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August 1986
August 1986
Floppy disc included with this
item has been shelved separately.
Consult LUIS or ask circulation
staff for assistance.
Circular 692
A Profitability Model for
a Mid-sized Beekeeping Operation
I COMPUTER SERIES
Malcolm T. Sanford
Florid Coopertiwe Extmion Srwv i I Inm of Food and Agrmulturl Sas Uni ty of Florida / John T. Wet. Don
101
F636c
1.692
guide
A PROFITABILITY MODEL FOR A MID-SIZED BEEKEEPING OPERATION
by
Dr. Malcolm T. Sanford
Extension Beekeeping Specialist
University of Florida
Costs of producing agricultural products have increased much
faster than selling price. Apiculture suffers as much, if not
more, than other agricultural enterprises because the price of
honey has not kept up with production costs. Even though the
1970s saw a dramatic rise in world honey prices from which
producers profited, over the long run the situation created
competition by foreign producers. Far lower labor costs, the
search for sources of hard currency and the strength of the U.S.
dollar have contributed to large imports of honey into the U.S.
during the 1980s. Only the existence of Commodity Credit
Corporation loans on honey, resulting in a price support program
about 20 percent above world market price, has kept many
beekeepers solvent.
Historically, it has been unprofitable to produce honey in
the United States, according to most published studies on the
subject. Adams and Todd (1933) figured it cost $.07 to produce
one pound of extracted honey for which the beekeeper received
$.045. Rodenberg (1967) declared that, over a 10-year period, the
cost of the most important items used by beekeepers increased 18
percent, while the price of honey decreased 7 percent. Coke
(1966) analyzed 15 commercial honey-producing firms in Florida and
found a net loss of $.0261 per pound of honey. A detailed study
of southwestern and midwestern beekeepers (Owens et al.,1973)
concluded:
Beekeeping for honey production in the United States is
not profitable. The unit price received by beekeepers
for bulk, extracted honey has not changed in the last
twenty-five years, while the cost of production has
increased. Thus, beekeepers, who rely on honey
production for income must supplement their income from
other sources, such as crop pollination and outside
employment.
The purpose of this software financial model is to help the
beekeeper better analyze his or her operation to see if it indeed
is profitable. Profitability is defined here in terms of monetary
income versus outgo. It is recognized that many beekeepers are
not interested in monetary gain, but prefer to keep bees as a
hobby. This is in no way to be discouraged, and the present model
may be of interest even to those beekeepers who eschew the profit
motive. Specific objectives of the financial model presented here
are to:
1. Determine the costs and returns associated with beekeeping.
UNIVERSITY OF FLORIDA L ;:IES
2. Aid beekeepers with budgeting and planning.
3. Recommend ways to reduce costs and increase returns.
4. Suggest how operation size affects costs and returns.
Beekeeping can be a profitable agricultural enterprise. It
is also recognized that, in order to be profitable, the beekeeping
operation must be analyzed carefully and the beekeeper ready to
diversify activities based on economic imperatives. This model
examines investment, operating expenses, cash flow and other
indices to reflect effects of decision-making at several different
levels within a beekeeping operation.
No study is any better than the data that go into it; this
means that the key to making reasonable decisions is adequate
record keeping. This simple fact cannot be overemphasized.
Without good records of individual colonies and beeyards, there is
no way production can be analyzed. The same is true of financial
records. If this model does nothing more than help the beekeeper
produce better financial and production records, it will have
served its purpose admirably.
As previously suggested, the beekeeping industry is currently
in a state of flux. There are a number of reasons for this,
including high interest rates for borrowing funds, expensive
manual labor requirements, increasing production costs of all
kinds, as well as lower prices caused by large quantities of
imported honey entering the United States each year. Beekeepers in
the United States have traditionally made their living producing
honey, at the same time providing pollination for a wide range of
cultivated and noncultivated plants virtually free of charge; this
is not expected to change much in the future. Those suggesting
that the economic ills of the beekeeping industry can be solved by
increasing pollination fees are simply not informed about the true
nature of this endeavor. As a consequence, this model, based on
honey production, seeks to help the beekeeper find profitability
niches.
There are two major strategies, often overlooked by
beekeepers, that can be used to improve profitability. The first
is to develop a local market based on promoting honey for what it
is, a unique product with an excellent reputation as a topping,
recipe ingredient or snack. Unfortunately, honey has not been
promoted as vigorously as other sweets, and the market has
suffered a great deal of erosion. The introduction of sweetener
substitutes has also resulted in reduced sales.
A second strategy is to examine more closely management of
the beekeeping operation. Traditionally, beekeeping has been
extensively practiced. There have always been many locations for
bees and moving them from one area to another has been relatively
inexpensive and easy. This is no longer the case. Locations,
especially in Florida, are difficult to come by. In addition, as
agricultural areas give way to urban development, prime locations
become even more difficult to find. The time has come to examine
carefully the profitability of more intensively managing honey bee
colonies, in an attempt to maximize productivity per unit.
As a corollary, financial management must be rigorously
intensive, As has been true of most agricultural operations
during the last three decades, financial analysis in beekeeping
enterprises has taken a back seat to production. This lack of
concern was abetted by favorable business conditions, including a
rise in the price of agricultural commodities and low interest
rates. In-depth financial management takes a good deal of head
scratching, pencil pushing and precious time. It can no longer
play second fiddle to production, however, if profitability is to
be maintained. Fortunately, the microcomputer revolution will
take some of the burden off the producer by facilitating financial
analysis through modeling or simulation. A case in point is this
model, developed on templates of a spreadsheet program called
Multiplan.
This model examines profitability of a mid-sized beekeeping
enterprise with 500 colonies of bees that moves once a year. It
is specifically geared for Florida conditions; however, many of
the considerations here will apply with some modification to any
size operation located in any part of the nation.
PROFITABILITY
Profit is equal to operating income from an operation minus
outgo. If income exceeds outgo, profitability is established.
Income is the collective returns from an activity, such as money
received for sale of bee products (honey, royal jelly, pollen,
package bees) or for pollination rental. Selling bees and queens
or equipment that normally would be used in an operation is not
income, but is considered a reduction in capital investment.
Outgo includes two kinds of costs: fixed and variable.
Fixed costs are those funds expended whether or not any production
or sale of products results. They are bills that must be paid
whether or not income is produced. Fixed costs include
depreciation on equipment, interest expenses, taxes, insurance and
rent. Variable costs, on the other hand, generally fluctuate,
depending on the scale of the operation. Labor is a large
variable cost and as more honey is produced, labor costs increase
proportionally. Other variable costs are fuel, supplies and bee
feed.
HOW THE MODEL WORKS
This model consists of financial spreadsheets or templates,
developed using Multiplan, a commercial software product, which
analyze fixed and variable costs, as well as potential income.
The sheets are linked together in specific ways so that resultant
numbers generated on one are immediately available to others.
Typewriter produced examples of these spreadsheets are located at
the back of this manual. The templates can also be printed from
the disk through Multiplan commands, as explained later.
Fixed costs are analyzed in the following sheets:
Sheet file name Description
BLDGINV Calculates building and related investment
and interest and depreciation costs, which
are then available to the annual investment
summary spreadsheet (ANNSUM) and also used
in a repair estimate spreadsheet (REPCOST).
LANDINV Calculates land investment and interest
HIVEINV
BEEINV
FENINV
These six investment spreadsheets are the basis for this
model; the following sheets depend on them for data collection:
Sheet file name Description
Incorporates investment sheets and calculates
repair costs, which are then available to the
cash flow spreadsheet (BEECASH).
Calculates annual investment depreciation
and interest, which are then available to
the summary of costs and returns
spreadsheet (SUMCOST).
Analyzes total investment from the ANNSUM
sheet above, and calculates payments
including interest and principal, which are
then available to the cash flow spreadsheet
(BEECASH).
Other costs are analyzed in the following spreadsheets, which are
independent from any of those listed above:
Sheet file name
Description
Lists variable honey production costs,
costs, which are then available to the
annual investment summary spreadsheet
(ANNSUM).
Analyzes investments in beehives and
calculates depreciation and interest costs,
which are then available to the annual
investment summary spreadsheet (ANNSUM) and
used as a base for estimating repairs in
the REPCOST spreadsheet.
Calculates bee investment and interest
costs, which are then available to the
annual investment summary spreadsheet
(ANNSUM).
Analyzes fence investment and calculates
depreciation and interest costs, which are
then available to the ANNSUM spreadsheet
and used as a basis for estimating repairs
in the REPCOST spreadsheet.
Uses machinery investment data to calculate
depreciation and interest costs, which are
then available to the ANNSUM sheet and used
as a basis for estimating repairs in the
REPCOST sheet.
MACHINV
REPCOST
ANNSUM
FINANCE
BEESEQ
OTHCOSTS
HONSALE
which are then available to the cash flow
spreadsheet (BEECASH).
Examines miscellaneous costs, which also
are then available to the cash flow
spreadsheet (BEECASH).
Analyzes variable costs associated with
honey processing and sales, as well
potential return, which are fed into the
cash flow spreadsheet (BEECASH).
