BULLETIN 546 DEMBLR 1982 Production and Marketing of Woody Ornamentals in Alabama AUBURN UNIVERSITY ALABAMA AGRICULTLURAL EXPERIMENT STATIO N AUBURN UNIVERSITY, ALABAMA SALE A. BUCHANAN, DIRECTOR CONTENTS Page 3 REVIEW OF PREVIOUS WORK.......................... 4 5 OBJECTIVES .............................................. 5 STUDY AREAS............................................ GENERAL PROCEDURES................................... 6 6 PRODUCTION SYSTEMS.................................... 8 Standardization Procedures.......................... 10 Source of Input Costs and Shipping Costs ............. 10 Input Costs...................................... INTRODUCTION ........................................... Shipping Costs................................... 11 Fixed Cost Allocations ............................. 11 12 14 19 19 22 RESULTS ................................................ Variable Costs..................................... Fixed Costs ....................................... Total Costs........................................ EFFECT OF PRODUCTION COST DUE TO VARIATION IN INPUT FACTOR PRICES............................... Land............................................. 22 22 Labor Capital LOSS ............................................ ........................................... .................. 23 23 BATES ............................................. SHIPPING COSTS......................................... 24 26 28 29 SUMMARY............................. LITERATURE CITED...................................... APPENDIX .............................................. FIRST PRINTING 3M, DECEMBER 1982 Information contained herein is available to all persons without regard to race, color, sex, or national origin. PRODUCTION AND MARKETING OF WOODY ORNAMENTALS IN ALABAMA FRED B. PERRY, JR. and M. B. BADENHOP 1 INTRODUCTION THE ALABAMA NURSERY INDUSTRY is a rapidly growing agricultural industry. Gross sales of woody ornamentals increased from approximately $3 million in 1949, to almost $5 million in 1959, and to more than $52 million in 1979 (14). During the same period, other Southern States experienced similar growth in woody ornamental sales. Although this indicates a seller's market, there is keen competition within the industry. Potential for growth of the industry should continue to be favorable. Future growth of subdivisions, shopping centers, industrial parks, recreational parks, highways, golf courses, and street municipal plantings, in addition to the relandscaping of existing homes, should continue to create considerable demand for woody ornamentals (12). Public interest in ecology and pollution abatement should also increase the demand for plants of all types. Little cost information is available to the nursery industry for planning and establishing production efficiency criteria for management. In fact, statistical information of all types is scarce for the United States nursery industry. In Alabama, no satisfactory data bases have been developed on cost relationships for nursery crops as have been developed for most other agricultural crops. It is for this reason this study was undertaken. 2 'Associate Professor, Department of Horticulture, Auburn University, Auburn, Alabama, and Professor, Department of Agricultural Economics and Rural Sociology, University of Tennessee, Knoxville, respectively. 2 Research for this study was initiated in support of Southern Regional Project S-103, "Economics of Producing and Marketing Woody Ornamentals in the South", with cooperators on the regional level in nine Southern States. This project began on July 1, 1975, and was terminated September 30, 1982. ALABAMA AGRICULTURAL EXPERIMENT STATION Knowledge of production costs is important to nurserymen because these estimates can help answer pressing management questions. However, the use of such estimates requires recognition of their limitations. Production costs influence product availability and quantities offered for sale. These costs include land, labor, and capital (materials, equipment, and cash) that could have been used to produce other products. Thus, the cost of one unit of the product depends upon the value placed on these inputs. These values may be different for each producer. Actual costs vary from firm to firm for a given commodity as production techniques, size, efficiency of operations, accounting procedures, and prices of labor, supplies, utilities, interest on borrowed capital, taxes, and insurance vary. For these reasons, cost comparisons must be made with caution. REVIEW OF PREVIOUS WORK The Horticultural Research Institute has for many years compiled information about nurserymen that is useful to nursery businessmen as well as researchers (5). In general, the Institute's reports provide a broad picture of the industry in terms of general resources, trends, operating costs, products, services, customers, and the market. Information is also provided on data processing and on how to establish bookkeeping systems. Such information is useful, but is not sufficient to answer production and marketing questions about locational differences, cultural practices, impact of changing factor prices, and the choice of shipping mode as prices change. Results useful to this study were reported in 1972 by Aylesworth (1) and in 1974 by Scott (11), who estimated the cost of producing six common species of woody ornamentals grown in Illinois (1, 11). In that study, an attempt was made to determine the most profitable time to harvest the different species studied by analyzing input costs, length of the production period, and impact of changing interest rates. Padgett and Frazier reported in 1962 the relationship between costs and pricing woody ornamental species in Georgia. Costs in this study were synthesized from several nursery operations for container-grown plants but were not identified for any given species (6). Coutu and Cohen, in a study of the market potential for native woody ornamentals in North Carolina, developed cost PRODUCTION AND MARKETING OF WOODY ORNAMENTALS comparisons of alternative cultural systems and illustrated preliminary applications of cost data on locational advantage (2). Cost figures for producing Pfitzerjunipers, Kurume azaleas, dogwood, and pin oak have been estimated from 1977-1979 data within the Southern Region (7, 8, 9, 10). A wide range in production cost for both container and field-grown stock was identified. These cost differences were primarily attributed to locational differences and variations in production practices. A comparative business analysis by Gunter, for Florida container-grown crops, relating sales, costs, returns, and production efficiency measures, was valuable to the nurseryman in evaluating efficiency (4). However, it did not provide detailed cost-price relationships for individual woody ornamental crops (4). OBJECTIVES The general objective of this study was to estimate costs of producing selected woody ornamentals to provide producers a means to evaluate production alternatives. Woody ornamentals, for which costs were estimated, were the Pfitzer juniper, Kurume azalea, Burford holly, and crapemyrtle, all produced in 1-gallon containers, and for forsythia which was fieldgrown. Specific objectives were to: (1) describe a nursery production system for producing the Pfitzer juniper, Kurume azalea, Burford holly, and crapemyrtle in 1-gallon containers and for field grown forsythia, and to estimate costs for producing these plants under the system described for representative nursery producers in Alabama; (2) develop estimates of the effect of varying input costs on cost-price relationships of producing woody ornamentals grown in Alabama; and (3) estimate costs for shipping Alabama grown nursery stock in 1-gallon containers by standard sized carriers from production points to selected markets in the southern, midwest, mid-atlantic, and northeastern parts of the United States. STUDY AREAS Nursery production areas in Alabama are concentrated mainly in two geographical locations. These areas, one in the southern gulf coast part of the State and the other in the ALABAMA AGRICULTURAL EXPERIMENT STATION northern part of the State near the Tennessee border, encompass two major plant hardiness zones, see figure. The south Alabama production area borders on Zone 8b (15°F-20°F) and Zone 9a (20°F-25°F average minimum temperature), while the north Alabama production area is entirely in Zone 7b (5°F10°F) (13). Minimum temperatures in the