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The proposed approach and methodology is protected by copyright and no part of this document may be copied or disclosed to any third party, either before or after the contract is awarded, without the written consent of ADAS.

0936648

An economic analysis of the

potential returns achieved from growing 10 specific horticultural

crops in Wales

Issued By: ADAS Cymru

Submitted to:

Katina Davies, Market Analyst

Horticulture Wales

Glyndŵr University

Prepared by:

Chris Creed, Harriet Roberts and John Birkenshaw

ADAS UK Ltd & ADAS Wales

Copyright


0936648

Contents

Executive Summary .................................................................................................................... 4

Introduction .................................................................................................................................. 6

1.1 Background ..................................................................................................................... 6

1.2 Changes to Single Farm Payment and CAP reform ....................................................... 7

1.3 Objective ......................................................................................................................... 8

1.4 Choosing the 10 crops .................................................................................................... 8

2 Methodology ....................................................................................................................... 11

3 10 Crop Gross margins ..................................................................................................... 14

3.1 Apples for juicing ........................................................................................................... 14

3.1.1 Apple juice production guide ............................................................................. 14

3.1.3 Apple juice gross margin .................................................................................... 16

3.2 Asparagus ..................................................................................................................... 17

3.2.1 Asparagus production guide .............................................................................. 17

3.2.2 Asparagus gross margin .................................................................................... 19

3.3 Baby leaf salad ............................................................................................................. 20

3.3.1 Baby leaf salad production guide ...................................................................... 20

3.3.2 Baby leaf salad gross margin ............................................................................. 22

3.4 Cauliflower .................................................................................................................... 23

3.4.1 Cauliflower production guide ............................................................................. 23

3.4.2 Cauliflower gross margin ................................................................................... 25

3.5 Fresh cut herbs ............................................................................................................. 26

3.5.1 Fresh cut herbs production guide ..................................................................... 26

3.5.2 Fresh cut herbs gross margin ............................................................................ 29

3.6 Kale ............................................................................................................................... 30

3.6.1 Kale production guide ......................................................................................... 30

3.6.2 Kale gross margin ................................................................................................ 32

3.7 Leeks ............................................................................................................................. 33

3.7.1 Leek production guide ........................................................................................ 33

3.7.2 Leek gross margin ............................................................................................... 35

3.8 Raspberries ................................................................................................................... 36

3.8.1 Raspberry production guide .............................................................................. 36

3.8.2 Raspberry gross margin ..................................................................................... 38

3.9 Garden or green-pull Rhubarb ...................................................................................... 39

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3.9.1 Rhubarb production guide ................................................................................. 39

3.9.2 Rhubarb gross margin ........................................................................................ 41

3.10 Strawberries .............................................................................................................. 42

3.10.1 Strawberry production guide ............................................................................. 42

3.10.2 Strawberry gross margin .................................................................................... 44

3.11 Fixed costs ................................................................................................................ 45

4 Gross Margin Calculator ................................................................................................... 47

5 Considerations ................................................................................................................... 48

5.1 Suggestions for further work ......................................................................................... 48

References ................................................................................................................................. 49

Acknowledgements ................................................................................................................... 50

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Executive Summary

The Welsh horticulture sector is complex and ranges from small growers to large agri-businesses. Major producers marketing to the retail sector include Puffin Produce and Emmet’s Wales. A number of medium-sized grower-businesses exist which occupy niche sectors throughout Wales. The remainder of the industry is characterised by smaller growers typically supplying limited volumes of mixed produce, often to the same market sector or buyer. While many suppliers are keen to explore new market opportunities, time pressures, small production volumes and seasonally limited growing windows present financial and technological barriers to optimising market opportunities.

Many buyers of horticulture produce (including wholesalers, retailers, caterers and those involved in the hospitality industry) have expressed a desire to source local produce. A number of Visit Wales’ strategies also note the importance of Welsh food as a factor in attracting visitors to and within Wales. Visit Wales research found that around 28% of day visitors visited a food establishment because Welsh food was on the menu. The same data also identified that food is an important factor in the level of satisfaction visitors reported in relation to their visit1. However, time pressures, lack of knowledge of where local producers are located, quality and price issues all pose barriers to developing this relationship. To meet the market aspiration to source Welsh produce many conventional arable/livestock/dairy farms are seeking ways to diversify into horticulture to increase the profitability of their business and to ensure a sustainable and robust crop production business for the future.

One of the problems encountered by the Welsh crop production industry is the shortage of reliable financial data that they can use to compare crops and find the new crop types for their own farms. Gross margins from a respected source are also invaluable for business plan formulation in order to secure any necessary finance from the bank. Various nationally available margins tend to be ‘broad brush’ and do not have the sensitivity to develop new crop production streams for growers in Wales.

This project has researched and produced validated gross margins for 10 crop types with potential for widespread uptake by Welsh horticulture grower businesses (Table 1).

Table 1. Crop type, production system and gross margin value for 10 selected crops for potential uptake by growers in Wales. All figures are exclusive of VAT.

Crop Cropping system Direct farm sales gross margin (per ha)

Wholesale/ retail gross margin (per ha)

Apple Juice bottled on site £14,123 £8,648

Asparagus Field grown £14,270 £1,670

Baby leaf salad Grown in an unheated polytunnel or glasshouse in substrate, bagged for sale

£15,699 £455

Cauliflower Field grown £2,937 £64

Fresh cut herbs - annual

Grown in an unheated polytunnel or glasshouse in substrate, bunched

£27,349 £16,841

1 Wales Visitor Survey 2009, Day Visitors Report, Visit Wales

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Crop Cropping system Direct farm sales gross margin (per ha)

Wholesale/ retail gross margin (per ha)

Fresh cut herbs - perennial

Grown in an unheated polytunnel or glasshouse in soil – bunched

£200,946 £87,986

Kale Field grown - picked over continuous harvest

£18,678 £6,454

Leeks Field grown - traditional long season

£12,750 £1,950

Raspberries Outdoor, soil grown £23,618 £5,058

Rhubarb Field grown garden or green pulled

£8,195 £1,475

Strawberries Protected table top production in substrate under Spanish tunnels

£39,509 £5,509

The margins (Table 1) are split into: direct farm sales which would be most relevant to smaller businesses (pick your own, farm shop, sales to restaurants and veg box schemes) and supermarket/wholesale/retail (suitable for larger scale enterprises and includes a commission price set at 8% of gross profit). The gross margins include the variable costs of production for one full cropping year per ha (unless otherwise stated). They do not include any establishment costs for the perennial crops or any infrastructure costs for growing structures or associated equipment. Standard figures for these have been detailed within this document to give an idea of fixed costs. All figures are exclusive of VAT.

An Excel-based tool has been produced allowing growers to input their own data on production areas and yields in order to compare with standard gross margin data for the selected crops. The outputs from this project could be further developed as an online resource by Horticulture Wales.

As the tool can be used by growers to determine their own gross margins, organic growers will be able to substitute their own figures. This may include premium price returns, reduction in costs of fertiliser and pesticides, yield information and extra costs incurred, for example hand weeding and potentially lost cropping seasons in stockless systems.

The tool must be used with some caution as crops with very high gross margins are likely to have very limited sales potential with large tonnages and only relatively small areas would be feasible. This applies to crops such as fresh herbs, baby leaf salads etc. as a hectare of these crops could be difficult to sell retail at any farm gate type enterprise and even wholesale unless some supermarket supply could be organised.

All of the figures are given in hectares for comparison, however on some of the more intensive crops the margins could be divided by ten to give outputs and costs per 1000 m2 which, conveniently, is roughly equal to a quarter acre.

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Introduction

1.1 Background

According to the Horticulture Strategy for Wales, the market volume of fresh fruit, vegetables and potatoes in Wales is nearly 500,000 tonnes with a farm gate value of £191 million. Potatoes account for 10% of this total, vegetables 44% and fruit 46%. Fruit and vegetables grown in Wales are estimated to account for 20% of the total Welsh market. A number of large grower-businesses exist which occupy niche sectors throughout Wales. The remainder of the industry is characterised by smaller growers typically supplying limited volumes of mixed produce, often to the same market sector or buyer. Horticulture Wales has identified a shortage of reliable financial data for Welsh growers to use as an aid to managing their businesses and to be able to compare their data with reliable industry standards. The brief sought to produce gross margin standard data for horticulture crops; this type of data exists for other Welsh enterprises such as beef and sheep plus arable. In these areas farmers can use the data to calculate what could be viable on their farms and predict what the returns are likely to be. The gross margins can also highlight weaknesses in a business that could be addressed and improved.

A difficulty encountered in calculating gross margin figures for horticulture is uncertainty over the likely return; this is somewhat different to agriculture which is more predictable generally, for example cereal crops where yields and prices are much more predictable, except perhaps potatoes where there can be wide variation in crop returns. This can be overcome with built-in sensitivity but most importantly the breakeven price can be derived so the grower is aware at what point the crop is not viable.

For example in 2013 the price of strawberries supplied to multiples varied from £2.20 per kg up to £6.00 per kg, depending on demand and various discounted offers, and this is difficult to present as a gross margin but a breakeven of circa £3.00 per kg would be useful information to have.

