THIB^CONOMICSOF CARNATIONAND CBRYSANTH^MUM … · CARNATIONS Carnations are one of the leading cut . Planting rate is 35 plants/in or 630 flower crops in the world and the largest

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THIB^CONOMICSOF CARNATIONAND

CBRYSANTH^MUM GROWING

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By

CherylKemlck, fonner Research Assistant

GallBarth, Senior Research Officer

Glen, IRonazi, Regional^conomlst

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DEPARTMENTOFAGRICl. ILTURE

SOUTHAUSTRALIA

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ACKNOWL:^-DGM^NTS

We wish to acknowledge the kind cooperation of thefollowing SAflowercompanies who contributed their timeand expertise to producing this paper. These growerswere most generous in providing details of theirproduction records, budgets and returns, and made theaccurate production of carnation and chrysanthemumenterprise budgets possible.

Gallimaufry, Mount Compass

Natrem Investtnents Pty Ltd, Angaston

Gundaloo Flower Farm, My10r

Warnock's Flower Nursery, Mount Compass

Mon F1eur Nursery, Lenswood

Daly's Carnations, Murray Bridge

Tirelin Flowers, Penfield Gardens

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GallBarthNorthfield Research Centre

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CONT^NTS

Introduction ................................................................... 7

Carnations ..................................................................... 8

Hydroponic carnationsSummary

Chrysanthemums. ........................................................ 23Summary

Enterprise comparisons ............................................... 31

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@ Department of Agriculture, South Australia

February 1989

Printed by Government Printer, South Au. tr. 11a

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INTRODUCTION

The analyses are based on a well-The cutflower industry is one of themost rapidgrowth sectors of horticulture managed planting whichis maintained forin Australia. During the pastfive years two years in the case of carnations, andmanynewflowergrowers and wholesalers sixmonthsforchrysanthemums. Because

of the strong emphasis on quality, and tohave entered the industry. Statisticsgathered in 1985 by the SADepartiiient of enhance year-round flowering, most

carnations and chrysanthemums are nowAgriculture suggest that cutflowergrown in a greenhouse structure. 'ITieproduction represents a healthy industry

with an estimated wholesale value of $14 analyses are based on a polyhouse, notbecause this is the recoirnnended type ofnullion.

house, but because the majority of thegrowers interviewed were making use ofthese houses.

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Tile cost and return analysespresented here are designed to helpexisting growers in their production andmarketing decisions, and to providepotential growers with a general guide tothe econonntcs of commercial production.

Tile listing of operations and inputsof chemicals and fertilisers in the analysesare notintended to be a 'recipe' forproduction. Not all chemicals, for example,would necessarily be required duringproduction of a particular crop.

Cost and return analysts

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To obtain most benefitfrom the

analyses it is suggested that existing orpotential growers use the format of thebudgets as a basis for calculating an up-to-date budget, Incorporating actual cropproduction figures from their ownbusinesses.

Estimates used in the analyses arecomposite figures gathered by Individuallyinterviewing a number of growers.

Gross margin and sensitivity analysis

A gross margin, in its simplest form,is the difference between the gross incomeearned and the variable (direct) costsinvolved in the enterprise. Overhead costs,such as councilrates, permanentlabouror general farm costs, are notincluded,nor are capital costs.

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The gross margin enables theidentification of significant production andcostitems and is a useful means of

comparing the profitability of carnationswith other greenhouse crops.

The calculated gross margin issensitive to changes in any costs, pricesand productivity. A sensitivity analysis istherefore included to show the effects of

two key variables (yield and price) on theyearly gross margin.

7

CARNATIONS

Carnations are one of the leading cut . Planting rate is 35 plants/in or 630plants/bed (2 5201house).flower crops in the world and the largest

flower crop (wholesale value in 1987 $6.3 . An average yield is assumed to be 20nullon) gr'own in SA. Carnations are a stems/plant over the two-year period.popular crop to grow for local markets However, yield ranging from 10 stems/because of their high use by florists, good plant to 30 stems/plantis taken intoyield potentials and adaptability to accountin the sensitivity analysis anddifferent growing systems. SA conditions the break-even analysis.are notldealforyear-round carnation

. an average price of 25 cents/stem isproduction, but growers can useassumed overthe two years (allowing forgreenhouses and management techniquesthe lower price received for second-gradeto schedule crops for peak market periods.carnations). However, prices of 15 to 40cents/stem are taken into accountin theCarnations are also a very labour-sensitivity analysis.intensive crop and require skilled

managers to assure highyields. The . Chemical and fertiliser prices are averagefollowing budget analysis is based on retail prices that growers could expecttostandard carnations (SIms type) and pay as at I March 1987.assumes production supervised by an

. A range of insecticides and fungicidese>cperienced grower.have been used to average pest anddisease control costing. Not all chemicalsCarnations are still(1988)importedlisted would necessarily be used in ainto SAfrom other States during slowgrower's spray program.production periods. Most standard

carnations (Sims type) produced in SAare .It is assumed that six layers of wiremesh is required to support the plants,marketed in SA. However, spray or

miniature carnations are marketed in and that the wire mesh is replaced everyother States. too years.

