Economics and HLB

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Economics and HLB

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Economics and HLB

  1. 1. Economic Considerations ofEconomic Considerations ofEconomic Considerations ofEconomic Considerations of Managing HLB through a FoliarManaging HLB through a Foliar N i i l SN i i l SNutritional StrategyNutritional Strategy Future of the Global Orange JuiceFuture of the Global Orange Juice Industry WorkshopIndustry Workshop Fritz Roka April 6 2010April 6, 2010 CREC – Lake Alfred, FL 1
  2. 2. Protocol ComparisonsProtocol Comparisons Standard HLB Control Foliar Nutritional PlanStandard HLB Control • control psyllids • inspect every tree 4x/yr Foliar Nutritional Plan • control psyllids • treat nutritional• inspect every tree 4x/yr  (12x/yr in Brazil) • remove systematic trees • treat nutritional  deficiencies • sustain production of• remove systematic trees  ‐ immediately • sustain production of  infected trees 2
  3. 3. Cost/Benefit ComparisonsCost/Benefit Comparisons Std: Tree removal Alt: Foliar nutritionStd: Tree removal Alt: Foliar nutrition Costs Tree inspections Higher production costs  (more materials) Removal of productive  trees Uncontrolled HLB  inoculum Benefits Lower HLB inoculum No tree inspection costs M i t i d tiMaintain production 3
  4. 4. Economic QuestionEconomic Question Given: fruit priceGiven: fruit price,  tree yield, and  diff i l b/ S d d lcost differential b/w Std and Alt,  what rate of annual HLB tree removal willwhat rate of annual HLB tree removal will  equate the cumulative NPV of each strategy? 4
  5. 5. NPV AssumptionsNPV Assumptions • Annual production cost difference: $255/acAnnual production cost difference: $255/ac – Alt. Foliar Nutritional: $1,510 – Std. Tree Removal: $1,255 • Natural tree loss rate of 2% annually • 10 year planning horizon, constant fruit pricesy p g , p • 10% discount rate • HLB starts when trees are 8 years (mature)HLB starts when trees are 8 years (mature) • No resets • Yields of infected trees maintained by Foliar programYields of infected trees maintained by Foliar program 5
  6. 6. Initial Production: 150 tree/ac 3.5 bx/tree ($/Ac) $3,844 10 Y C NPV 6.2 p.s./bx $1,057 10 Yr Cum NPV  by fruit price,  HLB Foliar Program 0 ‐$1,730 (%/Yr) Tree Loss Threshold  by fruit price,  HLB Foliar Program 3.5% 2.9% $1.10 $1.25 $1.40 2.4% Fruit Price ($/p.s.)
  7. 7. Critical Assumptions – Uncertain future 1. Foliar nutritional cocktail can maintain production of infected treesproduction of infected trees. Any reduction in annual yield or productive life, decreases the NPV of a Foliar program and increasesp g the HLB tree loss threshold of the Std program. 2 Aggressive tree removal program can2. Aggressive tree removal program can hold HLB infection rates to “low” and constant levelsconstant levels. As probability increases that future HLB tree losses exceed threshold levels, the higher the cost of, g continuing a tree removal program. 7
  8. 8. The next generation?The next generation? • To what extent will lower inoculums levelsTo what extent will lower inoculums levels  assure that young trees can be grown to full‐ bearing maturity?bearing maturity? • Can a foliar nutritional program allow an  infected young tree to reach full bearinginfected young tree to reach full‐bearing  maturity? 8

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