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Publication #FE986

Cost of Production for Processed Oranges in Southwest Florida, 2014/15 1

Ariel Singerman2

Introduction

This article presents the cost of production per acre for processed oranges in southwest Florida during 2014/15. The cost estimates below do not represent any individual operation. Instead, their purpose is to serve as a benchmark for the Florida citrus industry. Typical users of these estimates include growers, consultants, property appraisers, and researchers.

The Survey

A total of twelve growers participated in the data collection process. Eight growers attended a meeting at the UF/IFAS Extension Hendry County office in June of 2015, while another four growers submitted their responses by mail. The number of acres managed by their combined operations accounted for approximately 32,400 acres. The acreage for oranges in southwest Florida during 2014 was estimated at 265,927 (USDA/NASS 2014). Thus, the combined acreage of the surveyed growers represents 12% of the total acreage devoted to oranges in that region.

Growers brought a completed survey form to the meeting that had been distributed to them beforehand. The questionnaire asked growers to provide annual, per acre costs, by program, for a typical irrigated, mature grove (10+ years old), including resets. By surveying growers regarding the costs of their caretaking programs—as opposed to surveying chemical companies to obtain the retail cost of materials—the figures reported here better reflect growers' costs since they typically get discounts for bulk purchases that would not be accounted for otherwise.

The data collection process at the UF/IFAS Extension Hendry County office was completely anonymous and confidential. During the meeting, growers operated a remote-control device that allowed them to 'click-in' the costs for each caretaking activity included in the survey. One of the main advantages of this surveying methodology was that growers did not need to submit their completed forms, which is useful to ensure their anonymity; there is no way to trace the answers back to any individual operation. The estimates below were obtained by averaging the responses submitted by the group of participating growers.

Table 1 shows the costs of production by program. The estimates include both the cost of materials and the costs associated with their application. The total cost for weed management—which includes chemical and mechanical mowing, as well as herbicides—was $248.19 per acre. At $666.00 per acre, foliar sprays were the largest expense in grove caretaking. Fertilizer was the second largest expense at $486.96 per acre. Citrus Health Management Areas (CHMA) sprays accounted for $20.55 per acre. The expense for pruning was $31.50 per acre, while that for irrigation was $198.14 per acre. Adding all the costs listed above, the cultural cost of growing oranges for processing during 2014/15 without tree replacement was $1,651.33 per acre.

Growers were also asked to provide details regarding their reset practices, including the number of trees replaced in their groves. On average, growers replaced nine trees per acre during 2014/15. The total cost of tree replacement, including tree removal, site preparation, and care of the reset trees was estimated at $346.77 per acre. Adding the reset cost to the cultural cost yields a total production cost with tree replacement of $1,998.10 per acre.

The Florida citrus industry currently faces the challenges imposed by huanglongbing (HLB, citrus greening); growers have responded to the disease by adjusting their production inputs to varying degrees. Thus, there are currently different levels of spending in grove caretaking. To provide a range for those levels without disclosing individual grower data, we performed the computations presented in Table 2. This table shows the average cost of production per acre and standard deviation for the two largest expenses: foliar sprays and fertilizer. All the other costs included in Table 1 are combined in Table 2 under “Other Costs”. Column 1 shows the average costs while columns 2 and 3 are obtained by subtracting and adding the value of the standard deviation from column 1, respectively. As shown at the bottom of Table 2, the low (high) level of caretaking for processed oranges totals $1,465.91 ($2,579.14).

Table 3 shows the total costs growers incurred during 2014/15; that is, the cultural cost of production with tree replacement presented in Table 1 plus management, regulatory, and opportunity costs. Thus, the total cost of production for processed oranges totals $2,444.41 per acre. Based on this estimate, the break-even prices per box for different levels of yield are presented in Table 4. Break-even prices are calculated on an on-tree and delivered-in basis. The latter assumes harvesting costs per box are $2.55, which is based on the results of the survey entitled 2014/15 Picking, Roadsiding, and Hauling Charges for Florida Citrus. The calculations in Table 4 also include the FDOC assessment of $0.20 per box for the 2014/15 season. Thus, for example, the on-tree and delivered-in break-even prices for covering the total costs of production with yield at 250 boxes per acre are $1.60 and $2.05 per pound solids, respectively.

Summary

This article presented a summary of the 2014/15 costs of production for processed oranges in southwest Florida. The methodology chosen to collect the data was different from that used in previous years and consisted of surveying growers directly. The current approach more accurately reflects growers' costs in the era of HLB, which has introduced greater variation in the levels of spending on caretaking practices across citrus growers. The total cost of production for processed oranges with tree replacement in 2014/15 was $2,444.41 per acre.

Reference

United States Department of Agriculture, National Agricultural Statistics Service (USDA/NASS). 2014. Commercial Citrus Inventory: Preliminary Report. Maitland, FL: Florida Department of Agricultural Services.

Tables

Table 1. 

Cultural costs of production per acre for processed oranges in southwest Florida, 2014/15.

