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Costs of Production of Apple, Cherry and Pear Karina Gallardo WSU-TFREC-CPAAS WA State Horticultural Association Annual Meetings – Dec 4, 2012

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Content Cost of production of apple, cherry, and pear Two apple cultivars: Honeycrisp, and Red delicious Two pear cultivars: Anjou and Barlett One cherry cultivar: Sweetheart Assumptions Distribution of cost centers Summary of findings Estimated net returns at various prices and yields

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Cost of production of apple Honeycrisp and Red delicious

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Assumptions - Apples Honeycrisp 10-acre block 3 by 10 feet 1,452 trees/acre Two dimensional, planar canopy, randomly trained Dwarf-9 series Red delicious 25-acre block 4 by 12 feet 900 trees/acre Three dimensional, planar canopy, randomly trained M-106

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Percentage distribution of cost centers during a full production year – Honeycrisp (2011)

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Percentage distribution of cost centers on a full production year – Red delicious (2012)

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Estimated Net Returns at Various Prices and Yields – Honeycrisp Full Production [1] Net Yield (bins/acr e) [2] FOB Price ($/bin) [3] (6,169.51)(5,169.51)(4,169.51)(3,169.51)(2,169.51) 25 (5,770.03)(4,520.03)(3,270.03)(2,020.03)(770.03) 30 (5,370.56)(3,870.56)(2,370.56)(870.56) (4,971.08)(3,221.08)(1,471.08) , (4,571.61)(2,571.61)(571.61)1, , (4,172.13)(1,922.13) , , Overhead cost 5% Interest cost 5% [1] Includes amortized establishment costs. [2] Assumes an 825-pound bin. Takes into account an average pack out of 72%. [3] Price represents gross FOB price (no warehouse charges deduction).

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Estimated Net Returns at Various Prices and Yields – Red delicious Full Production [1] Net Yield (bins/acr e) [2] FOB Price ($/bin) [3] (6,585.34)(5,585.34)(4,585.34)(3,585.34)(2,585.34) 30 (6,747.77)(5,247.77)(3,747.77)(2,247.77)(747.77) 40 (6,910.19)(4,910.19)(2,910.19)(910.19)1, (7,072.61)(4,572.61)(2,072.61) , (7,235.03)(4,235.03)(1,235.03)1, , (7,397.45)(3,897.45)(397.45)3, , Overhead cost 5% Interest cost 5% [1] Includes amortized establishment costs. [2] Assumes an 850-pound bin. Takes into account an average pack out of 85%. [3] Price represents gross FOB price (no warehouse charges deduction).

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Cost of production of cherry Sweetheart

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Assumptions - Cherry Sweetheart 10-acre block 10 by 16 feet 272 trees/acre Two dimensional, planar canopy, randomly trained Mazzard rootstock

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Distribution of cost centers during a full production year – Sweetheart

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Cost centersSweetheart ($/acre) 2009 Orchard activities Pruning and training748 Green fruit thinning163 Chemicals925 Fertilizer61 Beehives45 General farm labor368 Irrigation/electric charges150 Harvest Picking labor4,240 Checkers, tractor, drivers, hauling.400 Cost centers - Cherry

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Cost centersSweetheart ($/acre) 2009 Maintenance/repairs Machinery repair + fuel/lube700 Wind machine and alarm repair40 Mainline, pump, and pond50 Overhead395 Interest435 Total variable costs 8,719 Cost centers - Cherries

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Cost centersSweetheart ($/acre) 2009 Fixed costs Depreciation685 Interest1,034 Other fixed costs Land and property taxes150 Insurance50 Management300 Amortized establishment costs964 Total fixed costs3,106 Cost centers - Cherry

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Summary of Costs and Returns – Full Production Year - Cherry Sweetheart ($/acre) 2009 Variable cost8,719 Fixed cost3,106 Total costs11,824 Total returns19,200 (8 $2,400/ton) Net returns7,376 Cultivar Cost ($/acre)

