Sample costs to establish a fig orchard and produce calimyrna variety of figs in the San Joaquin Valley are presented in this study. This 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. A blank column, “Your Costs”, in Tables 2 and 3 is provided for your convenience.
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, 530-752-2414 or your local UC Cooperative Extension office.
Sample Cost of Production Studies for many commodities can be downloaded at requested through the Department of Agricultural and Resource Economics, UC Davis, (530) 752-4424 or obtained from the local county UC Cooperative Extension offices. Some archived studies are also available on the website.
An additional cost of production study for Mission variety of figs grown in this region is also available: “Sample Costs To Establish A Fig Orchard And Produce Figs, Mission Variety In the San Joaquin Valley – 2005”.
The University of California does not discriminate in any of its policies, procedures or practices. The university is an affirmative action/equal opportunity employer.
The assumptions refer to Tables 1 to 9 and pertain to sample costs to establish a fig orchard and produce calimyrna figs for paste in the San Joaquin Valley. Practices described represent production practices and materials considered typical of a well-managed orchard in the region. Costs, materials, and practices in this study will not apply to all situations. Establishment and cultural practices vary among growers within the region. 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.
Land: The farm consists of 500 acres of land. There are 80 acres currently being established in the actual fig orchard with another 415 acres on which figs are grown and 5 acres of roads and farmstead. No other crops are grown. Land is valued at $5,000 per acre and is not depreciated.
Trees: The specific variety of fig tree planted in this study is calimyrna. The trees are planted at 15′ X 20′ spacing, with 155 trees per acre. Fig trees have a very long production life if they are well maintained. Some fig orchards in the San Joaquin Valley that are still producing a commercial crop are over 75 years old. The life of the orchard at the time of planting is estimated to be 50 years.
ORCHARD ESTABLISHMENT CULTURAL PRACTICES AND MATERIAL INPUTS
Site Preparation. The orchard is established on ground that has not been previously planted to trees or vines. The land is assumed to be slightly rolling and not a class I soil. The orchard site is not leveled, thus requiring a drip or sprinkler irrigation system.
Irrigation: Pumped water (plus labor) is the irrigation cost. The cost is based on system pumping 24 acreinches of water 350 feet in a 500 foot well over 500 acres. Water is pumped to the orchard after running through a filtration station into a permanent drip system in the tree rows. The cost of the irrigation system is for the installation of a new pump, well, filtration system, and permanent drip lines. The new irrigation system is installed after the orchard has been laid out and prior to planting. The life of the irrigation system is estimated at 30 years.
Price per acre foot of water will vary by grower in this region depending on Table A. Applied Irrigation Water power source, cost, various well characteristics, and other irrigation factors. In this study, water is estimated to cost $76.92 per acre foot. No assumption is made about effective rainfall. The amount of water applied to the orchard being established varies each year and is shown in Table A.
Land Preparation: Land preparation begins with a deep ripping, going down five to six feet in order to break up underlying hardpans which would affect root and water penetration. The ripping is performed by contract operators. Following ripping the ground is disced then floated by the orchard owner. This helps to break up large clods of soil and smooth the ground in advance of planting the trees. All of the land preparation operations are done in the year prior to planting, but in this study, costs are shown in the first year.
Planting: Planting starts by marking the tree location with a stake, then holes are dug, and trees planted. The young trees are pruned back soon after planting. Regular pruning and sucker removal begins in the second year and hours required to perform these tasks as well as costs increase annually. Pruning is normally performed in the winter months. Removing the suckers is usually performed while weeding crews hand hoe the orchard. In the second year 10% of the trees or 16 trees per acre will have to be replanted.
Orchard Floor Management: Weed control for the orchard begins in the fall with a residual herbicide sprayed along the tree rows. The same chemicals are used for this control during the life of the orchard, but only half of the full rate is used in the first two years and increases to the full rate in the third. In spring a contact herbicide is used to control vegetation in the middle of the tree rows with two applications. In the first two seasons, a full rate of the spot spray is used only on 25% of the acreage. Beginning in the third year, full rates are again used, but this time on 100% of the acreage.
