Calculating your break Even point -BEP-

I am looking for producers to calculate their Break Even Point so it can be compared to the bulk price.

Different operations: Sap Producers only, Syrup from Purchased Sap, Bulk Producers, Bottlers, Tap to Bottle Producers, etc.

There are many people that have stated, keep your costs down and others that "Need New Rigs and equipment" to keep their tour business going. I am looking to see how costs on real production amounts vary and what different style of operations costs to make their product that is sold.

If you change your tubing every 10 years spread the tubing cost over 10 years, 15, 20, what ever. I am going to make a spread sheet that can be used to assist in the calculation if there is interest.

I have a friend that wants to get back into production...should he, at 50 buy new, used, sell sap, sell bulk, go full farm, or forget about it??? Looking for honest data not just a quick worded response. He and his dad also ran a 5 x16 wood fired rig for many years.

I am expecting many different operations but a future trader can find an operation similar to theirs and see what to expect.

I do not want to know how you sold your product or what you get for it...this is all about costs and the total gallons you produced in one season or you can average your seasons and what your total expenses are.

Who's in?

There was a thread last year on one of the forums, here or SBI, doing the same thing. See if you can find it and get some info. I have a spreadsheet I track expenses, sap, syrup production and sales on that tells me when I have paid expenses and made a profit and my production stats. I have offered it for sharing before, but I will clear my data from it first. The formulas will still be intact. The two times I purchased pans or complete evaporators I spread those expenses over five years.

I don't mind sharing numbers but I would never want my name beside those numbers. If I did Mr. Uncle Sam would make sure SPUD went away for a very long time. Please don't tell me I'm the only one thinking this way.:cool:

My real name is BOB Barker.

Do you mean we aren't supposed to operate in the red. Three years of minimal sap flow. Can't squeeze sap out of frozen trees or trees that are too hot.

I hear ya. My last two have been less than adequate. Seems when the trees get going the temp goes into the 60's. So I am going back to being able to cool the sap again.

I am just looking to see how inexpensive it can be done. You take new rigs every 5-7 years depending on how you depreciate them out and you can be in the red for ever.

I am looking at a new rig in a couple more season and it will be in the 25K range and that is still taking a $4000 bite every year over 7. in a poor season that around 600 of the taps going to that payment annually.

No you don't need to stay out of the red; but if I want to sleep in the nice warm bed, next to my honey...I do. The hay loft gets darn cold when its -27 last winter. And at fifty I don't get much sugar in the hay loft an more. LOL

I had actually previously calculated my 2105 break even point after a conversation with a fellow sugar maker earlier this year about the possibility of bulk buyers paying $.75 a pound for off taste syrup.
However, to make the numbers more accurate by looking at more than one year, I went back to 2010. I included taxes, insurance, 10 year tubing replacement, five year drop line replacement, and all of the associated direct production costs. No equipment purchases or depreciation.

2010 $11.27 478 gal syrup
2011 $12.70 378 gal syrup
2012 $22.21 216 gal syrup
2013 $12.48 508 gal syrup
2014 $12.14 1067 gal syrup
2015 $9.91 1007 gal syrup ( concentrated sap to higher %, sap much higher in sugar than ever before)

So, leaving out the short 2012 season, it averages out that my break even point is $11.70. Since 2015 may turn out to be an anomaly year, it might really be $12.14 leaving out 2015.

Joe

BreezyHill- When I set my woods up I started with 5000 taps. A year later I added 1000 more taps. Last year I added 3000 more taps. In my expenses I did not add the cost of my stainless sap tanks because they will last a lot longer then 10 years. Here is what I added for expenses. Please tell me if I am forgetting something.

All mainline
All tubing
All fittings, wire, wire ties, saddles, Ts, connectors etc.
2-Vacuum pumps
2- Releasers
spouts for 10 years
labor (I give the kids a little money when they help).
Electric bill for 10 seasons (average)
Taxes on land
Coffee and Sarah Lee Pound Cake (while waiting for sap to run).
Tools (drills, tubing tools and other stuff)

For the 9000 taps my break Even Point is $17,000 or $1.89 per tap. I average 20 GPT. My average sugar is 1.8%. If I boiled my sap I would average 93 barrels (40 Gallon barrels). I hope this helps.