The following two spreadsheets complete the financial model and
are dependent on most of the sheets above:
Sheet file name Description
Examines month by month expenses and
income taken from the following sheets:
BEESEQ, HONSALE, OTHCOSTS, REPCOST,
FINANCE. Totals are then available to the
summary of costs and returns spreadsheet
(SUMCOST).
Analyzes costs and returns on a yearly
basis and calculates return on investment
and management costs. Figures are taken
from totals in the BEECASH sheet, as well
as depreciation and interest costs from
the ANNSUM sheet.
GETTING STARTED
1. Backing up Your Program Diskette: Before doing anything else,
make a backup copy of this data diskette using the Disk
Operating System (DOS) diskcopy or copy commands. The diskette
included with this package is formatted for DOS 2.0 on the IBM
Personal Computer. Be sure this version of the operating
system is installed or you will experience formatting errors.
It is highly recommended to only employ at all times copies of
the files herein as work files, keeping the original diskette
and/or files in a safe place! Standard caution also suggests
that a backup copy of the original diskette be made as well.
2. Hardware Configuration: This package was developed on an IBM
Personal Computer using Version 1.0 of Multiplan. It operates
under DOS 2.0 with at least 128K memory. Using other
versions of the DOS or Multiplan may require modification of
this package. Consult the DOS or Multiplan documentation if
you experience problems in running the program. Other
hardware items needed are an 80-column monitor and dot matrix
printer.
3. Portability: Although this program was developed on an IBM
Personal Computer, it should work on most IBM compatibles
using Multiplan (Version 1.0) with MS-DOS 2.0. Versions of
Multiplan are also available for a number of other machines,
including CP/M-80, Apple DOS and Radio Shack TRSDOS, using as
BEECASH
SUMCOST
little as 64K memory. Conversion software is available which
transforms IBM files to work on other disk formats.
4. Multiplan: Before using the software package you should
become familiar with the command structure of the Multiplan
(Version 1.0) spreadsheet program. Only a limited working
knowledge of the transfer and print commands is needed to view
and print the files. To modify the files you will need to
understand the locking and unlocking commands.
5. Single Disk Drive: This software package is specifically
designed to be used in single disk drive machines. This
configuration eliminates the Multiplan help files. However,
Multiplan's help files (MP.HLP) can be copied from the
Multiplan diskette to the diskette with the economics model.
This reduces disk capacity to some extent and is a trade-off
each user must make. Most should be able to use this model
effectively without resorting to Multiplan's help facility.
6. Report any problems with this package to the developer:
Dr. Malcolm T. Sanford
Extension Apiculturist
University of Florida
202 Newell Hall
Gainesville, FL 32611
(904) 392-1801
7. Please fill out the evaluation sheet found at the end of this
document.
8. Use of This Software Package:
a. Print out the documentation found in the BECON1.DOC and
BECON2.DOC files. You can do this by using the copy command
(copy BECON1.DOC Iptl followed by copy BECON2.DOC Iptl).
b. Follow the steps given below to begin using the model.
9. Using This Software (Single Disk Drive): To begin using the
package, do the following AFTER backup copies of the original
diskette have been made, and you have a printed copy of the
documentation (see a. above).
a. At the DOS 2.0 prompt A> first copy the Multiplan help
files (MP.HLP) to your backup economics diskette, if you
desire. Then place the Multiplan system diskette in drive
A and type MP80 to execute the 80-column version of the
program. If you have a Multiplan working diskette with
the 2.0 operating system already installed, you may only
have to reset the machine for Multiplan to boot
automatically.
b. After the program is loaded into memory and a blank
template appears, remove the Multiplan system diskette
from drive A and insert your backup diskette for this
beekeeping economics program. Now you are ready to load
the first sheet [type: T (transfer) L (load) BLDGINV] as
described below. If the help files have been transferred,
they should also be available [type: H (help) or ALT H].
c. As the files are loaded, print a copy of each [type: P
(print) P (print to printer)] to obtain a printed backup
of the default data. These sheets can be cut and pasted
together when a file is more than one print-out sheet in
width.
d. Follow the instructions in this circular as they lead you
through the model. The documentation describes and
analyzes figures already in the various files (this is
called the default data).
10. Modifying Files: As a user, you have the ability to modify
the files in this model. However, if the changes are saved
under the ORIGINAL file name (e.g. the BLDGINV file is
modified and then saved under its same name, BLDGINV), the
original or default data are no longer available (except on
your backups or as printed out). It is possible to save
modified files under a different file name (e.g. BLDGINV saved
as BLDGINV2), but the linking between modified worksheets must
be reestablished, a lengthy procedure (see Figure 1 at the end
of this circular to see how sheets are linked). To protect the
user from inadvertently modifying files, all cells are locked
and must first be unlocked using Multiplan's lock command before
they can be modified in any way. This is easy to accomplish
by accessing the lock command and establishing a range of
cells to unlock. See Multiplan's documentation or help files.
11. Two-Disk Drive Systems: For experienced users who wish to use
two disk drives and have the Multiplan program diskette with
help files in drive A while the economics backup diskette is
in drive B, the files can be modified and saved by renaming
all the files and links, prefacing each with a B:, referring
to the B drive. For example, to access the BLDGINV file on
the B drive, B:BLDGINV can be entered at the T (transfer) L
(load) prompt. However, to access a file on the B drive that
is dependent on other sheets (e.g. ANNSUM, REPCOST, FINANCE,
BEECASH, SUMCOST), simply entering the command B:ANNSUM is
not enough. While attempting to load B:ANNSUM, for example,
the program will look to the A drive for the supporting sheets
(e.g. BLDGINV, LANDINV, FENINV, MACHINV, BEEINV, HIVEINV) and
not be able to find them. Therefore, the links from the
supporting sheets must be dissolved and relinked, prefacing
each sheet's name with B:.
As a specific example, notice that the ANNSUM sheet is
linked and dependent on the HIVEINV sheet for total hive
investment (HIVES). To dissolve this link the X (external) C
(copy) command is issued while the cursor is on the number
showing total hive investment ($66775.00). Type the external
sheet's name HIVEINV (caution: ignore sheet and range names
that appear by default), then push the tab to advance the
cursor to the range name and type HIVES, then push the tab to
advance the cursor to the cell number. Now push the delete
key followed by the return key. This eliminates the link; the
number should disappear from the screen. To reestablish this
link for the B drive, do the reverse. For the external sheet
type B:HIVEINV, advance to the range name and type HIVES and
finally advance to the cell number and push the return key.
Once the links are reestablished in this manner, be sure to
save the sheet under the B drive name (B:HIVEINV). Consult
Multiplan's documentation or help files for clarification if
you have problems.
12. Analyzing Costs Using This Software: With the preliminaries out of
the way and a blank Multiplan template on the screen, the model
should be ready to use. Read closely the following documentation
which guides you step by step toward profitability in beekeeping.
Caution: Although an attempt was made to incorporate as much
detail as possible into this model, it should be looked at only as
a planning tool; it cannot and should not be used as more than
that. The figures presented and their relationships will not fit
all operations and tax and investment rules are constantly
changing. This model is meant to be dynamic and changeable--and
was developed in this spirit. It is not meant to be relied on
totally for management decisions.
FIXED COSTS
The following fixed costs are analyzed in this model. They
are for capital investments in a building, land, bees, beehives,
fences and machinery.
Building: Most operations need a building as a base of operations
and place to extract honey and repair equipment. Load the file
BLDGINV using the T (transfer) L (load) command. It shows
estimated costs of a building with 2500 square feet, at $17 per
square foot. Notice extra costs of electricity, compressed air
and truck doors. The blanks included in the model allow you to
fill in any miscellaneous items. Annual interest expense on the
building is calculated as follows: (total investment/2 x 0.075).
The 7.5% interest is an average figure used throughout the fixed
cost categories. It represents potential interest income if funds
were invested elsewhere, instead of on a beekeeping enterprise.
Depreciation expense is figured on the ACRS (accelerated cost
recovery system). Property class is 18 years of useful life;
there is no salvage value. The figure of $3883.50 has been taken
from the ACRS depreciation template and used for the first year's
annual depreciation. The other figures are for years 2 through 18
and can be used for analysis in succeeding years.
Caution: Depreciation methods and tax law requirements are
constantly changing and there are many options. Always consult
with your accountant to determine the preferred depreciation
method for your own operation. Figures provided are only a
guideline.
Structure of Spreadsheets: Notice the structure of the
spreadsheet as it appears on the screen; it's similar to that
found in all the others. The name of the file is in the upper
left-hand corner. If the sheet needs to be scrolled to the left a
cell in the upper right corner shows More---->--; follow the line
until it ends with --->END]. Now follow the ] downward to the
sheet's bottom -----END]. Scroll right until you reach the first
column and see END OF SPREADSHEET----. In many of the sheets
there may be a good deal of blank space in the upper right portion
of the sheet. Just run the cursor downward until numbers come
into view.
After examining the model thoroughly, you can try changing
numbers in this and the other spreadsheets. You can't go wrong as
long as you maintain your original diskette and use backups as
working diskettes. Unlock cells with caution; some have only
example numbers in them while others are the results of formula
calculations.
