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CHAPTER X: ESTABLISHMENT OF A MODERN DATE PLANTATION

by A. Zaid and A. Botes
Date Production Support Programme

1. Introduction

During the last ten years, reports have indicated the potential and viability for a date production industry. Most of these reports focused on economics and marketing of the date palm at national or regional level. This chapter will concentrate on useful information in both technical and fi nancial aspects for individual farmers. Technical establishment of a date plantation will cover the following components: f easibility study, suitability of the site, selection of varieties to be planted, site preparation, irrigation system and technical practices, while fi nancial establishment will highlight the establishment and operational costs and the cash fl ow statement.

2. Technical establishment of a date plantation

2.1 Feasibility study

After being convinced about the marketing potential of dates, and before purchasing land or developing his/her own farm, a potential date grower must seriously look at several factors and consequently conduct a feasibility study before any physical date establishment. The feasibility study should focus on the following:

- Survey of the area: with maximum information on its location (latitude, longitude and altitude), vegetation, communications and infrastructure;

- Meteorological data: The date grower must contact the nearest weather station to his plantation (within a circle of 30 to 50 km if possible) and request the following data for at least 10 - 15 years:

* Daily values of maximum temperatures (°C);
* Daily values of average temperature (°C);
* Daily values of minimum temperatures (°C);
* Daily values of rain (mm);
* Daily values of evapotranspiration (mm);
* Daily values of sunshine (Hr.);
* Daily values of wind (km);
* Daily values of maximum humidity (%); and
* Daily values of minimum humidity (%).

- Soil analysis: This is a primary factor since it will indicate the success potential of the culture, and will also be used as a guideline for future fertilisation programmes, and irrigation requirements.

- Water analysis: The most important factor to look at is the salinity level along with the depth of the underground water table, if any.

- Mode of irrigation: Depending on water availability, its quality and also taking into consideration all the above factors, a mode of irrigation system will be selected. Flood irrigation is discouraged for a commercial plantation. In order to ensure high water use-effi ciency the date grower should select either drip or microsprayer systems.

- Economical analysis: A local and national market survey is to be implemented to see how promising the market is.

- Climatic requirements: The two main climatic requirements for successful cultivation of dates is a long, hot growing season and an absence of heavy rain or high humidity during the ripening period. Frost incidence, is another environmental factor to take into consideration. Details on climatic requirements can be found in Chapter IV.

- Water availability: To maximise the probability of a successful date plantation, long term water availability must be ensured. Salinity level must not be too high (5 - 6 % at most) even though adult date palms can survive higher levels (9 - 10 %).

- Soil type: Date palms are grown in a wide variety of soils. The optimum soil should have a maximum water-holding capacity and good drainage. Sandy soils require excessive fertilisation and irrigation and permit rapid leaching of mineral nutrients. However, sandy soil that is underlined by more retentive soil of fi ner texture in the first two metres is appreciated. Growth development and fruit quality of dates are reduced under very saline soil conditions.

- Labour requirements: Date palm culture is labour intensive during pollination and harvesting/packing periods. Labour requirements for other operations during the year (bunch thinning, pulling down and tying, covering bunches, irrigation, pruning, fertilisa-tion, etc.) are lower.

2.2 Selection of varieties to plant

Local clones, which are exclusively of seed-origin, must be assessed for their suitability for commercial production. Even though some of these seedlings show signs of measuring up to the best internationally renown varieties, such as Medjool, Bou Fegouss, Barhee, etc, these seedlings must be thoroughly evaluated before large scale multiplication and planting can be initiated. The large scale multiplication and plantation of international renown varieties is essential for reaching the international market and getting high value from the plantation.

2.3 Site preparation

Once all the above factors and conditions have been assembled, the date grower must concentrate on the preparation of his/her site for the initiation and establishment of the date plantation. To avoid repetition, the reader is invited to refer to Chapter VI.

3. Financial establishment of a date palm plantation

3.1 Establishment cost

The introduction of a new enterprise to the farm business can be expensive. However, diversifi cation into date production is seen as part of the bigger existing farming business which will make use of existing infrastructure and mechanisation. Careful planning is thus needed to allocate scarce resources amongst the different farming activities, in a way that the best alternative satisfi es the respective requirements. Detailed calculations are necessary for the farmer to determine the capital needed to implement his/her plan and to forecast its fi nancial result.