Mowing is also used to control vegetation and is performed four times in all years. Not only is mowing used to manage orchard floor vegetation, but it also is used to shred pruned limbs during the first mowing in spring. The soil is tilled in preparation for harvest by packing, leveling, and smoothing the ground. This operation produces a smooth, hard surface free of debris for efficient mechanical harvesting.
Pest Management: During typical years pest control in fig orchards is limited to controlling rodents, but in exceptionally cool weather a rapid build up of insect pests can occur which may require treatment. Baits are applied through the orchard at bait stations. Arthropod pests are typically not a problem in fig orchards, but serious infestations can occur and may require pest control. No insecticide or disease sprays are assumed to be used for the orchard in this study.
|Year||Pounds Of N/Acre|
Fertilizer: Nitrogen is the major nutrient required for proper tree Table B. Applied Nitrogen growth and optimum fruit yields. Nitrogen fertilizer is spread in a granular form at increasing rates during orchard establishment and is shown in Table B.
Pollination: Caprification or pollination of the figs occurs once a year in late May or early June and is supplemented by additional
wasps contracted from an outside pollinator service. For further information see Pollination in the Production Cultural Practices and Material Inputs section.
PRODUCTION CULTURAL PRACTICES AND MATERIAL INPUTS
Pruning: Pruning is done by hand in the winter months. Prunings are thrown into the center of the tree rows and shredded by a tractor and mower. Suckers are removed by hand crews as they hoe weeds during April.
Fertilization: Nitrogen (N) fertilizer is applied in summer/fall following harvest. Proper levels of N to be applied to the orchard are determined by leaf analysis. Sampling is usually done in July, prior to the application of fertilizer. In this study, nitrogen is applied at a rate of 50 pounds of N per acre in the form of ammonium nitrate (34-0-0).
Orchard Floor Management: Weeds in the mature orchard are controlled with chemical and cultural practices as used in the later years of orchard establishment. A combination of residual herbicides is sprayed in a strip along the tree rows to control weeds there throughout the season. Tree row middles are mowed four times in the spring and summer in order to manage resident vegetation on the orchard floor and to prepare the ground to be packed, leveled, and smoothed prior to the first harvest. Vegetation in the row middles that are not controlled by cultivation receives two sprays of a contact herbicide during spring and summer.
Pollination: Caprification refers to the pollination of Smyna type figs, such as the calimyrna variety, by the wasp specie (Blastophaga psenes L.) This wasp performs the function that bees and other pollinators normally provide, by crawling across the male flower (also known as a caprifig), covering itself with pollen, then entering the eye of the female fig (known as the Calimyrna fig) and dusting the flowers with pollen. Typically the fig wasp is put out in the orchard during June. Fig wasps are usually supplied to the orchard during these periods in order to ensure proper pollination and good fruit set. In this study, services for caprification are provided by another fig grower or company that supplies the wasps at an annual cost of $125 per acre.
Pest Management: Arthropod and disease pests are commonly not serious enough in fig orchards to warrant treatment. The only pests that require control in this study are rodents. Commercially available baits are used in bait stations within the orchard in order to manage them during the growing season.
The pesticides and rates mentioned in this cost study are a few of those that are listed in the UC IPM Fig Pest Management Guidelines and can be accessed on the internet at http://www.ipm.ucdavis.edu/PMG/cropsagriculture.html. Written recommendations are required for most pesticides and are made by licensed pest control advisors. For information and pesticide use permits, contact the local county Agricultural Commissioner’s office. For additional information contact the farm advisor in the county of interest.
Harvest: Harvesting may start in the third or fourth year after the orchard is planted. As the yields increase the cost to harvest also increases, until yield maturity is reached in the tenth year. The number of harvests per year also changes as the orchard matures. In the third year, three harvests are performed. The fourth year requires four, the fifth year figs are harvested five times, and from the sixth year on six harvests are completed annually. In this cost study, the crop is harvested and sorted by the grower, although some growers custom hire the harvest operation.
