late pickings require about one-half of peak yield hours. Picking time varies by variety and yield, ranging from 40 to 140 hours per acre. Picking time is based on picking 90 feet of row per hour. Cherry tomatoes are at the upper end of the picking range and may be picked directly into baskets. The tomatoes are delivered to the onsite packing shed.
Yields. Based on grower information, yields are estimated at 30,000 pounds per acre.
Packing. The grower has a small packing shed/area on site. Packing costs include the sorting, packing
and carton costs (where applicable). Cartons are assumed to be reusable except for those delivered to the wholesale markets.
Returns. According to growers in the area, average returns over the season for tomatoes sold at the
farmers’ market are $2.25 per pound and wholesale markets at $1.70 per pound. Returns, using a weighted average based on 80% retail and 20% wholesale over various yields, are used in the Ranging Analysis Table.
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Marketing/Selling. Growers in the area market and sell their own produce. Selling and marketing costs include advertising, delivery, and/or shipping costs, bookkeeping and other related costs such as a scale for weighing. These costs are shown under Cash Overhead. Approximately 20% of the crop is delivered to stores and restaurants for resale. The remaining 80% is sold at farmers’ markets. Four crops are grown on the farm and at any one time, three of the four crops are being marketed; therefore, one-third of the costs are allocated to each crop.
Wholesale. The grower uses his/her pickup to deliver to the markets, stores, or other sales outlets. It is
assumed that one trip per week is made to all locations taking a total of two hours which includes travel (1.5 hours), loading and unloading time (0.5 hours).
Farmers’ Market. The grower rents a stall at a farmers’ market three times per week at $30 per market
($90 per week). Average travel time per week to the three markets is 3.5 hours and then the grower spends 6 hours at each market or 18 hours per week to set up, breakdown and staff the booth. For the purposes of this study, it is assumed that each customer will purchase three pounds of tomatoes in a plastic bag. In reality, not every customer will require a bag or some may need more than one. The bags are included as a marketing cost.
Winter Squash Production Practices and Material Inputs
Land Preparation. The field is disked in the fall and cover crop planted. The field is ripped in two directions once every five years. One fifth of the cost is included each year. Soil amendments and fertilizers are applied and incorporated prior to planting. Cover Crop. A cover crop of legumes and grasses for nutrients and erosion control is planted in the fall (October), mowed and rototilled in separate operations in February. The ground is left untouched for the next month for the cover crop to decompose. Plant. Plastic mulch (and T-Tape) is laid on the rows prior to planting. Mixed winter squash (acorn, butternut, Delicata, Hubbard, kabocha) are planted on 2 x 6 foot spacing in early May. Rows are 6 feet wide and 200 feet long, approximately 36 rows per acre. Two to three seeds are planted in each hole with the use of a hand jab planter taking 18 man hours per acre. Fertilizer/Soil Amendments. In April, compost at 10 tons per acre, blood meal (13-0-0) at 800 pounds per acre, and oyster shell lime at 400 pounds per acre are individually applied. Compost is not applied every year, but every other year on average; therefore, one-half of the cost is included each year. Potassium sulfate is hand applied at 50 pounds per acre. Rock phosphate at one ton per acre is hand applied once every three years. One third of the material/cost is shown as an expense each year. Irrigation. T-Tape is laid down the rows prior to planting. The crop is irrigated every other day beginning right after planting and continuing for two weeks, thereafter the crop is irrigated once per week through September. Water is gravity fed from the irrigation district through a drip system. Water in the district is sold by the miner’s inch, which is a continuous flow of water throughout the season through an approved measuring device, equivalent to 11.25 gallons per minute. The water cost of $35 per acre is an average monthly cost based on the participating growers’ data. The water cost is paid monthly by the grower regardless of the amount used on the crop. The district delivers water for 6 months, April 15 to October 15. Labor hours are calculated at one-half hour per acre per irrigation. The cost (hours) includes time to clean the water box twice a week, flush the filters, and walk the irrigation lines. No assumption is made about effective rainfall, evaporation, or runoff.