The potential value of gross margin analysis is;

Evaluating new crops

Assisting with the production of business plans

Highlighting labour requirements and when the labour is needed

Identifying the investment needed to produce crops

Exploring the potential for profitable diversification in response to changing market conditions

Gross margins are at their simplest gross financial outturn minus crop specific variable costs. Gross margin data can however also be supplemented with a labour profile detailing what hours and when they are needed so prospective growers can avoid crops that overlap with, for example, the lambing season, or if several enterprises are considered then all of the labour is not required at the same time. One of the problems is communicating this technique to many growers who do not have, but need, an understanding of these concepts. The gross margin will also give some idea as to when the crops will produce some financial input into the business, which can assist with cash flow.

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1.2 Changes to Single Farm Payment and CAP reform

Farm diversification brings with it lots of potential opportunities, moving away from beef, sheep or arable production into horticulture however may flag up some changes to the Single Farm Payment. However the Single Farm Payment Scheme will be replaced by a basic payment scheme in 2015 which puts in place additional payments for greening and younger farmers.

Under the new regime, EU farmers will have to comply with greening measures to qualify for 30% of their new Basic Payment from 2015. The three basic measures are crop diversification, the maintenance of permanent grassland and the need to establish

Ecological Focus Areas (EFA) on 5% of arable land. These changes to payments to farmers will take effect from 1 January 2015. This means that changes will be made to the content of the 2015 Single Application Form. Shifting to horticultural production should have little bearing on the basic payment scheme as payments are now tied to land not crops.

With the additional greening measures however there could be issues connected with cropping over 10 ha, if the area of permanent pasture went down by more than 5%. There is also some uncertainty for growers concerning Ecological Focus Areas (EFA); these must amount to 5% of the arable area if arable area is over 15 ha. Land coverage can include woodland and hedges so may be difficult to calculate because EFA and cropping rules have not been finalised.

The new rules dictate that:

1. Those with between 10 ha and 30 ha of arable land must grow at least two crops with no one crop accounting for more than 75% of the arable land.

2. Those with more than 30 ha arable land must grow at least three crops, main crop not exceeding 75 % and the two main together crops not exceeding 95 %. Grass will count as a crop type and there are additional flexibilities if grass covers more than 75% of the arable land. Winter and spring crop varieties count as separate crop types.

3. In addition, farms where more than 75% of their agricultural land is permanent grassland or where more than 75% of their arable land is grassland are exempt, providing the remaining arable area does not exceed 30 ha.

The key points for smaller scale horticultural operations are:

Farms with less than 10 ha arable land are exempt from greening

Land certified as being farmed organically qualifies automatically for the greening payment

The greening requirements cover: o permanent grassland must not be reduced by more than 5% o crop diversification as detailed above (10-30 ha 2 crops, >30 ha 3

crops) o ecological focus areas (EFAs) 5% if farming greater than 15 ha2

2 Policy and Economics Division CAP Reform FAQs v2 2014 - www.dardni.gov.uk/cap-reform-political-

deal-faq2.pdf

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1.3 Objective

To produce 10 detailed gross margins on crop sectors suitable for Wales in order to support diversification in Welsh horticulture.

1.4 Choosing the 10 crops

The 10 crops were chosen through discussion with ADAS UK Ltd. and Horticulture Wales. They represent a cross section of horticultural crops and production systems which have been identified as suitable for Wales and present a market opportunity either through direct farm sales, veg box schemes, supplying local farm shops, restaurants and hotels or retailers. The crops are detailed in Table 2.

Table 2. Details of the 10 crops chosen to have gross margins produced for a Welsh Horticultural situation and reasoning

Crop Reason for inclusion

Apple Juice

Apple juice, rather than apples themselves, was selected as there is high interest in growing the crop in Wales but the Welsh climate would not provide the skin finish required for fresh sales and scab would be a significant issue. Juice represents a value-added product that has shown significant growth over the past 10 years with juice seen as a convenient way to ‘gain one of your 5 a day’3. Creating a brand and selling at farm gate or through local farm shops has been demonstrated in Wales as a highly viable business. Juice has the advantage of an 18 month shelf-life and a 12-month cash flow. This type of produce can also be sold over the internet and offers other initiatives such as holding juicing events, paid pressing of other people’s juice and, if some cider varieties are also established, cider production.

Asparagus

Asparagus as a candidate offers niche, high-value crop which has increased in popularity in recent years. It is a perennial crop with relatively high establishment costs but once established will last 10 years with careful management. There are any number of potential retail opportunities, however it does require a significant labour input for harvesting and grading so would need to be fitted around other crops carefully. It is often a useful crop to get interest in direct type farm sales early in the season.

Baby leaf salad

Baby leaf salad grown under protection for a cut-and-come-again production system was picked out due to the change in consumer preference for baby leaf over whole head salads. The cut-and-come-again nature of production, with successive plantings and under polytunnels, means it could be produced all year round. The margin has been produced for a bagged end product sold either to retailers, via a veg box scheme, to restarants or to farm shops. To allow for production on more marginal soils, substrate was chosen which would suit small micro businesses.

3 Frost D. et al. (2006) Investment Opportunities in the Welsh Horticultural Processing Sector. Centre for Alternative Land Use Report

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=PqvfeDLgYamzmM&tbnid=nKMMvaDYOaYIYM:&ved=0CAUQjRw&url=http://www.verticalveg.org.uk/salad-leaf-mixes-for-every-season/&ei=na5PU46YHYOp0QWT5IDYDA&bvm=bv.64764171,d.d2k&psig=AFQjCNGEaPj3-MQmc7cjqhSxSOSzRMCOLQ&ust=1397817340917045

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Cauliflower

Cauliflower was chosen as a basic crop which is already successfully grown in West Wales and would suit production in other parts of Wales, especially coastal areas. Outlets for small scale production would be to farm shops, veg box schemes and restaurants wanting to source local products. To achieve profits from wholesale or supermarket sales, production would have to be on a large commercial scale and highly mechanised as cauliflower is very cheaply available from other parts of the UK.

Herbs

Fresh cut herbs are allied to baby leaf salad as the system suits small, medium and large outfits; there are many market opportunities and crop options along with a good demand. It is perceived as a trendy market driven by use among celebrity chefs. Value can also be added by drying and supplying potted plants. To allow for the range, a perennial herb and an annual crop were selected.

Kale

Kale has potential in Wales and there is growing interest in bagged, chopped winter greens for their ease of use and nutritional benefits. Kale comes in a range of varieties and has an attractive crinkled leaf to add interest. The crop can be picked over several times, removing outer leaves for bagging rather than harvesting whole heads. The crop is also grown for animal fodder so could be dual purpose, meaning less wastage.

Leeks

Traditional long-season leeks were chosen as a renowned Welsh crop already being successfully grown on various scales. They offer good potential to build up a brand for Welsh Leeks with PDO4 status, perhaps providing a niche opportunity in supermarkets as well as for more direct farm sales. As with cauliflower, to achieve profits from wholesale or supermarket sales, production would have to be on a large, commercial scale and highly mechanised as leeks are very cheaply available from other parts of the UK.

Raspberries

Outdoor raspberry production was chosen due to the Welsh climate being appropriate for the crop as long as soil type is suitable. Raspberries are a high value crop with great pick-your-own (PYO) or direct farm sales potential. The margin detailed is for raspberries (summer or autumn fruiters) grown in the soil in a low input system without protection, therefore not suitable for supermarkets. If soil type or quality is not suitable, there is the option of moving into pot production under Spanish tunnels.

4 PDO - Protected Designation of Origin is part of an EU initiative which identifies food and drinks where their authenticity and origin can be guaranteed and protects against imitation throughout the whole of the EU. PDO is open to products produced, processed and prepared within a specific geographical area, and with features and characteristics attributable to that area.

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=IIdon5Ic1-AM5M&tbnid=D6fs55SqCTx_1M:&ved=0CAUQjRw&url=http://www.juicingbook.com/vegetables/kale&ei=_7JPU-KVEaj00gX_kYDQBw&bvm=bv.64764171,d.d2k&psig=AFQjCNFqKxjKNlAAo2DOsxSYrsgpl_nUFg&ust=1397818481858518

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=c2xxS4rbnaAUXM&tbnid=v3FWeoXiUUw8pM:&ved=0CAUQjRw&url=http://camel-csa.org.uk/2010/04/23/seasonal-recipe-no-41-a-risotto-of-leeks-and-pancetta/&ei=W7RPU5GJG6Px0gX42ICwBA&bvm=bv.64764171,d.d2k&psig=AFQjCNHgHZ6zECwi-s_dC5P6i0k87Qyf-w&ust=1397818814760110

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Rhubarb

Garden or green-pulled rhubarb was chosen as it requires relatively low input to grow and retails well, with scope for larger-scale production for supermarkets. The crop has few pests and diseases and own-stock can be used for propagation. With suitable management it can be harvested from March to October, with an option for indoor forcing from December to March.

