Economics and HLB

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
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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
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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
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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?
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5. NPV AssumptionsNPV Assumptions
• Annual production cost difference: $255/acAnnual production cost difference: $255/ac
– Alt. Foliar Nutritional: $1,510
– Std. Tree Removal: $1,255
• Natural tree loss rate of 2% annually
• 10 year planning horizon, constant fruit pricesy p g , p
• 10% discount rate
• HLB starts when trees are 8 years (mature)HLB starts when trees are 8 years (mature)
• No resets
• Yields of infected trees maintained by Foliar programYields of infected trees maintained by Foliar program
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6. Initial Production:
150 tree/ac
3.5 bx/tree
($/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. 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.
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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?
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