Ultra-Niche Crops Series: Blueberry Enterprise Budget

Blueberries are a perennial crop that requires costs for an establishment year and pre-production year, during which a farmer receives no income, followed by several years of production when costs exceed returns. Finally, after about five years, they return a profit each year. Due to high initial investment, costs associated with perennial fruit crops and several years between planting and first harvest, blueberry farmers must prepare for a heavy financial burden early on. Thus, farmers need to plan far into the future to make sure they have a profitable crop in the long run. Having an enterprise budget is essential to know what costs, returns, and expected profits will be over the life of the crop.

Costs of production vary considerably, from farm to farm and season to season. The variations are based on the unique character of each operation and the uncertainty of factors beyond the control of the farm operator. The source of some of the differences can be found in key input categories, such as: (1) machinery costs, which can vary because of the differences in age, size, and usage of equipment; (2) irrigation costs, which are subject to variations in rainfall, temperature, and irrigation systems; (3) fertilizer, seed, and chemical costs, which will vary depending on quantities used and prices paid; and (4) labor costs, which are dependent on prevailing wage rates, working conditions, and the efficiency of individual workers. Ideally, growers should keep detailed records that serve as a reference when estimating their production, harvest, and marketing costs.

This factsheet can serve as a guide to help new and existing blueberry growers develop budgets for their own farms in order to make informed business management decisions. Growers who can market more than one acre of fruit, or who can produce other crops can capitalize on the ability to spread the cost of equipment over more crops. This information for blueberries should enable farmers to make informed decisions about profitability, as well as production. The following blueberry economics information, which comes from growers in the state, other universities’ research, and typical New Jersey values, will provide a basic understanding of the crop. This budget depends on a number of assumptions, which correspond to one particular set of production practices. Numbers can vary greatly from farm to farm, highlighting the need for farmers to adjust the budget to fit individual needs. For more information on production practices, please see FS1299, Rutgers Ultra-Niche Crops Series: Pick-Your-Own (PYO) Blueberries.

Initial Investment

To begin producing blueberries, farmers must initially invest in equipment, either new or used. This initial investment for one acre of blueberries, available in Table 1, includes an irrigation well, pump, and irrigation system; a used tractor; a sprayer; a mower; pick-your-own supplies (scale and buckets, and pruning tools). The budget does not include harvesting equipment, because we are assuming that this is a pick-your-own farm with some blueberries handpicked for customers to pick up. A larger, wholesale blueberry farm, or a larger retail farm that sells pre-picked blueberries would consider a mechanical harvester. Altogether, using the assumptions for this “typical” budget, these costs total $38,600 for one acre, which is high relative to other crops even with some used equipment. While production should be able to cover these high costs in the long run, farmers can lower costs by sharing equipment with other crops on a larger farm or expand production if they have a market for more blueberries.

Table 1: Initial Investment – 1 Acre Field Production.

Item	Cost	Useful Life	Annual Depreciation	My Costs
Irrigation well, 70gpm	$3,500	20	$175
Trickle irrigation, pipes and valves	$4,000	20	$200
Pump - 50gpm	$3,500	20	$175
Pick-Your-Own Supplies (Scale, picking buckets)	$500	5	$100
Tractor	$15,000	15	$1,000
Sprayer	$12,000	15	$800
Pruning tools	$100	5	$20
Other equipment			$0
Total Investment Costs	$38,600		$2,470

Fixed Costs

Fixed costs for one acre of production occur annually regardless of production, thus they are the same in the establishment, pre-fruiting, and production years (see Table 2). They include interest, repairs, taxes, insurance, land charges, dues, subscriptions, and depreciation of equipment value. We include a land rental “opportunity” cost to reflect the ownership cost of the land, which we have assumed to be $100 per acre. This can vary across the state. Dues and subscriptions are memberships in professional organizations like Farm Bureau and subscriptions to trade journals and other business-related publications such as The Wall Street Journal. This “typical” budget assumes that annual insurance costs $500, annual repair costs are 1.5% of the initial investment, and equipment has a straight-line useful life with no salvage value. Additionally, this budget assumes that production is for one acre. Altering this assumption by incorporating blueberry production within a larger farm would allow farmers to share fixed costs among crops, as well as mitigate gains and losses.

Table 2: Fixed Costs – One Acre

Item	Cost	My Costs
Depreciation	$2,470
Interest	$965
Repairs	$579
Taxes	$50
Insurance	$500
Land Charge	$100
Dues and Subscriptions	$40
Electricity	$26
Total Fixed Costs	$4,730

With these assumptions, the total fixed costs are $4,730 per year. Of these costs, by far the largest portion, accounting for $2,470, comes from depreciation, which accounts for the loss in value of a farmer’s equipment assets as they age. While this amount is quite high, it would be even larger for new equipment. Farmers can reduce the cost per acre by expanding production of blueberries, assuming there is a market demand, and they can use this equipment for other crops. Buying used equipment will require more maintenance costs than new equipment.