It should be kept in mind that costs will vary from one farm to another, depending on the current setup in terms of existing infrastructure and machinery, source of water supply, irrigation system to be used, etc. Costs given are based on a Namibian Date Palm Project (80 ha at Naute/Keetmanshoop), quotations and some estimates of the authors.

In light of possible existing scenarios, the following costs are not included: acquisition of land; source of water supply; mechanisation; and marketing cost. Additional costs needed for date production will be highlighted.

The breakdown of cost items in this paper should be used as a guideline and need to be adapted for each specifi c situation. Table 61 gives an outline of the establishment costs involved per hectare, for a modern plantation of at least 20 ha. The spacing is 10 × 8 m and 125 palms are planted per hectare, of which 5 are males.

TABLE 61
Establishment costs per ha for a modern date plantation (US$)

COST ITEM


COST IN US$

Land Preparation:



1. cleaning and levelling


20

2. ripping


60

Water Supply Line


1,600

On-land Irrigation System


1,200

Establishment of Plantation:



3. plant material

(US$ 22 × 120)

2,640

4. fertilisers


24

5. labour

(4 × US$ 2 × 5 days)

40

6. hardening of plants


16

TOTAL COST


5,600

The irrigation system to be installed in a modern plantation should be such that effi ciency is at maximum (at least 85 %) and that volume of water per palm can be controlled. A well planned and effective irrigation system, based on the use of microsprayers or drippers, together with proper management and production practises will result in optimum yields.

The smaller producer establishing only 1 to 5 ha will not install such an expensive irrigation system and it is estimated that the establishment cost might be in the order of US$ 3,200 per ha. This amount includes US$ 2,640 for plant material, US$ 80 for labour, fertiliser and pesticides, and US$ 520 for water supply.

Table 62 gives an outline of additional capital expenses needed to build and equip a modern packing house, for a larger commercial plantation of at least 40 ha. The international food market is very competitive and quality control and hygiene criteria are strict. Thus, to enter the export market successfully and to sustain the supply of quality fruit, the facilities mentioned are essential.

Realising the magnitude of the total costs involved, the immediate question is whether the project will survive. This question will be answered in the sections to follow. It should be kept in mind that date production is a long term project and generates only income from year four or fi ve from establishment. Measures should thus be taken to maintain a cashfl ow during that period.

Various options exist, and the farmer, as a manager, should decide what option best fi ts his skills and business. The following can be successfully implemented as an intercrop: vegetable production; lucerne and citrus. An intercrop will however increase capital investment.

TABLE 62
Additional capital expenses (US$): buildings and equipment of a packing house

COST ITEM

COST IN US$

INFRASTRUCTURE


Packing House/Shed structure

300,000


(office, ablution, packing room, cold rooms, etc.)


Labour Houses

140,000

IMPLEMENTS


Tractor and trailer

24,000

Pick-up

16,000

Equipment



tools

200


plastic crates for harvesting

3,400


grading/sorting line/Table

3,000


washing Table

1,000


packing line/Table

2,000


electronic scale

1,000


press for pitted dates

1,000


vacuum packer

5,000

TOTAL

496,200

One of the advantages of a date plantation is that it creates a special micro climate favourable for other crops. Some plantations in the northern hemisphere, for instance, successfully produce citrus as an intercrop. Because of the high costs of needed facilities, i.e. packing house, cold rooms, labour houses, etc., it seems almost essential to have other crops also utilising these facilities. Other crops sharing these capital expenses have not been considered in the sections to follow.

3.2 Operational cost

Operational expenses represent those expenditures that occur only if production is undertaken. Capitalisation of the investment cost is dependent upon the production process. Each activity to improve yield and quality costs money and the manager should decide how much, of which activity and at what cost to apply.

A carefully worked out balance of inputs in relation to outputs is needed since maximum production does not necessarily result in maximum profi t.

Tables 63 and 64 represent the activities involved in date production, packaging and marketing with their respective costs over a 10- year period, for large and small commercial date plantations, respectively. Cost indications in Table 63 is per hectare and refl ects the Naute Date project (Namibia), while Table 64 represents activities and respective cost estimates to be encountered by the small date producer (5 ha plantation).

Analysing Table 63, it is clear that the expensive activities are packaging and export marketing. In year 10, full production, pre-harvest costs are about 6 cent (US) per kg and harvest costs are US$ 0.524 of which packaging material is US$ 0.496. At this point of the production cycle, one should decide whether to export in bulk, thus achieving lower prices, or whether to target the retail stores and pre-pack the date fruit in attractive "glove boxes", achieving higher prices.

