Vegetable crops Production Cost and Return

Analysis: What is new Ventura County, 2012

Eta Takele

UCCE Area Farm Management Economist Southern California

The value of Ventura County vegetable crops industry is

$554,078 million in 2013/14; The three crops we conducted cost studies for:

Crop Value $million

Rank in the county

Rank in California

Celery 180,864 6 2; Monterey (1)

Peppers 52,370 8 2; Bell peppers; Riverside (1)

Cabbage 26,943 11 3; Monterey (1) and Kern (2)

Survey 2011-12; Data collected from farmers; pest control advisors and commodity farm advisors;

Information collected inputs, time of operation, equipment used; leases and food safety regulations.

From the data we saw that:

Production practices among growers vary a lot for a cop; except in the amount of N and water. Even for N; the source or type of materials used vary.

Farms have multiple crops (a minimum of 4 veg. crops farms).

What is the same or at least common to growers are: • land lease: ~$2800/year; • Assessment fees/rates differ by crop but ~ same

rate for growers within crop; • Pest Control advisor fees same: $45/acre; • Food safety cost are same per farm regardless of

the size of farm; therefore the bigger the farms; the smaller the cost gets;

• Conditional waiver program fees are same per acre.

Costs of Production, $ Per Acre, 2012-13

Crops

Bell Pepper Bell Pepper

Cost Category Celery Fresh Processed Cabbage difference explanations (partial)

Land Prep 430 469 443 848 broadcast fertilizer- cabbage more

Planting 1,502 1,732 1516 687 processed BP do not use stakes

Growing 1,428 2,703 1335 1008 Growing period-shortest for cabbage

Harvesting and marketing 6,750 5,400 1301 4200 Disposal 442 56 removal of stakes-fresh BP

cash overhead 1,728 2,386 1900 1389 major cost, land lease Non-cash overhead 124 104 100 80

Total 11962 13236 6651 8212

Costs of Production Per Acre 2012-13 Crops

1999 2012-13 1999 2012-13 Cost Category Celery Celery BP BP incr/yr; major differences Land Prep 245 430 185 456 6% -12% Planting 1008 1,502 1093 1624 4% Growing 884 1,428 1321 2019 4%-5%; mainly water Harvest & market 3868 6,750 2021 3350.5 5%-6% --labor cost Disposal 442

cash overhead 898 1,728 895 2143 7%-11% ; mainly land lease (>100% increase)

Non-cash overhead 179 124 177 102 Total 7082 11962 5692 10136.5 5.7%-6.5% Percent Change-overall 0.69 0.78 Percent Change/year 0.06 0.07 6% for Celery and 7% for BP

Costs of Production Per Acre 2012-13

Crops

Bell Pepper Bell Pepper

Cost Category Celery Fresh Processed Cabbage

Land Prep 430 469 443 848

Planting 1,502 1,732 1516 687 Growing 1,428 2,703 1335 1008

Harvesting and marketing 6,750 5,400 1301 4200

Disposal 442 56 cash overhead 1,728 2,386 1900 1389 Non-cash overhead 124 104 100 80

Total 11962 13236 6651 8212 Price survey (growers) 11 11 280 8 ($/unit) ctn ctn ton ctn Break-even yield/A 1,088 1203 23.39 1027

Survey yield/A 1,350 1800 30 1050 Yield for all crops above break-even for total cost

Bread even yield % 80% 66% 77% 97%

What is this information telling us?

• Costs of production have increased more than 6%-7%/year at least in the two crops (celery and BP) that we had data to compare from 1999 to 2012-13.

• We also looked at price trends: Price fluctuates but on average showed positive change of 4%-5% /year for celery and BP;

What is this information telling us?

• Even though, all the four crops/enterprises are profitable for the data represented; highest for fresh BP; followed by celery; 3rd processed BP and last cabbage.

Looking into food Safety program costs: • Program began~ late 198os but real

enforcement came about much later. Programs include evaluating potential contamination risk by looking at:

• Traceability record; Adjacent Land Use; Fertilizer/Crop nutrition; Irrigation/water use; Crop protection; Employee Hygiene.

Costs:

• Good Agricultural Production (GAP); ~$550/farm;

• Harvest crew audits (2x/year):~$390/crop season

• Conditional Waiver Program (CWP)—the Federal Clean Water Act (began in 2005): $23/acre

• Per acre food safety costs depend on farm sizes (except the CWP which is /A; therefore for our study the overall cost ranged from $9.46/A-$13.65/A.

What are the factors that influence future costs:

• Land lease will continue to be high; maybe increasing especially in light of the drought; demand and lease for land with well water will increase; wells cost any where from $½ million to $1 million;

• Harvesting costs being major in the production of these crops (>40% in the fresh crops) and being labor intensive; labor availability & management will continue to play a major role in production costs.

Risk Management Strategies:

• Operations are diversified; our interview showed at least 4 different crops grown by each farm;

• Some are combining organic and conventional crops.

• Farmers have options to switch crops; to alternate to manage pest and diseases.

• Health trend encouraging demand increase.

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