. Drip irrigation is the principal form ofirrigation used. Overhead sprinklers areused when establishing the young plantsand for rapid crop cooling during hotwindy conditions.

. Tile cost of the water has not been

included in the budget.

. Casual labouris assumed to be $61hourand an allowance for operatorlabourisincluded as a non-cash cost at an

imputed cost of $81hour.

. Cartage costs are based on cartonscontaining 300 stems (approximately 30bunches) and being delivered either byhired transport (for example by bus), orpersonally delivered (in which case $31carton allows for delivery van runningcosts and labour cost).

The carnation analysis is perlonnedfor a 10-house enterprise, which is a sizethat can realistically be operated by onefull-time grower with minimal casuallabour. As the size of the enterpriseincreases labour can be more efficientlyused, and repetitive jobs such asdisbudding, picking and bunching can beallocated to casual labour. This will allow

more operatortime for marketing,upgrading and e>, pansion.

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Assumptions

Tile assumptions relating to thebudget are:

. House size is 6 in x 20 in (120 in21consisting offour beds each I in x 18 in.

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o1tis assumed that cartons are returned

and re-used up to 10 times.

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Tables have been included to

accountfor some overhead costs (costs ofmachinery, penmanentlabour). Theseoverhead costs have then been allocated

as a cost against the enterprise in the totalcost review.

Overhead costs

This analysis is not a whole-farmbudget, so overhead costs such as farmmortgage and overdrafts, have not beenincluded.

Break-even analysis

The break-even analysis table givesantndicatlon of the prices that the growerneeds to receive to cover variable costs,

cash plus imputed labourcosts and totalcosts. Total costs include variable labourand the nontinated farm overheads.

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.It is importantto remember that thegross margin is based on a two-yearperiod.

To accountfor the fact that a higherproportion of the income is received in thesecond year, and a high proportion of thecosts are paid outin the first year, aninterest cost on working capital has beenincluded. A figure of 18.5 per cent wasconsidered appropriate as this is thecurrent bank overdraft rate. Even ifthe

grower alreadyhad sufficientfundsavailable, these would incur an

opportunity cost of 12 to 16 per centICUrrentinvestinent rates).

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Other considerations

Crop: Carnations (2 year crop)Unit: L house

Gross Income

Yield

Total income IAI

Variable costs

. Growers sell their flowers to wholesalers

or florists. Although a higher price perstem is usually attained when sellingdirect to florists, the delivery costs (directcosts of running a delivery vehicle andlabour costs) often tend to nullify or evenexceed the extra income.

SoupreparatlonCultivation

Rotary hoeingBed fomiingImplement repairs

PlantingPlants

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50 400 stems @ ^0.25/stem

0.5 hours @ $4,161hrI hour @ $4,161hrI hour @ $4.16/hr

$21house

Area: South Australia

Date: June 1987

2 520 plants @ $0,351plant

$

12 600.00

1.2 600.00

9

2.08

4.16

4.16

2.00

882.00

Grosslncome

Yield

Total Income IAI

Fertiliser

Preplanting:25 kg/house @ $0,351kgSuperphosphate

Complete nuneralmix 25 kg/house @ $0,531kgAfter planting:

80 kg/house @ $0,881kgPotassium nitrate

130 kg/house @ $0,871kgCalcium nitrate

30 kg/house @ $0,411kgUrea

50 400 stems @ ^0.25/stem

Trellisl, ,. gMaterials:

Wire mesh

Weed control

Applic: tractorImplement repairsPre-emergent:

Dacthal@

Roundupo

Pest and disease controlApplic: tractorSpray unitrepairsPerlekttiion'

KelttlaneoAmbush'Thlodane'

Rowal'

BaycoroZlneb 800

9 rolls @ $39,00150 in roll

0.75 hr/house @ $4,161hour$0,501house

100 g/house @ $23,161kg2 L @ $25,401L

$

1.2 600.00

12 600.00

Pinching and buddingDlsbudding

IrrigationRepairsandmaintenance $20,001house

^leetrlcltyIrrigation, lights, coolroom $150,001house

Harvest and marketingHarvesting labourRubberbands

10.95 hrs/house @ $4,161hour$1,001house7.5 inL/house @ $9,501Lx 24 applications12.5 inL/house @ $14,381Lx 30 applications1.5 inL/house @ $146,001Lx 24 applications20 inL/house @ $11,631Lx 24 applications5 g/house @ $49.65/kgx 8 applications17 inL/house @ 67,511Lx 18 applications15 g/house @ $6,061kgx 8 applications

8.78

13.20

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70.481/3. 11

12.15

.

351.00

100 hrs/house @ $6.00/hour

3.12

0.50

2.32

50.80

"

30 hours @ $6,001hr2 kg @ $6,001kg

45.58

1.001.71

5.395.265.58

1.99

20.66

0.73

.

