June, 1940] Budget Analysis of Orchards 15 



Each individual operator setting out an orchard should study his va- 

 rious resources carefully and combine them to maximize his returns. If 

 he has the desire and financial backing to set out and carry 1000 trees, 

 and if he has considerable acreage of good apple land, the best combina- 

 tion might be the 1000 trees as permanents on 37 acres of land. On the 

 other hand, if he has a definitely limited area, he might consider the com- 

 bination of 500 permanents (60 years) and 500 semi-permanents (25 

 years) on 181/2 acres of land. This combination will be more expensive 

 per unit of product, but because of land limitations the volume of apples 

 will be larger in the first years of the orchard's life. 



If, however, prices of apples tend to adjust to the costs of the bulk- 

 line farms, and if the operators on these bulk-line farms adopt the prac- 

 tice of growing only permanent trees, the operator who needs to grow 

 apples on the basis of 54 trees to the acre is handicapped. 



In figure 5 are plotted the estimated cost curves involved in setting out 

 1000 trees in each of the three methods of planting. These curves in- 

 clude estimated costs of labor, materials, and use of land but not credits 

 for sales of apples. In figure 9 are plotted the gross returns based on 

 standard yields and normal prices for each type qf planting up to the 

 end of the sixtieth year. In figure 10 are plotted the yearly net returns 

 (income minus cost) from each of the three methods. In figure 11 these 

 net returns are accumulated at five per cent interest to the twenty-eighth 

 year. 



At the end of the twenty-fifth year, the three methods would have in- 

 volved no significant difference in total investment requirements except 

 in the use of varying areas of land. The gross income from the three 

 methods would be the same for the first 18 years, at which time half the 

 trees would be cut out in method three. The income from methods one 

 and two would continue equal to the twenty-fifth year, when half the 

 trees would be cut in both methods two and three. 



The inventory value of the permanent trees is the important factor in 

 studying the results at the twenty -fifth year. The discussion of the rela- 

 tive value of trees of various ages and types on page 14 of this bulletin 

 throws additional light on the problem. To summarize at this point, 

 (Fig. 11) at the end of 25 years, method one would result in a net ac- 

 cumulated income of $2,900 plus the value of 1000 permanent trees; 

 method two, $5,400 plus 500 permanent trees; and method three, $300 

 plus 250 permanent trees. 



If one should estimate that the labor expense per tree was five per 

 cent less in the second method and ten per cent less in the third method 

 due to closeness of planting, the situation would be modified only slightly. 



Influence of high labor cost 



A rough comparison of an orchard under management involving high 

 labor cost (resulting from either inefficient use of labor or higher wages) 

 with one representing the normal situation is illustrated in figure 12. 

 On the basis of an orchard of 1000 trees the net investment would be 

 greater and the orchard would come out of the deficit at a later period. 

 In the previous studies, there was little correlation between the amount 

 of labor put on an orchard and the yields. In would seem that exten- 

 sive management practices using labor efficiently and without fussing 



