How much does it cost to grow an acre of romaine hearts in the nation’s salad bowl?
A new study from the University of California at Davis Cooperative Extension gives us a comprehensive breakdown for costs in the state’s Central Coast region: Monterey, Santa Cruz, and San Benito counties.
The short answer: for a 1,500-acre operation, growing costs, $7,400, harvest costs $9,383, for a total of $16,793 per acre.
It’s interesting to look into the figures for a breakdown. Let’s go to the number one source of grower cost complaints: labor. I see that the cost per acre for equipment operators is $300; labor for irrigation, $325; nonmachine labor, $304, for a total cost of $929 per acre—approximately 5.5 percent of total costs.
This puts grower complaints about labor costs into perspective. “The labor rates used in this study are $29.60 per hour for machine operators, $25.00 for irrigators and $23.68 for general labor, which includes overhead of 48 percent.
The basic hourly wages are $20.00 for machine operators, $16.90 for irrigators and $16.00 for general labor. The overhead includes the employers’ share of federal and California state payroll taxes, workers’ compensation insurance for truck crops (code 0172), and a percentage for other possible benefits.”
These figures are well above the California 2023 minimum wage rate of $15.50 per hour.
The cost per carton varies, of course, with the yield. At a yield of 700 carton per acres, the cost per carton is $22. At 850 cartons, it is $20. At 1,000 cartons, it is $18. (Harvest costs, of course, will increase with higher yield.)
Now let’s look at returns. Net return per acre above total costs:
For 700 cartons, we are seeing breakeven somewhere between $20 per carton ($-1,138) and $24 per carton ($1,662).
For 850 cartons, breakeven comes someplace between $16 per carton ($-2,961) and $20 ($195).
For 1,000 cartons, breakeven is also between $16 per carton ($-2,472) and $20 ($1,528).
Water costs (always a fascinating subject): low, at $282 per acre-foot, reflecting the fact that Salinas Valley crops rely more or less exclusively on groundwater. Total irrigation costs are $582 per acre. Incidentally, although the grower is responsible for pumping costs, any underground costs (such as wells running dry) are borne by the landowner.
So how profitable is lettuce? Let us look at prices for August 16 for shipping points at Salinas and Watsonville: they range from $19.65 to $25.75 per carton for 24-count, lined. For 24-count, film-wrapped: $20.65-26.75.
So growers can still make money on romaine. But margins are thin, except of course in exceptional markets.
Let me end with one final figure: $56 per acre for the food safety program. It wouldn’t be surprising if this cost goes up quite a bit in the near future.
Other recently released UC studies cover iceberg lettuce, bunched broccoli, and broccoli crowns.