1.0

600.00

20.00

150.00

180.0012.00

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Gros. Income

Yield

. Total 1.1come IAI

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I^arrest and marketing Icont. )Calyx clips

20 160 clips @ $17,0011 000 clips(400fo of crop'50 400 stems @ $0,02110 stemsPostharvesttreatinent17 cartons @ $3,001cadonCartons

168 cartons @ $3,001cartonCartage

Other variable costsOffice materials

Momtenance of house:$300/housePlastic

$501houseOther

4 @ $251analysisLeafanalysisI @ $351analysisSoil analysis

Interest on w/capital @ 18.5%

50 400 stems @ ^0,251stem

Total cash costs (B)

Gross margin per glasshouse (A-B)

$301house

Gross margin ayear

Sensitivity analysis: effect of yield and price change criero59 margin a year

$

1.2 600.00

1.2 600.00

Price

$1stem

342.72

100.8051.00

504.00

,

0.150.200.25

0.300.350.40

30.00

25 200

300.00

50.00

100.00

35.00

570.68

~187

443

I 073

I 703

2 333

2 963

37 800

$4 653.35

Yield

(stems per housej50400 63 000

$7 946.65

633

I 578

2 523

3 4684 4/3

5 358

$3 973.32

I 453

2 713

3 973

5 233

6 493

7 753

2 274

3 849

5 424

6 999

8 57410 149

75 600

I. I.

3 094

4 984

6 874

8 76410 654

12 544

Break-even analysis: Price per stem required to cover costs

Bunches/10 housesStems/house

Cash costs onlyCash and labour

Total costs

252 00025 200

Tractor and labourrequirements

Operation

0.160.37

378 00037 800

Soupreparatio, IRemoval and cleaning up of previous cropCultivation

Rotary hoeingBed fomning

planting

Fertiliser

Pre-plantingApplications

TrellislngInstallation

0.40

0.120.25

Yield

504 00050 400

0.27

0.090.20

630 00063 000

0.21

No. oftimes

Weed control

Herbicide application:Pre-emergentRoundup'

Hand weeding

Pest and disease control

Spraying

Whitewash

Application and removal

IrrigationInstallation of lines

Repairs and maintenance

0.080.16

756 00075 600

0.17

Workrate

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2

0.070.14

Hours/houseTractor

time

0.15

0.500.50

1.00

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I

Labourtime

0.501.00

1.00

I

16.0

0.6

1.3

2.5

I

6.0

0.25

0.50

73

0.5

25.0

~

0.25

0.50

0.15

5.0

0.3

0.6

15.0

10.95

1.2

16.0

4.0

4.0

3.0

Tractor and labourrequirements (cont. I

Operation

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Pinching and digbi, ddlngPinching/pruningDlsbudding

Harvesting and marketingHarvestingPOSttiarvest treattnents

Grading and packingDelivery

Other labour

Bookwork/recordsMaintenance of house

Management/general

No. of

times

Total labourminus casual labour

Operatorlabour

Workrate

Hours/houseTractor

time

Specific overheads, 1.0 houses

Item

Labourtime

Rotary hoe 40 inchCultivator

9.0

120.0

Total

200.015.0

100.0

45.0

A

Irisurarice

Depreciation

New

priceI^)

Total

14.20

Life

Iyrs)

14.0

16.0

30.0

3 000

I 000

$2 350 @ I%

648.8

Resale

value

(;^I

648.8

6

6

Average Depreciationannual cost

I^/yrjInvest-

merit

I$/yr)

500

200

I 750

600

2 350

1.3

416.67

133.33

550.00

23.50

550.00

573.50

Total cost review

Cash costs onlyOperatorlabourSpecific overheadsGeneral overheads

Total enterprise costs

Flower farm machl, Iery and equipment Inventory and associated overhead costs

648.8 hours @ $8

Machinery and equipment Inventory for a flower farm, size: 1.0 houses

$6 574.893/10 houses

Item

BuildingsShedsCoolroomHouses

Irrigation plantI 500Pump

Drippers, tubing and fittings I 5003 0002 500 gallon water tanks

Mumg tank (fibreglass) 300

500Filtration system2 000Fertiliser Injecting system

200Overhead Irrigation system

Machinery and equipment11 kW tractor

Pro drive sprayerUtility truck or vanTrailer

KnapsackStar droppersSundry toolsGrading benchesBuckets

I. house

4 653.355 190.40

New

price($1

1.0 houses

20 000

5 000

20 000

46 533.5351 904.00

573.506 574.89

Life

(yrs)

105 585.92

Resalevalue

I$)

30

15

20

Average Depreciationvalue cost

(^/yrjI$1

o

o

2 000

.

10

7

8

8

7

7

5

Total

10 000

I 000

14 000

250

200

670

2 000

I 000

400

10 0002 500

11 000

o

o

o

o

o

o

o

9

6

7

7

5

151510

4

750750

I 500

150

250

I 000100

666.67

333.33900.00

2 000

200

3 000o

o

o

o

o

o

150.00

214.29

375.0037.20

71.43

285.7i40.00

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6 000600

8 500125

100

335I 000

500

200

888.89133.33

I 571.4335.7140.00

44.67

133.33

100.00

100.00

1.4

45 360 6 121.29

.

