3/31/2017 What Does it Cost to Grow Cherries, Gala Apples and Anjou Pears? Recent Grower-Based Studies R. Karina Gallardo WSU-Tree Fruit Research and Extension Center, School of Economic Sciences, Wenatchee Template I-Green curve

Content Budget Process Where to find these studies? Assumptions made Study components Summary of findings Use of budgets

Budget Process Convene a group of growers The budgets are not a survey Representation of location, size of operations, and experience

Budget Process (2) Determine the production scenario Puts everyone on the same page when it comes to our assumptions

Budget Process (3) Costs depend on the assumptions Numbers are a reflection of expected costs under a strict set of assumptions

Where is it? http://extecon.wsu.edu/

Cost Estimates of Establishing and Producing Sweetheart Cherries are available in both Excel and PDF http://extecon.wsu.edu/pages/Enterprise_Budgets

Assumptions for Sweet Cherry Study Sweetheart on Mazzard rootstock Block size: 10 acres Orchard size: 150 acres Irrigation system Overhead and under tree drip sprinklers Public irrigation district Architecture Two dimensional system (planar canopy), randomly trained w/18-in radius from tree center In-row space: 10 feet Between row: 16 feet Life of planting: 25 years Density: 272 trees per acre

Summary of Costs Sweetheart Cherries by Categories ($/acre) Fixed Costs

Estimated Net Returns per Acre at Various Prices and Yield – Sweetheart Cherries   Price ($/ton) Yield (tons/acre) 800 1,600 2,400 3,200 4,000 2 -6,379 -4,779 -3,179 -1,579 21 4 -6,060 -2,860 340 3,540 6,740 6 -5,742 -942 3,858 8,658 13,458 8 -5,424 976 7,376 13,776 20,176 10 -5,106 2,894 10,894 18,894 26,894 12 -4,788 4,812 14,412 24,012 33,612 [1] Includes amortized establishment costs.

Cost Estimates of Establishing and Producing Gala apples are available in both Excel and PDF http://extecon.wsu.edu/pages/Enterprise_Budgets

Assumptions for Gala Study Gala on 9 series Dwarf rootstock Block size: 40 acres Orchard size: 160 acres Irrigation system Overhead and under tree drip sprinklers Public irrigation district Architecture Two dimensional system (planar canopy), randomly trained w/18-in radius from tree center In-row space: 4 feet Between row: 10 feet Life of planting: 15 years Density: 1,089 trees per acre

Estimated Net Returns per Acre at Various Prices and Yield - Gala   Price ($/bin) Yield (bins/acre) 200 225 250 275 300 35 -3,193 -2,318 -1,443 -568 306 40 -2,381 -1,381 -381 618 1,618 45 -1,569 -444 680 1,805 2,930 50 -757 492 1,742 2,992 4,242 55 1,430 2,805 4,180 5,555 60 867 2,367 3,867 5,367 6,867 [1] Includes amortized establishment costs. [2] Assumes pack-out of 20 packs/bin (all grades) and 925 lb/bin 

Summary of Costs By Categories ($/acre) Fixed Costs

Cost Estimates of Establishing and Producing Anjou Pears WILL SOON be available

Assumptions for Anjou Study 12-year old pear orchard Orchard size: 40 acres Irrigation system Micro sprinkler on tubing on every row and 14-ft spacing in the tree row Public irrigation district Architecture In-row space: 7 feet Between row: 15 feet Operating period: 20 years Density: 350 trees per acre; 25% of the planted trees are pollenizer trees (Bartlett)

Break-even Return per Bin Break-even Return per Bin to Cover Production Cost – Anjou Pears   Cost per Acre Break-even Return per Bin 1. Total Variable Costs $5,344.24 $167.01 2. Total Cash Costs[1] = Total Variable Costs + Land and Property Taxes + Insurance + Fees and Dues $6,175.24 $192.98 3. Total Cash Costs + Depreciation of Irrigation System, Machinery, Equipment and Building $6,650.24 $207.82 4. Total Cost = Total Cash Costs + Depreciation + Interest[2] + Management Cost $9,684.13 $302.63 [1] If there are other cash costs on an individual's orchard, these costs must be identified and included in the cash cost break-even return calculation. [2] Interest costs include some actual cash interest payments.

Summary of Costs By Categories ($/acre) Fixed Costs

Estimated Net Returns per Acre at Various Prices and Yield - Anjou   Price ($/bin) Yield (bins/acre) 200 225 250 275 300 20 -5,111.05 -4,611.05 -4,111.05 -3,611.05 -3,111.05 32 -3,284.13 -2,484.13 -1,684.13 -884.13 -84.13 40 -2,066.18 -1,066.18 -66.18 933.82 1,933.82 50 -543.75 706.25 1,956.25 3,206.25 4,456.25 60 978.68 2,478.68 3,978.68 5,478.68 6,978.68 [1] Assumes 1,100 lb/bin.

REMEMBER: Use of These Budgets Growers Starting point for comparison and creation of own budgets Policy makers Educational tool for understanding the different cost centers in tree fruit production Lenders and investors Illustration on operating loans and projected costs and returns Other researchers Financial feasibility of new technologies

Increased consumer confidence and satisfaction Apples, cherries, peaches, strawberries, and related fruit crops provide health and enjoyment  for all  Americans. Yet the U.S. fruit industry is competing in a world of globalized trade and technology. Consumers are increasingly quality-demanding and safety-oriented. To address these challenges scientists have united to develop and implement new technology to accelerate the pace and reduce the cost of delivering new varieties uniquely designed for consumer satisfaction and industry sustainability.   The $14.4 million RosBREED project, funded by the USDA-NIFA Specialty Crop Research Initiative and matching funds, is providing plant breeders of fruit crops in the Rosaceae family with much-needed DNA-based diagnostics for plant field performance and fruit quality.   Although just a little over a year old, RosBREED breeding programs are already reaping significant resource savings using this new diagnostic capability. Breeders have enriched their plant material with the genetic predisposition for consistent fruit quality after storage (apple) and for reliable cropping of large, delicious fruit (cherry).   Investing in diagnostic screening for fruit quality characters was an easy decision for the breeders as these traits are critical to grower profitability because of consumer demand. However, what traits should be the next targets for this new technology?   To help answer this question, RosBREED socio-economists are surveying growers, market intermediaries, and consumers to determine high value traits and preferences. Improved flavor and texture, enhanced nutritional quality, and plant disease resistance are all potential targets.   Newly developed apple, cherry, peach, and strawberry varieties improved with these high priority attributes will assist all sectors of the supply and demand chain to meet future challenges through: Increased consumer confidence and satisfaction Increased fruit consumption and health Decreased pesticide use Increased industry profitability, competitiveness, and sustainability This project is supported by the Specialty Crops Research Initiative of USDA’s National Institute of Food and Agriculture

Thank You R. Karina Gallardo 3/31/2017 Thank You R. Karina Gallardo Washington State University Tree Fruit Research and Extension Center, School of Economic Sciences 1100 N. Western Ave. Wenatchee, WA E-mail: karina_gallardo@wsu.edu Phone: (509) 663–8181 x 261 Template I-Green curve