Cost Benefit Analysis for Controlling Diaprepes
Ronald P. Muraro
University of Florida, IFAS
Citrus Research and Education Center
Lake Alfred, FL 33850, USA
Since the 1960s when Diaprepes was introduced into Florida, over 30,000 acres of citrus in 21 counties have been infested. The grower returns have been affected both by reduced yields (revenue) and additional cultural costs to control Diaprepes. As Dr. David G. Hall indicated earlier, fruit yields could be reduced 40% without an adequate control program. This paper will discuss the estimated costs of the Diaprepes IPM control programs discussed by Dr. Clayton W. McCoy and Dr. Larry W. Duncan. Also, a comparison of grower returns if each IPM program is implemented will be presented as well as potential losses if no Diaprepes control program is initiated by a grower.
Estimated Cost of Diaprepes IPM Control Programs
Referring to the Diaprepes IPM control programs discussed by Dr. Clayton McCoy, the estimated costs for each of these programs are shown in Table 1. The first control defense suggested was "foliar sprays" during April and May for controlling the adult Diaprepes. Several insecticide products were indicated by Dr. McCoy (Sevin, Guthion, and Orthene) which could be used in a Diaprepes foliar spray. Sevin 4F XLR was selected as the insecticide for our example. The estimated cost per spray application of Sevin 4F was $73.20 per acre. Two sprays are recommended which would result in a total "foliar spray" control cost of $146.40 per acre.
A second IPM control program discussed by Dr. McCoy, was the use of "biological control" or the use of parasitic nematodes. Bio-Vector 355 at 200 million nematodes per acre was used in the example. Two applications are recommended: one in the summer and one in early fall. The estimated cost per application of Bio-Vector 355 was $35 per acre or $70 per acre for the two applications. If the nematode treatment is applied through an irrigation system, the application cost would be approximately $3 per acre resulting in a per application cost of $28 per acre.
A third IPM control for Diaprepes would be a "soil barrier treatment" applied in the spring. Capture 2 EC was the material used to estimate the cost for this control program. The estimated cost for the soil barrier treatment was $68.75 per acre.
The fourth recommended IPM control program for Diaprepes is for the control of the foot rot fungus Phytophthora. In grove sites where poor water drainage is a problem or where soil tests indicate a high concentration of the Phytophthora pathogens, the recommendation is to treat the soil to at least a six-inch depth under the tree canopy where most of the "feeder roots" of the tree are located. Ridomil Gold EC was used to estimate the cost for Phytophthora control. The estimated cost per application using Ridomil Gold EC was $93.44 per acre. Two applications are recommended, one during the summer months and the second during the fall, for a total cost of $186.88 per acre. If applied through irrigation system, the cost per application would be $86.44 per acre.
Economic/Cost Benefits of Diaprepes IPM Control Programs
To analyze the economic/cost benefits of the Diaprepes IPM programs described above, a 15-year discounted cash budget analysis was used to compare projected cumulative annual net returns. The descriptive citrus grove data used in the analysis is shown in Table 2. The example grove is a 10+ year old 'Valencia' orange grove with a planting density of 145 trees per acre. Annual tree loss is assumed to be 3% per year under a Diaprepes control program and 5% per year with no control program. Average yields from a southwest Florida yield study was used in the analysis. Grove care costs, including overhead/administrative costs, for a processed juice cultural program was estimated to be $757.28. Annual reset/replacement costs was estimated to be $83.43 per acre at the 3% tree loss rate and $123.54 per acre at the 5% tree loss rate. On-tree price used in the analysis was $5/box and the discount rate was 10%.
The following seven grove scenarios were analyzed for comparing the net returns of Diaprepes IPM control programs.
Scenario #1: No Diaprepes infestation with no reduction in normal expected yields.
Scenario #2: Diaprepes control #1 which includes only two "foliar sprays" applications for an additional grove care costs of $146.40 per acre.
