Higher Fuel Costs in New UC Costs Study

Reflected in costs for producing 12 California commodities.

Published on: Oct 8, 2008

UC Davis, and UC Cooperative Extension economists have released 12 new cost-of-production studies. The reports reflect the impact of changes in the 2008 economy on production costs for growing fresh market potatoes, processing tomatoes, alfalfa, single- and double-cropped blackeye beans, winegrapes, almonds, prunes, blackberries and beef cow-calf operation.

Consumers can see food prices rising in the supermarket. On the production end, costs are also rising. Besides the higher fuel costs for operating farm equipment, trucking companies add surcharges to compensate for higher fuel costs. Energy costs may drive up the cost of drying and processing fruits and nuts.

"People are talking about higher fuel prices, but that leads to higher chemical and fertilizer costs too," says Richard De Moura, research associate in the UC Davis Department of Agricultural and Resource Economics. "On the other hand, interest rates are lower, reducing operating loan and long term investment costs."

Each study is based upon a hypothetical farm operation using practices common in the region. UC Cooperative Extension farm advisors, growers, researchers, farm accountants, pest control advisers, industry consultants and other agricultural associates provided input and reviews. Assumptions used to identify current costs and operations for the individual crops, material inputs, cash and non-cash overhead are described.

An analysis table shows profits over a range of prices and yields. Other tables show the monthly cash costs by cultural operations, the costs and returns per acre showing material inputs, hourly equipment costs, and whole farm annual equipment, investment and business overhead costs.

The cost studies are available online at coststudies.ucdavis.edu, at county UCCE offices, by mail from the University of California, Department of Agricultural and Resource Economics, One Shields Ave., Davis, CA 95616; or by calling (530) 752-1517. Internet downloads are free. There is a $3 handling fee for each mailed report.