Masters Theses

Date of Award

8-1988

Degree Type

Thesis

Degree Name

Master of Science

Major

Agricultural Economics

Major Professor

John R. Brooker

Committee Members

Robert P. Jenkins, S. Darrell Mundy

Abstract

The Packing Simulation (PACKSIM) model was used in an analysis to determine the effects that variations in product prices, crop yields, operating level, interest rate, financing and packing charges would have on the operation of a fresh vegetable packing facility. The initial analysis consisted of 15 vegetables (spring and fall broccoli, canta-loupe, cucumber, okra, Irish potatoes, sweet potatoes, tomatoes, bell peppers, fall greens, sweet corn, squash, pole beans and spring and fall cabbage). The initial assumptions were that product prices were based on a five-year average of Atlanta wholesale prices, crop yields were based on the 1988 vegetable budget, operating level was set at 70 percent of rated capacity, packing charges were obtained from several sources and 90 percent of the total capital was financed at 10 percent interest. In the analysis, product prices were varied 25 percent above and below the Atlanta wholesale prices, crop yields were reduced 10 and 20 percent below budget levels, operating level was set at 50 and 90 percent of rated capacity, packing charges were adjusted to 10 cents per unit above packing cost, interest rates were changed to 8 and 12 per cent and the total amount financed was changed to 80 percent. Analysis of the facility packing 15 vegetables revealed that several vegetables had packing cost greater than their packing charge. Coordinating the harvest, delivery and packing of 15 vegetables would be difficult. The analysis was also conducted on several combinations of vegetables taken from the original 15. These models included a six- vegetable facility (Irish potatoes, tomatoes, bell peppers, sweet corn and spring and fall cabbage), a five-vegetable facility (Irish potatoes, tomatoes, bell peppers and spring and fall cabbage), a five-vegetable facility with a hydrocooler (tomatoes, bell peppers, sweet corn and spring and fall cabbage) and a four-vegetable facility (tomatoes, bell peppers and spring and fall cabbage). Due to the design of the program, changes in product prices exhibited no effect on the break-even analysis of the facility in these models. This study also revealed that decreases in yield by 10 and 20 percent required that acreage be increased about 10 percent and 25 percent, respectively, for all the facilities analyzed. Change in yield had no effect on packing cost per crate, average variable cost, average fixed cost and total fixed cost. A decrease in packing level to 50 percent of rated capacity required acreage to increase to a range of 37 to 49 percent to maintain the break-even level of operation. An increase to 90 percent of rated capacity required acreage to decrease to a range of 12 to 17 percent to maintain the break-even level of operation. Average variable cost per unit of output decreased 12 to 19 percent at the 50 percent packout level and increased 6 to 10 percent at the 90 percent packout level. Average fixed cost declined 29 to 32 percent at the 50 percent packout level and increased 14 to 19 percent at the 90 percent packout level. Total fixed cost was not effected by changes in packing level. Total variable cost increased 43 to 62 percent at the 50 percent packout level and decreased 13 to 21 percent at the 90 percent packout level. Acreage was required to decline in a range of 13 to 19 percent when packing charges per unit of output were adjusted to 10 cents above packing cost. Packing cost per crate increased 5 to 10 percent, average fixed cost increased 19 to 25 percent, total variable cost declined 17 to 18 percent and total crates sold declined 17 to 18 percent. Average variable cost and total fixed cost were not effected by the change in packing cost. Changes in interest rates exhibited no effect on packing cost per crate, average variable cost and average fixed cost. In order to maintain the break-even level of packinghouse volume, acreage was reduced in a range of 6 to 10 percent at 8 percent interest rate and increased in a range of 5 to 11 percent at 12 percent interest rate. Total fixed cost, total variable cost and total crates sold decreased in a range of 7 to 8 percent at 8 percent interest rate and increased in a range of 7 to 8 percent at 12 percent interest rate. Financing at the 80 percent level required the break-even acreage to decline in a range of 3 to 9 percent. This change in financing level exhibited no effect on packing cost per crate, average variable cost and average fixed cost; however, total fixed cost declined 4 percent, total variable cost declined 4 to 5 percent and total crates sold declined 4 to 5 percent.

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