2000 CHRISTMAS TREE PRODUCTION BUDGET 1
Single Leaf Conifer - Frasier Fir, Canaan Fir, Douglas Fir, and Blue Spruce
Hand Planted - 10 year Rotation 2
Wholesale Sales
  ITEM     YEAR      
YOUR
          1 2 3 4 5 6 7 8 9 10 TOTAL   BUDGET
Christmas Trees (percent  sold) 3 10% 25% 35% 30% 100%  
INCOME
Christmas Trees 1,360 3,400 4,760 4,080 13,600  
800 trees sold over entire rotation
$17 per tree 1000 1000 850 775 700 700 700 700 700 700
VARIABLE  COSTS
Seedlings 4 700 105 805  
Fertilizer 50 50  
Herbicides 60 60 60 40 40 40 40 40 40 40 460  
Insecticides 20 30 40 50 50 50 50 50 340  
Shearing 5 106 97 175 175 175 175 175 175 1253  
Hired Labor 378 243 81 81 81 81 81 81 81 81 1269  
Fuel, Oil, Grease 13 12 11 11 11 11 11 11 11 11 113  
Machinery Repairs 6 5 5 5 5 5 5 5 5 5 51  
Harvesting 6 80 200 280 240 800  
Miscellaneous 7 15 15 15 15 15 15 15 15 15 15 150  
Interest on Oper. Cap. 110 40 27 25 33 34 41 52 59 56 476    
TOTAL VARIABLE COSTS 1332 480 325 304 400 411 498 629 716 673 5767  
FIXED COSTS
Operator Labor Charge 8 90 90 54 54 72 72 90 90 72 72 756  
Mach. And Equip. Charge 9 31 31 31 31 31 31 31 31 31 31 310  
Land Charge 85 85 85 85 85 85 85 85 85 85 850  
Management Charge 10 50 50 50 50 50 50 68 170 238 204 980    
TOTAL FIXED COSTS 256 256 220 220 238 238 274 376 426 392 2896  
TOTAL COSTS 1588 736 545 524 638 649 772 1005 1142 1065 8663  
RETURN ABOVE VARIABLE COSTS -1332 -480 -325 -304 -400 -411 862 2771 4044 3407 7833  
RETURN OVER TOTAL COSTS -1588 -736 -545 -524 -638 -649 588 2395 3618 3015 4937  
PRESENT VALUE RETURNS 11 -1588 -669 -450 -394 -436 -403 332 1229 1688 1279 588  
 
1 No charges for marketing are included due to the wide range of marketing situations found in Ohio.  However, marketing costs
should be added to your budget.  These costs should include the labor, advertising, supplies, and facilities used in the marketing of the trees. 
Marketing costs may be minimal up to $5/tree in operations with an extensive marketing program.
2 No costs are included for reclamation of the ground after the final year of the Christmas Tree stand.  Reclamation may be necessary depending
upon the future use of the ground.
3 1000 trees originally planted, 800 harvested, 200 trees died or were not suitable for sale
4 1000 seedlings planted first year, 150 re-planted second year.  Cost per seedling= $0.70.
5 Shearing costs= $0.125/tree year 3 and 4, $0.25/tree following years.
6 Harvesting includes cutting, baling, transporting to loading area, and loading on vehicle.
Wholesale harvesting costs= $1.00/tree.
7 Includes small tools, soil tests, etc…
8 Labor Charged at $9.00/hour.   It is the labor required of the operator to manage the operation.  Does not include harvesting, marketing or shearing.
See table below for labor requirements.
9 Includes depreciation, interest, and insurance costs.
10 Year 1-6 management charge is $50. Year 7-10 management charge= 5% of sales
Labor Requirements (hours)
Year
Hourly Charge = $9.00 /hour 1 2 3 4 5 6 7 8 9 10 TOTAL
Hired Labor 42 27 9 9 9 9 9 9 9 9 141
Operator Labor (Management) 10 10 6 6 8 8 10 10 8 8 84
11 Returns Over Life of Stand and Time Value of Money
Since a Christmas tree 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 (present value) is worth more than $1 in the future (future value).  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 Christmas tree 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 returns and present value of returns from the enterprise.
Returns Over Total Costs Present Value Discount Rate  = 10%
Year 1 -1588 -$1,588 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.
1 Year 2 -736 -$669
2 Year 3 -545 -$450
3 Year 4 -524 -$394
4 Year 5 -638 -$436
5 Year 6 -649 -$403
6 Year 7 588 $332
7 Year 8 2395 $1,229
8 Year 9 3618 $1,688
9 Year 10 3015 $1,279
TOTAL $4,937 $588
Over the life of the tree stand, the enterprise will generate $4,937 in returns.  However, since much of the return comes in future years, it is not the same as having $4,937 in the operator's pocket today.  The present value column indicates that if the operator was given the equivalent return in one lump sum today (present value), it would be worth $588. The difference of the future value returns and the present value returns is a result of the time value of money.