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March 2005
2005 Guidelines for Estimating
Irrigated Processing Potato
Production Costs
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Potato acreage in Manitoba has increased significantly in the last 10
years. Expansion in the French Fry processing industry has been the main
driver of this increase. This expansion has placed Manitoba second only
to Prince Edward Island in total area planted to potatoes. Processing
acreage in Manitoba accounts for over 80% of the total acreage and
results in an annual value-added in excess of $360,000,000. The balance
of the acreage is divided between seed (10,500 acres) and fresh (table)
production (8,000).
The following budget estimates the cost of producing processing potatoes
based on a total land base of 480 acres, with certain input costs based
on 420 acres and a harvested acreage of 399 acres. This is due to the
trend toward the dryland corners not being planted to potatoes, where
pivot irrigation is used. The figures provide an economic evaluation of
processing potatoes required to cover all costs including labour and
investment. Management has not been accounted for in this enterprise
budget.
To estimate a cash flow budget the actual payments on principal and
interest may be substituted for the fixed costs in the budget. As well,
an estimate has to be made to cover family living expenses and funds
required for capital purchases.
Disclaimer: This budget is only a guide
and is not intended as an in-depth study of the cost of production of
this industry. Interpretation and utilization of this information is the
responsibility of the user. If you require assistance with developing
your individual budget, please contact your local Manitoba Agriculture,
Food and Rural Initiatives office.
Irrigated Processing
Potato - Cost of Production 2005
|
| A. |
Operating Costs |
Cost/Acre |
Cost/CWT |
Your Cost |
|
1.01 |
Seed & cutting |
$184.80 |
$0.79 |
__________ |
|
1.02 |
Seed treatment |
$83.12 |
$0.35 |
__________ |
|
1.03 |
Fertilizer |
$120.75 |
$0.51 |
__________ |
|
1.04 |
Herbicides |
$51.58 |
$0.22 |
__________ |
|
1.05 |
Fungicide & Insecticide |
$189.47 |
$0.81 |
__________ |
|
1.06 |
Fuel Costs-Field |
$54.01 |
$0.23 |
__________ |
|
1.07 |
Trucking Costs |
$39.88 |
$0.17 |
__________ |
|
1.08 |
Irrigation Fuel |
$32.48 |
$0.14 |
__________ |
|
1.09 |
Maintenance & Repairs |
$177.94 |
$0.76 |
__________ |
|
1.10 |
Custom Work & Rental |
$83.58 |
$0.36 |
__________ |
|
1.11 |
Hired Labour |
$169.72 |
$0.72 |
__________ |
|
1.12 |
Insurance |
$75.11 |
$0.32 |
__________ |
|
1.13 |
Utilities |
$30.08 |
$0.13 |
__________ |
|
1.14 |
Other Costs |
$74.59 |
$0.32 |
__________ |
|
Subtotal Operating Costs |
$1,367.11 |
$5.83 |
__________ |
|
1.15 |
Interest on Operating |
$37.60 |
$0.16 |
__________ |
|
Total Operating Costs |
$1,404.70 |
$5.99 |
__________ |
|
| B. |
Fixed Costs |
|
2.01 |
Own Land Cost |
$80.00 |
$0.34 |
__________ |
|
2.02 |
Depreciation |
$301.30 |
$1.28 |
__________ |
|
2.03 |
Investment |
$104.05 |
$0.44 |
__________ |
|
Total Fixed Costs |
$485.35 |
$2.06 |
__________ |
|
| C. |
Labour |
|
3.01 |
Own Labour |
$98.00 |
$0.42 |
__________ |
|
| Total Cost of Production |
$1,988.06 |
$8.47 |
__________ |
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Assumptions
- This budget outlines the cost of producing processing potatoes under irrigated
conditions and is based on a pivot system with a river as the water source. (see back page
for details)
- A potato land base of 399 harvested acres was assumed in developing this budget.
The cost of production does not include the cost of maintaining
the corners not under irrigation. The crop
rotation was based on growing potatoes no more than 1 in 3 years.
- Total gross yield per acre was assumed at 276 cwt/acre with marketable yield estimated
at 234.6 cwt/acre. Assumed contract size of 100,000 cwt.
- Crop Insurance is based on premiums for 2005 at the 80% coverage rate.
- All trucking operations related to marketing of processed potatoes were assumed to be
custom hauled to the processors. A rate applicable to hauling potatoes approximately 100
miles was assumed.
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| For more information contact your local Manitoba Agriculture, Food and
Rural Initiatives office |
| Prepared by: |
Peter Blawat, P.Ag.
Farm Management Specialist |
Ian McCartney, P.Ag.
Farm Management Specialist |
Keith Kyle, P.Ag.
Farm Management Specialist |
Bruce Shewfelt, P. Eng
PRFA |
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