Strawberries

Protected, table-top strawberry production, under Spanish polytunnels, was chosen as it is a high value crop with potential for both retail and the direct farm sales market. The table-top polytunnel system removes any difficulty with soil type or quality, ensures even production and ease of picking. It also provides a contrast to the low input raspberry system. Again, this technique has potential for direct retail with possible expansion into supermarket supply.

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2 Methodology

To create the gross margins data was collected from a variety of sources, including published gross margins, agronomists both in house and external, farmers and growers and other publications including several CALU documents (detailed in Table 2). Some of our sources have requested to remain confidential. The data collected was collated onto a single spreadsheet per crop detailing data source and cropping considerations. The project team then reviewed each collated data set for each crop type to ensure consistency and identify any anomalies in the data.

Where data was sourced from outside of Wales or from large commercial holdings, calculations were made to make relevant to Welsh situations. For example, with vegetable production the majority of published information is from large commercial holdings in Lincolnshire where much of the process is heavily mechanised meaning labour costs are reduced, for a smaller scale Welsh system labour hours were estimated from published figures in Nix (2014) to make the gross margins more relevant to the Welsh system detailed.

Where it was not possible to obtain accurate retail prices from our growers, prices were calculated from in store supermarket prices using an average 30% mark up. This was cross-referenced with figures published in Horticulture Week Edibles data5. Seed and plant prices were sourced from propagators and seed companies and validated by growers and published figures for medium to bulk purchases.

The consolidated Welsh gross margin was then validated by ADAS horticultural consultants with extensive experience of the Welsh horticultural sector and, where possible, with Welsh growers.

The gross margins produced are the financial output of an enterprise minus its variable costs. Enterprise output is the market value of production retained on the farm, sometimes referred to as home to grower. The variable costs are specific to the enterprise and vary in proportion to the size of the enterprise. Fixed costs for land rent, machinery and general overheads have been omitted and would have to be covered by a total farm gross margin before arriving at profit. Items of variable cost will vary according to external factors such as levels of weeds, soil type or distance to market. The assumptions used to create the margins within this project are clearly stated and provide a generic measure for each crop. To be valuable to a farmer or grower these gross margins will need to be tailored to their specific enterprise and the Excel tool will enable this to a certain extent. These gross margins should however help to give an idea of what could be expected from a cropping system and can provide a useful check on technical performance.

An idea of fixed cost has been estimated for each situation and a ‘breakeven’ price calculated to give farmers and growers an idea of the minimum price they would need to get from any outlet to maintain a sustainable business.

As suggested earlier, it is not sensible to pick out crops with very high gross margins and apply these to large areas. Here some advice and guidance is useful and is available, for example, from one of the Farming Connect schemes.

5 Horticulture week, Haymarket Business media data supplied by Market Intelligence services ©

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Table 3. Data sources for each crop used to create the gross margins

Crop Data source

Apple Juice ADAS experience in set ups

Nix 20146 – Top fruit

ADAS Management Budgets fruit crops, nursery stock and bulbs

7Plant prices FP Matthews Ltd.

Asparagus Consultation with Asparagus Growers Association

Frost et al. (2007)

ADAS Management Budgets vegetable crops 8

Wilson Dyer – Independent asparagus consultant

Plant prices – NL

Baby leaf salad Grower correspondence (confidential)

ADAS Management Budgets vegetable crops

Seed prices Elsoms, CN seeds and Tozer

Cauliflower Grower correspondence (confidential)

Vegetable agronomy organisation (confidential)


Nix 2014 – Field scale vegetables

Seed prices Elsoms and Tozer

Herbs Grower correspondence (confidential)

ADAS Management Budgets glasshouse crops9


Kale Grower correspondence (confidential)





Leeks Grower correspondence (confidential)


6 Nix (2014) John Nix Farm Management Pocket book

7 An ADAS Management Budget for illustrative purposes 1991 – Gross margin booklets, fruit crops, nursery stock and bulbs

8 An ADAS Management Budget for illustrative purposes 1994 – Gross margin booklets, vegetable crops

9 An ADAS Management Budget for illustrative purposes 1994 – Gross margin booklets, glasshouse crops

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Crop Data source


Frost et al. (2007)



Rhubarb Grower correspondence (confidential)

Rhubarb growers association (Founded March 2014)


Raspberries Grower correspondence (confidential)


ADAS figures direct retail

Nix 2014 – Soft Fruit

Plant prices Hargreaves plants

Strawberries Grower correspondence (confidential)


ADAS figures direct retail

Nix 2014 – Soft Fruit

Plant prices Hargreaves plants

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3 10 Crop Gross margins

The margins are split into two cost brackets; direct farm sales (which would be most relevant to smaller businesses e.g. pick your own, farm shop, sales to restaurants and veg box schemes) and wholesale or supermarket sales (suitable for larger scale enterprises and includes a commission set at 8 %). The gross margins include the variable costs of production for one full cropping year per ha (unless otherwise stated). They do not include any establishment costs for the perennial crops, infrastructure costs for growing structures or associated equipment. Standard figures for these have been detailed in section 3.11 to give an idea of additional costs. All figures are exclusive of VAT.

3.1 Apples for juicing

Apple juice, rather than apples for direct sale, was selected as the Welsh climate would not provide the skin finish required for fresh sales and scab would be a significant issue. Juice represents a value-added product that has seen significant growth over the past 10 years with juice seen as a convenient way to ‘gain one of your 5 a day’. Creating a brand and selling at farm gate or through local farm shops has been demonstrated in Wales as a highly viable business with juice having the advantage of an 18 month shelf life and a 12 month cash flow. This type of produce can also be sold over the internet with potential for other initiatives such as holding juicing events, paid pressing of other people’s juice and, if some cider varieties are also established, cider production.

3.1.1 Apple juice production guide

Ideally, apples need to be situated in a frost-free area with a good deciduous wind break to shelter the crop. Trees should be planted as Maidens in autumn or winter on suitable root stock and staked to provide support. The ideal soil type is a deep well-drained medium loam. Soil analysis should be taken prior to planting and any deficiencies rectified. The expected output from an orchard during establishment are:

Year one and two – nil,

Years three to six – 1 to 6 t/ha

Year seven onwards – 10 to 20 t/ha.

Once established orchards are generally fertilised using top dressings based on soil and leaf analysis through the year. Foliar feeds of Calcium can also improve the crop quality.

Orchards are generally maintained with an herbicide strip beneath the trees to avoid weed competition and a grass alleyway is established to protect the soil surface from tractor movement.

Pest and disease control in juicing orchards is less critical than in orchards for fresh sales, however a program of fungicides is required for scab and powdery mildew control to maintain tree health and vigour. Insecticides are required for aphid, caterpillar and other pests if they become too numerous although a background level is tolerable. Traps are available for several moth pests to assist with spray timings.

Trees need to be pruned annually in winter to maintain productivity and allow light interception into the canopy. Fruit trees produce most fruit on two and three year-old wood so removing older wood will help to maintain yields.

Harvesting can either be by hand into bulk bins or by mechanical means which shakes the apples off the tree. These are then scooped up using a tractor into trailers.

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Juicing, bottling and pasteurising equipment represents a significant cost but can be well worth the investment and holding events such as ‘juice your own apples’ days can be valuable publicity for businesses.

Table 4. Apple juice production notes

APPLE JUICE – BOTTLED ON SITE

Varieties: Varies according to requirements - suggest a mix of varieties including: Discovery, Bramley, Katy and Red Windsor.

Soil and Situation: Deep well-drained medium loam, sandy or clay loam or brick earth, adequately sheltered and frost free.

Cropping System: Traditional orchard system staked trees, planting maidens at 606 trees/Ha, Herbicide strip maintained beneath and grass sward established in alleyways

Establishment costs:

Year 1 - Trees £2,272, Sundries (stakes, grass sward etc.,) £600, Labour £127. Crop inputs £775 per year

Equipment costs: Juicing equipment. Press and scratter (pulveriser) plus equipment to pasteurise the juice. Sometimes available second hand. Growers have got started with £3,000.

Spacing: 5.5 m alleyways, 3 m between trees

Further Information:

Picking by hand into bulk bins @ 5p/kg is used in this gross margin calculation - Mechanical harvesting costs ~£350/ha

1 tonne of apples yields approximately 500 litres juice

Cider is essentially the same process, except the juice is not pasteurised, there are specific cider varieties and a certain proportion of these are required to call a product cider.

Harvest Period: September/October

Marketed Yield: Established orchard 15 t/ha

Man Hours Per Ha: Production, harvesting, juicing and bottling

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Production* 40 20 2 2 2 2 2 2 2 2 2 2 80

Harvesting /juicing/

Bottling*

20 - - - - - - - 90 30 20 20 180

*Number of hours/ha

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3.1.3 Apple juice gross margin

This gross margin has been produced according to the production notes above. Planting and establishing an orchard is a significant investment in both time and money. The gross margin detailed provides an indication of the gross margin of a fully established orchard achieving 15 t of fruit per ha. This does not factor in the cost of establishment or equipment and ignores potential loss of other crop during establishment. Having said that there is the possibility of supplementing apple tonnage in establishment years and beyond, by sourcing fruit locally. Surplus apples are readily available to those with juicing equipment and a mix of varieties will add interest to blends.

