Bishop, C. and Curtis, K. 2008, Northwestern Nevada Leaf Lettuce Production Costs and Returns, 2008, University of Nevada Cooperative Extension

INTRODUCTION

Sample costs and returns to establish and produce ‘leaf lettuce’ under sprinkler and drip irrigation in Northwestern Nevada are presented in this publication. ‘Leaf lettuce’ includes greenleaf, redleaf, endive, escarole, butter, and romaine types. Spring Mix may consist of various mixtures of these and other ‘baby’ salad greens. This publication is intended to be a guide used to make production decisions, determine potential returns and prepare business and marketing plans. Practices described are based on the production practices considered typical for this crop and region, but may not apply to every situation. The “Your Farm” column in Tables 1 & 2 is provided for your use.

lettuce crops

ASSUMPTIONS

The following assumptions refer to Tables 1-3, and reflect the typical costs and returns to establish and produce leaf lettuce under sprinkler and drip irrigation in Northwestern Nevada. The practices described are not the recommendations of the University of Nevada, Reno, but rather the production practices and materials considered typical of a well-managed farm in the region, as determined by the best available literature in April 2008. Costs, materials, and practices are not applicable to all situations, as establishment and cultural practices vary among growers within the region.

Table 1: Northwestern Nevada Leaf Lettuce Production Costs & Returns, 400 acres, 2008

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Table 2: Investment Summary

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Table 3: Monthly Cash Flow

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Farm

The representative farm consists of 402 acres of land, on which 400 acres is cultivated for leaf lettuce production and 2 acres are used for owner housing, a machine shop and roads. During the growing season the enterprise will produce one harvest with total production at 10 tons (or 80 boxes of 25 wt) of leaf lettuce per acre. The minimum land market value in 2008 was approximately $11,500.00 per acre for agricultural land in northwestern Nevada with water rights.

plowing crops

Land Preparation

Stubble from the previous planting is disked across the previous crop rows. The ground is ripped to break up the soil to improve water infiltration and fertilizer penetration. The field is then disked twice, first with a heavy disk, followed by a light disk, and land planed to remove small high and low spots. Five hundred pounds of ammoniated phosphate (11-52-0* at $209.50/acre) is spread prior to listing the beds. Beds are listed to a 40 inch width.

Sub-surface drip tape is installed under the beds and set spot sprinklers are laid between beds. The beds are then pre-irrigated with the set spot sprinklers to allow for a moist bed at planting.

Tractor

Planting

In mid-April, pelleted seed is planted by precision planter at 160,000 seeds per acre at a cost of $224.00 per acre.

seeds

Production Cultural Practices and Material Inputs

Irrigation

Irrigation begins in April and continues until the middle of June. The set spot sprinklers are used to germinate the lettuce, and then are removed from the fields. Irrigation occurs every five days through the buried drip tape increasing in frequency to every three days as the season progresses. Irrigation costs shown in Tables 1 and 2 cover the per acre cost of water at $25.00 per acre foot, plus an administration fee of $50.00 per land parcel, which is assumed to be one parcel per every 50 acres, or eight for the 400 acre farm. Maintenance costs on ditches, such as hauling dirt to fix wash-outs, broken head gates, and machinery costs to weed the ditches are $400.00 annually. Material costs for the drip tape itself are $500.00 per acre; filters and other necessary parts cost $240.00 per acre and have a five year life for a per acre per year cost of $48.00. Diesel for the portable pumps is an additional $32.00 an acre. Costs of pumping for the drip tape are $1,011.00 per month for the four month season for all 400 acres. Total irrigation costs excluding labor and system costs are $627.00 per acre.

irrigation controller

Fertilization

In early May, fluid fertilizers are spread by the drip irrigation system. Two hundred and twenty pounds of commercial fertilizer with a nitrogen content of 32-0-0, (UN32* at $52.50/acre) is normally applied.

Pest Management

A variety of pest management methods are used depending on pest population cycles. Pest treatment will normally begin in April.

Weeds

Most herbicides that are commonly used will cause damage to leaf lettuce crops. Therefore, weed control is completed by hand weeding twice during the season and costs are included in labor calculations.

