2000 Black Raspberry Budget
"Pick Your Own" Sales
1 Acre
  ITEM     YEAR        
YOUR
          0 1 2 3 4 5 6 7 8 9 10 TOTAL/A   BUDGET
INCOME 1,2
Black Raspberries Yield (lbs/A) 0 0 400 1200 2400 2800 3000    3,000    2,800    2,400        2,200    20,200  
Price 2.25 /lb. $900 $2,700 $5,400 $6,300 $6,750 $6,750 $6,300 $5,400 $4,950 $45,450  
VARIABLE  COSTS/A
Cover Crop Seed 3 10 60 70  
Plants 4 2340 2,340  
Fertilizer 5 45 5 9 17 17 17 17 17 17 17 17 191  
Lime 15 15  
Herbicides 5 15 15 150 150 150 150 150 150 150 150 150 1,380  
Insecticides 5 15 15 15 15 15 15 15 15 15 135  
Fungicides 5 30 190 190 190 190 190 190 190 190 190 1,740  
Pesticides 6 15 45 355 355 355 355 355 355 355 355 355 3,255  
Straw Mulch 7 200 200  
Hired Labor - Establishment 8 0 270 0 0 0 0 0 0 0 0 0 270  
Hired Labor - Winter Pruning 9 0 0 194 194 239 239 239 239 239 239 239 2,057  
Hired Labor - Summer Pruning 10 0 0 95 95 108 108 108 108 108 108 108 945  
Hired Labor - Supervisory 11 0 0 90 90 90 90 90 90 90 90 90 810  
Marketing Costs 12 150 150 150 150 150 150 150 1,050  
Machinery Operating Expense 5 15 10 10 15 15 15 15 15 15 15 145  
Custom Machine Hire 13 33 125 158  
Miscellaneous 14 15 15 15 15 15 15 15 15 15 15 15 165  
Interest on Oper. Cap. 15 14 281 101 102 121 121 121 121 121 121 121 1,343    
TOTAL VARIABLE COSTS 167 3401 1223 1231 1464 1464 1464 1464 1464 1464 1464 16,269  
FIXED COSTS/A
Operator Labor Charge 16 200 55 55 55 55 55 55 55 55 55 55 750  
Mach. And Equip. Charge 17 125 325 250 250 125 125 125 125 125 125 125 1,825  
Land Charge 100 100 100 100 100 100 100 100 100 100 100 1,100  
Irrigation System 18 900 10 10 10 10 10 10 10 10 10 990  
Trellis 19 1120 1,120  
Operating Overhead 20 45 45 45 45 45 45 45 45 45 45 450  
Co-op Fee 21 50 10 10 10 10 10 10 10 10 10 140  
Liability Insurance 22 50 50 50 50 50 50 50 50 50 50 500  
Management Charge 23 100 100 45 135 270 315 338 338 315 270 248 2,473    
TOTAL FIXED COSTS 525 2745 565 655 665 710 733 733 710 665 643 9,348  
TOTAL COSTS 692 6146 1788 1886 2129 2174 2196 2196 2174 2129 2106 25,616  
RETURN ABOVE VARIABLE COSTS -167 -3401 -323 1469 3936 4836 5286 5286 4836 3936 3486 29,181  
RETURN OVER TOTAL COSTS -692 -6146 -888 814 3271 4126 4554 4554 4126 3271 2844 19,834  
PRESENT VALUE RETURNS 24 -692 -5587 -734 611 2234 2562 2570 2337 1925 1387 1096 7,711  
1 Production may or may not take place in year 2 and 3.  Well managed plants are much more likely to produce berries in early years.  Early production of berries is
 critical to the economic success of the enterprise.
2 One quart of raspberries weighs about 1.5 lbs.
3 Annual rye is used in year 0 then plowed under.  A perennial grass in then seeded in year 1 to provide a permanent sod between rows of berries.
4 1800 plants @ $1.30/plant.
5 See OSUE Bulletin 782-99 "Brambles - Production, Management, and Marketing" for fertilizer recommendations.
6 See OSUE bulletin 506B2 "Ohio Commercial Small Fruit & Grape Spray Guide" for pesticide recommendations.
7 100 bales @ $2.00/bale.  Only used in year 1.
8 Establishment labor requires 30 hours for planting and setting up the trellis and irrigation.  Labor rate is $9.00/hour.
9 Winter pruning requires 21.5 hours in year 2 and 3 and 26.5 hours in year 4-10.  Labor rate is $9.00/hour.
10 Summer pruning requires 10.5 hours in years 2 and 3 and 12 hours in years 4-10.  Labor rate is $9.00/hour.
11 Supervisory labor involves directing traffic and pickers, handling money, and providing service to the customers.  Labor rate is $9.00/hour.
12 Marketing costs for labor and supplies required for retail sales.  This cost can vary greatly depending upon type of facilities and marketing programs used.
13 Custom hire of plowing, disking, making raised beds, and driving trellis stakes.
14 Includes, soil tests, small tools, supplies, etc…
15 Interest charged at 9%.
16 Operator labor is for unpaid operator and/or family labor.  Labor rate is $10.00/hour.
17 Machinery and equipment charges are equivalent to the cumulative custom charges for the machine operations required for the enterprise.
18 Irrigation system includes pumps and 2" main lines at $1500 divided over 5 acres and feeder lines to plants at 600$.  Example: $1500/5 acres + $600/acre = $900/acre.
