Peach and Apricot Farm Business Plan

The Wilson Family Peach Farm is planning to grow seven varieties of peaches and nectarines in the first three years including the Redhaven, Ishtara, Tenn Natural, Lovell, Bailey, Montclar, Starks Redleaf, and the famous Elberta. Once profitability has been established, the farm will begin to expand into more rare varieties such as the new Guardian, which has been proven to be well suited to the local environment. In addition, the owners will dedicate approximately ten acres to the growing of hybrids such as pluots, which are a combination of apricots and plums. Trees will be spaced 16 ft apart within rows 20 ft apart. Average yield per tree is expected to initially be 132 lbs/tree. Considering the prime area and some of the proprietary methods the Wilsons plan to implement, yields are expected to go up to as much as 160 lbs/tree. Expected yields per acre will be around 500 bushels.

With the current trend toward high-density plantings of the dwarf, semi-dwarf and spur type trees, careful planning of cultivars (varieties), strains, rootstocks, and spacing will pay dividends.

Marketing will target the local produce stands that often concentrate on hybrids and are able to offer higher margins for high-quality fruits. In addition, Mrs. Wilson has started to establish contracts with distributors to local grocery stores. Any damaged fruit that is still edible will be sold to canning factories.

3.1 Product Description

Peaches are grown on fruit trees (Prunus persica) of the family Rosaceae (rose family) having decorative pink blossoms and a juicy, sweet fruit. Several of its horticultural varieties were brought by the Spanish to North America, where it became naturalized as far north as Pennsylvania by the late 17th century. The numerous varieties of peaches under cultivation are generally distinguished as clingstone or freestone; the latter include the famous Elberta peach. In the United States commercial peach production centers in California and in the southern Atlantic states. Elsewhere the peach is cultivated in southern Europe, Africa, Japan, and Australia. The tree is prey to frost and is attacked by various fungi, virus diseases, and insect pests, against all of which careful precautions must be taken by growers. Purple-leaved and double-flowering forms are cultivated as ornamentals. The peach is closely related to other species of Prunus e.g., the cherry, plum, and almond. *

The nectarine is a smooth-skinned peach with both freestone and clingstone varieties. It is a classical example of bud variation. The nectarine tree occasionally produces peaches, and the peach tree nectarines. In appearance, culture, and care the nectarine is almost identical to the peach.*

The attractiveness of this fruit is that fresh, high-quality peaches and nectarines are sweet tasting and low in calories, with one medium peach furnishing only about 37 calories. These fruit are a good source of Vitamin C and yellow-fleshed varieties are a good source of Vitamin A.

Peach/nectarine harvest begins in May, peaks in July, and ends in August.

One of the most critical aspects of fruit farming is the post-harvest treatment which can preserve or destroy its freshness and appeal. Peaches have a post-harvest life of 14 – 28 days if they are handled properly after harvest. During Dr. Wilson’s tenure at the University of Georgia as an professor of agriculture, he concentrated much of his research on the post-harvest treatment of stone fruit. In order to produce the fruit with the highest quality, Dr. Wilson will be devoting a great deal of effort to create the best environment for the preservation of the harvest. This includes monitoring of the fruit’s maturity and quality indices, optimum temperature and relative humidity of storage, and rates of respiration and ethylene production.

* Source: American Fruit Producers Almanac.

3.1.1 Sourcing

Site and Soil Requirements
Sunlight, and plenty of it, is the key to maximizing fruit production. An area is needed where the trees will be in the sun most or all of the day. The early morning sun is particularly important because it dries the dew from trees, thereby reducing the incidence of diseases. If the planting site does not get plenty of sun, then you can’t expect the best performance from the trees.  Very steep or badly eroded hillsides and areas having poor air circulation and poor soil water drainage must be avoided. Although peach trees will grow well in a wide range of soil types, a deep soil ranging in texture from a sandy loam to a sandy clay loam is preferred. Peach trees are extremely sensitive to poorly drained soils. In areas of poor drainage, roots will die, resulting in stunted growth and eventual death of the tree.