Variable Costs

Variable costs for one acre of blueberries change depending on how much the farmer decides to produce in a given year (see Tables 3, 4, and 5). In a blueberry establishment year (Table 3), these costs include plants; a soil test; fertilizer; fungicides and insecticides, tractor operating costs; labor for planting, applying fertilizer, and maintaining the field; and interest on operating capital. A typical spacing is 4’ by 10’ which is 1088 plants per acre, making plants at $3 each the largest establishment cost of $3,264. Altogether, variable establishment costs total approximately $5,181 per acre in the establishment year.

Table 3: Annual Variable and Total Costs: Establishment Year - One Acre

Item	Unit	Price	Quantity	Cost	My Costs
Materials
Seeds/Plants	plant	$3.00	1088	$3,264
Soil Test	acre	$20.00	1	$20
Annual Cost of Drip and Overhead Irrigation	acre	$30.00	1	$30
Fertilizer 10-10-10	lbs	$0.30	600	$180
Fungicide and Insecticide	acre	$0.23	1088	$251
Pre- and Post-Emergent Herbicide	acre	$120.00	1	$120
Tractor Use/Oil and Gasoline		$33.55	9	$302
Labor
Planting Labor	hours	$16.88	24	$405
Apply Fertilizer	hours	$16.88	1.5	$25
Maintenance Labor	hours	$16.88	20	$338
Interest and Operating Capital		5.00%		$247
Total Variable Costs				$5,181

In the early, pre-fruiting years, variable costs are similar to those in the establishment year, except for the costs of plants. Variable costs in pre-fruiting years include a soil test, fertilizer, herbicide, tractor usage, labor, and interest on operating capital. Altogether, these costs total approximately $1,914 per acre.

Table 4: Annual Variable and Total Costs: Pre-Fruiting Years - One Acre

Item	Unit	Price	Quantity	Cost	My Costs
Materials
Soil Test	acre	$20.00	1	$20
Irrigation Supplies		$30.00	1	$30
Fertilizer 10-10-10	lbs	$0.30	600	$180
Fungicide and Insecticide	acre	$0.23	1088	$251
Pre- and Post-Emergent Herbicide	acre	$120.00	1	$120
Tractor Use/Oil and Gasoline		$33.55	30	$1,007
Labor
Maintenance Labor	hours	$16.88	8	$135
Disbudding Labor	hours	$16.88	2	$34
Apply Fertilizer	hours	$16.88	15	$25
Apply Herbicide	hours	$16.88	15	$25
Interest on Operating Capital		5.00%		$87
Total Variable Costs				$1,914

In fruit-producing years, variable costs are higher than in other years, due to the cost of selling the fruit. The variable costs include a soil test, fertilizer, pesticides, herbicides, tractor usage, and labor. Also included is pruning and thinning labor, maintenance labor, the cost of labor for employees to work with customers during the pick-your-own season and to pick berries for retail customers who don’t want to pick, and interest on operating capital; with all variable costs totaling about $5,146.

Table 5: Annual Variable and Total Costs: Production Years - One Acre

Item	Unit	Price	Quantity	Cost	My Costs
Materials
Soil Test	acre	$20.00	1	$20
Irrigation Supplies		$30.00	1	$30
Fertilizer 10-10-10	lbs	$0.30	600	$180
Fungizide and Insecticide	acre	$300.00	1.00	$300
Herbicide	pint	$120.00	1.00	$120
Tractor Use/Oil and Gasoline		$33.55	9.00	$302
Packing boxes	25 lb. box	$1.07	350.00	$375
Labor
Production Labor
Soil Test	hours	$16.88	1	$17
Apply Fertilizer	hours	$16.88	1.5	$25
Apply Pesticides	hours	$16.88	2.5	$42
Apply Herbicide	hours	$16.88	1.5	$25
Maintenance	hours	$16.88	7	$118
Pruning and Thinning	hours	$16.88	16	$270
Mowing	hours	$16.88	1.65	$28
Other Labor	hours	$16.88	0	$0
Other Labor	hours	$16.88	0	$0
Sub-Total				$526
Harvesting Labor
Picking for customers who don't want to pick	hours	$16.88	60	$1,013
Managing customers	hours	$16.88	80	$1,350
Other Labor	hours	$16.88	0	$0
Other Labor	hours	$16.88	0	$0
Sub-Total				$2,363
Total Labor				$2,888
Selling Charge		4.00%		$686
Interest on Operating Capital		5.00%		$245
Total Variable Costs				$5,146

Of these variable costs, the largest chunk comes from labor. Assuming a base wage rate of $12.50 per hour and considering benefits, which add another $4.38 per hour, the true cost of labor would be $16.88 per hour. Due to this high cost, small adjustments in efficiency of labor can greatly reduce variable costs. This means that to get a true picture of their farm’s profitability, farmers must be sure to include the work that they perform themselves.

