Avocados:
A Brief Introduction into
the Complexities of an Agribusiness Sector


            VI. Producer Decision-Making in Avocado Production
                        A.    Overview
                        B.    "Is it worth starting an avocado orchard?"
                                Figure: California Avocado Acreage
                        C.    "Is it worth replacing older avocado trees ?"
                                    1.    The Influence of the Costs of Production
                                    2.    The Influence of Prices and Interest Rates
                        D.    "Is it worth expanding an existing avocado orchard?"
                                    1.    The Influence of the Costs of Production (again)
                                    2.    The Influence of the Availability of Inputs


VI.    Producer Decision-Making in Avocado Production

A. Overview

Having described some of the basic biological characteristics as well as market characteristics of avocado production, this section of the tutorial wants to look at some of the basic questions that California avocado growers, both old and new, must face. These decisions are essentially economic decisions which are constrained or limited by biological as well as market considerations.

The first thing to emphasize is that, unlike vegetable production or row crops, avocado production (or any type of tree or vine production) involves significant set-up time and cost. Establishing a new orchard will often result in having to wait between three and five years before a commercial yield is achieved. On the other hand, avocado production, like some other tree crops, benefit from the characteristic that avocados can be "stored" on the tree for several weeks or months since avocados ripen after they have been picked.

Three different decisions will be explored in this section:

  1. Is it worth starting an avocado orchard?
  2. Is it worth replacing older avocado trees?
  3. Is it worth expanding an existing avocado orchard?
The explanations of the workings behind these questions are not necessarily unique to avocado production -- they are important questions for any producer of agricultural goods (or any manufactured goods, for that matter) to ask. Some of the explanations involve information specific to avocado production but it would be a good exercise to consider the same questions for such commodities as oranges and grapes.


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B. "Is it worth starting an avocado orchard?"
Outline of Web Tutorial
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This web tutorial was developed as part of the "Partnership to Promote Diversity in Food System Education" project funded by the Hispanic-Serving Institutions Education Grants Program administered by the Cooperative State Research, Education and Extension service of the U.S. Department of Agriculture.
The project is part of a collaboration among the following organizations:
The Business Division of Santa Ana College in Santa Ana, CA
The Agribusiness Department of the California Polytechnic State University in San Luis Obispo, CA
The United Agribusiness League of Irvine, CA