COST AND RETURNS OF
PRODUCING BANANAS ON GUAM
M. Weidman
B. de Guzman
R. Rajendran
Technical Report
AES Publication No.·67
Agricultural Experiment Station
College of Agriculture and Life Sciences
University of Guam
Mangilao, Guam 96923
1987
Wilfred P. Leon Guerrero
Dean/Director
COST AND RETURNS OF
PRODUCING BANANAS ON GUAM
INTRODUCTION • • •
1
FARMING PRACTICES.
1
COST •••
2
RETURNS.
3
SUMMARY AND CONCLUSIONS.
4
REFERENCE CITED ••
4
TABLES • • • • • •
• 5-13
COST AND RETURNS OF
PRODUCING BANANAS ON GUAM
1
2
3
by M. Weidman , B. de Guzman and R. Rajendran
INTRODUCTION
The increased activity in local tourism has given rise tq an expanded
market for local produce. Hence the agriculture sector is gearing toward
supplying, in part, the tourist industry. Primary items of production are
fruits and vegetables. Information regarding cost and returns of local
production will provide directions ·on improving production and marketing
methods.
T. Khamoui in his study of market potentials for Guam produce rated
bananas as· a candidate crop for expansion based on estimated Guam farm
price being equal to or greater than minimum target price. Hence, this
cost and returns study
SAMPLE FARMS
It is estimated that 90% of banana farmers on Guam are in the south.
The south has the best soil for banana production. The total area covered
by the study was 50 acres. This represents 50% of the estimated acreage
under banana production.
The following criteria were used in selecting farms for the study:
1)
The farmers produce, and sell bananas on a regular interval.
2)
They have at least 2 acres in banana production.
Both eating and cooking bananas were covered by the study.
survey was conducted in March and April, 1987.
The
Results of the survey and analysis are shown in Tables 1 thru 8.
Analysis is on a per acre basis.
FARMING PRACTICES
Age of the Plantation
The youngest plantation among the farms surveyed was 5 years old.
The oldest plantation was 30 years old. The farmers started with 1 or 2
acres and continuously expanded through the years.
1
Agricultural Economist,
2
•
Agricultural Extension Agent,
- 1 -
3 .
Horticulturist
Planting
A complete crop cycle for bananas is normally 4 years. Judging by
the age of the plantation, it will appear that all the bananas are beyond
their profitable cycle.
While none of the fields were plowed down
completely to start a new cycle, all farmers were engaged in continuous
planting and mat clearing. Pulling a sucker and replanting takes from 15
to 25 minutes. Number of suckers planted in a year's time range from 50 to
200 suckers regardless of the size of the farm.
Planting
activities.
is
done
together
with
other
plantation
maintenance
Management
At least .6 of the farmers have a full-time job els~where. Regardless
of the size of the farm, the farms are operated as a one man operation,
hiring help occasionally for plantation maintenance.
Chemical Application
Fertilizers were used only in Farms 1, 4 and 6.
agents were not used.
Pesticide and weed
c~ntrolling
Irrigation
Only 3 farmers (1, 3 and 4) indicated that they irrigate their
fields. No records are kept as to how much water was used. The amounts
quoted were estimated on one acre inch of water. The labor requirements
were given by the farmer.
Labor (Field Management)
Under this category is a variety of activities that include clearing,
planting, pruning, irrigating, chemical application, etc.
The farmers
normally spend a regular amount of time at certain intervals to do all of
the above.
Tractor (Plowing, Clearing Cultivation)
Tractor time was the costliest. input for Farms 3, ·. 5 and 7. Equipment
were used either for replanting, cultivating, or clearing new areas which
did not yield immediate returns for the above farms.
Hence, the net
revenue loss •
. Labor (Harvesting/Marketing)
Farmers harvest and market their produce within 2 days. Records on
amount of time spent for harvesting and marketing is normally combined as
one activity. Harvesting and marketing is done on a Thursday continuing on
to. Friday. Most of the time the farmers harvest and deliver on Fridays.
- 2 -
COST ANALYSIS
Costs·were estimated using averag~ 1986 prices. A breakdown·of cost
by factor inputs is shown in Table 9. It shows that the biggest cost
incurred is with field maintenance, ranging from 50 to 80% of total cost of
production. Both . harvesting/marketing and other cost (fixed costs) also
account for a sizeable portion of the cost of production.
