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  • Author or Editor: Robin G. Brumfield x
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Since World War II, U.S. agriculture has reduced production costs by substituting petrochemicals for labor. Adverse impacts from chemical intensive agriculture include increased pest levels, groundwater and surface water contamination, soil erosion, and concerns about harmful levels of pesticide residues. Sustainable farming programs such as integrated crop management (ICM) and organic farming encourage farmers to use systems that reduce the adverse impacts of chemical agriculture. However, before farmers adopt an alternative system, they must determine that economic benefits from the alternative farming activities exceed the costs incurred. Unfortunately, relatively few studies have compared the cost of organic crop production with conventional production systems. Results of these studies are mixed. In some studies, organic systems are more profitable than conventional systems with organic price premiums, but are not economically viable without price premiums. In one long-term study, the organic system was more profitable than a conventional one if the cost of family labor was ignored, but less profitable if it was included. In some studies, net returns were higher for ICM than for conventional or organic systems, but in others, they were higher. Results also vary on a crop by crop basis.

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The computer program Greenhouse Cost Accounting, available for DOS-based microcomputers and Macintosh computers, is described. The software enables the user to perform cost accounting and to determine the profitability of greenhouse crops. The information can be used by managers to analyze various production, financial, and marketing strategies. The Greenhouse Cost Accounting program uses cost information typically found on income statements and direct cost information for each crop. From these inputs, the program allocates as many costs as possible to individual crops. The remaining unallocated costs are assigned to each crop on a per square-foot-week basis. The computer output provides information on costs and returns on a per crop, per unit, and per square-foot basis. It also provides an income statement showing total costs, allocated costs, and unallocated costs. The output can aid the manager in making decisions about pricing, reducing unprofitable production, controlling costs, and increasing sales of profitable crops. The program also can be used by greenhouse management classes or for extension workshops.

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The environmental horticulture industry (sometimes referred to as the “green industry”) is usually divided into nursery and floriculture crops. The green industry in the northeastern United States is an important component of agricultural production, with over $2 billion in farm cash receipts, equating to 22.4% of all farm cash receipts in the northeastern United States. It is the number one agricultural commodity in five northeastern U.S. states. Competition in the green industry has become fierce. Many factors have put downward pressure on price. These include the recent volatility of fossil fuels and general energy prices, domestic competition, off-shore production, a weakened and stressed economy, and the growth of the mass market. Nationally, the number of producers continues to decline as a direct result of the newly defined economic risks. The industry's profit margins are typically low, leaving little room for growers to absorb significant increases in costs or decreases in revenues. Unlike farmers who produce field crops, nursery and greenhouse firms bear the entire price, market, and production risks because these crops have had no government support programs. This article will discuss what strategies producers in the northeastern United States are using to reduce costs and increase profits in tough economic times. It will analyze how producers have they honed their marketing and management skills to continue to survive and respond to current trends.

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The development of New Zealand's economy was based largely on exports to England. With the formation of the EEC, New Zealand was forced to find other markets and concentrate on a wider variety of export commodities. Marketing boards for specific products with monopoly power have been at the center of agricultural and horticultural exports in New Zealand. New Zealand has concentrated on developing new varieties, premium quality, research on postharvest handling, branding, and other marketing procedures to compete in the world market and give producers a good return.

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A 1995 study of 22 Australian nurseries 1) developed a profile of production, management, and profitability; 2) compared their performance to relevant U.S. benchmarks; and 3) identified trends and potential areas of improvement in the management of Australian nursery enterprises. The study confirmed that Australian nurseries incur high labor costs (38.8% of sales) comparable to United States nurseries, while costs of materials and supplies were lower than in the United States. Australian managers were concerned with marketing and recruiting and keeping labor rather than increasing capital investment to enhance production efficiency. Capital expenditures were funded from internal cash flow rather than external financing. Many of the nursery managers used relatively simple performance indicators, and most business objectives were stated in general terms. Concerns about the viability of the industry included oversupply, the growth in chain stores' business, factors eroding the demand for nursery products, and greater regulation.