Scenario #3: Diaprepes control #2 which includes the two "foliar sprays" as well as the "biological control treatments". The additional grove care costs for this scenario would be $216.40 per acre.
Scenario #4: Diaprepes control #3 which includes the two "foliar sprays", plus "biological control treatments" and the "soil barrier treatment". The additional grove care costs for this scenario would be $285.15 per acre.
Scenario #5: Diaprepes control #4 which includes the two "foliar sprays", plus "biological control treatments" and the "Phytophthora control." The additional grove care costs for this scenario would be $403.28 per acre.
Scenario #6: Diaprepes control #5 which includes the two "foliar sprays", plus "biological control treatments", the "soil barrier treatment" plus the "Phytophthora control". The additional grove care costs for this scenario would be $472.03 per acre.
Scenario #7: Diaprepes infestation with "no Diaprepes control" program and a 40% reduction in normal expected yields.
For comparison purposes, a scenario for both a non-infested Diaprepes grove and an infested Diaprepes grove with "no control programs" are included. Also, each scenario with a Diaprepes infestation and a control program, two net cash flow situations are presented: one with "no yield reduction" and one with a "15% yield reduction". For the scenario with a Diaprepes infestation and no control program, the yield reduction is assumed to be 40% of normal expected yields.
Summary of the 15-year net cumulative cash flow for the Diaprepes economic/cost analysis is shown in Table 3. The first value, actual/nominal value, is the 15-year sum of the annual net cash flows. The second value is the net present value (NPV) of the 15-year net income stream. Scenario 1 with no Diaprepes infestation represents a more realistic/typical economic comparison of a Florida 'Valencia' orange grove. With a cumulative cash flow of $15,628 and an NPV of $7,924/acre, Scenario 1 shows the benefits of not having a Diaprepes infestation in a citrus grove.
Scenarios 2 through 6 represent five possible Diaprepes control programs ranging from only "foliar sprays" (Scenario 2) to an all inclusive IPM control program (Scenario 6) including foliar sprays, biological control, soil barrier treatment and Phytophthora control. Each scenario was analyzed assuming no yield reduction and a possible 15% yield reduction. With no reduction in yields, all five scenarios had a positive NPV. However, due to the additional cost of the applicable Diaprepes control programs, the decrease in NPV from Scenario 1 ranged from 14% to 45%. When a 15% yield reduction was assumed, the NPV's remained positive except the decrease from Scenario 1 ranged from 41% to 72%.
Scenario 7 represents a grove situation where a Diaprepes infestation is present but no Diaprepes IPM control program has been implemented. In this scenario, yields are assumed to decrease by 40% along with an increase in annual tree loss from 3% to 5%. The result is a positive NPV but at an economic cost of 95% decrease from the NPV of Scenario 1.
Summary
Diaprepes now infects over 30,000 acres of citrus in Florida. Without adequate controls, this pest can render a citrus grove operation non-profitable. The current alternative Diaprepes control programs add substantial costs to the cultural operation of a citrus grove. Utilizing the current recommended Diaprepes control programs has the potential of maintaining a positive cash flow for a citrus grove. Without any controls, a Diaprepes infested grove will likely be rendered uneconomical.
References
1. Hall, David G. 2000. History and Importance of Diaprepes to Florida. Paper presented at the March 22, 2000 "Diaprepes Short Course" held at the Citrus REC, Lake Alfred, FL.
2. McCoy, Clayton W. and Larry W. Duncan. 2000. IPM: An Emerging Strategy for Diaprepes in Florida Citrus. Paper Presented at the March 22, 2000 "Diaprepes Short Course" held at the Citrus REC, Lake Alfred, FL.
3. Muraro, Ronald P., Fritz M. Roka and Robert E. Rouse. 1999. Budgeting Costs and Returns for Southwest Florida Citrus Production, 1998-99. University of Florida, IFAS, Food and Resource Economics Information Report EI 99-5. October. 41 pages.
