An Interactive Decision Support Tool to Estimate the Economic Feasibility of Organic Apple Production

Monday, July 28, 2014
Ballroom A/B/C (Rosen Plaza Hotel)
H. German Rodriguez, Program Associate , University of Arkansas, Fayetteville, AR
Jennie H. Popp, Co-Director , Dept. of Agriculture Economics and Agribusiness, University of Arkansas, Fayetteville, AR
Curt R. Rom, Co-Director, Center for Agricultural and Rural Sustainability , Horticulture, Dale Bumpers College, Fayetteville, AR
Heather Friedrich , Horticulture, University of Arkansas, Fayetteville, AR
Jason McAfee , University of Arkansas, Fayetteville, AR
Freeman Luke , University of Arkansas, Fayetteville, AR
Certified organic apples represented 3.4% of the total sales ($121.4 million) of all organic produce in the U.S. in 2011 (USDA-NASS, 2012). Washington State accounted for 84.0% of those certified organic apple sales, followed by California (10.2%), Arizona (2.0%), Michigan (1.2%) and Colorado (1.1%). The southern states tend to lag behind these states in both acres harvested and certified organic apple sales (USDA-NASS, 2012). Mon and Holland (2006) have shown that organic apples can be both profitable and sustainable in the Pacific Northwest; however, there is limited experience and published research on organic apple orchard profitability in the southern region.

Surveys of southern stakeholders indicated that great opportunities exist for markets of both fresh and processed fruit, but significant challenges still exist. These challenges include a lack of information available on the economic impacts of different organic production practices and the potential returns available from organic production (Rom, Friedrich, and McAfee, 2007). In response to these challenges, the University of Arkansas has been conducting research and developing tools to help potential local and regional organic apple producers to achieve their production and economic goals.

Consequently, the objective of this poster is to show the benefits of a new organic apple decision support tool by presenting examples of the different economic analysis that the tool is able to estimate. For instance, the tool can use default data, information entered by the user or a combination of both to estimate the operation’s breakeven (price and yield) points, to conduct yield and price sensitivity analyzes (answering “What If” questions related to changes in costs and returns), and 3) to provide a risk assessment of the probability of obtaining positive net present values of net returns during the entire life of the organic apple orchard.

All these economic analyses allow producers to compare between different production and marketing practices and assist them to make better planning and investment decisions in Arkansas and across the southern region.

References

Mon, P.N. and D.W. Holland. 2006. Organic apple production in Washington State: An input–output analysis. Renewable Agriculture and Food Systems 21(2):134-141.

Rom, C.R., H. Friedrich, and J. McAfee. 2007. Organic fruit production: challenges and opportunities for research and outreach. Acta Horticulturae 737:147-154

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