Table 5. Apple juice gross margin – full cropping year

Enterprise output /ha Quantity £ Total

Crop sales - Direct farm (L) 7500 £2.50 £18,750

Crop sales - Wholesale (L) 7500 £1.50 £11,250

Variable costs

Production Labour (hrs) 80 £6.31 £500

Fertiliser £225

Spray program £550

Harvest labour (hrs) 119 £6.31 £750

Juicing £2,254

Packing and Carriage £348

Total variable cost £4,627

Gross margin - Direct farm sales £14,123

Gross margin - Wholesale £6,623

Breakeven price /L £0.62

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3.2 Asparagus

Asparagus offers niche high-value crop which has increased in popularity in recent years. It is a perennial crop with relatively high establishment costs but, once established, will last 10 years with careful management. There are any number of potential retail opportunities, however it does require a significant labour input for harvesting and grading so would need to be fitted around other crops carefully. It is often a useful crop to get interest in direct type farm sales.

3.2.1 Asparagus production guide

To establish asparagus quickly and evenly, module plants need to be ordered from a propagator in January so that they can propagate the seed and grow the young plant in time to allow planting out into the field at the end of the April. By planting in this way cropping can begin within two to three years. Alternatively, one year-old crowns can be bought from Holland on spec and various grades are available. Asparagus can be grown on a ten year cycle so the cost of plants and establishment can be spread over these ten years.

Asparagus is fairly robust when it comes to pest and disease pressures so there are no routine pesticide sprays required. Occasionally asparagus beetles are found or there are sporadic fungal attacks but these will be treated only if and when they occur. Asparagus nutrition is concerned with maintaining soil indices. The crop will generally require around 150 kg/ha Nitrogen, 50 kg/ha Phosphate and 50 kg/ha Potash10.

Once the cropping cycle has begun, harvesting occurs from the end of April until mid-June (historically the 21st June is quoted). This is necessary to allow the ferns to grow up and restore the starch levels in the crown for the following year, cutting beyond this date will weaken the crowns and shorten the life of the plantation. The harvesting phase of asparagus incurs a significant proportion of annual costs and needs to be managed carefully. If the weather is particularly hot then the asparagus will have to be picked daily. If the weather is cold then the asparagus may only require picking twice a week. To harvest, asparagus is cut just below the ground and stacked into trays to be taken away for washing, sorting and grading. The spear needs to left long enough before harvesting to reach its optimal height. However, if left too long then the tight bud at the apex of the plant will ‘blow’ causing a loss of quality.

After harvesting the asparagus needs to be cooled to between 2-3 degrees oC to ensure an optimum shelf life. The spears must also be prevented from drying out. The harvested asparagus can be graded into either jumbo (the biggest), premium (middle) or sprue (small). Some farms may also offer a soup grade which all other sizes can go into. In terms of packing, some farms use a polythene sleeve (included in this gross margin 25p/kg), whilst others put the asparagus in bundles of approximately 0.5 kg11.

10 DEFRA Fertiliser manual RB209 8th edition June 2010

11 Frost D., Creed C., Turner S. and van Diepen P. ADAS Wales (2007) Increasing The Product Range Of Welsh Grown Vegetables. CALU Farming connect

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Table 6. Asparagus production notes

ASPARAGUS

Varieties: Gijnlim is currently the most favoured variety, other varieties such as Geulph Millenium and Mondeo are becoming increasingly popular. Asparagus can be established from field grown crowns or from module raised transplants. Field grown crowns usually produce bigger plants which can save the grower a year in growing time.

Soil And Situation: Medium loam pH 6.5, well drained

Cropping System: Asparagus is best planted on flat land or in a 50mm furrow and is earthed up in the dormant period. It is recommended that there should be 22,000 plants in a hectare

Planting: Early June

Spacing: Not considered to be too important. Tractor wheel centres often determine the spacing – row 1.5 m apart, 30 cm between crowns

Establishment costs:

£4,700/ha – field operations, plants and planting


It is best to keep perennial weeds away (especially creeping thistle and couch grass) as asparagus can be grown for up to ten years. Maintaining a good soil structure and building up a sufficient amount of soil organic matter before planting is recommended.

Harvest Period: End of April until the 21st of June - Harvesting 20 kg/hour, grading 60 kg/hour. 22 months after planting

Marketed Yield: 600 - 2000 kg/ha

Man Hours Per Ha:

Production, harvesting and grading/packing


Production* 4 5 6 1 - 1 20 20 - - - - 57

Harvesting/ packing*

- - - 100 200 200 - - - - - - 500

*Number of hours/ha

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3.2.2 Asparagus gross margin

This gross margin has been produced according to the production notes above, and details the costs for a fully-established asparagus crop to the point of sale. It does not include the cost of plants and ignores potential loss of other crop during establishment. It also does not include infrastructure costs such as cold storage.

Table 7. Asparagus gross margin


Crop sales - Direct farm (kg) 3,000 £6.50 £19,500

Crop sales - Wholesale (kg) 3,000 £2.50 £7,500

Variable costs

Production labour 57 £6.31 £360

Fertiliser £60

Spray program £150

Harvesting (hrs) 500 £6.31 £3,150

Packing and Carriage £1,510

Commission £600




Breakeven price /kg £1.74

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3.3 Baby leaf salad

Baby leaf salad is increasingly being chosen over traditional whole head salads by consumers both in supermarkets and direct farm sales. The cut-and-come-again nature of production teamed with successive plantings under protection can allow for all year round production. The margin has been produced for a bagged end product for retailers or sold via a veg box scheme, or to restarants or farm shops. To allow for production on more marginal soils, substrate was chosen which would suit small micro businesses.

3.3.1 Baby leaf salad production guide

Baby leaf salads can be produced either in the soil, in grow bags or in troughs using a soilless growing media such as peat or coir. Production can be outdoor or indoor, in heated or unheated glasshouses or polytunnels. The gross margin detailed below is for production in unheated polytunnels in a soilless growing media.

There are a huge range of leaves that can be included in this category including oriental brassicas, rocket, a number of lettuces, spinach and many others. Mixed seed is available but due to the spread in maturity and speed of growth it is better to grow single types and mix after harvest. Seed rates per unit area are available from seed suppliers and differ across the species. The main types grown are; lettuce, including Lolla Rossa, Oakleaf, Batavian and radicchio types, spinach, including chards, oriental brassicas and rockets.

Plants can either be directly sown or bought in from a propagator as module plants in peat blocks. Direct sowing is a cheaper but a less consistent option for some lettuce varieties where module plants are preferred. The brassica and spinach type baby leaves are better when sown directly.

The proportions and structure of the growing containers does not really matter as long as there is adequate depth and drainage, standard seed trays or troughs, recycled mushroom trays, hydroponic troughs, or even recycled guttering would be suitable. The growing media could be peat or coir-based and can be used more than once. Under protection i.e. in a polytunnel or glasshouse and if winters are not too severe, production can be all year round although growth will be slower through winter.

Fertiliser is normally contained within the substrate, pre-mixed prior to use and can be topped up with liquid feeds. A pesticide spray program will be tailored to site specific problems, which can include flea beetle, aphid and caterpillar. Slug control may also be required.

To harvest, the crop is normally cut and placed into polythene bags holding around 100g-450g depending on market requirements. Hand cutting with shears is used on small scale units in substrate, elevator cutters are generally used on larger areas and where production is in the soil, mechanisation bringing with it labour savings.

On a small scale it is better to sell ‘unwashed’ and to detail this on the label as this is a critical process and will need full HACCP analysis if done. Storage at 20C will prolong shelf life.

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Table 8. Baby leaf salad production notes

BABY LEAF SALAD – BAGGED

Varieties: Oriental brassica, rocket. Lettuce, spinach and many others

Soil And Situation: Substrate in various containers.

Cropping System: Crops sown on a continuity system, many are cut over 3 or more times

Spacing: As recommended by seed companies.

Further Information

Crops of this type are very intensive and the scale of growing can be very small

Harvest Period: All year

Marketed Yield: 9575 tonnes/Ha

Man Hours Per Ha:



Production* 13 13 13 13 13 13 13 13 13 13 13 13 160


329 329 329 329 329 329 329 329 329 329 329 329 3952

*Number of hours/ha

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3.3.2 Baby leaf salad gross margin

This gross margin has been produced according to the production notes above for a substrate grown baby leaf crop, hand harvested and not washed prior to bagging. Infrastructure costs, for example polytunnels, irrigation systems and cold storage are not included.

Table 9. Baby leaf salad gross margin



Crop sales – Wholesale (kg) 9,575 £4.90 £46,918

Variable costs

Seed/plants £7,484

Production Labour (hrs) 160 £7.00 £1,120

Growing media £1,000

Fertiliser £450

Spray program £120

Harvesting 3952 £7.00 £27,663


Commission £3,753



Gross margin - Wholesale £455


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3.4 Cauliflower

Cauliflower is already successfully grown in West Wales and would suit production in other parts of the country particularly in coastal regions. Outlets for small scale production would be to farm shops, veg box schemes and restaurants wanting to source local products. To achieve profits from wholesale or supermarket sales production would have to be on a large commercial scale and highly mechanised as cauliflower is very cheaply available from other parts of the UK.

