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pocket and ownership costs, which consist
of a combination of principal and interest
payments and a return on investment to the
grower, or both, for machinery, housing,
land, and funds to pay previous years’
establishment costs. The gross income and
variable cash costs remain the same as in
Table 6HD, except the irrigation system are
amortized over their productive life and
included in fixed costs.
Net projected returns (gross income
minus total costs) become positive at full
production, with gross income exceeding
total costs of $415 per acre. At the end of
the establishment period, $27,723 per acre
remains to repay all previous establishment
costs. This cost is amortized over 25 years
as an annual payment of $1,652 per acre,
including principal and interest, to recover
the capital investment of establishing the
orchard.
The major cost components as a percent
of total economic cost are shown in Table
8HD, page 20. When all expenses are
Results of establishing a Ultra-high-
density cherry orchard
Cash flow analysis
A cash flow analysis for establishing an
ultra-high-density cherry orchard is
presented in Appendix C, Table 6UHD,
page 18. It shows the cash costs required to
develop this type of orchard. Cash costs
include labor, trees, irrigation system, trellis,
fertilizer, chemicals, beehives, machinery
repairs, fuel, lube and oil, labor housing
repairs and maintenance, operating (short-
term) interest, machinery and whole-farm
insurance, irrigation water assessments, and
property taxes. The income, variable costs,
and cash fixed costs are shown for each of
the four establishment years plus the first
full production year. Total variable costs are
$2,062 in year 0, with an additional $328 of
included, the top two items are charges and
harvest costs at about 23 and 18 percent,
respectively. Fertilizer and chemicals, trees,
and machine costs follow at 13, 11, and 10
percent, respectively. The remaining four
cost items comprise about 25 percent of the
total economic costs.
Summary of establishing a high-density
orchard
Figure 1, page 20, shows the cumulative
cash flow and economic costs of
establishing a high-density orchard. The
light and darker blue lines denote these
results. The cumulative cash flow turns
positive by $661 in year 8, and the
cumulative economic returns by $7,508 in
year 10. Appendix D, Tables 9HD-15HD,
pages 21-27, contains the annual cost and
return budgets for establishing this high-
density orchard.
cash fixed costs for a total cash cost of
$2,390 per acre. As in the high-density
system, in year 0, the old orchard trees are
removed, and the ground is prepared for
planting young trees the following year.
A positive cash flow begins at full
production with gross income exceeding
total cash costs by $9,596 per acre.
However, the orchard does not return a
sufficient gross income to pay all previous
years’ cash costs; there is $20,306 per acre
remaining over and above prior expenses.
The major cost components to total cash
costs are shown in Table 8UHD, page 20.
Tree costs represents 23 percent of the total
cash costs to establish this orchard. Harvest
costs are the second-largest item, making up
20 percent of the total cash costs. The trellis
system, fertilizer and chemicals, and all
labor, not including harvest labor, is 16, 11,