SUBSTRATE TUTORIAL INSTRUCTIONS

Open the tutorial.xls Excel Workbook which is in the Hort4050 web home page directory. Select the SUBSTRATE worksheet. If needed, change the screen size of Excel so that the bottom right cell of your window reads "*SC1*.

To make sure that you have set the screen to the correct size, click on the cell containing *SC1* then hit the page down button; the *SC2* cell should now be highlighted. If not, adjust the screen size either larger or smaller and repeat this procedure until the *SC2* cell is highlighted.

Proceed through the first of the two parts of that tutorial. The first part leads you through an example problem to show how to determine the cost of producing a 1 mineral soil : 2 peat moss : 2 perlite substrate using the pad system. Note that equipment costs change with ingredients (peat moss requires a bale fluffer; mineral soil needs steam pasteurization equipment). Part 2 begins on screen 20 and presents you with blanks into which you can enter your own substrate mixing scenario. Go through part 2 entering the appropriate information pertaining to Exercise 1 below. Then alter Exercise 1 as appropriate to answer the questions asked in Exercises 2 through 5.

  1. What does it cost per cu. yd. to make the following substrate? What is the point of indifference? You will be making 500 cu. yd. per year. Mixing system: pad (you won't need a soil shredder, boiler, steam trailers, or oil for pasteurization because you are not using soil; you will need a peat bale fluffer and soil trailers) Mix: 60% peat moss : 20% vermiculite : 20% perlite. The pre-plant nutrient charge includes the following materials and amounts in one cu. yd. of substrate: 2.25 lbs. superphosphate, 10 lbs. dolomitic limestone, 1.5 lb gypsum, 1.0 lb wetting agent and 2 oz. fritted micronutrients. The interest rate is 10%, the hourly labor rate is $6.00, and the commercial cost of 1 cu. yd. of substrate is $50.00. For all other costs use the values given in the next three pages of supplemental information.

    Cost to produce 1 cu. yd. __________ Point of indifference __________

     

  2. How much will the cost for mixing one cu. yd. of substrate in example 1 increase if you pay your substrate mixing employees $8.00 per hour rather than the current $6.00 per hour (an increase of 33.3% in pay)?

    Increased cost per cu. yd. __________ % increase in production cost __________

     

  3. If the price of peat moss increases 20% how much will the cost of producing one cu. yd. of substrate in example 1 increase?

    Increased cost per cu. yd. __________ % increase in production cost __________

     

  4. What would it cost per cu. yd. for a substrate consisting of equal volume parts of soil, peat moss and sand? You will need a boiler, soil shredder, steam trailers, and a peat bale fluffer as well as oil (@ $0.70/gallon) for pasteurizing; you will not need the soil trailers. All other specifications remain the same as in exercise 1.

    Cost to produce 1 cu. yd. __________ Cost difference from example 1 __________

     

  5. How much cheaper would it be to make a substrate composed of 3 volume parts of pine bark (@ $18.00/cu. yd.) + 1 part peat moss + 1 part sand than the mix in exercise 1? You won't need a soil shredder, boiler, steam trailers, or oil for pasteurization because you are not using soil; you will need a peat bale fluffer and soil trailers.

    Cost to produce 1 cu. yd. __________ Cost difference from example 1 __________

     

 

SUPPLEMENTAL INFORMATION:

     Here are some "named" screens you may go directly to, using
the "F5" key then typing one of these names listed:

     Screen name            Description

     MENU                 This screen (SC3)
     FACTS                Background facts
     PAD                  Pad system equipment
     MIXER                Mixer system equipment
     MEDIA                Media component variable costs
     FERT                 Fertilizer variable costs
     FCOST                Fixed cost determination
     VCOST                Variable cost determination
     TCOST                Total cost determination
     PI                   Point of Indifference
     SHEET                Blank worksheet (you enter the numbers)


                                                              


The two major types of mixing systems used for substrate preparation
are:
    1)  the PAD system for small to medium size production.
    2)  the MIXER system for medium to large size production.

The different equipment requirements of each system are accounted
for in the "fixed" cost component of the cost analysis, but note that
mix components also have different equipment needs.

BACKGROUND FACTS

  1. A 100,000 sq. ft. pot plant firm can consume between 400 and 640 cu. yd. of substrate per year. We will assume 500 cu. yd. for the current calculations.
  2. With a reasonable credit rating, money is available at 2% over the prime rate. Let's assume this totals 10%.
  3. Annual repairs for the PAD system equipment are $720 and for the MIXER system are $800 (would really depend on actual equipment used).
  4. The office expenses of a 100,000 sq. ft. firm including secretary and supplies are approximately $11,700 (based on a study by Brumfield, et al.)
  5. The general manager salary is assumed to be $40,000 for a 100,000 sq. ft. firm with 2 days (0.8%) of their time applied to substrate prep.
  6. Approximately 1 gallon of oil is required for the pasteurization of 1 cu. yd. of substrate. Pasteurization is needed for mineral soil-containing substrates.
  7. The total labor inputs into mixing substrate are 18.2 minutes per cu. yd. for the pad system and 13.2 minutes per cu. yd. for mixer system.
  8. Hidden in an hourly labor assessment is the cost of two 15 minute coffee breaks, 6 legal holidays, 5 vacation days, 5 sick leave days, social security, workman's comp, and unemployment insurance. This package of benefits equals about 22% of the hourly wage received by the employee.
  9. Substrate can be purchased ready-mixed for $50/cu. yd.

