|
September 1998
Appendix C
Estimated Costs of Production
The information provided here is the most recent cost
of production data found in Canada. Accurate cost
and returns for the 1998 growing season are not expected
to be available until spring 1999. Interested growers
are strongly advised to carefully examine the data
and compare it to their own situation.
| Table C.1: Estimated Costs of Production of Hemp: Manitoba |
| |
Low Scenario |
High Scenario |
|
Hempseed |
Residual alk |
Hempseed |
Residual Stalk |
| Cost/Return |
Low seed rates,
yield and $/Ac. |
Low $/Ac. |
High seed rates,
yield and $/Ac. |
High $/Ac. |
| Seed (1) |
49.50 |
|
100.00 |
|
| Fertilizer (2) |
38.15 |
|
38.15 |
|
| Chemicals (3) |
10.00 |
|
10.00 |
|
| Fuel |
11.00 |
4.00 |
11.00 |
4.00 |
| Machinery Operating (4) |
15.00 |
6.00 |
15.00 |
6.00 |
| Crop/Hail Insurance (5) |
6.00 |
|
6.00 |
|
| Other Costs |
7.50 |
|
7.50 |
|
| Land Taxes |
5.50 |
|
5.50 |
|
| Licensing Fee (6)> |
15.00 |
|
15.00 |
|
| Sampling/Analy. Fee (7) |
16.00 |
|
16.00 |
|
| Drying Costs (8) |
2.14 |
|
3.57 |
|
| Cleaning Costs (9) |
3.00 |
|
5.00 |
|
| Interest in Operating |
6.33 |
0.36 |
8.20 |
0.36 |
| Total Operating Costs |
185.12 |
10.36 |
240.92 |
10.36 |
| Land Investment Costs |
17.80 |
|
17.80 |
|
| Machinery Depreciatio |
17.50 |
5.00 |
17.50 |
5.00 |
| Machinery Investment |
7.00 |
7.50 |
7.00 |
7.50 |
| Storage Costs |
2.14 |
2.14 |
2.14 |
2.14 |
| Total Fixed Costs |
44.44 |
14.64 |
44.44 |
14.64 |
| EM>Sum |
229.56 |
25.00 |
285.36 |
25.00 |
| Labour |
15.00 |
15.00 |
15.00 |
15.00 |
| Total Costs (10) |
$244.56 |
$40.00 |
$300.36 |
$40.00 |
| Expected Yield (lb/ac) |
300 |
3,000 |
500 |
5,000 |
| Break-even Price ($/lb)(11) |
0.82 |
0.01 |
0.60 |
0.01 |
- Seeding rate of 15 lbs/acre @ $3.30 (Low Scenario) and 20 lbs/acre @ $5 lb for High Scenario.
- 100 lbs N/ac. and 45 lbs P205/acre.
- Roundup was applied prior to seeding
- Machinery operating costs assumed to be 50% higher than canola.
- Crop insurance not expected to be available for several years, private hail insurance may be available earlier, assumed premium in upper range for
specialty crops.
- Health Canada has not yet announced plans for licensing fees. Given the trend toward government cost recovery, this may be an eventuality. This
analysis assumed $300/licensed location for a 20 acre field.
- Sampling cost assumed to be $130/field, THC analysis @ $170/sample/20 acres.
- Drying likely required for safe grain storage.
- Cleaning required for food grade.
- The total cost of producing one acre of grain and the residual stalk is $284.56 in the Low Scenario, $340.36 in the High Scenario.
- At these yields, growers will require at least 60¢/lb for the grain and 1¢/lb for the residual stalk to break-even under the High Scenario.
Source: Dr. Jack Moes in his presentation at the Alberta Hemp Low-THC Hemp Symposia, March 1998.
| Table C.2: Estimated Growing Costs and Returns for Hemp in Kentucky Using Current Technology, Yields and
Prices ($US/Acre) |
| Cost/Return |
Straw |
Seed
Grain |
Seed
Certified |
Straw & Grain |
| Seed |
$125.00 |
$25.00 |
$25.00 |
$125.00 |
| Fertilizer |
<45.01 |
45.01 |
45.01 |
45.01 |
| Herbicides |
0.00 |
10.95 |
10.95 |
0.00 |
| Lime |
12.12 |
12.12 |
12.12 |
12.12 |
| Fuel, Oil |
18.43 |
14.06 |
14.06 |
22.25 |
| Repair |
16.14 |
30.38 |
30.38 |
23.12 |
| Interest |
8.38 |
5.24 |
5.24 |
8.94 |
| Storage |
5.00 |
5.00 |
5.00 |
5.00 |
| Transport to Processor |
27.20 |
8.00 |
5.60 |
24.00 |
| Total Variable Costs |
$257.28 |
$155.76 |
$153.36 |
$265.44 |
| Fixed Costs |
50.27 |
45.00 |
70.73 |
75.05 |
| Operator Labour |
56.00 |
56.00 |
70.00 |
63.00 |
| Total
Enterprise Costs |
$363.55 |
$256.76 |
$294.09 |
$403.49 |
| Stalk Yield (tons/acre) |
3.4 |
0.5 |
0.5 |
2.25 |
| \US $Price per Ton |
$200 |
$120 |
$120 |
$200 |
| Stalk Revenue/Ton |
$680.00 |
$60.00 |
$60.00 |
$450.00 |
| Seed Yield (lbs/ac.) |
- |
1,069 |
700 |
700 |
| Price Per Pound |
- |
$0.39 |
$1.20 |
$0.39 |
| Total Seed Revenue |
$0.00 |
$416.91 |
$840.00 |
$273.51 |
|
Profit |
$316.45 |
$220.15 |
$605.91 |
$319.51 |
Fixed Costs include depreciation, taxes and insurance.
Figures are updated to 1997 based on estimates by
Dave Spalding in the report to the Governor's Hemp
and Related Fiber Crops Task Force. Several additional
adjustments are included in the text. Herbicide, storage
and transportation to processor costs have been added
to these estimates. Spalding's repair estimates were
increased by 50% and seeding rates for fibre increased
form 40 lbs/ac. to 50lbs/ac. It is worth mentioning
Hempline Inc. of Ontario is recommending growers use
60-65 lbs/ac (Kime, 1998).
| Source: |
Table 3, Economic Impact of Hemp in Kentucky, July 1998 by Dr. Eric C. Thompson, Dr.Mark C. Berger and Steve N. Allen of the
University of Kentucky Centre for Business and Economic Research. |
|
