Presentation on theme: "Cost of Establishing a Fruit Orchard and National Fruit Market Trends"— Presentation transcript:
1 Cost of Establishing a Fruit Orchard and National Fruit Market Trends 4/2/2017Cost of Establishing a Fruit Orchard and National Fruit Market TrendsR. Karina GallardoWSU-Tree Fruit Research and Extension Center, School of Economic Sciences, WenatcheePresentation at the WA Chapter of American Society of Farm Managers & Rural AppraisersLeavenworth May 5, 2011Template I-Green curve
8 Cost Estimates of Establishing and Producing Gala apples are available in both Excel and PDF
9 Assumptions for Gala Study Gala on 9 series Dwarf rootstockBlock size: 40 acresOrchard size: 160 acresIrrigation systemOverhead and under tree drip sprinklersPublic irrigation districtArchitectureTwo dimensional system (planar canopy), randomly trained w/18-in radius from tree centerIn-row space: 4 feetBetween row: 10 feetLife of planting: 15 yearsDensity: 1,089 trees per acre
10 Data on Costs during a Full Production Year for a 40-Acre Gala Block Cost per Unit ($)Units per AcreCost per Acre ($)Number of AcresTotal Cost Per Acre ($)Total Cost for Block ($)Chemicals & Fertilizer*900.004036,000.00Irrigation Water* & Electricity 100.004,000.00Pruning (dormant)labor cost per tree0.551,089598.9523,958.00Green Fruit Thinning0.60653.4026,136.00General Farm Labor 500.0020,000.00Machinery Repair, Fuel & Lube325.0013,000.00Irrigation & Pump Repair70.002,800.00Wind Machine & Alarm System Repair40.001,600.00Pond Maintenance50.002,000.00Beehives45.00290.003,600.00Harvest Costs (per bin)picking (multiple picks)23.00501,150.001,700.0068,000.00checkers & tractor drivers5.00250.00hauling 6.00300.00Crop Insurance86.523,460.80Land and property taxes75.003,000.00Insurance (all farm)Management salaries400.0016,000.00
11 Summary of Costs By Categories – Gala Apples ($/acre) Fixed Costs
12 Estimated Net Returns per Acre at Various Prices and Yield - Gala Price ($/bin)Yield (bins/acre)20022525027530035-3,193-2,318-1,443-56830640-2,381-1,381-3816181,61845-1,569-4446801,8052,93050-7574921,7422,9924,242551,4302,8054,1805,555608672,3673,8675,3676,867 Includes amortized establishment costs.  Assumes pack-out of 20 packs/bin (all grades) and 925 lb/bin
13 Cost Estimates of Establishing and Producing Sweetheart Cherries are available in both Excel and PDF
14 Assumptions for Sweet Cherry Study Sweetheart on Mazzard rootstockBlock size: 10 acresOrchard size: 150 acresIrrigation systemOverhead and under tree drip sprinklersPublic irrigation districtArchitectureTwo dimensional system (planar canopy), randomly trained w/18-in radius from tree centerIn-row space: 10 feetBetween row: 16 feetLife of planting: 25 yearsDensity: 272 trees per acre
15 Summary of Costs Sweetheart Cherries by Categories ($/acre) Fixed Costs
16 Estimated Net Returns per Acre at Various Prices and Yield – Sweetheart Cherries Price ($/ton)Yield (tons/acre)8001,6002,4003,2004,0002-6,379-4,779-3,179-1,579214-6,060-2,8603403,5406,7406-5,742-9423,8588,65813,4588-5,4249767,37613,77620,17610-5,1062,89410,89418,89426,89412-4,7884,81214,41224,01233,612 Includes amortized establishment costs.
17 Cost Estimates of Establishing and Producing Anjou Pears WILL SOON be available
18 Assumptions for Anjou Study 12-year old pear orchardOrchard size: 40 acresIrrigation systemMicro sprinkler on tubing on every row and 14-ft spacing in the tree rowPublic irrigation districtArchitectureIn-row space: 7 feetBetween row: 15 feetOperating period: 20 yearsDensity: 350 trees per acre; 25% of the planted trees are pollenizer trees (Bartlett)
19 Break-even Return per Bin Break-even Return per Bin to Cover Production Cost – Anjou PearsCost per AcreBreak-even Return per Bin1.Total Variable Costs$5,344.24$167.012.Total Cash Costs = Total Variable Costs + Land and Property Taxes + Insurance + Fees and Dues$6,175.24$192.983.Total Cash Costs + Depreciation of Irrigation System, Machinery, Equipment and Building$6,650.24$207.824.Total Cost = Total Cash Costs + Depreciation + Interest + Management Cost$9,684.13$302.63 If there are other cash costs on an individual's orchard, these costs must be identifiedand included in the cash cost break-even return calculation. Interest costs include some actual cash interest payments.