Change some of the examples shown such as electricity in
BLDGINV and watch the speed of recalculation. This capability and
the linking of the sheets are the source of the model's power and
utility--try matching recalculation speed and accuracy with a
pencil
Land: Land is not depreciable and investment in it must be
separated from capital investments like a building that occupies
it. Load the LANDINV file; land investment is estimated to be
$1875. The interest cost is calculated as follows: total land
investment x 0.075 or $675. Again, this formula is not sacred,
but is given as a guideline only!
Bees: Bee investment is estimated in the BEEINV file. Load the
file and notice the figures are based on 500 packages purchased at
$18. Places are provided for other related costs. The bees have
no depreciable value and the interest is calculated the same as
for the land.
Hives: Estimated costs of putting one beehive together are found
in the HIVEINV file. Load the file and notice percentage of costs
for each hive component. Blanks are provided to add items. Total
value is based on making 500 hives, each consisting of a standard
10-frame brood chamber and four standard deep (9 5/8") supers.
Notice that most of the costs are in beeswax (foundation), supers
(woodenware) and labor. Hive investment is depreciable and is
shown here as a ten-year-class property. The ACRS template figure
of $5342 has been entered as annual depreciation. A case can be
made for placing hives in different property classes for
depreciation; this is a guideline figure only Consult your tax
accountant. Interest is calculated the same as for the building
as noted on the spreadsheet.
Fences: A major predator of honey bee colonies in Florida is the
black bear. The estimated fixed costs associated with three bear
fences are found in the FENINV file. Load the file and notice
that blanks are provided for other costs. Fences are shown here as
ten-year-class property with no salvage value. Annual
depreciation of $97.63 comes from the ACRS template. Interest is
calculated the same as for the building.
Machinery and Equipment: Estimated fixed costs of machinery and
equipment associated with this scale of operation are shown in the
MACHINV file. Load the file. Replacement values for the 3/4 ton
truck and used 1/2 ton truck are based on 50% personal use and 50%
business use. Blanks have been added to fill in other investments
in the 3-year, 5-year and 10-year property classes. The ACRS
template reveals differing rates of depreciation based on present
property classes.
Again, consult your accountant to be sure equipment is
classed properly. It is expected that this sheet will be modified
greatly by each user. Equipment will vary significantly among
beekeeping operations, and depreciation rules are always in flux.
Trade-in values are estimates only and need careful examination.
Blanks are left to fill in other asset depreciation if necessary.
The most important figures in this sheet are the totals which will
be carried forward into the annual summary spreadsheet (ANNSUM) as
machinery and equipment replacement value, annual depreciation on
machinery and equipment and interest totals on these investments.
Again, interest is calculated as replacement costs plus salvage
value/2 X 0.075.
SUMMARIZING INVESTMENTS
A summary of the above investment (fixed) costs for this
operation is found in the ANNSUM file. Loading the file
automatically takes data from the above files (BLDGINV, LANDINV,
HIVEINV, BEEINV, MACHINV, FENINV) and puts it in summary form.
Annual depreciation and interest are loaded automatically into the
costs and returns spreadsheet (SUMCOST), when it is called up
later in this model.
Load the ANNSUM file and notice the sequence of numbers being
incorporated. The first column is taken directly from the
investment spreadsheets. Column two reveals a total investment in
each category per hive. The third column provides an idea of the
percentage of investment each category represents. Notice that
hives make up 47% of the investment, the building is 30% and
machinery and equipment are 14%. This gives the beekeeper an idea
of where he/she might cut initial investment costs if necessary.
Modifying Dependent Spreadsheets: Much of the ANNSUM file cannot
be modified as is because its figures were automatically loaded
from the investment files. Attempting to modify the figures will
result in the error message "cell locked by external copy." In
order to change such a figure, return to the investment
spreadsheet that is its source and modify it there first. For
example, if after seeing the annual investment summary, the
building costs appear too high, return to the BLDGINV file, change
it to suit your taste and then save it by answering Y to the
message overwritee existing file." Remember that only if the file
is saved under its original name, in this case BLDGINV, will the
modified figure be reflected in the ANNSUM file. See "How the Model
Works" and study Figure 1 to determine which sheets are
dependent on which. Multiplan also has a command sequence
[External (X) file (F)] which allows the user to see dependent
sheets for each spreadsheet currently in use.
FINANCING THE INVESTMENT
How the investment is financed is of utmost importance.
Total investment cost from the ANNSUM file is automatically loaded
into the FINANCE spreadsheet for analysis. Load the FINANCE file.
The default figure for total investment is $142,005.88. In order
to change this figure you must return to the investment files
(BLDGINV, LANDINV, BEEINV, HIVEINV, MACHINV, FENINV), modify and
save them, load and save the annual investment summary file
(ANNSUM) and finally load the FINANCE file. The down payment,
interest rate and years to finance can be changed, however,
providing differing monthly payment scenarios.
Both principal and interest for the first year are
automatically calculated by the FINANCE spreadsheet. Notice that
the figures are also incorporated into a cash flow scenario for
one year (January thru December). To see December, you must
scroll to the right (More--->-) and then downward. You can change
interest rate, down payment and other figures (unlock cells with
cautionl. Do not attempt to change the numbers in column three;
they are used to calculate resulting principal and interest.
Monthly interest and principal are automatically loaded from the
FINANCE file into the cash flow spreadsheet (BEECASH) when it is
called.
ESTIMATING REPAIR COSTS
Another fixed cost item is repairs on machinery and
equipment, hives, building, etc. These are estimated in the
REPCOST spreadsheet. Load the REPCOST file and notice that
investment figures are taken from their respective sheets as they
were when loading the ANNSUM file. Estimates of one percent are
used for repairs, but this can vary with individual situations.
Again, the figures are incorporated into a monthly breakdown and
will be loaded automatically into the cash flow spreadsheet
(BEECASH) when it is loaded.
The REPCOST file is also similar to the ANNSUM file in that,
to modify it, you must return to one of the investment files,
modify and save it and then load the REPCOST file again. Changing
any of the investment files subsequently requires reloading first
the ANNSUM and then FINANCE files in that order and finally, the
REPCOST file so the figures can be automatically entered into the
cash flow spreadsheet (BEECASH), or summary of costs and returns
spreadsheet (SUMCOST), both of which are dependent on figures in
the ANNSUM, FINANCE and REPCOST files.
OTHER COSTS
The many other costs to run the business may be considered
either fixed or variable. For the cash flow analysis in this
study, costs prorated on a monthly basis and, therefore,
considered fixed are rent, office supplies, tools, heating (fuel),
accounting service (November and December), real estate taxes
(June and December), insurance (November) and associations and
conventions (June and January). These expenses are found in the
OTHCOSTS spreadsheet. Load the OTHCOSTS file. Blanks are
provided to modify the sheet; remember to be sure all
modifications are incorporated into the cash flow template at the
bottom of the sheet so they will be reflected in the cash flow
spreadsheet (BEECASH) when it is called.
VARIABLE COSTS
Estimated variable costs for this model are shown in two
files: honey production costs in the BEESEQ file and packaging,
advertising and container costs in the HONSALE file. These costs
vary according to number of colonies operated and amount of
product (honey) produced. In order to analyze these expenses, the
first thing to do is examine the beekeeper's activities throughout
the year. Producing honey is a seasonal occupation, hectic in
pace during spring and summer, while often providing an abundance
of leisure time in fall and winter.
SEQUENCE OF EVENTS: THE BEEKEEPING YEAR
The following is a probable sequence of events for a
500-colony beekeeping operation in Florida. It is based on one
move per year to take advantage of the citrus flow. The figures
provided here are aggregates of all beeyards in the operation,
which might number as many as 12 to 16, each with 30 to 40 hives.
Costs are accounted for according to the month accrued and fed
into the yearly cash flow spreadsheet (BEECASH) for comparison and
to aid in financial planning.
Load the BEESEQ file and notice costs for each of the time
periods mentioned below. Again, these numbers will probably be
greatly different between operations. This file is easy to modify
after all cells are unlocked. Be sure to save the file after
modifying it using the original name so the figures are
automatically loaded into the cash flow spreadsheet (BEECASH),
when it is accessed later in the model.
A word of explanation is in order for the BEESEQ spreadsheet.
The default labels have been abbreviated because of space
limitations. They provide information on how cost estimates were
calculated. The following definitions will be helpful in
understanding these labels:
op.la operator labor hi.la hired labor col. = colony
or op. operator hi. = hired or beehive
TM oxytetracycline (Terramycin 25), a drug for controlling the
bee disease called American foulbrood.
Those not acquainted with the timing of bee management
operations should consult A Florida Beekeeping Almanac, University
of Florida, Cooperative Extension Circular 537. Only abbreviated
explanations for bee management procedures are shown on the BEESEQ
spreadsheet.
Totals for the year for each category along with the
percentage accounted for by each are shown in the BEESEQ file.
These reveal that operator labor, hired labor, sugar and queen
costs are high in comparison to other categories (drugs,
trucking). Reducing queen costs thus might provide substantial
savings, although stock performance should never be slighted in
intensive bee management. Hired labor, too, may be substituted
where possible for operator labor, which is more expensive per
hour by comparison. Delegating as many duties as possible can
free the manager's time and reduce costs as well.