Machinery overhead costs

Depreciation on plant and machineryInsurance on plant and machineryInsurance on buildings

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Total

Tractor operating costs

DescriptionPurchase price

Annual operation

Operating costs IPer I 000 hours)FuelLubrication

$21 860 invested @ I%$23 500 invested @ 19"o

Repairs and maintenanceTyres - front

- back

Battery, 12v, 15 plate

Registration and Insurance

1.1. kilowatt tractor

Total cost per I 000 hoursOperating cost per hour

$10 000200 hours

6 121.29

218.60235.00

Chemical price list

Chemical

5.5 L/hr @ $0,501L$150/yr

574.89

SuperphosphateComplete mineral mixPotassium nitrate

Calcium nitrate

Urea

Dacthal'

Roundup'perlekthiono

Kelthaneo

Ambush@

8% of $10 000

3 000 hrs @ $751tyre2 000 hrs @ $300/tyre2 000 hrs @ $55

$851year

$2 750.00150.00

Price/package($)

800.00

50.00300.00

27.50

17,55150 kg26,40150 kg44,05150 kg

870,0011tonne25,00150 kg57,9012.5 kg

127,0015 L47,5015 L71,9015 L73,0010.5 L

85.00

4 162.504.16

Price/unit

1.5

0,351kg0,531kg0.88/kg0,871kg0,411kg

23,161kg25.40/L9.50/L

14,381L146,001L

Chemical price list (coat. I

Chem^cal

'11/10dano

Rowajo

BaycoroZlneb 800

HYDROPONICCARNATIONS

This analysis is made to allow acomparisonbetween in-ground carnationsand those that are grown hydroponicallyIn a styrene box/potting mix system. Thisis just one of many hydroponic systemsused by growers to avoid problemsencountered by fusadum infestattons orpoor soil quality. This system is readilyadaptable to manygreenhouses and lessexpensive than establishing permanentbeds. However, there is considerable lossof planting space in a greenhouse andtherefore lower enterprise yields, whenboxes are used instead of beds.

Price/package($)

58,1515 L49,6511 kg

337,5415 L60.60/10 kg

All assumptions relating to the firstanalysis are valid here. In addition:

. Tile hydroponic carnations are assumedto be grown In a pinebark/sand mix instyrene boxes, at a planting rate of sixplants a box.

. A10cally formulated brand of hydroponicnutrient mixis used, augmented bycalcium nitrate bought at bulk rate.

yield of 50 400 stems a greenhouse, stemprice would need to average 9 cents tocover cash operating e><penses; 20 cents astem is required to cover cash and ounier-manager labour and 21 cents a stem isrequired to cover all nominated costs.Twenty five per cent yield reductionresults in zero profit and insufficientreturns to cover a proportionate share offarm overhead costs.

Price/unit

11,631L49,651kg67,511L

6,061kg

Hydroponically-grown carnationswould need to achieve a 10 per cent stempremium to be of similar profitability tonon-hydroponic glasshouse crops. Thispremium would be necessary to counterthe lower productivity of the hydroponicgreenhouse because of its lower plantingdensity.

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On the basis of the stated

assumptions for carnation production acrop gross margin of $3 973 a glasshouseayear could be e>cpected. At a median

SUMMARY

Profitability

Assuming the median yield andprice, flower growers managing a 10-polyhouse business could e>cpect about$10 000 profit a annum, over and abovenominated costs including their ownlabour, imputed at $8 an hour' Poorproduction, lower average returns, greatertime input or higher overhead costs allhave the potential to eliminate profit.

The break up of cash costsillustrated in the pie charts (figures I and2) emphasises the significance of'harvestand marketing' costs and 'other variable'costs. 'Other variables' include the highcostitem of working capital required toconduct the two-year growing program.

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1.6

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25.60fo

.

3.7% '^\

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I I I\\

'2.90,6

23.3%

I

menre L: Carnation enterprise costs, cash costs per glasshouse.

e

3.1%

b

0.3%

7.5%

*'g

. Other variable costs

a Soilpreparation^ Planting^I Fertiliser

. Trellising

.Weed, pest & disease^ Pinching & disbuddingt;^ lingatiion & electricity1:21Harvesting & marketing

...

4.7%

*:41

25.6%

19%

7.8%

18.5% I

' *$$*;;:t*;:;;\:**<. .-* ***:::-.**::::,.

...*... *..

Figure 2: Hydropo, ,IC carnation enterprise costs, cash costs per glasshouse.

\

15.1%

"

6.0%

. Sitepreparation^ Planting^;^I Fertiliser^ Trellising. Weed, pest & diseasea Pinching & disbudding^ Irrigation & electricityt;, Harvest & marketing11^ Other variable costs

4.8%

9.9%

3.5%

8.8%

1.7

Crop: Hydropo, Ile carnations (2 year crop)Unit: I. house

Gross Income

Yield

Total Income IAI

Variable costs

Site preparationPinchark/sandSoilmixamendments

Plan. t1,18Plants

34 560 stems @ ^0.25/stem

Fertiliser

Hydroponic nutrient mixCalcium nitrate

Trellisl, ,gMaterials:

Wire mesh

Weed control

Applic: tractorImplement repairsRoundupo

Pest and disease control

Applic: tractorSpray unitrepairspertekthionoKelthaneoAmbushoThiodano

Rowajo

BaycoroZlneb 800

Pinching^Idbi, ddi, ,gDlsbudding

IrrigationRepairsandmaintenance $90,001house

ElectrldtyIrrigation, lights, coolroom $150,001house

5.2 in' @ $57.40/in'15 kg/house @ $1,001kg

I 728 plants @ $0,351plant

Area: South AustraliaDate: June 1987

160 kg/house @ $1,761kg130 kg/house @ $0,871kg

9 rolls @ $39,00150 in roll

^

8 640.00

0.5 hrs/house @ $4,161hour$0.30/house2 L @ $24,501L

8 640.00

10.95 hrs/house @ $4,161hour$1,001house7.5 inL/house $9,501Lx 24 applications12.5 inL/house @ $14,381Lx 30 applications1.5 inL/house @ $146,001Lx 24 applications20 inL/house @ $11,631kgx 24 applications5 g/house @ $49,651kgx 8 applications17 inL/house @ $67,511Lx 18 applications15 g/house @ $6,061kgx 8 applications

298.48

.

