The Future of Florida’s Tomato Industry

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    11-Aug-2015

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  1. 1. The Future of Floridas Tomato Industry: Mechanized Harvest Department of Food and Resource Economics Ricky Lynch-Curtiss Fry-Lee Bowman-Lott Bullock Department of Forestry Emily Witt
  2. 2. Research Question Will the introduction of mechanical harvesting in the production of fresh-market Florida tomatoes cause growers to realize increased profitability by cutting harvest costs, allowing them to better compete with Mexican tomato producers?
  3. 3. Background Information Today in agriculture producers must not only compete with their neighbor but also on a global scale. Because of this it is important that domestic growers have every advantage at hand in order to compete on the World Market. Specialty crops and vegetable famers receive very little attention in farm legislation, so the comparative advantage must come from somewhere else. Not only do these farmers receive little help from government legislation they must also compete with a Mexican market that not only has lower costs but also benefits from the NAFTA which eliminated tariffs on Mexican imports.
  4. 4. Background Information In the late 1940s Californias processing tomato industry cut costs and increased profitability by introducing a mechanical harvester to eliminate the need for hand harvesting. Significantly reducing their harvest costs. 95% of California growers implemented mechanical harvest within 10 years. Short Video of California Tomato Harvester
  5. 5. Motivation Since 1994, Mexicos comparative advantage in labor cost has had significant impact on the profitability and market share of Florida Growers. It has caused many Florida producers to cut and even stop production.
  6. 6. As Floridas fresh market continues to be negatively affected by Mexican growers, new technology should be introduced to level the harvest cost playing field.
  7. 7. Motivation Agriculture is a leading component of Floridas economy and tomatoes are a large part of Florida agriculture production. Floridas fresh tomato production accounts for nearly all of the U.S. fresh tomato production from December-May Accounts for nearly half of the domestically produced fresh market tomatoes. Accounts for over $400 million in annual revenue
  8. 8. Literature Review Harvest mechanization helps agriculture remain competitive Article explains how California tomato farmers have continued to remain competitive due to the implementation of harvest technology. Proved that mechanized harvest reduced labor cost to less than 20% of total cost. Proved that the mechanical harvester doesnt lead to additional unemployment, instead it creates more jobs due to the increase in production (Thompson and Blank, 2000).
  9. 9. Literature Review Engineering and Horticultural Aspects of Robotic Fruit Harvesting: Opportunities and Constraints Over the last few decades, various ideas for how to mechanize harvesting have been studied, however a feasible solution has not been found yet. The technology is available, but the research is not fully completed on how to successfully mechanically harvest tomatoes. This article focuses on the technology that is necessary to put this into practice, because it would be much more successful. If the technology was there, then mechanized harvesting would be much more profitable. This article supports our research on the profitability increase from mechanized harvesting compared to hand harvesting (Burks et. al., 2005).
  10. 10. Objectives & Expectations The objective of this research is to determine if the implementation of mechanical harvest will have a significant affect on Florida fresh market tomato producers profitability. We expect that market price per acre will decrease due to an increase in output, this increase will offset any price decrease. Labor costs will decrease due to the elimination of the amount of laborers that are required to hand harvest. Fixed costs will increase due to the machine but will only affect profit in the short run.