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Pest Management. The pesticides, rates, and application practices mentioned in this cost study are listed on the UC IPM website at www.ipm.ucdavis.edu. Pesticides mentioned in this study are not recommendations, but those commonly used in the region. For information and pesticide use permits, contact the local county Agricultural Commissioner’s office. For information on other pesticides available, pest identification, monitoring, and management, visit the UC IPM website or contact your county farm advisor. Pest control costs can vary considerably each year depending upon local conditions and pest populations in any given year. Adjuvants are recommended for many pesticides for effective control and are an added cost. The adjuvants are not included in this study.
Weeds. The field is hoed twice, once in May and once in June at 72 hours per weeding. Insects. Neemix is applied for aphids and/or white flies once in July and once in August, at two hours
per application using a backpack sprayer. Diseases. Powdery mildew is assumed to be controlled with the Neemix application. Rodents. Gophers are controlled by trapping from the last week of April through May, and periodically
as needed. It takes one-half hour per day to monitor the three traps in each crop.
Harvest. The mixed squash are picked two to three times (three in this study) per week from mid-September to mid-October (4-6 weeks). The squash are picked into fruit lugs, which when full, are set on a trailer pulled by a tractor for delivery to the on site packing area. It takes approximately 30 man-hours per week to pick a weekly average of 6,000 pounds of squash.
Yields. Based on grower information, yields are estimated at 30,000 pounds per acre. Although yields
are lighter at the beginning and end of the season, yields are assumed to be 6,000 pounds per week.
Packing. The grower has a small packing shed/area on site. Packing costs include the sorting, packing and carton costs. Cartons are assumed to be reusable (shown under Non-Cash Overhead) except those delivered to the wholesale markets.
Returns. According to growers in the area, returns for squash sold at the farmers’ market average $1.00
per pound and wholesale markets at $0.75 per pound.
Marketing/Selling. Growers in the area market and sell their own produce. Selling and marketing costs include advertising, delivery, and/or shipping costs, bookkeeping and other related costs such as a scale for weighing and are included in Cash Overhead. Approximately 20% of the crop is sold wholesale or delivered to stores for resale. The remaining 80% is sold at farmers’ markets. Four crops are grown on the ranch and at any one time, three of the crops are being sold wholesale and at the markets. Therefore, one-third of the marketing costs are allocated to each crop.
Wholesale. The grower uses his/her pickup to deliver to markets, stores, or other sales outlets. It is
assumed that one trip per week is made and takes two hours which includes travel (1.5 hours), loading and unloading (0.5 hours).
Farmers’ Market. The grower rents a stall at a farmers’ market three times per week at $30 per market
($90 per week). Average travel time per week to the three markets is 3.5 hours per week and then the grower spends 6 hours at each market or 18 hours per week which includes set up, breakdown and staffing the booth.
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Melon Production Practices and Material Inputs
Land Preparation. The field is disked in the fall and a cover crop planted. The crop is mowed and rototilled in the winter/spring. The field is ripped in two directions once every five years and one-fifth of the cost is included each year. Soil amendments and fertilizers are applied and incorporated prior to planting. Cover Crop. A cover crop of legumes and grasses for nutrients and erosion control is planted in the fall (October); mowed and rototilled in separate operations in February. The ground is left untouched for the next month for the cover crop to decompose. Plant. Mixed melons (cantaloupe, honeydew, watermelon, specialty melon) are planted from late April through late May on 2 x 6 foot spacing. Rows are 6 feet wide and 200 feet long, approximately 36 rows per acre. Seeds are planted in each hole with the use of a hand jab planter taking 18 man hours per acre. Fertilizer/Soil Amendments. In April, compost at 10 tons per acre, blood meal (13-0-0) at 800 pounds per acre, and oyster shell lime at 400 pounds per acre are individually applied. Compost is not applied every year, but every other year on average; therefore, one-half of the cost is included each year. Potassium sulfate is hand applied at 50 pounds per acre. Rock phosphate at one ton per acre is hand applied once every three years. One third of the material/cost is shown as an expense each year.
