Cost and Returns Studies
Cost and Return Studies for many of California’s fruit, vegetable, field, tree and vine crops, and animal commodities are made available to the public through a joint effort between the Department of Agricultural and Resource Economics (ARE) at the University of California, Davis and the University of California Division of Agricultural and Natural Resources (ANR). Cost and Return studies contain an abundance of information regarding the costs of production for a specific commodity, including operating costs, broken down monthly and annually, establishment costs for perennial crops, and other costs associated with operating a farm in California. Cost and Return studies are performed for a specific farm that is assumed to be well-managed, so they do not reflect costs and returns for all farms. Detailed assumptions are provided at the beginning of each study to document how costs and returns were calculated.
Over 3,500 cost studies are maintained and archived on the UC Cost and Return Studies website dating back to the 1930s. In 2020, over 23,000 cost studies were downloaded across all commodities. Cost study users include growers, but also University of California Cooperative Extension advisors and specialists, researchers, bankers and credit professionals, USDA agencies, insurance companies, marketers and shippers, other input suppliers, farm managers and rural land appraisers. The most important feature of these studies is that they are based on sound objective information from members of the industry and others with specific knowledge and expertise. Thus, high quality, objective Cost and Returns Studies become a benchmark for almost everyone in and around California’s Agricultural industry.
A Cost and Return study begins with a meeting among University of California Cooperative Extension farm advisors, growers, industry representatives and a research staff person from UC Davis ARE. Growers, agricultural support companies and agricultural advisors provide the ARE staff person with production details, such as what operations are performed and what month they occur, materials used for cultural practices, such as seeds, pesticides, and fertilizers, and what, if any, custom services are hired, such as spraying and harvesting. The staff person updates or enters new information such as operating loan interest rates, labor and fuel rates. Cash overhead costs such as field sanitation, assessment fees, property taxes and insurance are updated. Non-cash overhead costs and interest rates on investment loans is updated. This information is then entered into a stand-alone computer program called Budget Planner, which calculates costs and returns based on standardized economic and engineering formulas. The draft of the study is sent out to contributing advisors and selected growers for review. The finished study is posted on the UC Cost and Return Studies website with full access to the public.