Should Avocado Growers Consider

A “Nursery Cooperative”?

 

Reuben Hofshi

Del Rey Avocado, Fallbrook, CA

 

 

Editor’s Note:  The following article is written by Reuben Hofshi, a California avocado grower, and it provides his suggestion on how to produce a less expensive clonal avocado tree if a grower wished to grow their own.  This article is presented in order to encourage discussion on the topic of how the industry can increase profitability.  Comments are encouraged from readers.  This article does not necessarily reflect the views of  UC, CAC, CAS or CRB.

 

California avocado growers, in the last few years, have enjoyed a relatively stable market and record returns for their fruit.  However, things have been changing rapidly on many fronts, which affect the potential for future profits.  This paper provides a possible solution that can help growers cope with an uncertain economic future.  On the economic front, avocado imports will continue to increase and will attain an international commodity value.  This value will be determined by worldwide supply-demand and by the minimum price the dominating supplier of avocados to the international trade will be willing to accept.  Our foreign competitors can produce avocados for a fraction of our cost, and can afford to sell them at prices below commercial profitability to California growers.  This makes it difficult for California to compete in the international market.

 

On the pest front, new pests such as the avocado thrips and the Persea mite are more than a challenge.  Adequate control of these pests is difficult at best.  Many groves are planted on rough, steep terrain.  Options for effective chemical control on steep terrain or on the urban interface are few.  The extremely limited arsenal of pesticides coupled with the availability of helicopters and other spray equipment also restricts the industry.  Finally, biological control of these pests has not been achieved yet, although a search for effective biological control agents is currently being conducted.

 

On the cultural front, trees are getting older, less productive and are producing smaller fruit.  Harvesting costs have skyrocketed to as much as 10 - 12 cents per pound.  A qualified, documented work force is in short supply.  As these workers retire, the replacement avocado picker is likely to be young, inexperienced and possibly undocumented.  Water costs are very high, drought conditions are likely to return, and adequate water availability is not a given, at any price.

 

It is this author’s opinion that the future survivors of the California avocado industry will need to adopt a different means to farm more efficiently, reduce costs, and produce more fruit.  Although cost reduction of harvesting, spraying, irrigating and fertilizing is very important, it is limited in magnitude.  Producing more fruit per acre is the most likely means to compete with low value foreign imports.  We have to learn to sell the fruit for less than customary, and still remain profitable.  This is not achievable with a sustained industry average yield over the last 10 years of 4,905 lbs. per acre (CAC, 1998 Annual Report, Industry Statistics).

 

One strategy to significantly increase productivity is through high-density planting.  Tree cost is one of the main limiting factors for planting in ultra-high densities.  Growers who would like to try planting avocados in high-densities will need affordable trees to minimize the financial burden.  Unless grafted clonal trees become available for less than $10 per tree, growers will have difficulty implementing a planting strategy as described in the previous article.  An alternative solution is for growers to form a nursery cooperative to produce their own quality trees, rapidly and relatively inexpensively.

 

In order to discuss the components of nursery production and their associated costs, a brief description of the avocado clonal propagation process is necessary.  Avocado trees, prior to developing the clonal propagation method, were grafted on seedling rootstocks.  Mexican seedlings such as ‘Topa Topa’ and ‘Zutano’ were mostly used, although Guatemalan race seedlings such as ‘Nabal’ and ‘Reed’ and the West Indian-Guatemalan hybrid ‘Lula’ were also used.

 

As Phytophthora root rot became widespread, the search for tolerant and resistant rootstocks became the major focus of avocado research.  It was recognized that in order to make an exact copy, duplicates of a potential root rot resistant tree were necessary.  Since the avocado does not lend itself successfully to propagation by cuttings or air layering, a cloning method needed to be found.  Additionally, clonal trees are uniform in growth habit, and can enhance productivity by reducing the chance for poor producing trees.  In 1972 E. F. Frolich, from UCLA, published his work on his etiolation method.  This was the needed breakthrough for the successful commercial cloning of avocados.

