EBB2 On Costs and Returns Estimate Southwestern Idaho and Eastern Oregon: Treasure Valley Spanish Yellow Onions District II

Transcription

1 EBB2 On Costs and Returns Estimate Southwestern Idaho and Eastern Oregon: Treasure Valley Spanish Yellow Onions Mike Thornton, Lynn Jensen, Paul E. Patterson, and Neil R. Rimbey Background and Assumptions District II The University of Idaho s costs and returns estimates are based on economic costs, not accounting costs. All resources are valued at a market rate or opportunity cost. Input prices are taken from the U of I s annual survey of agricultural supply companies. The selling price is a historical average, not a current year s price. The cost estimate shown here is typical for growing Yellow Spanish onions in southwestern Idaho and eastern Oregon. Although production practices may be similar for individual farms, each farm has a unique set of resources with different levels of productivity, different production problems, and therefore different costs. Farm size, crop rotation, age and type of equipment, and the quality and intensity of management are all crucial factors that influence costs. The Model Farm This costs and returns estimate models a 1,000 acre farm with 125 acres in onions. In addition to onions, the farm grows 250 acres of either potatoes or sugarbeets, 125 acres of alfalfa seed or dry beans, 250 acres of grain, and 250 acres of corn. The farm uses a concrete ditch and siphon tube irrigation system with water delivered to the farm from an irrigation district. The district charges a flat fee per acre for water. Production Practices After harvest of the grain crop that precedes onions, the ground is disked, ripped twice, roller harrowed, planed, and bedded when the field is fumigated. The following April, the beds are harrowed off and planted to onions. The field is then corrugated and cultivated three times over the next two months. In September, onions are topped, mechanically lifted for curing, then loaded onto trucks and hauled to a packing shed or storage facility. The price shown in the revenue section reflects a weighted average of the different markets where onions are typically sold. The assumption here is that one fourth of the crop is sold at harvest on a pre season contract, another fourth is sold on the open market at harvest, and the remaining 50 percent is stored commercially and marketed over a six month storage period. Fertilizer is split applied in the fall and spring. Fall fertilizer is custom broadcast, while additional nitrogen is custom side dressed in two spring applications. The farm operator performs weed control using tillage, cultivation, hand labor, and herbicides. A pre emergence herbicide tank mix is applied after planting and before emergence. Five additional post emergence herbicide applications are made from April through June. There are two contract hand weeding operations during this same period. The first insecticide application is banded at planting. Two insecticide applications are ground applied in June to control onion thrips. Four additional insecticides are applied by air in June and July to control thrips. Three fungicide applications are made by air to control downy mildew and neck rot. The first two are tank mixed with an insecticide and applied in July. The last fungicide is applied in August and tank mixed with the sprout inhibitor MH30. Onions receive about 30 inches of water during the growing season from 15 irrigations: 2 inches in April before planting, 2 inches in May, 6 inches in June, 12 inches in July, and 6 inches in August. Resources: Machinery, Land, Labor, and Capital Table 3 lists the tractors, trucks, and other equipment used to produce onions, along with their operating and ownership costs. Except for trucks, machinery is valued at 75 percent of replacement cost new, Table 3. The truck s price includes the cost of a used truck and 75 percent of the cost of a new selfunloading bed. In the years between equipment price surveys, done approximately every five years, machinery prices are adjusted using USDA s Farm Machinery s Paid Index. The land charge is cash rent and covers the ownership costs (depreciation, interest, and insurance) of the irrigation system. A machinery labor charge is made for all field operations except those performed on a custom basis. Custom operations are listed separately. The non machine labor accounts for extra planting and harvesting field labor. Labor to operate machinery and drive trucks is valued at $14.10 per hour, while irrigation and non machine labor are

2 valued at $9.45 and $8.35, respectively. Labor rates include a base wage plus a percentage for Social Security, Medicare, unemployment insurance, and other labor overhead expenses. Labor overhead amounts to 15 percent for nonmachine labor, 25 percent for irrigation labor, and 30 percent for machinery labor. A management fee, approximately 5 percent of expected gross returns, is included as an ownership cost. Interest on operating capital is charged from the time an input is applied until the month of harvest and is calculated at a nominal rate of 9.5 percent. Interest on intermediate term capital is calculated using a rate of 8.75 percent. A general overhead charge, calculated at 2.5 percent of operating expenses, is included to cover unallocated whole farm costs such as office expenses, legal and accounting fees, and utilities.

