Date post: | 27-Dec-2015 |
Category: |
Documents |
Upload: | phillip-norton |
View: | 218 times |
Download: | 1 times |
eFarmer.useFarmer.us
PotatoesProduction, Market, and Expected ReturnDecember 2008
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Overview• Originated in Andean Mountains• The USDA first included potatoes in crop production
statistic in 1866• The potato plant is a herbaceous annual• Optimum temperature for growth is 64°F to 68°F , but
can range between 50°F to 86°F• The 4th most consumed food crop in the world behind
rice, wheat and corn • 446.8 million cwt produced in 2007
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Market Opportunities• Potato Chip Companies for Chipping• Restaurants and Local/Area Wholesalers
– Small “new” potatoes– Russets– Specialty or “gourmet” – Very small “mini” or “creamer” potatoes
• Command premium prices in some markets
• Fresh Market Options– Farmers’ Market– Produce Auctions– Cooperatives– Roadside Stands
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Market Opportunities• Average Price per unit in the past
2007
U.S. 407,517 21,547 3,899 27,796 375,823 7.05 2,879,247 2,649,705
2006
U.S. 398,921 23,337 4,482 28,576 365,863 6.65 2,668,287 2,442,474
ProductionUsed for
Seed
Farm Disposition
Sold
Price per cwt.
Value ofUsed on Farm
Seed, feed, household
useShrinkage and Loss Production Sales
1,000 cwt. Dollars 1,000 dollars
eFarmer.useFarmer.us
Health and Nutrition• The Potato is a good source of dietary energy
Source: United States Department of Agriculture, National Nutrient Database http://www.potato2008.org/en/potato/factsheets.html
eFarmer.useFarmer.us
Production Characteristics• Loam soils are most desirable for good potato yields;
however potatoes can be grown on wide range of well-drained soil types
• Extensive ground preparation is necessary before planting• 15-18 100-pound bags of seed potatoes are needed to
plant an acre– Only certified seed stock should be purchased
• Seed potatoes should be planted 4 - 5 inches deep and should be spaced 10 - 14 inches apart with rows 24 - 36 inches apart
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Production Characteristics• Can be grown on raised beds with black plastic and drip
irrigation• Irrigation (1-1.5 inches a week) • Soil with a pH range of 5.2-6.4 is considered ideal • 90% of US potatoes are planted in the spring (March 15 to
April 10) and harvested in the fall• Potatoes are harvested between 120 - 150 days• Labor needs are approximately 25 hours per acre;
– fresh market potatoes which require approx. 50 hours per acre and then additional 25 hrs for washing, etc.
– Potatoes for chipping require approx. 20 hours per acre for harvesting and marketing
eFarmer.useFarmer.us
Production Characteristics• Yellowing of the potato plant's leaves indicates that the crop
has reached maturity– If the potatoes are to be stored rather than consumed immediately,
they are left in the soil to allow their skins to thicken • The potato vines should be removed 2 weeks before the
potatoes are dug up• Potatoes are harvested using a spading fork, a plough or
commercial potato harvesters • Tubers should be stored in a humid area ( 90 to 95 % relative
humidity) – 40°F if the tubers are for eating or to be used for seed potatoes
– Processing tubers used for french fries are typically stored at 45°F – Tubers for potato chips are stored at temperatures of 50 to 55 °F
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Production Characteristics• Weed Management
– 3 plowings and frequent use of a mechanical cultivator are needed before the soil reaches a suitable condition: soft, well-drained and well-aerated
– Herbicides, A three- or four- year rotation system • Disease Management
• Pest Management– A pre-plant broadcast application of a soil insecticide
copyright eStudy.us 2008 [email protected]
• Wireworms• White Grubs•Potato Leafhoppers
• Colorado Potato Beetle•Aphids•Nematodes
• Back leg or soft rot• Rhizoctonia stem canker
• Scurf, scab and viruses• Early blight•Other Occasional Pest
