Production, Market, and Expected Return December 2008 Highbush Blueberries Production, Market, and Expected Return December 2008 copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Overview Native to North America (North America continues to be the world’s leading producer) Blueberries are perennial, long-lived, deciduous, woody shrubs Elizabeth White and Dr. Frederick Coville domesticated the wild highbush blueberry in the early 1900’s Today more than 42,000 metric tons are harvested each year copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Market Opportunities Direct Marketing Farm stands Pick your own (reduced labor cost / added insurance cost) Internet (jelly, jam, pancake mix, etc…) Wholesale marketing to regional groceries for fresh fruit in during the June – July timeframe Processed blueberries Canned blueberries Frozen blueberries Liquid blueberries (juice, purees and concentrates) Dried blueberries (dehydrated for the retail snack and food processing industry) copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Market Opportunities Export Market (for large producers) Food Brokers and Sellers and distributors including foodservice and bakery suppliers Marketing blueberries in Kentucky Kentucky MarketMaker Kentucky Restaurant Rewards Program Marketing Fresh Produce at Farmers Markets Marketing at Produce Auctions Marketing Fresh Produce to Restaurants Community Supported Agriculture (CSA) Pick-Your-Own (U-Pick) Marketing Grower Cooperatives (Co-ops) Marketing Via the Internet copyright eStudy.us 2008 michael.roberson@eStudy.us

Kentucky Markets and Producers Plant and Fruit Suppliers Bluegrass Blueberries (URL) Heartland Blueberries (URL) Fuller's Hillside Nursery (URL) Markets Kentucky Farmer’s Market Directory (URL) Fairview Produce Auction (URL) Pick Your Own (PickYourOwn.org) Reed Valley Orchard (URL) Brackenridge Berry Farm (URL) copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Health and Nutrition Found to be high in antioxidants such as Vitamins C and E Fresh Frozen Energy kcal 84 79 Protein g 1.1 0.65 Selenium mcg 0.1 0.2 Fat 0.49 0.99 Vitamin C mg 14.4 3.9 Carbohydrate 21.45 18.86 Thiamin 0.055 0.05 Fiber 3.6 4.2 Riboflavin 0.061 0.057 Calcium 9 12 Niacin 0.619 0.806 Iron 0.41 0.28 Panthothenic acid 0.184 0.194 Magnesium 8 Vitamin B6 0.077 0.091 Phosphorus 18 17 Folate 11 Potassium 114 Vitamin B12 Sodium 1 2 Vitamin A IU 80 71 Zinc 0.24 0.11 Vitamin E 0.84 0.74 Copper 0.084 0.051 Vitamin K 28.6 25.4 Manganese 0.497 0.228 copyright eStudy.us 2008 michael.roberson@eStudy.us

Production Characteristics A blueberries plant usually achieves full production in the fifth year and produces for five to seven years there after Generally planted in the October or November Plants should be spaced six feed apart in the row and row should be 8 to 12 feet apart Highly organic and well drained soil is best Irrigation (1-2 inches a week) doubles yield in Kentucky Blueberries require an acidic soil pH (4.8– 5.5) most Kentucky soils will need intervention to meet requirements copyright eStudy.us 2008 michael.roberson@eStudy.us

Production Characteristics Land that doesn’t suit the pH requirement will need a preparation year (sulfur to lower pH or limestone treatment to increase pH) Blueberries have a low nitrogen requirement. Nitrogen Fertilizer (120 pounds per acre) applied at three different period helps improve production at bud time followed by two more applications in six week intervals First year cost include land preparation and planting expenses (605 blueberry plants, mulch, fertilizer, herbicides, and insecticides) Substantial labor costs begin with picking in the third year copyright eStudy.us 2008 michael.roberson@eStudy.us

Production Characteristics Harvest in Kentucky begins in June and last for six weeks One acre at full production requires about 340 labor hours to harvest (approx. 5 workers over two weeks) Blueberries require cold storage between harvest and delivery At maturity some plants should be remained and transplanted to another location Blueberries maintain shallow roots which helps with removal and transplantation copyright eStudy.us 2008 michael.roberson@eStudy.us

