New Red-blushed Pear to Boost Grower Profitability

Kerry Stott, Mark O'Connel, Ian Goodwin, Susanna Turpin and Bill Malcolm

AFBM Journal, 2018, vol. 15

Abstract: A discounted net cash flow (NCF) model incorporating Monte Carlo simulation was developed to quantify the net benefits and risks of growing the new red-blushed pear cultivar ‘ANP-0131’ (Deliza®) on a representative orchard block in Victoria’s Goulburn Valley. Results were compared to those for retaining a traditional low-density (343 trees/ha) planting of ‘Packham’s Triumph’. ‘ANP-0131’ was grafted to Quince A rootstock and trained on Open Tatura trellis at densities of 1,481, 2,222 or 4,444 trees/ha; these are three of the training system x rootstocks x tree spacing combinations currently being investigated at Agriculture Victoria’s experimental orchard in Tatura. The trees in the experimental orchard are currently in their fifth year of a potential life-span of 30 years and have been fruiting for the last three years. Hence, the analysis is prospective and based on crucial assumptions concerning pack-outs, prices and yields. From 10,000 simulations it was found that growers could invest in the new ‘ANP-0131’ pear system with confidence. Subject to the law of diminishing returns, the most profitable planting was 2,222 trees/ha, for which the mean Net Present Value (NPV) was $258,471/ha evaluated over 30 years using a discount rate of 4.5% real. The Modified Internal Rate of Return (MIRR) was 10.9 per cent, beating the real nine per cent return on Australian equities. The payback period ranged from 7 to 11 years from best to worst case scenarios. The relative advantage of the new planting over the existing planting of ‘Packham’s Triumph’ was clear; the mean annuity of the NPV for the new planting was $15,835/ha p.a., the NCF for the existing planting was a modest $4,595/ha p.a. and there was a 20 per cent chance that it would lose money in any one year.

Keywords: Crop Production/Industries; Farm Management (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ags:afbmau:284947

DOI: 10.22004/ag.econ.284947

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