Re-engineering Post-harvest Processing for Export Profits. Australia Can Export Apples Competitively

Transcription

1 Re-engineering Post-harvest Processing for Export Profits Australia Can Export Apples Competitively

2 Re-engineer post harvest processing for export: four processes Mechanize Tipping And Grading Remove DPA Pack into Export Bins Store Directly Into Reefer

3 Post-harvest processing and shipping costs for export Post-harvest processing and shipping costs for export $/kg Cost to Remove DPT Residues From Facilities Negligible Mechanized Cost to tip/grade/pack into export bins and reefer 0.05 Rental Cost of Collapsible Export Bins 0.10 Shipping CIF to Asia/Europe 0.40 Total 0.55

4 Class A Apples Delivered CIF Europe AUD 80c or USD 56c/kg; USD0.84/kg CIF packout, net before juicing sales) Traditional Packing in Cartons Pack Directly in Export Bins $/kg Running Total Running Total $/kg Capital Fixed Op Variable Op Tipping & CA Packing CIF AUD CIF USD AUD Cost Packed in Export Bins but not Shipped USD Cost Delivered to Asia or Europe Cost at Farmgate: Capital Intensive for 90% Packout

5 Post-harvest processing costs for export: from $89c to 15c/kg $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $- Normal Traditional Packing Includes Tipping, CA, Packing Labor and Carton Costs Export Pack Direct, Mechanized Packing For Export Virtually Eliminates Packing, Carton and CA Costs Packing Tipping & CA Export Bins

6 Combined post-harvest processing and export costs fall from $1.33 to $0.55/kg $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 Traditional Packing Includes Tipping, CA, Packing Labor and Carton Costs Direct Packing For Export Cuts Packing, Carton and CA Costs, So Cost to Process and Deliver Apples to Importing Countries Falls from AUD $1.33 to AUD $0.55/kg CIF AUD Packing Tipping & CA Export Bins $- Normal Export Pack

7 Total Costs to Deliver Grade A Apples to Europe/Asia CIF: AUD 1.90 falls to $1.20/kg: or only USD AUDUSD 70c $2.50 Traditional Packing Includes Tipping, CA and Packing Labor and Carton Costs $2.00 $1.50 $1.00 $0.50 Direct Packing For Export Cuts Packing, Carton and CA Costs Reducing over AUD cost to deliver apples to importing countries from AUD $1.91 to AUD 1.20 CIF AUD Packing/Ex-Bin Tipping & CA Variable Op Fixed Op Capital $- Normal Export Pack

8 Profit From Export: From $0.92 to $1.66/kg Based On Last Year s Ave. CIF Export Price for Australian Apples of 2.86/kg $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 Profit CIF AUD Packing/Ex-Bin Tipping & CA Variable Op Fixed Op Capital $- Normal Export Pack

9 Why Not Build a Post-Harvest Export Industry to Put a Floor Under the Australian Apple Market?

10 END: Additional appendices follow

11 Appendix: Detailed Costs: Grading and Packing for Export Packing for Export Equipment 1,700,000 1,700,000 Lifetime Depreciation 113, ,333 Interest: 5 vs 8% 85, ,000 Maintenance 20,000 20,000 Shed 24,000 24,000 Subtotal Equip Costs 242, ,333 Shifts (6 day) 2 1 People/shift 7 7 hours/shift apples/hr lanes rows/sec sec/hr apples/hr Capacity/hr/lane , ,000 Lanes 6 6 Production/week shift Operating Weeks Production tons 46,080 23,040 Labor Rate/hr Labor Costs 268, ,840 Total Costs 511, ,173 Costs/ton

12 Overcome High Labor Costs by Investing Big in Best Practices Per Hectare Cap Cost Life Interest Dep Cost/y $/kg Net USD Capital 6% Land Perm Water Irr Infra Irr Local Evap Cooling Trellis Netting Infra Netting/Extend Day Extend Day Trees Bins Incubation Equipment Cap Costs Total 165,000 9,900 6,810 16,

13 Conclusion: Australia Could Export Apples Competitively Invest in best practices both to increase labor productivity and to reduce unit production costs Improve export logistics to reduce costs further, e.g. by packing directly for export If production and exports are increased then economies of scale should reduce costs further Good Australian innovation can also help reduce costs Work with the local community to find and train costeffective labor for both orchards and nurseries

14 Export Model: Double Click on Table to Change Values Per Hectare Cap Cost Life Interest Dep Cost/y $/kg Net USD Total Capital 6% Land Perm Water Irr Infra Irr Local Evap Cooling Trellis Netting Infra Netting/Extend Day Extend Day Trees Bins Incubation Equipment Cap Costs Total 165,000 9,900 6,810 16, Total Fixed Op 21, Total Variable 14, Pack Export Bin 28, Export CIF 32, Yield t/ha AUDUSD Tip $/kg Pack $/kg Packout %

15 20-30 times more employment per ha 35 Employment per 100ha Arable Dairy Orchard

16 30-50 times more income /export per 100 ha 12,000,000 Income/100ha 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Arable Dairy Orchard

17 50-60 times more income per ML irrigation water used Income/Megaliter of Water Arable Dairy Orchard

18 Summary Grower Metrics and Assumptions Tons/Ha $/Ton Revenue/Ha ML/Ha $/ML H2O/Revenue Employ/Ha Wheat % 1 Dairy % 1.5 Apple , % 30

19 Australian Apples Are on the Wrong Side of Trade (due to import of concentrate) 150% Australian Exports as Share of Production 100% 50% 0% -50% Beef Wheat Milk Apple Wool -100% -150%

20 SWOT Analysis of Australian Pome Fruit Export Capability SWOT Strengths: Widely Available Affordable Land Plenty Affordable Water for Orchards Matching Grower Expertise IP and Branding Track Record Matching Capital: Labor Productivity Opportunities: Improve Logistics/Costs to Export Secure LT Export Contracts in North Local & Fed Seek Ag Employ/Export Demand for Clean Fruit (GV & TAS) Demand from Asia, Cider, Fresh Juice 10x+ Income/Employ for Land/Water ANALYSIS Weaknesses: High Labor Costs to Grow High Packing Costs Fruit Fly Lack Critical Mass to Export Reliably Nursery Industry too Small for Growth Threats: More Countries Restrict DPA Unable to Control Fruit Fly Unwilling to Compete with NZ Unwillingness to Grow for Export Drought of Epic Proportions War or Trade Wars