 

The cloning process begins with the planting of an avocado seed in a container to serve as a nurse for the future rootstock.  Once the seedling reaches adequate girth, a selected rootstock scion is grafted and is left to develop.  One bud is selected, and after a relatively short period it is placed in a dark room, usually on a table with a dark plastic cover and equipped with an air-circulating fan.  The shoot is permitted to grow chlorophyll free, etiolate, and it is removed from the chamber when the shoot is between 8 to 12 inches tall.  Etiolation encourages accumulation of auxins and other growth promoting hormones, which are unstable in the presence of light.  A portion of the new stem adjacent to the bud union, which is tender and more readily rooted, is covered with sterile rooting medium.  This is accomplished either in a second container, placed on top of the original container, or by filling the part of the planting sleeve that previously was folded down and not used.  If adventitious roots develop successfully, the nurse seed is severed from the rooting stem, and the newly rooted shoot is given time to develop under humid conditions.  Once the plant hardens off, it is grafted to the preferred variety and left to develop in a 3-5 gallon container or sleeve.  W. H. Brokaw improved this process with the addition of a loosely clamped metal ring placed just above the bud union.  The ring eventually severs the nurse seed from the developing clonal rootstock.

 

R. Hofshi reported a different method of cloning avocados in 1996 (“Clone your own avocado at home”, Subtropical Fruit News 4(2): 4-6).  This method appeared to be more efficient and less expensive than the method currently practiced in California.  It is a variation of a commercial technique practiced by André Ernst, a nurseryman in South Africa (personal communication).  Since that article was published, failures and less than optimal results necessitated improvements in that process.  The success rate has increased dramatically and the process is now streamlined in its entirety.  A clonal tree is produced which is surviving solely on its own root system (without a nurse seed attached).  Additionally, a non-clonal seedling, as a by-product, can also be produced.

 

In this cloning method, the seed is planted in a 12 oz. cup, and the emerged plant is grafted and etiolated as described above.  When the etiolated plant is removed from the dark chamber, a thin bamboo stake is embedded in the cup and placed alongside the shoot.  A point about 3 to 4 inches above the graft is selected, the shoot is carefully wounded with a razor blade on two sides, and 1% IBA powder is applied to the cut area.  A 6-ounce clear plastic cup was previously prepared by slicing the cup with a knife on one side from top to bottom.  The cut continues to the center of the bottom of the cup, where a pencil-wide hole is made.  The cup is placed over the shoot, with the stem fitting through the hole and the wounded part of the stem located about a quarter of the way below the top of the cup.  The cup is taped to the stake with masking tape, and then filled with sterile rooting mix.  The entire setup is placed on a propagation table to develop.  In about a month, there is a full complement of well-developed adventitious roots.  The roots become visible through the cup and when the stem thickens, it is grafted to the desired variety while still attached to the nurse seed.  Once the graft develops new growth, the plant is severed at the bottom of the cup, and the newly grafted cloned plants are placed on a heated misting table for further growth.  The remaining nurse plant (the nurse seed and the grafted rootstock) can now be grafted to function as a seedling plant.  If the process is started early in the year and budwood is available when needed, it is possible to reuse the existing grafted nurse seed, allowing the rootstock scion to regrow, and the whole process of etiolation etc., could be repeated again.

 

The establishment, cost, and benefits of a nursery cooperative

 

A group of growers, with a common need for a large number of trees, can pull together their resources and produce their own trees.  As an illustration, we can look at 200 acres planted to a density of 435 to 733 trees per acre as described in the preceding article on high-density plantings.   This will require 87,000 to 146,600 trees, respectively.  The current commercial cost of non-patented varieties on Duke 7 rootstock, for example, is approximately $15 per tree.  For a 200 acre planting to high-density the total cost for trees will be $1,305,000 and $2,190,000, respectively.  Commercial nurseries require a $5 deposit for all clonal trees ordered and a deposit of $435,000 to $733,000 would be required.  It takes approximately 18 months from date of order to tree delivery.  At 6%, without accrued interest, there would be an added cost of $39,150 to $65,970 in lost interest, respectively.

