|Authors: ||P.R. Fisher, J.C. Vallejo, A.W. Hodges, C.R. Hall|
|Keywords: ||benchmark, cost accounting, greenhouse, nursery, plugs, rooted cuttings, shrinkage|
Crop shrinkage represents the difference between the value or unit number of crops planted versus crops sold.
Our objective in this pilot study was to benchmark three broad categories of crop losses, including internal production losses, unsold product, and credits on shipped product.
Surveyed growers provided more detailed loss codes within these categories.
Crop losses were tracked by 11 large U.S. growers who each produced at least $1 million (M) in wholesale value of seedling plugs or rooted cuttings in 2009 and 2010. The total value of product planted averaged $15.7 M in 2010 across the companies.
Total shrinkage per firm averaged 9.23% of units (containers) produced or 9.48% of crop value.
Shrinkage represented an average loss of annual sales of $1.26M per firm.
Among plant types, losses were highest for seedling plugs (14.98% of units, 14.89% of value), followed by rooted cuttings (11.63, 11.49%, respectively) and finished plants (6.82, 5.82%). The higher shrinkage rate for young plants compared with finished plants included production losses related to germination of plugs, and poor quality unrooted cuttings (starter material). Product losses of unsold young plants also occurred because of a high level of plants grown for risk management, trays that were only partially-filled and were therefore not saleable, or product grown on speculation.
Levels of shrinkage varied widely between firms and years (ranging from 6.1 to 20.1%), and in the distribution between shrinkage categories, depending on the type of crops grown and business marketing structure.
Monitoring shrinkage is strongly recommended for horticulture firms in order to identify areas for improved efficiency, allow accurate cost estimates, and benchmark efficiency over time and against competitors.
Download Adobe Acrobat Reader (free software to read PDF files)