Production cost analysis
on Pears
Mariette Kotze
Information Manager: Agricultural Economics
Income & cost factors
at grower level
• Producer income = f(yield x quality x price)
• Optimisation of resources & infrastructure =
efficiency / unit
• Adaptability / suitability of variety to specific
growing conditions (Risk!)
• Quality (pack out, colour, size)
• Variety mix (early vs late) – Risk!
• Market options of fruit on tree
Pear weighted average cost of
production(on-farm) per ha
R 140 000
+53%
R 116 186
R 120 000
Costs (R)
R 100 000
R 80 000
R 76 115
R 60 000
R 40 000
R 20 000
R 0
2010
2011
2012
2013
2014
2015
Cost breakdown of full-bearing
Pear orchard =
Other
Overheads
19%
Depreciation
9%
Water Costs
2%
Miscelaneous
(leaf samples &
Pollination)
3%
Crop Protection
17%
Consultants
1%
Electricity
4%
Fuel &
Lubricants
7%
Fertilizer
5%
Labour
33%
Labour costs & employment
trends
R1.4 Billion
46 000
45 000
35,000
30,000
44 000
25,000
20,000
42 000
41 000
R481 mill
15,000
40 000
10,000
39 000
5,000
38 000
37 000
0
2006
2007
2008
2009
2010
Tot Pome Fruit Employment
2011
2012
2013
2014
2015
Average minimum wage/annum
Average minimum wage/annum
Total no. of labourers
43 000
Break-even
R 400 000
R 300 000
Costs (Rand)
R 200 000
R 100 000
R 0
-R 100 000
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15
-R 200 000
-R 300 000
-R 400 000
-R 500 000
-R 600 000
Net Farm Income
Cumulative Cashflow
Conclusion
• Average is not good enough – ROI &
opportunity cost
• Break-even dependant on many factors cultivar selection, suitability, climate, region,
quality and marketing!!
• Achieve greater efficiencies/productivity
• Cost per unit produced
Thank You