3 Table Irrigated Onions, Southwestern Idaho. Quantity or Value or Item Per Acre Unit Cost Cost/Acre Gross Returns Onions - marketable 550 cwt $5.50 $3, Operating Inputs Seed: $ Onion Seed Pellets: Yellow 0.33 pail $ $ $0.00 Fertilizer: $ Dry Nitrogen - Preplant 50 lb $0.50 $25.00 Dry P2O5 115 lb $0.38 $43.70 Micronutrients 1 ac $12.00 $12.00 Liquid Nitrogen 250 lb $0.60 $ $0.00 Pesticides: $ Vapam 42% 40 gal $3.90 $ Lorsban 15G 6 lb $1.75 $10.50 Roundup Original Max 1.0 pint $4.75 $4.75 Prowl H2O (2x) 2.5 pints $4.10 $10.25 Buctril 2EC (2x) 2.0 pints $7.85 $15.70 Poast 1.5EC 1.0 pint $8.75 $8.75 Meth. Seed Oil 2.0 pint $1.85 $3.70 Dual Magnum 1 pint $12.35 $12.35 Goal 2EC (2x) 1.0 pints $11.25 $11.25 Success (2x) 12 fl oz $5.10 $61.20 AZA-Direct (2x) 24 fl oz $1.30 $31.20 Lannate LV (3x) 9 pints $7.10 $63.90 Carzol 1 lb $48.00 $48.00 Dithane 75DF Rainshield 3 lb $2.60 $7.80 Quadris 15 fl oz $2.35 $35.25 Pristine 18 oz $2.20 $39.60 MH30 Sprout Inhibitor 1.33 gal $18.00 $23.94 Custom & Consultants: $ Custom Fertilize 1 ac $8.00 $8.00 Custom Fumigate 1 ac $35.00 $35.00 Custom Sidedress 2 ac $12.00 $24.00 Hand Weed 2 ac $ $ Custom Air 5G 5 ac $7.50 $37.50 Consultant 1 ac $17.00 $17.00 Irrigation: $39.97 Water Assessment 1 ac $37.40 $37.40 Irrigation Repairs - CD* 1 ac $2.57 $2.57 $0.00 Machinery: $ Fuel - Gas 2.69 gal $3.00 $8.07 Fuel - Diesel gal $2.65 $85.12 Lube 1 ac $13.98 $13.98 Machinery Repairs 1 ac $59.10 $59.10 Labor: $ Labor (machine) hr $14.10 $ Labor (irrigation - cd) 5.25 hr $9.45 $49.61 Labor (other) 1.72 hr $8.35 $14.36 SWI-On-07 University of Idaho

4 Table Irrigated Onions, Southwestern Idaho. Quantity or Value or Item Per Acre Unit Cost Cost/Acre Storage: $ Storage Bin Rental 275 cwt $0.93 $ Storage Operating Costs 275 cwt $0.20 $55.00 Other: $ Crop Insurance 1 ac $60.00 $60.00 Marketing 550 cwt $0.08 $44.00 Operating 9.5% $87.13 Total Operating Costs $2, Operating Costs per Unit $4.23 Net Returns Above Operating Expenses $ Ownership Costs: Tractors & Equipment Insurance Tractors & Equipment Depreciation & Interest Irrigation Equipment Depreciation & Interest Land ** Overhead Management Fee $6.09 $ $ $62.00 $ Total Ownership Costs $ Ownership Costs per Unit $1.40 Total Costs per Acre $3, Total Cost per Unit $5.63 Returns to Risk -$73.47 Notes: * Includes irrigation system ownership costs. Breakeven Analysis: - Base + 10% 10% Yield Operating Cost Breakeven $4.70 $4.23 $3.85 Ownership Cost Breakeven $1.56 $1.40 $1.27 Total Cost Breakeven $6.26 $5.63 $5.12 Yield $4.95 $5.50 $6.05 Operating Cost Breakeven Ownership Cost Breakeven Total Cost Breakeven SWI-On-07 University of Idaho