southern area can drop to 7°F, while in north Alabama, minimum temperatures can be several degrees below zero. GENERAL PROCEDURES The technique employed in this study was enterprise budgeting, a device used in production planning involving the level and sequencing of necessary inputs and anticipated results. Budgets developed reflect capital requirements, production systems, input costs, and input-output coefficients for both container and field-grown plants which are appropriate to production areas in Alabama. The model budgets are intended only as guides. They are useful to nurserymen in identifying and changing production decisions, estimating capitalized values, supporting financial management programs, and planning alternative courses of action. Adjustments must be made in the budgets by users to include their actual input costs and production sequences. To facilitate consistency in model budgets, basic guidelines were specified for the study. These related to production systems, standardization procedures, input costs, shipping costs, and fixed cost allocations. PRODUCTION SYSTEMS Production sequences, cultural practices, and costs were synthesized from data collected from managers of Alabama nurseries producing the crops studied. The assumed level of management for which data were collected was defined as "high level management." The level of management influences the level of technology employed, physical production responses, and, to a lesser degree, the level of input and output prices. Specifying the level of technology does not mean that the same cultural practices, machinery, etc. will be found on all nurseries even in the same area. Technology that is applicable to large nurseries may not be economically justifiable for small nurseries. For example, topography, soil type, and field PRODUCTION AND MARKETING OF WOODY ORNAMENTALS 7 Climatic zones (zones of plant hardiness) and average annual minimum temperatures. ALABAMA AGRICULTURAL EXPERIMENT STATION layout may affect the type of machinery used in producing field-grown stock and may be quite different for nurseries of different sizes. Budgeted production sequences and associated technical coefficients may not exactly represent any one nursery firm, but it is believed the data are representative of production sequences for Alabama nurseries. The main reasons for a detailed description of the steps in the production process were to obtain information about timing and amount of labor required; machinery required, when it was needed, and the amount it was used; materials required and when they were needed; and field space required and when it was needed. From the technical coefficients generated from studying these production steps, direct costs for labor, supplies, machinery, and other materials of production were estimated. STANDARDIZATION PROCEDURES The standardization procedure involved fixing some of the physical characteristics of nurseries such as nursery size, crop mix, finished plant sizes, and plant loss rates, tables 1 and 2. The number of salable plants was used as the basic unit for developing all requirements for production, allowing sufficiently for propagation and production losses. Also, basic input prices for land, interest rates, salaries, and hourly wage rates were fixed, table 3. However, in the latter case, input prices were varied to study their effect on production cost per plant. Loss rates were similarly studied. In addition, overhead items such as license fees, bonds, advertising, general repairs and maintenance, utilities, taxes, and insurance were specified. However, in this case, quantities and prices were not specifically fixed. TABLE 1. NURSERY STANDARDS FOR A 55-ACRE NURSERY WITH 5 ACRES DEVOTED TO CONTAINER PRODUCTION Characteristics Unit Container production 5 4 8 x 40 80 32,000 12-14 128,000 Field production 50 45 - Size of firm Total......................Acres Acres Growing area ............... Bed size...................Feet Number Beds per acre ............. Number Plants per acre ............ Spacing, av ................... Inches on center Number in production Total plants ................ 4,500 30 x 44 202,500 0 C 0 0 z z v TABLE 2. STANDARD ENTERPRISE MIX FOR A 55-ACRE NURSERY WITH 5 ACRES DEVOTED TO CONTAINER PRODUCTION Enterprise mix Acres Container crop-i gal. Kurume azalea........ 0.4 .4 Pfitzer juniper.... Bufford holly........... .4 .4 Crapemyrtle.......... .4 Forsythia.............. Other species......... 2.0 Field crop Total crop Pct. 10 10 10 10 10 50 Production cycle Months 10 18 22-24 13 24 18-24 Loss rate Growing Propagation Pct. 10 10 5 10 50 10 Pct. 2.5 2.5 5 3 10 4.6 Plants ini production cycle No. Finished sie sie Sales in fl' fl' Pct. Sales in prn srn Pct. In. 9-12 0) 0 In z 12,800 12,800 12, 800 12,800 12,800 64,000 70 9-12 12-15 18-24 24-36 12-15 25 50 50 25 50 30 75 50 50 75 50 0 0 v 0 z z C,, B&B broadleaf and narrow leaf ever75 12-15 25 202,500 10 5 24-30 100 greens..............45 'Percent sales in the fall are estimates. Where fewer actual sales are anticipated, increased winter protection costs would be involved. cc 10 ALABAMA AGRICULTURAL EXPERIMENT STATION TABLE 3. FACTOR PRICE ASSUMPTIONS FOR BASE AND COMPARATIVE COST ANALYSIS Factor Land Value per acre ....... Dol. Capital Investment Time .............. Rate ............... Operating Time .............. Rate ............... Labor Operator ........... Supervisor ......... Seasonal ........... Unit Base conditions Comparative cost analysis Low Medium High 2,000 1,000 3,000 Months Pct. 12 10 12 7 12 15 12 18 Months Pct. 6 10 6 7 6 15 6 18 Dol. per year Dol. per year Dol. per hour 20,000 12,000 3.50 15,000 9,000 2.50 25,000 15,000 3.50 30,000 18,000 4.50 SOURCE OF INPUT COSTS AND SHIPPING COSTS Input Costs All input costs were based on 1980 prices. Input costs considered were land, capital, labor, general overhead, machinery mix, variable operational inputs, and shipping cost. Land. Land is a major component of capital investment in a nursery, so land values could have a considerable impact on the budgeting results. For budgeting purposes, land values were fixed at $2,000 per acre with land costs (property tax and interest) charged against the nursery in the analysis. Fixed value estimates included consideration of locational factors such as potential for residential developments, plant sites, and highway right-of-ways, and consideration of differences in productivity. Capital. It was assumed a nursery grower could earn or obtain all the capital needed for investment and operating purposes at annual rates of 15 percent compounded over the time span required to grow the crop. Investment capital included the owner's own capital (his equity) and that which might have to be borrowed. The annual interest charge on operating capital was calculated for a time period of 6 months for each current year and compounded for previous years, which was considered representative of the average time the money was involved. Interest charges represent what could be earned by a nurseryman in an alternative investment. PRODUCTION AND MARKETING OF WOODY ORNAMENTALS 11 Labor. It was assumed that seasonal unskilled labor was available in unlimited quantities as needed at a $3.50 hourly wage rate. Labor requirements and timing of each growing and harvesting operation were specified according to the production system. Performance rates outlined for production systems are reasonable and easily attainable. However, it is recognized that considerable labor (time) is required for activities not specifically listed. Some examples are machinery repairs; general repairs; hauling materials; losses caused by weather, especially rain; purchasing and storing inputs; banking requirements; time associated with selling; and time losses between activities. The labor requirement was increased 20 percent to allow adequately for these activities. General overhead. General overhead in a nursery consists of large expense items often equal to the variable expenses for the nursery as an entire unit (3). These costs were allocated to each budget based on survey results in actual nurseries. Machinery mix. Types of machinery and equipment for each budgeted production sequence represented that which was actually being used in production nurseries. Costs for machinery were determined from suppliers in the area where used. Use of custom operators to perform various field tasks was assumed for crops when appropriate. Machinery inputoutput coefficients were obtained