15.00

604.80

282.321/3. 11

32 hrs/house @ $6,001hour

351.00

2.08

0.3050.80

.

45.58

1.00

1.71

5.39

5.265.58

1.99

20.66

0.73

1.8

192.00

90.00

150.00

,

Crop:lt,:ydropozilc carnations 12 year cropjUnit: I house

Gros. Income

e

Yield

a Total 1.1come IAI

Homest and rriarketlngRubberbands

Calyx clips (400fo of crop)PostharvesttreatrnentCartons

Cartage

Other variable costs

Office materialsMaintenance of house:

$300/housePlastic

$501houseOther

4 @ $251analysisLeaf analysisI @ $351analysisSoil analysis

Interest on w/capital @ 18.5%

34 560 stems @ ^0,251stem

1.5 kg @ $6,001kg14 120 clips @ $17.00/I 000 clips34 560 stems @ $0,03110 stems12 cartons @ $3,001carton1/8 cartons @ $3,001carton

Total cash costs IB)

Gross margin per glasshouse (A-B)

Area: South Australia

Date: June 1,987

$301house

Gross margin peryear

Sensitivity analysis: effect of yield and price change on gross margin a year

^

8 640.00

8 640.00

Price

$1stem

9.00

240.04

103.6834.56

354.00

0.15

0.20

0.25

0.30

0.350.40

1.7 280

-523

-91

341

773

I 205I 637

30.00

300.00

50.00100.00

35.00510.93

25 920

Yield

totems per housej34 560

33

681

I 329

I 977

2 6253 273

$4 005.00

$4 635.00

$4 635.00

590

I 454

2 318

3 182

4 046

4 910

43 200

I 146

2 226

3 306

4 386

5 466

6 546

1.9

51. 840

I 702

2 998

4 294

5 590

6 886

8 182

Break-even analysts: Price per stem required to cover costs

Yield

Bunches/,. O housesStems/house

Cash costs onlyCash and labour

Total costs

Tractor and lal, our requirements

Operation

252 00025 200

Site preparationRemoval and cleaning up of

previous crop

Fillstyrene boxes andcartin

0.16

0.37

378 00037 800

0.40

0.12

0.25

504 000

50400

Planting

Fertiliser

Application

Trellis1,18Instanation

Weed control

Roundupo

Pest and disease control

Sprayirig

Whitewash

Application and removal

IrrigationInstallation of lines

Repairs and maintenance

Pinching and digbuddlngPinching/pruningDlsbudding

0.27

No. oftimes

0.09

0.20

630 000

63 000

0.21

Workrate

0.08

0.16

I

756 000

75 600

0.17

Hours/houseTractor

time

0.07

0.14

0.15

I

,

Labour

time (hr)

73

14.0

17.5

0.50

0.15

5.0

0.50

30.0

10.95

5.0

0.6

20

16.0

4.0

6.0

5.0

6.0

80.0

.

Tractor and labour requirements toont. )

Operation

,

,

11arvest1,18 and marketingHarvestingPostharvesttreatrnents

Grading and packingDelivery

Other labour

Bookwork/recordsMaintenance of house

Management/general

No. of

times

Total labour

Operator labour

Specific overheads, 1.0 houses

Work

rate

Item

Hours/houseTractor

time

Styrene boxes 2 880

Total

Insurance

Depreciation

Labour

time (hrj

New

priceI$)

Total

Life

(yrsj($)

Total cost review

2 880

50.015.0

62.0

40.0

$1 440 @ I'

11.45

Cash costs onlyOperatorlabourSpecific overheadsGeneral overheads

Resale

value

,

3

14.0

16.030.0

Total enterprise costs

Average Depreciationannual cost

($/yr)Invest-merit

(^/yrj

416.1

416.1

o

416.1 hours @ $8

$6 541,56110 houses

I 440

I 440

960.00

960.00

14.40

960.00

I. house

974.40

4 005.003 328.80

21.

1.0 houses

40 049.9633 288.00

974.40

6 541.56

80 853.93

Chemical price inst

Chemical

I$1

Calcium nitrate

Hydroponic nutrient mixRoundupopertekthionoKelttianeoAmbusho

ThtodanoRowajo

BaycoroZineb 800

Price/package

870,1111 t35,29120 kg

127,0015 L47,5015 L71,9015 L73,0010.5 L58,1515 L49,6511 kg

337,5415 L60.60/10 kg

Price/unit

0,871kg1,761kg

25,401L9.50/L

14,381L146,001L

11,631L49,651kg67,511L6.06/kg

.

