EBB2 On 07 2007 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
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.
Table 1. 2007 Irrigated Onions, Southwestern Idaho. Quantity or Value or Item Per Acre Unit Cost Cost/Acre Gross Returns Onions - marketable 550 cwt $5.50 $3,025.00 Operating Inputs Seed: $310.20 Onion Seed Pellets: Yellow 0.33 pail $940.00 $310.20 $0.00 Fertilizer: $230.70 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 $150.00 $0.00 Pesticides: $544.14 Vapam 42% 40 gal $3.90 $156.00 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: $321.50 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 $100.00 $200.00 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: $166.27 Fuel - Gas 2.69 gal $3.00 $8.07 Fuel - Diesel 32.12 gal $2.65 $85.12 Lube 1 ac $13.98 $13.98 Machinery Repairs 1 ac $59.10 $59.10 Labor: $212.87 Labor (machine) 10.56 hr $14.10 $148.90 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
Table 1. 2007 Irrigated Onions, Southwestern Idaho. Quantity or Value or Item Per Acre Unit Cost Cost/Acre Storage: $310.75 Storage Bin Rental 275 cwt $0.93 $255.75 Storage Operating Costs 275 cwt $0.20 $55.00 Other: $104.00 Crop Insurance 1 ac $60.00 $60.00 Marketing 550 cwt $0.08 $44.00 Operating Interest @ 9.5% $87.13 Total Operating Costs $2,327.53 Operating Costs per Unit $4.23 Net Returns Above Operating Expenses $697.47 Ownership Costs: Tractors & Equipment Insurance Tractors & Equipment Depreciation & Interest Irrigation Equipment Depreciation & Interest Land ** Overhead Management Fee $6.09 $252.85 $300.00 $62.00 $150.00 Total Ownership Costs $770.94 Ownership Costs per Unit $1.40 Total Costs per Acre $3,098.47 Total Cost per Unit $5.63 Returns to Risk -$73.47 Notes: * Includes irrigation system ownership costs. Breakeven Analysis: - Base + 10% 10% Yield 495 550 605 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 470.2 423.2 384.7 Ownership Cost Breakeven 155.7 140.2 127.4 Total Cost Breakeven 626.0 563.4 512.1 SWI-On-07 University of Idaho
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 06 06 06 06 07 07 07 07 07 07 07 07 07 Preharvest: Irrigate 3.31 3.31 3.31 9.92 19.84 9.92 49.61 Disk 7.83 7.83 Fertilize 88.70 87.00 87.00 262.70 Rip/subsoil 25.76 25.76 Harrow 9.56 9.56 Plane 7.64 7.64 Fumigate 191.00 191.00 Crop Insurance 60.00 60.00 Assessments 37.40 37.40 Repairs 2.57 2.57 Harrow Off 3.05 3.05 Plant 335.39 335.39 Corrugate 6.14 6.14 Ground Spray 27.82 40.52 115.50 183.84 Cultivate 16.17 8.08 24.25 Hand Weed 100.00 100.00 200.00 Aerial Application 28.80 156.15 71.04 255.99 Consultant 17.00 17.00 General Pickup Use 2.29 2.29 2.29 2.29 2.29 2.29 2.29 2.29 2.29 2.29 2.29 2.29 27.47 General Truck Use 0.39 0.39 0.39 0.39 0.39 0.39 0.39 0.39 0.39 0.39 0.39 0.39 4.66 Total Preharvest Costs 5.99 333.17 2.68 2.68 2.68 2.68 2.68 478.36 249.67 351.98 195.67 83.64 1711.87 Harvest: Top Onions 12.42 12.42 Split Centers 7.20 7.20 Lift Onions 6.94 6.94 Load Onions 42.84 42.84 Crop Hauling 104.38 104.38 Assessments 44.00 44.00 Total Harvest Costs 217.79 217.79 Storage: Storage 310.75 310.75 Total Storage Costs 310.75 310.75 Interest on Operating Capital 0.05 2.68 2.71 2.73 2.75 2.77 2.79 6.58 8.55 11.34 12.89 13.55 17.74 87.13 Operating Costs per Acre 6.03 335.86 5.38 5.40 5.43 5.45 5.47 484.94 258.23 363.32 208.56 97.19 546.27 2327.54 Cash Ownership General Overhead 5.17 5.17 5.17 5.17 5.17 5.17 5.17 5.17 5.17 