from the Farm Planning Manual prepared by Extension specialists at the University of Tennessee, as were published materials relating to nursery operations and time and motion studies of operations performed at nurseries (15). Operationalinputs. Operational inputs included such items as liners (if not propagated by the nursery), plastic for greenhouses and under containers, materials for balling and burlapping, containers, chemicals (insecticides and herbicides), media components, and fertilizers. Shipping Costs Transportation costs from production points to selected market centers were investigated. Shipping cost estimates were based on standard sized carriers (semitractor trailer) moving plants to markets in Atlanta, Indianapolis, Washington, New York, and Boston. FIXED COST ALLOCATIONS Standard procedures were used to allocate fixed costs, those which were incurred regardless of the level of output once the 12 ALABAMA AGRICULTURAL EXPERIMENT STATION operation was established. Total fixed costs for the entire nursery were estimated on an annual basis. Taxes on land were estimated at the rate of 2 percent per year of the assessed value which was at full market value. Annual interest charge to land was at the rate of 10 percent per year of full market value. Some costs, such as depreciation, were difficult to classify because some costs could have been caused by obsolescence (a fixed cost) or wear through use (a variable cost). For this reason, depreciation was included along with insurance and taxes as a fixed cost. Annual depreciation of buildings was estimated by dividing the initial value of the buildings, adjusted for salvage value, by years of useful life. Annual interest charges to buildings were at an annual rate of 6 percent of initial cost. Annual insurance and taxes were an estimated cost based on 2 percent of the initial cost of the buildings. For machinery and equipment, depreciation, taxes, and insurance costs were adopted from the Farm Planning Manual (15). Interest was charged at an annual rate of 7.5 percent of initial cost. A higher rate might more appropriately be charged in the future if interest rates continue to increase. Included in fixed costs was a group of costs identified as general overhead. Items in this grouping were those which could not be tied specifically to other physical inputs, such as utilities, advertising, insurance, and management level salaries. Management level salaries, the largest overhead cost item, were estimated in terms of alternative employment opportunities facing nursery operators and supervisors. All overhead costs for which the budgets were prepared were cumulative by years (months), covering the time production began until time of sale. RESULTS Nurserymen in various Alabama nurseries utilized different combinations of resources to produce ornamental plants. Even within concentrated production areas, individual producers frequently used different resource combinations. Many factors, including similarities in weather, soil, transportation cost for inputs, etc. caused similar cost patterns within production areas. Variations in one or more of these key factors often resulted in a greater cost difference between production areas than within areas. Nursery size for estimating production costs was standardized as a 55-acre nursery. Four acres were devoted to TABLE 4. ESTIMATED CAPITAL REQUIREMENTS FOR A 55-ACRE ALABAMA NURSERY PRODUCING IN THE FIELD AND IN CONTAINERS, 1980 Item Description Unit Number Per unit Dol. Total initialSavgvlu cost Dol. Slvgnvlu Dol. Usflie yeullif Vol. 0 C C) Land Buildings Office...................25 x 60 ft. 12 x 100 ft. Machinery storage ........ Packing and supply 24 x 50 ft. storage .................. Concrete slab..............35 x 50 x .33 ft. Acre Sq. ft. Sq. ft. 55 1,500 1,200 1,200 21.4 6 2,000 20 6 10 30 1,500 110,000 30,000 7,200 12,000 640 9,000 0 20 20 20 20 10 1,050 1,900 1,970 94 118 100 83 375 200 430 120 38 500 21 350 115 150 810 1,000 0 9,414 10 10 10 10 10 10 10 8 10 10 10 6 10 10 10 10 10 10 5 10 5 z z Propagation greenhouses ... 21 x 96 ft. Subtotal............... Machinery and equipment 34 h.p. Tractor ................. Tractor with front-end h.p. loader................50 Tractor..................85 h.p. Plow...................3-14 in. mounted ft. tandem, Disk......................8 mounted Harrow.................10 ft. Cultivator...............2-row Rotovator for 50 h.p. tractor 50 ft. Sprayer.................Hydraulic piston 100 gal. pto Sprayer, air blast .......... Transplanter.............2-row Fertilizer spreader.......... 1/2-ton Pickup truck............. U-blade digger ........... Forklift Cu. yd. 2,016 sq. ft. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. Ea. m 1683,840 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 - z 0 0 0 0 C) mn v 10,500 19,000 19,700 -940 - 5 ft. 4-wheel 1 1 /2-ton Backpack, solo Pump, controls, line, nozzles, etc. Miscellaneous Hand tools ............... Subtotal............... -r Total................. -r---~r Rotary mower............ Farm trailers............. Truck ................... Sprayer, small............ Irrigation system .......... .................. pto 750 1,175 1,000 829 3,000 2,000 4,300 1,200 386 5,000 210 3,500 1,150 1,500 8,100 375 -750 - z z m -I CD 10,000 93,615 262,455 CA) 14 ALABAMA AGRICULTURAL EXPERIMENT STATION container-grown stock, 45 acres to field production, and 6 acres to buildings, roadways, and holding areas. The standard enterprise mix consisted of Kurume azalea, Pfitzer juniper, Burford holly, crapemyrtle, forsythia, and other ornamental species grown in containers and in the field. This enterprise mix produced in one production cycle 128,000 1-gallon container-grown plants and 202,500 field-grown plants. For this study, enterprise budgets were developed for the container-grown crops and for field-grown forsythia. Table 4 shows the estimated capital requirements (land, buildings, and equipment) for the 55-acre nursery. Capital requirements are $262,455, with $110,000 allocated to land, $58,840 to buildings, and the remaining $93,615 to machinery and equipment. Data on labor and equipment requirements, to complete a production cycle for each of the five species studied, are detailed in appendix tables 1 through 5. The total cost per hour for operating various types of farm equipment is detailed in appendix table 6. VARIABLE COSTS Costs which varied with the quantity of crops produced (variable costs) amounted to $56,690 for container production, table 5. On an overall basis, variable costs were 73 cents per plant. However, when variable costs of each ornamental species produced were considered according to specific production requirements of each crop, more accurate production costs were ascertained. Variable costs for producing 1-gallon container nursery plants per salable plant were Pfitzer juniper, 93 cents; kurume azalea, 74 cents; Burford holly, 78 cents; crapemyrtle, 56 cents; and other representative evergreen crops, 89 cents. For the field-grown forsythia, variable cost per plant was 55 cents. Propagation costs and the cost of purchasing liners are important variable cost items. For this container operation, liners were purchased for Pfitzer junipers, and cuttings were propagated for other species grown. Cost for each potted 6- to 7-inch Pfitzer juniper liner was 32.5 cents, thus requiring $4,267 to produce 12,800 salable plants. Cost of propagating cuttings and growing them to container sizes, producing 12,800 salable plants for each species were: Kurume azalea, $2,229 or 17.4 cents each; Burford holly, $2,305 or 18.0 cents each; crapemyrtle, $2,244 or 17.5 cents each; forsythia, $2,396 or 18.7 TABLE 5. ESTIMATED VARIABLE COSTS OF PRODUCING 12,800 -GAL.-CONTAINERS OF EACH OF THE SELECTED CROPS IN A 55-ACRE NURSERY WITH 4 ACRES CONTAINER GROWING AREA, ALABAMA DeciUnit Cost pe Pfitzer juniper ntQuantity Cost Korunme ,azalea Quantity Cost Burford holly Cost Qoantity Crapemyrtle Quantity Cost Forsythia, Qoantity Cost Other crops (64,000) cost 0 C 1 0 Materials Propagation Containers ... Medium .... Rooting hormone Pine hark mix.. 3 in. plastic pots Peat, vermiculite, perlite IBA in talc, .3 pct. Pine bark, sand, and nutrients Ea. Cu. ft. Lh. Cu. ft. lb. 50 1] 1 lb. 50lb .04 .75 8.00 t4,588 t62 5 583.12 121.50 4.00 -162 14,183 .5 567.32 4.00 81(1(0 14,662 .5 t75 439.86 4.00 87.50 (.16A)5 38.40 z z m Chemicals Fertilizer ........ 