California Agricultural Issues Lab
of the University of California
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AgInfo / March 18, 2020
“You do have to think about it commodity by commodity. Which ones are most sensitive to income? Which ones aren’t? Let me just give you a quick example from the wine industry. […] So you could have the central valley wine industry be better off at the same time, the coastal wine industry is hurt. And we saw that in a recession 10 years ago.”
UC Agriculture and Natural Resources’ Agricultural Issues Center has released four new studies detailing the costs and returns of wine grape production in the southern San Joaquin Valley. All four cost studies illustrate the cost and benefit of nearly full mechanization on wine grape production.
The studies estimate the cost of establishing a vineyard and producing wine grapes, focusing on four wine grape varieties – Cabernet Sauvignon, Chardonnay, Rubired and Colombard.
“Those studies take into consideration mechanical pruning, leafing, shoot thinning, and harvest on a typical wine grape vineyard with the average production level for this region,” said George Zhuang, UC Cooperative Extension viticulture advisor in Fresno County.
“With farming labor becoming more scarce and expensive, growers will opt to transition into more mechanization,” Zhuang said. “These studies provide detailed information about the trellis type, planting density, cost and potential benefit of vineyard mechanization. Based on these studies, fully implemented mechanization reduces the production cost from $3,000 to $2,500 per acre and that represents 17% cost reduction. This information will ultimately help growers to guide their production practices to more profitable and competitive ways under the new era of farming labor.”
Wine grape growers should look at the costs, particularly expenses associated with mechanization, Zhuang said.
“The investment to purchase and own equipment can be high,” Zhuang said. “Fortunately, it is easy to find a contractor in this region to perform certain vineyard tasks, if the initial investment to purchase equipment is prohibitive.”
Numerous studies, including UC studies, have confirmed the benefits of vineyard mechanization to grape and wine quality with lower production costs.
“It is a win-win-win situation,” Zhuang said. “Growers can improve their farming margins, wineries and juice processing plants can get reliable and higher quality grapes and juice from farms, and average consumers can enjoy better wine and more healthy grape products at an affordable price.”
The studies are based on 200-acre farms with the vineyard established on 40 acres using two types of trellis systems – quadrilateral cordon system and bilateral cordon system. In addition to regular grape production expenses – such as irrigation, fertilization and pest control – the researchers broke out the differences between machinery costs and hand labor hours required for thinning, pruning and harvesting for each variety.The prices for labor, materials, equipment and custom services are based on October 2019 figures.
The California minimum wage law will gradually decrease the number of hours employees can work on a daily and weekly basis before overtime wages are required. For more information and to view the California minimum wage and overtime phase-in schedules visit cail.ucdavis.edu.
Input and reviews were provided by UC Cooperative Extension farm advisors, specialists, grower cooperators and other agricultural associates. The authors describe the assumptions used to identify current costs for wine grape establishment and production, material inputs, cash and non-cash overhead. A ranging analysis table shows profits over a range of prices and yields.
The new studies are:
All four winegrape studies can be downloaded from the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu/. Sample cost of production studies for many other commodities are also available on the website.
For additional information or an explanation of the calculations used in the studies, contact Donald Stewart at the Agricultural Issues Center at (530) 752-4651 or destewart@ucdavis.edu.
For information about local grape production, contact George Zhuang, UCCE viticulture advisor for Fresno County, at gzhuang@ucanr.edu; UCCE viticulture specialist Matt Fidelibus at mwfidelibus@ucanr.edu; UCCE viticulture specialist Kaan Kurtural at skkurtural@ucdavis.edu; Karl Lund, UCCE viticulture advisor for Madera, Merced and Mariposa counties, at ktlund@ucanr.edu; or Gabriel Torres, UCCE viticulture advisor for Kings and Tulare counties, at gabtorres@ucanr.edu.
UC Agricultural Issues Center has released new studies estimating the cost and returns of establishing an almond orchard and producing almonds for three growing regions of California.
