Evaluation of Economic Efficiency of Apple Orchard Investments

• Published in: Sustainability 2015-08, Vol.7 (8), p.10521-10533
• Main Authors: Badiu, Dorin, Arion, Felix H, Muresan, Iulia C, Lile, Ramona, Mitre, Viorel
• Format: Article
• Language: English
• Subjects: Agribusiness; Agricultural production; Apples; Costs; Efficiency; Farmers; Farms; Malus; Organic farming; Payback periods; Profits; Sustainability; Sustainable development; Trees; Veterinary medicine
• ISSN: 2071-1050; 2071-1050
• DOI: 10.3390/su70810521

The tree-growing sector is considered to be an important supplier of food and raw material for industry worldwide. Increasingly competitive decisions regarding international investment in orchards depend on business analysis. This study compares three apple orchards situated in Cluj-Napoca, on the Eastern limits of the Transylvanian Plain, Romania. While the climatic and soil conditions are relatively consistent among the three orchards, the technical and economic results (expressed in hectares) vary due to the use of three different technological systems of apple production: extensive, intensive, and super-intensive. The study compares the life cycle, starting with age of fructification, production level (quantity and quality), costs (investment and production costs--divided into material costs, mechanical costs, human costs, and overhead costs), income, profit (including rate of profit), and investment efficiency: Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period (PP). It was observed that the most economically efficient technological system in terms of investments is the super-intensive one, with a higher production level, a higher share of Extra Class apples, and a younger age of initial fructification. However certain inconveniences of this system--such as a more expensive investment, a higher cost of running the business throughout the year, and a reduced life cycle--cannot be ignored.