Ralph’s Synopsis About Avocados!
Besides being a pretty tree and producing fruit that is good to eat, avocados can be very profitable.
Uncle Sam may offer you great tax benefits for growing such crops. You may be able to depreciate your trees over seven to nine years, but depreciation can only begin after the avocado tree reaches four years of age. This is when the tree is considered in its first year of production. (Check with your CPA).
You may also depreciate other items such as irrigation systems, fencing, wells, grove equipment, trucks, tractors, and grove equipment.
You may expense all operating costs including water, fertilizer, spraying, road maintenance, erosion, and fire control.
When buying an established grove, every tree you remove may be fully depreciated that year accelerating your depreciation into a tax credit.
Here are some ballpark figures to help you consider your costs: There are approximately 100 to 125 trees per acre, which upon maturity, may produce between 50 to 500 pounds of fruit per tree annually. The avocado tree will flower and set next year’s crop from February through May, and depending upon the variety and the area, be ready to pick approximately 7 to 18 months later.
Early varieties of Bacon, Edrenol, Fuerte, Sir Prize, and Zutano take less time maturing and are typically ready by late fall to winter, and early spring (7 to 10 months).
The early summer varieties like Pinkerton, Wurtz, Hass and Gems follow the earlies from February through April and May.
Mid to Late season varieties of Hass, Reeds, and Lamb Hass that mature and are best in the late spring, summer and early fall holding up to (12 to 18 months).
The best and most consistent producers, with the ability to hold its fruit the longest on the tree, easiest to pack, store and ship is the standard Hass, followed by the Gem then the Reed and Lamb Hass. Hass can be selectively picked as early as Thanksgiving in the southern districts and possibly remain on the tree clear into the following October or November, in the northern districts, depending on area and cultural practices.
Because Avocados can be farmed in most of California’s coastal plains, one can expect to have this rich tasting fruit available year-round.
By following the Hass variety through a season, one could start picking in the San Diego area around Thanksgiving and follow the season right up to Santa Maria and Morro Bay into late summer and fall, almost a year later.
There is a lot of talk about Chile and Mexico taking over the market and ruining the business; (just the opposite) once the imports came on the scene 18 plus years ago it stimulated the market into higher prices due to a more consistent supply, keeping the markets at higher prices, with less price variations throughout the season.
The U.S. consumes approximately two + billion pounds of avocados annually, with California producing 350 to 500 million pounds, Chili at 300 to 500 million, Peru with 300 to 400 million and Columbia (the new kid on the block) just starting to come into production that could someday push the behemoth Mexico with its 4 to 5 BILLION #’s annual production.
This leaves Mexico to fill the gap with its 4,250,000,000 (yes billion!) pounds, that’s 500 to 600 truckloads of fruit a week or 40 to 60 million #’s a week coming across our southern border from Mexico alone. Also, the industry estimates the consumption is still 7% greater than the world’s production.
World supplies are no longer limited to Israel and Spain, that ship into Europe, Kenya and South Africa are new players helping supply Europe and the orient. With the Philippines starting to plant avocados
If you are looking for a grove, first select a person that is knowledgeable about the industry and the area you have selected, the market and the general farming aspects. Compare notes with as many professionals as possible, such as packers, grove managers, analysts, and growers. You should select a healthy grove or understand the rehab efforts that will be necessary to bring an old grove back or replant it with new trees into full production.
High density planting and advanced pruning are new concepts on the scene, so ask your professional about these practices. Production up to 25 to 30,000 pounds per acre is being created with only small increases in expenses, using less acreage, less growing expenses and creating larger returns, with both Gems and Reeds.
Weather matters: Cold air is like water in that it falls and drains along the surface of the landscape and will not drain through oak groves or high brush fast enough to disperse and alleviate freezing, so stay out of cold areas. On the other end of the spectrum HEAT has been the enemy of many producing areas and has damaged a lot of groves into no return.
Soils are very important. Sandy loams and D-G soils are the best for drainage allowing excess water to drain through the soil instead of pooling which kills the tree’s roots. STEEP is in. allowing the water and cold to drain past plantings
Now, let’s use our new facts and create a set of understandable numbers. Those 100 to 125 trees per acre should produce 50 to 500 pounds of fruit per tree annually. You should receive after picking .75 to $1.50 per pound, creating $6,500 to $15,000 per acre annually.
Now, deduct $6,000 to $7,500 per acre annually for water and $1,00 to $3,500 per acre annually for care, fertilizer, and insect control. The net should be from -$1,000 to +$15,000 per acre annually.
There are a lot of variables, but may I say if a person watches what they buy and truly farms it correctly, a very healthy profit and great tax benefits can be realized.
Where else can a person invest in land in the world’s most popular area and be paid handsomely while holding for that investment to grow? North San Diego County’s coastal communities are some of the fastest growing real estate in the nation. Good luck on your future investment decisions.
As our climate continues to change one fact must be included into your equation (NATURAL WATER) wells, rivers, ponds, seasonal streams. No grower will be able to exist unless they have some source of natural water to increase their bottom line.
By converting or planting to high density you may be able to add another $2,500 to $10,000 per acre to your bottom line.
Again, its very important to work with an experienced agent that understands these new concepts to make sure you select the right property and the best managers
The following websites provide avocado information/facts.
www.californiaavocado.com (California Avocado Commission)
www.californiaavocadosociety.org
Respectfully
Ralph B Foster
Sunshine Properties Real Estate