Timothy J. Smith
Factors to take into consideration when evaluating the horticultural and economic potential of an orchard block. A block is an identifiable unit of similar trees.
|Orchard Quality Factors:||
|Average Yields||50,000 lb/A . +||45-50,000||40-45,000||Less Than 40k|
|Variety / Strain||NEW! The Market Demands More!!||Not new, but the market is not saturated.||A “Commodity” variety, only best quality returns a profit.||Variety out of favor. Market not interested.|
|Fruit Quality||Exceptional. Top 10 percent of “the pool”. Prospective packing houses buy you and your spouse dinner, and give you a hat.||Very good pack-out without sorting into the bin at harvest. Returns in top 1/3 of pool. Prospective packing houses buy you lunch.||Percentage of “fancy” grade creeping up. Returns in middle 1/3 of pool. Prospective packing houses answer your phone calls.||Returns in lower 1/3 of the pool. You consider moving to a new packing house to find better returns. Your present packer agrees that you should.|
|Returns per Bin||$160+||$120-160||$100-120||Less than $100|
|Can This Orchard Be Improved?||No, the block is already in fine shape. Relax; and congratulations.||Yes, problems are few and cheaply corrected. Keep care of the orchard.||Maybe, but problems are numerous and expensive to correct. Plan to remove soon, while you have a choice.||No, removal is the best option. You should have already, it’s cheaper as a pasture.|
Age of apple trees is not a certain factor in the quality of an orchard. However, two factors tend to strongly influence the quality and value of apple trees as they age:
- Fruit quality tends to be best after the trees have filled their orchard space, but prior to about 16-18 years of age, when very careful, intensive management is required to maintain young, productive bearing surface throughout the tree. This is especially true when the orchard rootstock is “semi-dwarf” or seedling. The cumulative effect of winter damage, disease and nutrient imbalance will often decrease the health and vigor of vegetative growth throughout the tree, leading to oversetting of the crop, and subsequent smaller fruit size, inferior fruit shape and color, and reduced storage quality. The potential reduction of fruit quality on older trees can often be avoided by the alert grower, who may prune, manage pests, irrigate and fertilize in a manner that maintains fruit quality, but this effort involves increased labor costs and a high degree of managerial skill.
- Popularity of the variety or strain is usually linked to the age of the tree, but some apples endure in “niche” markets indefinitely. Older trees tend to be of varieties that are no longer highly valued by the market (See “Variety/Strain section below)
Production efficiency is a primary factor in the economic potential of an orchard block. There is only minor variation in the cost of production on an acre of apples. Some apple varieties are more expensive to produce than others, a difference usually dependant on harvest labor expenses. The cost of producing a bin of apples is tied very closely to the number of bins produced per unit of land. Simply stated, every orchard has its’ unique cost to produce a bin. The industry cost of production average is interesting, but not what counts on a block by block assessment. Your production costs divided by the number of bins produced equals your cost of producing a bin of fruit. Increasing production decreases cost per bin.
Most cost studies assume a 40 bin per acre production level. While some orchards consistently grow higher yields, 40 bins is the approximate industry average. Some varieties, such as Golden Delicious, have the inherent capacity to produce higher than average yields. Others, such as Fuji, tend to average lower yields. When average per-bin returns are low, it is difficult to stay in business if your production is average or lower. Many well-managed, healthy orchards will average 45-55 bins per acre. Higher yields may (in many varieties) induce alternate bearing, and lower fruit quality.
Popularity of the variety or strain is a factor that may evolve over time. A variety (or version of a variety) that was highly valued at the time of planting will likely “go out of style” during the 10-15 years after planting. This process is not certain, but is highly likely. Economic returns tend to reflect the popularity of a variety, and its’ capacity to produce the highest quality (reddest) fruit. Returns to the grower will be higher for the best quality “out of style” variety, but will never approach the level that were common when that specific variety was new.
Fruit quality has been defined by the Washington apple industry as variations of color intensity and visible surface defects. There has been a recent addition of a “12 pound rule” to the Red Delicious fruit, which requires inspectors to certify that the fruit has a certain minimum crispness at the time it is shipped to the market. Early harvest fruit must meet a minimum degree of sweetness.