3.4.1 Cauliflower production guide

Large-scale commercial cauliflower production is highly mechanised and grown exclusively from module-raised transplants sourced from a propagator. Planting is according to a schedule starting in February/March and continuing to late May. The earliest plantings are generally covered with plastic to protect and advance the crop. Harvest can also be extended through the winter with a combination of later varieties, planting dates and on sites with a climatic advantage such as in Pembrokeshire. In a mild winter cutting could be continued from October to the end of May allowing 12 month production. The gross margin detailed below, however, is for a traditional season crop.

Planting is usually by module planter or other tractor-mounted planting machine. On light soils irrigation is required for plant establishment. For smaller enterprises mechanisation of such processes is unlikely to be possible so labour costs are likely to be considerably higher.

Fertiliser needs to be specifically tailored to each crop but can be based on an N:P:K ratio of 20:10:10 at 600 kg/ha. A nitrogen top dressing is usually required. Weed control is very important and herbicide is applied after planting before weeds develop. Steerage hoes and gentle earthing up can also be done to provide some weed control and prevent wind rock.

Pest control is essential. Treatment for cabbage root fly, caterpillars and aphids should be routine. Diseases that affect cauliflower are clubroot, ringspot, Alternaria, light leaf spot along with downy and powdery mildews. Lime is essential to prevent clubroot, pH should be maintained at 6.5 as an absolute minimum. There is a wide range of fungicides to control leaf diseases and the requirement is prophylactic treatment at 2 week intervals, observing the harvest interval of the products used.

Harvesting is normally hand cutting individual heads onto a field harvesting rig for packing directly in the field.

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Table 10. Cauliflower production notes

CAULIFLOWER

Varieties: F1 hybrid varieties are industry standards, these combine both vigour with uniformity. The maturity date varies with variety and can be used to aid continuity of harvest.

Soil And Situation: Friable well drained well drained soil pH 6.5 – 7.0

Cropping System: Soil grown, module raised transplants

Sowing/planting Sow March/April, plant May/June

Spacing: 30 to 50 cm apart giving 37,500 heads/ha


Gross margin given per crate 1 crate usually comprising 12 harvested heads ~10kg

Harvest Period: July – Mid November

Marketed Yield: 1800 crates = 18 t/ha

Man Hours Per Ha:



Production* 5 - 35 2 3 3 2 - - - - - 50


- - - - - - 140 140 - - - - 280

*Number of hours/ha

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3.4.2 Cauliflower gross margin

This gross margin has been produced according to the production notes above, to sell to retailers or wholesale. The margins are exceptionally tight therefore production would need to be on a large mechanised scale to reduce labour costs and be economically viable.

Table 11. Cauliflower gross margin


Crop sales - Direct farm (crate) 1,800 £5.00 £9,000

Crop sales - Wholesale (crate) 1,800 £3.70 £6,660

Variable costs

Seed/plants £722

Mechanical operations £315

Fertiliser £450

Spray program £328

Harvest labour (hrs) 280 £6.31 £1,764


Commission £533



Gross margin - Wholesale £64

Breakeven price /crate £3.37

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3.5 Fresh cut herbs

Fresh cut herbs are allied to baby leaf salad as the system suits small, medium and large outfits; there are many market opportunities and crop options along with a good demand. It is perceived as a trendy market driven by use among celebrity chefs. Value can also be added by drying and supplying potted plants. To allow for the range, a perennial herb and an annual crop were selected.

3.5.1 Fresh cut herbs production guide

Fresh cut herb production can be carried out in polytunnels, glasshouses and outdoors. If efficiently managed, a small unit can be highly productive; for herbs a quarter of an acre is often perceived as a large unit. The gross margin detailed below is for fresh cut packets and bunches but there are equally good retail opportunities for potted herbs (either culinary or ornamental), dried products and for box schemes. For fresh cut the main markets are to restaurants, supermarkets, wholesale, farmers markets, direct retail and internet. Table 12 details the types of herbs which are suitable for production in Wales.

Table 12. Herb species with market potential in Wales

Herb Type of plant Season

Sage Perennial All year

Thyme Perennial All year

Rosemary Perennial All year

Mint Herbaceous April - Oct

Parsley Annual, may overwinter March – Oct

Coriander/Dill Annual Continuity April - Oct

Basil Half Hardy Annual May - Oct

Tarragon (French) Herbaceous Perennial May - Oct

Horseradish Perennial All year

Fennel Varies Depends on type

Annual Herbs:

For annual herbs coriander is very popular when sold in bunches. This needs to be drilled on a continuous basis. A good guide is to drill on emergence of the last crop. For seed rates consult seed suppliers. It is recommended that you use a precision drill, such as Stanhay, to ensure an even stand. Annual herbs like coriander are generally harvested in the field with the farm labour cutting bunches with knives and placing a rubber band around each. These are then placed into trays and cold stored to maintain freshness.

For soil production, weed control is very important to avoid competition and reduce grading costs. Fertiliser should be given as recommended from soil analysis as some pest and disease problems, such as aphid and leaf spots, may occur. Crops can sometimes be cut over twice and crops are usually repeated so potential yields could be higher than those stated in one year. It is recommended to start on a small scale and fully research what herbs are popular in your area, and at what times of the year, and not to increase production until markets can be built up.

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Table 13. Fresh cut annual herbs - production notes

FRESH CUT HERBS – Annual

Varieties: Coriander, Dill, Parsley, Basil

Soil And Situation: Well drained, perennial weed -free soil, tested for nutrients Some poly-tunnels may be useful

Cropping System: Bed type system is normal; bed width 1.2M or to suit tractors etc. Mostly direct drilled, some transplants

Spacing: Seed and planting rates vary with types grown.


May cut over on two or three occasions

Harvest Period: End of March until October, could be longer in tunnels

Marketed Yield: 6700 kg/ha

Man Hours Per Ha:



Production* - - 20 20 20 20 20 20 20 20 - - 160


- - 25 25 25 25 25 25 25 25 - - 200

*Number of hours/ha

Perennial Herbs:

Sage, rosemary and thyme are popular perennial herbs, which can also be sold in bunches or cellophane packs with potential for dried and pot production.

Perennial herbs are normally planted out as module plants from a propagator and can be planted through plastic mulches to aid weed control, which can be a problem in perennial crops. Crops may live for more than 12 months in mild winter areas and may be harvested for longer periods in favourable years. Christmas has good marketing potential for herbs but some protection may be required to ensure quality and continuity of supply.

Sage has been selected for the gross margin calculations as this can be grown at 12 -15000 plants/ha, often in three or four row beds. It is harvested by hand, cutting with secateurs, bunching with elastic bands and put into plastic trays, which can be reused. Some cutting back between harvests will help keep beds tidy and can be done mechanically. Initial sales are likely to be small as markets may take time to develop.

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Table 14. Fresh cut perennial herbs - production notes

FRESH CUT HERBS – perennial outdoor

Varieties: Sage, Thyme, Rosemary

Soil And Situation: Well drained soil, tested, no perennial weeds. Beds could be plastic mulch

Cropping System: Bed type system 1.2m or to suit tractor wheels, plants from modules

Spacing: 12 – 15,000 Ha, 3 or 4 rows per bed


Plants bought in from specialist propagators

Harvest Period: April to November may be longer in a mild year

Marketed Yield: 8 tonnes/ha

Man Hours Per Ha:



Production* 10 - 30 40 40 40 40 40 40 30 10 10 330


- - - 75 75 75 75 75 75 75 75 - 600

*Number of hours/ha

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3.5.2 Fresh cut herbs gross margin

This gross margin has been produced according to the production notes above. These are for fresh cut herbs - bunches and loose - for an annual coriander crop and a perennial sage crop growing in the soil outdoors or under an unheated polytunnel (polytunnel costs not included). It is important to note the margins are calculated on a per hectare basis. A tenth of a hectare would be more common for an herb enterprise therefore the margin value needs to be adjusted as such.

Table 15. Annual fresh cut herb (coriander) gross margin



Crop sales – Wholesale (kg) 6,700 £3.73 £24,991

Variable costs

Fertiliser £411

Spray programme £269

Seed/plants £250

Sundries £180

Production labour (hrs) 160 £7.00 £1,120


Packing and carriage £1,521

Commission £1,999




Breakeven price/kg £0.77

Table 16. Perennial fresh cut herb (sage) gross margin


Crop sales - Direct farm (kg) 8,000 £27 £216,000

Crop sales – Wholesale (kg) 8,000 £14 £112,000

Variable costs

Fertiliser £450

Spray programme £183

Seed/plants £4,200

Sundries £389

Production labour (hrs) 330 £7.00 £2,354


Packing and carriage £3,278

Commission £8,960





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3.6 Kale

Kale has potential in Wales with growing interest in bagged winter greens for their ease of use and nutritional benefits. Kale is available in a range of varieties and has an attractive crinkled leaf to add interest. The crop can be picked several times over removing outer leaves for bagging rather than harvesting whole heads. The crop is also grown for animal fodder so could be dual purpose, meaning less wastage.