TABLE 63
Operational cost per ha for a large commercial date plantation (US$)


YEAR

ACTIVITY

1

2

3

4

5

6

7

8

9

10

Pre-harvest Cost:











· water

28

28

28

28

28

28

28

28

28

28

· fertilisers

24

24

24

24

24

24

24

24

24

24

· labour (*)

6

12

12

12

14

17

20

24

29

32

· mechanisation

10

10

10

10

10

10

10

10

10

10

· protection:











bags:

plastic





100


100


100



shade net





400

400

400

400

400

400


pesticides

10

10

15

15

20

20

20

30

30

30

SUB-TOTAL (1)

78

84

89

89

596

499

602

516

621

524

Harvest Costs:











· labour




5

10

30

60

80

100

120

· mechanisation




5

10

20

30

40

40

40

Packing Costs











· packaging material:












packages




480

960

960

2,400

2,400

2,40

3,36


cartons




62

124

217

310

310

0

0


labour (**)




4

5

20

40

55

310

800










70

80

SUB-TOTAL (2)




556

1,109

7,967

2,840

2,885

2,920

4,400

Marketing Costs:











· cold Storage/electricity




1,000

1,000

1,400

1,400

1,600

1,600

2,000

Local marketing:











· transport




36

72

126

180

180

180

252

· agency fees




97.2

194.4

340.2

486

486

486

486

Export marketing:











· transport:












road




84

168

294

420

420

420

588


air/sea




840

1680

882

1,260

1,260

1,26

1,76

· agency fees




277.2

554.4

970.2

1,386

1,386

0

4










1,386

1940.4

SUB-TOTAL (3)




2,334.4

3,708.8

4,012.4

5,132

5,332

5,332

7,224.8

TOTAL(1 + 2 + 3)

78

84

89

2,979.4

5,373.8

6,478.4

8,574

8,733

8,873

12,148.8

(*) Labour includes weeding, pruning, pollination, thinning and orchard maintenance.
(**) Labour includes sorting, cleaning, de-stoning, packing and packing house maintenance.

The calculations in Table 63 for marketing costs are based on the assumption that 30 % of the harvest will be marketed locally and 70 % will be for the export market. Estimated marketing costs are in the order of US$ 0.86 per kg. In the calculations for transport to Europe, air transport is used only during the first two years of production. Air transport is quite expensive, but since volumes to be exported are low in the initial stages of production, sea transport cannot be considered. Total operational cost as outlined in Table 63 amounts to US$ 1.446 per kg (Naute Project during 1997).

TABLE 64
Operational cost for a small date plantation (1 ha); (US$)


YEAR

ACTIVITY

1

2

3

4

5

6

7

8

9

10

Pre-harvest Cost:











· water (***)

120

120

120

120

140

140

160

160

160

200

· fertilisers

24

24

24

24

24

24

24

24

24

24

· labour (*)

6

12

12

12

14

17

20

24

29

32

· mechanisation

10

10

10

10

10

10

10

10

10

10

· protection:











bags: plastic





100


100


100


shade net





400

400

400

400

400

400

pesticides

10

10

15

15

20

20

20

30

30

30

SUB-TOTAL (1)

170

176

181

181

708

611

734

648

753

696

Harvest Cost:











· labour




5

10

30

60

80

100

120

· mechanisation




5

10

20

30

40

40

40

Packing Costs











· packaging material:




35

70

130

180

180

180

250

· labour (**)




4

5

20

40

55

70

80

SUB-TOTAL (2)




49

95

200

310

355

390

490

Marketing Cost:











· cold storage




40

40

60

60

80

80

100

· transport




120

240

420

420

420

420

840

SUB-TOTAL (3)




160

280

480

480

500

500

940

TOTAL (1+2+3)

170

176

181

390

1,083

1,291

1,524

1,503

1,643

2,126

(*) Labour includes weeding, pruning, pollination, thinning and orchard maintenance.

(**) Labour includes sorting, cleaning, de-stoning, packing and packing house maintenance.

(***) Higher water cost for small date plantation due to the fact that water is usually supplied from a borehole and pumped with a diesel engine at high cost.