 

The proposal put forth is that growers investigate the potential of a nursery cooperative as an alternative source of avocado trees.  The seed money would be the equivalent of the deposit for trees. There are a number of costs associated with this potential venture that will be outlined in the following paragraphs.  This is intended to be the basis for a discussion.  The projected costs are based on a smaller scale operation (approximately 40,000 clonal trees produced annually) and, therefore, the actual costs of a large-scale operation may be different from this model.  The figures used below are based on expenses in 1999 dollars.  Additionally, these costs would vary depending on site-specific circumstances.

 

The projected fixed costs would be:

 

1.  Land - $20,000/acre.  Total cost is $60,000.  Land has been previously cleared and leveled for building.

2.  A half-acre greenhouse delivered and installed $40,000.  This cost includes labor, equipment rental, and permits.  An alternative would be to lease a suitable greenhouse with land, thereby lowering the initial cost.

3.  Interior tables with heaters, foggers and an electronic greenhouse management system: $100,000.  (About 150 tables that can handle 1,250 plants each for the nurse plants and the young clonal plants.  Six etiolation tables could handle 7,500 plants and any propagation table could be easily converted to an etiolation table, if necessary.) This cost includes others costs such as property tax and property insurance.

4.  Additional items such as shadecloth, irrigation and a tractor are listed in Table 1.

 

 

 

 

 

 

 

 

 

 

 

 

Production costs for 100,000 initial plants would be:

 

5.  Two grafts per plant at $0.35 per graft (100,000 plants x 2 grafts x $0.35 = $70,000).

6.  Seeds, cups, bamboo stakes, sterilized soil mix, containers, fertilizer, pesticides, etc. at $1.50 per plant: $150,000.

7.  Water and power at $0.20 per plant: $20,000.

8.  Two full-time nursery workers at $25,000 per year each: $50,000 (benefits included).  Nursery workers are responsible for all operations such as planting, caring for the plants at all stages, as well as general maintenance of the greenhouse.  A professional grafter, under contract for guaranteed results, performs all grafting.

 

The total cash outlay for an operation that will produce approximately 87,000 ready-to-plant clonal plants (assuming an 87% success rate which is reasonable based on our experience) if everything is paid for up front is presented in Table 1. These costs are based on a grower owned operation in Southern California.  The figures are rounded up to minimize underestimating costs.  Additional costs may come from the need for accounting and supervision.  In this scenario, management fees for the greenhouse operations are not a factor since the grafting contractor requires specific care, which he makes sure, is followed by the greenhouse employees.

 

The total cost per ready-to-plant clonal tree with the operation fully paid is $6.21 when 87,000 clonal trees are produced.  If 146,600 clonal trees are produced one will need 168,500 initial seeds and the cost will be $5.15 per clonal tree.  (This assumes relative costs for all expenses except labor that is increased by two more employees at $25,000 each).

 

The investment and production costs can be viewed differently.  If the fixed cost is amortized over 10 years, and the interest saved pays for cost of living increases, then the corresponding yearly fixed cost is $25,000.  Adding the actual expenses for growing the trees will bring the total cost of producing grafted clonal trees to $315,000 for 87,000 trees, and $529,400 for 146,600 trees, or $3.62 per tree (Patent fees are not included).  Adding unforeseen costs, quality clonal avocado trees could be produced for less than $4.00 per tree.

 

The added fringe benefits for producing trees under a “cooperative” venture include:

 

1.  The ability to plant high-density trees at a cost very similar to conventional planting.

2.  Selection of only the best trees.

3.  Trees, which failed the first graft, are identified and distributed separately.

4.  Trees could be trained at the nursery level, as recommended by all persons advocating high-density planting, particularly single leader or a similar approach (P. Stassen, G. Martin).

5.  Potential for as many non-clonal grafted seedlings as desired for about $2.00 per tree.  These trees could be used in a high-density planting scheme, which includes tree removal at a certain age.  The trees scheduled for removal could be on seedling rootstock, providing Phytophthora root rot is not a problem.

6.  Having such a competitive advantage may bring commercial nurseries to lower the price for their clonal trees to the rest of the industry.

 

Cooperatives are as good as their members, collective motivation and the drive and leadership of their managing director.  Surely, the quality of the trees and the tremendous savings, coupled with the benefits of high-density plantings are good reasons for serious growers of the future to consider this option.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reuben Hofshi’s article “Should Avocado Growers…”, Table 1.