Irrigation. T-Tape is laid down the rows prior to planting. The crop is irrigated every other day beginning right after planting in May and continuing for two weeks, thereafter the crop is irrigated once per week through September. Water is gravity fed from the irrigation district canal through a drip system. Water in the district is sold by the miner’s inch, which is a continuous flow of water throughout the season through an approved measuring device, equivalent to 11.25 gallons per minute. The water cost of $35 per acre is an average monthly cost based on the participating growers’ data. The water cost is paid monthly by the grower regardless of the amount used on the crop. The district delivers water for 6 months, April 15 to October 15. Labor hours are calculated at one-half hour per acre per irrigation. The cost (hours) includes time to clean the water box twice a week, flush the filters, and walk the irrigation lines. No assumption is made about effective rainfall, evaporation, or runoff.
Pest Management. The pesticides, rates, and application practices mentioned in this cost study are listed on the UC IPM website at www.ipm.ucdavis.edu. Pesticides mentioned in this study are not recommendations, but those commonly used in the region. For information and pesticide use permits, contact the local county Agricultural Commissioner’s office. For information on other pesticides available, pest identification, monitoring, and management, visit the UC IPM website or contact your county farm advisor. Pest control costs can vary considerably each year depending upon local conditions and pest populations in any given year. Adjuvants are recommended for many pesticides for effective control and are an added cost. The adjuvants are not included in this study.
Weeds. The field is hoed twice, once in May and once in June at 72 hours per weeding. Insects. Neemix is applied for aphids once in July and once in August, at two hours per application
using a backpack sprayer. Diseases. Powdery mildew is assumed to be controlled with the Neemix application. Rodents. Gophers are controlled by trapping from the last week of April through May, and periodically
as needed. It takes one-half hour per day to monitor the three traps in each crop.
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Harvest. The mixed melons are picked three times per week from mid-July to early September. It takes an average of 20 hours per week to pick the melons. The melons are picked into fruit lugs and when filled set on the bin trailer for delivery to the on site packing area. Yields are assumed to be 7,285 pounds per week and it takes 20 hours per week at peak season with fewer hours at the beginning and end of the season.
Yields. Yields based on grower information are estimated at 51,000 pounds per year (watermelons,
15,000 pounds; cantaloupe, 12,000 pounds, honeydew, 12,000 pounds, and specialty melons 12,000 pounds). Yields are lighter at the beginning and end of season.
Returns. Twenty percent of the crop is sold wholesale: watermelons, $0.60 per pound; cantaloupe, $0.94
per pound; honeydew, $0.75 per pound and specialty melons, $1.20 per pound. The remaining melons are sold at farmers’ markets: watermelons, $0.80 per pound; cantaloupe, $1.25 per pound; honeydew, $1.00 per pound and specialty melons, $1.50 per pound.
Marketing/Selling. Growers in the area market and sell their own produce. Selling and marketing costs include advertising, delivery, and/or shipping costs, bookkeeping and other related costs such as a scale for weighing and are included in Cash Overhead. Approximately 20% of the crop is delivered to stores and restaurants for resale. The remaining 80% is sold at farmers’ markets. Four crops are produced on the ranch and at any one time three crops are being sold at the markets. Therefore, one third of the wholesale and market prices are divided among the four crops. Melons are priced prior to delivery to the farmers’ markets.
Wholesale. The grower uses his/her pickup to deliver to markets, stores, or other sales outlets. It is
assumed that one trip per week is made and takes two hours (1.5 hours travel time plus 0.5 hours for loading and unloading).
Farmers’ Market. The grower rents a stall at a farmers’ market three times per week at $30 per market
($90 per week). Average travel time per week to the three markets is 3.5 hours per week and then the grower spends 6 hours at each market or 18 hours per week which includes set up, breakdown and staffing the booth.
Labor, Equipment and Interest
Labor. Hourly wages for workers are $11.50 for machine operators and $10.00 per hour non-machine labor. Adding 34% for the employer’s share of federal and state payroll taxes, workers’ compensation insurance for truck crops (code 0172) and a percentage for other possible benefits give the labor rates shown of $15.41 and $13.40 per hour for machine labor and non-machine labor, respectively. Workers’ compensation costs will vary among growers, but for this study the cost is based upon the average industry final rate as of January 1, 2009 (personal email from California Department of Insurance, March 2009, unreferenced). Labor for operations involving machinery are 20% higher than the operation time given in Tables 1, 7 and 12 to account for the extra labor involved in equipment set up, moving, maintenance, work breaks, and field repair.
