Costs and profitability analysis

PUBLICATION 8026

Bell Pepper Production: Sample Costs and Profitability Analysis
UNIVERSITY OF CALIFORNIA Agriculture and Natural Resources
http://anrcatalog.ucdavis.edu

Based on 1999 Data Collected in Ventura County, California
Etaferahu Takele, Area Farm Advisor, Agricultural Economics and Farm Management, UC Cooperative Extension in Southern California. The author wishes to expressher appreciation to the University of California, Division of Agriculture and Natural Resources, Thelma Hansen Trust for funding this project. She also expresses her appreciation to those growers and other cooperators who provided data and review in the development of this study.

This study presents sample costs of production for bell peppers developed in Ventura
County, California, in 1999, butthe methodology we used to analyze costs, profits, and investments can easily be modified to address individual situations in production areas throughout California. Tables 1 and 2 include a “Your cost” column where growers can enter their own costs for comparison with ours. Also note that because of rounding, the totals given in tables 1 through 6 may differ slightly from the sums of theirconstituent numbers. We based our study on certain assumptions that we developed from production practice and cost information gathered from growers and agricultural institutions in the area. This is one of a series of six reports on vegetable crop production that are based on Ventura County data. As a grower or other agriculture professional, you can benefit from this report in many ways. It can helpyou make production decisions, determine potential returns, prepare budgets, evaluate production loans, and analyze policies. A discussion of the assumptions and calculation methods we used in this study is provided in the text. Cultural practice and cost data are presented in detail in six tables: Table 1. Costs per acre to produce bell peppers Table 2. Costs and returns per acre to produce bellpeppers Table 3. Monthly cash costs per acre to produce bell peppers Table 4. Range analyses of bell pepper production costs and returns Part A. Costs per acre and per carton at varying yields Part B. Returns per acre above operating costs Part C. Returns per acre above all cash costs (gross margin) Part D. Returns per acre above total costs (returns to management) Table 5. Farm equipment andinvestment values and annual costs Table 6. Farm equipment actual hours of use and hourly costs

ANR Publication 8026

BELL PEPPER PRODUCTION: Sample Costs and Profitability Analysis

2

Bell peppers are grown for both the fresh and processed markets. Market price sometimes determines how bell peppers are harvested. This study assumes that the costs of production are the same for fresh marketand processed crops except for harvesting (picking and packing) and selling costs, crop prices, and yield.

S T U DY A S S U M P T I O N S
This report is based on a 1,300-acre vegetable farm, the average size of farm for the growers we interviewed. Most land used for vegetable crops in Ventura County produces two or more crops a year. Each crop is planted and harvested several times a year, soplanting, harvesting, and selling of vegetable crops are year-round activities for growers, farm workers, and sellers. We calculated our costs assuming that at least two crops are produced on each acre, resulting in a total of 2,600 acres of farmed land per year. For our study, the crops grown on the farm include broccoli, bell pepper, celery, spinach, loose-leaf lettuce, and cilantro (we haveissued a report similar to this one for each of these crops). This crop mix is not present, of course, on every farm in Ventura County, but several farms in our interview pool did produce all six crops. The growing period for each crop varies depending on time of planting. Consequently, production costs—particularly for irrigation, disease and pest management, and overhead—would be expected to...