Costs and Profitability for Mechanized Pruning and Harvest in Two Cider Apple Orchard Systems

Abstract

Growers need reliable information on costs and returns they can expect for a cider apple (Malus ×domestica) orchard suitable for mechanization because specialty cider apples can only be used for making cider, and returns are expected to be lower than for fresh table apples. This study estimates the costs, returns, and net profit that growers may realize by planting cider apples in either a freestanding or tall spindle system that use a mechanical harvester (both systems) and mechanical hedger (tall spindle system only). Results show that both production systems have positive net returns during full production, and their respective break-even returns are lower than the current market price, demonstrating that both systems are potentially profitable investments. Results also show that the tall spindle system is potentially more profitable due to the advantages of earlier start of fruiting and higher crop yield. The estimated net returns of the tall spindle system during full production are nearly 4 times higher than that of a freestanding system. At a discount rate of 10%, the net present value (NPV) of the tall spindle system is positive and payback period is 13 years, whereas the NPV of the freestanding system is negative. The discount rate represents the time value of money and reflects the perception of risk for the investment. The break-even discount rates (i.e., NPV = 0) are ≈6.88% for the freestanding system and 10.78% for the tall spindle system. Sensitivity scenarios found that when all else was constant, profitability increased as market price, crop yield, and production area increase and also when the cost of the harvester decreased. Because mechanical harvesters are expensive, profitability tends to be more favorable for larger farms due to economies of scale. Also, a high picking efficiency is important because fruit that falls on the ground is considered crop yield loss and reduces the gross income from cider apples.