The assessment of fruit quality has been driven in Washington by the emphasis on red color as a primary quality factor in our predominant red varieties. As color becomes less intense, and a lower percentage of the fruit surface is covered in red, the fruit quality grade is lowered into “U.S. Extra Fancy” or “Washington Fancy.” Returns per packed box tend to be $1 – 2.50 higher for the Washington Extra Fancy fruit.
Ever-redder strains of popular varieties are released almost yearly, making the older strains less competitive at producing the highly prized “Washington Extra Fancy” fruit. Few packers sell fruit at the minimum level of quality, most “high-grade” fruit by packing only the fully colored, and most intensely colored apples.
Fruit size was, at one time, a major factor in fruit economics. At one time, there was a significant price premium for reasonably large fruit, those that fit 80 or 88 fruit into the standard 44 pound box. There remains a small price difference for this fruit, but it may be either slightly positive or negative. It is to the growers benefit to produce fruit that falls mostly between size 80 and 125. Fruit smaller or larger than this is usually discounted significantly, except for specific varieties sold in specialty export markets.
As fruit quality variation increases, and the fruit size averages smaller, packing labor costs rise. The increased packing costs (line time) are deducted from the grower returns. Higher quality fruit going into the bin during harvest results in more boxes packed per bin, lower packing costs, and higher potential returns per box of packed fruit. This accounts for much of the wide variation in “returns per bin” payed to the grower.
Returns per Bin
Recent studies indicate that the average cost of production for 40 bins of Red Delicious apples is about $2754/acre variable (“out of pocket”) costs, or a total of $4645/acre if fixed costs are included. If you wish to stay in business over an extended period, you must consider fixed costs. If you do not, you are “living on your depreciation.” It is even more necessary, over the short term, to cover your variable costs, as these expenses are usually in the form of immediate payments for materials and labor.
You must determine your cost of production, which could vary somewhat from the average. Your whole-orchard average is interesting, but good record keeping might allow to assess individual blocks to determine their economic viability.
Example: At 40 bins per acre, an average return per bin of $70 would return $2800, which may cover your variable (“cash”) costs per acre. At 40 bins/A $116 per bin will meet the industry average $4645 total cost of production. Increasing returns can be addressed by reducing your costs (without significantly harming your production or quality), increasing production, improving quality of fruit, or improving performance on all of those factors.
Can This Orchard Be Improved?
Is the orchard block is on a good site, with a sufficient supply of water available? Is it a variety and rootstock that is reasonably modern? Are the trees basically sound of structure, and reasonably healthy? Is the orchard unaffected by replant disease?
If so, both yields and quality may be improved over a two to four year renovation period. An orchard may respond even more rapidly to improved irrigation and pruning if either have been less than optimum.
In the case of irrigation management, fruit quality may improve dramatically the first season, then continue to improve as the tree develops higher quality bearing surface. The degree of fruit size and quality improvement is usually relative to the severity of stress the trees experienced during July and early August.
If the trees have not been adequately pruned, a similar fruit improvement may be expected if pruning is optimized. In a properly pruned orchard, light will penetrate to the trunk and the soil surface beneath the trees. The improved light will properly color the fruit that is present the first season, and will induce the production of healthy fruiting structures throughout the tree. Fruit color and size may continue to improve for three to four seasons after renovation started. Greatest increase in pruning expenses will be the first year; the subsequent two to three year’s pruning costs may be higher than industry average.
Insect, weed and disease control may need improvement in a neglected block, as will the mineral nutrition of the trees. Reducing the direct damage that insects and disease cause to fruit will have obvious immediate benefits. Weed control tends to improve both the mineral nutrition and irrigation management in the block, indirectly improving fruit quality and yield.
You can not improve an orchard and sufficiently increase economic returns if the variety or strain is not viable. You may consider using otherwise healthy, semidwarf or dwarf rootstocked trees as the structure for grafting the orchard to a more economic variety. Grafting can cost over $500 per acre, and fruit yields may not be significant for 3-4 years.
If grafting is not an option, the orchard may cost you less if is removed and the land fallowed for future planting options. Removal costs about $300-350 per acre. Leaving the trees standing unsprayed is not an option, as destructive pests rapidly build up and spread to neighboring orchards.