ProfitFruit: Decision Support System for Evaluation of Investments in Fruit Production

Innovative techniques were developed in the Isafruit project in order to create a more ecological sustainable way of fruit growing. Before fruit growers will consider implementation of these innovations they need information concerning their economic sustainability. The economic model ProfitFruit is made to evaluate the profitability of innovative techniques. ProfitFruit includes a database with quantitative data concerning apple growing in three European fruit growing regions: North Germany (Jork), Switzerland and the Netherlands. Data include amounts of inputs and its costs, yield and prices, labour demand and costs for fixed assets. ProfitFruit calculates returns, gross margin, marginal gross margin, fixed costs as well as labour income of the entrepreneur. ProfitFruit is used for the economic evaluation of the Isafruit Casa sprayer, of mechanical thinning, and of hot water treatment to prevent storage rot. In general, the Isafruit Casa sprayer is the most profitable of these techniques. If the sprayer functions well, it will decrease costs and therefore increase returns when compared to a standard spraying machine. Therefore, fruit growers who can afford the investment might invest in this technique. Also mechanical thinning instead of chemical thinning may be profitable, especially if it results in better product quality and higher prices. Hot water treatment increases total costs, compared with the chemical way of protection. Therefore not many integrated fruit growers will decide to apply this technique, not even when it becomes more effective or if additional labour demand decreases. However, due to problematic storage rot and high prices for organic apples (no chemicals allowed), hot water treatment seems profitable in organic production. Also a desired reduction of the residues on apples might stimulate hot water treatment. In general, costs and labour demand will be critical success factors for implementation of innovative techniques which are meant to spare the environment. INTRODUCTION ProfitFruit is one of the work packages of the Isafruit project. The mission of Isafruit is to improve human health through increased consumption of fruit, produced in a sustainable way. The view of Isafruit is that better fruit quality and availability, a higher convenience of fruit and fruit products and improved consciousness of consumers result in higher consumption. Higher fruit consumption is supposed to result in increased health and well-being. The strategic objective of Isafruit is to increase fruit consumption by taking a total chain approach, identifying the bottlenecks and addressing them by consumer driven preferences. ProfitFruit work package WP 5.3 aims at providing knowledge and methods to improve the capacity of farms in economical terms to deliver more fruits with the desired quality standards. Decision support system ProfitFruit is build within WP 5.3. This paper presents the results of calculations, using ProfitFruit, of the effects of innovative apple production techniques on gross margin and labour income, including sensitivity analyses. Background of these calculations is that the more ecologic sustainable way of fruit production techniques studied in the Isafruit project must also be economic sustainable (profitable) for the fruit growers to be implemented. Proc. XXVIIIth IHC – IS on the Challenge for a Sustainable Production, Protection and Consumption of Mediterranean Fruits and Nuts Eds.: A.M. D’Onghia et al. Acta Hort. 940, ISHS 2012 448 MATERIAL AND METHODS The decision support system (Schreuder and Peppelman, 2007) was built in Excel and was based on standard data for apple growing, concerning yield, fruit prices, input costs, labour demand and costs for fixed assets. For this paper, only the Dutch standard data (Peppelman and Groot, 2004) were used, although the model also includes Swiss and German standard data. The most important basic data are presented and explained in Table 1. In standard scenario’s, 3% of the yield is lost during harvest, 80% of the yield is sold after storage and standard storage loss is 5%. Using ProfitFruit, calculations were made for new and innovative techniques, mostly developed in other Isafruit Work Packages. the new techniques directly affected yield (kg/ha), quality (price), input costs, labour demand and fixed assets, and if yield was effected also costs for storage and selling changed. All effects on labour demand are assumed to concern temporary labour (€ 10/hour), affecting marginal costs. First, the experts and engineers who developed the new techniques were asked to present or estimate effects on yield and quality, material use, labour demand and price of machines. Based on this information, the most likely effects of the new techniques on gross margin en labour income of apple growers were calculated. Next, in sensitivity analyses, the price of machines, effects on product quantity and quality and/or effects on storage loss and additional labour demand for these techniques were varied. The following techniques were studied: Isafruit Casa Sprayer The Isafruit Casa sprayer is developed in Isafruit Work Package 5.1. The machine reduces chemical use by adopting the dosage depending on location and wind, measured amount of leaves at the trees and measured health status of the trees. For a description of the sprayer see Van de Zande et al. (2008). P. Marucco, G. Doruchowski, J. van der Zande and M. Wenneker (pers. commun.), who developed this sprayer, estimated a 50% reduction of chemicals used for crop protection and growth regulation, compared to the standard. Extra costs for the sprayer (sensors, software and other components) are estimated at € 21,000. The operational speed is expected to be the same as the operational speed of a standard spraying machine, so no extra labour is needed. Yield and quality are supposed to be not affected by the use of the Isafruit Casa sprayer. Mechanical Thinning Chemical thinning is substituted by a mechanical way of thinning, using a special machine. This saves one spraying with ATS (€ 53/ha). Labour demand for application is the same as for standard: the same driving time is needed for the mechanical thinning as for the eliminated spraying. It is estimated to save 5 labour hours due to reduced labour demand for the following hand thinning. The extra machine costs are € 8,500 and no effects on yield and quality are expected. Hot Water Treatment Hot water treatment, also named ‘hot water dipping’, is developed in Isafruit Work Package 4.1. In this paper, hot water treatment is supposed to be combined with an antagonist treatment for acceptable results. Costs for the equipment are estimated at € 55,000 (Maxin and Klopp, 2004; Schirmer et al., 2004; Schreuder, 2006). Due tot hot water treatment, one chemical spraying can be omitted, saving € 53 per ha. Extra costs for energy and antagonists are € 57 and € 168 per ha, respectively. Total extra labour hours (4 tonnes/hour capacity) and the antagonist treatment are estimated at 21 hour/ha. RESULTS AND DISCUSSION First the relevant technical and financial data for the standard situation are presented (Table 1). Then the financial effects from use of the innovative production methods are shown, followed by sensitivity analyses per technique.