Costs for a mature grove (10+ years old) including resets

Number of applications

Materials cost per acre ($)

Application cost per acre ($)

Total cost per acre ($)

Cultural Costs

       
 

Weed Management

       
   

Mowing (chemical & mechanical)

5

3.82

57.55

61.37

   

Herbicides

3

114.64

72.17

186.81

   

Total Weed Management Costs

     

248.19

 

Foliar Sprays

       
   

Insecticides

 

233.87

 

233.87

   

Fungicides

 

119.73

 

119.73

   

Nutritionals

 

162.50

 

162.50

   

Application:

       
     

Ground

5

 

122.43

122.43

     

Aerial

3

 

27.46

27.46

   

Total Foliar Sprays Costs

     

666.00

   

CHMAs Sprays

3

 

20.55

20.55

   

Total CHMAs Sprays Costs

     

56.65

 

Fertilizer

       
   

Ground/Dry Fertilizer 

3

338.55

31.06

369.61

   

Fertigation/Liquid Fertilizer

4

89.24

28.11

117.35

   

Total Fertilizer Costs

     

469.80

 

Pruning

       
   

Topping & Hedging

1

 

31.50

31.50

   

Total Pruning Costs

     

31.50

 

Irrigation

       
   

Irrigation System1

     

76.14

   

Fuel for pump

     

122.00

   

Total Irrigation Costs

     

198.14

Total Cultural Costs without Tree Replacement

   

1651.33

 

Tree Replacement (9 trees):

       
   

Tree Removal (Clip-shear; use front-end loader)

   

61.20

   

Site Preparation and Tree Planting (includes reset trees)

 

110.52

   

Supplemental Fertilizer, Sprays, Sprout, etc. (Trees 1–3 years old)

175.05

   

Total Tree Replacement Costs

     

346.77

Total Cultural Costs with Tree Replacement

   

1998.10

1 Irrigation system includes maintenance and repairs to emitters, clean ditches, ditch and canal maintenance, and water control.

Table 2. 

Different levels of caretaking for processed oranges in southwest Florida, 2014/15.

 

(1)

(2)

(3)

 

Average Cost

Low

High

   

–1 SD

+1 SD

 

$/acre

Foliar Sprays

     
 

Insecticides

233.87

194.03

273.71

 

Fungicides

119.73

68.97

170.50

 

Nutritionals

162.51

100.94

224.07

 

Ground Application

122.43

93.92

150.94

 

Aerial Application

27.46

9.48

45.44

 

Total Foliar Sprays Costs

666.00

467.35

864.66

Fertilizer

     
 

Ground/Dry Fertilizer

338.55

138.66

538.44

   

Application Cost

31.06

14.77

47.34

 

Fertigation/Liquid Fertilizer

89.24

0.00

203.85

   

Application Cost

28.11

0.00

79.70

 

Total Fertilizer Costs

486.96

153.43

869.33

Other costs (Weed Management, Pruning, etc.)1

845.14

845.14

845.14

Total Production Cost with Tree Replacement

1998.10

1465.91

2579.14

1 This refers to the costs of programs included in Table 1, excluding foliar sprays and fertilizer.

Table 3. 

Total costs of production per acre for processed oranges in southwest Florida, 2014/15.

Total Cultural Costs with Tree Replacement

1998.10

Other Costs

 
 

Interest on Operating (Cultural) Costs

99.91

 

Management Cost

63.34

 

Property Tax/Water Management Assessment

28.73

 

Interest on Average Capital Investment

254.34

 

Total Other Costs

446.31

Total Costs

2444.41

Table 4. 

Break-even price per box for processed oranges in southwest Florida, 2014/15.

 

Yield (boxes per acre)

 

175

200

225

250

275

300

325

350

375

 

dollars per acre

Cost of Production Per Acre

2444

2444

2444

2444

2444

2444

2444

2444

2444

Pick and Haul ($2.55/box)

446

510

574

638

701

765

829

893

956

FDOC Assessment ($0.20/box)

35

40

45

50

55

60

65

70

75

Total Delivered-in Cost Per Acre

2926

2994

3063

3132

3201

3269

3338

3407

3476

Break-even Price:

dollars per box

 

On-tree

13.97

12.22

10.86

9.78

8.89

8.15

7.52

6.98

6.52

 

Delivered-in

16.72

14.97

13.61

12.53

11.64

10.90

10.27

9.73

9.27

Break-even Price:1

dollars per pound solids

 

On-tree

2.29

2.00

1.78

1.60

1.45

1.33

1.23

1.14

1.07

 

Delivered-in

2.74

2.45

2.23

2.05

1.90

1.78

1.68

1.59

1.52

1 Assumes 6.11 pounds solids per box based on Florida Department of Citrus (FDOC) Processor Statistical Report for the 2014/15 season.

Footnotes

1.

This document is FE986, one of a series of the Food and Resource Economics Department, UF/IFAS Extension. Original publication date December 2015. Reviewed September 2018. Visit the EDIS website at https://edis.ifas.ufl.edu for the currently supported version of this publication.

2.

Ariel Singerman, assistant professor and Extension economist, Food and Resource Economics Department, UF/IFAS Citrus Research and Education Center, Lake Alfred, FL.


The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other UF/IFAS Extension publications, contact your county's UF/IFAS Extension office.

U.S. Department of Agriculture, UF/IFAS Extension Service, University of Florida, IFAS, Florida A & M University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, dean for UF/IFAS Extension.