FIXED COST and VARIABLE COST DETERMINATION

Fixed costs and variable costs consist of the following components:         
    FIXED COSTS                          VARIABLE COSTS
  1. Depreciation of equipment         1. Substrate components    
  2. Annual Interest                   2. Nutrient amendments
  3. Taxes                             3. Fuel oil (if steaming)
  4. Insurance                         4. Labor
  5. Repairs    
  6. Office Expenses
  7. Management Expense

   The TOTAL COST of substrate preparation is a sum of both the fixed
and variable cost components.

FIXED COSTS - FACILITIES AND EQUIPMENT for various mixing systems

PAD SYSTEM							
 **********

Equipment Useful Life (years) Cost
Shelter with concrete floor (20' x 30') 20 $6,500
Concrete pad (40' x 40' x 4") 20 $1,650
Tractor (skid steer, 25 HP, 11 cu. ft.. bucket) 10 $11,000
Soil shredder (if using mineral soil in mix;15 cu. yd../hr) 10 $7,000
Two 4-cu. yd. steam trailers (if steam pasteurizing the mix) 10 $9,000
Steam boiler (needed if using mineral soil in mix; 800,000 BTU) 10 $3,500
Peat bale fluffer (if using peat moss in mix) 10 $8,000
Two 4-cu. yd. soil trailers (if not using steam trailers) 10 $5,000

FIXED COSTS - FACILITIES AND EQUIPMENT for various mixing systems

MIXER SYSTEM
 **********

Equipment Useful Life (years) Cost
Building 40' x 50' (incl. wire, insulation, floor) 20 $24,000
Tractor (skid steer, 25 HP, 11 cu. ft.. bucket) 10 $11,000
Soil shredder (if using mineral soil in mix; 15 cu. yd../hr) 10 $7,000
Mixer (8 cu. yd..) with steam fittings (if steaming is needed) 10 $9,600
Mixer (8 cu. yd..) without steam fittings 10 $8,700
Steam boiler (needed if using mineral soil in mix; 800,000 BTU) 10 $3,500
Elevator (12 ft) with 6 cu. yd. hopper 10 $11,300
Peat bale fluffer (needed if using peat moss in mix) 10 $8,000

VARIABLE COSTS - SUBSTRATE COMPONENT and FERTILIZER COSTS

SUBSTRATE COMPONENTS
 **********

Substrate Component Cost/cu. yd.. Cost/cu. ft.. (inc. freight)
Peat moss $ 25.65 $ 0.95
Vermiculite $ 39.15 $ 1.45
Perlite $ 40.50 $ 1.50
Sand (concrete grade) $ 15.12 $ 0.56
Soil $ 12.00 $ 0.44
Pine bark humus $ 15.00 - $ 18.50 $ 0.56 - $ 0.69
Hardwood bark $ 26.90 $ 1.00
Peat-Lite type mix $ 54 - $ 67.50 $ 2.00 -$ 2.50

VARIABLE COSTS - SUBSTRATE COMPONENT and FERTILIZER COSTS

FERTILIZER COMPONENTS
 **********

Fertilizer Component Cost/ton Cost/lb
Superphosphate (0-44-0) $ 209 $ 0.105
Gypsum $ 152 $ 0.076
Dolomitic limestone $ 47 $ 0.024
Hydrated lime $ 118 $ 0.059
Micronutrients (fritted) $ 1520 $ 0.048 /oz.
Ammonium nitrate $ 228 $ 0.114
Calcium nitrate $ 262 $ 0.131
Potassium nitrate $ 491 $ 0.246
Wetting agent (AquaGro 2000 G) $ 6500 $ 3.250 




Answers:



1.  Variable Cost / cu. yd       $ 40.61
    Fixed Cost / cu. yd.         $ 11.63    
    Total Cost / cu. yd.         $ 52.24     
    Point of Indifference        619 cu. yd.  
2.  $52.98 - $52.24 = $0.74      % rise = 1.42 %  
3.  $55.63 - $52.24 = $3.39      % rise = 6.49 %  
4.  Total Cost / cu. yd.         $ 42.36
    Cost difference from example 1 is  - $9.88  
5.  Total Cost / cu. yd.         $38.65
    Cost difference from example 1 is  - $13.59






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Last Modified: 27 July 2000



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