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Today's farmers need current and accurate farm management information. The Internet, and specifically the World Wide Web (web), is a powerful tool to efficiently and effectively deliver this information. Rutgers Cooperative Extension developed a web site to host agricultural production budgets for three cropping systems (conventional, integrated crop management and organic) for crops raised in the northeastern United States. Since budget information needs to be kept current if it is to be of real value to a farmer, we determined that the best way to keep the information up to date was to provide a separate, interactive HTML form that could be viewed and submitted from a users' standard web browser. The interactive web site enables farm management specialists to provide costs and returns information on current agricultural practices in a timely manner. This web site is accessible via the Rutgers Cooperative Extension Farm Management Home Page.

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In 2011, Rutgers, The State University of New Jersey (New Brunswick, NJ, USA) and Akdeniz University (Antalya, Turkey) conducted a survey to identify needs, interests, and capacities of Turkish women farmers. We interviewed extension educators and female farmers in three villages and used the results to develop a pilot, 28-hour course to train 40 small-scale citrus (Citrus sp.) and greenhouse producers from Kumluca, Turkey. Training included computer literacy, citrus and greenhouse production, and business management. The municipalities of Elmali, Duzce, Korkuteli, and Boztepe, Turkey, duplicated the successful pilot program within the next 2 years. To expand the training to more women farmers, we partnered with colleagues in Germany, Spain, and Malta to develop Empowering Women Farmers with Agricultural Business Management Training (EMWOFA), which had a multiplier effect by training educators who then trained women farmers to improve their business skills. The outputs of EMWOFA were a training manual for educators, a workbook for the women farmers, and e-learning videos in English, Turkish, Spanish, German, and Maltese.

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Production costs have been analyzed in several studies using such normative approaches as budgeting and mathematical programming, and positive approaches as estimation of production, cost, or profit functions. This study used budgeting methods to analyze the costs and benefits of adopting integrated crop management (ICM) or organic methods versus conventional agriculture for tomatoes (Lycopersicon esculentum Mill.), sweet corn (Zea mays L. var. saccharada), and pumpkins (Cucurbita pepo L.). Data were collected using field studies conducted at the Rutgers University Snyder Research and Extension Farm, Pittstown, N.J. Time and motion study techniques were used to record machinery use and labor quantities. Records of production inputs and yields were also collected. These records were then converted to a 1.0-acre (0.4-ha) basis to constructed crop budgets. Results show that ICM systems are more profitable than conventional and organic systems. Organic systems had the lowest net returns. However, because of the organic price premium, the net returns were fairly close to those for conventional and ICM systems.

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Turkish cut-flower exports grew from about $100,000 in 1985 to $11 million in 1995 (not adjusted for inflation). Since this is a growing industry in Turkey, we wanted to examine the production structure and main problems of export-oriented contract growers. We surveyed 33 cut-flower export growers and 30 contract growers between May and July 1997. We conducted the survey in the Antalya province, which is the center of the export-oriented cut-flower production in Turkey. The results indicate that cut-flower companies were not highly mechanized, but did use computerized accounting systems. Transportation of cut flowers to foreign markets was the largest expense item in the cut-flower industry. Despite a high rate of unemployment, cut-flower companies face difficulties in obtaining and keeping qualified employees. Managers tended not to use specific performance indicators such as sales per employee or sales per square foot relevant to the cut-flower industry. The most common method for arranging cut-flower export sales was personal contact with the importers. Contracts between firms which grew and exported flowers and smaller contract growers were common, but some problems existed concerning quality and financial obligations. Growers are using fewer commission contracts and are instead opting to sell on a fixed-price basis. The main concerns raised by managers were related to increased competition, price-cutting, transportation expenses for export, training, and labor supply.

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