Economic Evaluation of New Varieties ::

Introduction ::

The following sections compare the relative economic performance of recent releases from the macadamia breeding program and regional variety trials.

These 20-year cash flow forecasts compare both annual net cash flow and cumulative cash flow for the four recent variety releases (G, J, P & R) and compares these with established industry varieties A16 and 741. Forecasts include performance in both the Bundaberg region and the Northern Rivers of NSW.

All scenarios model establishment of a new 100-hectare farm. Irrigation establishment and operating costs are included in all Bundaberg scenarios and excluded from all Northern Rivers scenarios.

The industry average planting density 312 trees per hectare (8x4m) is assumed for all varieties other than P, which is based on the higher density of 400 trees per hectare due to the relatively small size of these trees.

This analysis has been undertaken to evaluate elite selections from the B1.1 populations in regional variety trials.

DISCLAIMER

Results presented in this report are based on yield and kernel recovery data from the macadamia regional variety trials up to the end of Year 8. Year 9 data will be included in the next update. (Macadamia regional variety trials – Series 3, Phase 2 (MC11001))

The data shown in the tables has been sourced directly from Economic evaluation of the macadamia breeding program

The project partners associated with this report include the Queensland Alliance for Agriculture and Food Innovation (QAAFI) and the Department of Agriculture and Fisheries (DAF). While every care has been taken to ensure the validity of information collected and analyses produced, neither of these project partners, nor any persons acting on their behalf, make any promise, representation, warranty or undertaking in relation to the appropriateness of findings in this report and expressly disclaim all warranties (to the extent permitted by law) about the accuracy, completeness, or currency of information in this report.

Users of this report should seek independent advice to confirm any information in this report before relying on that information in any way. Reliance on any information provided within this report or by any of the project partners is entirely at your own risk. The project partners will not be responsible for, and will not be liable for, any loss, damage, claim, expense, cost (including legal costs) or other liability arising in any way (including from the project partners’ or any other person’s negligence or otherwise) from your use or non-use of the report or from reliance on information contained in the report or that the project partners provide to you by any other means.

Varieties & Assumptions ::

The following tables show yield, kernel recovery and planting densities for new varieties and industry standards from regional variety trials. Growth curves were developed for each variety using measured yield from years 1 to 8. Mature yield was estimated for each variety by extrapolating these growth models to full maturity.

Table 1: Performance of varieties from regional variety trials in Bundaberg

Variety

G

 J P R A16

741
Estimated mature NIS yield (t/ha)

7.52

 7.07 9.99 6.1 6.56

6.78
Saleable kernel recovery %

38.20

 41.10 32.60 35.20 37.20

34.90
Trees / ha

312

 312 400 312 312

312

Table 2: Performance of varieties from regional variety trials in Northern Rivers, NSW

Variety

G

 J P R A16

741
Estimated mature NIS yield (t/ha)

8.33

 6.01 9.78 8.2 6.60

6.40
Saleable kernel recovery %

39.5

 41.3 32.8 36.1 38.6

37.4
Trees / ha

312

 312 400^ 312 312

312

^ Planting density of 400 per hectare suggested for Bundaberg but is not recommended by Macadamia Innovation for planting in the deep red soils found at Alstonville as Variety P is a smaller tree when grown in the shallower soils at Bundaberg.

Table 3: Assumptions for financial analysis scenarios. Price growth, inflation, depreciation, finance and taxation have been excluded to simplify analysis.

Assumptions

Bundaberg

(irrigated)

Northern Rivers NSW

(non-irrigated)
NIS price (10-year fixed average @33% KR)

$3.80

$3.80
Farm establishment costs

$4,180,000

$4,002,500
Non-bearing fixed costs per hectare*

$2,715

$1,657
Bearing costs per hectare*

$7,798

$6,693

* Average cost data from benchmark cost of production sample 2013-2017.  High-density plantings will have higher costs of establishment and maintenance.

Rates of Return ::

The following tables show the net present value (NPV) and internal rate of return (IRR) for selections in both Bundaberg and Northern Rivers NSW.

NPV is calculated by subtracting the present value of the capital outlays from the present value of the cash inflows. IRR is the rate of return, or discount rate at which the net present value (NPV) will be equal to zero.

  • New varieties P, J and G achieved a higher NPV and IRR than standard varieties 741 and A16 in Bundaberg.
  • New variety R achieved the lowest NPV and IRR of the six varieties analysed for Bundaberg. NPV and IRR was highest for three new varieties (P, J and D) in Northern Rivers NSW, however variety J showed a lower NPV and IRR than standard variety A16.
  • All varieties (including standards) achieved a higher NPV and IRR in Northern Rivers NSW compared with Bundaberg.
  • This may be explained by the lower farm establishment and production costs for non-irrigated farms in Northern Rivers NSW.

Table 4:  NPV and IRR for new and standard varieties in Bundaberg

Variety

NPV IRR

P (HD)

$11,786,344

13.3%

J

$10,269,956

12.7%

G

$10,066,610

12.7%

741

$7,355,470

11.0%

A16

$6,578,898

10.3%

R

$5,850,380

9.9%

Table 5:  NPV and IRR for new and standard varieties in Northern Rivers, NSW

Variety

NPV IRR

P (HD^)

$13,933,636

15.3%

G

$13,766,906

15.3%

R

$12,296,133

14.8%

A16

$9,561,524

12.9%

J

$9,130,651

12.6%

741

$8,659,837

12.3%

^ Planting density of 400 per hectare suggested for Bundaberg but is not recommended by Macadamia Innovation for planting in the deep red soils found at Alstonville as Variety P is a smaller tree when grown in the shallower soils at Bundaberg.

Link to: New Varieties

Cash Flows ::

The following figures show both annual net cash flow (NCF) and yearly cash balance (YCB) for varieties G, J, P and R compared with established industry varieties A16 and 741 in Bundaberg and Northern Rivers NSW.

NCF is the difference between annual cash inflows and outflows over the analysis period. In the following scenarios, this is the difference between annual income generated from nut production and costs incurred from various heads of expenditure. Yearly cash balance or YCB is the cumulative net cash flow over the analysis period.

Bundaberg ::

In Bundaberg, varieties P and J achieved positive cash flow sooner than standard varieties 741 and A16. Over the term of the analysis varieties P, J and G maintained higher NCF than the two standards. These results are reflected in the YCB for varieties in Bundaberg.

Figure 1: Net cash flow by variety for Bundaberg

Figure 3: Cumulative cash balance by variety for Bundaberg

Northern Rivers ::

In Northern Rivers, positive cash flows were realised earlier for varieties P, G and R when compared to standard varieties. NCF for variety J over the analysis term was very similar to standard varieties A16 and 741, while P, G and R remained higher. These cash flows are shown cumulatively in the yearly cash balance for varieties in Northern Rivers NSW.

Figure 2: Net cash flow by variety for Northern Rivers NSW

Figure 4: Cumulative cash balance by variety for Northern Rivers NSW

Link to: Accessing New Varieties

Summary ::

Based on available yield and kernel recovery data to date, analysis of the four newly released varieties has identified their long-term economic potential compared with industry-standard varieties.

While it is apparent that varieties perform differently in different production regions, these analyses show that increasing yield and kernel recovery can result in significant long-term economic gains and farm business viability.

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