Sample Costs

Traditional High-Density Orchards
Super-High Density Orchard
Useful Links
Sources

What is the key to success when incorporating costs into your business plan?Here are some very basic sample costs and other useful numbers that may be helpful to you as you think about your business plan. These are shown in 2010 $. Please keep in mind that these are rough orders of magnitude and that it is critical to do your homework thoroughly and specifically for your particular situation. One of the facts we want to illustrate here is that all these numbers can vary widely depending on the circumstances. The key to be successful is to do an honest assessment.

TRADITIONAL HIGH DENSITY ORCHARDS

Land Cost per Acre
$1,000 to more than $50,000 in California
Tree Cost
$6.00 and up depending on size and variety.
Trees per Acre
150 to 300 depending on terrain, pruning, irrigation, and orchard style.
Cost to Prepare Land and Plant Trees
$5,000 on average, very variable.
Cost to Maintain 1 Acre of Orchard per Year
$500 - $2,000
Cost to Harvest per Ton
$300 - $700, very variable by orchard style, variety and crop load.
Tons per Acre - Mature Trees
1 – 6T
Pounds of Olives per Mature Tree
20lbs - 80lbs; depends on tree size, variety, pruning, year, weather, tree density, etc...
Average Sales/Purchase Price per Ton of Olives
$550 - $900
Cost of Small Commercial Olive Mill

Mill (350-500lbs/hour)
Peripheral Milling Equipment (e.g. scale, tanks, etc.)

$60,000
$30,000 - $50,000

Cost of Medium Commercial Olive Mill

Mill (2T/hour)
Peripheral Milling (e.g. scale, tanks, etc.)

$220,000 - $320,000
$80,000 - $100,000

Average Cost of Milling at a Public Facility
$300 - $450/T
Gallons of Oil Per Ton of Olives
12 - 50
Retail Price of Oil - 500ml of Premium Oil
$7 - $30


SUPER-HIGH-DENSITY ORCHARDS

Expenses

Planting Costs Per Acre at 6’ x 17’ Spacing
$4,800 - $5,800 (including ground preparation, trellis, irrigation, trees, bamboo, planting, and tying)
Maintenance Cost per Acre (First Three Years)
$2,800 - $3,300 (including pruning, tying, maintenance, fertilizing, weed-control, and cultural costs)
On-Going Annual Costs per Acre
$1,100 - $1,500
Contract Harvest Costs per Acre
$250 - $400 depending on what services, materials, and equipment
Harvesters
$125,000 - $350,000

Normally, an orchard of 200 acres or more can support the cost of owning a harvester.



Revenue
There are three primary payment methods for SHD growers who do not process and market their own olives:

  • Fixed price based on oil yield, plus a revenue split if the average price received by the miller exceeds an agreed upon level.
  • Guaranteed minimum price based on oil yield plus an agreed percentage of average selling price.
  • Fixed charge per ton of fruit delivered against a final sales price for milling, processing, and storage. A marketing fee is applied to the sales, usually in the form of a percentage of the sales price.

The points in common of all three methods are:

  • Multiyear agreements are common (3 to 12 years).
  • Payment is determined based both on oil yield and quality.
  • Payment is spread over the crop year (Oct to Sept).

Note
The tons mentioned above are “short” tons, not metric tons: 1 Short Ton = 2,000lbs

Consult our Useful Number Conversions page for conversion numbers related to the olive oil business.

USEFUL LINKS
University of California – Cooperative Extension: Sample Costs to Establish an Olive Orchard and Produce Olive Oil -- Olive Oil Cost Study North Coast - 1999

University of California – Cooperative Extension: Sample Costs to Establish an Olive Orchard and Produce Olive Oil -- Olive Oil Cost Study Central Coast - 2001

University of California – Cooperative Extension: Sample Costs to Establish a Super-High Density Olive Orchard and Produce Olive Oil Olive Oil -- Sacramento Valley - 2007

SOURCES
Alan Greene, A Greene Idea, for SHD information

 

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