20 Estimated Net Returns per Acre at Various Prices and Yield - Anjou Price ($/bin)Yield (bins/acre)20022525027530020-5,111.05-4,611.05-4,111.05-3,611.05-3,111.0532-3,284.13-2,484.13-1,684.13-84.1340-2,066.18-1,066.18-66.18933.821,933.8250706.251,956.253,206.254,456.2560978.682,478.683,978.685,478.686,978.68 Assumes 1,100 lb/bin.
21 REMEMBER: Use of These Budgets GrowersStarting point for comparison and creation of own budgetsPolicy makersEducational tool for understanding the different cost centers in tree fruit productionLenders and investorsIllustration on operating loans and projected costs and returnsOther researchersFinancial feasibility of new technologies
23 U.S. Domestic Per Capita Consumption 4/2/2017U.S. Domestic Per Capita ConsumptionLbs/personYearsSource: USDA, cited by Desmond O’Rourke 2010Template I-Green curve
24 U.S. Consumer TrendsStagnant per capita consumption of major fruits: apples, oranges and bananas.Other fruits such as berries, table grapes and sweet cherries are gaining.Wider Consumer interest in super fruits, tropical fruits (like pineapples, mangos and papayas) and exotic fruits (like durians, ugly fruit, berries, etc.)Source: Adapted from Desmond O’Rourke, 2010
25 Competition from Manufactured Snack Foods and Beverages ITEM19972008ChangeValue of Shipments($billion)(percent)Snack Foods (baked goods, cookies, crackers, nuts, ice cream, yogurt, chocolate and confectionery, etc.)65.895.5+ 45.1Snack Beverages (coffee, tea, soft drinks, bottled water, beer, wine, brandy, etc.)61.282.0+ 34.0Major Fruits (Apples, Oranges and Bananas)7.610.5+ 38.1GRAND TOTAL, selected snacks134.7188.1+ 39.7Source: Desmond O’Rourke, 2010
26 Source: USDA FAS, Outlook of the US Apple Industry
27 New VarietiesNew varieties to be released by breeding programs in Washington State, New York, Minnesota, Belgium, Holland, Germany, Italy, Australia, New Zealand, South Africa, and so on.Traditionally breeding programs have focused on “supply side” characteristics, and not too much on demand side characteristics.Source: Adapted from Desmond O’Rourke, 2010
28 RosBREED: Enabling Marker Assisted Breeding In Rosaceae Socio-Economic GoalsThe Socio-Economics Team will identify valuable breeding trait targetsBased on knowledge of what industry sectors and consumers value to inform breeding decisionsAccelerate and increase efficiency of cultivar development and adoption.New cultivars will have targeted appeal, be more quickly accepted, and have enhanced commercial impact.RosBREED
29 RosBREED Household data analysis 2010 Breeder survey 2010 What trait is my next breeding target?We like disease resistant apple trees!We like firm tart cherries that pit well!RosBREED’s Socio-Economics Team will determine trait valuesBreeder survey 2010Producer survey Fall 2010/Winter 2011Market Intermediary survey Fall 2010Household data analysis 2010Consumer survey 2012I like tasty strawberries!RosBREED
30 Export Markets Little growth expected in domestic markets because: Slow growth expected in U.S. population.Per capita consumption of fresh apples is stagnant.With rising incomes, consumer tend to choose competing fruits and snacks.Source: Adapted from Desmond O’Rourke, 2010
31 Growth in Fresh Apple Imports, Key Regions, 1996-98 to 2006-08 Source: Adapted from Desmond O’Rourke, 2010
32 Thank You R. Karina Gallardo 4/2/2017Thank YouR. Karina GallardoWashington State University Tree Fruit Research and Extension Center, School of Economic Sciences1100 N. Western Ave. Wenatchee, WAPhone: (509) 663–8181 x 261Template I-Green curve
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