,

I,

22

CHRYSANTH^MUMS

price received for second-qualityChrysanthemums are very popularwith consumers because of the range of chrysanthemums). However, prices of 50

cents to $3.50/bunch are taken intofomi and colour offlowers available.

nitouglioutthe world they are considered account in the sensitivity analysis. Pricesreceived varymarkedly throughouttheto be one of the flowers most utilised byyear, the highest prices being attainedflorists or sold as a bunch line. In the

during holiday periods and wintersurvey conducted In 1984,months. Therefore, animportant part ofchrysanthemums werefound to have thechrysanthemum growing is schedulingthird bigliest wholesale value in the State,the crop.behind carnations and roses.

. Chemical and fertiliser prices are averageretail prices growers could e>cpect to payas at I March 1987.

,

Chrysanthemums are basicallyhardy plants, which are more easilymanaged and far less labourintensivethan carnations. In the pastchrysanthemums have been producedprimarily outdoors under natural daylength for the Mother's Day marketinautumn. With the wide range of varietiesnowavailable, growers can take advantageof protection afforded by me>cliensivepolyhouse structures and schedule foryear-round production. Crop schedulingfor peak market periods (holidays, wintermonths)is very Importantfor optimalreturns with chrysanthemums.

e.

The assumptions relating to thebudget are as follows:

. House size is 6 in x 20 in (120 in2)

consisting offour beds each 1.0 in x18 in.

. Planting rate is 20 plants/in' or 360plants/bed (I 4401house).

. in average yield is I bunch/plant, overthe six months. However, yield rangingfrom 0.4 bunches/plant to 6 bunches/plant are taken into accountin thesensitivity analysis and the break-evenanalysis.

. Aprice of $21bunch is considered to bean average price tallowing for the lower

. A range of insecticides and fungicideshave been used to average pest anddisease control costing. Not all chemicalslisted would necessarily be used in agrower's spray program.

.It is assumed that two layers of wiremesh is required to support the plants,and that this is bought new every twoyears.

. Drip irrigation is the principal form ofirrigation used in bed plantings.Overhead sprinklers are used whenestablishing the young plants and forrapid crop cooling during hot windyconditions.

Assumptions

=

. The cost of the water has not been

included in the budget.

. Casual labouris assumed to be $61hourand operator labour is included later inthe analysis at $81hour.

. Cartage costs are based on cardboardcartons containing 10 bunches which aredelivered either by hired transport Iforexample by bus), or personally delivered(in which case $31carton allows fordelivery van running costs and labourcost).

.It is assumed that cartons are returned

and re-used up to 10 times.

23

Tables have been included to

accountfor some overhead costs (costs ofmachinery, penmanentlabour). Theseoverhead costs have then been allocated

as a cost agairistthe enterprise in the totalcost review.

Overhead costs

Tills analysis is not meant to be awhole-farm budget, so overhead costs,such asfarm mortgage and overdrafts,have notbeen included.

The break-even analysis table givesan indication of the prices a bunch thatthe grower needs to receive to covervariable costs, cash plus imputed labourcosts and total costs. Total costs includevariable, labour and farm overheads.

a higher price a bunch is usually attainedwhen selling direct to florists, the deliverycosts Idirect costs of running a deliveryvehicle, and labour costs) often tend tonullify, or even exceed the extra income.

Break-even analysis

Growers can sentheir flowers to

wholesalers or direct to florists. Although

Other considerations

The results of the chrysanthemumanalysis are quite encouraging. Ayearlygross margin of approximately $3 300 ahouse is attained with the major costsbeing the buying of plants and marketing.Assuming the average yield of one bunch aplant, the price required to cover cashcosts is only 86 cents a bunch.

The break-even price required tocover total costs Is $1.85 a bunch for the

yield of one bunch a plant. Hence iftheaverage price of $2 a bunch is attained,the enterprise will be quite profitable.Again, it is Important to remember thatthe price received is very dependent onscheduling the crop for optimum marketperiods.

Chrysanthemum profitability

Crop: Chrysanthemums(6 month crop)Unit: I. house

SUM^RY

Grosslncome

Yield

Total Income (A)

Variable costs

Soupreparatlon

Cultivation

Rotary hoeingBed fonningImplement repairs

PlantingPlants

,

.

I 440 bunches @ $21bunch

0.5 hours @ $4,161hrI hour @ $4.16/hrI hour @ $4,161hr$21house

Area: South AUStraUaDate: June 1987

,

I 440 plants @ $0,201plant

,

$

2 880.00

2 880.00

24

2.08

4.16

4.16

2.00

8.00

.