“These cost studies are valuable for agricultural producers all along the continuum – growers considering entering into a new crop production business, less experienced growers, and those with decades of experience,” said Emily Symmes, UC Cooperative Extension integrated pest management advisor for the Sacramento Valley. “The information in these cost studies allows growers to evaluate their production practices and associated costs relative to an exemplary hypothetical orchard specific to their geographic region, and can help with development of business models, crop insurance and lending.”
In 2018, almonds ranked third among California commodities with almond growers receiving nearly $5.5 billion in cash receipts.
The cost analyses are based on hypothetical farming operations of well-managed almond orchards, using cultural practices common to the region. Local growers, UC Cooperative Extension farm advisors and supporting agricultural representatives provided input and reviewed the methods and findings of the studies.
“The recent almond updates for the Sacramento and San Joaquin valleys reflect costs associated with the continually evolving conditions facing agriculture,” said Symmes, who co-authored the almond cost studies. “Some of the notable updates include labor, irrigation and pest management costs – all integral to producing and delivering a high-quality crop.”
The researchers based one study in the Sacramento Valley, one in the northern San Joaquin Valley and the other in the southern San Joaquin Valley.
The southern SJV study is based on an orchard that uses double-line drip irrigation, whereas the other two locations use microsprinkler irrigation. All are multi-year studies, estimating costs from removal of the previous orchard, through almond orchard re-establishment and the production years. The economic life of the orchards used in these analyses is 23 to 25 years.
Navel orangeworm (NOW) is a major pest in almond production; Symmes and her co-authors describe in detail the pesticide applications and winter sanitation methods for each location for NOW control and include the costs.
The authors describe the assumptions used to identify current costs for orchard establishment, almond production, material inputs, cash and non-cash overhead. A ranging analysis table shows net returns over a range of prices and yields.
The new studies are titled:
The studies are available for free download at the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu/. Sample cost of production studies for many other commodities are also available on the website.
For additional information or an explanation of the calculations used in the studies, contact Donald Stewart at the UC Agricultural Issues Center at (530) 752-4651 or destewart@ucdavis.edu. To contact a local UC Cooperative Extension advisor, find the UCCE office in your county at https://ucanr.edu/About/Locations/. The Agricultural Issues Center is a statewide program of UC Agriculture and Natural Resources.
Among California’s agricultural commodities, cattle rank fifth in revenue. The University of California Agriculture and Natural Resources’ Agricultural Issues Center has released a new study showing the cost and returns of a beef cattle operation.
“Ranchers can use UC beef-cattle cost studies to guide their production decisions, estimate their own potential revenue, prepare budgets and evaluate production loans,” said Rebecca Ozeran, UC Cooperative Extension livestock and natural resources advisor for Fresno and Madera counties.
The study estimates costs and returns of a representative owner-operated beef cattle operation located on rangeland in the Central San Joaquin Valley and foothills of Madera and Fresno counties. The study describes a 200-head cow-calf operation and includes pasture costs on the basis of the rental per animal unit month.
The analysis is based upon a hypothetical cow-calf operation, where the cattle producer both owns and leases rangeland. The “typical” ranch in the Central San Joaquin Valley is an owner-operated cow-calf operation, often relying on multiple private leases. The operations described represent production practices and materials considered typical of a well-managed ranch in the region.
Input and reviews were provided by ranch operators, UC Cooperative Extension farm advisors and other agricultural associates. The study describes in detail the assumptions used to identify current costs for the cow-calf herd, material inputs, cash and non-cash overhead. The cost calculations in this study are based on economic principles that include all cash costs and overhead costs. The study also includes a “ranging analysis” to show potential net returns over a range of market prices. Other tables show the average costs and revenues, the distribution of monthly costs and revenues over the year, and the annual equipment, investment and business overhead costs.