eFarmer.useFarmer.us
Production Opportunity Cost• Capital Requirements (Land , Building, Equipment)
– Mechanical Cultivator– Potato Harvester (for large production)– Installation of an irrigation system– Plastic Mulch installation– Potato Storage Areas (only for chipping production)
• Labor Requirements – Minimum wage rate for minimal trained laborer in Kentucky
is $9.13• Competitive Crops for Land Resource
– Top 5 Kentucky Crops by Value of Production• Tobacco, Hay, Corn, Soybean & Wheat
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Revenue• Revenue sources
– Revenue may vary with price and yield– Seed Production (increase variable and fixed costs)
• Production incentives from the government– Revenue Assistant– Agriculture Management Assistance Program– Commodity Loans
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Cost Overview for Fresh Market• PRODUCTION COST
– Variable Cost • Lime• Fertilizer• Seed• Seed Treatment/Cutting• Herbicides• Insecticides• Fungicides• Fuel and Lube• Repairs• Irrigation
– Fixed Machinery Costs– Fixed Irrigation System Costs
• HARVEST & MARKETING COST– Variable Cost
• Marketing Cost• Bags• Fuel and Lube• Repairs• Hired Labor
– Washer– Grader– Bagger
– Fixed Machinery Costs– Fixed Irrigation System Costs
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Expected Return ReportProduction 1000 2000 3000 4000
Gross Revenue (Price $8.00/cwt) $8,000 $16,000 $24,000 $32,000
Variable Production Costs $2,651 $5,302 $7,952 $10,602
Variable Harvest & Marketing Cost $3,597 $7,194 $10,791 $14,388
Annual Interest 6% on Variable Cost $88.98 $177.99 $266.95 $355.93
Total Variable Costs $6,337 $12,675 $19,010 $25,346
Total Fixed Costs $800 $800 $800 $800
Total Expenses $7,137 $13,475 $19,810 $26,147
Return to Land, Capital and Mgt $863 $2,525 $4,190 $5,854
Assumptions: 250 potatoes per acre
Cash Flow Statement: See Appendix*Values are rounded for reader friendliness
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Risk• Market Risk: Price per cwt changes throughout the year
(timing of harvest is highly important)
• Production Risk: Potato yield and grade vary per acre depending on weather (irrigation systems minimize this risk)
• Financial Risk:– Large initial investment
• quality seeds• machinery• land
– Expected return using Average Cash Flow– Time Value of Money
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
Basic Summary• Market Opportunity
– Farmers’ Market– Produce Auctions– Cooperatives– Local Restaurants/Wholesalers
• Advantages of Western and Central Kentucky– Early planting is March to April, there is also a late planting from June
to July (weather conditions)– Kentucky farmers have skill and capital to grow potatoes (investment
would be in an irrigation system)– Production for laborers is full time job
– Annual consumption, per person, in the United States is 125 pounds
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
AppendixQUANTITY UNIT $/UNIT TOTAL
GROSS RETURNS
Potatoes (Table Stock) 1000 cwt $8.00 $8,000.00
VARIABLE COSTS
Lime 2 ton $12.12 $24.24
Fertilizer 4 acre $90.00 $360.00
Seed 60 cwt $17.00 $1,020.00
Seed Treatment/Cutting 60 cwt $2.00 $120.00
Herbicides 4 acre $30.00 $120.00
Insecticides 4 acre $45.00 $180.00
Fungicides 4 acre $75.00 $300.00
Fuel and Lube 38.8 hrs $3.26 $126.33
Repairs 4 acre $40.00 $160.00
Irrigation 32 hrs $7.50 $240.00
Total Production Cost $2,650.57
HARVESTING AND MARKETING:
Bags 4000 each $0.16 $640.00
Hired Labor: Wash/Grade/Pack 240 hrs $8.00 $1,920.00
Washer/Grader/Bagger 10 hrs $1.75 $17.50
Marketing Costs 10% gross return $800.00
Fuel and Lube 19 hrs $3.14 $59.57
Repairs 4 acre $40.00 $160.00
Total Harvest and Marketing Cost $3,597.07
Annual Interest Rate 6.0%
Interest $88.98
TOTAL VARIABLE COST $6,336.62
RETURN ABOVE VARIABLE COSTS $1,663.38
FIXED COSTS
Depreciation on Machinery and Equipment $360.00
Depreciation on Irrigation System $340.00
Taxes on Land $20.00
Insurance $80.00
TOTAL FIXED COSTS $800.00
TOTAL EXPENSES $7,136.62
RETURN TO LAND, CAPITAL, AND MGT $863.38
copyright eStudy.us 2008 [email protected]