Crop: Chrysanthemums 16 month crop)limit: I. house

Gross Income

Yield

? Total income (A)

Fertiliser

Preplanting:29 kg/house @ $0,191kgDolomite

14 kg/house @ $0,351kgSingle superUreafomnaldehyde 8kg/house $0,351kgPotassiumsulphate 8kg/house $0,611kg

After planting:Complete mineral mix 10 kg/house @ $0,531kgFoliar feed 6 applications

L 440 bunches @ ^21bunch

Weed control

Applic: tractorImplement repairsTenorarjo

Roundup'

,,

-

Pest and disease control

Applic: tractorSpray unit repairsRowal'Dithane'

Zinebo

Baycor'Kelthane'

Ripcord'pinmOro

Omiteo

Area: South Australia

Date: June 1987

I hr/house @ $4.16/hour$0,501house32 g/house @ $45.61kgx 2 applications0.5 litres @ $25,401L

^

2 880.00

IrrigationRepairs andmaintenance

2.7 hrs/house @ $4,161hour$1,001house5 g/house @ $49,651kgx 6 applications15 g/house @ $6,341kgx 8 applications15 g/house @ $6,061kg x 8 applications17 inL/house @ 67,511Lx 8 applications12.5 inL/house @ $14,381Lx 6 applications5 inL/house @ $58,061Lx 6 applications5 g/house @ $23,001kg x 12 applications10 g/house @ $15,121kg x 6 applications

2 880.00

ElectricityIrrigation, lights,coolroom

5.56

4.192.80

4.84

,

Harvest and marketingCasual labour:

HarvestingGrading and packing

5.282.00

$5,001house

4.16

0.50

2.92

12.70

$38,001house

11.24

1.00

1.49

0.76

0.73

9.18

1.08

1.74

1.38

0.91

15 hours @ $6,001hr10 hours @ $6,001hr

25

5.00

38.00

90.00

60.00

Crop: Chrysanthemums 16 month crop)Unit: I. house

Gross 1.1co, ,IC

Yield

Total income IAI

11^est and marketing (cont. )0.5 kg @ $6,001kgRubberbandsI 440 bunches @ $0,20110 bunchesPostharvesttreatrnent14 cartons @ $3,001cartonCartons

144 cartons @ $3,001cartonCartage

Other variable costsOffice materials

Maintenance of house:PlasticOther

Leaf analysisSoil analysis

^ 440bunches @ ^21bunch

Total cash costs IB)

Gross margin per glasshouse (A-B)

Area: South AustraliaDate: June 1,987

Gross margin peryear

$81house

$751house$151houseI @ $251analysisI @ $351analysis

Sensitivity analysis: effect of yield and price change on gross margin a year

^

2 880.00

2 880.00

Price

$1bunch

3.00

28.80

42.00

432.00

,

,

0.51.00

1.502.00

2.50

3.00

3.50

576

-I 285-709

-133

443

I 019

I 5952 171

8.00

75.00

15.00

25.0035.00

864

-I 199-335529

I 393

2 257

3 1213 985

Yield

CDunches per house)11.52 1440 1,728

$1 232.39

$1 647.61

~I 1/2

40

I 192

2 344

3 496

4 6485 800

$3 295.22

*

-I 0254/5

I 855

3 2954 735

6 1757 615

.I

928790

2 5184 246

5 974

7 7029 430

2 01.6

-851I 1653 181

5 1977 213

9 22911 245

26

2 204

-764

I 5403 844

6 148

8 452

10 75613 060

Break-even analysls: Price perbunch required to cover costs

Bunches/1.0 houses 5 760Bunches/house 576

*

Cash costs onlyCash and labour

Total costs

Tractor and labourreq. ulrements

Operation

Yield

8640 1.1. 520 1,4400

864 1152 1,440

1.62

2.76

SoupreparationRemoval and cleaning up of

previous cropCultivation

Rotary hoeingBed fomiing

Planting

Fertiliser

Application:Pre-plantingAfter planting

TrellislngInstallation

Weed control

Herbicide application:Tenorarjo

Roundupo

Pest and disease control

Spraying

Whitewash

Application and removal

IrrigationInstallation of lines

4.09

I

1.19

1.95

a

2.85

0.98

1.55

2.22

0.861.31

1.7 280

I. 728

No. oftimes

1.85

0.77

1.15

20 1.60 23 040201.6 2304

1.60

0.71

1.04

Work

rate

2

I

1.42

0.670.95

Hours/houseTractor

time

1.29

0.500.50

1.00

,

Labourtime

0.501.00

1.00

10.00

0.60

1.30

2.50

2

18

0.25

0.5

2.00

0.15

0.50

1.50

0.50

0.50

2.00

27

2.70

0.03

0.6

4.00

4.00

4.00

Tractor and labourreq. ulrements (cont. )

Operation

Irrigation (cont. )Repairs and maintenance

DishiLdd. ing

Harvesting and marketingHarvestingGrading and packingDelivery

Other labour

Bookwork/recordsMaintenance of house

No. of

times

Total labourminus casual labour

Operatorlabour

Work

rate

Hours/houseTractor

time

Flower farm ,machinery and equipment Inventory and associated overhead costs

Machlziery and equipment Inventory for a flower farm size: 1.0 houses

Item

BuildingsSheds

CoolroomHouses

Labourtime

Irrigation plantPumpDrippers, tubing and fittings2 500 gallon water tanksMixing tank (fibreglass)Filtration systemFertiliser injecting systemOverhead irrigation system

0.75

.