Production Characteristics Weed management Maintain Grass between roles Mulch three feet under plants Pest management Insects generally aren’t a financial burden Pest List Blueberry maggot Blueberry stem borer Cranberry fruitworm Cherry fruitworm Leafroller Leafhopper Aphids Japanese beetle copyright eStudy.us 2008 michael.roberson@eStudy.us

Production Characteristics Bird and rodent control Birds create substantial lose Netting (expense but may pay-off in some locations) Scare-eye balloons Mylar reflective tape Sonic devices Rodents are a problem in the initial years inhabiting the mulch and feeding on the blueberry plant roots Pollination Insect pollinated (horn-faced bees, mason bees, carpenter bees, bumblebees, and orchard bees) Manage crop border vegetation to improve habitat copyright eStudy.us 2008 michael.roberson@eStudy.us

Production Characteristics Disease management Fruit Diseases Mummy berry Botrytis blight (gray mold) Anthracnose fruit rot Stem and Foliage Diseases Fusicoccum canker Phomopsis twig blight Root Diseases Phytophthora Root Rot Bacterial Crown Gall Virus and Phytoplasmas copyright eStudy.us 2008 michael.roberson@eStudy.us

Production Opportunity Cost Capital Requirements (Land , Building, Equipment) Small tractor Mower Sprayer Refrigeration One to Ten acres of land Labor Requirements (minimal labor training) costs are market rates for agriculture labor (2008 labor rate: $9.00) Land Opportunity Cost (lease value for class A: $100) copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Revenue Estimates Revenue sources Revenue may vary greatly with price and yield variation No secondary revenue sources Production incentives from the government Revenue assistance Costs share copyright eStudy.us 2008 michael.roberson@eStudy.us

Production Cost Overview Preparation Year Planting Year Full Production Year Variable Costs Soil Test Sulfur Herbicide Grass Seed Fertilizer Variable Machinery Costs Hired Labor Fixed Machinery and Equip Variable Costs Herbicide (Burndown) Plants Peat Moss Fertilizer Mulch (Sawdust) Herbicide (Planting) Herbicide (Midseason) Insecticide Seed Grass Fall Herbicide Irrigation Variable Machinery Costs Hired Labor Fixed Machinery Costs Fixed Irrigation System Costs Variable Costs Fungicide Fertilizer Herbicide (Spring) Pollination Insecticide Herbicide (Fall) Irrigation Variable Machinery Costs Plastic Clamshells Marketing Costs Refrigeration Hired Labor Fixed Machinery Costs Fixed Irrigation System Costs Fixed Refrigeration Cost copyright eStudy.us 2008 michael.roberson@eStudy.us

Gross Revenue, Costs, and Return Yield in pounds 4,000 6,000 8,000 10,000 Gross Revenue (Price $2.00) $8,000 $12,000 $16,000 $20,000 Variable Costs less Labor $2,614 Explicit Labor Costs $1,440 $2,160 $2,880 $3,600 Implicit Labor Costs $432 Total Variable Costs $4,486 $5,206 $5,926 $6,646 Fixed Costs $947 Total Production Costs $5,434 $6,154 $6,874 $7,594 Interest $255 Total Costs $5,689 $6,409 $7,129 $7,849 Return to Land, Cap. And Mgt. $2,311 $5,591 $8,871 $12,151 Companion spreadsheet (Blueberries.xls) Source for assumptions: http://www.uky.edu/Ag/NewCrops/blueberrybudget.pdf copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Risk Assessment Market Risk: Price is somewhat variable ($1.50 to $3.00) Production Risk: Blueberry yield is impacted by weather 3,000 to 10,000 pounds per acre spread (irrigation systems minimize this risk) Financial Risk: Blueberries reach full yield after four to five years of growth. Capital sources must partner with appropriate loan contracts to accommodate no output during the initial three years Expected Return using average cash flow ( Cash and other requirements for each production year Time Value Model (NPV=$24,000 using “Net Return Slide”) copyright eStudy.us 2008 michael.roberson@eStudy.us