The costs in the BEESEQ file can be modified. Notice that
blanks have been added for detailing other miscellaneous costs as
well. A cash flow template is automatically developed for each
cost based on the month incurred. This will then be reflected
automatically in the cash flow spreadsheet (BEECASH) when it is
loaded or called. By definition, variable expenses aren't
incurred uniformly throughout the year. The monthly inflow and
outflow of funds from an operation comprise cash flow, a major
indicator or barometer of any business. It is not always
possible, especially in agricultural endeavors, to have more
income than outgo each month, as costs and income are generated at
different times. However, on the average, cash flow must be
positive (more income than outgo) or the business will fail.
RETURNS: THE BOTTOM LINE
Now that production costs have been examined, they must be
offset by income from the operation. There are two major ways
honey is sold by the beekeeper: retail and wholesale. Most large
beekeepers sell on the wholesale market; the crop is extracted,
packed in 55-gallon drums and shipped to be processed by
middlemen, called packers. Alternatively, the beekeeper may
prefer to develop a local market and sell retail. This model
examines the effects of both wholesaling and retailing honey. As
such, it assumes the beekeeper will do some of both.
Load the HONSALE spreadsheet. Notice it is divided into
several parts. The top sections have to do with projected retail
and wholesale sales and respective container and marketing costs.
The bottom portion of the sheet includes a profit and cost
analysis and the usual cash flow template at the bottom
incorporates figures from the other sections. Again, the cash
flow figures will be available automatically to the cash flow
spreadsheet (BEECASH) when it is loaded.
The honey return per colony in this model is estimated to be
106 pounds. This is an optimistic figure and represents an
average of about 50 pounds per major flow (citrus, gallberry).
This yield multiplied by the number of colonies results in a total
of 53,000 pounds.
The HONSALE file first shows estimated costs and returns for
retailing 25,500 pounds (48% of the crop) in various sized
containers. In this case, gross retail sales are projected at
$26,545 and retail container costs are $7710. Retail marketing
costs total $2310 and include $.04 per pound for advertising
expenses and 100 hours ($650) of operator labor.
Wholesaling honey requires less work and fewer direct
expenses, but the selling price is lower as well. Packing 27,500
pounds (52% of the crop) in drums produces projected gross sales
of $12,100. Container costs are $1083.33 and marketing costs are
only $721.50.
Projected profit from total sales of $38,645 is $26,820.17.
Notice that 62% of the profit is derived from retail sales and 38%
is from wholesale sales. Total retail sales are 69% of total
sales.
The figures reveal that the majority of costs in the packing
are for containers, 74% overall, and 77 and 60% for the retail
and wholesale sides, respectively. Advertising also takes up a
large share as well, being 13% of overall costs.
Again, costs and returns do not occur evenly throughout the
year. As a consequence, total costs, as well as an estimate of
the months they will be incurred or paid, are included in the cash
flow analysis. Total honey and wax returns are projected at
$40,145. Notice that wax return is scheduled for October and
November and honey return occurs September through January.
The HONSALE spreadsheet can be easily modified because it
relies on so few linked figures (except colony numbers and pounds
of honey/colony produced) from other worksheets in the model. The
formulas used in calculations have been locked to protect the
user, but can be unlocked if necessary.
CASH FLOW
A positive cash flow over a long period of time is important
if a business is to survive. However, many operations, especially
seasonal ones like beekeeping, can have widely fluctuating costs
and returns over the year. This is the reason that the present
model attempts to estimate the time at which costs might be
incurred and income gained.
Detailed examination of the cash flow statement (BEECASH
file) shows that income is produced only 5 months of the year
(September through January). Costs, however, are incurred every
month and vary from a high of $6767.78 in August to $561.26 in
February. Use of a cash flow summary helps to separate effects of
debt retirement (principal and interest are calculated separately
and accounted for) and operator labor (see cash flow summary).
Some beekeepers prefer not to pay themselves first,
eliminating this direct cost from the cash flow statement.
Investment advisors, however, discourage the practice. Neither
depreciation nor interest on capital investments is a cash cost
and, as a consequence, is not figured into the cash flow
statement..
The cash flow statement (BEECASH) shows a negative cash
balance at the end of the year ($22,331.98). This indicates that
at least that much cash will be needed at some time during the
year, if the business is to remain solvent. There is a positive
cash flow of $16,136.79, but this is before the beekeeper is paid
(operator labor in the cash flow summary) and debt is retired.
Debt retirement is a major factor in negative cash flow; it has
been reduced from $119,453.37 to $89,559.48.
Because the BEECASH file depends on figures automatically
entered from other worksheets in the model (BEESEQ, HONSALE,
REPCOST, OTHCOSTS, FINANCE) it can only be changed by returning to
these files and modifying and then saving them using the original
file names. Once this is done, the BEECASH file will show these
modifications.
SUMMARY OF COSTS AND RETURNS
Summary of costs and returns is shown in the final worksheet
of this model (SUMCOST). Analysis of cost percentages again
reveals the part played by container expenses (18% of total
costs). Notice that depreciation represents 26% of total costs
and interest on investment is 12%; these are not cash costs and so
are not reflected in the cash flow statement (BEECASH). Gross
return over cash costs the first year is $15,236.48, representing
$30.47 per colony and $.28 per pound of honey produced.
Return on investment to the operator including both labor and
management is $4.53 per colony and $.04 per pound of honey
produced. If operator labor is paid directly, the loss is
$9539.81, or $19.08 per colony and $.17 per pound of honey
produced. It is obvious from this analysis that the operation
lost money in its first year. This does not mean the business is
a failure. Most beginning businesses lose money the first few
years of operation, especially if, as in this case, a substantial
debt must be paid off.
The SUMCOST spreadsheet takes its data from two worksheets:
BEECASH, totals of cash costs, dependent on OTHCOSTS, REPCOST,
HONSALE, BEESEQ, and FINANCE; and ANNSUM, depreciation and
interest, dependent on BLDGINV, HIVEINV, LANDINV, BEEINV, FENINV,
MACHINV. Therefore, the SUMCOST sheet can only be modified by
returning to those files that contribute to the figures in the
BEECASH and ANNSUM files, modifying and saving them, then loading
the BEECASH AND ANNSUM files, saving them and, finally, loading
the SUMCOST file.
ANALYSIS
Now that a financial model of a mid-scale beekeeping
enterprise has been constructed, some generalizations are in order
about the particular operation represented in the model. The
analysis that follows, therefore, is for the default values before
modification, and is the reason they should be saved on the
original diskette, while the user modifies a copy of the original
diskette.
At the outset, it appears that the business is not
profitable, because the return to management is in the red some
$9500. However, there are extenuating circumstances. First, the
business is paying off a heavy debt load; second, the operator is
receiving $6.50 per hour for his/her labor. Assuming the family
has other income, the loss could also be a significant tax
shelter, while the beekeeping operation is becoming established.
An examination of investment costs shows that they could be
reduced in a number of ways. The building could be rented or
reduced in size or an old building could be purchased and
renovated. Many beekeepers have little investment in excess land,
and most do not go into large-scale honey production with totally
new equipment and bees. Thus, the possibility exists that land,
hive and bee investments can be substantially reduced. Machinery
and equipment investment may also be modified, depending on the
operation. Any saving on investments, however, reduces
depreciation possibilities. Quality asset investments are
important for the business as it grows and their acquisition
should be evaluated carefully.
Obviously, the amount of financing required for this
operation is important. Anything reducing the amount of money
that needs to be borrowed would improve profitability. This means
a larger down payment or perhaps extending the payments beyond 5
years. Fluctuating interest rates on asset purchases are sure to
remain important factors in the future. It is important to
remember that interest expenses are fixed costs and must be paid
whether or not any honey is produced.
Variable costs in this operation could be examined carefully
for savings opportunities. Analyzing expenses in.the beeyard
provides insight into several savings possibilities. One is queen
cost; this represents 11% of total production outlay (notice that
this cost is for requeening only one-half the hives each year).
One consideration is to rear one's own queens; another is to find
less expensive providers of queen bees. Again, quality
considerations take on prime importance here, for no colony is
better than its queen.
Sugar is another large cost (17% of total). The price varies
considerably and substitutes such as high fructose corn syrup
(HFCS) have been substantially less expensive recently. Because it
is already in liquid form, HFCS also saves labor in mixing.
However, it must be recognized that bees store HFCS more readily
than food made from sucrose (table sugar) and, thus, the
possibility of the resultant honey being declared illegally
adulterated increases.
Operator labor is the largest variable production cost (37%
in this example) and so must be looked at carefully in terms of
cost reduction. As suggested before, any duties that can be done
by hired labor, if it frees the operator for more important work,
should be carefully considered. In many management situations,
the conventional wisdom of "do it yourself" is not the best.
Hiring and delegating duties in beekeeping seem to make eminent
sense, but only studying the effects on each operation's
profitability will prove the point.
The concept of intensively managing bee colonies also comes
into play when considering variable costs. Reducing the number of
colonies also potentially reduces beeyards and thus driving time.
Spending more management time on one colony also qualifies as
intensive activity. Most beekeepers agree that intensive colony
management pays greater dividends in the long run.
