Vegetable crop enterprise budgets are designed to assist producers, Extension agents, lenders, and others in estimating the potential costs and returns associated with vegetable production in Alabama. These budgets are assumed to be relevant state-wide

Break-even tables are provided at the bottom of most budgets to indicate what prices and yields will be needed in order to cover crop production variable (out-of-pocket) and fixed costs.

Machinery cost estimates have been provided on the back of each budget. Machinery complements are estimated based on the most typical set and size of equipment used on a particular crop. Investment costs reflect a five-year average purchase price. It is also assumed that only one set of equipment is available to the farm operation.

Net returns above all specified costs are shown for various yields and prices. These charts are based on estimated costs and are for reference only. This chart can be used to give an idea of what could potentially happen to returns if prices or yields vary from expected.
 

Two major types of costs are incurred in production: variable or direct costs, and fixed costs. Variable costs (excluding labor, management, and land charges) are listed under Item 2 in the budgets and fixed costs are listed under Item 4.

Variable costs are generally easier to estimate. These are the out-of-pocket costs that can be allocated to a specific enterprise such as seed, chemicals, etc. Annual cropping decisions are based on these costs. If you can cover these costs in the short-run, i.e. one year, then you should consider producing that crop.

Fixed costs include such items as depreciation, interest and general farm overhead. These costs are much more difficult to allocate to a specific enterprise; however, such costs must be covered by the total mix of enterprises on the farm. In the long-run, both variable and fixed costs must be covered to remain in business.

A machinery complement is developed for each enterprise budget, with depreciation, interest, and insurance calculated on a per-hour and per-acre basis. The table on the following page lists the basic assumptions used in calculating estimated per-acre costs for the various machinery operations in producing these crops.

The first items in the list are self-propelled machines providing their own power. The first five items are tractors with costs figured on a per-hour basis. The remaining self-propelled machines are figured on both a per-hour and per-acre basis. For budgeting purposes, we are interested in the per-acre cost.

The "drawn implements" must be powered by one of the five tractors. The costs of individual operations used in the budgets were developed using the MACHCOST computer program. The procedure employed in the calculations was as follows:

                                                            $5.57 total costs per acre