After initial installation, $10/year is required for maintenance and repairs.
19 Trellis costs include 100 - 4" wooden posts, 35 - 5" end posts, 6000 ft. high tensile wire, and miscellaneous parts.
20 Operating overhead costs include expenses such as pick-up truck, access road, restroom facilities, retail facility, advertising, and taxes.  Divided over
an assumed 10 acres of production.   Example: $450/10A=$45/A
21 Co-ops are available for producers to participate in to market raspberries.  If participation in a co-op does not occur, ignore associated cost.
  Cost reflects yearly fee.   Divided over an assumed 10 acres of production.  Example:  $100/10 acres=$10/acre  
22 Liability insurance covers issues such as injury, advertising, and accidents related to the commercial activity of the enterprise. 
Divided over an assumed 10 acres of production.  Example:  $500/10 acres = $50/acre.  
23 Management charge is an opportunity cost for the operator's management ability.
                                     
Labor Requirements (hours/A)
Year
0 1 2 3 4 5 6 7 8 9 10 TOTAL
Hired Labor - Establishment 0 30 0 0 0 0 0 0 0 0 0 30
Hired Labor - Winter Pruning 0 0 21.5 21.5 26.5 26.5 26.5 26.5 26.5 26.5 26.5 228.5
Hired Labor - Summer Pruning 0 0 10.5 10.5 12 12 12 12 12 12 12 105
Hired Labor - Supervisory 0 0 10 10 10 10 10 10 10 10 10 90
Operator Labor Charge 20 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 75
Hired Labor Rate =  $9.00 /hour Operator Labor Rate = 10.00 /hour
24 Present Value Calculations, Explanation, and Interpretation
Since a black raspberry operation occurs over as many as ten years, it is important to examine the time value of money associated with the enterprise.  Time value of money is based on the premise that $1 today is worth more than $1 in the future.  This is basically because the $1 today can be invested and appreciate in value until some time in the future. Therefore in regards to the raspberry enterprise, $1 of return in year one would be worth more than $1 of return in year ten.  Returns in future years need to be discounted to reflect the time value of money.  The following table lists the future value and present value of returns from the enterprise.  Explanations and interpretations of the table follow at the bottom of the page.
Returns Over Total Costs Cumulative Returns Over Total Costs Annual Present Value Cumulative Present Value Discount Rate = 10%
Year 0 -$692 -$692 -$692 -$692
1 -$6,146 -$6,838 -$5,587 -$6,279 The discount rate is the degree to which the future values are discounted to reflect current values.  It is generally assumed to be equivalent to the  amount you could earn in alternative investment opportunities.
2 -$888 -$7,726 -$734 -$7,013
3 $814 -$6,912 $611 -$6,401
4 $3,271 -$3,641 $2,234 -$4,167
5 $4,126 $486 $2,562 -$1,605
6 $4,554 $5,039 $2,570 $965
7 $4,554 $9,593 $2,337 $3,302
8 $4,126 $13,719 $1,925 $5,227
9 $3,271 $16,990 $1,387 $6,614
11 10 $2,844 $19,834 $1,096 $7,711
Annuity Equivalent = $1,255
Returns Over Total Costs = Annual revenue generated by the enterprise
Cumulative Returns Over Total Costs = Running total of the annual revenue generated by the enterprise (explained below).
Present Value = Annual revenue generated by the enterprise discounted to present values.
Cumulative Present Value = The running total of the annual revenue generated by the enterprise discounted to present values (explained below).
Annuity Equivalent = See below
Returns Over Total Costs vs. Annual Present Value Returns: Over the life of the planting, the enterprise will generate $19,834 in total returns.  However, since much of the return comes in future years, it is not the same as having $19,834 in the operator's pocket today.  The cumulative present value column indicates that if the operator was given the equivalent return  in one lump sum today, it would be worth $7,711. The difference of the total returns and the total present value returns is a result of the time value of money.
Cumulative Returns Over Total Costs Explained:  Cumulative returns keeps a running total of the revenue generated by the enterprise.  For example, year 1 generates -$692 and year 2 generates -$6,146 for a cumulative revenue of -$6,838.  In year ten, the cumulative returns are the total amount generated by the enterprise over the life of the plants.  Therefore, the enterprise will generate a total of $19,834 over its 11 year life.  Cumulative values are helpful in determining when initial outlays (but not interest) will be paid back.  This payback occurs when the cumulative returns go from negative to positive.  In this case, initial outlays are paid back by year 5. 
Cumulative Present Value Explained :  The cumulative present values are the running total of the present values generated each year by the enterprise.  In this case, interest is taken into account when determining when initial outlays are paid back.  Therefore, on a present value basis, initial outlays will not be paid back until year 6. 
Annuity Equivalent Explained :  An annuity equivalent is the average amount of revenue that the enterprise must generate every year to produce the total present value equivalent.  For example, the raspberry budget must average $1,255 in revenue every year in order to generate $7,711 in present value revenue over the life of the enterprise.  While this value may not be critical to a single enterprise, it is an excellent means of comparing the average return of various enterprises that may have different lengths of production lives.  For example, a producer could use annuity equivalents to compare the average annual return on raspberries (10 year life) versus apples (25 year life).
* Income taxes are not considered in this analysis but the investor's expected income tax rates are an important consideration in analyzing the financial impact of an investment in a perennial crop such as raspberries.