Beyond production costs, an in-depth analysis of returns in
terms of honey and marketing costs can be extremely important.
Much of the markup in agricultural produce occurs "beyond the farm
gate," and the beekeeper should, therefore, position him/herself
to take advantage of this. All too many sell their hard-won honey
inexpensively to honey processors, who take advantage of markup.
In this example, for instance, potential profit of $16,525 is
expected in the retail side of the operation (packing only 48% of
honey produced). This is significantly less than the profit
expected from the wholesale side of the operation (packing 52% of
the crop). It may be worthwhile then to look critically at
advertising and promotion in the local market; there appears to
be a large potential profit in increasing these efforts with
relatively little increased expense. Advertising costs have been
purposely set high in this model as an example.
A significant amount of cost is represented by containers in
both retail and wholesale sales. These costs should be examined
carefully because they represent such a great percentage of
possible profits.
Cash flow analysis in this model adds a significant
dimension. It shows the relative importance of loan payments, as
well as the ups and downs of income and disbursements throughout
the year. It also helps to predict when short term borrowing
might be essential to keep the business afloat, and reveals the
critical need for working capital in starting this kind of
operation. All too many businesses simply don't have enough
working capital to carry them through the first few years, when a
few dollars one way or another can spell success or disaster.
CAVEATS
The figures in this model are based on a number of
assumptions; they are not in any sense a consensus, but rather
are best guesses. Present and potential producers should not take
them as absolutes. The value of the model lies not so much in the
numbers printed here, but in the fact that economic simulation
with any set of figures is made possible with relative ease.
There are a number of ways to calculate interest on
investments and depreciation. Your best sources of advice are a
tax consultant and/or accountant and attorney. As you become more
comfortable with the model, other ways of using the templates are
sure to come to mind.
The estimate of 106 pounds of honey per colony is just that,
an estimate. Some would say that is high in Florida; another
arguable figure is the number of hours of both operator and hired
labor needed. And the list goes on: truck costs, driving time,
packing costs and labor and prevailing interest rates.
SIZE OF THE OPERATION
Although the model presented here is quite comprehensive, it
does not reveal everything about a potential business. Perhaps
one of the most elusive considerations in any endeavor is the
effect of size, sometimes called economy of scale. The basic
concept is that as size increases, so does efficiency. However,
there is a limit to this. Efficiency may in fact decrease due to
limitations in any of several variables: labor, equipment,
management and working capital.
There is a noticeable lack of economic data on beekeeping
operations in the United States. However, our Canadian neighbors
have investigated several aspects of beekeeping economics,
including effects of size. In a study from the Province of
Alberta (Andruchow, 1982) the following preface is published:
As the size of the operation increases, cost savings
can be expected in areas of operations and fixed
investment components. For example, specialized bee
equipment costs will be spread over a wider base as
the number of hives increase. Operating cost savings
can come about from the use of larger equipment, bulk
buying, and more efficient use of labor and land.
Lower production costs per pound of honey with
increased size would result in increased returns to
management.
One trend found in this study was a general decrease in
return per pound of honey as the size of the operation increased.
The average prices received per pound of honey sold were 78.65,
61.58 and 58.11 cents for operations with fewer than 100, between
100 and 699 and over 700 hives, respectively.
Investment costs per hive ranged from $546.58 for apiaries
with fewer than 10 hives, to a low of $194.75 for operations with
700 to 999 hives. Operations with 1000 hives or more had
significantly higher building and honey equipment costs (about
22%) when compared to those having 700 to 999 hives. This
appears to be justified because of purchase of labor-saving
devices such as forklifts and hive loaders.
Economies of size were most apparent for labor use in the
Alberta study. Labor per pound ranged from 87.84 cents for
operations with less than 10 hives to 13.97 cents for operations
with 700 to 999 hives. Average vehicle expenses were 5.87, 5.49
and 3.74 cents for operations with fewer than 100, 100 to 699 and
over 700 hives, respectively. Building and repair costs also
declined with size, as did operating costs.
The Alberta study indicated positive operating returns were
only seen in the 700- to 999-hive class and a positive return on
investment was only realized by operations having 400 or more
hives. In summary, the 700- to 999-hive class operations have
lowest investment, labor, operating and total production costs on
a per pound of honey sold basis. In addition, the relatively high
honey production of 151.04 pounds per hive yielded a profitable
return to apiaries within this class.
Although the Canadian study suggests that economies of scale
favor operations of 700 to 999 hives, those data must be tempered
by present and future conditions in Florida. Unlike the prairie
provinces of Canada, the Sunshine State is rapidly becoming urban
with the concomitant problems of decrease in bee pasturage,
increase in urban and agricultural pesticide usage and increase in
potential for neighbor to neighbor conflicts resulting in
beekeeping ordinances. On the other hand, more urban markets
nearby may provide more retailing opportunity.
CONCLUSIONS
The financial model presented here can provide significant
help to those contemplating a career in commercial beekeeping. It
follows decision making through investment costs, probable
operating costs in the field as correlated with the Florida
Beekeeping Almanac (Florida Cooperative Extension Circular 537,
1979) and costs and returns in marketing honey on a retail and
wholesale basis.
The aim of this model is to fill a void that has existed for
some time, by providing a guide to use in developing detailed
financial analysis. The 1980s business climate demands a "sharper
pencil." Fortunately, the decade has also provided an electronic
sharpener in the form of the microcomputer. Perhaps this
easy-to-use simulation will enable more beekeepers to be able to
say with some degree of assurance how much it costs them to
produce a pound of honey.
REFERENCES
Adams, R. L. and Frank E. Todd. "Cost of Producing Extracted
Honey in California," Technical Bulletin No. 656, United States
Department of Agriculture, Washington, D.C., 1933.
Andruchow, Lloyd. "The Economics of Beekeeping in Alberta 1980,"
Agdex 821-16, Economic Services Division, Alberta Agriculture,
September 1982.
Coke, E. W. "Apiary Records of Citrus and Tupelo Honey Producers
as Discussed at the 12th Annual Florida Beekeepers Institute,"
Florida Agricultural Extension Service, University of Florida,
(IFAS) 1966.
Owens, Charles D., Thayer Cleaver and Rodger E. Schneider. "An
Analysis of Beekeeping Production Costs and Returns,"
Production Research Report No. 151, Agricultural Research
Service, United States Department of Agriculture, 1973.
Rodenberg, Harry. "Cost of Production Survey Related to Market
Price of Honey," Am. Bee J. 107:139, 1967.
Sanford, M.T. "A Florida Beekeeping Almanac, University of
Florida, IFAS Circular 537, 1979.
Acknowledgement: This program was developed under a grant from
the Office of Instructional Resources, University of Florida. The
author also wishes to thank IBM, Dr. Jeannine Webb and those at
the University of Florida's Faculty Support Center for Computing
for invaluable assistance. In addition, I would like to thank the
reviewers: Jim Johnson, Texas Tech University; Alan Bolten, Jon
Van Blokland, Paul Willis and Karen Mettling, University of
Florida; and James Tew, Ohio Agricultural Technical Institute, for
their valuable comments.
EVALUATION
Name
Address
Affiliation
Experience in apiculture
Please comment on the value of this package with regard to the numbers
below, 1 being highest, 5 being lowest:
Rating scale
Ease of use
Documentation
Performance
Error handling
What can be added to make this package more useful?
Additional comments
Please return to:
Dr. Malcolm T. Sanford
Extension Apiculturist
University of Florida
202 Newell Hall
Gainesville, FL 32611
Ph. 904/392-1801
_I
Fig. 1 File links.
FILE NAME--BLDGINV
Number of square feet
Amount per square feet
Total building value
Electricity
Air
Truck Doors
Total building investment
Trade in value (none)
Years to depreciate
Annual depreciation
Annual interest
(Represents potential interest income
if funds were placed elsewhere)
ACRS Depreciation $3883.50
(18 year property class) $3452.00
$3020.50
$2589.00
$2157.50
$1726.00
ACRS is the Accelerated Cost Recovery System
First year's depreciation is $3883.50.
2500
$ 17.00
$42500.00
300.00
100.00
250.00
$43150.00
$0.00
18
$3883.50
$1618.13
(ACRS)
9% first & second year
8% third year
7% fourth & fifth years
6% sixth year
5% seventh & eighth years
4% until year 19
instituted in 1981.
Caution: Consult your attorney, accountant or tax preparer for the
latest IRS rules. The figures presented here for both
interest and depreciation are not necessarily those best for
all years and all operations.