Risk Assessment – Payoff Table Yield in pounds 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 $1.00 -$1,779 -$1,239 -$699 -$159 $381 $921 $1,461 $2,001 $1.25 -$1,029 -$239 $551 $1,341 $2,131 $2,921 $3,711 $4,501 $1.50 -$279 $761 $1,801 $2,841 $3,881 $4,921 $5,961 $7,001 $1.75 $471 $1,761 $3,051 $4,341 $5,631 $6,921 $8,211 $9,501 $2.00 $1,221 $2,761 $4,301 $5,841 $7,381 $8,921 $10,461 $12,001 $2.25 $1,971 $3,761 $5,551 $7,341 $9,131 $10,921 $12,711 $14,501 $2.50 $2,721 $4,761 $6,801 $8,841 $10,881 $12,921 $14,961 $17,001 $2.75 $3,471 $5,761 $8,051 $10,341 $12,631 $14,921 $17,211 $19,501 $3.00 $4,221 $6,761 $9,301 $11,841 $14,381 $16,921 $19,461 $22,001 Price Source for assumptions: http://www.uky.edu/Ag/NewCrops/blueberrybudget.pdf copyright eStudy.us 2008 michael.roberson@eStudy.us

Risk Assessment – Net Return Years of Operation 1 2 3 4 5 6 7 8 9 10 Yield in pounds 1000 3000 6000 8500 Gross Returns $0 $2,000 $6,000 $12,000 $17,000 Variable Costs less Labor $311 $2,579 $337 $704 $1,227 $1,983 $2,614 Explicit Labor Costs $216 $360 $1,080 $2,160 $3,060 Implicit Labor Costs $24 $576 $432 Total Variable Costs $335 $3,371 $769 $1,496 $2,739 $4,575 $6,106 Fixed Costs $25 $420 $370 $784 $955 $947 Total Production Costs $361 $3,792 $1,139 $2,280 $3,694 $5,523 $7,054 Interest $14 $126 $15 $48 $104 $186 $255 Total Costs $375 $3,918 $1,154 $2,328 $3,798 $5,709 $7,309 Return to Land, Cap. And Mgt. -$375 -$3,918 -$1,154 -$328 $2,202 $6,291 $9,691 Worksheet uses a $2.00 price See Appendices “Prod. Detail” for year by year detail Source for assumptions: http://www.uky.edu/Ag/NewCrops/blueberrybudget.pdf copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Basic Summary Market Opportunity Pick Your Own Farmer’s Market Regional Groceries Advantages of Western and Center Kentucky June to July harvest timing (after Florida – before Michigan) Kentucky farmers have the skill and capital to grow blueberries (many would need to add an optional irrigation system) Farmer’s market and whole supplies will need access to five workers per acre during harvest season Over low lose risk crop Good often to replace tobacco revenue or add revenue Good marginal land use crop copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Appendices copyright eStudy.us 2008 michael.roberson@eStudy.us

Appendix – Prod. Detail (Preparation Year) Quantity Unit $/Unit Total Gross Returns $0.00 Variable Costs Soil Test 2 assays $10.00 $20.00 Sulfur 650 pounds $0.27 $175.50 Herbicide quarts $15.22 $30.44 Grass Seed 10 $2.00 Fertilizer (10-10-10) 800 $0.07 $56.00 Variable Machinery Costs 1 acre $9.36 Variable Costs less Labor $311.30 Hired Labor hours $9.00 Unpaid Labor $12.00 $24.00 Total Labor Cost Total Variable Cost $335.30 Fixed Costs Machinery and Equip Costs $25.47 Total Fixed Costs Total Cost without Interest $360.77 Interest $14.01 Total Costs $374.78 Return to Land, Cap. And Mgt. ($374.78) copyright eStudy.us 2008 michael.roberson@eStudy.us