Fig harvesting begins as the fruit naturally falls to the ground. In the late season crop some fruit may cling to the trees, which require growers to use blowers to force those remaining fruit to fall. The sweeper windrows the figs into the middle of the orchard row so that the harvester can pick up the fruit and dump them into field bins. A hand crew may rake the figs that are lying next to the tree out to where a mechanical orchard sweeper can reach them. The figs are hauled from the field to a dry yard. A grower with 500 acres of figs in production is assumed to own their dry yard and would sort their figs. After sorting, the figs are sold to processors.
For growers that do not own harvesting and packing equipment, the needed equipment for harvesting and packing operations should be removed from the equipment and investment inventories on Table 5, and custom harvest and packing charges should be placed in Harvest costs in Tables 1 and 2, to replace grower performed harvest and packing costs.
Assessments: Under a state marketing order, mandatory assessment fees are collected by the California Fig Advisory Board (CFAB). These assessments are charged both to the grower and the processor to pay for fig marketing and advertising. Half of the fee of $52 per ton of merchantable fruit (merchantable fruit is destined for dried or paste markets) is paid by the grower and is shown in this study, while the remaining $26 is paid by the processor. Additionally, a voluntary assessment is also paid by fig growers for research and administration and is managed by the California Fig Institute (CFI). Though the assessment is voluntary it is currently supported by 100% of the growers. CFI charges growers $5.50 per ton of merchantable fruit. Both of these assessments are shown as a harvest cost.
|Figs – Pounds/Acre|
Yields: As noted above, figs most often Table C. Annual Yield Per Acre begin bearing an economic crop in the third year after planting. Typical annual yields for the Calimyrna variety is measured in pounds merchantable figs and tons for cull fruit. Normal cull percentages for Calimyrna figs have decreased over past ten years from an historical average of 32% to 15% which resulted in increasing the amount of figs sold for higher value paste or dried fruit. This
study uses a 30% cull rate. The yields shown in Table C are from the third year of orchard establishment to maturity.
Returns: Calimyrna figs command a higher price than the Mission variety. Return prices for calimyrnas over the past 10 years have ranged from $0.35 to over $1.00 per pound of merchantable fruit. For figs that are sold for dried fruit or paste a price of $0.90 per pound is used. Culled fruit is sold for cattle feed with the grower receiving $0.03 per pound in this study. Table 7 indicates returns to risk and management at various levels of fig prices and yields. It calculates returns above three levels of cost: operating, cash, and total.
Labor. Labor rates of $16.59 per hour for machine operators and $13.99 for general labor includes payroll overhead of 43%. The basic hourly wages are $11.60 for machine operators and $9.78 for general labor. The overhead includes the employers’ share of federal and California state payroll taxes, workers’ compensation insurance (code 0016), and a percentage for other possible benefits. Workers’ compensation insurance costs will vary among growers, but for this study the cost is based upon the average industry final rate as of January 1, 2005 (California Department of Insurance). Labor for operations involving machinery are 20% higher than the operation time given in Table 2 to account for the extra labor involved in equipment set up, moving, maintenance, work breaks, and field repair.
Management. Wages for management are not included as a cash overhead cost. The owner farms the orchard and the returns above total costs are considered a return to management. Additional management costs ranging from $75 to $125 per acre may occur if practices are contracted.
Equipment Operating Costs. Repair costs are based on purchase price, annual hours of use, total hours of life, and repair coefficients formulated by the American Society of Agricultural Engineers (ASAE). Fuel and lubrication costs are also determined by ASAE equations based on maximum PTO horsepower and fuel type. Prices for on-farm delivery of diesel and gasoline are $1.51 and $2.05 per gallon, respectively. The fuel prices are a January 2005 average based on four California delivery locations plus $0.24 per gallon, which is one-half the high – low price range for regular gasoline in 2004 from the California State Automobile Association Monthly Survey. The cost includes a 2.25% sales tax (effective September 2001) on diesel fuel and 7.25% sales tax on gasoline. Gasoline also includes federal and state excise tax, which can be refunded for on-farm use when filing your income tax. The fuel, lube, and repair cost per acre for each operation in the “Cost Per Acre to Produce” table is determined by multiplying the total hourly operating cost in the “Hourly Equipment Costs” table for each piece of equipment used from the Operation Time (hours/acre) column 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.
