Good Fruit Grower

December 2012

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Orchard Economics Cherry enterprise budgets available O Oregon State University has updated enterprise budgets for sweet cherry production. by Melissa Hansen TABLE 1 High-density cherry orchard Estimated per-acre returns over total costs at varying yields and prices, in pounds per acre. (Negative numbers are in red.) Yield in pounds/acre Price/lb 8,000 10,000 12,000 14,000 16,000 18,000 20,000 $ 0.55 $ 0.65 $ 0.75 $ 0.85 $ 0.95 $ 1.05 $ 1.15 4,090 3,290 2,490 1,690 890 90 710 SOURCE: Oregon State University TABLE 2 Standard-density cherry orchard Estimated per-acre returns over total costs at varying yields and prices, in pounds per acre. (Negative numbers are in red.) Yield in pounds/acre Price/lb 6,000 8,000 10,000 12,000 14,000 16,000 18,000 $ 0.55 $ 0.65 $ 0.75 $ 0.85 $ 0.95 $ 1.05 $ 1.15 2,560 1,960 1,360 760 160 440 1,040 SOURCE: Oregon State University 2,060 1,560 1,060 1,260 460 560 560 140 60 440 840 1,540 2,240 440 1,340 2,240 3,140 4,040 340 1,440 2,540 3,640 4,740 5,840 1,140 2,440 3,740 5,040 6,340 7,640 1,940 3,440 4,940 6,440 7,940 9,440 2,740 4,440 6,140 7,840 9,540 11,240 490 210 690 3,590 3,090 2,590 2,090 1,590 1,090 2,590 1,890 1,190 1,590 590 910 210 1,110 2,010 2,910 510 1,610 2,710 3,810 4,910 410 1,710 3,010 4,310 5,610 6,910 1,410 2,910 4,410 5,910 7,410 8,910 2,410 4,110 5,810 7,510 9,210 10,910 regon State University agricultural economists recently updated enterprise budgets for both standard and high- density sweet cherry orchard systems. Enterprise budgets are designed to help growers estimate actual costs and review individual production costs against industry averages. The budgets are developed from analyzing the costs of typical orchard practices shared by a participating team of growers. The individual costs are then averaged to estimate per-acre costs associated with the particular crop or orchard system under study. Budgets are a guide and not meant to be representative of any particular farm. The two updated enterprise budgets reflect the typical costs associated with standard and high-density, fresh- market sweet cherry production in Wasco County, Oregon. Authors of the reports are OSU's agricultural economist Clark Seavert, instructor Rebecca Sullivan, stu- dent Tyler West, and extension horticulturist Lynn Long. For the standard-density orchard, the budget is based on 60 acres (with 136 trees per acre) on Mazzard root- stock, planted on a spacing of 16 by 20 feet. Trees are mature, 15 to 25 years old, with establishment costs fully amortized prior to the budget. Production is 12,000 pounds (6 tons) per acre, at a gross price to the grower of 85 cents per pound. Mike Omeg reminds growers not to get too hung up on the specifics. The high-density orchard budget is based on 25 acres with 340 trees per acre on Gisela 6 rootstocks and planted on a 10- by 16-foot spacing. The trees range in age from 8 to 15 years with establishment costs amortized over a 25-year period. Average production is 14,000 pounds (7 tons) per acre at a gross price to the grower of $0.85 per pound. Cherry grower Mike Omeg of The Dalles, Oregon, who's provided data in previous enterprise budgets, reminds growers not to get too hung up on the specifics. He explains that it's difficult to compile a set of figures reflecting the diversity of individual production practices that are followed by growers. For example, some growers put a lot of effort and cost up-front in plant- ing and training orchards, while others less so. "That's always been the crit- icism of enterprise budgets—how to balance different management styles and practices of the growers providing the data," he said. In the latest cherry enterprise budgets, Omeg thinks the average pro- duction of six tons used in the standard-density enterprise budget is on the "high" side. "Most standard-density blocks in The Dalles are less than six tons," he said, noting that the countywide average is around four tons. Also, he believes the seven-ton average for high-density blocks is on the low side and that most high-density orchards are yielding higher than 14,000 pounds per acre. Additionally, he has not found input costs to be much different between his family's standard-density and high-density orchard systems. The OSU enterprise budgets showed about $685 per acre more in vari- able cash costs for the high-density system compared to the standard, but $600 of that was higher harvest costs because of the higher tonnage picked (12,000 pounds versus 14,000 pounds). When looking at the costs involved in producing a pound of fruit, the higher density system was more efficient, with fruit costing $0.50 per pound to produce compared to $0.53 for standard density. Price, production, labor costs What Omeg zeroes in on when reviewing an enterprise budget are price, production, and labor costs. He pays particular attention to harvest costs. "I look at the production [variable cash] costs to see if I'm in the ball park with my inputs, but what really matters to me are the price, yield, and harvest costs," Omeg said. "By looking at price and production (see Tables 1 and 2), you can see how small changes on price can improve your bottom line. I'm a believer that the best way to increase your bottom line is to increase the price you receive." Omeg says he tends to spend more per acre on inputs than those shown in the enterprise budgets. "Sometimes I spend twice as much on GOOD FRUIT GROWER DECEMBER 2012 23 photo by Geraldine Warner

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