Most fruit plants, including peaches, grow best when the soil pH is near 6.5. Since the natural pH of most Georgia soil is below this level, it is necessary to incorporate lime before planting to raise the pH to the desired level.

Purchasing Trees
The old adage “you get what you pay for” is an important consideration when buying peach trees. Often, bargain plants are not healthy or may not be a variety adapted to your area. The Wilson’s have a reliable source of trees, rootstocks and saplings that has been in operation for over thirty years.

The Wilsons plan to purchase trees that meet the following criteria:

• A healthy one-year-old tree, approximately three to four feet tall.
• All trees must have a good root system.
• Trees that are no more than two years old. Frequently, older trees do not have sufficient buds on the lower portion of the trunk to develop a good framework.
• No trees that appear stunted, poorly grown, diseased or insect injured.

Fertilization
Fertilizing peaches starts with adjusting the soil pH to 6.5 before planting. Additional fertilization using lime and calcium nitrate will occur in March and August.

Distribution
Farmers who are able to sell to the local produce stands usually are able to achieve a higher margin than other competitors since these stands are usually the place where buyers go to get the highest-quality produce and search for rare and new types of cultivars. In an area such as Georgia that has such a strong tradition of fruit farming, only the farmers offering the highest quality are able to break into this market. This requires excellent land, and most importantly, knowledgeable and sustained management on the part of the farmer. Based on previous acquaintance and Dr. Wilson’s reputation in the agriculture field, Mrs. Wilson has been able to establish tentative contracts with ten different local produce sellers and with a local distributor. Final approval of these contracts will depend on the tested quality of the farm’s produce.

3.2 Competitive Comparison

The peach farming industry is highly competitive. Each farm has high capital costs, low margins, and a high intensity of competition.

In addition,  the produce is seen as undifferentiated and a “commodity” with little value separation between competitors, this means that buyer power is very high.

 The barriers to entry and exit are moderately high in this industry. Switching costs between different types of produce are virtually non-existent. However, the costs to entry and exist the market are usually quite high. However, the advantages of producing at high volume and reaping the benefits of economies of scale are quite attractive. Once the farm reaches maximum production, these economies of scale will work toward the owner’s advantage.

The large number of competitors in this field including substitutes (which includes almost all other types of fruit and some vegetables) mean that the pricing for such produce is very competitive. The only way to have an advantage in this industry is either serving a niche or a low cost leadership principal applied aggressively to all aspects of the business.

3.3 Technology

During Dr. Wilson’s twenty years as a professor of Agriculture at the University of Georgia, he became involved in some of the most leading edge technological  and biological developments in the stone fruit growing field. His monogram, Quantitative Maturity and Quality indices for Freestone Fruits (Bert, Wilson et. al, Agriculture Digest: Spring 1990) has established industry-wide standards for both farmers and suppliers. It is Dr. Wilson’s intention to continue introducing new procedures and processes in his farming in order to maintain a competitive advantage and to be an image for other fruit farmers to aspire toward. Much of this will be of an empirical and statistical nature in order to identify and establish various trends in disease and pest prevention (especially in the organic field). As an example of the technology to be used, Dr. Wilson will begin to utilize the new laser puff to measure the ripeness of peaches. The instrument, developed by University of Georgia agricultural and biological engineers, uses a puff of air and a laser beam to measure the firmness of fruit to help fruit growers and packers deliver a riper, more consistent product to market.

3.4 Future Products

At the beginning of operations the Wilson Family Peach Farm plans to grow established early harvest varieties of peaches and nectarines in order to be first to market  during the year of American grown fruit. As the farm starts producing a profit (estimated sometime around year four) the farm will start producing some of the newer varieties such as the recently developed Guardian, which is far better suited for the local environmental conditions than other varieties, even the well established Elberta variety. The farm will also start producing hybrid for the small niche market of specialty fruits in order to produce a higher margin.