How to Take Apple Orchards on Lease?

This post details the pricing aspect of apple orchard lease.

There are a number of factors such as health of tree, health of spurs etc. which determine the output. I will try to keep things generic here.

The final price depends on:

1. The size
2. The degree of coloring
3. Time of sale

per crate average realized price should be around 700 rs. It can be more if proper care is taken and market rates are good. If the markets are very bad or the product quality is not good, realized price can drop to 600.

Per crate expense will vary depending on location and size of trees. A safe assumption  can be 200 rs per crate for good quality care excluding transport (it will be less if you do the run of the mill thing. but it is better to spend and realize more per crate). Transportation and other expenses can be assumed around 100 (Again it can be a bit less depending on the location).

Lets say you want to net 150-200 rs per crate.
Take the average yield of last 6 years for calculating the average yearly yield. Deduct 5 percent because of falling production to arrive at the final figure. If the yearly yield data is not available, you will have to estimate based on age or size of tree and spurs.

Average realized price per crate - per crate maintenance  expense - other expenses - expected net profit = average per crate purchase cost.

lets plug in the figures.

700 - 200 - 100 - 175 = 225

Multiply 225 by average yield to arrive at the lease valuation per year. This is a fair price.

Final pricing depends on some other factors as well. But it should be roughly around this price. You can plug in different values based on your situation.

All in all it is a good business with average returns of more than 50 percent per year (you can pay half at the lease time and half at fruit plucking). but it depends. The chances of losses are minimal if leases are taken for an extended period of time. Proper management is essential though. Mismanagement can ruin it. If the price of lease is high, returns will be affected. It is a bad business if you dont manage it well.

This post is very generic. Will go into more specifics in a later post.