3.6.1 Kale production guide

Kale is grown mainly from module raised transplants according to a schedule, with planting starting in February/March and continuing on to late May. Some kale crops are direct-drilled with a dual human consumption and grazing output.

More recent introductions, for example, Cavolo Nero and Black Russian types are becoming more popular with celebrity chefs. Nowadays, there is some stretching of the Kale definition to extend the season, blurring the distinction between Kale and Calabrese/broccoli. Harvesting normally starts in mid-June and continues to the following March/April when plants will run to seed.

Planting can be done by module planter or other tractor-mounted planting machines. On light soils irrigation maybe required for plant establishment.

Like cauliflower, fertiliser needs to be specifically tailored to each crop but can be based on a N:P:K ratio of 20:10:10 at 600 kg/ha with a nitrogen top dressing usually required. Weed control is very important and herbicide is applied after planting before weeds develop. Steerage hoes and gentle earthing up can be done to provide some weed control and prevent wind rock.

Pest control is essential. Treatment for cabbage root fly, caterpillars and aphids should be routine. Kale is particularly susceptible to white fly therefore treatment will be essential. Movento is the only effective product available. Diseases that affect Kale are clubroot, ringspot, Alternaria, light leaf spot and downy/powdery mildews. Lime is therefore essential to prevent clubroot, maintaining a pH of 6.5 as a minimum. There is a wide range of fungicides to control leaf diseases and the requirement is prophylactic treatment at two week intervals, observing the harvest interval of the products used.

Harvesting is normally by hand, cutting individual leaves with repeat cuts over an extended period. Whole heads can also be harvested but this will require repeat planting. The leaves can be bagged for direct sales or washed, chopped and bagged for supermarket. This gross margin assumes the leaves are bagged directly without further processing.

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Table 17. Kale production notes

KALE – PICK OVER

Varieties: Traditional varieties: Thousand Head and Pentland Brigg. Newer varieties include: Cavolo Nero, Black Russian and Bolshoi

Soil And Situation: Friable, well-drained soil, pH 6.5 – 7.0

Cropping System: Sow April – June, Transplant May – July. Suggested density 26,000 per hectare

Spacing: 30 to 50 cm apart


Kale is particularly susceptible to white fly therefore treatment is essential

Harvest Period: October – February

Marketed Yield: 20 t/ha

Man Hours Per Ha:



Production* - - 10 20 10 - - - - - - - 40

Harvesting/ packing

52 52 - - - - - - - 52 52 52 260

*Number of hours/ha

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Kale gross margin

This gross margin has been produced according to the production notes above, assuming continuous picking and bagging into 500g bags.

Table 18. Kale gross margin


Crop sales - Direct farm (t) 8 £3,000 £24,000

Crop sales – Wholesale (t) 8 £1,600 £12,800

Variable costs

Seed/plants £722

Fertiliser £550

Spray program £450



Packing and Carriage £950

Commission £1,024




Breakeven price /t £665

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3.7 Leeks

Traditional long-season leeks are a renowned Welsh crop already successfully grown on various scales. They are particularly interesting as there is a move to get PDO status on the Welsh Leek as used in the traditional Welsh dish Cawl. This could offer Welsh leeks a niche opportunity for a premium in supermarkets as well as greater direct farm sales. As with cauliflower, to achieve profits from wholesale or supermarket sales, production would have to be on a large, highly mechanised scale. Without such a premium, highly mechanised leeks are very cheaply available from other parts of the UK. Leeks have a long season of around 10-11 months with storage and, as leeks generally grow to a size and then remain at this size, they are perfect for farmers’ markets or as fillers for box schemes.

3.7.1 Leek production guide

Leeks are grown from either transplants or, more cheaply, from direct drilling. Weed control is much more of an issue with direct drilling than with leeks grown from transplants. Other advantages of planted leeks are that they look and generally taste better due to a deeper establishment and extended blanch. Marketing time often determines planting date but early leeks tend to go in during April, whereas winter leeks need to be in by the end of May. Module grown plants can be bought from propagators or can be produced by the grower if tunnels or glass houses are available. Plants take around six weeks to produce but growers can save themselves two weeks by using a germination cabinet (set at 23°C.)

Planting can be done by module planter or other tractor machines. Dibbing machines can also be used which punch holes in the soil, then the plants are dropped in. Plants are planted at 30 to 50 mm intervals. Watering just after planting will give plants quicker start.

A well-drained soil is required as vehicular access will be needed from October to April. Leeks respond well to lime and need a soil pH of 6.5 or above. Fertiliser needs to be specifically tailored to each crop but can be based on a N:P:K ratio of 20:10:10 at 600 kg/ha.

Weed control is very important in leeks so it is best to get an herbicide on before weeds develop. Steerage hoes and gentle earthing up can also be done to provide some weed control. Some skill is needed in choice of materials used for herbicide use as leeks can be sensitive to certain products. Rust can be a problem in autumn but by using a combination of fungicides and resistant varieties it can be kept under control. Rotations are also useful for controlling soil borne disease or root problems. Similar crops, such as garlic and onions, should be avoided from rotations.

Once leeks are ready they need lifting from the soil. They will have developed a big fibrous root meaning that they will normally require undercutting or forking to loosen them. Leeks are often lifted into field crates and moved to the packing shed. Roots can be trimmed and the yellow skins can be removed in the field. When leeks are grown on a larger scale, undercutters and top lifters are used along with a washing machine that also trims the roots and tops. This is not included in this margin.

Leeks are often sold in nets or in cardboard, waxed boxes, if they are going to market. Leeks can potentially be stored for a couple of months but a fresh-lifted leek is preferred.

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Table 19. Leek production notes

LEEKS – TRADITIONAL LONG SEASON

Varieties: King Richard - early leeks, Musselburgh and Winterreuzen types can cope better with colder weather. F1 hybrids are now available which combine both vigour with uniformity

Soil And Situation: Well drained, medium loam. Irrigation maybe required - Leeks require a well-drained soil as access will be needed from October to April.

Cropping System: Field grown, planted with module raised transplants from a plant raiser

Sowing and planting

Sow Jan/Feb, plant March/April

Spacing: 30 to 50 mm apart, population 110,000-200,000 plants /ha


Weed control is very important in leeks, some skill is needed in choice of materials used for herbicide use. Rust can be a problem in autumn but by using a combination of fungicides and resistant varieties it can be kept under control

Harvest Period: Late July-September

Marketed Yield: 20 t/ha

Man Hours Per Ha:



Production* - - 5 6 - - 20 80 15 - - - 126

Harvesting/ packing

90 100 100 110 - - - - - 50 50 60 560

*Number of hours/ha

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3.7.2 Leek gross margin

This gross margin has been produced according to the production notes above. To sell to retailers or wholesale, the margins are tight therefore production would need to be on a large, mechanised scale to be economically viable. Alternatively, a premium would need to be sought for Welsh leeks i.e. PDO.

Table 20. Leek gross margin


Crop sales - Direct farm /t 20 £1,000 £20,000

Crop sales - Wholesale /t 20 £500 £10,000

Variable costs

Seed/plants £600


Fertiliser £130

Spray program £400




Commission £800




Breakeven price/t £363

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3.8 Raspberries

Cane fruits are increasing in popularity with consumers as they are versatile and need minimal preparation before eating. They are also a healthy option as they are high in antioxidants and vitamins. Multiples are the main buyers but other markets include; PYO, farm shop and farmers’ markets. Surplus product can also be frozen down for future value-added production such as jams and coulis or simply sold as a frozen ready-to-use product.

3.8.1 Raspberry production guide

Cane fruits are very sensitive to poor drainage so serious consideration of the site is needed. Ideally soils should be of a sandy loam or lighter texture. Soil analysis is vital to adjust nutrition pre-planting but also to check for diseases such as verticillium wilt. Counts of free-living nematodes are also useful to support management options. Substrate production in pots is an option on more marginal sites. There is a range of raspberry types (summer and autumn fruiters) and planting material available to growers depending on situation and requirements, including modules, long cane and root. Planting a range of varieties will extend the harvest period. Planting is carried out by hand and best results generally come from March plantings. Once planted the canes will begin to throw young shoots. These will need tying in so a post and wire system is needed, at the latest in the September following planting. Posts are braced at each end and usually go in at 20 m intervals, closer on windy sites. Wires are stretched between the posts at 0.7 m and 1.5 m to which canes are tied Irrigation and feeding in the form of a trickle tape will give better yields. Canes will generally require irrigation from early flower to the end of harvest to maintain quality and yield, with a general rule of 25 mm water/week. Most UK supermarket production is now tunnelled so if you are considering that market plan for three rows in an 8 m tunnel. Tunnels either go on in March for early crops or pre-harvest on main season and autumn fruiters for rain protection. This has not been included in the gross margin calculation. A good plantation will produce 12 tonnes/ha but the range is 2.5-15 so it is easy to see the value of good husbandry. Prices range from £3-7 per kg depending on markets. Plantations should be in full pick by year three and a good plantation should last 10-12 years. Harvesting is generally by hand into 200g punnets and an efficient cool chain process will ensure fruit quality.

