Issue link: http://read.dmtmag.com/i/95311
Orchard Economics Jason Matson with Matson Fruit Company in Selah, Washington, who also provided input for the study, said Red Delicious pencils out for low-cost producers but not for those who have high operational costs. For example, some other growers who were involved in the study said the cost of planting trees in a Red Deli- cious block could be as low as $100 per acre, which shocked Matson, who calculates that his costs for tree planting, using a GPS, are closer to $500 per acre. He also figures he uses far more ladders than others who provided input. Good enough "Looking at the study, I think the costs of capitalization are pretty good, but our operational costs are far higher than those outlined in the budget," he said. "I think with Red Delicious you've just got to be cheap. You have to be willing to say, 'That's good enough.'" Matson said he can't do that because his family's approach to growing fruit is far more detail-oriented, which increases costs. The company still has a lot of Red Delicious orchard and is making money while prices are high. If there's another downturn, their detail-oriented approach won't work, he said. "When you look at the pruning of your Reds and you're TABLE 1 Red Delicious returns per acre The table shows the estimated per-acre returns for Red Delicious apples at various prices and yields after the orchard reaches full production. Prices shown are gross f.o.b. prices. To calculate net returns, deduct packing charges of $184 a bin from the f.o.b. price per bin. (Negative numbers are in red.) Packable yield without culls bins/acre1 40 50 60 70 80 90 F.O.B price dollars/bin2 250 300 350 400 450 6,910.19 4,910.19 2,910.19 910.19 1,089.81 7,072.61 4,572.61 2,072.61 427.39 2,927.39 7,235.03 4,235.03 1,235.03 1,764.97 4,764.97 7,397.45 3,897.45 397.45 3,102.55 6,602.55 7,559.87 3,559.87 440.13 4,440.13 8,440.13 7,722.29 3,222.29 1,277.71 5,777.71 10,277.71 Includes amortized establishment costs. 1 Assumes an 850-pound bin and an average packout of 85%. 2 Price represents gross f.o.b. with no warehouse charges deducted. Packing charges are estimated at $185 per bin. SOURCE: Karina Gallardo, Washington State University very detailed, it costs more, and if there's no margin in it, you lose your shorts. We're struc- tured as a detail-oriented farm. When you have two extra tractor drivers, that's another $60,000, plus $100,000 in equipment. You need more margin to cover that." For that reason, Matson Fruit Company is planting high-margin varieties, such as Honeycrisp. Scott Jacky at Valley Fruit Company in Yakima, Washington, said it's hard to come up with hard numbers on production costs because much depends on the size and type of operation. For example, if a grower with a 300-acre orchard planted 30 acres of Red Delicious, they wouldn't necessarily buy a brand-new tractor to farm those addi- tional acres. Maintenance costs for trac- tors and sprayers might also be lower for Red Delicious than for multicolored apple varieties. Varies by farm He also pointed out that growers might estimate different costs for certain tasks, depending on how they have their budget set up. What is included in a line item might vary from farm to farm. Jacky said whether it makes sense for a grower to plant or continue to produce Red Delicious depends to a large degree on their sales desk and whether it has a good export market for the variety. "We've had good luck at Sage [Market- ing]," he said. "We haven't got to the point where it's time to talk about planting more, but we would like to maintain the same amount we have." Milne said McDougall and Sons still thinks there's a market for Red Delicious. It is not a major focus of the company, but it is part of its diverse portfolio. "We still need to have some," he said. "The retailers are still asking for them and if your marketing outfit is not supplying them, they'll go to the next one who is. If we don't carry some of everything, someone else will beat us to the punch line and pick up the business." • PACIFIC CALCIUM, INC.® The makers of Nature's Intent Calpril® Intent Dolopril® and Nature's introduce 2 new Organic products! Granulated Fish Bone Meal 4-13-0 Nature's Intent 7-2-4 Growth is natural. Quality is intentional. Distributors can be found at www.naturesintent.com Email info@naturesintent.com Int'l Toll Free 877-571-3555 Phone 509-486-1201 44 DECEMBER 2012 GOOD FRUIT GROWER www.goodfruit.com