Appendix - Prod. Detail (Planting Year) Quantity Unit $/Unit Total Gross Returns $0.00 Variable Costs Herbicide (Burndown) 1 quarts $15.22 Plants 605 plants $2.65 $1,603.25 Peat Moss 14 bales $22.00 $308.00 Fertilizer (Ammonium Sulfate) 61 pounds $0.10 $6.10 Mulch (Sawdust) acre $250.00 Herbicide (Planting) $138.00 Herbicide (Midseason) 2.5 pints $9.00 $22.50 Insecticide 2 $3.70 $7.40 Seed Grass 10 $2.00 $20.00 Fall Herbicide 8 $9.67 $77.36 Irrigation 5 months $15.00 $75.00 Variable Machinery Costs $56.61 Production Costs less Labor $2,579.44 Hired Labor (Planting and Hoeing) 24 hours $216.00 Unpaid Labor 48 $12.00 $576.00 Total Labor Costs $792.00 Total Variable Costs $3,371.44 Fixed Costs Machinery Costs $72.31 Costs on Irrigation System year $348.00 Total Fixed Costs $420.31 Total Cost without Interest $3,791.75 Interest $125.79 Total Costs $3,917.54 Return to Land, Cap. And Mgt. ($3,917.54) copyright eStudy.us 2008 michael.roberson@eStudy.us

Appendix – Prod. Detail (Year After Planting) Quantity Unit $/Unit Total Gross Returns $0.00 Variable Costs Fungicide 5 gallons $3.20 $16.00 Plants (Replanting) 15 plants $2.65 $39.75 Fertilizer (Ammonium Sulfate) 122 pounds $0.10 $12.20 Herbicide 16 pints $9.67 $154.72 Insecticide 2 $3.70 $7.40 Irrigation months $15.00 $75.00 Variable Machinery Costs 1 acre $31.73 Variable Costs less Labor $336.80 Hired Labor Cost hours $9.00 Unpaid Labor Costs $12.00 $180.00 Total Labor Costs Total Variable Cost $516.80 Fixed Costs Machinery Costs $22.30 Costs on Irrigation System year $348.00 Total Fixed Cost $370.30 Total Costs without Interest $887.10 Interest $15.16 Total Costs $902.26 Return to Land, Cap. And Mgt. ($902.26) copyright eStudy.us 2008 michael.roberson@eStudy.us

Appendix - Prod. Detail (Third Year) Quantity Unit $/Unit Total Gross Returns 1000 pints $1.50 $1,500.00 Variable Costs Fungicide 5 gallons $3.20 $16.00 Fertilizer (Ammonium Sulfate) 193 pounds $0.10 $19.30 Herbicide (Spring) 1 $76.93 Pollination hive $40.00 acre $74.13 Insecticide $17.70 Herbicide (Fall) 8 $9.67 $77.36 Irrigation months $15.00 $75.00 Variable Machinery Costs $39.29 Plastic Clamshells $100.00 Marketing Costs 0.1 gross $150.00 Refrigeration 30 days $0.60 $18.00 Variable Costs less Labor $703.71 Hired Labor (Picking) 40 hours $9.00 $360.00 Unpaid Labor 36 $12.00 $432.00 Total Hired Labor $792.00 Total Variable Cost $1,495.71 Fixed Costs Machinery Costs $45.92 Costs on Irrigation System year $348.00 0.5 years $341.00 $170.50 Pest Control $220.00 Total Fixed Cost $784.42 Total Costs without Interest $2,280.13 Interest $47.87 Total Costs $2,328.00 Return to Land, Cap. And Mgt. ($828.00) copyright eStudy.us 2008 michael.roberson@eStudy.us