“In addition to producing meat, cattle play an important role in California’s landscape and environment by grazing on vegetation that could fuel wildfire,” Ozeran said. “Ranching therefore has ecological and social impact on rural and fire-prone communities. If we can help ranchers remain economically viable, then we help support local stewardship of productive natural landscapes and contribute to fire resiliency and food security.”
The new study, “Sample Costs for Beef Cattle, Cow-Calf Production – 200 Head Operation, Central San Joaquin Valley – 2019” is authored by Ozeran, Donald Stewart, staff research associate of the University of California Agricultural Issues Center; and Daniel A. Sumner, director of UC Agricultural Issues Center.
This study and other sample cost of production studies for many commodities are available for free download at https://coststudies.ucdavis.edu. The program is supported by UC Agriculture and Natural Resources, including both Agricultural Issues Center and UC Cooperative Extension, and the UC Davis Department of Agricultural and Resource Economics.
For more information, contact Stewart at (530) 752-4651 or destewart@ucdavis.edu. To discuss this study with a local UC Cooperative Extension farm advisor, contact your county UC Cooperative Extension office https://ucanr.edu/About/Locations or contact Rebecca Ozeran at (559) 241-6564 or rkozeran@ucanr.edu.
Choices Magazine / Agricultural & Applied Economics Association
Federal regulation of milk prices began in 1933 as a central program in President Roosevelt’s New Deal agricultural policy (Sumner and Wilson, 2000). However, after the Supreme Court ruled that many features of New Deal programs were unconstitutional, California enacted a milk price policy in the Young Act of 1935. California adopted the main features of the price regulations that the court had said exceeded federal authority under the Commerce Clause to regulate commerce within a state. California retained its California Milk Marketing Order (CMMO) for more than 8 decades, despite the creation of a Federal Milk Marketing Order (FMMO) system under legislation later in the 1930s (Sumner and Wilson, 2000). This long-standing policy ended in 2018 with a vote to create a California Order as a part of the FMMO system administered by the U.S. Department of Agriculture (USDA).
“The egg industry has been declining for decades in California,” Sumner said. “Raising eggs is about converting corn and soybeans to eggs. It’s expensive to haul corn and soybeans around. And we don’t grow corn and soybeans in California.”
A new study on the costs and returns of a beef cattle operation has been released by the University of California Agriculture and Natural Resources’ Agricultural Issues Center. The estimated costs can help ranchers and land management agencies on California’s Central Coast make business decisions.
“This cost study can be a valuable tool for someone who is thinking about going into the cattle business because it will help them think through the various categories of costs, and aid in developing a budget and business plan,” said Devii Rao, University of California Cooperative Extension livestock and natural resources advisor for San Benito, Monterey and Santa Cruz counties.
Based on the typical costs of a 300-head cow-calf operation, the study estimates costs of an owner-operated beef cattle operation located on leased rangeland in the Central Coast region of California. The cost calculations in this study are based on economic principles that include all cash costs and uses the rental cost per animal unit month (AUM) as a cost of pasture.
“The study can also be used by a seasoned rancher,” said Rao, a co-author of the study. The first cost table has an empty column titled, “Your Costs.” This is probably one of the most useful pages for the experienced rancher. Producers can use this column to enter their own costs and compare them to the costs in the study. It will help them think about where they can make changes in their operation to reduce costs.”
The analysis is based upon a hypothetical cow-calf operation, where the cattle producer leases all rangeland. The “typical” ranch in the Central Coast is an owner-operated cow-calf operation using multiple private and public leases. The practices described represent production practices and materials considered typical of a well-managed ranch in the region.
Input and reviews for this study were provided by ranch operators, UC ANR Cooperative Extension farm advisors and other agricultural associates. A narrative describes the assumptions used to identify current costs for the cow-calf herd, material inputs, cash and non-cash overhead. A ranging analysis table shows profits over a range of average market prices. Other tables show the costs and revenue for production, monthly summary of costs and revenue, and the annual equipment, investment and business overhead costs.