eFarmer.useFarmer.us
AppendixQUANTITY UNIT $/UNIT TOTAL
GROSS RETURNS
Potatoes (Table Stock) 2000 cwt $8.00 $16,000.00
VARIABLE COSTS
Lime 4 ton $12.12 $48.48
Fertilizer 8 acre $90.00 $720.00
Seed 120 cwt $17.00 $2,040.00
Seed Treatment/Cutting 120 cwt $2.00 $240.00
Herbicides 8 acre $30.00 $240.00
Insecticides 8 acre $45.00 $360.00
Fungicides 8 acre $75.00 $600.00
Fuel and Lube 78 hrs $3.26 $253.97
Repairs 8 acre $40.00 $320.00
Irrigation 64 hrs $7.50 $480.00
Total Production Cost $5,302.45
HARVESTING AND MARKETING:
Bags 8000 each $0.16 $1,280.00
Hired Labor: Wash/Grade/Pack 480 hrs $8.00 $3,840.00
Washer/Grader/Bagger 20 hrs $1.75 $35.00
Marketing Costs 10% $1,600.00
Fuel and Lube 38 hrs $3.14 $119.13
Repairs 8 acre $40.00 $320.00
Total Harvest and Marketing Cost $7,194.13
Annual Interest Rate 6.0%
Interest $177.99
TOTAL VARIABLE COST $12,674.57
RETURN ABOVE VARIABLE COSTS $3,325.43
FIXED COSTS
Depreciation on Machinery and Equipment $360.00
Depreciation on Irrigation System $340.00
Taxes on Land $20.00
Insurance $80.00
TOTAL FIXED COSTS $800.00
TOTAL EXPENSES $13,474.57
RETURN TO LAND, CAPITAL, AND MGT $2,525.43
gross return
eFarmer.useFarmer.us
AppendixQUANTITY UNIT $/UNIT TOTAL
GROSS RETURNS
Potatoes (Table Stock) 3000 cwt $8.00 $24,000.00
VARIABLE COSTS
Lime 6 ton 12.12 $72.72
Fertilizer 12 acre 90 $1,080.00
Seed 180 cwt 17 $3,060.00
Seed Treatment/Cutting 180 cwt 2 $360.00
Herbicides 12 acre 30 $360.00
Insecticides 12 acre 45 $540.00
Fungicides 12 acre 75 $900.00
Fuel and Lube 116.4 hrs 3.256 $379.00
Repairs 12 acre 40 $480.00
Irrigation 96 hrs 7.5 $720.00
Total Production Cost $7,951.72
HARVESTING AND MARKETING:
Bags 12000 each 0.16 $1,920.00
Hired Labor: Wash/Grade/Pack 720 hrs 8 $5,760.00
Washer/Grader/Bagger 30 hrs 1.75 $52.50
Marketing Costs 0.1 $2,400.00
Fuel and Lube 57 hrs 3.135 $178.70
Repairs 12 acre 40 $480.00
Total Harvest and Marketing Cost $10,791.20
Annual Interest Rate 0.06
Interest $266.95
TOTAL VARIABLE COST $19,009.86
RETURN ABOVE VARIABLE COSTS $4,990.14
FIXED COSTS
Depreciation on Machinery and Equipment $360.00
Depreciation on Irrigation System $340.00
Taxes on Land $20.00
Insurance $80.00
TOTAL FIXED COSTS $800.00
TOTAL EXPENSES $19,809.86
RETURN TO LAND, CAPITAL, AND MGT $4,190.14
gross return
eFarmer.useFarmer.us
AppendixQUANTITY UNIT $/UNIT TOTAL
GROSS RETURNS
Potatoes (Table Stock) 4000 cwt $8.00 $32,000.00
VARIABLE COSTS
Lime 8 ton $12.12 $96.96
Fertilizer 16 acre $90.00 $1,440.00
Seed 240 cwt $17.00 $4,080.00
Seed Treatment/Cutting 240 cwt $2.00 $480.00
Herbicides 16 acre $30.00 $480.00
Insecticides 16 acre $45.00 $720.00
Fungicides 16 acre $75.00 $1,200.00
Fuel and Lube 155.2 hrs $3.26 $505.33
Repairs 16 acre $40.00 $640.00
Irrigation 128 hrs $7.50 $960.00
Total Production Cost $10,602.29
HARVESTING AND MARKETING:
Bags 16000 each $0.16 $2,560.00
Hired Labor: Wash/Grade/Pack 960 hrs $8.00 $7,680.00
Washer/Grader/Bagger 40 hrs $1.75 $70.00
Marketing Costs 10% $3,200.00
Fuel and Lube 76 hrs $3.14 $238.26
Repairs 16 acre $40.00 $640.00
Total Harvest and Marketing Cost $14,388.26
Annual Interest Rate 6.0%
Interest $355.93
TOTAL VARIABLE COST $25,346.48
RETURN ABOVE VARIABLE COSTS $6,653.52
FIXED COSTS
Depreciation on Machinery and Equipment $360.00
Depreciation on Irrigation System $340.00
Taxes on Land $20.00
Insurance $80.00
TOTAL FIXED COSTS $800.00
TOTAL EXPENSES $26,146.48
RETURN TO LAND, CAPITAL, AND MGT $5,853.52
Gross Return
eFarmer.useFarmer.us
Bibliography• Overview
– http://www.ers.usda.gov/Briefing/Potatoes/Background.htm• Production Characteristics
– http://www.potato2008.org/en/potato/cultivation.html– http://www.coopext.colostate.edu/TRA/PLANTS/
index.html#http://www.coopext.colostate.edu/TRA/PLANTS/potato.html
• Pest Management– http://www.ca.uky.edu/entomology/entfacts/ef304.asp
• Production Opportunity Cost– http://www.kltprc.net/books/mm2002/Gifs/Fig_16_2.htm
• Expected Return Report– http://www.uky.edu/Ag/AgEcon/pubs/software/
budgets_veg_melon.html• Basic Summary
– http://www.agmrc.org/commodities__products/vegetables/potatoes.cfm