KIWI CORNER 



Paul Fisher 



Hopefully you've had a wonder- 

 ful spring of sales, with loads 

 of customers leaving your gate 

 with their trunks full of beautiful 

 plants. As you begin to count the 

 money, and even think forward to 

 next spring, it can be difficult to 

 know what plants were most prof- 

 itable and which lines you might 

 increase or eliminate in the future. 

 Do you know how much it cost to 

 produce each of your plant prod- 

 ucts? If you do, you're ahead of 

 the game. 



Cost accounting is a very useful 

 method that adds up the costs of 

 production in order to help you 

 make strategic and pricing deci- 

 sions. The kind of questions that 

 can be addressed by cost account- 

 ing include: Should you buy in 

 snapdragon plugs or grow your 

 own? Should you keep your own 

 stock plants or buy in cuttings? 

 Should you increase your number 

 of hanging baskets or focus more 

 on cell-packs? 



A key concept in cost account- 

 ing is the difference between over- 

 head (fixed) and direct (variable) 

 costs. 



Examples of overhead costs are 

 advertising, property taxes, man- 

 agement salary and benefits, land 

 and truck rental, and utilities such 



as heating. These costs basically re- 

 main constant regardless of the 

 crop and number of units produced. 



Direct costs include the pots, 

 seeds or cuttings, media, produc- 

 tion labor, and other inputs that 

 can be allocated to each unit pro- 

 duced, and directly increase as you 

 grow more 8-inch mixed baskets, 

 etc. 



To calculate the cost of produc- 

 ing a plant product, for example, a 

 4-inch geranium, you can go 

 through the following steps. 



1. Look at your annual income 

 statement and add up all overhead 

 costs that cannot be split off as di- 

 rect costs (e.g., 5100,000). If you 

 have a diversified farm or business, 

 figure out what proportion of that 

 5100,000 can be allocated to the 

 greenhouse operation (e.g., half of 

 the total 5100,000, or 550,000, in 

 greenhouse overhead costs). 



2. Calculate the number of square 

 feet of bench space (e.g., 7200 sq. 

 ft. in our hypothetical farm), and 

 the number of weeks in the year 

 you run the greenhouse operation 

 (e.g., 40 weeks). Divide the total 

 greenhouse overhead cost by the 

 bench area times the weeks opet- 

 ated (e.g., 550,000 divided by 

 (7200 X 40) equals 50.17). 



3. That figure (50.17 in the ex- 

 ample) is the square-foot-per-week 

 cost (i.e., the cost of operating 

 each square foot of greenhouse for 

 one week). The square-foot-per- 

 week cost is incurred by your busi- 

 ness, regardless of whether or not 

 you are growing a plant on that 

 bench space. 



4. For each product you grow, cal- 

 culate the overhead cost of its pro- 

 duction by multiplying the square- 

 foot-per-week costs times the num- 

 ber of weeks of production times 

 the square footage required per 

 container. For example, a grower 

 might produce 4-inch geraniums 

 for eight weeks at a 6 x 6-inch 

 spacing (which is 0.25 square 

 feet). With a square-foot-per-week 

 cost of 50.17, the overhead cost 

 for 4-inch geraniums would be 

 50.17 times eight weeks times 0.25 

 square feet, or 50.34. 



5. Now add up all of the variable 

 costs for each product: for ex- 

 ample, the geranium cutting, the 

 pot, fertilizer, media, insecticide, 

 fungicide, and labor. Note that it 

 can be hard to calculate the fertil- 

 izer, insecticide, or fungicide costs, 

 but these are usually insignificant 

 in terms of the overall cost. When 

 calculating labor costs, be sure to 



HARRY STOLLER & CO., Inc 



109-111 Essex St., Haverhill, MA 01830, (978)373-6838, (800)244-0332 

 We cater to the small and medium size nursery in any quantity desired. 



1. New heavy grade domestic burlap sqs. 

 untreated and no-rot treated 



2. Open burlap bags 



3. New windbreak burlap 



4. Balling bags 



5. Wire baskets 



6. Flat-folded burlap basket liners 



7. Truck covers 



8. Sisal twine and poly twine 



9. Woven polypropylene sqs. 