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Yield (tons/acre) Price ($/ton) [2] 8001,6002,4003,2004, , , , , , , , , , , , , , , , , , , , , , , , , , , [1] Includes amortized establishment costs [2] Price represents FOB discounted price (FOB minus packinghouse charges). Estimated net returns at various prices and yields – Sweetheart cherry full production [1]

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Cost of production of pear Anjou and Bartlett

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Assumptions - Pears Anjou 40-acre block 7 by 15 feet 350 trees/acre (25% of planted trees are pollinizers – Bartlett) Bartlett 10-acre block 8 by 15 feet 389 trees/acre (10% of planted trees are pollinizers – Anjou) Modified central leader, freestanding

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Percentage distribution of cost centers during a full production year – Anjou (2010)

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Percentage distribution of cost centers during a full production year – Bartlett (2010)

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Cost centersAnjou ($/acre) 2010 Bartlett ($/acre) 2010 Orchard activities Pruning600 Green fruit thinning300 1,020 Chemicals and fertilizer1,200 Beehives10090 General farm labor Irrigation/electric charges Harvest Picking labor Checkers, tractor, drivers, etc Hauling100 Cost centers - Pears

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Cost centersAnjou ($/acre) 2010 Bartlett ($/acre) 2010 Maintenance/repairs Machinery repair Fuel/lube Wind machine and alarm repair Mainline, pump, and pond50 Overhead Interest Total variable costs5,3444,566 Cost centers - Pears

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Cost centersAnjou ($/acre)Bartlett ($/acre) Fixed costs Depreciation Interest2, Other fixed costs Land and property taxes50117 Insurance42085 Management Other (assessment fee, etc.) Amortized establishment costs1,980 Total fixed costs4,3404,220 Cost centers - Pears

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Summary of Costs and Returns – Full Production Year - Pears Anjou ($/acre) 2010 Bartlett ($/acre) 2010 Variable cost5,3444,566 Fixed cost4,3404,220 Total costs9,6848,875 Total returns8,000 (32 $250/acre) 7,714 (30.25 $255/acre) Net returns-1,684-1,072 Cultivar Cost ($/acre)

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Break-even Return per Bin to Cover Production Cost – Anjou Pears Cost per Acre Break-even Return per Bin 1.Total Variable Costs$5,344.24$ Total Cash Costs [1] = Total Variable Costs + Land and Property Taxes + Insurance + Fees and Dues $6, $ Total Cash Costs + Depreciation of Irrigation System, Machinery, Equipment and Building $6,650.24$ Total Cost = Total Cash Costs + Depreciation + Interest [2] + Management Cost $9, $ [1] If there are other cash costs on an individual's orchard, these costs must be identified and included in the cash cost break-even return calculation [2] Interest costs include some actual cash interest payments

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Price (per bin) Yield (bins per acre) [1] $200$225$250$275$ , , , , , , , , , , , , , , , , , , [1] Refers to total yield per acre of Anjou and Bartlett Pears. Assumes a bin size of 1,100 pounds. Estimated Net Returns at Various Prices and Yields – Anjou Full Production [1]

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Break-Even Return per Bin to Cover Production Costs – Bartlett Pears Cost per Acre Break-even Return per Bin 1.Total Variable Costs$4,565.63$ Total Cash Costs [1] = Total Variable Costs + Land and Property Taxes + Insurance + Fees and Dues $5, $ Total Cash Costs + Depreciation of Irrigation System, Machinery, Equipment and Building $5,654.63$ Total Cost = Total Cash Costs + Depreciation + Interest [2] + Management Cost $8, $ [1] If there are other cash costs on an individual's orchard, these costs must be identified and included in the cash cost break-even return calculation [2] Interest costs include some actual cash interest payments

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Estimated Net Returns at Various Prices and Yields – Bartlett Full Production [1] Yield (tons per acre) Price (per ton) $250$275$300$325$ , , , , , , , , , , , , , , , , , , , , , [1] Includes amortized establishment costs.

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Where is it?

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THANK YOU Karina Gallardo SES – TFREC – CPAAS Washington State University Wenatchee, WA.

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