Field management includes labor, tractor, bushcutter and mower time.
Table 10 shows that Farms 3, 5 and 7 attributed most of the field
management cost to tractor time. In all the other cases, labor time is the
most expensive component of field management cost. Farm 8 did not use any
machinery.
RETURNS
The average 1986 market prices received by the farmers were used to
estimate gross returns. A comparison of the productive performances of.the
sample farms is summarized in Table 11. Positive net returns is registered
with Farms 1, 2, 4 and 6. The amount of net retur~s fall into 3 groups.
The first group is where net returns per acre is well above $2,000 per
year. The second group has net returns in the range of $1,300 to $1,600
per acre per year. The third group are the ones incurring a loss from $79
to about $2,600 per acre per year.
TABLE 9.
Sample Farms
ITEM
Field Maintenance
Harvesting/Marketing
Fertilizer
Water
Transportation
Other Cost
TABLE 10.
1
2
3
4
5
6
7
8
72.9
7.0
13.6
2.5
.3
3.7
49.2
28.8
-0-017.3
4.7
82.1
7.4
-04.9
2.9
2.7
61.0
10.0
17.5
2.5
7.3
1.7
82.0
14.1
-0-00.4
3.5
52.7
21.8
15.3
-02.8
7.4
57.4
13.4
-04.9
3.8
25.3
63.8
23.2
-0-01.4
11.6
FIELD-MANAGEMENT COST ANALYSIS OF THE SAMPLE FARMS (PERCENT)
Sample Farms
ITEM
Labor
Tractor
Mower
Bushcutter
COST ANALYSIS OF THE SAMPLE FARMS (PERCENT)
1
73.7
26.3
-0-0-
2
92.3
-05.1
2.6
3
4
5
6
7
8
44.3
55.7
-0-0-
92.1
-05.3
2.6
33.1
66.9
-0-0-
67.0
-022.0
11.0
32.9
67.1
-0-0-
100
-0-0-0-
.., 3 -
While Farm 3 has one of the highest cost of production per pound,
selling mainly cooking bananas contributed to a substantial loss per a~re.
In the case of Farms 5 and 8, selling prices for their bananas are also low
perhaps due to a contractual arrangement.
The other farms have no
contracts for marketing bananas. In the case of Farm 7, the farm has only
2 acres while its costs of production match those of Farm 5 which has 7
acres.
TABLE 11a.
SUMMARY OF PRODUCTION PERFORMANCES OF THE SAMPLE FARMS
Sample Farms
ITEM
Yield/Acre (lbs)
Cost of Prod./Acre ($)
Gross Revenue/Acre ($)
Net Revenue/Acre ($)
Cost of Prod./Lb. ($)
Selling Price (Eat)/Lb ($)
Selling Price (Cook)/Lb ($)
Net Return/Lb. ($)
6110.00
4577.00
5993.00
1416.00
.75
1.00
-0.23
Yield/Acre (lbs)
Cost of Prod./Acre ($)
Gross Revenue/Acre ($)
Net Revenue/Acre ($)
Cost of Prod./Lb. ($)
Selling Price (Eat)/Lb ($)
Selling Price (Cook)/Lb ($)
Net Return/Lb. ($)
[:
3
4
11050.00
1523.25
11050 .oo
9526.75
.13
1.00
-0.86
3251.00
3519.00
9l6.60
(2592.00)
1.08
-0.29
(
.80)
3755.00
1350.00
3004.00
1654.00
.36
.80
-0-
.44
Sample Farms
TABLE llb.
ITEM
.
2
1
6
5
3208.00
2089.00
1694.00
( 395.00)
• 65
.75
.35
(
.12)
2860.00
317.00
1651.00
1334.00
.11 .
.70
-0-
.47
7
8
1300.00
2424.00
1300.00
(1124 .00)
1.86
1.00
-0(
.86)
338.00
172.00
93.00
( 79.00)
.50
.35
.20
(
.23)
SUMMARY AND CONCLUSIONS
On the cost side, a breakdown of cost showed that field management is
a sizeable portion of total cost of production. When a tractor is used,
tractor time is the most expensive input in field management which explains
the net revenue losses incurred by some of the farms surveyed.
