Factors that Affect the Economic Feasibility of Cider Apples in Washington State given Mechanical Harvest and Two Different Orchard Design Systems

Primary author: Suzette Galinato
Co-author(s): Carol Miles; Travis Alexander; Jacqueline King

Primary college/unit: Agricultural, Human and Natural Resource Sciences
Campus: Pullman

Abstract:

We utilize partial budget analysis to evaluate the profitability of a cider apple block given two orchard design systems – freestanding system, and tall spindle trellis system. The two systems have different tree spacing, thus they have different tree density and horticultural management that affect production costs and returns. We also evaluate the size of the cider apple orchard and/or volume of fruit production, and output price needed to make an investment in mechanical harvest economically feasible.
Given the study’s assumptions about production and estimates of costs and returns, results show that: (1) it is economically feasible to use a mechanical harvester in both systems; and (2) the tall spindle system is a more profitable investment than the freestanding system.
Economies of scale are obtained when the per-unit cost of output decreases with the scale of operation. Economies of scale often rely on fixed costs, which are costs that do not vary with output. In addition, the quantity of output produced is partly determined by the production area. The share of the purchase cost of a mechanical harvester in the total expenses for fixed capital is 37% in the freestanding system, and 44% in the tall spindle system. Also, the fixed costs are 68% and 65% of the total production costs during full production in freestanding and tall spindle systems, respectively. These are sizeable amounts and growers will realize more cost advantages by producing more output, which can be achieved by increasing the scale of their cider apple operation.