EastFruit has repeatedly focused on adapting new horticultural technologies to local conditions in Central Asian countries. Initial investments in the horticulture business for this region were focused primarily on the development of intensive apple orchards. This is where the most significant experience has been accumulated, but it has been noted as having the most disappointments as well.
Recently, we received a lot of feedback regarding information we released related to these orchards. We showed that the average apple yield from intensive orchards in Tajikistan in its 4th year after planting reached only 7 tons per hectare. However, it should have been at least five times higher.
Thus, we decided to contact several international experts with extensive experience in the region in order to analyse mistakes made and offer guidance on how to make the necessary corrections. In summarising the detailed feedback we received from each expert practitioner, we noticed several vital issues, which are listed below. We have ranked them not in decreasing order of importance, but from strategic to specific. However, all of these issues are very important and could potentially lead to complete bankruptcy if companies do not take corrective actions.
- Investor not on site and not in control. Entrusting the management and economic activity of an orchard to a relative or friend instead of a trained specialist very often leads to significant problems. Investors refuse to believe that a relative or a close friend would abuse their position. Since many specific operations must be performed at an orchard, which only a specialist can fully comprehend, the practice of relying on friends or relatives often leads to negative consequences for the owner, and it is not always possible to save the orchard and the business. Therefore, we advise investing in this business only if you are planning to be directly involved and personally supervise all processes. Otherwise, the chances for failure are very high.
- Going too big in year 1. Many farms in the region have had no prior experience in horticulture. But, owners are starting apple businesses planting gigantic orchards and are not paying attention to the physical and technical limitations of the land and cultivation technology. As a result, quantity destroys quality. Also, many owners do not understand that it is almost impossible to plant a 1,000-hectare apple orchard in one year, but they try to do it anyway. Therefore, we advise planning an economically feasible and relatively small-sized orchard in the first stage. Less is more. Expansion of the business can be carried out later after having gained initial experience with the smaller orchard and developed a team of specialists, which is also very beneficial from a financial point of view.
- Wrong location for orchard climatically. This is a common problem in Uzbekistan, Kazakhstan, Tajikistan and other countries of the region. One can often see huge apple orchards in areas where the climate does not allow the apples to develop their colour. Therefore, it is necessary to clarify with an expert prior to planting whether the climate is suitable for growing apples and if so, which varieties would grow best. At the same time, any advice from suppliers should be verified by an independent international expert, even if you have to pay for the expert guidance.
- Lack of agronomists who understand modern technologies. As a rule, this does not stop investors. However, failure to comply with even one technical element for an orchard could potentially nullify the entire apple business. If the farm does not have an experienced agronomist and a team of specialists, then even expensive external consulting, most likely, will not solve all the problems. Therefore, when planning a horticultural business, there is a need to ensure the availability of qualified personnel. It is also essential to take the time to continually train your expert team as technologies are constantly evolving. It is critical that employees know English and constantly visit the leading apple farms in the leading countries of the world, as well as undergo various international training and refresher courses.
- Trying to save money on professional consulting services. Often, business owners invest millions of dollars hoping to save several thousand on consultations. However, in Central Asia, where the apple tree does not grow easily given the climate, it is impossible to achieve success by only copying achievements that work in countries like the Netherlands or Poland. The situation is further complicated by things such as a shortage of trained personnel, often low-quality planting material, cheap plant protection products, lack of equipment, etc. Also, in such challenging conditions, some consultants may not agree to work despite large sums of money if they value their reputation. Hence, before planting an orchard, it is important to study the market of consulting services available and obtain high-quality technical support that would allow your team to grow and develop professionally. The same applies to market analytics – there is no need to save on it since it allows you to sell a product at a higher price. Finally, it is also essential to understand that free advice from sellers of seedlings or other supplies cannot be considered a consulting service since a seller’s goal is to make profits from owners buying their goods.
- Imitation of modern technologies (using poor quality elements to save money). For this, we are referring to items such as planting materials, trellises, irrigation systems, machinery, equipment, storage and processing of apples, etc. Purchase of low-grade planting material, cheap low-quality irrigation systems, and low-quality supports lead to disastrous business consequences. We have seen an orchard quickly destroyed simply because the investor decided to make by himself the concrete posts to support the orchard. Therefore, if you decide to plant an intensive orchard, you should not purchase any materials or technology from unknown suppliers. Likewise, saving on plant protection products can lead to low quality or a complete loss of the crop. A low-quality apple costs, on average, 10-20 times less than a quality one.
- Relaxed approach to following technology. Failure to meet the deadlines or perform the scope of work, the substitution of concepts and frequent attempts to replace the necessary specific chemicals with various generics create chaos. It distorts precision planning and the structure of work. When optionality or cutting corners occur, results are subpar such as achieving only 7 tons of apples instead of 35-40 tons that should produce by the 4th year of an intensive orchard.
- Large orchard but no storage. Many investors do not understand that it is physically impossible to quickly harvest and sell apples from 20, 30, 40, let alone 100 hectares. Also, many do not realise that costs for apple storage and processing per hectare can significantly exceed investments in seedlings, irrigation, support, netting, and even equipment! “Storage is not a separate business, but an integral part of the fruit and vegetable growing business”, as quoted and repeated for many years at hundreds of regional events by FAO’s Investment Center economist Andriy Yarmak. But remember, fruit storage is not a way to make extra income despite what many storage equipment suppliers say. This is simply a must for any commercial horticultural venture growing stock varieties of apples. But, constructing a storage facility at the same time as planting an orchard is not required, since the need for storage will arise only after a couple of years.
- Self-designed storage instead of professional solutions. Investors do this to save money, but, in fact, it is an ineffective solution. If there are ready-made, long-term and successfully working solutions, do not invent something that has already been precisely thought out and tested by tens and hundreds of thousands of other investors.
- Investment in processing apples instead of focusing on reducing poor quality production. Such enterprises are usually unnecessary. In some isolated cases where such an investment works, processing becomes an entirely separate business and has minimal direct correlation to their orchard. For example, many farmers want to invest in juice production, but only want to sell pure apple juice, which is very difficult. In order to make processing profitable, it is necessary to purchase up to 20 other types of fruits and vegetables for processing, develop many recipes, invest in marketing and distribution, and correctly assess the cost of their own raw materials. After all, the cheaper the raw materials, the higher the business profits. Therefore, we advise to do everything possible to reduce any waste in the orchard. At the best farms, the percentage of non-commercial apples does not exceed 5%, so it is more profitable to dispose of those apples or sell them to professional processors than to spend hundreds of thousands of dollars trying to increase profit from waste.
As the German saying goes, “it is always hard to start.” Mistakes in any venture are inevitable and problems usually disappear over time. Do not despair if you have made mistakes and take corrective actions. If the goal is set and the appropriate technologies are being followed, any farm can achieve success. However, if one learns solely from their mistakes, it may take too long to achieve success.
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