In terms of returns, eating bananas command a better selling price;
hence, contributing to a positive net return in most cases. Depressed
selling prices seem to be associated with contractual marketing
arrangements. On the other hand, those without contracts sometimes spend 2
hours after each harvest on the road to market bananas.
- 4 -
T
It appears that 3 to 4 acres is the ideal size for a one man banana
operation. Note that most of the banana farmers are part time farmers.
The most encouraging results are with Farm 2 with 4 acres, selling eating
bananas at $1.00 per pound. Farm 2 attributes its yield per mat per year
of 37 lbs to a very fertile soil. Comparatively, Farm 6, with 20 acres,
may have a lower cost of production on a per acre basis but its yield per
mat per year is .73 of a pound. Perhaps, the smaller size farm are better
managed, hence, yields are better than the 20 acre farm.
When viewing cost of production, careful consideration -must be made
of the cultural practices.
Use of such chemicals or pesticide, weed
controlling agents, even fertilizer and irrigation is not a common practice
in local banana production.
REFERENCE CITED
1)
Khamoui, Thao. 1984. Market Potentials for Guam Produce.
of Guam. AES Publication No. 43.
- 5 -
University
TABLE 1 • ANNUAL COST AND RETURNS OF
PRODUCING BANANAS PER ACRE ON FARM 1
I.
COST
A)
B)
II.
TOTAL
FACTOR
COST $
475
64
40
2,375
320
960
2,592
434
-0-
Fixed Cost
1) Insurance
2) Property Tax
3) Interest
4) Land Lease
621
116.50
12.40
67
13
91.67
-o~
RETURNS
A)
III.
Variable Cost
1) Labor-Field mgmt (hr)
2) Labor-harvest/market. (hr)
3) Tractor-field mgmt (hr)
4) Mower-field mgmt (hr)
5) Bushcutter-field mgmt (hr)
6) Fertilizer (lbs)
7) Water (1,000 gals)
8). Fuel and maintenance
TOTAL
INPUT
UNITS
Eating
1) Grade A
2) Grade B
NUMBER
OF POUNDS
VALUES $
5,525
585
5,525
468
SUMMARY
1)
2)
3)
4)
ITEM
Total Cost per acre ($)
Total Yield per acre (lbs)
Total Revenue per acre ($)
Net Revenue per acre ($)
TOTALS
4,576.57
6' 110.00
5,993.00
1,416.43
ABOUT THE FARM: Located in Inarajan, the plantation (6 acres) was 9 years
old. It was planted to eating bananas at;the spacing .of 20'x10' or 216
· mats per acre.
- 6 -
TABLE 2. ANNUAL COST AND RETURNS OF
PRODUCING BANANAS PER ACRE ON FARM 2
I.
COST
A)
B)
II.
Variable Cost
1) Labor-Field mgmt (hr)
2) Labor-harvest/market (hr)
3) Tractor-field mgmt (hr)
4) Mower-field mgmt (hr)
5) Bushcutter-field mgmt (hr)
6) Fertilizer (lbs)
7) Water (1,000 gals)
8) Fuel and maintenance
780
520
-072
36
-0-031.25
NUMBER
OF POUNDS
Eating
1) Grade A
11,050
VALUES $
11,050
SUMMARY
1)
2)
3)
4)
.
TOTAL
FACTOR
COST $
27.50
20.50
36.00
-0-
ITEM
~
156
104
-036
36
-0-0-0-
Fixed Cost
1) Insurance
2) Property Tax
3) Interest
4) Land Lease
RETURNS
A)
III.
TOTAL
INPUT
UNITS
TOTALS
Total Cost per acre ($)
Total Yield per acre (lbs)
Total Revenue per acre ($)
Net Revenue per acre ($)
1,523.25
11,050.00
11,050.00
9,526.75
.
ABOUT THE FARM: Located in Merizo, the plantation (4 acres) was 7 years
old. It was planted eating bananas at th~ spacing of 12'x12' or '300 mats
per acre.
- 7 -
TABLE 3. ANNUAL COST AND RETURNS OF
PRODUCING BANANAS PER ACRE ON FARM 3
I.
COST
A)
B)
II.
