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FeedHoneycrisp profitability
Returns are high, but so are production costs.
Honeycrisp is one of the hottest varieties in the United States, but it’s costly to grow and store. New production-cost figures for the variety have been developed by Washington State University economists to help growers and packers determine if returns adequately cover the variety’s higher planting and storing costs.
A team of WSU agricultural economists led by Dr. Karina Gallardo recently updated or created enterprise budgets for organic apples, Gala apples, d’Anjou and Bartlett pears, and Sweetheart cherries, all of which can be accessed on the WSU Extension Web site in Excel spreadsheet or PDF formats.
Honeycrisp is a relatively new variety for Washington growers and was first planted in Washington in 1999, reports the Washington Growers Clearing House Association.
Industry statistics show that Honeycrisp has been in the top three Washington plantings since 2005, and surpassed Gala and Fuji plantings in 2008. As of 2011, nearly 9,100 acres were planted in the state, with most of the trees planted in Yakima Valley, followed by Columbia Basin and Wenatchee, according to the U.S. Department of Agriculture’s statistics service.
Honeycrisp requires a higher investment in planting and storing costs than varieties like Gala, Gallardo said, but returns can be more than double those of Gala.
Returns for most tree fruit crops have been relatively strong the last two years, but growers must still pay attention to both production and packing costs when assessing whether f.o.b. (free on board) prices truly cover all costs involved in tree fruit production, Gallardo said during a session at the Washington State Horticultural Association’s annual meeting in December. While production and packing costs have increased about 3 percent each year, f.o.b. prices can fluctuate significantly from year to year, depending on market and supply conditions.
F.o.b. prices for Red Delicious were above production and packing costs in 2011, but, in general, the variety has not been as healthy in terms of profit as other varieties, she noted.
Production costs and returns are highly variable for any particular orchard operation due to case-specific expenses like capital and labor, type and size of machinery and equipment, cultural practices, management skills and crop yields, said Gallardo. WSU’s cost estimates are designed to serve as a general guide for establishing and producing crops. When using the enterprise budgets, growers should closely examine the assumptions used and make adjustments in the costs/and or returns to fit their particular situations.
| Estimated net returns at various prices and yields – Honeycrisp full production | |||||||
|---|---|---|---|---|---|---|---|
| Yield | Price ($/bin) | ||||||
| (bins/acre) | 250 | 300 | 350 | 400 | 450 | 500 | 550 |
| 30 | (5,510) | (4,010) | (2,510) | (1,010) | 490 | 1,990 | 3,490 |
| 35 | (5,361) | (3,611) | (1,861) | (111) | 1,639 | 3,389 | 5,139 |
| 40 | (5,211) | (3,211) | (1,211) | 789 | 2,789 | 4,789 | 6,789 |
| 45 | (5,062) | (2,812) | (562) | 1,688 | 3,938 | 6,188 | 8,438 |
| 50 | (4,913) | (2,413) | 87 | 2,587 | 5,087 | 7,587 | 10,087 |
| 55 | (4,764) | (2,014) | 736 | 3,486 | 6,236 | 8,986 | 11,736 |
| 60 | (4,615) | (1,615) | 1,385 | 4,385 | 7,385 | 10,385 | 13,385 |
| 65 | (4,465) | (1,215) | 2,035 | 5,285 | 8,535 | 11,785 | 15,035 |
|
Includes amortized establishment costs, overhead costs of 5%, and interest costs of 5%. Assumes an 825-pound bin. Source: Karina Gallardo, WSU |
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