Articles
CAPITAL INVESTMENT IN LABOR AND MACHINES FOR AN ECONOMICAL SYSTEM OF FRUIT PRODUCTION
As a business, its primary objective is to produce a favorable return on investment.
Over the years the fruit enterprise has changed from a relatively simple operation, providing fruit for the farmer and his neighbors, to a very complex operation involving labor relations and benefits, cost accounting, engineering, business law, government regulations, public relations, commerce and international trade.
This complex operation has become a system of production and management consisting of 3 main integrated aspects: biological facets, physical or engineering facets, and economic aspects.
Biological facets include pest management, land management, tree management, and cropping.
Physical or engineering facets include machines, mechanical and chemical aids, climate control, and labor.
Economic aspects include economic advantages of alternative methods of cropping technology as affected by labor, machinery, marketing methods and markets, climate, location, government regulations, taxes, etc.
It is the economic aspects which have contributed the most to making fruit growing a business system of production management.
In this system, cropping is the primary concern, the economical cropping of premium-valued fruit.
Both the level of cropping and the characteristics of the crop determine the income from the market being served.
However, it is not the purpose of our discussion today to include marketing and market aspects as factors in net returns to the business enterprise, even though they can and do have an important bearing on profit levels.
There is no question that fruit production is both labor and capital intensive.
Mechanization is the use of capital as a substitute for labor, or to make labor more efficient.
The greater use of machines, however, does not always result in greater net returns.
In fact, from an economical standpoint, certain orchard operations can be performed more profitably by labor than by machines.
Further, certain orchard designs or systems enable greater labor and machine efficiency than others, even though greater capital investment is initially required.
However, the greater efficiency brought about by the use of a machine may not always be the direct effect of the machine as a substitute for labor, but rather the greater efficiency brought about by the use of a machine may not always be the direct effect of the machine as a substitute for labor, but rather the greater efficiency which is brought about indirectly or subsequently to a mechanical operation.
Thus, it is the cost-return advantage (economical aspect) of a particular production management system which has significance.