Risk: Risk is caused by various sources of uncertainty which include production, price, and financial.
Examples of these are insect damage, a decrease in price, and increase in interest rates. The risks associated with fig production should not be underestimated. While this study makes every effort to model a production system based on typical, real world practices, it cannot fully represent financial, agronomic and market risks which affect the profitability and economic viability of fig production. Due to the risk involved, access to a market is crucial. A market channel should be determined before any fig orchards are planted and brought into production.
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. These costs include property taxes, interest on operating capital, office expense, liability and property insurance, sanitation services, and investment repairs.
Property Tax: 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. County taxes are calculated as 1% of the average value of the property for this study. Average value equals new cost plus salvage value divided by 2 on a per acre basis.
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 7.65% per year. A nominal interest rate is the going 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.
Office Expense: Office and business expenses are estimated at $100 per acre. These expenses include office supplies, telephones, bookkeeping, accounting, legal fees, road maintenance, etc.
Insurance: Insurance for farm investments vary depending on the assets covered and the amount of coverage. Property insurance provides coverage for property loss and is charged at 0.69% of the average value of the assets over their useful life. Liability insurance covers accidents on the farm and costs $917 for the entire farm or $1.83 per acre.
Sanitation: Sanitation services provide portable toilets for the orchard and cost the farm $1,410 annually. Cash overhead costs are found in Tables 1, 2, 3, 4, and 5.
NON-CASH OVERHEAD COSTS
Non-cash overhead is calculated as the capital recovery cost for equipment and other farm investments.
Capital Recovery Costs. Capital recovery cost is the annual depreciation and interest costs for a capital investment. It is the amount of money required each year to recover the difference between the purchase price and salvage value (unrecovered capital). It is equivalent to the annual payment on a loan for the investment with the down payment equal to the discounted salvage value. This is a more complex method of calculating ownership costs than straight-line depreciation and opportunity costs, but more accurately represents the annual costs of ownership because it takes the time value of money into account (Boehlje and Eidman). The formula for the calculation of the annual capital recovery costs is:
*# & # Capital &- * –
,,+%$ PurchasePr ice ” ValueSalvage’( )%%$ RecovFactor ery((’/./ + ,+Salvage Value ) RateInterest/.
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). 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 the tables.
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. The interest rate of 6.01% used to calculate capital recovery cost is the USDA-ERS’s ten-year average of California’s agricultural sector long-run rate of return to production assets from current income. It is used to reflect the long-term realized rate of return to these specialized resources that can only be used effectively in the agricultural sector.
Building. The shop building is a 1,800 square foot metal building or buildings on a cement slab.
Land. Land cost $3,500 per acre. Because only 495 of the 500 acres are planted with figs, the land is valued at $3,535 per producing acre.
Field/Shop. This orchard includes a shop, shop tools, and field tools.
Fuel Tanks. A single 100-gallon fuel tank using gravity feed is on a metal stands. The tank is setup in a cement containment pad that meets federal, state, and county regulations.
Irrigation System. The micro-sprinkler irrigation system is laid out and installed prior to planting and the labor cost is included in the system cost. The irrigation system consists of a pump, filtration and pressure system connected to a micro-sprinkler system.
Establishment Cost. The cost to establish the orchard is used to determine non-cash overhead expenses, depreciation, and interest on investment for production years. The establishment cost is the sum of cash costs for land preparation, planting, trees, production expenses, and cash overhead for growing fig trees from planting until the end of the first year fruit is harvested. The Accumulated Net Cash Cost/Acre in the third year shown in Table 1 represents the establishment cost per acre. For this study, this cost is $3,825 per acre or $1,912,500 for the 500 acre orchard. Establishment cost is depreciated beginning in the fourth year over the remaining 47 of the 50 years that the orchard is assumed to be in production.
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.