TOTAL
FACTOR
COST $
227
52
73
-0-0-0652
-0-
1,135
260
1,752
-0-0-0171
105
Fixed Cost
1) Insurance
2) Property Tax
3) Interest
4) Land Lease
75.00
20.50
-0-0NUMBER
OF POUNDS
RETURNS
A)
III.
Variable Cost
1) Labor-field mgmt (hr)
2) Labor-harvest/market (hr)
3) Tractor-field mgmt · (hr)
4) Mower-field mgmt (hr)
5) Bushcutter-field mgmt (hr)
6) Fertilizer (lbs)
7) Water (1,000 gals)
8) Fuel and maintenance
TOTAL
INPUT
UNITS
Cooking
1) Grade A
2) Grade B
3) Grade c
488
650
2,113
VALUES $
244.00
260.00
422.60
SUMMARY
ITEM
1)
2)
3)
4)
TOTALS
Total Cost per acre ($)
Total Yield per acre (lbs)
Total Revenue per acre ($)
Net Revenue per acre ($)
3,518.50
3,251.00
926.60
(2,591.90)
ABOUT THE FARM: Located in Merizo, the plantation (4 acres) was 8 years
old. It was planted to cooking bananas at the spacing of 10'x10' or 433
mats per acre.
- 8 -
TABLE 4. ANNUAL COST AND RETURNS OF
PRODUCING BANANAS PER ACRE ON FARM 4
I.
COST
A)
B)
II.
Variable Cost
1) Labor-field mgmt (hr
2) Labor-harvest/market (hr)
3) , Tractor-field mgmt (hr)
4) Mower-field mgmt (hr)
5) Bushcutter-field mgmt (hr)
6) Fertilizer (lbs)
7) Water (1,000 gals)
8) Fuel and maintenance
160
29
-027
27
2,000
115
-0-
Fixed Cost
1) Insurance
2) Property Tax
3) Interest
4) Land Lease
TOTAL
FACTOR
COST $
800.00
145.00
-054.00
27.00
252.20
36.80
10.50
-024.66
-0-0-
RETURNS
A)
III.
TOTAL
INPUT
UNITS
Cooking
1) Grade A
NUMBER
·OF POUNDS
VALUES $
3,755
3,004
SUMMARY
1)
2)
3)
4)
ITEM
TOTALS
Total Cost per acre ($)
Total Yield per acre (lbs)
Total Revenue per acre ($)
Net Revenue per acre ($)
1,350.16
3,755.00
3,004.00
1,653.84
ABOUT THE FARM: Located in Merizo, the p+,antation (3 acres) was 5 years
old. It was planted to eating bananas at the spacing of 13 'x13' or 256
mats per acre.
- 9 -
TABLE 5. ANNUAL COST AND RETURNS OF
PRODUCING BANANAS PER ACRE ON FARM 5
I.
COST
A)
B)
II.
B)
TOTAL
FACTOR
COST $
74
59
56
-0-0-0-0-0-
370.00
295.00
1,344.00
-0-0-0-07.44
Fixed Cost
1) Insurance
2) Property Tax
3) Interest
4) Land Lease
17.14
13.57
-042.14
NUMBER
OF POUNDS
RETURNS
A)
III.
Variable Cost
1) Labor-field mgmt (hr)
2) Labor-harvest/market (hr)
3) Tractor-field mgmt (hr)
4) Mower-field mgmt (hr)
5) Bushcutter-field mgmt (hr)
6) Fertilizer (lbs)
7) Water (1,000 gals)
8) Fuel and maintenance
TOTAL
INPUT
UNITS
VALUES $
Eating
1) Grade A
1,426
1,070.00
Cooking
1) Grade A
1,782
624.00
SUMMARY
ITEM
1)
2)
3)
4)
TOTALS
Total Cost per acre ($)
Total Yield per acre (lbs)
Total Revenue per acre ($)
Net Revenue per acre ($~
2,089.29
3,208.00
1,694.00
( 395.29)
ABOUT THE FARM: Located in Merizo, the plantation (7 acres) was 25 years
old. It was planted to eating/cooking bananas at the spacing of 8'x 8' or
676 mats per acre.
- 10 -
TABLE 6. ANNUAL COST AND RETURNS OF
PRODUCING BANANAS PER ACRE ON FARM 6
I.
COST
A)
B)
II.