Equipment Operating Costs. Repair costs are based on purchase price, annual hours of use, total hours of life, and repair coefficients formulated by American Society of Agricultural Engineers (ASAE). Fuel and lubrication costs are also determined by ASAE equations based on maximum power takeoff (PTO) horsepower, and fuel type. Prices for on-farm delivery of red-dye diesel and gasoline are $3.70 (excludes excise taxes) and $3.36 per gallon, respectively. The fuel prices are the average costs from July 2008 through December 2008 derived from American Automobile Association (AAA) and Energy Information Administration monthly data. The diesel fuel cost includes a 2.5% local sales tax and gasoline includes federal and state excise taxes and 8% sales tax. Gasoline also includes federal and state excise tax, which are refundable for on-farm use when filing
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your income tax. The fuel, lube, and repair cost per acre for each operation in Tables 1, 7 and 12 is determined by multiplying the total hourly operating cost in Table 18 for each piece of equipment used for the selected operation by the hours per acre. Tractor time is 10% higher than implement time for a given operation to account for setup, travel and down time. Interest on Operating Capital. Interest on operating capital is based on cash operating costs and is calculated monthly until harvest at a nominal rate of 5.75% per year. A nominal interest rate is the typical market cost of borrowed funds. The interest cost of post harvest operations is discounted back to the last harvest month using a negative interest charge. The rate will vary depending upon various factors, but the rate in this study is considered a typical lending rate by a farm lending agency as of January 2009.
Risk. The risks associated with crop production should not be minimized. While this study makes every effort to model a production system based on typical, real world practices, it cannot fully represent financial, agronomic, market, and weather risks, which affect profitability and economic viability.
Cash Overhead Costs Cash overhead consists of various cash expenses paid out during the year that are assigned to the whole farm and not to a particular operation. Property Taxes. Counties charge a base property tax rate of 1% on the assessed value of the property. In some counties special assessment districts exist and charge additional taxes on property including equipment, buildings, and improvements. For this study, county taxes are calculated as 1% of the average value of the property. Average value equals new cost plus salvage value divided by two on a per acre basis. Insurance. Insurance for farm investments varies depending on the assets included and the amount of coverage. Property insurance provides coverage for property loss and is charged at 0.82% of the average value of the assets over their useful life. Liability insurance covers accidents on the farm and costs $504 per farm. Watershed Fees. Growers are required to belong to a watershed coalition or get their own discharge permit from the Regional Water Quality Control Board, which is extremely costly. The local subwatershed coalition, charges an annual fee of $65 per farm plus $1.00 per irrigated acre for watershed management and planning. Office Expense. Office and business expenses are estimated at $350 per acre. These expenses include office supplies, telephones, bookkeeping, accounting, legal fees, shop and office utilities, and miscellaneous administrative charges. Advertising/Marketing. The grower belongs to several local organizations to promote the farm and products. Costs for website maintenance and for miscellaneous advertising and marketing are estimated at $300 ($75 per acre). Management/Supervisor Salaries. The grower farms the land; therefore no salaries are included for management. Returns above costs are considered a return to management. Investment Repairs. Annual maintenance is calculated as two percent of the purchase price.
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Non-Cash Overhead Costs
Non-Cash overhead is calculated as the capital recovery cost for equipment and other farm investments. Capital Recovery Costs. Capital recovery cost is the annual depreciation and interest costs for a capital investment. It is the amount of money required each year to recover the difference between the purchase price and salvage value (unrecovered capital). It is equivalent to the annual payment on a loan for the investment with the down payment equal to the discounted salvage value. This is a more complex method of calculating ownership costs than straight-line depreciation and opportunity costs, but more accurately represents the annual costs of ownership because it takes the time value of money into account (Boehlje and Eidman, 1984.). The formula for the calculation of the annual capital recovery costs is ((Purchase Price – Salvage Value) x Capital Recovery Factor) + (Salvage Value x Interest Rate).
Salvage Value. Salvage value is an estimate of the remaining value of an investment at the end of its useful life. For farm machinery (tractors and implements) the remaining value is a percentage of the new cost of the investment (Boehlje and Eidman, 1984.). The percent remaining value is calculated from equations developed by the American Society of Agricultural Engineers (ASAE) based on equipment type and years of life. The life in years is estimated by dividing the wear out life, as given by ASAE by the annual hours of use in this operation. For other investments including irrigation systems, buildings, and miscellaneous equipment, the value at the end of its useful life is zero. The salvage value for land is the purchase price because land does not depreciate. The purchase price and salvage value for equipment and investments are shown in Table 17.
