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Ginseng 2000

Ginseng 2000

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Published by: hassan_maatouk on Jan 12, 2010
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Market Factors
The ginseng industry has experienced some pricevolatility in recent years due to increased productionvolumes and a slowing in the market distributionsystem.Producers are increaingly investigating value-addedprocessing for ginseng. Product developmentcontinues to take place with ginseng tea, novelbeverages and nutraceuticals.
Key Success Factors
Supply stabilization
Market distribution channel maturation
Processed product market development
Increased yields per acreThis information is a tool to project costs and returnsfor B.C. farm enterprises and is a general guide toplan individual farm operations.The sample budget should be used as a guide onlyand should not be used for business analysis. Eachfarm should develop their own budget to reflect theirproduction goals, costs and market prices.Information regarding financial planning and otherenterprise budgets may be downloaded from theinternet at http://fbminet.ca/bc or obtained from yourlocal office of the B.C. Ministry of Agriculture, Foodand Fisheries.


Ginseng Prices
0.0010.0020.0030.0040.0050.00
        1        9        9        4        1        9        9        5        1        9        9        6        1        9        9        7        1        9        9        8        1        9        9        9
        $        /        l        b  .
Green Seed
Root
Ginseng - Southern InteriorSpring 2000
PLANNING FOR PROFIT 
Ministry of Agriculture,Food and Fisheries
Production Targets
Root yields in Year 4 of 2,800 lbs./acre
Seed yields in Year 4 of 400 lbs./acre
Total Labour:Year 1 (planting) 49 hrs/acreYear 2 128 hrs/acreYear 3 64 hrs/acreYear 4 124 hrs/acreYear 5 (harvesting) 363 hrs/acreThe above indicators are provided for comparisonpurposes and are set out as potential productiontargets.
Fungal infections continue to cause problems insome production areas, especially in wet years.Ginseng production is best located in warm, dryclimates with south facing slopes and well-
Risk Factors & Strategies
drained, sandy loam soil. Timely applicationsof appropriate fungicides will reduce theincidence of disease.
Pesticide residue standards differ in Canada andthe U.S.A.. In Canada, the maximum residuelimit has been set at 1 ppm but in the U.S., is setat 10 ppb. Strategies to reduce pesticideresidues to meet the current U.S. standardinclude research to develop super critical CO
2
 extraction techniques to produce “pesticideresidue free” ginseng value-added products(powdered ginseng and ginseng extracts) forexport into the U.S. Another managementtechnique is the use of different chemicals fordisease control.
 
Sample Enterprise Budget and Worksheet
The sample enterprise budget provided should be viewed as a first approximation only. Use the column“Your Estimate” to add, delete and adjust items to reflect your specific production situation.The sample budget is based on interviews with producers and BCMAF commodity specialists. Costestimates are based on standard practices in the area and do not represent any particular farm.
Your
Year 1
Your
Year 2
Your
Year 3
Your
Year 4
YourPlanting Estimate 1st GrowYrEstimate 2nd GrowYrEstimate 3rd GrowYrEstimate Harvest Estimate
Projected Income
Seed $0 $0 $0 $0 $0Root 0 0 0 0 39,200
Projected DirectExpenses
Stratified Seed $3,000 $0 $0 $0 $0Irrigation System* 1,500Fertilizer 100 100 100 100 100Pest ControlFumigation 20Herbicide 30 30 30 30 30Fungicide 350 350 350 350Insecticide 50 50 50 50Straw Mulch 700 100Posts & Anchors* 212Cable System* 2,500Shade Cloth* 9,000Machinery OperationsFuel, Oil, Lubrica-tion156 46 46 46 87Repairs & Mainte-nance309 617 617 617 617LabourLayout and Set-Up 270Hand Weeding 400 240 240 160Install/Pull ShadeCloth440 120 120 120Roll/Remove ShadeCloth120 120 120 300Harvesting - Berries/ Flowers400 800Remove Posts &Cables160Harvesting - Root 800Washing - Root 256Rack & Unrack Dryer280Marketing 1,960
Total DirectExpenses
$8,797 $11,253 $1,673 $2,073 $6,071
 
The following assumptions were made in calculating the sample budget:
1 acre of a ten acre ginseng operation growing in the Southern Interior.
The operation is well managed.
Target Yield of 400 lbs/acre of seed in the 4th year. Sufficient seed for the operation’s replanting pro-gram is harvested. Seed is assumed not to be sold. Flowers are removed on the balance.
Target Yield of 2,800 lbs/acre of root (dried) in the 4th year.
Price of $14.00/lb.
Machinery Costs (fuel, oil and lube) are for the following operations: Field Preparation (plowing, disk-ing and bed forming) (Year 1) Layout (Year 1), Seeding (Year 1), Post & Cable Installation (Year 1),Fertilization (Year 1+), Herbicide Application (Year 1-5), Fungicide Application (Year 2-5), InsecticideApplication (Year 2-5) and Root Harvesting (Year 5).
Labour costs are calculated at $8.00/hr of hand weeding and berry picking and at 10.00/hour for layout,post and cable installation and removal, shade cloth installation, unrolling and removal and racking andunracking the dryer. Labour costs include UIC, CPP and WCB for all other operations.
All other labour operations are performed by the operation owners.
Assumptions—Ginseng - 10 AcresCalculation of Projected Net Income
Projected Income
………….
Less Projected Direct Expenses
-.
= Projected Contribution Margin
=.
Less Projected Indirect Expenses
Depreciation (e.g., buildings and equipment)-.Interest-.Other Indirect Expenses (e.g., operator labour)-.
= Projected Net Income
………….To assess the net income of an enterprise,
indirect expenses
must be subtracted from income. Indirectexpenses do not vary with the level of output and are typically associated with inputs used in more thanone enterprise and must be allocated appropriately (prorated) between uses.Buildings
1
$25,000Power Machinery
2
25,000Field Machinery
3
51,600Irrigation 5,000Posts & Cables 21,700Shade Cloth 45,000Washer 5,000Dryer 30,000Vehicle 20,000Other 2,500Total $230,800
1
Accomodates equipment and supply storage,washing area, dryers and workshop
2
New 45 Hp tractor, modified
3
Plow, disk, fertilizer spreader, sprayer, bedshaper, mulch spreader, post pounder, seeder, dig-ger, washer, dryer
Building & Machinery Replacement Cost

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