12-6 18-6-12 Osmocote. Ammonium nitrate...........33.5-0-0 0-0-62 Muriate of potash Diammonium 18-46-0 phosphate Soluble Fe Chelated iron Diazinon. Insecticide Insecticide Disyston. Dexon...........Fungicide Benlate..........Fungicide Banrot...........Fungicide Fungicide Ca ptan ........... Cho Iun..........Sterilization Greenhouse cover, plastic ... Sq. ft. saran.......... Sq. ft. Greenhouse Mmn.winter heat. Ronstar.......... Herbicide Subtotal ..... Machinery and equipment .... Trailer with front loader 50 h.p. Tractor 34 h.p. Trailer, 4-wheel Sprasycc Irrigation system Mist Hand tools Subtotal .. Field production in containers 6 in. plastic cans Containers Soil mix..........Pine bark mix with nlutrients z 10.35 .56 50350 5. 4.20 -- 1.2 12.42 2 2070 29.75 1.56 6.55 5 50 lb. 50 lb. 5lb. Cal. Gal. 311). 211). Gal. 5 - 21.00 - 0 0 0 2 lb. 41lb. Sq. ft. Sq. ft. 25' x 96' 7.50 11.35 30.00 18.45 27.30 19.00 29.80 545 1.50 .025 .130 496.00 33.00 - - - - - - 1 - - .75 75 4 3 1 4,000 3,000 .5 1,706.83 - - 11.35 22.50 13.84 10920 89.40 1.50 100.00 390.00 248.00 1,099.23 1.53 53.16 .28 32.40 149.40 8.00 2.40 1,954.00 1,706.77 312.50 .22 1.12 1.25 1.00 1 4,000 3,000 .5 - 2.50 20.66 - .56 .50 4.13 - 4.20 5.68 123.75 11.97 2.07 1.50 100.00 - 37.50 22.50 20.66 - .75 1.12 - - 0 m 23.75 29.80 1.50 100.00 390.00 248.00 1 4,000 .63 .38 .63 38 11.97 2.07 - z 50i lb. Hr. Hr. Hr. Hr. Hr. Hr. - - .14 - - .0 - 156.70 5.39 .35 .28 .11 2. - - Co) -- .25 17.50 .25 19 100 100 1 14,474 55 1.53 75.95 .28 51.30 166.00 4.00 2.40 1,790.69 1,751.62 343.75 821.45 .1.53 139.97 .28 86.40 166.00 4.00 2.40 1,222.03 1,715.48 318.75 4.62 6.12 4.34 1.11 2.70 1.66 .04 2.40 - - - Ea. 1,706.77 312.50 .25 12.25 .25 12 90 200 1 13 129 50 100 1 100 .25 32.25 .25 32 .88 .08 .25 .04 - - 14,222 54 2.40 164.63 1,848.86 337.501 9,360.0 - .13 6.25 13,129 50 13,196 51 Cu. vdl. Continued TABLE 5. (Continued). ESTIMATED VARIABLE COSTS OF PRODUCING 12,800 1-CAL. CONTAINERS OF EACH OF THE SELECTED CROPS IN A 55-ACRE NURSERY WITH 4 ACRES CONTAINER GROWING AREA, ALABAMA Materials Field plot cover . Description Cost per unit Pfitzer juniper Cost Quantity Kurume azalea Cost Quantity Burford holly Quantity Cost Crapemyrtle Cost Quantity Forsythia Quantity Cost Other crops (64,000) cost 18,385.00 sea Unit 6 mil. black polyethylene Liners...........6-7 in. potted Chemicals 18-6-12 Osmocote. Ammonium nitrate....... 33.5-0-0 0-0-62 Muriate of potash Diammonium phospbate. 18-46-0 Sq. ft. .02 .325 .56 8.50 4.30 7.50 3.00 10,500 13,129 144 450 - 2t0.00 10,500 4,266,93 6,496.20 80.64 38.25 - 210.00 - 10,500 210.00 - 10,500 - 210.00 - 10,500 - 210.00 - lb. 50 lb. 50 lb. 50 lb. 510lb. 144 900 - 2,229.27 80.64 76.50 - 2,305.37 - 2,244.23 6.69 3.22 - 2,396.36 - 56.86 13.52 8.70 2.52 5.25 - - Ammonium sulfate............21-0 urea Fertilizer, form...........38-0-0 ferComplete 5-20-20 tilizer .......... ferComplete siliz-r .......... 12-6-6 Soluble fe Chelated iron Lime............Dolomite Superphosphate . 0-20-0 Pesticides, growing Routine spray program Meta systox R, keltbane and tedion .......... Insecticide Diazinon.....Insecticide Insecticide Disyston ..... Insecticide Sevin 50 WP .... Insecticide Chlorodane ... Miticide Kelthane ... Karatbane..Fungicide, mildew Banrot......Fungicide Fungicide Benlate .......... Fungicide Dexon, 35 oct. W Captan, 50 WP.. Fungicide Fungicide Truban, 30 WP . Manzate......Fungicide Herbicide Ronstar .......... 1.16 .84 .25 90 50 lb. 50 lb. 50 lb. 5 50 50 21.00 3.25 .25 5.25 .25 - 5.25 - .25 5.25 5.85 D lb. lb. lb. 10.35 11.35 1.50 3.50 - 2.50 8 3 28.38 12.00 10.50 17 1 8 2 176.00 11.35 12.00 7.00 25 0.72 8 3 258.75 8.75 12.00 10.50 - 8 3 12.00 10.50 1 8 3 335.34 11.75 12.00 10.50 w - n C - Gal. Gal. Pt. Gal. 21lb. 21lb. 21lb. 30.00 18.45 4.40 15.50 29.80 - 60.00 - - - - - - - -C .75 -- 22.50 - 5 - 92.25 2.60 12.80 - 3.38 - 101.40 - 3.38 - 101.40n -r mi 5 lb. 31lb. 4 lb. 21lb. 3 lb. 50 2.60 3.20 - - - - 1 - 2.60 - - - 1 4 - 1 1 .57 .28 - 2.60 15.50 10.83 t.53 - - 1 4 - 2.60 12.80 29.80 27.30 1.53 25.90 3.00 X m 1 1 .28 1 1 19.00 27.30 5.45 25.90 6.00 - - -- - - m -4 - lb. 30.00 - - - - - - t .16 3.00 I) D 4.80 .16 4.80 - Continued 0 z 0 TABLE 5. (Continued). ESTIMATED VARIABLE COSTS O~F PRODUCINC 12,800 1-GAL. CONTAINERS OF EACH OF THE SELECTED CROPS IN A 55-ACRE NURSERY WITH 4 ACRES CONTAINER GROWING AREA, ALABAMA Materials .. Princep 4 g. Princep 80 WP .. Paraquat ... Enide 50 W ... Treflan 5 pct. ... Roundup ... Lasso 50 WP .... Subtotal ............ Tractor..........34 C) Other crops (64,000) rust 0 Descrip tion Herhicide Herbicide Herhicide Herhicide Herbicide Herhicide Herbicide h.p.Hr SQuantity 50 lh. 5 lh. gal. 1 lh. 40 lh. Cal. 50 lh. - Cost Pfitzer juniper Cost 20 o20 - Kurume azalea Quantity Cost .10 - Burford holly Quantity Cost .20 .10 .10 - Crapemyrtle Quantity Cost .20 .20 .10 .10 97 17 Forsythia Quantity Cost 20 1 12.20 22.50 8.00 6.50 611.72 97 17 .3 .12 .06 .07 .03 .02 70 420.98 10404 3.01 .63 .21 .04 .16 .30 32.40 2.75 3.62 218.50 30.90 - z z 30.50 22.50 40.00 16.00 25.50 65.00 36.45 - 12.20 8.00 - - 6.50 - - 255.22 468.72 257.04 395.05 368.03 104.04 8.00 6.50 3.64 421.04 494.76 104.04 8.00 5.10 6.50 3.64 205.26 420.98 104.04 .20 .10 C) 0 '1 Machinery and equipment Tractor with front end loader .... h.pHr. Tractor .......... 85 h.pHr. Plow............8-14 in. mounted Disc............8 ft. tandem, mounted Harrow..........10 inHr. 2row Cultivator ....... Rotovator, for 50 h.p. tractor .... 50 inHr. Sprayer .......... hydraulic Sprayer, air hlast. 100 gal. pto Transplanter..... 2row Fertilizer -Hr. spreader ... Pickup truck ... 1/2-ton U-hlade digger . Fork lift..........pto 5 ft. Rotary mower.. Farm trailer... 4-wheel Truck ......... 1 -ton Sprayer..........Backpack, solo Irrigation system Pumps, controls, pvc pipe complete Hand tools 4.34 6.12 10.03 Hr Hr. Hr. Hr. Hr. Hr. Hr. Hr. Hr. Hr. Hr. Hr. Hr. Hr. Hr. 2.10.30 108 42 84.80 17 114 t7 - 0 0 0 1.78 .68 2.35 10.16 2.70 9.25 3.93 1.81 4.38 .80 5.15 4.50 1.11 7.10 .83 1.66 1.20 .06 - 8 - -- - - z m 21.60 8 21.60 21 56.70 12 32.40 z - 2 50 - 6 106 --240 1 20 2 - 3.62 218.50 30.90 11766 50 6 89.20 218.50 30.90 99.01 50 6 ------104 218.50 -----30.90 115.44 - 50 6 71.50 8 273 1 20 218.50 30.90 79.36 6.64 453.18 1.20 .62 50 6 .2 C,) Conveyor 20 ft. Minure spreader Suhtostal s .... ... .. Miscellaneous - Hr. Hr. 1.33 - 398.40 1.20 .s62 2.66 1,529.74 240 1 20 398.40 1.20 .62 345 1 20 572.70 1.20 .62 240 1 20 398.40 1.20 3.62 - 2 2.66 1,643.05 2 2.66 2,021.56 2 2.66 1,104.08 2 2.66 1,835.14 8,660.00 Continued TABLE 5. (Continued). ESTIMATED VARIABLE COSTS OF PRODUCING 12,800 1-GAL. CONTAINERS OF EACH OF THE SELECTED CROPS IN A 55-ACRE NURSERY WITH 4 ACRES CONSTAINER GROWING AREA, ALABAMA DescripUi Materials tion Cost Pfitzer juniper Quantity Ui per unit Cost Kururne Quantity azalea Cost Burford holly Quantity Cost Crapernyrtle Quantity Cost Forsy thia Quantity Cost Other crops (64,000) cost 3,420.00 12, 910.00 TAI- Labor Propagation... Growing ... Subtocal.... Interest on operating capital at t5 pct, 6 mo... Total variable cost . Average variable c~ost per plant.. Total fixed cost Average fixed cost pei plant.. Total cost per plant... Man Man Hr. Hr. 3.50 3.50 789 - 2,76t.50 11,1136.84 827.76 11,864.60 .93 4,433.01 .34 1.27 t59.00 696.50 - 556.50 2,437.75 8,820.57 661.54 9,482.11 .74 3,549.35 .28 1.02 194.25 727.50 - 679.88 2,546.25 9,343.75 700.78 10,044.53 - 202.00 377.90 - 707.00 1,322.65 6,600.08 495.00 7,095.09 - 226.30 380.00 - 1,330.00 792.05 6,518.18 488.86 7,007.04 .55 4,137.66 .32 .87 52,735.00 3.955.00 56,690.00 .89 20,212.00 .31 1.20 LRIr G) ho-o C C .78 5,962.85 .47 1.25 .56 4,877.78 .38 .94 - r x m m z -a 0 z PRODUCTION AND MARKETING OF WOODY ORNAMENTALS 19 cents each; and other evergreen species, $3,677 or 28.7 cents each. Liner costs were about 35 percent of the total variable costs for the Pfitzer junipers and propagation costs were about 24 percent of the variable costs for Kurume azaleas. In terms of the total costs for producing these plants, variable costs comprised 73 percent of the total costs for Pfitzer junipers; 72 percent for Kurume azaleas; 62 percent for Burford holly; 60 percent for crapemyrtle; 63 percent for forsythia; and 74 percent for other container-grown evergreens. FIXED COSTS Table 6 shows the annual ownership cost (fixed costs) for the various capital items required. Costs per unit were estimated using the total annual fixed cost for the nursery and the total number of plants of the various species being grown in the nursery for sale in a given year. Thus, the fixed cost per plant could be determined regardless