  11. 11. Hypothesis 0: 5 1: 5 5 represents the parameter estimate of the dummy variable Machine which accounts for the implementation of the machine
  12. 12. Fixed Cost of Harvester Commercial harvester is already in use for the production of crush market tomatoes. We are using the fixed cost per acre of this machine as our estimate for the cost of the proposed fresh tomato harvester. The cost of the two machines should be relatively close. The fixed cost per acre for the harvester comes from published UC Davis information. Year Cost of Machine 1994 209 1995 160 1996 202 1997 128 1998 185 1999 195 2000 127 2001 114 2002 148 2003 171 2004 177 2005 202 2006 141 2007 129 2008 115 2009 116
  13. 13. Harvest Cost We will use a combination of industry contacts as well as published IFAS cost data to determine the cost of hand harvesting per acre. We will use UC Davis published cost data to determine the machine harvesting per acre. Harvest costs encompass more than just labor. Today on average Florida hand harvest labor costs are $2000/acre. Year Harvest Cost Hand Harvest cost machine 1994 3570 340 1995 3577 424 1996 3668 494 1997 3672 545 1998 3679 429 1999 3677 400 2000 3694 481 2001 3689 504 2002 3704 760 2003 3726 748 2004 3721 677 2005 3730 576 2006 3728 613 2007 3767 558 2008 3750 616 2009 3900 634
  14. 14. Market Price Fresh market tomato prices per acre will be calculated using published USDA data. The USDA keeps track of annual acres planted, harvested, yield per acre, and market price. We will only use data from 1994 onward due to the implementation of NAFTA and the spike in Mexican production which ensued. Year Market Price 1994 9042 1995 8556 1996 10969.51 1997 12425 1998 13170.97 1999 9065 2000 12520 2001 10854.36 2002 12285 2003 12804 2004 11916 2005 19166 2006 14315.01 2007 12281.5 2008 19754 2009 15482.29
  15. 15. Pre-harvest Cost Our pre-harvest cost data comes from published IFAS data. It encompasses everything that is needed in order to produce fresh market Florida tomatoes. Including fixed land and equipment costs Year Pre-harvest Cost 1994 5514 1995 6974 1996 7804 1997 7978 1998 7006 1999 7459 2000 7678 2001 8462 2002 8544 2003 8547 2004 9742 2005 10313 2006 11042 2007 11023 2008 11585 2009 12104
  16. 16. VariablesYear Profit Market Price Yield Revenue Harvest Cost Pre-harvest Cost Cost of Machine X1 Y1 X2 X3 X4 X5 X7 X8 1 -42 9042 330 9042 3570 5514 0 2 -1995 8556 310 8556 3577 6974 0 3 109 10970 355 10970 3668 7193 0 4 1249 12425 350 12425 3672 7504 0 5 1052 13171 355 13171 3679 8440 0 6 -3060 9065 350 9065 3677 8448 0 7 802 12520 400 12520 3694 8024 0 8 -1297 10854 335 10854 3689 8462 0 9 -814 12285 325 12285 3704 9395 0 10 -47 12804 330 12804 3726 9125 0 11 -1547 11916 360 11916 3721 9742 0 12 4222 19166 370 19166 3730 11214 0 13 9 14315 350 14315 3728 10578 0 14 -2509 12282 385 12282 3767 11023 0 15 4419 19754 332 19754 3750 11585 0 16 -522 15482 366 15482 3900 12104 0 17 8702 9042 330 9042 340 5514 209 18 8132 8556 310 8556 424 6974 197 19 10476 10970 355 10970 494 7193 199 20 11880 12425 350 12425 545 7504 160 21 12742 13171 355 13171 429 8440 129 22 8665 9065 350 9065 400 8448 162 23 12039 12520 400 12520 481 8024 174 24 10350 10854 335 10854 504 8462 114 25 11525 12285 325 12285 760 9395 149 26 12056 12804 330 12804 748 9125 180 27 11239 11916 360 11916 677 9742 202 28 18590 19166 370 19166 576 11214 154 29 13702 14315 350 14315 613 10578 121 30 11724 12282 385 12282 558 11023 129 31 19138 19754 332 19754 616 11585 115 32 14848 15482 366 15482 634 12104 116
  17. 17. Model This model estimates profit with mechanical harvesting = 1 + 2 2 + 5 5 + 7 7 + + + Where: 2 = 5 = 7 = = = Parameter Estimates Variable D F Estimate Standard Error t Value Approx Pr > |t| Intercept 1 -3303 4613 -0.72 0.4806 X2 1 0.9999 0.0266 37.60 DW 1 0.1677

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