Capital Recovery Factor. Capital recovery factor is the amortization factor or annual payment whose present value at compound interest is 1. The amortization factor is a table value that corresponds to the interest rate used and the life of the machine.
Interest Rate. An interest rate of 4.75% is used to calculate capital recovery. The rate will vary depending upon loan amount and other lending agency conditions, but is the basic suggested rate by a farm lending agency as of January 2009. Greenhouse. The greenhouse is used to grow transplants for tomato production. The plastic greenhouse has a useful life of five years. Size is 24 x 48 feet. Greenhouse Planting Flats. The grower owns 76 planting seed flats for growing tomato transplants. The 10-inch x 20 inch flats have an expected useful life of three years. T-Posts. Seven foot T-Posts are used for staking or tying up the tomatoes. The posts are amortized over 20 years based on grower input. The grower owns 1,404 T-Posts. T-Tape. T-Tape use varies by grower ranging from one to several years. Tomatoes use 10,800 feet and the melons and squash each use 7,200 feet with a useful life of two years. Deer Fence. A fence to protect the crop from the deer is installed around the plantings. The fence (2,142 feet) is installed around the four acres. Land. Land in this study is valued at $100,000 per acre, based on grower input from recent sales. The land value is based on being a homesite. Land designated for agricultural value would most likely be considerably less.
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. Pack Boxes/Pack Cartons. Unwaxed 15 pound cartons are used for the sorted tomatoes. Forty pound lug boxes (hold 30 pounds of product) are used for picking the melons and squash. The cartons delivered to the farmers’ market are reused whereas the cartons delivered to the wholesale market are not returned and the cost is expensed accordingly. Tools – Shop/Field. This includes shop and packing shed equipment and tools, hand tools, and miscellaneous field tools - pruning, picking, gopher traps, backpack sprayer, hoes, picking buckets, lug boxes, scale for use at farmers’ markets. The value is an approximation and not based on a specific inventory. Equipment. Farm equipment is purchased new or used, but the study shows the current purchase price for new equipment. The new purchase price is adjusted to 60% to indicate a mix of new and used equipment. Equipment costs are composed of three parts: non-cash overhead, cash overhead, and operating costs. Both of the overhead factors have been discussed in previous sections. The operating costs consist of repairs, fuel, and lubrication and are discussed under operating costs.
Table Values. Due to rounding, the totals may be slightly different from the sum of the components.
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REFERENCES
American Society of Agricultural Engineers. 1994. American Society of Agricultural Engineers Standards Yearbook. Russell H. Hahn and Evelyn E. Rosentreter (ed.) St. Joseph, Missouri. 41st edition.
Boehlje, Michael D., and Vernon R. Eidman. 1984. Farm Management. John Wiley and Sons. New York, New York
California State Automobile Association. 2009. Gas Price Averages 2008. AAA Press Room, San Francisco,
CA. Internet accessed April 2008. http://www.csaa.com/portal/site/CSAA California State Board of Equalization. Fuel Tax Division Tax Rates. Internet accessed January 2009.
http://www.boe.ca.gov/sptaxprog/spftdrates.htm Energy Information Administration. 2008. Weekly Retail on Highway Diesel Prices. Internet accessed April
2008. http://tonto.eix.doe.gov/oog/info/wohdp University of California Statewide IPM Project. 2008. UC Pest Management Guidelines, Citrus. University of
California, Davis, CA. http://www.ipm.ucdavis.edu
For information concerning the above mentioned University of California publications contact UC DANR Communications Services (1-800-994-8849) or your local county Cooperative Extension office.
