HortWatch - taking the guesswork out of growing

       • Hortwatch   •Library  •

Factors Critical To Orchard Profitability

Factors Critical To Orchard Profitability

If we express orchard performance as profit we can define it as:

  • Profit = revenue minus costs.
  • Revenue can be defined further as yield multiplied by price.
Data we have collected on apple orchard performance over the years shows large differences occur among orchards in regard to revenue. For instance, one survey we did in the late 1990s showed a five-fold difference in per hectare orchard revenue between the lowest and highest. In this same survey, orchard costs excluding those costs directly related to production levels such as picking and post harvest, showed a range of less than two fold between the highest and lowest.

Also, when the overall production cost is studied we find that more than 56 % of costs relate to post harvest services over which the grower has little control, and a further 16 % of costs relate directly to harvesting. This means that growers only have full control over about 25 to 30 % of their costs and partial control over a further 20 %.

This means there is very limited scope to influence profit by manipulating the cost structure. Reducing costs are also often associated with increasing risk. For example, the pesticide programme which is often singled out as a fertile area for cost savings by dropping sprays out, represents only around 10 % of the total cost of production. Dropping a single spray, out of a total of 15 or more sprays, then is only going to save you less than one percent of your total costs. If it happens to be a critical black spot spray and 1 % black spot slips in, your supposed 1 % cost saving suddenly vanishes and may be replaced by huge increases in handling costs.

With so little scope to influence costs, the key to improving profit lies with working on the orchard revenue stream. Now, revenue is defined as yield X price.

YIELD is determined by the following:

  • Tree canopy area - Yield is maximized at around 70 % available light interception.
  • Effective canopy management - Pruning and training systems designed to capture light efficiently and distribute it well throughout the canopy.
  • Good pest and disease control.
  • Avoidance of soil limiting factors - Good drainage, adequate spring and summer soil moisture, adequate and balanced nutrient levels.
  • Minimal weed competition.
  • Variety cropping characteristics.
  • Rootstocks - MM106 and the dwarf rootstocks M26 and M9 tend to out perform other rootstocks.
  • Uniform and regular cropping - minimal biennial bearing.
  • Avoidance of adverse weather events - frost, high winds, flooding.

PRICE is determined by:

  • Variety - must be appealing to the consumer and well suited to the local growing conditions.
  • Fruit size profile - very important for Royal Gala, Fuji and Granny Smith and well over ride yield in these varieties.
  • Fruit appearance - must be free of russet, wind rub, pests and diseases and have adequate colour.
  • Meet buyer internal quality specification - Brix, flesh pressure.

The following orchard management factors influence fruit quality

  • Pruning and canopy management - determine fruit size and colour, internal quality parameters such as fruit pressure, brix calcium status.
  • Fruit thinning strategy - affects fruit size and colour.
  • Harvest management - determines pack-out levels, and storage out turn.

By understanding and applying good crop husbandry it's possible to improve orchard profit levels through lifting income. There is more scope for improvement from this approach than can be achieved through attempts to reduce costs at individual orchard level.

July 2001

Hortwatch® is a product of AgFirst
Phone: 64 6 872 7080
Fax:     64 6 870 3629