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Evaluation of Economic Efficiency of Apple Orchard Investments

Author

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  • Dorin Badiu

    () (Department of Horticulture and Landscape Architecture, University of Agricultural Sciences and Veterinary Medicine Cluj-Napoca, 3-5 Manastur Street, 400372 Cluj-Napoca, Romania
    These authors contributed equally to this work.)

  • Felix H. Arion

    () (Department of Economic Sciences, University of Agricultural Sciences and Veterinary Medicine Cluj-Napoca, 3-5 Manastur Street, 400372 Cluj-Napoca, Romania
    These authors contributed equally to this work.)

  • Iulia C. Muresan

    () (Department of Economic Sciences, University of Agricultural Sciences and Veterinary Medicine Cluj-Napoca, 3-5 Manastur Street, 400372 Cluj-Napoca, Romania
    These authors contributed equally to this work.)

  • Ramona Lile

    () (Department of Economics, Faculty of Economic Sciences, "Aurel Vlaicu" University of Arad, 77 Bdul. Revolutiei, 310130 Arad, Romania
    These authors contributed equally to this work.)

  • Viorel Mitre

    () (Department of Horticulture and Landscape Architecture, University of Agricultural Sciences and Veterinary Medicine Cluj-Napoca, 3-5 Manastur Street, 400372 Cluj-Napoca, Romania
    These authors contributed equally to this work.)

Abstract

The tree-growing sector is considered to be an important supplier of food and raw material for industry worldwide. Increasingly competitive decisions regarding international investment in orchards depend on business analysis. This study compares three apple orchards situated in Cluj-Napoca, on the Eastern limits of the Transylvanian Plain, Romania. While the climatic and soil conditions are relatively consistent among the three orchards, the technical and economic results (expressed in hectares) vary due to the use of three different technological systems of apple production: extensive, intensive, and super-intensive. The study compares the life cycle, starting with age of fructification, production level (quantity and quality), costs (investment and production costs—divided into material costs, mechanical costs, human costs, and overhead costs), income, profit (including rate of profit), and investment efficiency: Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period (PP). It was observed that the most economically efficient technological system in terms of investments is the super-intensive one, with a higher production level, a higher share of Extra Class apples, and a younger age of initial fructification. However certain inconveniences of this system—such as a more expensive investment, a higher cost of running the business throughout the year, and a reduced life cycle—cannot be ignored.

Suggested Citation

  • Dorin Badiu & Felix H. Arion & Iulia C. Muresan & Ramona Lile & Viorel Mitre, 2015. "Evaluation of Economic Efficiency of Apple Orchard Investments," Sustainability, MDPI, Open Access Journal, vol. 7(8), pages 1-13, August.
  • Handle: RePEc:gam:jsusta:v:7:y:2015:i:8:p:10521-10533:d:53714
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    References listed on IDEAS

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    1. Mouron, Patrik & Scholz, Roland W. & Nemecek, Thomas & Weber, Olaf, 2006. "Life cycle management on Swiss fruit farms: Relating environmental and income indicators for apple-growing," Ecological Economics, Elsevier, vol. 58(3), pages 561-578, June.
    2. Andrea Baudoin Farah & Almudena Gómez-Ramos, 2014. "Competitiveness vs. Sustainability: An Assessment of Profitability as a Component of an Approach on “Sustainable Competitiveness” in Extensive Farming Systems of Central Spain," Sustainability, MDPI, Open Access Journal, vol. 6(11), pages 1-27, November.
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    2. Riccardo Testa & Salvatore Tudisca & Giorgio Schifani & Anna Maria Di Trapani & Giuseppina Migliore, 2018. "Tropical Fruits as an Opportunity for Sustainable Development in Rural Areas: The Case of Mango in Small-Sized Sicilian Farms," Sustainability, MDPI, Open Access Journal, vol. 10(5), pages 1-17, May.

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