Insects

Several insects are threats to leaf lettuce production. Silverleaf whiteflies are a common pest and can be controlled by injection application of Admire* at planting ($66.25/acre) or by application of Lannate* during the growing season for moderate to heavy infestations. Other pests include aphids, cutworms and loopers. Aphids can be controlled by the application of one gallon of ladybugs per acre at a cost of $51.75 per acre. Caterpillars and destructive worms can be controlled with ten pounds per acre (at a cost of $220.00/acre) of bacillus thuringiensis, a naturally occurring mineral available under the brand name Dipel*. Total insect control costs are $338.00/acre not including labor.

lady bug

Vertebrates

Birds are a common vertebrate problem at planting in leaf lettuce stands. People watching the fields with shotguns are believed by producers to be the most effective treatment against seed loss. Per hour labor costs are included in labor calculations.

growing lettuce

Harvest

Harvest occurs in mid-June and is completely done by hand; the leaf lettuce is field packed into 25 pound boxes. After packing, the lettuce is refrigerated until it can be shipped to market via refrigerated trucks.

Labor

The owner/operator wage is based on an allowance to the owner/operator of $75.00 per acre. Hired labor costs for the 400 acre farm are $1,600,000. All employee benefits, payroll taxes, and worker’s compensation insurance are included in labor costs. Employee housing and associated utilities are included in the farm investment costs.

Utilities

Current utilities rates calculated using information from Nevada Power and. SWGAS Base utility costs of $350 per month for the household were combined with costs of $7 per acre per year to allow for utilities for outbuildings and shops.

Yield

The 400 acre farm yields 4000 tons (or 320000 boxes of 25wt) of mixed variety leaf lettuce annually.

Returns

Returns are based on 2006 National Agricultural Statistic Services reported prices for national averages. An estimated price of $0.35 per pound was used to calculate returns. Leaf lettuce returns can vary with extreme fluctuation both during the growing season and from year to year as well as differing by location due to market conditions. For this reason, risk analysis should be a consideration of any planting decisions.

leaf lettuce

Overhead and Capital Recovery Costs

Cash Overhead

Cash overhead consists of various cash expenses paid out during the year. These costs include property taxes, interest, office expenses, liability and property insurance, as well as investment/machinery repairs. A complete listing of farm investments and associated costs can be found in Table 3.

Interest on Operating Capital

Total operating capital is calculated based on 80 percent of total operating (variable) costs. The interest on operating capital is calculated at a rate of 6.5 percent for the four month production cycle.

Property Taxes

Property taxes in Nevada differ across counties. For the purposes of this publication, investment property taxes are calculated at 1 percent of the average asset value of the property.

Insurance

Insurance on farm investments vary, depending on the assets included and the amount of coverage. Property insurance provides coverage for property loss at .666 percent of the average asset value. Liability insurance covers accidents on the farm at an annual cost of $1,749.00.

Fuel and Lube

The fuel and lube for each piece of equipment is calculated at 8 percent of the purchase price.

Investment Repairs

Annual repairs on all farm investments or capital recovery items that require maintenance are calculated at 2 percent of the purchase price for buildings, improvements, and equipment and 7 percent of the purchase price for machinery and vehicles.

Office & Travel

Office and travel costs are estimated at $3,000.00 for an average year. These expenses include office supplies, telephone service, Internet service, and travel expenses to educational seminars.

Capital Recovery

Capital recovery costs are the annual depreciation (opportunity cost) of all farm investments. Capital recovery costs are calculated using straight line depreciation. Farm equipment may be purchased new or used, depending on producer panel preferences.

Salvage Value

Salvage value is 10 percent of the new purchase price, which is an estimate of the remaining value of an investment at the end of its useful life. The salvage value for land is the purchase price, as land does not normally depreciate.

Average Asset Value Computation

(Purchase Price + Salvage Value divided by 2)

Straight Line Depreciation Computation

(Purchase Price - Salvage Value divided by Useful Life)

*The information given herein is supplied with the understanding that no discrimination is intended and no endorsement by Cooperative Extension is implied.

REFERENCES

Land and Farm (2008). Current pricing for agricultural properties with water rights in northwestern Nevada.

Meister, Herman S. (2004). Sample Cost to Establish and Produce Leaf Lettuce Imperial County – 2004. Bulletin #LT-IM-04-1. University of California Cooperative Extension.

Smathers, Robert (2007). The Costs of Owning and Operating Farm Machinery in the Pacific Northwest 2005. A Pacific Northwest Publication #346. University of Idaho, Washington State University, and Oregon State University.

Takele, Etaferahu, Jose Aguiar, and Delos Walton (1996). Production Practices and Sample Costs to Produce Loose Leaf Lettuce, Coachella Valley, Riverside County. University of California Cooperative Extension.

NOTES

Sample production costs and returns publications for significant agricultural products in various regions of Nevada are available online at the University of Nevada Cooperative Extension Web site at UNCE For additional information, contact the Department of Resource Economics at the University of Nevada, Reno at (775) 784-6701 or your local University of Nevada Cooperative Extension office.

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