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Table 21. Raspberry production notes

RASPBERRIES

Varieties: Glen Ample early-mid followed by Tulameen as a late mid with Octavia finishing as a late. Marketing groups such as Berry Gardens have their own varieties not available to other growers.

Autumn fruiters or primocane varieties include Polka, Autumn Treasure, Himbo Top, and Joan Squire.

Soil And Situation: A deep well drained medium loam - sandy loam or lighter texture but heavier soils can be successful with special care

Cropping System: Soil grown with a simple post and wire trellis system – Canes planted in a single row

Spacing: 3.5 m between rows and 0.45 m down row giving 6350 plants per Ha

Planting: Any time between November and March under suitable soil conditions

Establishment costs/ha (not

included in GM):

Year 1 - Canes £3,500, Sundries (posts and wire, grass sward etc.,) £2,200, £1000 for irrigation equipment and hook up, Labour £424. Spanish tunnel £28,000. Crop inputs £750 per year. 3 years to full crop

Infrastructure costs (not included

in GM):

Raspberries require rapid chilling post-harvest to avoid rots and to maintain quality therefore adequate cold storage is required


Good drainage is essential, best results are from March plantings. It is important to test soils prior to planting for soil-borne diseases

Harvest Period: June – November with a range of varieties

Marketed Yield: 2.5 – 15 t/ha, 8 t/ha used in gross margin

Man Hours Per Ha:


Picking (4kg/hr)


Production* - 2 2 24 20 2 - - 100 100 - - 250


- - - - - - 1000 500 - - - - 1500

*Number of hours/ha

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3.8.2 Raspberry gross margin

This gross margin has been produced according to the production notes above for a summer fruiting crop. It details the costs for a fully-established, outdoor, soil-grown plantation, but does not include establishment or equipment costs and ignores crop loss of land in the three years it takes a raspberry crop to establish.

Table 22. Raspberry gross margin



Crop sales – Wholesale (t) 8 £4,000 £32,000

Variable costs

Fertiliser £300

Spray program £500

Mechanical Operations £300


Harvest Labour (hrs) 1500 £6.31 £9,465


Commission £2,560




Breakeven price /t £3,048

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3.9 Garden or Green-Pull Rhubarb

Garden or green pulled rhubarb can be grown with very low inputs and has good retail potential both through direct farm sales and to supermarket retailers. The crop has few pests and diseases and own stock can be used for propagation. With suitable management it will harvest from March to October and has the added option for indoor forcing from December to March.

3.9.1 Rhubarb production guide

Rhubarb has a justified reputation for growing on a wide range of soil textures and conditions. Some of the more temperate Welsh coastal sites around Pembrokeshire and the Llyn peninsular would be good for early pulling and could be harvested as early as late February in a good year

Perennial weeds are a problem in rhubarb and every effort has to be made to clear up the weed prior to planting, ideally you would want to plant rhubarb after an arable crop. Rhubarb is a good competitive crop with a dormant season so annual weed control is simpler than with some perennial crops. Unfortunately as it is a minor crop, there are limited herbicide options available.

The field will need liming up to a pH of 7.0 as rhubarb does not like acidity and, as with any perennial crop, it is difficult if not impossible to rectify low pH later on in the plantation’s life. Annual or two yearly soil analysis is recommended so pH decline can be spotted and addressed immediately.

Planting should be carried out when the plants are dormant. The ‘sets’ are ideally large chunks of the original plant or ‘crown’ and should have at least one good bud showing. The base of this bud should be under the soil with the top just showing.

Rhubarb is a gross feeding crop and is very responsive to fertiliser. Soil analysis should be carried out and nutrient indices maintained. As rhubarb is pulled more nitrogen is given to restore the growth and up to 150 kg/Ha is applied once pulling is completed.

Normally the crop can be pulled in the second year after planting but if there are any signs of weakness try and find out why, and rectify it before harvesting further to allow reserves to be built up. If all goes well then pulling can begin and should keep on going for another five to six years. Signs of decline are diminishing yields and a high count of thin and weak sticks. Heavily pulled or older crops are seldom useful for forcing but may be used for propagation i.e. dug up and split to create the sets for the next planting.

To supply continuous crops of good quality rhubarb it is likely that irrigation will be needed. Overhead water or trickle irrigation is suitable. Without irrigation the crops continually pulled are likely to become dormant earlier and the pulling season will be shortened, with more of a gap in the autumn season. The yield will also be reduced as will the quality.

Outdoor rhubarb is harvested by hand by carefully pulling to detach the petiole or stem without either snapping it or squeezing it, causing bruising. Any surplus is stripped off the bottom and the leaf area is usually removed by knife to give a tidy triangle.

The crop may be further graded in the pack house and put into a supermarket-type, lined, returnable crate or, for wholesale markets a second-hand cardboard box is often used. In this case, establishing a brand label may help with repeat sales. The harvested crop should be kept cool at around 10C.

Forcing the crop provides a value added option for production but has not been included in this analysis.

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Table 23. Rhubarb production notes

RHUBARB GARDEN OR GREEN PULLED

Varieties: The Sutton, Timperley Delight, Stockbridge Arrow and Reed’s Early Superb

Soil And Situation: Good moisture retention with freedom from waterlogging

Cropping System: Single harvest

Spacing: 92 cm x 76 cm giving 14.300 plants/ha

Further Information: Perennial weeds are a problem in rhubarb and every effort has to be made to clear up the weed prior to planting, ideally follow an arable crop. Herbicides are applied in the autumn and winter to control weeds in dormant crops

Establishment costs (not included

in GM):

Establishment costs - £7000 - £14000 / Ha for plants and £1600 for production labour, you should be able to take a crop in year 2 and a plantation can last for 5 to 6 years

Harvest Period: Normally late May-early June

Marketed Yield: 30 tonne/ha (range 25-40 tonne/ha)

Man Hours Per Ha: Production, harvesting and grading/packing


Production* - 3 - - - - - - - - 3 - 6

Harvesting / packing*

- - - - 173 173 - - - - - - 346

*Number of hours/ha

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3.9.1 Rhubarb gross margin

This gross margin has been produced according to the production notes above, and details the costs for a fully-established rhubarb crop excluding establishment costs and ignores crop loss of land in the two years it takes a rhubarb crop to establish

Table 24. Rhubarb gross margin


Crop sales – Direct farm (t) 30 £500 £15,000

Crop sales - Wholesale (t) 30 £300 £9,000

Variable costs


Fertiliser £500

Spray program £250



Commission £720



Gross margin – Wholesale £1,475

Break-even price /t £227

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3.10 Strawberries

Protected table-top strawberry production under Spanish polytunnels is a high value crop with potential for both the retail and the direct farm sales market. The table-top polytunnel system removes any difficulty with soil type or quality and ensures even production and ease of picking. It also provides a contrast to the low input raspberry system. Again this technique has potential for direct retail with possible expansion into supermarket supply.

3.10.1 Strawberry production guide

Commercial strawberry production is increasingly grown in Spanish tunnels in table-top substrate systems. This has seen an increase in popularity due to ease of picking and consistent cropping, plus it enables manipulation of the growing season through planting and fleecing crops, allowing crops to be grown from late May to November if desired.

Crops are grown in polytunnels, either Spanish or fixed, to increase yields and prevent rain from spoiling a crop. The tunnels normally contain five rows of strawberries grown in bags or troughs filled with coco peat (coir) substrate raised to approximately 1.5 m on a metal post and gutter system. The plants are trickle fertigated i.e. liquid-fed through the irrigation lines at each irrigation event in order to maintain adequate salt levels in the growing medium. Grass, bare soil or groundcover membrane is maintained beneath the rows.

Strawberries come in two main types; June bearers (JB) and everbearers (EB). JB varieties, with a range of techniques, will fruit from May until July, and EB types from June to November with a combination of forcing and delaying. Cold-stored plants cropping 60 days after planting can be used to fill gaps in production. As with raspberries, most supermarket production is protected.

Plants can be sourced as cold-stored runners or tray plants. Planting will be carefully scheduled but usually occurs in spring and summer. June bearers will crop for up to three years productively. Everbearers are increasingly being grown as annual crops due to issues with Western Flower Thrips.

Pest control is increasingly being managed through introductions of biological control agents such as predatory insects. This represents a significant labour increase for their application but is required as certain insects are now resistant to all available insecticides and there is increasing pressure from retailers for pesticide residue reduction.

Substrate production should avoid issues with soil borne pathogens as long as certified clean planting material is sourced. Pests and certain diseases, such as powdery mildew, are more prevalent in a tunnelled environment, so polytunnels need careful venting to avoid a build-up of excess humidity and extremes of temperature. Venting teams also incur significant labour costs.

