Representative Farm
Models: Thompson
Seedless Grapes
Jay E. Noel
Director, California Institute for the Study of Specialty
Crops, California Polytechnic State University
Mechel Paggi
Director, California Agribusiness Center, CSU, Fresno
Representative Farm Model
Overview
Representative farm is the size of operation
most likely to be in production in a given
region.
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NOT AVERAGE
Model’s Capabilities
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A Decision Making tool
Policy Analysis
Market/Production Analysis
Several Interrelated Worksheets in Excel
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Calculates Key Output Variables (KOVs)
Pro Forma Financial Worksheet
Income Statement 2005-2010
• KOV: Net Income
Statement of Cash Flows
• KOV: Cash Flow Position
Balance Sheet
• KOV: Debt to Asset Ratio, Net Present Value,
Net Worth, Liquidity, etc
Representative Farm Models Capture
Price and Yield Variability
Prices and Yields allowed to fluctuate around a
given mean forecasted price and yield for each
year being simulated.
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Based on forecasted mean price and yield and
historical price and yield variability.
Captures the yield and price risk involved in
agricultural production.
One hundred price and yield combinations are
selected around each year’s forecasted mean price
and yield giving one hundred net revenue and cash
flow estimates for each year in the simulation.
Allows for more “realistic” analyses
Thompson Seedless Model
Fresno Region
115 acres in production; 120 owned on farm
Allows for any combination of Raisin and
Green production
Any percentage of Green production can be
contracted
Allows for either Well or District Water costs
Can switch the mean yield between low,
medium, or higher yields (8.5,11,15
tons/acre)
Scenario Yields Tons/Acre
Year
Low
Green
Yield
Low
Raisin
Yield
Medium
Green
Yield
Medium
Raisin
Yield
High
Green
Yield
High
Raisin
Yield
2006
8.5
2.04
11.03
2.65
15.01
3.6
2007
8.5
2.04
11.03
2.65
15.00
3.6
2008
8.57
2.06
11.13
2.67
15.14
3.63
2009
8.59
2.06
11.15
2.68
15.18
3.64
2010
8.61
2.07
11.18
2.68
15.21
3.65
Scenario Prices $/Ton
Year
Cash Market
Green Price
Contract Green
Price
Cash Market
Raisin Price
2006
$99.00
$165.00
$929.60
2007
$99.00
$165.00
$939.40
2008
$99.00
$165.00
$950.28
2009
$99.00
$165.00
$960.75
2010
$99.00
$165.00
$971.25
Fresno Production Costs (numbers include overhead costs)
Green Cultural Costs ($/acre)
Raisin Cultural Costs ($/acre)
Irrigate Well
Irrigate District
Fertilize
Weed Control
Insect/Disease Control
$121.00
$0.00
$100.00
$35.00
$125.00
Lube and Repair
$32.00
Growth Regulator
$0.00
Labor
Fuel
$300.00
$35.00
Total Cultural Production Costs per
acre
Irrigate District
$748.00
Picking
$123.00
Rolling
$28.00
Box
$12.00
Paper
$25.00
Hauling
$10.00
Turning
$28.00
$226.00
$121.00
$0.00
Fertilize
$50.00
Weed Control
$20.00
Insect/Disease Control
$125.00
Lube and Repair
$32.00
Growth Regulator
$0.00
Labor
Fuel
Raisin Harvest Costs ($/ton)
Total Harvest Costs per ton (Paper
Drying)
Irrigate Well
$300.00
$35.00
Total Cultural Costs per Acre
$683.00
Green Harvest Costs
Picking ($/acre)
$200.00
Hauling ($/ton)
$10.00
Loan Information
Land Loan
• $200,000 principle remaining in 2005 at 7.5%
interest rate
• Amortized over 15 years
• Net Income accounts for interest payments
• Cash Flow accounts for principle payments
Operating Loan
• The interest on operating loans is built into
cultural costs.
