Fruit production can yield good returns but obstacles line the path to profitability, an economist told the Saskatchewan Fruit Growers Association meeting in Saskatoon Jan. 12.
“There is risk, so grow it slow,” cautioned Joe Novak of Saskatchewan Agriculture.
He advised growers to begin by calculating their operation’s costs and gathering information from experts.
“Be conscious of what you want to do and what your definition of success is,” he said in an interview.
Novak cited obstacles that include adequate and affordable land for growing fruit, access to good water and irrigation, money to finance the orchard venture and an appropriate number of labourers to do the work.
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Fruit groves can take years to come into full production, so growers must have the drive and passion to sustain such enterprises for 10 or more years.
“You have to love this.”
Novak recommended a go-slow approach, keeping investment and plantings to a minimum.
“Invest small amounts at first and see if you like it, see if you can grow and build on that.”
He recommended a base operation of at least 10 to 20 acres in fruit, less if producers are planning to hobby farm.
Tap into the network of fruit growers, university researchers and horticultural specialists for information on marketing, production and business management.
Identify whether your production will go:retail or wholesale or both.
Retail can include farmers’ markets where the price might be higher, but sales volume will be lower.
Farmers’ markets require face-to-face contact with customers and a day spent selling in the marketplace, while U-pick operations bring customers to the farm. Prices will be lower in wholesale markets, which demand larger volumes of production.
Novak advised growing one crop if heading toward wholesale, instead of the diversified orchard mix required in direct marketing operations.
“It’s prudent to have a mix of retail and wholesale markets when small,” he said.
Other potential obstacles include changing consumer tastes, diseases in the orchard, poor growing conditions and falling prices.
The risks in growing saskatoons are high, but much lower for cherries, which have low production costs and few issues with diseases and pests.
Apples are among the most profitable fruits, but like strawberries, are labour intensive.
While Novak expressed concern about too many growers getting into fruit and flooding the market, he is optimistic that growing fruit in Saskatchewan has a bright future and can be profitable.
“Just make sure you don’t overextend yourself.”
An orchard planner spreadsheet, developed by Novak can help detail expenses and revenues and forecast the approximate time frame for profitability.
Grower Lorraine Beaudette found the spreadsheet helpful in mapping an expansion on her acreage west of Saskatoon and estimating costs and profits.
She wants to add five months of fruit production to her agriventure enterprise that features activities like sleigh rides.
“It gives you the ability to show how many acres I may want to put in and what products,” she said.
“Without this, I’d be struggling along for a long time.”
The orchard planner helped her determine that sour cherries could be a profitable venture that will support her country lifestyle.
“If already living on a small farm holding, it really is complementary.”
Beaudette determined that starting with a 10 to 20 acre orchard will deliver the return on investment at a faster rate.
Using cherries in an orchard planner example, Novak calculated growers might be expected to see the first positive cash flows of $24,000 occurring in the sixth year. That would rise to $48,000 by the eighth year.
That was based on 40 acres yielding 8,000 pounds per acre and cherries selling for 25 cents a lb.
He estimated total production investment in the first eight years at $312,000.
Highest costs are expected in the second year on projected investments in equipment, buildings and irrigation, with operating costs levelling off after six years.
