Every year orchards are purchased or planted by people who have no experience in growing apples. For some, an orchard will be a challenge and a source of personal satisfaction and profit. For others, it may be a source of frustration and a bad investment. It’s important to become familiar with the business of producing and selling apples before investing your time, energy and money. Here are points to consider if you are thinking about starting or purchasing an orchard.
If you have had no previous experience in orchard management, consider working for a successful orchardist for at least a year to learn about the operation. If that’s not possible, be certain that a competent manager or qualified consultant can be employed before you decide to purchase an orchard.
Apple production requires a lot of labor. A permanent labor supply for spraying, pruning and general maintenance must be available. Additional seasonal labor will also be needed for harvesting and packing the fruit. Although every farm system is unique, 10 acres could be considered a minimum size for a commercial apple-growing enterprise. A 10-acre operation is large enough to use equipment efficiently and implement a continuous orchard renovation program, yet small enough that one person can take care of most of the work. Larger orchards can make more efficient use of machinery and equipment, but more hired labor, and thus more management skill, will be required.
Apple growing is an enterprise that requires a great deal of knowledge on the part of the orchard owner or manager. Making a profit growing apples in Minnesota (or anywhere else) can be done only with intense management, from variety selection through planting, training, controlling pests, thinning fruit, harvesting, handling and marketing. If you are considering orcharding as a career or a business opportunity, you must be willing to learn about and keep up-to-date with production practices.
Apple growing requires a very substantial capital investment. Many potentially successful orchards have failed simply due to lack of sufficient operating capital. Be sure you have the capital to purchase and operate an orchard before signing any agreement or sale contract. From the year of planting until the year that crop returns equal or exceeds annual costs, the apple grower will make a large investment. Dwarf trees may begin bearing a small crop their third year in the ground; these trees will not reach full productivity until the sixth or seventh year after planting.
Establishment costs per acre
Penn State has several worksheets in their 2012-2013 Pennsylvania Tree Fruit Production guide (http://extension.psu.edu/plants/tree-fruit/tfpg) that can be used to help estimate costs for the following:
- Land preparation
- Orchard planting
- Maintaining a productive apple orchard
The Penn State worksheets assume slightly lower tree densities than is probably optimal. If dwarf trees are planted at 8-foot by 14-foot spacing, there will be 388 to the acre.
These cost estimate sheets do not include costs for tree stakes. A permanent stake should be provided for each dwarf tree, so this cost should be added to your planting budget. Planting year costs include trees, tree guards, stakes, labor to plant and train trees, fertilizer and pesticides (herbicides, insecticides, fungicides, rodenticides and/or bactericides).
Nonbearing year costs include pesticides and the labor for pruning, training, mowing, and pest control. Remember, after the fifth year, production costs will increase while yields and income are also increasing. As the trees get larger, they will require more pest control chemicals to achieve good coverage, and more pruning, and it will be more time-consuming to harvest the fruit. Expect costs of $4,000 to $5,000 per acre.
Hiring honeybee hives and thinning fruit are additional costs in bearing years. Advertising and packing costs will vary depending on how the fruit is to be marketed. A pick-your-own orchard will not have high harvest costs, but will pay workers to do things that other orchards don’t, such as drive the customers on wagons around the orchard, or entertain crowds to attract them to the orchard. This kind of orchard is also likely to have higher insurance costs.
One site preparation expense not included in these worksheets is that of fencing the orchard to keep deer out. Fencing costs vary considerably, depending on type of fence chosen, materials used, size and layout of orchard. The Minnesota Department of Natural Resources can help you design a deer fence (http://www.dnr.state.mn.us/livingwith_wildlife/fences/index.html) for your orchard. Deer fencing should be considered essential to successful apple production in Minnesota. Young trees in particular are attractive to deer, and can be killed in a single season of heavy browsing. Hanging bars of soap, human hair, or other repellants in the trees might be effective, but you can’t always count on repellants.
One alternative to deer fencing could be keeping guard dogs in the orchard; however, there will be additional costs associated with this method of pest control. Do not plan to simply shoot the deer “as needed.” Special permits for killing animals harming your crop are available from the DNR; however, no matter how many deer you kill or have killed, more will soon replace them, and continue to damage your trees.
You could expect to have income from the trees after the fifth year. Yields from dwarf trees planted at a density of 300 to 400 trees per acre in Minnesota range from about 300 bushels per acre to 500 or more bushels per acre. Figuring that a bushel of apples weighs about 40 pounds, an acre of trees at this density should produce at least 16,000 pounds of fruit, and on a good site, with favorable climatic conditions and excellent management, as much as 20,000 pounds.
Not all of the production will be saleable; figure about 60 percent packout when you make income projections, and somewhat less for pick-your-own, since customers will not be as thorough pickers as hired harvesters, and they may eat a significant amount of fruit without purchasing it.
Prices for fruit will depend on how it is marketed: pick-your-own, pre-picked on-farm sales, farmers’ market sales, or wholesale in bulk to a packer. At some pick-your-own orchards in Minnesota, many varieties sell for about $1 per pound; pre-picked fruit costs about $1.25. The same fruit, wholesaled to a packer, might be worth only 10 cents per pound.
Some varieties command a higher price than others, prices will vary from year to year, and yields will also vary. Don’t assume that planting lots of Honeycrisp and no lower-value apples will allow you to beat the average. The only way most Minnesota orchard businesses make money is by retailing the fruit, and by having a diverse business that includes a bakery, a cider pressing operation, entertainment, or all of the above. Some orchardists grow other fruits and/or vegetables as well as apples. Many of these profit-generating activities were not part of the original plan for the orchard, but grew out of necessity.
It makes good business sense to draw up a marketing plan with assistance from a consultant before you plant the first tree. Figure out who will buy your apples and how you will sell them. Decide what will define your orchard and make people want to come to your farm or farmers market stand rather than going to someone else’s or going to a grocery store.
As you pencil out the financial outlook for your planned orchard, you may wish to consult the Small Business Administration (https://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business) for assistance in formulating a business plan. SBA staff can work with you to estimate costs for buildings, land, equipment and insurance, and the staff can help you figure out when you can expect to break even. The SBA website offers online courses, videos, chat sessions and other resources to help you through the process of creating a successful business.
Editor’s note: This column was used with permission granted from the University of Minnesota Extension. The material is available at http://fruit.cfans.umn.edu/apples/beforeyoustart/.