FILE NAME--LANDINV
Various land invested in $1875.00
Trade in value $1875.00
Annual depreciation (none) $0.00
Annual interest on investment $140.63
FILE NAME--BEEINV
Number of packages (new colonies) 500
Price per package $18.00
Total package costs $9000.00
Other associated costs $0.00
Total investment in bees $9000.00
Trade in value $0.00
Annual depreciation (none) $0.00
Annual interest on investment $675.00
FILE NAME--HIVEINV
Costs per colony:
1 Hive bottom
5 Standard supers @ $5.80/ea
50 Standard frames $.42/ea
50 Sheets foundation $.70/ea
Rabbits 2/super x 5 @ $.25/pr
1 Inner cover @ $2.95
1 Entrance reducer @ $.25
1 Hive cover @ $4.25/ea
1 Quart paint @ $3.00
8 hours labor @ $3.85/hr
Total per new colony built
Number of new colonies built
Total hive investment
Trade in value
Years to depreciate
Annual depreciation
Annual interest on investment
ACRS Depreciation template for
hives 10 year class property
$4.80
$29.00
$21.00
$35.00
$2.50
$2.95
$0.25
$4.25
$3.00
$30.80
$133.55
500
$66775.00
$0.00
10
$5342.00
$2504.06
$5342.00
$9348.50
$8013.00
$6677.50
$6009.75
4%
22%
16%
26%
2%
2%
0%
3%
2%
23%
100%
(ACRS)
8% first year
14% second year
12% third year
10% 4th 6th year
9% 7th 10th year
Caution: A case can be made to place hives in different property
classes. Consult your accountant!
% of Cost
FILE NAME--FENINV
Costs per fence:
1 Roll wire
14 Posts
Insulators
Fencer
Labor:
2.5 hours @ $7.15/hr
2.5 hours @ $3.85/hr
Total
Total number of fences
Total fence investment
Trade in value
Years to depreciate
Annual depreciation
Annual interest on investment
ACRS Depreciation template for
fence 5-year class:
First year @ 15%
Second year @ 22%
Third thru fifth @ 21%
$15.00
$109.90
$14.56
$50.00
$17.88
$9.63
$216.96
$650.88
$0.00
5
$136.68
$24.47
% of Cost
7%
51%
7%
23%
100%
(ACRS)
$97.63
$143.19
136.68
FILE NAME--MACHINV
Equipment Replacement Salvage Year Depreciation Annual Annual
Item Value Value Class Value Depreciation Interest
3-Year Class
3/4 ton truck $5000.001 $840.00 3 $4160.00 ---- $219.00
5th wheel trailer $5000.00 $900.00 3 $4100.00 --- $221.25
Used 1/2 ton truck $2000.004 $100.00 3 $1900.00 --- $78.75
Total 3-year class $12000.00 $1840.00 $10160.00 $2540.00 $519.00
5-Year Class
Extractor $1700.00 $510.00 5 $1190.00 ---- $82.88
Whirl dry $1200.00 $360.00 5 $840.00 ---- $58.50
Brand Melter $800.00 $50.00 5 $750.00 -$31.88
Sump pump tank $500.00 $50.00 5 $450.00 ---- $20.63
Uncapper $100.00 $0.00 5 $100.00 --- $3.75
4-1000 lb tanks $620.00 $180.00 5 $440.00 --- $30.00
Boiler $50.00 $0.00 5 $50.00 --- $1.88
Feeders $500.00 $0.00 5 $500.00 ---- $18.75
Moving screens $600.00 $0.00 5 $600.00 ---- $22.50
5 batteries $200.00 $0.00 5 $200.00 --- $7.50
Bee blower $450.00 $0.00 5 $450.00 --- $16.88
Storage containers $1835.00 $0.00 5 $1835.00 -- $68.81
Total 5-year class $8555.005 $1150.00 $7405.00 $1110.75 $363.94
Totals for Annual 6
Summary $20555.00 $2990.00 $17565.00 $3650.75 $882.94
1Based on 50% personal use.
Annual depreciation for 3-yr
ACRS Depreciation template:
3Annual depreciation for 5-yr
ACRS Depreciation template:
class property:
$2540.00
$3860.80
$3759.20
class property:
$1110.75
$1629.10
S1555 '_5
FJ
S4
T1
F:
S4
*T
4
Total cost to estimate 3-year repair costs less trucks:
6Total cost to estimate 5-year repair costs: $8555.00
Interest = replacement cost plus salvage value/2 .075
Lrst year @ 25%
icond year @ 38%
lird year @ 37%
first year @ 5%
second year @22%
third thru fifth @ 12%
$5000.00
FILE NAME--ANNSUM
Replacement Inv. Cost Percent of Trade in
Value per Hive Investment Value
Annual Annual
Years Depreciation Interest
Building
Hives
Bees
Machinery and equipment
Fences
Land
Totals
$43150.00
$66775.00
$9000.00
$20555.00
$650.88
$1875.00
$142005.88
86.30
133.55
18.00
41.11
1.30
3.75
284.01
30%
47%
6%
14%
0%
1%
100%
18
10
MISC
10
$0.00
$0.00
$0.00
$2990.00
$0.00
$1875.00
$4865.00
$3883.50
$5342.00
$0.00
$3650.75
$97.63
$0.00
$12973.88
$1618.13
$2504.06
$675.50
$882.94
$24.41
$140.63
$5845.16
FILE NAME--FINANCE
Total financial investment
Amount down
To finance:
Interest rate
Years to finance
$142005.88
$19834.88
$122171.00
12%
5
MONTHLY PAYMENTS ARE -------------- $2717.63
OF 12 MONTH PERIOD --------------- 1
PYMNT PRINCIPAL INTEREST BALANCE
1 1495.92 1221.71. 120675.08
2 1510.88 1206.75 119164.21
3 1525.99 1191.64 117638.22
4 1541.25 1176.38 116096.98
5 1556.66 1160.97 114540.32
6 1572.23 1145.40 112968.10
7 1587.95 1129.68 111380.10
8 1603.83 1113.80 109776.30
9 1619.87 1097.76 108156.40
10 1636.07 1081.56 106520.40
11 1652.43 1065.20 104867.98
12 1668.95 1048.68 103199.04
Totals 18971.96 13639.55
FILE NAME--REPCOST
Investment Est. Repair Per month
Building @ 1% of cost $43150.00 $431.50 $35.96
Hives @ 1% of cost $66775.00 $667.75 $55.65
Machinery, 3-year class @ 1% $5000.00 $50.00 $4.17
Machinery, 5-year class @ 1% $8555.00 $85.55 $7.13
Fences @ 1% of cost $650.00 $6.51 $0.54
Total $1241.31 $103.44
FILE NAME--BEESEQ
In Florida, the beekeeping year can start as early as January. During this month, the beekeeper makes his first colony
inspection and may begin to feed the bees for population buildup. The following estimated costs for the month of January
are for 450 colonies, supposing a 50 colony loss over winter from the usual 500. The total number of hives will be
brought to 500 in February.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor(Hrs) Labor Labor(Hrs) Truck Miles Queens
10 lb sugar @ $.25/lb x 450 col. $1125.00
.01 lb TM 25 @ $6/lb x 450 col. $27.00
10 min op.la/col. @ $6.50/hr $487.50 75
5 min hi.la/col. @ $3.50/hr $131.25 37.5
150 truck miles @ $.32/mile $48.00 150
2 hr op. drive time @ $6.50/hr $13.00 2
1 hr hi. drive time @ $3.50/hr $3.50 1
Note: Terramycin (TM 25) is routinely used as a disease preventative in most beekeeping operations. Op. La refers to
operator labor; hi. la to hired labor; op to operator; hi to hired; hr to hours; col. to colony or beehive.
In February, maple and willow are blooming heavily and populations are beginning to increase rapidly. At this time, the
beekeeper makes increase or divisions to replenish colony numbers, 50 new colonies are made by divisions. The following
are the estimated costs for the month of February:
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
7 lb sugar @ $.25/lb x 50 col. $87.50
10 min op. la./col. @ $6.50/hr $54.17 8
5 min hi la/col x 50 @ $3.50/hr $14.58 4
20 truck miles @ $.32/mile $6.40 20
1 hr op. drive time @ $6.50/hr $6.50 1
1 hr hi. drive time @ $3.50/hr $3.50 1
50 queens @ $5.00/ea $250.00
Beekeeping gets into full swing in March, and colonies are moved into the citrus groves and supered up by the middle of
the month. The following are estimated costs for March 1 through 15.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
10 min op. la./col. x 500 col. @ $6.50/hr $541.67 83
10 min hi. la./col. x 500 col. @ $3.50/hr $291.67 83
800 truck miles @ $.32/mile $256.00 800
8 hr op. drive time @ $6.50/hr $52.00 8
8 hr hi. drive time @ $3.50/hr $28.00 8
Meals, hotel, telephone $160.00
From the middle of March to mid April, citrus honey is harvested and extracted. The following are estimated costs for
March 15 through April 15.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
Pull Citrus Honey on 500 colonies:
5 min op. la./col. x 500 col. @ $6.50/hr $270.83 42
5 min hi. la./col. x 500 col. @ $3.50/hr $145.83 42
500 truck miles @ $.32/mile $160.00 500
5 hr op. drive time @ $6.50/hr $32.50 5
5 hr hi. drive time @ $3.50/hr $17.50 5
Meals, hotel, telephone $160.00
Extract Citrus Honey on 500 colonies:
50 hr op. la. @ $6.50/hr $325.00 50
50 hr hi. la. @ $3.50/hr $175.00 50
100 truck miles @ $.32/mile $32.00 100
2 hr op. drive time @ $6.50/hr $13.00 2
2 hr hi. drive time @ $3.50/hr $7.00 2
From mid April until the end of May, the bees are moved from citrus into gallberry and/or palmetto locations. The
following are estimated costs for April 15 through May 20.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
10 min op. la./col. x 500 col. @ $6.50/hr $541.67 83
10 min hi. la./col. x 500 col. @ $3.50/hr $291.67 83
800 truck miles @ $.32/mi $256.00 800
8 hr op. drive time @ $6.50/hr $52.00 8
8 hr hi. drive time @ $3.50/hr $28.00 8
Meals,hotel, telephone $160.00
The end of May and first half of June marks the harvest of gallberry and palmetto honey. The following are estimated
costs for May 20 through June 15.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
5 min op. la./col. x 500 col. @ $6.50/hr $270.83 42
5 min hi. la./col. x 500 col. @ $3.50/hr $145.83 42
500 truck miles @ $.32/mile $160.00 500
5 hr op. drive time @ $6.50/hr $32.50 5
5 hr hi. drive time @ $3.50/hr $17.50 5
Meals, hotel, telephone $160.00
Extraction is finished up in June and July. The honey is also being packed at this time. The following are estimated
costs from June 15 through July 15.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
40 hr op. la. @ $6.50/hr $260.00 40
40 hr hi. la. @ $3.50/hr $140.00 40
200 truck miles @ $.32/mile $64.00 200
2 hr op. drive time @ $6.50/hr $13.00 2
2 hr hi. drive time @ $3.50/hr $7.00 2
From mid July until the September 1, there is little work in the beeyard. However, packing and marketing the crop
are:inftlll swing. Beginning some time in September, colonies are requeened and fed in preparation for winter.
