Field Nurseries


 Distribution of Managed Capital. The distribution
 of the capital investment among land, buildings,
 equipment, etc. is an important area of concern in
 management. Figure 11 indicates the percentage
 distribution of total capital managed for the 1988
 field nursery average. Growing plants in inventory
 represented the largest share of capital managed,
 61.4 percent. Next in importance was land, 32.1
 percent. Other lesser areas of capital investment
 were machinery and equipment (2.1 percent),
 buildings and installations (1.5 percent), supplies (.1
 percent), accounts receivable (1.7 percent), and cash
 on hand (1.1 percent).

 Costs of Production
 For the purposes of this report, costs of
 production include not only cash outlays but also
 non-cash costs and allowances that must be covered
 over time if the business is to remain viable. The
 itemized budget for cash expenses presented in
 Appendix Table 5 and summarized in Table 2 of this
 report is considered to be a minimal analysis of the
 costs of production involved in an ornamental
 nursery enterprise. Included as a non-cash cost is an
 allowance for a minimum return on investment. The
 interest rate used here is 12 percent.

 Costs by Expense Category (Appendix Table 5).
 Costs by expense category were summarized from
the annual profit and loss statement or tax records
of the participating nurseries. The cost categories
were grouped into wages and salaries, production
supplies, other production costs, administrative and
overhead, and non-cash costs. These figures provide
benchmarks for the relative magnitude of various
cost items, and may provide guidance for persons
evaluating a Florida field nursery, either as a buyer,
seller, or lender.

 Salaries and wages. The salary and wage group
includes the operator's salary or time value, and
employees wages, salaries, benefits, and other payroll
costs. As mentioned earlier, in some cases the
operator's salary was zero or was not appropriate, so
a time-value was estimated based upon the operator's
expected earnings, or previous experience. The
operator's salary or time value averaged $33,654 for
the 1986 sample, $42,014 for the 1987 group, and


$42,536 for the 1988 nurseries. Wages, salaries, and
associated expenses for employees averaged $68,744
for 1986, $115,008 for 1987, and $120,655 for 1988.
Thus, total expenses on wages and salaries averaged
$102,398 for 1986, $157,022 for 1987, and $163,191
for the 1988 sample (Table 2).

 Production supplies. Expenses in this group
 include plants and seeds, containers, peat and soil,
 fertilizer and lime, pesticides and chemicals, and
 other production supplies. Expenses for supplies for
 the 1986 sample averaged $45,466, for the 1987
 group $120,810, and for 1988 nurseries $76,566.

 Other production costs. Other production costs
are facility repairs/maintenance and equipment
operating costs. For the 1986 group they averaged
$12,686, for 1987 $24,917, and for 1988 nurseries
$20,737.

 Administrative and overhead. Administrative and
overhead expenses usually cannot be assigned to any
particular crop or growing activity, yet must be
covered in order to remain in business. This group
of expenses includes travel/trade shows, insurance,
telephone, electric power, advertising, rent, and other
cash expenses. Administrative and overhead
expenses averaged $28,845 for the 1986 group,
$51,003 for 1987, and $36,616 for 1988.

 Total cash costs. Total cash costs, including all
items mentioned above, averaged $189,396 for 1986,
$353,752 for 1987, and $297,110 for the 1988 sample.

 Non-cash costs. Non-cash costs include
depreciation allowances on capital assets, decreases
in supply inventory (using supplies purchased during
a previous time period), and an interest charge for
the use of the capital invested in the nursery. These
costs averaged $96,769 for 1986, $210,289 for 1987,
and $158,069 for 1988.

 Total all costs. Total costs averaged $286,191 for
1986, $564,041 for 1987, and $455,179 for the 1988
group.