2000 Black Raspberry Budget
 Pre-Picked Wholesale 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 $2.50 /pint $0 $0 $1,333 $4,000 $8,000 $9,333 $10,000 $10,000 $9,333 $8,000 $7,333 $67,333  
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  
Containers 8 0 0 27 80 160 187 200 200 187 160 147 1,347  
Hired Labor - Establishment 9 0 270 0 0 0 0 0 0 0 0 0 270  
Hired Labor - Winter Pruning 10 0 0 194 194 239 239 239 239 239 239 239 2,057  
Hired Labor - Summer Pruning 11 0 0 95 95 108 108 108 108 108 108 108 945  
Hired Labor - Harvesting 12 0 0 450 1350 2700 3150 3375 3375 3150 2700 2475 22,725  
Hired Labor - Moving Berries 13 0 0 2 7 13 16 17 17 16 13 12 112  
Marketing Costs 14 0 0 67 200 400 467 500 500 467 400 367 3,367  
Machinery Operating Expense 5 15 10 10 15 15 15 15 15 15 15 145  
Custom Machine Hire 15 33 125 158  
Miscellaneous 16 15 15 15 15 15 15 15 15 15 15 15 165  
Interest on Oper. Cap. 17 14 281 142 241 394 443 468 468 443 394 369 3,655    
TOTAL VARIABLE COSTS 167 3401 1720 2917 4770 5365 5662 5662 5365 4770 4473 44,272  
FIXED COSTS/A
Operator Labor Charge 18 200 55 55 55 55 55 55 55 55 55 55 750  
Mach. And Equip. Charge 19 125 325 250 250 125 125 125 125 125 125 125 1,825  
Land Charge 100 100 100 100 100 100 100 100 100 100 100 1,100  
Irrigation System 20 900 10 10 10 10 10 10 10 10 10 990  
Trellis 21 1120 1,120  
Operating Overhead 22 23 23 23 23 23 23 23 23 23 23 225  
Co-op Fee 23 50 100 100 100 100 100 100 100 100 100 950  
Liability Insurance 24 50 50 50 50 50 50 50 50 50 50 500  
Management Charge 25 100 100 67 200 400 467 500 500 467 400 367 3,567    
TOTAL FIXED COSTS 525 2723 654 788 863 929 963 963 929 863 829 11,027  
TOTAL COSTS 692 6123 2374 3705 5633 6294 6625 6625 6294 5633 5302 55,298  
RETURN ABOVE VARIABLE COSTS -167 -3401 -386 1083 3230 3968 4338 4338 3968 3230 2860 23,062  
RETURN OVER TOTAL COSTS -692 -6123 -1040 295 2367 3039 3375 3375 3039 2367 2031 12,035  
PRESENT VALUE RETURNS 26 -692 -5567 -860 222 1617 1887 1905 1732 1418 1004 783 3,450  
1 Production may or may not take place in year 2 and 3.  Well managed plants are 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 Containers cost $0.10/pint.
9 Establishment labor requires 30 hours for planting and setting up the trellis and irrigation.  Labor rate is $9.00/hour. Labor requirements below.
10 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.  Labor requirements below.
11 Summer pruning requires 10.5 hours in years 2 and 3 and 12 hours in years 4-10.  Labor rate is $9.00/hour.  Labor requirements below.
12 Harvesting labor estimates assume  8 pounds of berries picked per hour.  Labor rate is $9.00/hour.  Labor requirements below.
13 Labor is required to move berries from field to refrigeration then to truck.  Labor also needed for labeling and taking containers back to field. 
Assumes 1000 pints can be moved per hour.  Labor rate is $9.00/hour.  Labor requirements below.
14 Marketing costs for supplies and refrigeration.  Marketing charge is $0.25/pint.  This cost can vary greatly depending upon type of facilities and marketing programs used.
15 Custom hire of plowing, disking, making raised beds, and driving trellis stakes.
16 Includes, soil tests, small tools, supplies, etc…
17 Interest charged at 9%.
18 Operator labor is for unpaid operator and/or family labor.  Labor rate is $10.00/hour.
19 Machinery and equipment charges are equivalent to the cumulative custom charges for the machine operations required for the enterprise.
20 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.
21 Trellis costs include 100 - 4" wooden posts, 35 - 5" end posts, 6000 ft. high tensile wire, and miscellaneous parts.
22 Operating overhead costs include expenses such as pick-up truck, access road, and taxes.  Divided over an assumed 10 acres of production.   Example: $225/10A=$22.5/A
23 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  
24 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
25 Management charge is an opportunity cost for the operator's management ability.
                                     
Labor Requirements
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 - Harvesting 0 0 50 150 300 350 375 375 350 300 275 2525
Hired Labor - Moving Berries 0 0.0 0.2 0.7 1.5 1.7 1.9 1.9 1.7 1.5 1.4 12.5
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
26 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 (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, whereas $1 in the future can not appreciate in value or collect interest. 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
Year 0 -$692 -$692 -$692 -$692 Discount Rate = 10%
1 -$6,123 -$6,815 -$5,567 -$6,258 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 -$1,040 -$7,855 -$860 -$7,118
3 $295 -$7,560 $222 -$6,896
4 $2,367 -$5,193 $1,617 -$5,279
5 $3,039 -$2,153 $1,887 -$3,392
6 $3,375 $1,222 $1,905 -$1,487
7 $3,375 $4,597 $1,732 $245
8 $3,039 $7,637 $1,418 $1,663
9 $2,367 $10,004 $1,004 $2,667
10 $2,031 $12,035 $783 $3,450
Annuity Equivalent = $561
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 $12,035 in total returns.  However, since much of the return comes in future years, it is not the same as having $12,035 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 $3,450. 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 -$6,123 for a cumulative revenue of -$6,815.  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 $12,035 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 6. 
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 7. 
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 $561 in revenue every year in order to generate $3,450 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.