Cost of production benchmarks for canning peaches and pears (FR01058)

This is a final research report from Hort Innovation’s historical archives. Please note that as these reports may date back as far as the 1990s, the content and recommendations within them may be superseded by more recent research.

What was it all about?

Prompted by long-term considerations of global competition for this industry, SPC Limited and Ardmona Foods Limited merged to establish a single $450 million canning business that would be well placed to supply domestic and export markets.

As a consequence of this changing dynamic, the cannery and its grower-suppliers agreed it was timely to establish objective benchmarks for the costs of producing canning peaches and pears in the orchard. There had been no recent study of these costs, and the industry felt that the establishment of relevant benchmarks would enable it to better plan for its long-term future.

Commencing with a study of two years’ data (2000/01 and 2001/02) for the canning peach and pear enterprises of individual businesses, the project was extended to include data for the 2002/03 and 2003/04 seasons. This report presented the benchmarks established for the four years to 2003/04.

Study Recommendations:

• A relatively small percentage of growers maintained orchard information in such a form that enabled them to compare their figures against the data from this study. Hort Innovation (which was then Horticulture Australia Limited) recommended that the industry should determine and implement a method whereby more growers could easily identify their own production costs and business profit by fruit type.
• Given that many growers would be unable to easily compare their own data against the Cost of Production data, it would be of benefit if some simple ballpark benchmarks were developed to assist growers to check their business efficiency without major recording. The then Horticulture Australia Limited recommended that some simple performance benchmarks should be developed to assist growers in understanding their business performance.
• Given the continuing competitive pressures from South American, South African and Chinese producers, it would become imperative that Australian labour costs were reduced. The then Horticulture Australia Limited recommended that the industry should devote R&D investment to identify ways in which labour costs could be reduced over time.
• This four-year study provided a valuable, objective insight into the performance of canning fruitgrowers and began to provide information that can be used by SPC Ardmona and growers to recognise the impacts of seasonal conditions, price and quality variations and increasing production costs on grower profitability in the context of cannery constraints on raw material cost. It also appeared that there was sufficient dynamic change from season to season to warrant annual studies for the foreseeable future. The then Horticulture Australia Limited recommended that the industry should continue to conduct future surveys whilst valuable information was being gained from the resulting data.