Table 1. Estimated costs for cultural programs for controlling Diaprepes in Florida citrus groves, 1998-99.
| Foliar Sprays: (Spring) | $/Acre |
|---|---|
| Material: Sevin XLR @ 2 gals/acre | $50.18 |
| 1 gal (97+%) | 2.04 |
| Ground application @ 150 GPA | 20.98 |
| Total cost of one foliar spray | $73.20 |
| Cost of 2 foliar sprays | $146.40 |
| Biological Control: (Summer and Early Fall) | |
| Material: Bio-Vector @ 200 million nematodes/acre | $25.00 |
| Custom application with herbicide booma | 10.00 |
| Total cost of one application | $35.00 |
| Cost of two applications | $70.00 |
| Soil Barrier Treatment: (Spring) | |
| Material: Capture 2 EC @ 1 pt/acreb | $58.75 |
| Custom application with herbicide boom | 10.00 |
| Total cost of one application | $68.75 |
| Phytophthora Control | |
| Material: Ridomil Gold EC @ 1 pt/acreb | $83.44 |
| Custom application with herbicide booma | 10.00 |
| Total cost of one application | $93.44 |
| Cost of two applications | $186.88 |
| aEstimated charge/cost for injecting material into an irrigation system is $3.00 per acre. bWith respect to materials, Amount Per Grove Acre does not equal Amount Per Treated Acre shown on the label as only a strip or band is being treated. In this report, it is assumed that only 50% or one-half of a grove acre is being treated. |
|
Table 2. Assumptions used in the Diaprepes economic analysis in Florida citrus groves, 1998-99.
| Variety | 'Valencia' orange (10+ years) |
|---|---|
| Trees per acre | 145 |
| Annual tree loss rate | 3% with Diaprepes control program 5% with NO Diaprepes control program |
| Average per tree yields | From Southwest Florida yield study |
| Grove care cost without Diaprepes control (includes overhead/administrative costs) |
$757.28/acre |
| Estimated annual reset/replacement cost | @ 3% rate: $83.43/acre @ 5% rate: $123.54/acre |
| On-tree price per box | $5.00/box |
| Discount rate | 10% |
Table 3. Summary of the 15-year net cumulative cash flow for the Diaprepes economic analysis in Florida citrus groves, 1998-99.
| Scenario | % yield reduction | Actual/ nominal value $/acre |
NPVa @ 10% $/acre |
|
|---|---|---|---|---|
| # 1 | No Diaprepes infestationb (Total grove care cost of $757.28/acre)c |
0.0% | 15,628 | 7,924 |
| # 2 | Diaprepes control #1b (Total grove care cost of $903.68/acre)c |
0.0% 15.0% |
13,432 9,196 |
6,811 4,663 |
| #3 | Diaprepes control #2b (Total grove care cost of $973.68/acre)c |
0.0% 15.0% |
12,382 8,146 |
6,278 4,131 |
| #4 | Diaprepes control #3b (Total grove care cost of $1,042.43/acre)c |
0.0% 15.0% |
11,350 7,115 |
5,755 2,608 |
| #5 | Diaprepes control #4b (Total grove care cost of $1,160.56/acre)c |
0.0% 15.0% |
9,578 5,343 |
4,857 2,709 |
| #6 | Diaprepes control #5b (Total grove care cost of $1,229.31/acre)c |
0.0% 15.0% |
8,547 4,311 |
4,334 2,186 |
| #7 | Diaprepes infestationb without control (Total grove care cost of $757.28/acre)d |
40.0% | 671 | 340 |
| aNPV = Net Present Value. bRefer to text for description of each scenario. cEstimated annual cost of a 3% annual reset/replacement program was $83.43/acre which was added to the scenario grove care cost in the economic analysis. dEstimated annual cost of a 5% annual reset/replacement program was $123.54/acre which was added to the scenario grove care cost in the economic analysis. |
||||