Appendix - Prod. Detail (Fourth Year) Quantity Unit $/Unit Total Gross Returns 3000 pints $1.50 $4,500.00 Variable Costs Fungicide 5 gallons $3.20 $16.00 Fertilizer (Ammonium Sulfate) 254 pounds $0.10 $25.40 Herbicide (Spring) 1 $76.93 Pollination hive $40.00 acre $74.13 Insecticide $16.22 Herbicide (Fall) 8 $9.67 $77.36 Irrigation months $15.00 $75.00 Variable Machinery Costs $40.44 Plastic Clamshells $300.00 Marketing Costs 0.1 gross $450.00 Refrigeration 30 days $1.19 $35.70 Variable Costs less Labor $1,227.18 Hired Labor 120 hours $9.00 $1,080.00 Unpaid Labor 36 $12.00 $432.00 Total Hired Labor $1,512.00 Total Variable Cost $2,739.18 Fixed Costs Machinery Costs $45.92 Costs on Irrigation System year $348.00 years $341.00 Pest Control $220.00 Total Fixed Cost $954.92 Total Costs without Interest $3,694.10 Interest $103.82 Total Costs $3,797.92 Return to Land, Cap. And Mgt. $702.08 copyright eStudy.us 2008 michael.roberson@eStudy.us

Appendix - Prod. Detail (Fifth Year) Quantity Unit $/Unit Total Gross Returns 6,000 pints $1.50 $9,000.00 Variable Costs Fungicide 5 gallons $3.20 $16.00 Fertilizer (Ammonium Sulfate) 315 pounds $0.10 $31.50 Herbicide (Spring) 1 $76.93 Pollination hive $40.00 acre $74.13 Insecticide $16.22 Herbicide (Fall) 8 $9.67 $77.36 Irrigation months $15.00 $75.00 Variable Machinery Costs $40.44 Plastic Clamshells $600.00 Marketing Costs 0.1 gross $900.00 Refrigeration 30 days $1.19 $35.70 Variable Costs less Labor $1,983.28 Hired Labor 240 hours $9.00 $2,160.00 Unpaid Labor 36 $12.00 $432.00 Total Hired Labor $2,592.00 Total Production Cost $4,575.28 Fixed Costs Machinery Costs $38.22 Costs on Irrigation System year $348.00 years $341.00 Pest Control $220.00 Total Fixed Cost $947.22 Total Costs without Interest $5,522.50 Interest $186.45 Total Costs $5,708.95 Return to Land, Cap. And Mgt. $3,291.05 copyright eStudy.us 2008 michael.roberson@eStudy.us

Appendix – Prod. Detail (Sixth to Tenth Year) Quantity Unit $/Unit Total Gross Returns 8500 pints $1.50 $12,750.00 Variable Costs Fungicide 5 gallons $3.20 $16.00 Fertilizer (Ammonium Sulfate) 376 pounds $0.10 $37.60 Herbicide (Spring) 1 $76.93 Pollination hive $40.00 acre $74.13 Insecticide $16.22 Herbicide (Fall) 8 $9.67 $77.36 Irrigation months $15.00 $75.00 Variable Machinery Costs $40.44 Plastic Clamshells $850.00 Marketing Costs 0.1 gross $1,275.00 Refrigeration 30 days $1.19 $35.70 Variable Costs less Labor $2,614.38 Hired Labor 340 hours $9.00 $3,060.00 Unpaid Labor 36 $12.00 $432.00 Total Labor Costs $3,492.00 Total Production Cost $6,106.38 Fixed Costs Machinery Costs $38.22 Costs on Irrigation System year $348.00 years $341.00 Pest Control $220.00 Total Fixed Cost $947.22 Total Costs without Interest $7,053.60 Interest $255.35 Total Costs $7,308.95 Return to Land, Cap. And Mgt. $5,441.05 copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Bibliography Health and Nutrition http://www.blueberry.org/health.htm Market Opportunities http://www.blueberry.org/blueberries.htm http://www.uky.edu/Ag/NewCrops/marketing.html Production Characteristics http://www.attra.org/attra-pub/PDF/blueberry.pdf http://www.uky.edu/Ag/NewCrops/introsheets/blueberryintro.pdf copyright eStudy.us 2008 michael.roberson@eStudy.us

copyright eStudy.us 2008 michael.roberson@eStudy.us Bibliography Risk Assessment http://www.uky.edu/Ag/NewCrops/blueberrybudget.pdf Disease Management http://www.oardc.ohio-state.edu/fruitpathology/organic/blueberry/index.html copyright eStudy.us 2008 michael.roberson@eStudy.us