5.17 5.17 5.17 62.00 Land Rent 300.00 300.00 Management Fee 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 150.00 Property Insurance 5.87 5.87 Cash Ownership Costs 17.67 17.67 17.67 17.67 17.67 17.67 317.67 23.54 17.67 17.67 17.67 17.67 517.87 Total Cash Costs per Acre 23.70 353.52 23.05 23.07 23.09 23.11 323.14 508.48 275.90 380.99 226.23 114.86 546.27 2845.41 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 5500 10 1625 238 2.64 0.06 0.00 0.09 4.52 4.60 7.31 Corrugator - 8R ON 1800 15 173 25 7.42 0.17 0.00 0.06 0.00 0.06 7.66 Cultivator - 8R ON 11900 15 1142 65 18.65 0.43 0.00 1.29 0.00 1.29 20.37 Landplane - 16' 13300 15 1277 75 17.89 0.41 0.00 2.04 0.00 2.04 20.34 Offset Disk - 15' 18000 15 1728 80 22.67 0.52 0.00 2.63 0.00 2.63 25.82 Onion Loader 64000 15 6144 72 90.30 2.08 0.00 9.69 0.00 9.69 102.07 Onion Rod Lifter 5200 15 499 27 19.46 0.45 0.00 0.86 0.00 0.86 20.77 Onion Row Splitter 2500 12 346 29 9.72 0.21 0.00 0.16 0.00 0.16 10.09 Pickup 1-3/4 ton 37000 8 5000 376 13.96 0.24 0.00 4.43 11.50 15.93 30.12 Pickup 2-3/4 ton 37000 8 8000 300 16.68 0.32 0.00 4.05 11.50 15.55 32.54 Planter - 8R ON 25000 10 4421 30 99.98 2.07 0.00 1.55 0.00 1.55 103.60 Roller Harrow -12' 17000 15 1632 179 9.60 0.22 0.00 4.38 0.00 4.38 14.20 Service Truck 15000 10 2500 148 12.36 0.25 0.00 1.34 7.62 8.96 21.58 Shredder 15' 12500 15 1200 33 38.57 0.89 0.00 1.69 0.00 1.69 41.15 Spike Harrow - 20' 900 15 86 60 1.51 0.03 0.00 0.11 0.00 0.11 1.66 Sprayer - 30' 3800 15 365 149 2.58 0.06 0.00 1.55 0.00 1.55 4.18 Tractor - 125hp 95000 15 18495 598 15.60 0.40 0.00 4.05 22.11 26.16 42.17 Tractor - 200hp 134000 15 26087 497 26.45 0.68 0.00 4.76 35.37 40.13 67.27 Tractor - 75hp 52000 15 10123 505 10.11 0.26 0.00 1.84 11.22 13.06 23.44 Truck 1-5 ton 55000 15 5000 345 16.13 0.37 0.00 7.97 2.74 10.71 27.22 Truck 2-5 ton 55000 15 5000 345 16.13 0.37 0.00 7.97 2.74 10.71 27.22 Truck 3-5 ton 55000 15 5000 345 16.13 0.37 0.00 7.97 2.74 10.71 27.22 Truck 4-5 ton 55000 15 5000 345 16.13 0.37 0.00 7.97 2.74 10.71 27.22 V-Ripper - 12' 9900 15 950 106 9.48 0.22 0.00 2.71 0.00 2.71 12.41
Table 4. Ranging Analysis EBB2-On-07 Net Returns Per Acre Above Operating Costs For Onions Yield (cwt/acre) (dollars/cwt) 385.00 440.00 495.00 550.00 605.00 660.00 715.00 3.85-786 -594-402 -210-18 174 365 4.40-574 -352-130 92 315 537 759 4.95-362 -110 143 395 647 900 1152 5.50-150 132 415 697 980 1263 1545 6.05 61 374 687 1000 1313 1626 1938 6.60 273 616 959 1302 1646 1989 2332 7.15 485 858 1232 1605 1978 2352 2725 Net Returns Per Acre Above Cash Costs For Onions Yield (cwt/acre) (dollars/cwt) 385.00 440.00 495.00 550.00 605.00 660.00 715.00 3.85-1303 -1111-920 -728-536 -344-153 4.40-1091 -869-647 -425-203 19 241 4.95-880 -627-375 -123 129 382 634 5.50-668 -385-103 180 462 745 1027 6.05-456 -143 169 482 795 1108 1420 6.60-244 99 442 785 1128 1471 1814 7.15-33 341 714 1087 1460 1834 2207 Net Returns Per Acre Above Total Costs For Onions Yield (cwt/acre) (dollars/cwt) 385.00 440.00 495.00 550.00 605.00 660.00 715.00 3.85-1540 -1354-1168 -981-794 -607-419 4.40-1328 -1112-895 -679-461 -244-26 4.95-1116 -870-623 -376-129 119 367 5.50-905 -628-351 -74 204 482 760 6.05-693 -386-79 229 537 845 1154 6.60-481 -144 194 531 870 1208 1547 7.15-269 98 466 834 1202 1571 1940 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 83843. 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. 09-08 (revised) No Charge