Block profitability

June 2007 | Prepared by Ross Wilson, AgFirst | Future Orchards® Orchard Walk notes and presentation

Block profitability gives growers a way to understand how individual orchard blocks contribute to the financial performance of the whole business. In these Future Orchards® Orchard Walk resources, Ross Wilson of AgFirst introduces a practical method for estimating block profit and demonstrates it using the Future Orchards® Cripps Pink monitor-block database.

The notes define block profit as income less cash expenses, including overheads, interest or lease costs and depreciation, before tax, reinvestment and drawings. Ross explains that whole-business accounts are essential, but they can hide large differences between blocks. One block may be making a strong contribution to the bottom line while another may be consuming labour and capital without producing an acceptable return.

Because many orchard businesses do not record every cost and item of income at block level, AgFirst developed a simplified data-collection approach. Growers record block details, production, grade recovery, returns and key labour inputs such as pruning, thinning and harvest. Industry-average figures can then be used for other costs to create an approximate but useful profitability measure. The resulting reports allow blocks to be ranked and benchmarked against similar blocks in the region or nationally.

The resource includes a South Australian Cripps Pink example showing how changes in yield, packout, returns and labour inputs can substantially alter profit from year to year. This illustrates why tonnes per hectare alone are not enough: marketable yield, grade recovery, price and cost structure must be considered together.

For growers, the practical value of block profitability is strategic. The analysis can help identify which blocks deserve further investment, which require changes in crop management or labour efficiency, and which may need redevelopment or removal. Used alongside longer-term business planning, block profitability provides a stronger evidence base for allocating capital and management attention.