Articles
THE COSTS AND RETURNS OF ESTABLISHING AND PRODUCING HAZELNUTS IN OREGON’S WILLAMETTE VALLEY
Article number
556_10
Pages
81 – 88
Language
English
Abstract
A study was completed to determine the costs and returns of establishing and producing a standard planting of hazelnuts in Oregon’s Willamette Valley.
In addition, the costs and returns of establishing and producing a double-density hazelnut orchard were estimated and the economic benefits of the two densities compared.
The standard density orchard consisted of trees planted 6.2 m x 6.2 m for 267 trees/ha vs. doubling the density and removing every other tree in year 11. The first year cash cost for the standard density orchard was US$2,839/ha.
Nut production begins in year 4 with .19 t/ha and increases to 2.93 t/ha at full production.
A positive cash flow begins in year 5. In year 11, the orchard returns a sufficient amount of gross income to pay all previous years’ cash costs of establishment with $1,869/ha above prior costs.
However, when total economic costs are included, the orchard cannot pay back all previous years’ establishment costs by year 12 and thus the $26,125 remaining costs are amortized over an assumed 25-year period and assessed against future crops.
A double-density orchard of 533 trees/ha increases the positive cash return in year 5 from $26/ha to $566/ha.
The additional cash costs to plant a double-density hazelnut orchard in the first year are $1,717/ha ($4,556 – $2,839). However, the net gain to the grower at the end of year 12 is $1,658/ha ($6,113 – $4,455). The additional revenues begin to offset the additional costs by year 9, rather than year 11 in a standard planting.
In addition, the costs and returns of establishing and producing a double-density hazelnut orchard were estimated and the economic benefits of the two densities compared.
The standard density orchard consisted of trees planted 6.2 m x 6.2 m for 267 trees/ha vs. doubling the density and removing every other tree in year 11. The first year cash cost for the standard density orchard was US$2,839/ha.
Nut production begins in year 4 with .19 t/ha and increases to 2.93 t/ha at full production.
A positive cash flow begins in year 5. In year 11, the orchard returns a sufficient amount of gross income to pay all previous years’ cash costs of establishment with $1,869/ha above prior costs.
However, when total economic costs are included, the orchard cannot pay back all previous years’ establishment costs by year 12 and thus the $26,125 remaining costs are amortized over an assumed 25-year period and assessed against future crops.
A double-density orchard of 533 trees/ha increases the positive cash return in year 5 from $26/ha to $566/ha.
The additional cash costs to plant a double-density hazelnut orchard in the first year are $1,717/ha ($4,556 – $2,839). However, the net gain to the grower at the end of year 12 is $1,658/ha ($6,113 – $4,455). The additional revenues begin to offset the additional costs by year 9, rather than year 11 in a standard planting.
Publication
Authors
C.F. Seavert, J.L. Olsen
Keywords
variable cost, fixed cash cost, fixed cost, net projected returns
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