5 Table 2. Monthly Summary of Cash Expenses per Acre EBB2-On-07 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Total Preharvest: Irrigate Disk Fertilize Rip/subsoil Harrow Plane Fumigate Crop Insurance Assessments Repairs Harrow Off Plant Corrugate Ground Spray Cultivate Hand Weed Aerial Application Consultant General Pickup Use General Truck Use Total Preharvest Costs Harvest: Top Onions Split Centers Lift Onions Load Onions Crop Hauling Assessments Total Harvest Costs Storage: Storage Total Storage Costs Interest on Operating Capital Operating Costs per Acre Cash Ownership General Overhead Land Rent Management Fee Property Insurance Cash Ownership Costs Total Cash Costs per Acre Table 3. Machinery and Equipment Costs per Hour Years <-Non-Cash-> <-----Cash-----> < Operating > Purchase to Salvage Hours Ownership Ownership Fuel & Total Total Description Trade Value Used Cap. Rec. Insur. Taxes Repairs Lube Oper. Costs/Hr. 4-wheeler Corrugator - 8R ON Cultivator - 8R ON Landplane - 16' Offset Disk - 15' Onion Loader Onion Rod Lifter Onion Row Splitter Pickup 1-3/4 ton Pickup 2-3/4 ton Planter - 8R ON Roller Harrow -12' Service Truck Shredder 15' Spike Harrow - 20' Sprayer - 30' Tractor - 125hp Tractor - 200hp Tractor - 75hp Truck 1-5 ton Truck 2-5 ton Truck 3-5 ton Truck 4-5 ton V-Ripper - 12'

6 Table 4. Ranging Analysis EBB2-On-07 Net Returns Per Acre Above Operating Costs For Onions Yield (cwt/acre) (dollars/cwt) Net Returns Per Acre Above Cash Costs For Onions Yield (cwt/acre) (dollars/cwt) Net Returns Per Acre Above Total Costs For Onions Yield (cwt/acre) (dollars/cwt) The practices and chemicals specified in this publication are based on survey information representative of typical operations. They are not recommendations. ALWAYS read and follow the instructions printed on the pesticide label. Due to constantly changing pesticide laws and labels, some pesticides may have been cancelled or had certain uses prohibited. Use pesticides with care. Do not use a pesticide unless both the pest and the plant, animal or other applicable site are specifically listed on the label. Store pesticides in their original containers and keep them out of the reach of children, pets and livestock. To simplify information, trade names have been used. No endorsement of named products is intended nor is criticism implied of similar products not mentioned. The Authors - Dr. Mike Thornton is superintendent of the Southwest Idaho Research and Extension Centers, University of Idaho, Parma, Idaho. Lynn Jensen is a potato and onion specialist with Oregon State University and is located in Malheur County, Ontario, Oregon. Neil R. Rimbey is an Extension agricultural economist with the University of Idaho and is located in the Caldwell Research and Extension Center, Caldwell. Paul Patterson is an Extension agricultural economist with the University of Idaho located in the District 4 Extension Office, Idaho Falls. Issued in furtherance of cooperative extension work in agriculture and home economics, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture, Charlotte V. Eberlein, Director University of Idaho Extension, University of Idaho, Moscow, Idaho The University of Idaho provides equal opportunity in education and employment on the basis of race, color, national origin, religion, sex, sexual orientation, age, disability, or status as a disabled vetran, Vietnam-era veteran, as required by state and federal laws (revised) No Charge