UCD Production Costs
Raisin Cultural Costs ($/acre)
Irrigate
Green Cultural Costs ($/acre)
$121
Fertilize
$8
Weed Control
$9
Irrigate
$170
Fertilizer
$16
Insect/Disease Control
$64
Weed Control
$80
Lube and Repair
$32
Insect/Disease Control
$97
Growth Regulator
$0
Lube and Repair
$13
$11
Fuel
$30
Labor
$427
Tie Vines
Total Cultural Costs ($/acre)
$691
Labor
Raisin Harvest Costs ($/acre)
Fuel
Harvest
$120
Bin Handling
$173
Haul
Total Harvest Costs (Drying on
vine)
$11
$304
$436
$70
Total Cultural Costs ($/acre)
$893
Green Harvest Costs ($/acre)
$345
Scenarios
Break Even Analyses Using Fresno
Production Costs
50% Green 50% Raisin Production 0% Contracted Green
Production
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Low Yields (8.5), Medium Yields (11), High Yields (15)
50% Green 50% Raisin Production 50% Contracted Green
Production
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Low Yields, Medium Yields, High Yields
100% Green 0% Contracted Green Production
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Low Yields, Medium Yields, High Yields
Net Income Break Even Analysis
50% Green 50% Raisin
0% Contracted Green Production
Low Yields Net Income
Medium Yields Net
Income
100%
100%
100%
90%
90%
90%
80%
80%
80%
70%
60%
High Yields Net Income
0.71
70%
70%
60%
60%
50%
50%
40%
30%
0.00
0.29
30%
30%
20%
20%
10%
0%
0%
Net Income 2006
50%
1.00
40%
40%
20%
10%
0.94
0.00
0.06
Net Income 2006
10%
0%
0.00
Net Income 2006
Net Income Break Even Analysis
50% Green 50% Raisin
50% Contracted Green Production
Low Yield Net Income
Medium Yield Net
Income
100%
100%
100%
90%
90%
90%
80%
80%
80%
70%
70%
70%
60%
50%
High Yield Net Income
0.94
50%
40%
60%
60%
1.00
50%
40%
40%
30%
30%
30%
20%
20%
20%
10%
10%
10%
0%
0.00
0.06
Net Income 2006
0%
0.00
Net Income 2006
0%
1.00
0.00
Net Income 2006
Net Income Break Even Analysis
100% Green
0% Contracted Green Production
8.5 tons/acre
Net Income
11 tons/acre
Net Income
100%
100%
100%
90%
0.21
90%
80%
0.00
80%
15 tons/acre
Net Income
0.30
90%
80%
70%
70%
60%
60%
60%
50%
50%
50%
40%
0.79
40%
0.00
0.70
70%
40%
30%
30%
20%
20%
20%
10%
10%
10%
0%
0%
0%
Net Income 2006
Net Income 2006
0.59
0.00
30%
0.41
Net Income 2006
2010 Cash Flow Break Even Analysis
100% Green
0% Contracted Green Production
2010 Cash Flow
8.5 tons/acre
100%
0.00
2010 Cash Flow
11 tons/acre
100%
0.10
0.00
2010 Cash Flow
15 tons/acre
100%
90%
90%
80%
80%
80%
70%
70%
70%
60%
60%
60%
50%
1.00
50%
0.90
90%
50%
40%
40%
30%
30%
30%
20%
20%
20%
10%
10%
10%
0%
0%
0%
Cash Flow 2010
Cash Flow 2010
0.76
40%
0.00
0.24
Cash Flow 2010
’06 – ’10 Net Present Value Break Even Analysis
100% Green
0% Contracted Green Production
Net Present Value
8.5 tons/acre
100%
0.01
0.00
Net Present Value
11 tons/acre
Net Present Value
15 tons/acre
100%
100%
90%
90%
90%
80%
80%
70%
70%
70%
60%
60%
60%
50%
50%
50%
0.99
0.24
0.00
80%
40%
40%
40%
30%
30%
30%
20%
20%
20%
10%
10%
10%
0%
0%
0%
NPV
0.76
NPV
0.86
0.00
0.14
NPV