In economic study of the costs of establishing, producing, and packing Honeycrisp apples in Washington State underlines the importance of high yields.
Dr. Karina Gallardo, agricultural economist at Washington State University, who compiled the study in 2011, calculates that a grower needs a net yield of at least 45 bins per acre (without culls) and a price of $500 f.o.b. ($333 after packing charges are deducted) to make a profit when the planting reaches maturity. Amortized establishment costs are included in her calculations.
The study is based on a hypothetical 10-acre block with 1,452 trees per acre on Malling 9-size rootstocks and makes the following assumptions:
• The irrigation system consists of overhead cooling and undertree drip sprinklers, with two separate submain lines.
• A pond is installed in year one, as it is used for irrigation during the first two years.
• Workers use ladders, not platforms.
• Interest on investment represents a 5 percent opportunity cost to the enterprise.
• The productive life of the orchard is 15 years, with a five-year establishment phase and ten years of full production.
Gallardo assumes net production (packable fruit) of 11 bins per acre in year three, 25 in year four, 40 in year five, and 43 at full production. The packout rate used in the study was 72 percent, which is higher than the average that growers actually experienced in 2011.
The full study, “2011 Cost Estimates of Establishing, Producing, and Packing Honeycrisp Apples in Washington,” can be downloaded at http://cru.cahe.wsu.edu/ CEPublications.
An Excel spreadsheet version of the enterprise budget can be found at the WSU School of Economic Sciences Extension Website at http://extecon.wsu.edu/pages/Enter prise_Budgets. Growers can modify certain values and use the Excel Workbook to evaluate their own production costs and returns.