Category: Publications

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New UC cost study of a cow-calf operation in California’s Central Coast

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.

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.

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Effects of subsidized crop insurance on crop choices

A new AIC study by Daniel Sumner and Jisang Yu, published in July 2018 in Agricultural Economics, focuses on how subsidized crop insurance affects crop choices. Crop insurance may change farm investments by reducing risks and providing subsidies. First, actuarially fair insurance reduces risks in crop production and marketing, holding the expected return constant. Second, insurance subsidies encourage farms to purchase crop insurance, which increases the expected return to insured risky crops.

The paper explores substitutions between market insurance and self-insurance and between a risky crop and a safe crop, and discusses each effect as a combination of subsidy and risk effects. Numerical illustrations show that an insurance subsidy has a larger impact on risky crop investments compared to that of an input subsidy when farms are more risk-averse and have high costs of self-insurance. The framework provides a novel way to evaluate subsidized crop insurance programs.

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AIC Releases New Raspberry Cost Study, also available in Spanish

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.
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UC Agricultural Cost and Return Studies Downloads

March 19, 2018, ARE News https://are.ucdavis.edu/department/news/2018/3/19/uc-agricultural-cost-and-return-studies-downloaded-users-46607-times-2017/

Agricultural cost and return studies were downloaded by users 46,607 times in 2017, demonstrating the benefit of this collaboration between the University of California Agricultural and Natural Resources, including Cooperative Extension and the Agricultural Issues Center (AIC), and the UC Davis Department of Agricultural and Resource Economics (ARE). There were also 3,279 downloads of tree loss and vine loss calculators from the cost studies website (https://coststudies.ucdavis.edu).

“It’s good to see so many active users of these tools that help farmers and other businesses make sound economic decisions,” said Dr. Daniel Sumner, AIC director and Frank H. Buck, Jr., distinguished professor in ARE. “We especially thank our industry partners, including growers, processors, lenders, suppliers and management companies, for sharing data that ensures the factual nature of these studies.”

Each cost and return study presents the practices typical for a specific commodity in a specific area of California during the year of the study. For example, a 2017 study details the practice used and costs and returns of growing walnuts in the northern San Joaquin Valley. Each study is intended as a guide to help farmers, ranchers, lenders and others assess costs, determine potential returns, prepare budgets, and evaluate loans and make better decisions. They are also used by students, researchers and government agencies. Current and archived studies are available for about 50 commodities, including fruit, vegetable, field, tree, and vine crops, as well as beef cattle, sheep and other animals.

Tree loss and vine loss calculators help determine the loss to future income by assessing the value of any lost tree or vine, either with or without replanting. Additional resources available on the cost studies website include conservation practice studies.

The 5 Most Popular Searches in 2017:
1. Almonds
2. Wine Grapes
3. Tree-Vine Loss Calculator
4. Organic
5. Sacramento Valley

Visit https://coststudies.ucdavis.edu to learn more.

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The Cost to Manage Invasive Aquatic Weeds in the California Bay-Delta

Karen M. Jetter and Kjersti Nes

from ARE Update Vol. 21, No. 3, Jan/Feb, 2018View Full Article PDF:    https://s.giannini.ucop.edu/uploads/giannini_public/55/2a/552a7310-8134-48d9-b4cf-601aa3364f8e/v21n3_3.pdf 

Abstract

Invasive aquatic weeds have become an increasing problem in the California Bay-Delta, with Brazilian waterweed and water hyacinth being particular problems. In 2014 and 2015, large mats of water hyacinth began to choke Delta waterways, increasing control costs of a variety of public agencies and marinas. Between 2013 and 2016, these groups spent about $46 million to manage all invasive aquatic weeds.

 

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New cost and returns studies for Garbanzo Beans (Chick Peas)

The UC Agriculture and Natural Resources’ Agricultural Issues Center has released two new studies on the costs and returns of producing garbanzo beans (chick peas), in the Sacramento and San Joaquin Valleys. Although acreage is relatively small, garbanzos are an important crop because California growers produce the large, cream-colored seed that’s used for the canning industry, often used for garnishes for salads.

The studies estimate the cost of producing garbanzo beans on 200 acres as part of a row crop rotation, using sub-surface drip irrigation. A 3-row bed tillage implement shallowly chisels, tills and re-shapes the beds, avoiding disturbance of the buried drip tape left in place. Planting of treated seed (for fungal and seedling diseases, Ascochyta rabiei, Rhizoctonia and Pythium), into residual soil moisture occurs in December. Seeding rates for the garbanzo beans are 85 pounds per acre.