2009 Mixed Vegetables Costs and Returns Study Sierra Nevada UC Cooperative Extension 14
UC COOPERATIVE EXTENSION Table 1. COSTS PER ACRE TO PRODUCE FRESH MARKET TOMATO
Price is weighted average based on 20% @ wholesale price and 80% @ retail (farmers’ market) price
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Table 5. GREENHOUSE OPERATIONS WITH EQUIPMENT & MATERIAL INPUTS FOR TOMATOES SIERRA NEVADA - Placer/Nevada Counties 2009
Non-Mach Operation Equipment Labor Broadcast Operation Month Tractor Implement hrs/acre Material Rate/acre Unit Cultural: Plant Feb 13.00 Seed 5.45 thou Flats 76.00 each Potting Soil 50.00 cuft Propagation Material 2.00 mnth Irrigate: First 10 days Feb 7.50 Water Irrigate: Feb 10.00 Water Mar 5.00 Water
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Table 6. OPERATIONS WITH EQUIPMENT & MATERIAL INPUTS FOR TOMATOES SIERRA NEVADA - Placer/Nevada Counties 2009
Non-Mach Operation Equipment Labor Broadcast Operation Month Tractor Implement hrs/acre Material Rate/acre Unit Cultural: Land Prep: Disk Oct 35HP Disk Cover Crop: Plant Oct 35HP Seed Drill Seed 100.00 lb Cover Crop: Mow Feb 35HP Mower Cover Crop: Rototill Feb 35HP Rototiller Fertilize: Apr 35HP Spreader Blood Meal 800.00 lb Fertilize: 1X/2 Yrs Apr 35HP Compost Spreader Compost 5.00 ton Fertilize: 1X/3 Yrs Apr 35HP Spreader Phosphate 667.00 lb Fertilize: Apr 35HP Spreader Lime 400.00 lb Fertilize: Apr 2.00 Potassium 50.00 lb Land Prep: Rip 1X/5 Yr Apr 35HP Rip Shank Fertilize: Incorporate Fertilizer Apr 35HP Rototiller Weed: Lay Mulch. Irrigate: Lay T-Tape Apr 35HP Mulch Layer 3.00 Mulch 10,800.00 ft Rodent: Gopher Apr 3.50 Traps May 11.00 Plant: Transplant. Install T-Posts Apr 304.00 Irrigate: Apr 4.00 Water 0.50 unit Water use/cost is based on a per acre $ value. May 4.00 Water 1.00 unit June 4.00 Water 1.00 unit July 4.00 Water 1.00 unit Aug 4.00 Water 1.00 unit Sept 4.00 Water 1.00 unit Oct 2.00 Water 0.50 unit Weed: Hand May 50.00 May 50.00 June 50.00 Plants: String Plants May 50.00 Twine 243.00 cft May 50.00 Twine 243.00 cft June 50.00 Twine 243.00 cft June 50.00 Twine 243.00 cft June 37.50 Twine 243.00 cft June 37.50 Twine 243.00 cft June 37.50 Twine 243.00 cft Insects: Worms Sept 2.00 Dipel 1.00 lb Harvest: 3X/Week July 35HP Bin Trailer + Forks 360.00 Aug 35HP Bin Trailer + Forks 1,440.00 Sept 35HP Bin Trailer + Forks 1,440.00 Oct 35HP Bin Trailer + Forks 360.00 Market: Pack/Sort July 9.00 Aug 18.00 Sept 18.00 Oct 9.00 Market: Wholesale July Pickup 0.33 Cartons 66.00 Aug 0.67 Cartons 133.00 Sept 0.67 Cartons 133.00 Oct 0.33 Cartons 66.00 Market: Farmers Market July 12.00 Stall Rental Customer Bags 1,333.00 each Aug 24.00 Stall Rental Customer Bags 2,666.00 each Sept 24.00 Stall Rental Customer Bags 2,666.00 each Oct 12.00 Stall Rental Customer Bags 1,333.00 each
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Table 7. COSTS PER ACRE TO PRODUCE WINTER SQUASH SIERRA NEVADA - Placer/Nevada Counties 2009
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UNIVERSITY OF CALIFORNIA COOPERATIVE EXTENSION
Table 13. CONTINUED SIERRA NEVADA - Placer/Nevada Counties 2009