Variable Cost
1) Labor-field mgmt (hr)
2) Labor-harvest/market (hr)
3) Tr~ctor-field mgmt (hr)
4) Mower-field mgmt (hr)
5) Bushcutter-field mgmt (hr)
6) Fertilizer (lbs)
7) Water (1,000 gals)
Fuel and mafntenance
~)
B)
17
13
-026
26
200
-0-0-
Fixed Cost
1) Insurance
2) Property Tax
3) Interest
4) Land Lease
TOTAL
FACTOR
COST $
89.00
69.00
-052.00
26.00
48.50
-08.68
16.00
7.50
-0-0-
NUMBER
OF POUNDS
RETURNS
A)
III.
TOTAL
INPUT
UNITS
VALUES $
Eating
1) Grade A
2,080
1,456.00
Cooking
1) Grade A
780
195.00
SUMMARY
1)
2)
3)
4)
ITEM
TOTALS
Total Cost per acre ($)
Total Yield per acre (lbs)
Total Revenue per acre ($)
Net Revenue per acre ($)
316.68
2,860.00
1,651.00
1,334.32
ABOUT THE FARM: Located in Merizo, the pl~ntation (20 acres) was 30 years
old. It was planted to eating/cooking bananas at the spacing of S'x 5' or
1,742 mats per acre.
- 11 -
TABLE 7. ANNUAL COST AND RETURNS OF
PRODUCING BANANAS PER ACRE ON FARM 7
I.
COST
A)
B)
II.
TOTAL
FACTOR
COST $
48
65
48
-0-:-0-0-0-0-
240.00
325.00
1,152.00
-0-0-0-093.00
Fixed Cost
1) Insurance
2) Property Tax
3) Interest
4) Land Lease
200.00
56.00
358.43
-0NUMBER
OF POUNDS
RETURNS
A)
III.
Variable Cost
1) Labor-field mgmt (hr)
2) Labor-harvest/market (hr)
3) Tractor-field mgmt (hr)
4) Mower-field mgmt (hr)
5) Bushcutter-field mgmt (hr)
6) Fertilizer (lbs)
7) Water (1,000 gals)
8) . Fuel and maintenance
TOTAL
INPUT
UNITS
Eating
1) Grade A
1,300
VALUES $
1,300.00
SUMMARY
TOTALS
ITEM
1)
2)
3)
4)
Total Cost per acre ($)
Total Yield per acre (lbs)
Total Revenue per acre ($)
Net Revenue per acre ($)
2,424.43
1,300.00
1,300.00
(1' 124 .43)
ABOUT THE FARM: Located in Merizo, the plantation (2 acres) was 11 years
old. It was planted to eating bananas at the spacing of 12'x 10' or 360
mats per acre.
- 12 -
TABLE 8. ANNUAL COST AND RETURNS OF
PRODUCING BANANAS PER ACRE ON FARM 8
I.
COST
A)
B)
II.
Variable Cost
1) Labor-field mgmt (hr)
2) Labor-harvest/market (hr)
3) Tract~r-field mgmt (hr)
4) Mower-field mgmt (hr)
5) Bushcutter-field mgmt (hr)
6) Fertilizer (lbs)
7) Water (1,000 gals)
8) Fuel and maintenance
B)
22
8
-0-0-0-0-0-0-
Fixed Cost
1) Insurance
2) Property Tax
3) Interest
4) Land Lease
TOTAL
FACTOR
COST $
110.00
40.00
-0-0-
-o-
-0-02.39
-020.00
-0-0-
NUMBER
OF POUNDS
RETURNS
A)
III.
TOTAL
INPUT
UNITS
VALUES $
Eating
1) Grade A
169
59.15
Cooking
1) Grade A
169
33.80
SUMMARY
TOTALS
ITEM
1)
2)
3)
4)
Total Cost per acre ($)
Total Yield per acre (lbs)
Tota~ Revenue per acre ($)
Net Revenue per acre ($)
172.39
338.00
92.95
( 79.44)
ABOUT THE FARM: Located in Yona, the plantation (4 acres) was 11 years
old. It was planted to eating bananas at the spacing of 6'x 6' or 1,210
mats per acre.
- 13 -
The Guam Agricultural Exeperiment Station
is an equal opportunity employer. All information
gained through its research program is available to anyone
without regard to race, color, religion, sex, age,
national origin or ha~icap.
- 14 -