In this scenario the small scale producer will sort and grade the fruit, but sell in bulk to a packing house. As a result, the expensive activities, i.e. pre-packing and export, are covered by someone else. This strategy will reduce production cost from US$ 1.446 per kg to US$ 0.236 per kg. Obviously the price to be received will also be much lower, as will be the risks involved in exporting.

3.3 Cash flow statement

The function of cash fl ow is to provide information on the timing and magnitude of cash (infl ows and outfl ows). Both cash fl ow statements here below summarise the cash fl ows for large (40 ha) and small scale (5 ha) date plantations, over a period of 10 years. For the calculations in Tables 65 and 66, the following average production potential per palm in kg is considered.

YEAR

LARGE SCALE

YEAR

SMALL SCALE

1 - 3


1 - 4


4

10*

5

15

5

20

6

30

6

35

7 - 8

35

7 - 9

50

9

40

10

70

10

50

* For a well maintained large scale modern date plantation, production could start one year earlier than the small scale one and be over 100 kg/palm/year.

An estimated cashfl ow statement for the large scale modern date plantation is given in Table 65. The costs indicated are calculated as follows:

* gross income:

-

30 % of production at US$ 2.4/kg


-

70 % of production at US$ 3/kg

* development cost:

-

plantation: 20 % own capital and rest as loan over 10 years at 18 %.


-

infrastructure: established only in year 4 with 20 % as own capital and rest as loan over 10 years at 18 %.

TABLE 65
Cash flow statement for 40 ha date plantation (US$)

Year

Prod.

Gross
Income

Development Cost

Operational

Management

Net

Balance

kg

US$

Plantation

Infrastructure

Cost

& Overheads

Income

1



44,000


3,120

40,000

-87,120

-87,120

2



40,000


3,360

40,000

-83,360

-170,480

3



40,000


3,560

40,000

-83,560

-254,040

4

48,000

135,360

40,000

96,600

119,176

40,000

-160,416

-414,456

5

96,000

270,720

40,000

89,000

214,952

40,000

-113,232

-527,688

6

168,000

473,760

40,000

89,000

259,136

40,000

45,624

-482,064

7

240,000

676,800

40,000

89,000

342,960

40,000

164,840

-317,224

8

240,000

676,800

40,000

89,000

349,320

40,000

158,480

-158,744

9

240,000

676,800

40,000

89,000

354,920

40,000

152,880

-5,864

10

336,000

947,520

40,000

89,000

485,952

40,000

292,568

286,704

11

336,000

947,520

40,000

89,000

485,952

40,000

292,568

579,272

12

336,000

947,520


89,000

485,952

40,000

332,568

911,840

13

336,000

947,520


89,000

485,952

40,000

332,568

1,244,408

14

336,000

947,520


89,000

485,952

40,000

332,568

1,576,976

15

336,000

947,520



485,952

40,000

421,568

1,998,544

The Table 65 cash fl ow statement suggests that net income is positive only as of year six, while the accumulating balance is negative up to year nine. Total costs in year 10 totals to US$ 1.95 per kg. Although costs can be recovered over the 15- year period with proper production techniques, planning and management, attention should be focused to improve the cashfl ow situation in years 1 to 5.

TABLE 66
Cash fl ow statement for 5 ha date plantation (US$)

Year

Prod. Kg

Gross Income US$

Development Cost

Operational Cost

Net Income

Balance

1



16,000

850

-16,850

-16,850

2




880

-880

-17,730

3




905

-905

-18,635

4




905

-905

-19,540

5

9,000

9,000


3,540

5,460

-14,000

6

18,000

18,000


3,055

14,945

945

7

21,000

21,000


3,677

17,323

18,268

8

21,000

21,000


3,240

17,760

36,028

9

24,000

24,000


3,765

20,235

56,263

10

30,000

30,000


3,480

26,520

82,783

Analysing costs at a smaller scale (Table 66), it can be seen that operational costs can already be covered in the first year of production (year 5 after establishment). The accumulated balance, however, is only positive in year 6. In calculating the cashflow, an income of US$ 1 per kg is assumed, considering that financing management and administration costs are taken into account. Investment in a 5 ha date plantation might thus result in a net income of US$ 26,520 in year 10 with a yield of 50 kg per palm at US$ 1 per kg.

When comparing the cost of production of 1 kg of dates for a large scale modern plantation and that for a small producer, one would like to suggest that a nucleus-regional packing


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