1.00

New

price($)

30.0015.0020.00

6.20

20 000

5 00020 000

Life

(yrs)

3.503.50

107.0525.00

82.05

Resale

value

($1

I 500

I 500

3 000300

500

2 000

200

30

1520

Average Depreciationvalue cost

(^/yr)(^I

o

o

2 000

,

10

7

8

8

7

7

5

,

10 000

2 50011 000

o

o

o

o

o

oo

750750

I 500150

250

I 000100

666.67

333.33

900.00

28

150.00214.29

375.00

37.20

71.43

285.7i40.00

,

Flower farm machinery and equipment Inventory and. associated overhead costsICO^t. I

Machinery and equipment Inventory for a flower farm size: LO houses

Item

*

11 kW tractor

Pro drive sprayerUtility truck or vanTrailer

KnapsackStar droppersSundry toolsGrading benchesBuckets

New

price(^)

Total

10 000I 000

14 000

250200

670

2 000

I 000

400

Machinery overhead costs

Life

(yrs)

Depreciation on plant and machineryInsurance on plant and machineryInsurance on buildings

Resalevalue

I$1

96

7

7

5

151510

4

Total

2 000

200

3 000

o

o

o

o

o

o

Average Depreciationvalue cost

($1 ($/yrj

Specific overheads: 1.0 houses

Item

6 000600

8 500125100

335I 000

500

200

Rotary hoe 40 inchCultivator

Wire mesh (I 450 in)

888.89

133.33

I 571.4335.71

40.00

44.67

133.33100.00

100.00

$21 860 invested @ I%$23 500 invested @ Icyo

Total

45 360

Irisurarice

Depreciation

New

price(^)

Total

6 121.29

Life

(yrs)

3 000

I 000

I 170

$2 935 @ I%

Resale

value

($)

6 121.29

218.60

235.00

6

6

2

6 574.89

Average Depreciationannual cost

(^/yr)Invest-

merit

(^/yr)

500200

o

I 750

600

585

2 935

29

416.67

133.33585.00

I 135.00

29.35I 135.00

I 164.35

rotateOStrevlew

Cash costs onlyOperatorlabourSpecific overheadsGeneral overheads

Total enterprise costs

82.05 hours @ $8

$6 541,56110 houses

I. house

I 232.39656.40

1.0 houses

12 323.886 564.00

I 164.35

6 541.56

26 593.79

.

I

.

30

,

The break-up of cash costsillustrated in the pie chart rugure 31emphasises the large proportion (53.2 percenti of costs directed into harvesting andmarking. 'Ibis proportion will decreaseSIgrilficaritly as the size of the totalenterprise increases. The resources andcosts associated with marketing a smallcrop can often be a limiting factor in theprofitability of a flower enterprise.

Enterprise comparison bar graphs

Tile bar-graphs (figure 4) showcarnations to be marginalIy moreprofitable than chrysanthemums on ayearly gross margin basis. CanIations are

.

.

I^-111T^RFRIS^^ COMPARISONS

Pie chart eighttimes more intensive in theirrequirement for operatorlabourtime thanchrysanthemums. Hence, despite a muchlower gross margin per crop and a slightlylower gross margin ayear forchrysanthemums compared withcarnations, chrysanthemums retum ahigher gross margin to each hour ofoperator labour.

Other factors notlimiting, a growercould manage 80 polyhouses ofchrysanthemums forevery 10 ofcarnations. The practical implication ofthis is that a grower would make a similargross margin at a higher return per hourfor managing 12 polyhouses ofchrysanthemumsto that for 10polyhouses of carnations.

~

\,\\

I J I\\\\J, ,,\\\\\\IIJ r/,\\\\\\\11 ,,,/r\\\\\\\\\111 r, ,I, /\\\\\\\\\\,,,,,/,,//

I'll ,,///,/,,

I'll ,,//#/1111 #

,,,,,,,,,,,,,,,,\ ...*:<**:*;::$;<*?'$**;:*'*;;'\:\:$;;:;$:;**,:;',,,,,,,,,,,,,,,,,, ...........:....*.:-:::::;**.*$:

\\\\\\\\\\\\\\\\\\\\\

,,, FIJI ,//""""''''''

,,//, 11/11/1111 r///////11/1/1

""""" 11/11 r///,\\\\\\\\\\\\\\\\\\\\

53,2910 \\\\\\\\\""""'1111/11/11 ,

1.0%

,

23,491o

Figure 3: Chrysanthemum enterprise costs, cash costs per glasshouse.

\\\\\\\

2. 19. '0

I . 69. '0

2.49'o

0.49'o

. Soilpreparation^ Planting$3;; Fertiliser

^ Weedcontrol. Pest & diseasea Irrigation^ ElectricityI^;I Harvest & marketing11^I Other variable costs

3.1%

31.

4

Gross

margins($'0001

3

2

I

oA

A- Carnations

Figure 4:1^,, ternrlse comparisons.

Gross margin per hour of operator labour

14

Carnations

GM/glasshouseGM/hour operatorlabour (648.8 hr)

Hydroponlc carnationsGM/glasshouseGM/hour operatorlabour (416.1 hr)

ChrysanthemumsGM/glasshouseGM/hour operatorlabour (82.05 hr)

Gross

Income

($'000)

12

. ..

\

B

10

\ \"

C

B - Hydroponic carnations

8

6

a Cash costs. Gross margins

4

2

oA CB

C-Chiysanthenums

.

$7 946.0012,251hr

,

,

$4 635.0011,141hr

$1 647.6120,071hr

32

^

,