of the length of the production cycle for a given species. Where the crop was grown for more or less than a year, an adjustment was made in the number of plants available for sale, reflecting the time period required to complete a production cycle. Total fixed costs for the 55-acre nursery included $13,200 for land, $7,511 for buildings, $13,353 for machinery and equipment, and $44,468 for general overhead, or a total fixed cost of $78,532. Fixed cost per 1-gallon container-grown plant grown on the 4 acres devoted to container production was 34 cents per plant for Pfitzer junipers; 28 cents for Kurume azaleas; 47 cents for Burford holly; 38 cents for crapemyrtle; and 31 cents for the other species of evergreen. For field-grown forsythia, fixed cost per plant was 32 cents. TOTAL COSTS Total cost per 1-gallon container-grown plant varied considerably by species. Cost estimates per plant for the Pfitzer juniper were $1.27; the Kurume azalea, $1.02; the Burford holly, $1.25; and the crapemyrtle, $0.94. The cost per plant of field-grown forsythia was $0.87. Variation in production practices among growers of the same species was common. Wide variations occurred in man-hours of labor used to produce the crop, type of equipment used, and the kind, amount, and value of chemicals used in the production process. The length of time in the production cycle also had an important effect on the total cost per plant. TABLE 6. ESTIMATED ANNUAL FIXED COSTS FOR BUILDINGS, EQUIPMENT, AND GENEBAL OVERHEAD FOR A 55-ACRE ALABAMA NURSERY PRODUICING IN THE FIELD AND IN CONTAINERS, 1980 0 Item Land.......................... Subtotal .................... Buildings Office......................... Machinery storage.............. Packing and supply storage. Concrete slab................. Propagation greenhouses........ Subtotal .................... Machinery and equipment Tractor ..................... Tractor with front end loader. Tractor........................ Plow.......................... Disk..................... Harrow....................... Cultivator ...................... Rotovator for 50 h.p. tractor ... Sprayer ....................... Sprayer....................... Transplanter.................. Fertilizer spreader .............. Pickup truck ................... U-blade digger ................. Forklift........... ............. Description TT ~ T~IT ~ Depreciation 2 T r 7 Interest3 r Dot. Dol. ~ 7 Insurance and taxes4 2,200 2,200 600 144 240 13 180 1,177 45 81 84 4 5 2 4 13 8 18 5 2 21 1 15 5 6 34 2 0 Total Dol. 2,200 11,000 13,200 (16.8 pct.) JI- taxes' Interest, 10 pct. 25 x 60 ft. 12 x 100 ft. 24 x 50 ft. 35 x 50 x .33 ft. 6 houses, 21 x 96 ft. 34 h.p. 50 h.p. 85 h.p. 3-14 in. mounted 8 ft. tandem, mounted 10 ft. 2-row 50 in. Hydraulic piston Air blast100 gal. pto 2-row '/2-ton 11,000 11,000 1,500 360 600 32 900 3,392 945 1,710 1,773 85 106 46 75 262 180 387 108 58 450 19 315 104 135 1,500 360 600 32 450 2,942 525 950 985 47 59 26 41 328 100 215 60 19 250 11 175 58 75 405 19 450 300 864 1,440 O 77 1,530 7,511 (9.6 pct.) 1,515 2,741 2,1842 136 170 74 120 603 288 620 173 tI- D-I II- r C c 79 721 31 505 167 216 1,168 96 900 Continued r m m Rotary mower................ .. .. Farm trailers................. Truck......................... Sprayer....................... Irrigation system............... pto 5 ft. 4-wheel 11'/-ton Backpack, solo Pumps, control, pvc pipe, nozzles, etc. m 729 75 450 z CD) 0 z "U o a c o TABLE 6 (Continued). ESTIMATED ANNUAL FIXED COSTS FOR BUILDINGS, EQUIPMENT, AND GENERAL OVERHEAD FOR A 55-ACRE ALABAMA NURSERY PRODUCING IN THE FIELD AND IN CONTAINERS, 1980 z m 0 -4 z Item Hand tools ...................... Subtotal ....................... General overhead Electricity Telephone ..................... ...................... Description Miscellaneous -- Depreciation 2 Dol. 150 8,162 - Interest Dol. 38 4,836 - Insurance and taxes 4 Dol. 0 355 - Total Dol. 188 13,353 (17.0 pct.) 1,800 1,200 2,500 250 1,000 2,600 1,000 20,000 12,000 2,118 44,468 (56.6 pet.) 78,532 (100.0 pct.) m z 0 0 0 0 X 0 m General repairs and maintenance (buildings, roads, etc.) License and bonds.............. Advertising ......... Insurance (general, health, workmens comp.) .............. Travel ........................... Operator's salary ................ Supervisory salary ............... Interest on av. (V/2)overhead ...... Subtotal. Total annual fixed cost ............... -- z rn z r - - - - (I) - 2,118 - - 'Property taxes were estimated at the rate of 2 pct. per year at full market value. 2Annual depreciation on buildings was estimated by dividing the initial value adjusted for salvage value by years of useful life. 3Annual interest on land was at the rate of 10 pct. per year of full market value; on buildings at an annual rate of 6 pct. of initial cost; and on machinery and equipment at an annual rate of 7.5 pct. of initial cost. 4 Annual insurance and taxes were an estimated cost based on 2 pct. of the initial cost of the buildings. 22 ALABAMA AGRICULTURAL EXPERIMENT STATION EFFECT ON PRODUCTION COST DUE TO VARIATION IN INPUT FACTOR PRICES Variations in production techniques are often caused by differences in input costs which affect nursery growers' decisions on cultural practices and investment in production facilities. To study the effect of changes in selected input costs on production cost estimates, a comparative analysis using different prices for land, labor, and capital was completed. Data on the production costs of the 1-gallon container-grown Kurume azaleas were used to illustrate the cost differences. It was assumed in the analysis that when the price of one input varied, prices of the other inputs remained constant. Further, for example purposes, it was assumed that as prices of various inputs changed, there was no change in the proportions of the inputs used. LAND Land values have a small effect on the cost of producing a 1-gallon container-grown Kurume azalea-about 1 cent per plant per $1,000 per acre change in land value, table 7. LABOR Salary paid the nursery operator, cost of supervisory labor, and wage rate for hired seasonal labor comprise labor cost. Total labor cost per plant varied considerably with different production systems for growing plants. Hired labor cost (variable costs) for 1-gallon container-grown plants ranged between 20 and 30 percent of the total variable costs, and operator and supervisory labor cost (fixed costs) ranged from 40 to 50 percent of total fixed cost. If the salary of a nursery grower operating a 55-acre nursery with 4 acres devoted to growing Kurume azaleas and other plants in 1-gallon containers were increased (decreased) by $5,000 annually, the cost per azalea would increase (decrease) about 4 cents per plant. Changes in supervisory labor costs also affect total cost per plant. When the cost of supervisory labor was increased (decreased) by $3,000 per year for 1-gallon container-grown plants in the nursery, the total cost per plant increased (decreased) between 2 and 3 cents. An increase in the hourly wage of 50 cents for hired seasonal labor resulted in an increase ofjust over 3 cents to the cost of a 1-gallon container-grown plant. PRODUCTION AND MARKETING OF WOODY ORNAMENTALS 23 TABLE 7. ESTIMATED EFFECTS OF LAND, LABOR, CAPITAL, AND FACTOR PRICES ON AVERAGE UNIT COST PER CONTAINER-GROWN PLANT, KURUME AZALEA PRODUCTION COST USED IN THE EXAMPLE, ALABAMA, 1980 Average cost per 1-gal. containergrown azalea Difference in cost per Cents Cents Cents Cents Cents Land value per acre (base value) -1.9 -1.4 -1.0 -0.8 -0.8 101.2 $1,000 ........... 102.0 2,000 ........... 1.9 1.4 1.0 0.8 0.8 102.8 3,000 ........... Labor costs' Operator's salary per yr. (base rate) -9.4 -7.0 -5.07 -3.9 -3.9 98.1 $15,000 .......... 102.0 20,000 .......... 9.4 7.0 5.07 3.9 3.9 105.9 25,000 .......... 18.8 14.0 10.1 7.8 7.8 109.8 30,000 .......... Supervisory salary per yr. (base rate) -5.5 -4.1 -3.0 -2.3 -2.3 99.7 $ 9,000 ........... 102.0 12,000 ........... 5.5 4.1 3.0 2.3 2.3 104.3 15,000 ........... 11.0 8.2 6.0 4.6 4.6 106.6 18,000 ........... Seasonal labor per yr. (base rate) -7.9 -5.9 -4.3 -3.3 -3.3 98.7 $ 3.00 ............ 102.0 3.50 ............ 7.9 5.9 4.3 3.3 3.3 105.3 4.50 ............ 15.8 11.8 8.6 6.6 6.6 108.6 5.00 ............ Interest rate variable and fixed costs -1.6 -2.2 -0.9 -1.2 -0.9 101.1 7 pct............ 102.0 10 pct.............. 3.6 2.7 2.0 1.5 1.5 103.5 15 pct........... 5.8 4.3 3.1 2.4 2.4 104.4 18 pct........... Kurume azaleas was assumed to be 'The amount of labor required to produce the consumed at the same rate during the production cycles of different lengths as it was for the 10-month azalea production cycle. CAPITAL Kurume azalea Cents Cost per plant difference by months in production cycle 24 18 13 10 The cost of money-or interest rate-charged to fixed and variable production costs, is an important cost item. Raising the interest rate from 10 to 15 percent for growing Kurume azaleas in 1-gallon containers would increase the cost of producing a plant about 1.5 cents. LOSS RATES Growing and harvesting loss rates vary by plant species grown. In this study, these losses were incorporated in the production cost per salable plant. It is quite common, however, that all salable plants are not actually sold. If these were carried over to another market season, additional costs would 24 ALABAMA AGRICULTURAL EXPERIMENT STATION TABLE 8. ESTIMATED EFFECT OF CHANGES IN THE PERCENTAGE OF PLANTS SOLD ON THE TOTAL COST PER 1-GAL. CONTAINER-GROWN PLANT BASED ON 12,800 SALABLE PLANTS OF DIFFERENT SPECIES, ALABAMA, 1980 Pct. of plants sold Total production cost per 12,800 100 90 80 70 salable plants' (0)2 (10)2 (20)2 (30)2 Dol. -------------Cost perplant,dol. -------Pfitzer juniper ...... 16,298 1.27 1.41 1.59 1.82 Kurume azalea ...... 13,031 1.02 1.13 1.27 1.45 Burford holly ....... 16,007 1.25 1.39 1.56 1.79 Crapemyrtle ........ 11,973 .94 1.04 1.17 1.34 Forsythia (fieldgrown) ........... 11,145 .87 .97 1.09 1.24 1.50 1.71 Other evergreens ... 15,360 1.20 1.33 'Losses in growing and harvesting plants vary by species grown. The cost of these losses was incorporated in the production cost of the 12,800 salable plants produced for each species. 2 The number in the parentheses expresses the data in terms of loss rates. All plants not sold were considered lost; therefore, the percentage not sold comprises the loss rate. 1-gal. containergrown plants (except forsythia) be incurred. The carryover costs were not included here. However, plants which were not sold are frequently considered as plant losses. When the costs to produce these unsold plants (losses) were subtracted from the total costs of producing all plants available for sale, the cost per plant actually sold increased considerably, table 8. Taking Kurume azaleas as an example, cost per 1 gallon of salable plant was $1.02 when all plants were sold. When only 90 percent of these plants were sold, cost per plant was $1.13, or 11 cents more; when only 70 percent were sold, cost per plant was $1.45, or 43 cents more. SHIPPING COSTS Plant species, size and type of truck, type of load, backhaul, loading and unloading rates, and transport charge per mile are sources of shipping cost variation. Informal surveys of trucking firms in 1980 indicated the following cost per mile for a loaded truck according to truck size: Truck size Cost per mile (dol.) 2-ton ............................ .65-.75 10-wheeler ....................... 85-1.00 5-axle ........................... 1.10-1.25 Variations in estimates differed according to guarantee of backhaul, number of stops, type of cooling, and type of plant protection. Shipping cost for nursery plants marketed in 1-gallon containers were estimated using shipping points in Huntsville and O Co 0 z z v v 0 m TABLE 9. SHIPPING COST PER 1-GAL. CONTAINER-GROWN PLANT FROM SHIPPING POINTS IN HUNTSVILLE AND MOBILE TO DESTINATION POINTS IN ATLANTA, INDIANAPOLIS, WASHINGTON, NEW YORK, AND BOSTON, 1980 z Shipping points Atlanta Indianapolis Washington New York Boston ---------------------- Miles --------------------------Huntsville ... Mobile ...... 176 335 485 716 678 943 911 1,176 1,117 1,382 Shipping cost per plant pyramid type load' Boston New York Indianapolis Washington Atlanta $1.10 $1.25 $1.10 $1.25 $1.10 $1.25 $1.10 $1.25 $1.10 $1.25 per per per per per per per per per per mile mile mile mile mile mile mile mile mile mile ------------------------------------- Dol. per plant--------------------.03 .06 .04 .07 .09 .13 .10 .15 .12 .17 .14 .19 .16 .21 .18 .24 .20 .25 .23 .28 a 0 m 0 O O 0 0 z r1 0 z z a -I r I- 'Based on 5-axle conventional semitractor trailer, 40,000 pounds maximum load at $1.10 and $1.25 per mile, one-way with no drop charges included. Also, based on 6,200 1-gal., 8 in.-10 in. container plants with a pyramid-type load. 26 ALABAMA AGRICULTURAL EXPERIMENT STATION Mobile and consuming centers in Atlanta, Indianapolis, Washington, New York, and Boston, table 9. It was assumed plants were shipped by 5-axle, semitractor trailer trucks with a 40,000-pound maximum load limit. Shipping costs at $1.10 and $1.25 per mile, one-way, with no drop charges, were used in making the estimates. The semitractor trailer could carry 4,350 or 6,200 1-gallon containers, respectively, depending on whether the containers were loaded as a "racked"-type load or as a pyramid stack-type load. Under the assumptions stated and using a pyramid-type load, shipping cost per plant with a transport cost of $1.25 per mile from Mobile to Atlanta would be 7 cents; Indianapolis, 15 cents; Washington, 19 cents; New York, 24 cents; and Boston, 28 cents. Similarly, the shipping cost from Huntsville to Atlanta would be 4 cents; Indianapolis, 10 cents; Washington, 14 cents; New York, 18 cents; and Boston, 23 cents. Shipping cost per plant increased almost 45 percent when 1-gallon plants were placed on racks rather than the pyramid-loading method, table 9. Some observations about shipping costs, regardless of loading method, can be made. In general, from Mobile, shipping costs more than double when the consuming center shifts from Atlanta to Indianapolis and quadruple from Mobile to Boston. Shipping costs from Huntsville increased 28 percent when the destination point was moved from Washington to New York and 36 percent when it moved to Boston. There are only minor differences in shipping costs from Mobile to either Indianapolis or Washington although these costs are about four times what they would be from Mobile to Atlanta. SUMMARY Cost estimates were developed for producing four woody ornamental species grown in 1-gallon containers and for one species field-grown. The four species, Kurume azaleas, Pfitzer junipers, Burford holly, and crapemyrtle, comprised about half of the woody ornamental mix grown on 4 acres devoted to container production, which was part of a 55-acre nursery operation. Forty-five acres of the nursery were devoted to field-grown plants and 6 acres were devoted to buildings, roadways, and holding areas. Estimates were based on cultural practices commonly found in Alabama nurseries. Estimates of the effect of selected factor price differences on cost-price relationships were also made. The effect of loss rates on cost per plant was ascertained. PRODUCTION AND MARKETING OF WOODY ORNAMENTALS 27 Shipping costs for plants shipped from Huntsville and Mobile to consuming centers in Atlanta, Indianapolis, Washington, New York, and Boston were estimated. Total costs for producing the four different species in 1-gallon containers were Kurume azaleas, $1.02; Pfitzer juniper, $1.27; Burford holly, $1.25; and crapemyrtle, $0.94. The cost per plant of the field-grown forsythia was $0.87. Variation in production practices among growers of the same species was more common than was homogeneity of production practices among growers. Wide variations occurred in man-hours of labor used to produce the crop, in the type of equipment used, and in the kind, amount, and value of chemicals used in the production process. Land values have only a small effect on the cost of producing 1-gallon container-grown plants-about 1 cent per plant per year per $1,000 per acre change in land value. The cost of money-or interest rate-charged to fixed and variable production costs is an important cost item. Raising the interest rate from 10 to 15 percent for growing a 1-gallon container-grown plant for 1 year would increase the cost per plant about 1.5 cents. A 50-cent increase in the hourly wage for hired seasonal labor resulted in an increase of just over 3 cents for the annual cost of a 1-gallon container-grown plant. If the annual salary of the operator of the nursery producing a 1-gallon container-grown plant in 1 year was increased by $5,000, the cost per plant would increase about 4 cents per plant. If the cost of supervisory labor increased $3,000 annually, the increased cost per plant would be between 2 and 3 cents. Growing and harvesting loss rates vary by plant species grown. In this study, with Kurume azaleas taken as an example, the cost per salable plant would increase by 11 cents per plant if only 90 percent of the plants offered for sale were actually sold. If only 70 percent were actually sold, the cost per salable plant would increase by 43 cents. Variations in shipping cost estimates per plant occur because of size of container, kind of plant, size and type of truck, type of load, backhaul, loading and unloading rates, and shipping charge per mile. Typical shipping costs for moving 1-gallon container-grown plants from Mobile to Atlanta would be 7 cents; Indianapolis, 15 cents; Washington, 19 cents; New York, 24 cents; and Boston, 28 cents. 