Input and reviews were provided by UC ANR Cooperative Extension Farm Advisors and other agricultural associates. Assumptions used to identify current costs for the garbanzo bean crop, material inputs, cash and non-cash overhead. A ranging analysis table shows profits over a range of prices and yields. 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.

The importance of these studies right now is that they are currently being used to help secure USDA crop insurance for garbanzo production, expected in 2020.

The new studies are titled: “Sample Costs to Produce Garbanzo Beans (Chick Peas), in the Sacramento and Northern San Joaquin Valleys – 2018”

“Sample Costs to Produce Garbanzo Beans (Chick Peas), in the Southern San Joaquin Valley – 2018

These studies and other sample cost of production studies for many commodities are available. They can be downloaded from the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu.

 

For additional information or an explanation of the calculations used in the studies, contact the Agricultural Issues Center at (530) 752-4651 or the local UCCE Farm Advisors; Sarah Light, selight@ucanr.edu, Rachael Long, rflong@ucanr.edu, Michelle Leinfelder-Miles, mmleinfeldermiles@ucanr.edu, or Nicholas E. Clark, neclark@ucanr.edu.

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AIC Presentations at the 2017 Western Alfalfa & Forage Symposium

1. THE FARM BILL AND THE WESTERN HAY INDUSTRY
pdf of presentation slides: cail.ucdavis.edu/publications/2017AlfalfaANDForage.pdf
video: http://lecture.ucanr.edu/Mediasite/Play/1d3a5333d9744d7ca739ae21b668a6e51d
Daniel A.Sumner and William A. Matthews
– Leaders of Agriculture Committees in Congress say the new farm bill is coming in early 2018 (They seldom do what they say, but maybe this time.)
–  Commodity focus on higher subsidy rates and new subsidies for cotton and dairy
–  Crop insurance and insurance-style programs have emerged as central
–  But hay gets none of this! So why does it matter to a western hay and forage crowd?

2. THE DRIVERS OF WESTERN HAY AND FORAGE EXPORTS
pdf of presentation slides: cail.ucdavis.edu/publications/Farm bill and Hay 2017.pdf
video: http://lecture.ucanr.edu/Mediasite/Play/dcc78ef86d6e482d89b440ecdb6cc0131d
William A. Matthews and Daniel A. Sumner
–  The export of Western-produced forage crops has increased over the past decade, with volume of exports increasing by 86 percent from 2007 to 2017.
–  Continued growth in Western exports depends on:
–  Western production of hay and other forage
–  Domestic demand for hay and other forage
–  Export growth also depends on:
Forage demand in foreign markets.
Forage supply from foreign suppliers
–  This presentation reviews the available data and economic factors driving the export markets

 

 

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Effects of Crop Insurance Premium Subsidies on Crop Acreage

Jisang Yu, Aaron Smith, Daniel A Sumner
American Journal of Agricultural Economics, Volume 100, Issue 1, 1 January 2018

Click here for full paper: https://academic.oup.com/ajae/article/100/1/91/4443107

Crop insurance premium subsidies affect patterns of crop acreage for two reasons. First, holding insurance coverage constant, premium subsidies directly increase expected profit, which encourages more acreage of insured crops (direct profit effect). Second, premium subsidies encourage farms to increase crop insurance coverage. With more insurance coverage, farms obtain more subsidies, and farm revenue becomes less variable as indemnities offset revenue shortfalls, so acreage of insured crops likely increases (indirect coverage effect). By exploiting exogenous policy changes and using approximately 180,000 county-crop-year observations, we estimate the sum of these two effects of premium subsidies on the pattern of U.S. acreage across seven major field crops. We estimate that a 10% increase in the premium subsidy causes a 0.43% increase in the acreage of a crop in a county holding the premium subsidy of its competing crop constant. Taking into account the small share of premium subsidies in expected crop revenue, this subsidy impact is analogous to an own-subsidy acreage elasticity of 1.24, which exceeds own-price acreage elasticity estimates in the literature. One explanation for the larger acreage response to premium subsidies is that insurance causes an indirect coverage effect in addition to a direct profit effect.

 

 

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