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University report cites cost to produce olives in northern California

China Agriculture Report By CnAgriChina Agriculture Report Print

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Of all the cost structures reported, the report’s authors note that while crop insurance is available at different rates and coverages for olives, the report does not factor in the cost of crop insurance.

According to the report, olives grown for oil begin economic production by the third year. At that point, the hypothetical 110-acre orchard can net $226 per acre the first year and about $750 in the second year of production (fourth year for the trees). This is based on a grower payment of $16 per gallon of oil produced.

Olives grown for oil are priced on the gallons of oil produced, which generally increases in volume from years three to five, at which point the trees are said to be at full production.

Full production of this variety can be five tons of fruit per acre, fresh weight, producing between 190 and 210 gallons of oil, according to the report.

Cost assumptions are based on mechanical harvesting and a 25-year economical life of the orchard.

Table Olives

The report uses the Manzanillo variety, assuming an orchard of 35 acres on a 40-acre parcel with trees planted on an 11-foot by 22-foot spacing for a density of 180 trees per acre. The report assumes a developed and producing orchard owned and operated by the farmer.

Cost assumptions are based on hand pruning and hand harvesting methods with an estimated economic life of 40 years.

Manzanillo olives are assumed to be fully bearing in the eighth year. The report also states that mature yields can vary greatly as olives are alternate bearing. For purposes of the report, an annual average yield of five tons is assumed.

A grower price of $1,020 is used for the study and tables within the report spell out potential returns at different prices and yield averages.

Like the report on olives grown for oil, authors did not calculate the cost of crop insurance into the figures because of the wide variability in coverages and costs for the programs.

According to the report, at $1,020 per ton to the grower, production would need to average five tons per acre to effectively break even. Production below that level would be at a loss to the grower.

The authors describe the assumptions used to identify current costs for the olive crop, material inputs, cash and non-cash overhead. A ranging analysis table shows profits over a range of prices and yields. Other tables show the monthly cash costs, the costs and returns per acre, hourly equipment costs, and the whole farm annual equipment, investment and business overhead costs.

The new studies are titled:

Free copies of these studies and other sample cost of production studies for many commodities are available. To download the cost studies, visit http://coststudies.ucdavis.edu.

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