Sales, Yields, and Returns

Sales, yields, and returns are available in Table 6 for one acre of blueberries. Yields are quite variable, depending on the use of fertilizer, the plant spacing, and the age and size of the plant. This budget assumes no yields in the establishment year and the pre-fruiting year (Year 2). A small yield of 3000 pounds per acre is assumed in Year 3. Then yields increase until Year 8 when they reach about 10,000 pounds per acre and drop back to about 9,000 pounds per acre in Years 16–20.

While blueberry prices range as well, a typical price is $2.80 per pound of fresh fruit for pick-your-own. If producers choose to sell wholesale, they would incur more harvesting costs but would require less management of the field. While returns in the first few years are negative, in the long run a farmer can profit from blueberry production.

Table 6: Sales, Yields, and Returns

Year	Unit	Price	Yields	Revenue	Returns	My Returns	Running Total
One	lb	$2.80	0	$0	(9,911)		(9,911)
Two	lb	$2.80	0	$0	($6,644)		(16,555)
Three	lb	$2.80	3000	$8,400	($1,939)		(18,494)
Four	lb	$2.80	5000	14,000	$3661		($14,832)
Five	lb	$2.80	6,500	18,200	$7,861		($6,971)
Six	lb	$2.80	8,000	$22,400	$12,061		$5,090
Seven	lb	$2.80	9,000	$25,200	$14,861		$19,952
Eight	lb	$2.80	10,000	$28,000	$17,661		$37,613
Nine	lb	$2.80	10,000	$28,000	$17,661		$55,274
Ten	lb	$2.80	10,000	$28,000	$17,661		$72,935
Eleven	lb	$2.80	10,000	$28,000	$17,661		$90,597
Twelve	lb	$2.80	10,000	$28,000	$17,661		$108,258
Thirteen	lb	$2.80	10,000	$28,000	$17,661		$125,919
Fourteen	lb	$2.80	10,000	$28,000	$17,661		$143,581
Fifteen	lb	$2.80	10,000	$28,000	$17,661		$161,242
Sixteen	lb	$2.80	9000	$25,200	$14,861		$176,103
Seventeen	lb	$2.80	9000	$25,200	$14,861		$190,965
Eighteen	lb	$2.80	9000	$25,200	$14,861		$205,826
Nineteen	lb	$2.80	9000	$25,200	$14,861		$220,687
Twenty	lb	$2.80	9000	$25,200	$14,861		$235,549
Average Yield and Return			7,825		$11,777
Twenty Year Total Return							$235,548
Twenty Year Average Annual Return					$11,777

In the establishment year, the plants produce no blueberries. With a yield of zero, revenue during this year is zero as well. On a one-acre farm with these “typical” budget assumptions, a farmer should expect to spend approximately $9,991. Following the establishment year is another pre-fruiting year with lower costs because plants were already purchased in the establishment year. In that year, a farmer should expect to lose approximately $6,644. In the third year, the farmer can expect a small yield of about 3,000 pounds of blueberries resulting in a loss for the year of $1,939 under our “typical” budget assumptions.

Even once a plant begins producing blueberries, the yields should continue to increase from year to year until they reach their maximum production of about 10,000 pounds in about Year 8. According to this budget’s assumption, the farmer can start to see a positive annual return in Year 5. The average yield is 7,825 pounds per acre or $11,777.

Clearly, the returns on a blueberry farm change dramatically from establishment year to the twentieth year; the early years being negative and later ones being positive. Some recommendations to reduce this financial burden include acquiring a loan that allows the farmer to pay off earlier years once the farm is profitable, or perhaps establishing the plants over multiple years to spread out costs. Once the farm is established, the farmer will want to plant some plants each year so that there are always fruit-bearing plants.

Additional Resources

1. Economics/Crop Budgets | NC State Extension, North Carolina State University, Raleigh
2. Highbush Blueberry Production, PennState Extension, College of Agricultural Sciences, Penn State University
3. Blueberry Economics: The Cost of Establishing and Producing Blueberries in the Willamette Valley, Oregon State University, Extension Service
4. Approximate Herbicide Pricing, University of Florida IFAS Extension
5. Southern Highbush Blueberry Marketing and Economics, University of Georgia Extension
6. Apple Spray Materials Cost per Dose, University of Maine Extension
7. Blueberry 2010 Fruit and Nut Planning Budgets, Mississippi State University, Department of Agricultural Economics
8. Idaho Crop Input Price Summary for 2015, University of Idaho
9. FS1299: Ultra-Niche Crops Series: Pick-Your-Own (PYO) Blueberries, Rutgers NJAES
10. Fertilizer Costs in 2017 and 2018, Department of Agriculture and Consumer Economics, University of Illinois
11. Sample Costs to Establish and Produce Bluberries in San Luis Obispo, Santa Barbara, and Ventura Counties, Conventional Production, 2007, University of California Cooperative Extension
12. Blueberry Cost and Return Estimates, University of Kentucky, Cooperative Extension Service, Center for Crop Diversification
13. Fruit and Vegetable Prices, U.S. Department of Agriculture, Economic Research Service

For more information, please visit our website: Ultra-Niche Crops.

Project sponsored by the USDA-NIFA Beginner Farmer and Rancher Development Program.

December 2019