The following are estimated costs for July 15 through September 15.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
250 queens @ $5.00/ea $1250.00
10 lb sugar @ $.25 x 500 col. $1250.00
.01 lb TM 25 @ $6/lb x 500 col. $30.00
1 tsp fumagillin @ $1.30 x 500 $650.00
10 min op. la./col @ $6.50 (500) $541.67 83
5 min op. la./col @ $3.50 (500) $145.83 42
300 truck miles @ $.32/mile $96.00 300
3 hr op. drive time @ $6.50/hr $19.50 3
3 hr hi. drive time @ $3.50/hr $10.50 3
During the latter part of September, colonies are checked for queen acceptance and population level. A further, final
inspection occurs in October or November and colonies weak in numbers are combined with stronger ones, in keeping with
the beekeeper's philosophy of taking winter losses in the fall. The following are estimated costs for September 15
through November 15.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
5 min op. la. x 250 col. @ $6.50/hr $135.42 21
150 truck miles @ $.32/mile $48.00 150
3 hr op. drive time @ $6.50/hr $19.50 20
There are a number of miscellaneous activities for the beekeeper to be engaged in from November through December. These
include hive maintenance (repair and painting) and perhaps most important, planning for the coming year. The following
are estimated costs for November 15 through December 31.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles Queens
Maintenance 200 op. la. @ $6.50 $1300.00 200
Maintenance 200 hi. la. @ $3.50 $700.00 200
600 truck miles @ $.32/mile $192.00 600
Planning 40 op. hrs @ $6.50 $260.00 40
Totals for the year for each category along with the percentage accounted for by each are provided below. This shows
that operator labor, hired labor, sugar and queen costs are high in comparison to other categories (drugs, trucking).
Reducing queen costs, for example, might provide savings, although stock performance should never be slighted in inten-
sive bee management. Hired labor too, may be substituted for operator labor, which is less expensive per hour by
comparison.
Operator Operator Hired Hired Truck
Categories Sugar Drug Misc Labor Labor (Hrs) Labor Labor (Hrs) Truck Miles queens
Annual totals $2462.50 $707.00 $640.00 $5242.25 823 $2304.17 658 $1318.40 4120 $1500.00
Cost percentages of total 17% 5% 5% 37% 16% 9% 11%
Total or 100% of costs:
$14174.32
FILE NAME--OTHCOSTS
Costs Monthly Months Payment
Due
Rent
Office supplies
Tools
Accounting service
Real estate taxes
Insurance except trucks
Associations & Conventions
Heating, fuel
Total
$400.00
$150.00
$200.00
$175.00
$500.00
$500.00
$400.00
$400.00
$2725.00
$33.33
$12.50
$16.67
$33.33
Nov & Dec
Jun & Dec
November
Jun & Jan
FILE NAME--HONSALE
Container Number Total cost Price per
Total lbs Size (lb) needed Cost of container Pound Total sell
Retail and local sales: 12000 60 200 $4.00 $800.00 $0.95 $11400.00
4000 5 800 $1.80 $1440.00 $0.98 $3920.00
3500 2 1750 $1.00 $1750.00 $1.15 $4025.00
6000 1 6000 $0.62 $3720.00 $1.20 $7200.00
25500 $7710.00 $26545.00
Retail Total marketing
Marketing Costs Total Ibs Cost/lb Miles Cost/mile # hrs Cost/hr cost
Advertising 25500 $0.04 $1020.00
Transportation 2000 $0.32 $640.00
Hired labor 0 $3.50 $0.00
Operator labor 100 $6.50 $650.00
TOTAL $2310.00
Container Number Total Total Selling
Total Pounds Size (Ib) Needed Price Cost Price/Lb Price
Wholesale sales 27500 660 42 $26.00 $1083.33 $0.44 $12100.00
Total marketing
Marketing Costs Total lbs Cost/lb Miles Cost/mile # hrs Cost/hr cost
Advertising 27500 0.02 $550.00
Transportation 300 $0.32 $96.00
Hired labor 3 $3.50 $10.50
Operator labor 10 $6.50 $65.00
Total $721.50
Profit and Cost Analysis:
Total Sales
Total Retail Sales
Retail Container Costs
Retail Advertising Costs
Retail Transport Costs
Retail Hired Labor Costs
Retail Operator Labor Costs
Total Costs
Retail Profit ------- >
$38645.00
$7710.00
$1020.00
$640.00
$0.00
$650.00
$26545.00
$10020.00
$16525.00
% Sales % Retail
Costs
69%
77%
10%
6%
0%
6%
62% <----Percent
Total Profit
% Sales %
Wholesale
Costs
Total Wholesale Sales
Wholesale Container Costs
Wholesale Advertising Costs
Wholesale Transport Costs
Wholesale Hired Labor Costs
Wholesale Operator Labor Costs
Total Costs
Wholesale Profit --------- >
Total Profit -----------------
Total Retail Costs
Total Wholesale Costs
Retail and Wholesale Costs
Cost
Total
Total
Total
Total
Total
container costs
advertising costs
transport costs
hired labor costs
operator labor costs
$1083.33
$550.00
$96.00
$10.50
$65.00
$12100.00
$1804.83
$10295.17
$26820.17
$10020.00
$1804.83
$11824.83
$8793.33
$1570.00
$736.00
$10.50
$715.00
60%
30%
5%
1%
4%
38% <----Percent
Total Profit
% Total
Costs
85%
15%
100%
Jul & Aug
Sep & Oct
Oct & Nov
November
Oct & Nov
Total Honey Return
Total Wax Return:
Cappings
$38645.00 Sep-Jan
Lbs Cappings Lbs Other
250
$/lb
$2.00
Total
$500.00
500
Other wax rendering
Total wax return
Total return (honey and wax)
$2.00
(Oct & Nov)
$1000.00
$1500.00
$40145.00
FILE NAME--BEECASH
January February March April May June
CASH INFLOW
Honey sales $7729.00 $0.00 $0.00 $0.00 $0.00 $0.00
Wax sales $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Other income $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
TOTAL CASH INFLOW $7729.00 $0.00 $0.00 $0.00 $0.00 $0.00
----------------------------------------------------------------------------------------------------------------
CASH OUTFLOW
Sugar $1125.00 $87.50 $0.00 $0.00 $0.00 $0.00
Drugs $27.00 $0.00 $0.00 $0.00 $0.00 $0.00
Misc. expenses (production) $0.00 $0.00 $240.00 $80.00 $160.00 $160.00
Hired labor (production) $134.75 $18.08 $319.67 $345.33 $465.50 $157.50
Truck costs (production) $48.00 $6.40 $256.00 $192.00 $256.00 $160.00
Containers $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Queens $0.00 $250.00 $0.00 $0.00 $0.00 $0.00
Repairs $103.44 $103.44 $103.44 $103.44 $103.44 $103.44
Hired Labor (packing) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Truck costs (packing) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Rent $33.33 $33.33 $33.33 $33.33 $33.33 $33.33
Office supplies $12.50 $12.50 $12.50 $12.50 $12.50 $12.50
Tools $16.67 $16.67 $16.67 $16.67 $16.67 $16.67
Accounting service $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Insurance $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Real estate taxes $0.00 $0.00 $0.00 $0.00 $0.00 $250.00
Advertising $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Associations & Conventions $200.00 $0.00 $0.00 $0.00 $0.00 $200.00
Heating, fuel $33.33 $33.33 $33.33 $33.33 $33.33 $33.33
TOTAL CASH OUTFLOW $1734.03 $561.26 $1014.94 $816.61 $1080.79 $1126.78
---------------------------------------------------------------------------------------------------------------------
$816.61 ($1080.78) ($1126.78)
January
CASH FLOW SUMMARY
Net cash flow
+Beginning cash balance
-New capital investment