Quantity Price or Value or Your Acre Unit Cost/Unit Cost/Acre Cost NON-CASH OVERHEAD COSTS (Capital Recovery) Land 4,750 Deer Fence 206 Boxes (30 lb) 426 Tools - Shop/Field 160 T-Tape 77 Equipment 924 TOTAL NON-CASH OVERHEAD COSTS/ACRE 6,543 TOTAL COSTS/ACRE 21,853 NET RETURNS/ ACRE 32,867
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UNIVERSITY OF CALIFORNIA COOPERATIVE EXTENSION Table 14. MONTHLY CASH COSTS PER ACRE TO PRODUCE MELONS
Price is weighted average based on 20% @ wholesale price and 80% @ retail (farmers’ market) price
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Table 16. OPERATIONS WITH EQUIPMENT & MATERIAL INPUTS for MELONS SIERRA NEVADA - Placer/Nevada Counties 2009
Non-Mach Operation Equipment Labor Broadcast Operation Month Tractor Implement hrs/acre Material Rate/acre Unit Cultural: Land Prep: Disk Oct 35HP Disk Cover Crop: Plant Oct 35HP Seed Drill Seed 100.00 lb Cover Crop: Mow Feb 35HP Mower Cover Crop: Rototill Feb 35HP Rototiller Fertilize: Apr 35HP Spreader Blood Meal 800.00 lb Fertilize: 1X/2 Yrs Apr 35HP Compost Spreader Compost 5.00 ton Fertilize: 1X/3 Yrs Apr 35HP Spreader Phosphate 667.00 lb Fertilize: Apr 35HP Spreader Lime 600.00 lb Fertilize: Apr 2.00 Potassium 50.00 lb Land Prep: Rip 1X/5 Yr Apr 35HP Rip Shank Fertilize: Incorporate Fertilizer Apr 35HP Rototiller Weed: Lay Mulch. Irrigate: Lay T-Tape Apr 35HP Mulch Layer 3.00 Mulch 7,200.00 ft T-Tape 7,200.00 ft Rodent: Gopher Apr 3.50 Traps May 11.00 Plant: May 21.00 Seed 1.00 lb Irrigate: May 4.00 Water 0.75 acre Water use/cost is based on a per acre $ value June 2.00 Water 1.00 acre July 2.00 Water 1.00 acre Aug 2.00 Water 1.00 acre Sept 0.50 Water 0.25 acre Weed: Hand May 72.00 June 72.00 Insects/Disease: Aphid/Mildew (Neemix) July 2.00 Neemix 1.00 pt Aug 2.00 Neemix 1.00 pt Insect: Squash Bug (Hand Vacuum) July 2.00 Harvest: 3X/Week July 35HP Bin Trailer + Forks 72.00 Aug 35HP Bin Trailer + Forks 144.00 Sept 35HP Bin Trailer + Forks 36.00 Pack/Sort July 36.00 Aug 72.00 Sept 72.00 Market: Wholesale July 0.33 Aug 0.67 Cartons 66.00 Sept 0.33 Market: Farmers Market July Pickup 12.00 Stall Rental Customer Bags 4,800.00 each Aug Pickup 24.00 Stall Rental Customer Bags 3,200.00 each Sept Pickup 12.00 Stall Rental Customer Bags 3,200.00 each
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Table 17. WHOLE FARM ANNUAL EQUIPMENT, INVESTMENT, AND BUSINESS OVERHEAD COSTS SIERRA NEVADA - Placer/Nevada Counties 2009
Cash Overhead Yrs Salvage Capital Insur- Yr Description Price Life Value Recovery ance Taxes Total 09 35 HP Tractor 15,000 20 1,925 1,118 69 85 1,272 09 Bin Trailer 1,250 20 65 96 5 7 108 09 Disk 2,100 20 109 162 9 11 182 09 Gandy Drop Spreader 6' 1,600 20 83 123 7 8 138 09 Mower-Flail 5' 3,250 20 169 250 14 17 281 09 Mulch Layer 1,500 20 78 115 6 8 130 09 Compost Spreader 6,500 20 339 500 28 34 562 09 Pickup 1/2 ton 32,000 5 14,342 4,732 190 232 5,153 09 Ripper (1 shank) 150 10 27 17 1 1 19 09 Rototiller 5' 4,545 20 237 350 20 24 393 09 Seed Drill 6' 10,100 20 526 777 44 53 874 09 Tractor Forks 250 20 13 19 1 1 22 TOTAL 78,245 17,913 8,259 394 481 9,134 46,947 10,748 4,956 237 288 5,481 *Used to reflect a mix of new and used equipment