The crop is harvested by hand into 250g or 400g punnets. An efficient cool chain process will ensure fruit quality.

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Table 25. Strawberry production notes

STRAWBERRIES – PROTECTED TABLE TOP PRODUCTION

Varieties: Elsanta, Vibrant or Sonata

Soil And Situation: Coir based growing media in bags

Cropping System: Table top structures, in Spanish polytunnels

Spacing: 10 plants per 1 m bag, 5 rows per tunnel

Infrastructure costs (Not included in

GM):

Estimated at: £37,500 for the table top structures, £9,400 for the grow bags (3 year life), £1000 for irrigation equipment and hook up and an estimated £28,000 for a Spanish tunnel per ha assuming 6250 m of table top. Cold storage and staff accommodation will also be required

Planting: Cold stored runners ideally before mid-August for full main season crop in following year


Much of strawberry pest control is now achieved with biological agents. These have been included in the spray program costs

Harvest Period: June – July. Fruit needs picking at least 3 times and week more frequently under warm conditions

Marketed Yield: 20 t/ha – 350g per plant

Man Hours Per Ha:



Production* - 10 30 30 120 - - 60 30 30 - - 310

Harvesting/ packing

- - - - - 800 200 - - - - - 1000

*Number of hours/ha

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3.10.2 Strawberry gross margin

This gross margin has been produced according to the production notes above. It details the costs for a table top crop of a main season June bearer crop. It does not include infrastructure costs such as the tunnels, table top structure, irrigation system, cold storage requirements and staff accommodation.

Table 26. Strawberry gross margin



Crop sales - Wholesale (t) 20 £2,500 £50,000

Variable costs

Plants £15,625


Fertiliser £200

Spray program £800

Harvest labour 1000 £6.31 £6,310


Commission £4,000




Breakeven price /t £2,025

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3.11 Fixed costs

Table 27 details some costs which may be useful to growers and farmers when looking into horticultural diversification and which should be considered when looking at crop gross margins. All costs are exclusive of VAT.

Table 27. Example fixed costs and assumed values used in calculations

Activity/Equipment Cost

Labour minimum wage*12 £6.31/hr

Average labour cost including supervision £7.00/hr

Skilled labour (handling machinery/ team leader) *

£8.00/hr

Spanish Tunnel /ha (structure 10 year life span, polythene 3 year life span)

£28,000/ Ha

Table-top structure/ha (10 year life span) £37,500/Ha

Fixed tunnel /M2 doors and wind up sides £27.00 m2

Juicing equipment £3000 upwards

Irrigation/ha (drip for soft fruit) excluding fertigation rig and scheduling equipment

£1,000/Ha

Field veg irrigation system, assumes reservoir in place

£1,200-£2,300 /ha

Tractor 110 horse power initial cost* £50,500

Tractor yearly cost (inc. depreciation, insurance, repairs and maintenance, fuel and oil)*

£10,119/yr

Cold storage - could be a second hand refrigerated van

£2000

Precision drill e.g. Stanhay 2nd hand £500

Staff accommodation costs per person Usually 7 per static caravan paying £20 -25 rent per week

£2,500 for delivered static caravan, plus electric, plumbing and planning

Average land price/ha * £22,105

Average land rent/ha * £309

Basic insurance (including public liability) 13 £1500-£2000 pa

Business rates or Non Domestic Rates (NDR) are charges on non-domestic properties for local services such as refuse collection and sewerage.14

Your business rate is calculated by taking the Ratable Value (RV) of your property and multiplying it by the current non domestic

12 * Nix J. (2013) John Nix Farm Management Pocket book, 44th edition 2014

13 Estimate from NFU mutual 17th June 2014 very rough estimate of basic insurance requirements to include employer liability, property, machinery and public liability. Please note for farm shops or PYO enterprises public liability is likely to be more due to the presence of public on site, Insurance is calculated on a site by site basis and this figure is only a very rough guide.

14 http://business.wales.gov.uk/running-business/tax-corporation-tax-allowances-business-rates-vat/business-rates-relief-in-wales accesses 17th June 2014

http://business.wales.gov.uk/running-business/tax-corporation-tax-allowances-business-rates-vat/business-rates-relief-in-wales


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Activity/Equipment Cost

rates "multiplier" Currently set at 0.47 (June 2014). Small businesses may be eligible for business rates relief. For more information visit business.wales.gov.uk

National Insurance (self-employed class 4)* 9% on profits between 7,956 and 41,865 and 2 % on profits over £41,865

Other taxes See John Nix for further details*

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4 Gross Margin calculator

To produce the gross margins detailed above, an Excel-based calculator was set up to allow manipulation of the variable costs and enable the creation of margins relevant to Wales. This calculator has been refined further into a tool which will hopefully be of use to farmers and growers. By manipulating the variable costs, changing the cropping area and inputting actual yields the tool uses the basic gross margin data sitting behind the project gross margins to create a more tailored gross margin, allowing growers to have a good understanding of what needs to be achieved to make diversification or expansion profitable.

The tool allows for two different calculations;

1. Quick calculation – this uses the data held within the spreadsheet utilised for the projected gross margin and just allows alteration to the area under production, the price, or the yield, to give an immediate gross margin based on the projected assumptions.

2. Detailed calculation – This allows the farmer or grower to input their specific variable costs under each of the headings for example; harvest labour, plant or fertiliser costs along with expected yields, farmed area etc. to allow them for example, to see what price is required to break even according to their specific system.

Figure 1. Screen shot of the Excel gross margin tool for asparagus

The tool is simplistic and gross margins will differ from season to season. Therefore the gross margins produced using this tool should be interpreted with caution and used only as a guide for early investigations into diversification. Farmers and growers are advised to seek further advice and support for more detailed business plans and appraisals.

Quick calculator – alter the text in blue according to grower/farmer enterprise data on area, yield or price to get a simple gross margin here.

Detailed calculation – Input figures into the white boxes relating to specific farm data on labour and variable costs, to create a more robust and farm-specific gross margin and breakeven price.

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5 Considerations

The gross margins detailed, and the associated production guides, should enable farmers and growers to better understand the profit potential of these 10 horticultural enterprises. The gross margins should be used with caution as they refer directly to the cropping situations detailed in the production notes and expert opinion, gleaned from various industry sources to provide a base line approximation. Gross margins will vary widely for individual crops between farms, between years and even between individual fields. For detailed business appraisals tailored to a specific holding and situation, farmers and growers should seek expert advice.

5.1 Suggestions for further work

Research and create gross margins for organic production systems for the same

or further crops and develop an organic version of the gross margin calculator

tool

Create gross margins for further fruit and vegetable crops include but also include

ornamental plant production

Look at specific diversification opportunities e.g. energy/food hubs - protected

crop production e.g. tomatoes, cucumbers, peppers linked with energy or heat

production, anaerobic digestion or other associated industry.

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References

Business Wales website http://business.wales.gov.uk/running-business/tax-corporation-tax-allowances-business-rates-vat/business-rates-relief-in-wales accesses 17th June 2014

Defra Basic horticultural statistics 2013, Updated 31 July 2013 https://www.gov.uk/government/publications/basic-horticultural-statistics

DEFRA Fertiliser manual RB209 8th edition June 2010

Ecological Land Cooperative Ltd. (2011) Small is Successful Creating sustainable livelihoods on ten acres or less, Ecological Land Cooperative Ltd.

Frost D. (2006), Exotic Mushroom Trials 2005-06 Undertaken for Centre For Alternative Land Use under the Farming Connect Scheme

Frost D., Creed C., Turner S. and van Diepen P.ADAS Wales (2007) Increasing The Product Range Of Welsh Grown Vegetables. CALU Farming connect

Frost D., Holmes M., Francis F., Hughes G, Simkin M., Skidmore D., Prof Edwards-Jones G., Buckler K., (2006) Investment Opportunities in the Welsh Horticultural Processing Sector. Centre for Alternative Land Use Report

Menterra Exotic Mushroom Project. Report available at www.economigwynedd.info/download.ashx

NFU mutual call 17th June 2014 estimate of basic insurance requirements to include employer liability, property, machinery and public liability.

Nix J. (2013) John Nix Farm Management Pocket book, 44th edition 2014.

Policy and Economics Division CAP Reform FAQs v2 accessed April 2014 - www.dardni.gov.uk/cap-reform-political-deal-faq2.pdf

Red tractor assurance – Fresh produce crop protocols www.assurance.redtractor.org.uk/rtassurance/schemes/resources/protocols.eb

Wales Tourist Board (undated) The size, characteristics and prospects for the farm tourism Sector

Wales Visitor Survey (2009), Day Visitors Report, Visit Wales



https://www.gov.uk/government/publications/basic-horticultural-statistics

http://www.economigwynedd.info/download.ashx

http://www.dardni.gov.uk/cap-reform-political-deal-faq2.pdf

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Acknowledgements

ADAS UK Ltd. would like to thank all the grower and industry contacts who have provided information to support the development of the gross margins, and validate the tool.

John Birkenshaw for his assistance with the vegetable margins

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