“This study will also be of value to land management agencies that lease their lands for cattle grazing,” she said. “Many agency staff are not familiar with the different aspects of cow/calf operations. For land management agency staff, the most useful portion of the study is likely to be the Operations Calendar, which summarizes the timeline for breeding, branding, vaccinating, calving, shipping, etc.”
“Sample Costs for Beef Cattle – Central Coast Region – 2018” can be downloaded for free from the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu/. Sample cost of production studies for many other commodities are also available at the website.
For additional information or an explanation of the calculations used in the studies, contact Donald Stewart at the Agricultural Issues Center at (530) 752-4651 or destewart@ucdavis.edu.
For information about beef cattle production in the Central Coast region, contact Rao at drorao@ucanr.edu.
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Growers get help from UC in estimating raspberry production costs: https://coststudies.ucdavis.edu
Spanish version: COSTOS DE MUESTRA PARA PRODUCIR Y COSECHAR FRAMBUESAS DE MERCADO FRESCO Producción de Primocañas
When growers are considering a new crop to plant, and penciling out their expenses and income, cost estimates from the University of California may help. A new cost and return study for commercially producing raspberries released by UC ANR Agricultural Issues Center and UC Cooperative Extension includes an expanded section on labor.
Sample costs to establish, produce and harvest raspberries for fresh market in Santa Cruz, Monterey and San Benito counties are presented in “Sample Costs to Produce and Harvest Fresh Market Raspberries in the Central Coast Region – 2017.”
“The study focuses on the many complexities and costs of primocane raspberry production over a three-year period, including crop establishment, fertility practices, overhead tunnel management, harvest and rising labor costs,” said Mark Bolda, UC Cooperative Extension farm advisor and co-author of the study.
The analysis is based upon a hypothetical well-managed farming operation using practices common to the region. The costs, materials, and practices shown in this study will not apply to all farms. Growers, UC Cooperative Extension farm advisors and other agricultural associates provided input and reviewed the methods and findings of the study.
“This raspberry cost and return study is the result of significant effort on the part of UC Cooperative Extension, the Agricultural Issues Center and several grower and industry collaborators, who shared their expertise and contributed mightily to the end product,” said Laura Tourte, UC Cooperative Extension farm management advisor and co-author of the study.
This study assumes a farm size of 45 contiguous acres of rented land. Raspberries are planted on 42 acres. The crop is hand-harvested and packed into 4.5-pound trays. There is a fall harvest during production year 1, a spring and fall harvest during production year 2, and a spring harvest during production year 3. Each harvest is three months long.
The authors describe the assumptions used to identify current costs for production material prices and yields. Tables show the phase-in schedules for California’s minimum wage and overtime laws through the year 2022. Other tables show the monthly cash costs, the costs and returns per acre, hourly equipment costs, and the whole farm annual equipment, investment and business overhead costs.
Free copies of “Sample Costs to Produce and Harvest Fresh Market Raspberries in the Central Coast Region – 2017” can be downloaded from the UC Davis Department of Agricultural and Resource Economics website https://coststudies.ucdavis.edu. Sample cost of production studies for many other commodities are also available at the website.
The cost and returns studies program is funded by the UC Agricultural Issues Center and UC Cooperative Extension, both of which are part of the UC Division of Agriculture and Natural Resources, and the UC Davis Department of Agricultural and Resource Economics.
For additional information or an explanation of the calculations used in the studies, contact the UC Agricultural Issues Center at (530) 752-4651 or UC Cooperative Extension advisors Mark Bolda at (831) 763-8025 or Laura Tourte at (831) 763-8005 in Santa Cruz County.
UC Agriculture and Natural Resources researchers and educators draw on local expertise to conduct agricultural, environmental, economic, youth development and nutrition research that helps California thrive. Learn more at ucanr.edu.
To read more UC ANR news, visit our newsroom at http://ucanr.edu/News.
Follow @UCANR on Twitter
Like us on Facebook http://facebook.com/ucanr