Conquering Impediments facing Citrus Mechanical Harvesting Fritz Roka December 8, 2009 SWFREC – Immokalee, FL

Impediments to Adoption The “Late Season” Problem Grower concern for tree health Costs of Gleaning (recovery %) Harvest debris Objective for my presentation today is to highlight (4) issues, which when solved, I believe could allow mechanical harvesting to expand at an accelerated pace. Common thread among these current impediments is that they constrain the ability of existing equipment to fully maximize their economic efficiency. Enhancing equipment efficiency lowers operational/ownership costs, leading to lower costs to harvest fruit. Lower harvesting costs leads to higher on-tree returns. At some point, hopefully, the price or cost savings from MH will get big enough that the market will take over and drive the rest of the adoption effort. Catch 22: Grower adoption, f(machine price) Machine price, f(capacity) Capacity, f(grower adoption)

Late season problem. ‘Valencia’ oranges, the most valuable fruit for OJ processing. After early May, tree looks like this. This year’s mature fruit ready for harvesting, next year’s immature fruitlets sizing up to between 2-3 cm. If this tree were to be MH, yields in the following year would decrease by at least 25% due to the excessive loss of emerging fruitlets. Our hope is with an application of an abscission compound – active ingredient is CMNP. With abscission, mature fruit is loosened allowing equipment to operate with less force and thereby preserve more, if not all the young fruitlets. A data submission package is being assembled for review by the USEPA and we hope by 2011, the EPA will grant Florida an EUP of 25,000 acres. Cost of registration: $9-11M Cost of research into management of CMNP: $500-600K since 1996. By 2011, we estimate that $20M of public funds have been committed to the registration and development of CMNP. Technical problems: just discussed are all solvable and within our financial capacity. But there are some additional impediments that cause me some concern over whether the industry will ultimately push ahead and fully transition to a MH’ed orange juice crop.

#1: Late Season ‘Valencia’ Concern when fruitlet diameter > 1 in 25-40% next year’s yield loss MH season shorten by 6-8 wks Goal: More boxes, Lower Cost Abscission the key Selective loosening, Reduced mechanical energy Other Abscission benefits faster harvest speeds less visible tree damage less debris Formal EPA registration process will begin sometime this month (Dec 2009) when the EPA receives the DOC the CMNP registration package. We hope that by the 2011 season, we will have an EUP for CMNP that will allow us to apply abscission over a significant number of acres without destroying the fruit. An economic assessment of CMNP concluded that with an EUP of 25,000 acres and fairly conservative price and production assumptions, that the value gained by ONLY harvesting late-season Valencias would offset the DOC investment into CMNP registration within (4) years.

#2: Grower Tree Health Concerns Growers see damage, conclude the worst, do not to adopt MH; IFAS research: Well nourished trees OK; What about commercial conditions and cumulative effect from multiple stresses?

Grower Tree Health Concerns: Commercial Yield Study Analyze harvest method on block yields. Data: 5 companies, 12 groves 82 blocks (at least 10 yrs/block) Preliminary results: (+8 yr blocks) Hamlin(hand) – Hamlin(mech) = -20 bx/a (ns) Valencia(hand) – Valencia(mech) = 44 bx/a (**)

#3: Costs of Gleaning: Recovery %, Machine Improvements Early performance data: 88-92% Recent experience: 75-82% Removal high (95%), Fruit lost at catch frame. Why fast operating speeds (2 mph) non-uniform trees economic incentive to fill trailers vs. recovery % other (?) “Gleaning” costs are averaging around $3.00 per box in the trailer (not including haul). As more and more fruit is gleaned, the net difference between hand and mechanical harvesting costs shrinks. Gleaning costs should be a function of the amount of fruit remaining after mechanical harvesting. As recovery % increases, fewer boxes are left to glean, higher the piece rate required to pay hand workers to glean. [go to next slide]

Gleaner Productivity Avail. Yield Productivity $8/hr Piece Rate Bx/ac Bx/hr $/bx 25 5.4 $1.49 50 6.5 $1.23 100 7.7 $1.04 200 8.8 $0.91 400 10.0 $0.84 500 10.4 $0.77

#4: Harvest Debris Processor controls load allocations! MH debris > hand debris Handling costs borne by processing plant Processor controls load allocations! Does std cull rate account for all debris costs? Cost efficient ways to reduce debris?

Debris Costs Preliminary Results 8 responses (plants) 75% of total boxes received 52K lbs per 100K boxes (<0.6%) 85% of debris wood 1/8 plants rejected a load b/c wood 5/8 plants rejected loads b/c non-wood stuff 3/8 plants did not reject any load 5/8 plants received MH loads (~7% boxes) 52K lbs = 580 boxes; b/w 0.5% and 0.6% 10 boxes of culls per 500 boxes on trailer = 2.0% Range of “measured” debris: min of 74 lbs/ 100K bx to max of 235,600 lbs/100K bx. Implication: can plants do a better job measuring volume/quantity of debris coming to plant

Debris Cost Prelim Results, 2008-09 Hauling debris $.001 /bx Extra graders $.019 /bx Fruit Receive Equip $.005 /bx Juice Ext. Plant equip $.001 /bx Juice Ext. Lease equip ? Sub total $0.026 /bx

Downtime Prelim Results, 2008-09 Fruit Rec Equip $.013 /bx range hourly costs: $200 - $3,400 Juice Ext Plant equip $.039 /bx range hourly costs: $500 - $13,000 Juice Ext Lease equip ? Downtime $0.052 /bx Equipment repairs $0.026/bx $78,000 per 1M boxes One Oxbo set: 2,000 ac/yr * 500 bx/ac = 1,000,000 bx per year

Industry Structure Grower Harvester Processor Nurseryman Equipment Manufacturer Harvester If industry is vertically integrated, decision making about technology adoption would be consolidated at the end of the process (i.e. processor level). A company’s CEO of CFO could analyze the investment decision, identify potential benefits AND COSTS before making an objective financial decision. But Florida citrus is generally NOT vertically integrated. Flow path of product moving from production of trees, growing of fruit, harvesting, and finally processing fruit into OJ. Each step in the flow path represents a different business entity. Implications: Each entity must make a profit. Benefits of new technology (MH) not equally shared across each entity. For some, MH could even increase costs. Processor

The Goal: 75¢ /box Very real; very realistic, but dependent on growers, harvesters, and processors working in a coordinated fashion to “exploit” the economies of scale we just discussed. At a savings of 20-cents per box, grower could increase his net returns by $100/ac ($250/ha) If costs were reduced by 75 cents, grower earnings would increase by between $200 and $300 per acre ($500 and $750 per ha). Over 100,000 acres (readily available for current CCSC), $30M of added grower earnings could be generated.

Thank you! Questions? http://citrusmh.ifas.ufl.edu