1. Production, Market, and Expected Return December 2008
Highbush Blueberries
Production, Market, and Expected Return
December 2008
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2. 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
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3. 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)
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4. 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
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5. 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)
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6. 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
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7. 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
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8. 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
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9. 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
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10. 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
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11. 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
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12. 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
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13. 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)
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14. 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
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15. 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
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16. 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:
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17. 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”)
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18. 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:
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19. 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:
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20. 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
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21. copyright eStudy.us 2008 michael.roberson@eStudy.us
Appendices
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22. 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 ( )
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)
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23. 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)
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24. 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)
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25. 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)
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26. 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
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27. 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
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28. 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
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29. copyright eStudy.us 2008 michael.roberson@eStudy.us
Bibliography
Health and Nutrition
Market Opportunities
Production Characteristics
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30. copyright eStudy.us 2008 michael.roberson@eStudy.us
Bibliography
Risk Assessment
Disease Management
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