+Down payment (cash)
+New long-term borrowing
-Monthly long-term principal
-Long-term interest expense
-Operator labor (production)
-Operator labor (packing)
+Short-term borrowing
-Short-term principal
-Short-term interest expense
$5994.97
$100.00
$142005.88
$19834.88
$122171.00
$1495.92
$1221.71
$500.50
$0.00
$0.00
$0.00
$0.00
February
($561.26)
$2876.85
$0.00
$0.00
$0.00
$1510.88
$1206.75
$60.67
$0.00
$0.00
$0.00
$0.00
March
($1014.94)
($462.70)
$0.00
$0.00
$0.00
$1525.98
$1191.64
$593.67
$0.00
$0.00
$0.00
$0.00
April
($816.61)
($4708.94)
$0.00
$0.00
$0.00
$1541.24
$1176.38
$641.33
$0.00
$0.00
$0.00
$0.00
May
($1080.78)
($8964.51)
$0.00
$0.00
$0.00
$1556.66
$1160.97
$897.00
$0.00
$0.00
$0.00
$0.00
June
($1126.78)
($13659.91)
$0.00
$0.00
$0.00
$1572.22
$1145.40
$260.00
$0.00
$0.00
$0.00
$0.00
ENDING CASH BALANCE $2876.85 ($462.70) ($4788.94) ($8964.51) ($13659.91) ($17764.31)
ACCUMULATED BORROWINGS $119453.37 $116735.75 $114018.12 $111300.49 $108582.87 $105865.24
------------------------------------ ------------------------------------------ _
($561.26) $1014.94
$5994.97
TOTAL CASH FLOW
July August September October November December Year Totals
CASH INFLOW
$0.00 $0.00 $7729.00 $7729.00 $7729.00 $7729.00 $38645.00 Honey sales
$0.00 $0.00 $0.00 $750.00 $750.00 $0.00 $1500.00 Wax sales
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Other income
$0.00 $0.00 $7729.00 $8479.00 $8479.00 $7729.00 $40145.00 TOTAL CASH INFLOW
----------------------------------------------- ------------------------------------------------------------------
$0.00
$0.00
$0.00
$350.00
$192.00
$0.00
$0.00
$103.44
$10.50
$368.00
$33.33
$12.50
$16.67
$87.50
$500.00
$0.00
$0.00
$0.00
$33.33
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$103.44
$0.00
$0.00
$33.33
$12.50
$16.67
$87.50
$0.00
$250.00
$0.00
$0.00
$33.33
$2462.50
$707.00
$640.00
$2304.17
$1318.40
$8793.33
$1500.00
$1241.31
$10.50
$736.00
$400.00
$150.00
$200.00
$175.00
$500.00
$500.00
$1570.00
$400.00
$400.00
CASH OUTFLOW
Sugar
Drugs
Misc. Expenses (production)
Hired labor (production)
Truck costs (production)
Containers
Queens
Repairs
Hired labor
Truck costs
(packing)
(packing)
Rent
Office supplies
Tools
Accounting service
Insurance
Real estate taxes
Advertising
Associations & Conventions
Heating, fuel
$1702.28 $1707.28 $536.78 $24008.21
$1250.00
$0.00
$0.00
$7.00
$64.00
$4396.67
$0.00
$103.44
$0.00
$0.00
$33.33
$12.50
$16.67
$0.00
$0.00
$0.00
$0.00
$0.00
$33.33
$0.00
$680.00
$0.00
$145.83
$96.00
$4396.67
$1250.00
$103.44
$0.00
$0.00
$33.33
$12.50
$16.67
$0.00
$0.00
$0.00
$0.00
$0.00
$33.33
$0.00
$0.00
$0.00
$10.50
$48.00
$0.00
$0.00
$103.44
$0.00
$0.00
$33.33
$12.50
$16.67
$0.00
$0.00
$0.00
$785.00
$0.00
$33.33
$0.00
$0.00
$0.00
$350.00
$0.00
$0.00
$0.00
$103.44
$0.00
$368.00
$33.33
$12.50
$16.67
$0.00
$0.00
$0.00
$785.00
$0.00
$33.33
$5916.94 $6767.78 $1042.78
TOTAL CASH OUTFLOW
($5916.94) ($6767.78) $6686.22 $6776.72 $6771.72 $7192.22 $16136.79 TOTAL CASH OUTFLOW
July August September October November December Totals
($5916.94) ($6767.78) $6686.22 $6776.72 $6771.72 $7192.22 $16136.79 Net cash flow
($17764.31) ($26411.88) ($36458.45) ($32644.77) ($29593.17) ($26546.57) ($22331.98) +Beginning cash balance
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $142005.88 -New capital investment
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $19834.88 +Down payment (cash)
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $122171.00 +New long-term borrowing
$1587.95 $1603.82 $1619.86 $1636.06 $1652.42 $1668.95 $18971.96 -Monthly long-term principal
$1129.68 $1113.80 $1097.76 $1081.56 $1065.20 $1048.68 $13639.55 -Long-term interest expense
$13.00 $561.17 $154.92 $650.00 $650.00 $260.00 $5242.25 -Operator labor (production)
$0.00 $0.00 $0.00 $357.50 $357.50 $0.00 $715.00 -Operator labor (packing)
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 +Short-term borrowing
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -Short-term principal
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -Short-term interest expense
($26411.88) ($36458.45) ($32644.77) ($29593.17) ($26546.57) ($22331.98) ($22331.98) ENDING CASH BALANCE
$103147.62 $100429.99 $97712.36 $94994.74 $92277.11 $89559.48 $89559.48 ACCUMULATED BORROWINGS
FILE NAME--SUMCOST
Total Annual Percent of Per lb
Costs Total Cost Per Hive of Honey
Sugar
Medication
Hired labor (production)
Truck costs (production)
Containers
Queens
Repairs
Truck costs (packing)
Hired labor (packing)
Rent
Office supplies
Tools
Accounting service
Real estate taxes
Insurance, except trucks
Advertising
Associations & conventions
Misc. Expenses (production)
Heating, fuel
Total operating capital
Interest on operating capital
TOTAL CASH COSTS
Depreciation
Interest on investment
Operator labor (packing)
Operator labor (production)
TOTAL COSTS
$2462.50
$707.00
$2304.17
$1318.40
$8793.33
$1500.00
$1241.31
$736.00
$10.50
$400.00
$150.00
$200.00
$175.00
$500.00
$500.00
$1570.00
$400.00
$640.00
$400.00
$24008.21
$900.31
$24908.52
$12973.88
$5845.16
$715.00
$5242.25
$49684.81
$40145.00
5%
1%
5%
3%
18%
3%
2%
1%
0%
1%
0%
0%
0%
1%
1%
3%
1%
1%
1%
48%
2%
50%
26%
12%
1%
11%
100%
$4.93
$1.41
*$4.61
$2.64
$17.59
$3.00
$2.48
$1.47
$0.02
$0.80
$0.30
$0.40
$0.35
$1.00
$1.00
$3.14
$0.80
$1.28
$0.80
$48.02
$1.80
$49.82
$25.95
$11.69
$1.43
$10.48
$99.37
$0.04
$0.01
$0.04
$0.02
$0.16
$0.03
$0.02
$0.01
$0.00
$0.01
$0.00
$0.00
$0.00
$0.01
$0.01
$0.03
$0.01
$0.01
$0.01
$0.44
$0.02
$0.45
$0.24
$0.11
$0.01
$0.10
$0.90
$80.29 $0.73
Expected gross return
less
Return
less
Return
less
Return
less
Return
total cash
over cash costs
depreciation
to inv., op. la. and mgmt*
interest
to operator labor & mgmt
operator labor
to management
*Investment, operator labor and management
$24908.52
$15236.48
$12973.88
$2262.60
$5845.16
($3582.56)
$5957.25
($9539.81)
$49.82
$30.47
$25.95
$4.53
$11.69
($7.17)
$11.91
($19.08)
$0.45
$0.28
$0.24
$0.04
$0.11
($0.07)
$0.11
($0.17)
SCIENCE
LIBRARY
This publication was produced at a cost of $567.06, or $2.64 per copy, to assist beekeepers to maximize profitability
of operations. 8-215-86
COOPERATIVE EXTENSION SERVICE, UNIVERSITY OF FLORIDA, INSTITUTE OF FOOD AND AGRICULTURAL SCIENCES. K.R. Tkrml.
da in pon opr lon ihth m United Stadt Depr ot Agrcul, pubiehus lmthin mnn a ter th purpore a May 8 and
Juw3 30, 1t14 A oA f Cong w; nd Is matoristedt rod ie h, duona infwrmUon ad w d oalyt b alsd d
ontlMlt hfumon wMiut d oa rmd colmo a or a onata ogn. Sin0g cpisrE t EdMt n pu*IUaas(A g +l ad th p"umth __
tin) m aroabe e m F lorida n Wdint on County Extmnmn Olffi. Inmarn on on buk ra* or cops fr o* p s
MaNbl ftm C"M. HItn. Pubcom Diutrbuon Cmn s BuPdiMg 4, U r ityi Florida Gnme Florida Beor pubi g t pubi
dae should conact thi adne a O detnine wlabli.
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