D. "Is it worth expanding an existing avocado orchard?"

The question of expanding an existing avocado orchard is somewhat different from the question of replacing old trees and somewhat similar to the question of whether it is worth starting an avocado orchard.
 

1. The Influence of the Costs of Production (again)

Assuming that the land is already owned or rented, the question of planting new trees again revolves around the costs of establishing new trees and the ongoing costs of production. An important consideration regarding the land is whether the soil is as productive as the land where the existing orchard is located. Lower productivity soil means either lower yields under the same management as the rest of the orchard or it means that higher levels of management must be applied in order to bring yields up to the norm (if that is biologically or economically possible).
 

2. The Influence of the Availability of Inputs

Other factors include the availability of critical inputs. As discussed earlier, water is a very important input but not always easy to get when desired. Assuming that a grower already has contracts for water delivery from state or federal water projects, increasing his or her water use may result in higher prices per acre-foot of water above and beyond the amount that was initially used. Obviously this drives up costs of establishment and production. In the case of the pumping of groundwater, the more water pumped the deeper a pump must go and the more it costs in terms of energy purchases to bring that additional water to the surface.

Another important input consideration is labor and management. In expanding an existing avocado orchard, there is more physical area that must be covered by labor and management. If there is some slack in both then these costs may not increase much, if at all (except during harvest time). On the other hand, if existing labor and management resources are at their maximum, then finding additional and qualified labor and management can be difficult -- this is especially important for management resources.

Like the question of replacing trees, the role of output and input price expectations play the same role in orchard expansion. The question of the opportunity cost of land is also revisited -- is it still better to grow avocados rather than develop the land slated for orchard expansion.

This concludes the section of the tutorial on production decisions. The next section will begin addressing the issue of selling avocados.


Go to:
VII. Selling Avocados and the Role of Value-Added
VI. Producer Decision-Making in Avocado Production
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