Spud

My business model is a bit different than Spud's or JoeJ's so I look at this as my cost to make one gal. of syrup. I used my 2015 stats. as these are likely closer to a typical year without building a new sugarhouse and setting up a new woods from nothing which was the 2014 season. This includes loan payments for new equipment, insurance (which is likely more per gal. than most pay due to insuring equipment in a commercial kitchen), taxes, some new tubing/mainline/fittings and spouts for about 100 taps and some drop replacement and repairs, tap lease, utilities and operating expenses like chainsaw fuel, filter papers, etc... I did not include fuel costs (wood) except for related equipment costs to cut it.

So with 748 taps and 300 gal. table grade syrup and 25 gal. of commercial syrup (filtered very dark strong with slight bud off flavor) produced, my cost/gal. was just over $20/gal.

For clarity this does not include any costs to then take the syrup produced and make value added products to then retail. Those costs include things like equipment, commercial kitchen rental, state inspection and licensing, travel costs, website and credit card sales administration, farmer's market expenses, packaging, etc...

Obviously it would be absurd for me to sell syrup bulk, and I do not except for this year about 15 gal. of the commercial. At this point I'm not going to get into the details of my costs and income from retail sales of my syrup.

The BEP for an operation is going to likely be different for every producer. Most likely don't consider their time in their accounting, though many likely pay others to help. I personally am a one man operation with help form my wife when she can, and from a couple friends when they are free, though they just generally come over and drink beer while I work. :) I suspect most wood operations that cut their own wood, like me, think of their fuel as free. Others may have equipment and tools from another profession or business that allow them to operate at a lower expense.

In terms of available resources for calculating your BEP and for financial planning, I have found UVM's "worksheets" to be helpful, (found here: http://www.uvm.edu/extension/maple/?...lications.html) and Rand posted an interesting spreadsheet last year here on the trader that can be found here:

http://mapletrader.com/community/sho...ht=spreadsheet

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Originally Posted by GeneralStark

In terms of available resources for calculating your BEP and for financial planning, I have found UVM's "worksheets" to be helpful, (found here: http://www.uvm.edu/extension/maple/?...lications.html) and Rand posted an interesting spreadsheet last year here on the trader that can be found here:

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Folks might check out http://blog.uvm.edu/farmvia/files/20...-Benchmark.pdf for more information on this topic. Mark Cannella (UVM Extension) has done quite a bit on this work, which is continuing. He'll be doing talks at the Vermont Maple Conferences in Hyde Park and Bellows Falls in January 2016.

May be a bit off topic, but to keep on cooking commercial in the spring with current bulk prices is a waste of my time. I'm better off working extra hours in town and save the grief.

I always figured between $15 to $20 to produce a gallon of syrup.including equipment depreciation. A little more for hobby producers,less for larger.
this does not include value added products

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Originally Posted by markcasper

May be a bit off topic, but to keep on cooking commercial in the spring with current bulk prices is a waste of my time. I'm better off working extra hours in town and save the grief.

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I think that's the point of the extremely low pricing from the buyers - they don't want commercial so they set the price low.

Quote:

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Originally Posted by markcasper

May be a bit off topic, but to keep on cooking commercial in the spring with current bulk prices is a waste of my time. I'm better off working extra hours in town and save the grief.

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Hahaha...discusions from my point of view go with the flow. Off topic is not valid unless there is no point to be made from the post relevant to the discussion or a way of looking at the topic.

BEP takes in so much and IMO you are very much on topic...No worries!

I have thought of ways to boil lower grade sap to satisfy a butcher that wants a bunch, but I have not had good luck end of season. This will add to cash flow as $30/ gallon for very strong and dark product is not bad with the time it takes to make that much.