28 ALABAMA AGRICULTURAL EXPERIMENT STATION (1) AYLESWORTH, Affecting Production Location and Time to Harvest Selected Woody Ornamental Plants in Illinois." Unpublished Ph.D. dissertation, Department of Agricultural Economics, Univ. of Illinois, Urbana-Champaign. COUTu, A. J. AND M. A. COHEN. 1978. Exploratory Analysis of the Market Potential for Native Woody Ornamentals. Center for Rural Resource Development, North Carolina State Univ., Raleigh, Report No. 12. H. AND PATRICK J. KIRSCHLING. 1974. Nursery Stock in 1Gallon Containers: Production Program and Economic Feasibility, New Jersey Agr. Exp. Sta., New Brunswick, A.E. 353. FRIES, HARRY LITERATURE CITED JAMES Q. 1972. "Economic Factors (2) (3) (4) GUNTER, DAN L. 1977. Business Analysis of Container Nurseries in Florida, 1976. Food and Resource Economics Department, Univ. of Florida, Gainesville, Economic Information Report 83, November. (5) (6) 1968. Scope of the Nursery Industry, Research Summary, 833 Southern Building, Washington, D.C. HORTICULTURAL RESEARCH INSTITUTE, INC. PADGETT, J. H. AND THOMAS L. FRAZIER. 1962. The Relationship Be- tween Costs and Pricing of Woody Ornamentals, Georgia Agr. Exp. Sta., Athens, Bull. N.S. 100. (7) S-103 TECHNICAL COMMITTEE. 1980. Factors Affecting (8) (9) Production Costs and Returns for Flowering Dogwoods, Southern Coop. Series Bull. 246. . 1980. Cost of Producing and Marketing a Shade Tree: The Pin Oak. Southern Coop. Series Bull. 244, January, 1980. . 1979. Factors Affecting Southern Regional Production Advantages for Juniperus chinensis 'Pfitzeriana'. Southern Coop. Series Bull. 237. .1979. Factors Affecting Southern Regional Production Advantages for Kurume Azaleas. Southern Coop. Series Bull. 241. T., JR. 1974. Production Costs and Time to Sell Nursery Stock, A.E. 4352, Department of Agricultural Economics, Univ. of Illinois, Urbana-Champaign. SCOTT JOHN (10) (11) (12) SMEAL, PAUL L., JAMES S. COARTNEY, AND K. E. LOOPE. 1974. The Eco- nomics of Establishing a Shade Tree Nursery, Virginia Polytechnic Institute and State University, Blacksburg, Extension Division Publication 592. (13) (14) (15) UNITED STATES DEPARTMENT OF AGRICULTURE. 1965 (revised). Plant Har- diness Zone Map. Agricultural Research Service, Washington, D.C., Miscellaneous Publication. No. 814. UNITED STATES DEPARTMENT OF COMMERCE, BUREAU OFTHE CENSUS. Census of Agriculture, 1949, 1959, and 1979. UNIVERSITY OF TENNESSEE AGRICULTURAL EXTENSION SERVICE, KNOXVILLE. 1977 (revised data). Farm Planning Manual. EC622. APPENDIX TABLE 1. LABOR AND EQUIPMENT REQUIREMENTS FOR 1-GAL., CONTAINER-GROWN PFITZER JUNIPERS, 12,800 PLANTS 0 0 0 Hr. per Month January ..................... Description Prepare soil mix. mix 50 cu. yd. Equipment Tractor, 50 h.p.-front end loader Tractor, 34 h.p.-manure spreader Hand Tractor trailer, 4-wheel Tractor, 50 h.p.-front end loader Tractor, 34 h.p. Trailer Hand --- z z v 12,800 plants Machine Man m 2.00 2.00 - 6.00 6.00 18.40 18.60 131.00 C 0 '1 April....................... Clear heds, place plastic down Fill 13,120 1-gal. containers, pot liners, move to field, 21/2 pct. death loss 18.60 40.00 40.00 40.00 - 0 0 v 0 z m April-August ................ Fertilize Osmocote (18-6-12) Weeding, 4x Herbicide application(3/ lb. Princep, 4 gal. per acre), 4x Insecticide application, 5x Watering 19.00 140.00 8.00 z rI - Hand Hand, cyclone spreader Hydraulic sprayer Irrigation system 4.00 12.00 5.00 12.00 December................. Winterize, if necessary Labor and materials- Continued Co 0 TABLE 1 (Continued). LABOR AND EQUIPMENT REQUIREMENTS FOR 1-GAL., CONTAINER-GROWN PFITZER JUNIPERS, 12,800 PLANTS quipent12,800 Desripion Mont Mot esrpio qipetMachine T Isr~r\ rlr-~ D~TTr-nll~~rr~ U~7.~TTrlll~~~sr~hrl~C 17rAT) I April-August ................ Respacing for 2nd year growth Hand Fertilize Hand Osmocote (18-6-12) Supplemental soluble fertilizer NH4NO3 in irrigation Pruning, Hr. per plants Man 40.00 19.00 Ix r" Hand 50.00 2.00 140.00 4.00 8.00 Tractor trailer Hand Tractor trailer Weeding, 4x Herhicide application (3/4lb. princep, 4 gal. per acre), 4x Insecticide application, 5x Watering October .................... Harvesting Select 12,800 plants and haul to shipping area and load on semitrailer 4,350 1-gal. containers per load Hand-cyclone spreader Hydraulic sprayer Irrigation system 4.00 12.00 5.00 12.00 m Tractor trailer 37.75 151.00 C x mU m Conveyors 20.00 z 0 z TABLE 2. LABOR AND EQUIPMENT REQUIREMENTS FOR PRODUCING 1-GAL., CONTAINER-GROWN KURUME AZALEAS, 12,800 PLANTS -o 0 Hr. per 12,800 . . . .plants Month Propagation June 1 ..................... D~escription Etquipment Machine Mvan C) 0 z z Cover greenhouse, 1 layer 6 mil. plastic plus Saran Prepare soil (6 cu. yd.) Sterilize house and containers Fill 3 in. pots (14,578 pots) 10 pct. death loss Move to greenhouse Hand Tractor, 52 h.p.-front end loader Hand Hand Tractor, 34 h.p. Trailer Hand Overhead sprinklers (irrigation system) .25 .25 .25 3.00 1.00 4.00 7.00 1.00 29.0 m z G) 0 -m 0 0 0 m Take cutting, trim, dip, and stick July-April................... Checking, observing, and watering plants (2 hr./wk. for 36 wk.) Mist Fungicide: Dexon 3x, 4 lb./600 gal. Banrot 3x, 36 oz./600 gal. Insecticide application 3x-summer Fertilize 6x, nursery special, 12-6-6 Pruning z 90.00 200.00 72.00 I- z, Tractor, 34 h.p. Hydraulic sprayer Tractor, 34 h.p. Hydraulic sprayer Cyclone seeder Electric shears 9.00 9.00 3.00 3.00 6.00 12.00 18.00 6.00 6.00 12.00 159.00 Continued Subtotal ................... Ix trrr (h rx7Lr ) TABLE 2 (Continued). LABOR AND EQUIPMENT REQUIREMENTS FOR PRODUcINc 1-GAL., CONTAINER-GROWN KURUME AZALEAS, 12,800 PLANTS Month Field production January ..................... Description Equipment Hr. per 12,800 plants Machine Man Prepare soil mix (mix 50 cu. yd.) Clear beds, blade field Fill 13,120 1-gal. containers Pot liners, move to field, 2.5 pct. death loss Tractor, 50 h.p.-front end loader Tractor, 34 h.p. with blade Tractor, 50 h.p.-front end loader Tractor 34 h.p. Trailer Hand Tractor, 34 h.p. Hydraulic sprayer 2.00 1.00 15.00 23.00 34.50 6.00 1.00 156.00 April ........................ April-October 15............ Fertilize 12-6-6, nursery special 7x Iron lx Pruning 122.50 2.00 2.00 4.00 C lx Electric shears Hand Tractor, 34 h.p. Trailer Tractor, 34 h.p. Trailer Tractor, 34 h.p. Hydraulic sprayer Irrigation system IT~PmT .~4 5.00 5.00 3.00 3.00 4.00 4.00 180.00 8.00 160.00 Weeding 5x C r x 6.00 5.00 18.00 Continued 0 Roundup 1x around beds Insecticide application, 5x Watering IT~()n IX m mn z -I -I Co) z "U 0 c C) 0 z z v TABLE 2 (Continued). LABOR AND EQUIPMENT REQUIREMENTS FOR PRODUCING 1-GAL., CONTAINER-GROWN KURUME AZALEAS, 12,800 PLANTS -n Month October ................... Description Harvesting, 70 pct. Select 8,960 plants and haul to shipping area and load on semitrailer ........... Watering and observing Harvesting, 30 pet. Select 3,840 plants and haul to shipping area and load on semitrailer - Equipment Tractor, 34 h.p. Trailer Irrigation system Hr. per 12,800 plants Machine Man 33.00 33.0045.00 10.00 140.00 m z 0 0 0 0 r October-February 0 z Co m z February .................... Trailer - 14.00 696.00 855.50 Subtotal ..................... Total ............. 34 4 ALABAMA AGRICULTURAL EXPERIMENT STATION TABLE 3. LABOR AND EQUIPMENT REQUIREMENTS FOR 1-GAL., CONTAINER-GROWN BURFORD HOLLY, 12,800 PLANTS Hr. per 12.800 nlants Month Propagation June ............ Description Equipment Machine Man Cover greenhouse, 1 layer plastic Prepare soil (6 cu. yd.) Tractor, 50 h.p.front end loader Tractor, 34 h.p. Trailer Hand - 3.00 .25 .25 .25 1.00 Sterilize house and containers 4.00 7.00 Fill 3-in. pots (14,183 pots) (5 pct. death loss) Hand Move pots to greenhouses June 15 ......... June-June (1 yr.) ......... Tractor, 34 h.p. .25 1.00 36.25 Take cuttings, strip, dip Hand and stick Checking and observing (42 wk. at 2 hr. per wk.) Mist Watering Drench with Benlate and Truban 2x Pentac spray 2x Di-syston spray 2x Han84.00 Mist system 50.00 Overhead sprinkler (irrigation system) 200.00 Hydraulic sprayer Tractor, 34 h.p. Hydraulic sprayer Han< 12.00 12.00 12.00 12.00 2.00 12.00 198.25 6.00 6.00 6.00 Tractor, 34 h.p. Hydraulic sprayer Tractor, 34 h.p. Cyclone seeder Hydraulic sprayer 6.00 6.00 6.00 - Fertilize with 12-6-6 Iron lx Shearing 2x Subtotal ......... Field Production June ............ - 1.00 Tractor, 34 h.p. Electric shears - 1.00 12.00 313.00 Prepare soil (50 cu. yd.) Tractor, 50 h.p.front-end loader Clear beds Tractor, 34 h.p. 2.00 1.00 6.00 1.00 Continued PRODUCTION AND MARKETING OF WOODY ORNAMENTALS TABLE 3 35 3 (Continued). LABOR AND EQUIPMENT REQUIREMENTS FOR 1-GAL., CONTAINER-GROWN BURFORD HOLLY, 12,800 PLANTS Month July............ Description Fill 13,474 1-gal. con tainers, pot liners, move to field Equipment Hr. per 12,800 plants Machine Man Tractor, 50 h.p.front-end loader Tractor, 34 h.p. Trailer Fertilize with 12-6-6 8x Hand Iron 2x Pentac spray 5x Di-syston spray 5x Weed 5x Round up around heds Prune 2x Watering Hydraulic sprayer Tractor, 34 h.p. Hydraulic sprayer Tractor, 34 h.p. Hydraulic sprayer Tractor, 34 h.p. Hand Tractor, 34 h.p. Trailer Hydraulic sprayer Tractor, 34 h.p. Electric shears Irrigation system 15.00 23.00 35.00 4.00 4.00 6.00 6.00 6.00 6.00 5.00 5.00 3.00 3.00 24.00 240.00 156.00 155.00 8.00 12.00 12.00 88.00 6.00 24.00 24.00 Octoher ......... Harvest 50 pct. of 12,800 plants (6,400) and haul to shipping area and Tractor, 34 h.p. Trailer load Fertilize with 12-6-6 2x Iron 1x Watering and ohserving Push up containers Hand Hand Hydraulic sprayer Tractor, 34 h.p. - 32.00 32.00 78.50 - OctoherApril .......... 35.00 2.00 2.00 105.00 4.00 40.00 32.00 32.00 78.00 April 15 ......... Harvest 6,400 plants, haul to shipping area Tractor, 34 h.p. Trailer and load -- Suhtotal .... Total ............-- 727.50 460.00 773.00 1,120.00 36 ALABAMA AGRICULTURAL EXPERIMENT STATION TABLE 4. LABOR AND EQUIPMENT REQUIREMENTS FOR 1-GAL., CONTAINER-GROWN CRAPEMYRTLES Month Propagation April .. ......... Description Equipm ent Hr. per 12,800 plants Machine Man Cover greenhouse, 1 layer 6 mil. plastic plus Saran Hand Prepare soil (6.5 cu. yd.) Tractor, 50 h front-end 1oader Sterilize house containers and Hand L.p.- - 3.00 May ............ .25 - 1.00 4.00 Fill 3 in. pots (14,662 pots) 10 pct. death loss Move to greenhouse June 1 .......... JuneNovember .... Checking, observing, Hand Tractor, 34 h .p. Trailer .25 .25 - 8.00 1.00 Take cuttings, trim, dip, and stick Hand 32.00 watering, and fertilizing plants (2 hr. per wk. for 23 wk.) Mist system Constant feed fertilizer 150 p.p.m. Injector syst(em l~j 57.50 57.50 11.00 11.00 Han( Tra46.00 Insecticide: Diazinon 1ix Tractor, 34 h L.p. Hydraulic sprayer with insecticide Fungicide: Captan 6x Benlate 5x weeding: Chemical Cyclone seeder (herbicide) Propagation NovemberMarch.........Checking, observing, watering, and fertilizing plants (2 hr. per wk. for 21 wk.) Mist system Constant feed fertilizer 75 p.p.m. Injector syst(:em Fungicide: Captan 5x Benlate 5x Subtotal ...... Field Production March .......... Prepare soil mix (51 cu. Tractor, 50 h.p.yd.) front-end loader Tractor, 34 h .p. Hydraulic sp rayer r 22.00 1.00 1.00 52.50 52.50 10.00 10.00 42.00 20.00 180.00 2.00 6.00 Continued PRODUCTION AND MARKETING OF WOODY ORNAMENTALS 37 TABLE 4 (Continued). LABOR AND EQUIPMENT REQUIREMENTS FOR 1 GAL., CONTAINER-GROWN CRAPEMYRTLES Month March ........... Description Equipment Hr. per 12,800 plants Machine Man 1.00 1.00 Clear beds, blade fields Tractor, 34 h.p.blade Fill 13,196 1-gal. containers 3 pet. Tractor 50 h.p.death loss front-end loader 15.00 23.00 34.50 130.00 - April 1 .......... Pot liners, move to field, can tight Tractor, 34 h.p. Trailer Watering and fertilization Irrigation system Fertilize: constant feed-150 p.p.m. Fungicide: Captan 3x Benlate 3x Insecticide: Diazinon 6x Chemical weeding: herbicide Injector system Tractor, 34 h.p. Hydraulic sprayer Tractor, 34 h.p. Hydraulic sprayer with fungicide Cyclone seeder Hand April- July .......... 126.00 126.00 6.00 6.00 12.40 6.00 2.00 - 2.00 13.00 June ............ Space plants JulyOctober ....... Harvest 25 pct. Select 3,200 plants, haul to shipping area Tractor, 34 h.p. T and load on semitrailer Trailer November ...... Shove up 9,600 plants Cover for winter Hand Tractor, 34 h.p. Trailer ;x~ 12.00 -acto30.00 9.00 15.00 .50 .50 18.00 NovemberMarch ........ Water, observe, and fertilize (75 p.p.m.) Irrigation system Injector system March .......... Remove winter cover Respace 9,600 plants April ............. Tractor, 34 h.p. Trailer Hand 147.00 147.00 .50 .50 14.50 9.00 9.00 Harvest 75 pct. Select 9,600 plants, haul to shipping area, and load on semi- Tractor, 34 h.p. trailer Trailer - 27.00 112.00 377.90 650.90 Subtotal ........ Total ............- 38 ALABAMA AGRICULTURAL EXPERIMENT STATION TABLE 5. LABOR AND EQUIPMENT REQUIREMENTS FOR FIELD-GROWN FORSYTHIA, 12,800 PLANTS, SLEEVE PACKED WITH WOOD SHAVINGS Month Propagation Description Equipment Hr. per 12,800 plants Machine Man JulyOctober....... Land preparation for propagation plot plow Tractor-plow 2x (3-14 in. mounted) Tractor-disk Disk 2x (8 ft. mounted) Tractor-harrow Harrow (10 ft.) Apply fertilizer (5-20-20 Tractor-fertilizer at 500 lb. per a.) spreader (Nursery plot consists of 0.16 a., 17 rows 100 ft. long and 3 ft. between rows) 0.30 .12 .06 .04 0.60 .15 .08 .06 November ...... Collect cuttings (25,600 6 in. cuttings), assuming 50 pet. survival rate producing 14,222 plants for Hand tools transplanting Stick cuttings Hand Tractor-sprayer Tractor-cultivator, 2-row Hand Backpack Spreader Tractor, 34 h.p. and mower - 75.00 38.00 AprilOctober.......Apply herbicide Cultivation 6x Weeding Spray insecticide 3x Fertilize (12-6-6) 3x Prune rooted cuttings November .04 .70 .06 .85 61.00 12.00 1.50 .40 14.40 2.40 .60 ...... Dig rooted cuttings (undercut, lift, pull, Tractor-digger select) (U-blade) Move plants to Pickup packing-storage Grade rooted cuttings Prepare soil mix (54 cu. Tractor, 50 h.p.yd.) loader Clear beds, blade fields, Tractor, 34 h.p.place plastic blade 1.35 .55 - 10.80 .70 75.00 Field production January ......... 2.12 1.00 6.35 16.00 Continued PRODUCTION AND MARKETING OF WOODY ORNAMENTALS 39 TABLE 5 (Continued). LABOR AND EQUIPMENT REQUIREMENTS FOR FIELD-GROWN FORSYTHIA, 12,800 PLANTS, SLEEVE PACKED WITH WOOD SHAVINGS Month February ........ Description Fill 14,222 1-gal. containers Equipment Hr. per 12,800 plants Machine Man Tractor, 50 h.p.loader 15.00 - Pot liners, move to field, place plastic Tractor, 34 h.p.trailer AprilSeptember .... Watering and fertiliza- 43.00 142.00 tion Fungicide-insecticide 6x Chemical weeding: herbicides 3x Space plants JulyMarch ........ Harvest plants Irrigation systeminjector Tractor, 34 h.p.hydraulic sprayer Cyclone seeder, backpack Hand 126.00 6.00 2.00 - 42.40 racto- 6.00 2.00 14.00 151.00 Tractor trailer Conveyors 38.00 20.00 TABLE 6. ESTIMATED MACHINERY FIXED AND VARIABLE COSTS FOR AN ESTIMATED REQUIREMENTS PER ACRE, 1980 a ANNUAL USE ON A PER HOUR BASIS, PLUS MACHINE AND LABOR TIME Type of I acn - New Expected Est. annual Total cost cost life use per hour Dol. Yr. Hr. Dol. 10,500 10 600 4.34 1 Hr. per acre Machine Man - Tractor, 34 h.p. .. Tracfor with frontend loader 50'h.p. 19,000 Tractor, 85 h.p...... 19,700 Plow, 3-14 in. mounted 940 Disc, 8 ft. tandem, 1,175 mounted ......... 514 Harrow, 10 ft. ....... Cultivator, 2-row ... 829 Rotovator, 50 in. for 50 h.p........ 3,000 Sprayer, hydraulic, 2,000 piston .......... Sprayer, 100 gal. air blast, pto .....4,300 1,200 Transplanter, 2-row Fertilizer spreader . 386 Pickup truck, /2-ton 5,000 10 10 10 10 10 10 8 10 10 10 6 10 600 600 100 70 70 60 110 140 140 40 60 500 6.12 10.03 2.10 1.78 .68 2.35 10.16 2.70 9.25 3.93 1.81 4.38 .75 .30 .28 .60 1.00 .20 .10 2.00 .20 - .83 .38 .35 .75 1.25 .25 .12 6.00 .25 - 40 .80 10 U-blade digger ..... 210 10 100 5.15 Fork lift, pto ...... 3,500 4.50 10 60 1,150 Rotary mower 5 ft. Farm trailers, 10 280 3.33 4-wheel, 3 ea ... 1,500 10 300 7.10 Truck, 11/2-ton ..... 8,100 Sprayer, back.83 375 5 40 pack, solo ....... 1.66 10 730 Irrigation system . 10,000 Hand tools, 1.20 5 1880 miscellaneous ... 750 'Annual fixed cost includes depreciation, interest, and insurance. less salvage value divided by expected life. Insurance rate = average per $1,000. .35 - 13.00 - .50 - .62 - - - Depreciation = value times $8.5