Effect of Mechanical Harvesting Technology Type and Harvester Ownership and Services Acquisition Methods on Profitability of Wild Blueberry Production

ABSTRACT

The profitability of wild blueberry (Vaccinium angustifolium) production using two alternative mechanical harvesters was evaluated under three different harvester ownership/service arrangements commonly used by farmers. Production data for the economic analysis were obtained from on-farm trials conducted in Nova Scotia, Canada. Net returns were CAD$323 ha⁻¹ using a semi-automatic bin handling system compared with CAD$281 ha⁻¹ for a small box handling system with outright harvester purchase. By comparison, net returns were CAD$90 ha⁻¹ using the semi-automatic bin handling system and CAD$63 ha⁻¹ using the small box system using rental harvesting services. The results are more sensitive to changes in yield than price.

KEYWORDS:

• Economic viability
• mechanization, automation, wild blueberries
• machinery management
• Atlantic Canada

Introduction

Increasing global competitiveness has prompted wild blueberry (Vaccinium angustifolium) producers to seek cost-effective and labor-saving harvesting technologies. Although farmers’ choice of harvesting technology is based on multiple factors, most account for important costs and returns associated with the investment. Several studies have evaluated the economic viability of highbush blueberries (Vaccinium corymbosum), especially for production conditions in the USA (e.g., Fonsah et al., 2007, 2008; Gallardo and Zilberman, 2016). However, the profitability of wild blueberry production has not been investigated, and economic viability using alternative mechanical harvesting systems for farming conditions in Atlantic Canada and the northeastern USA remains a critical knowledge gap. In addition, farmers generally tend to focus on basic financial information representing variable costs (or what farmers commonly refer to as operating costs of production) and do not capture opportunity costs associated with their production decisions (Fausett et al., 2015; Khan et al., 2020). This underestimates and misrepresents the true total and economic cost (Yiridoe, 2018).

Existing commercial wild blueberry mechanical harvesters are distinguished primarily by the type of harvest handling system: (i) traditional small box; and (ii) semi-automatic bin handling system (Figure 1). A semi-automated bin handling harvester was introduced in Atlantic Canada and the northeastern USA in response to farm labor constraints and cost-efficiency challenges. Depending on the size of the farm operation and other farmer considerations, the mechanical harvesting equipment may be leased, rented, or purchased outright. Custom harvesting is another option for harvesting wild blueberries in Atlantic Canada and the northeastern USA. Wild blueberry growers need technical information about production and harvesting costs and the economic viability of adopting the two mechanical harvest handling technologies, managed using the common harvester services acquisition arrangements (Esau et al., 2019). To evaluate the economic viability of the production systems, economic cost models are developed for production using the two mechanical harvesting systems under three harvester services acquisition arrangements. Total cost, including capital and other production costs, are estimated so that input and true economic cost (including opportunity cost) information can be used to assess investment and production decisions.

Figure 1. Mechanical harvester with alternative box handling systems.

The purpose of this study was to estimate and compare the farm-level profitability of wild blueberry production distinguished by mechanical harvest handling system type, each managed under three harvester acquisition and service scenarios. Farm returns associated with the semi-automatic bin handling system were compared with the small box handling system. To increase the farm management relevance of the study, the profitability analysis considered harvester ownership and harvester service arrangements commonly used by wild blueberry farmers in Atlantic Canada and the northeastern USA, including (i) ownership from outright purchase; (ii) rental services; and (iii) custom harvesting.

The first objective was to estimate and compare net returns for a representative 40 ha wild blueberry operation for the two harvester technologies and three harvester services acquisition scenarios. To evaluate the robustness of the initial results, we conducted sensitivity analysis for two important market factors: yield level and output price. Specifically, net returns were compared for three berry yield conditions (i.e., pessimistic, average, and optimistic yield) managed under the three different harvester services acquisition arrangements considered in the initial analysis. The study also evaluated the sensitivity of net returns to changes in wild blueberry price. Furthermore, advanced breakeven methods (see Dillon, 1993) were used to determine breakeven points for output price and yield, as well as breakeven points to cover variable costs, fixed costs, and total cost. A second objective was to evaluate the impact of a provincial government wild blueberry harvest efficiency capital investment support program on farm net returns. In 2018, the government of Nova Scotia provided a cost-share program, “Wild Blueberry Harvest Efficiency Program 2019–2020,” which allowed eligible farmers to upgrade their harvesters with 75% funding assistance, up to $20,000 per harvester. Details of the cost-share program and eligibility requirements are described in Government of Nova Scotia (2019) and are not repeated here. The research findings and information are important to farmers in production decision making, and farm survival and risk management.

Economic Studies of Mechanical Harvesting Systems for Specialty Crops

Economic studies of mechanical harvesters and harvest handling systems for high-value and specialty crops may be grouped broadly into three categories. The first group of such studies examined production efficiency associated with integrating farm labor use in mechanical harvesting. For example, Rodgers et al. (2017) evaluated how producer risk preferences affect the adoption of machine harvesting of southern highbush blueberries (V. darrowi × V. corymbosum). They concluded that labor risk and uncertainty significantly affect farmer adoption of mechanical harvesting technologies. Other production efficiency studies include Bartlett pear (Pyrus communis) production in California (Elkins et al., 2011) and apple (Malus domestica) production in Washington and Pennsylvania (Baugher et al., 2009). A second branch includes studies on the effects of adopting specific mechanical harvesters and harvest handling systems on social welfare (e.g., Huang and Sexton, 1996). The authors showed that producer welfare estimated using a perfect competition model may be distorted when the relevant market is imperfectly competitive. For example, Huang and Sexton (1996) found that although there are substantial potential benefits, Taiwanese farmers’ incentives to adopt a mechanical tomato (Lycopersicon esculentum) harvester were reduced because the dominance of a few (large) tomato buyers reduced returns to farmers.

The third group of studies examines the effects of mechanical harvesting on relative profitability (using partial budget analysis) or actual profitability (of whole-farm specialty crop production systems). Partial budget analysis of relative profitability is limited (compared with actual profitability studies) and include evaluation of wild blueberry production in Atlantic Canada (Khan et al., 2020), while Gallardo and Brady (2015) compared cost associated with using ladders versus labor working conditions-enhancing platforms to harvest apples produced in Washington state.

Recent actual profitability studies include Gallardo and Zilberman (2016), who compared net returns associated with mechanical versus manual harvesting for highbush blueberry production in Washington State to processed and fresh markets. Gallardo and Zilberman (2016) found that reducing yield quality losses (from fruit bruises), reducing the gap between fresh and processed blueberry prices, and increasing labor wages enhance profitability and likelihood of the mechanical harvester adoption. As with Gallardo and Zilberman (2016), Harper et al. (1999) evaluated the economic viability of eastern thornless blackberry (Rubus, subgenus Eubatus) production using improved mechanical harvesters coupled with novel shakers with alternative trellis designs. They reported that mechanical harvesting for fresh market packouts was profitable for output levels ranging from 13 to 31% of expected yield, compared with a breakeven yield of 44 to 49% using manual hand harvesting. In addition, lower harvest costs for the mechanical harvesters studied resulted in financially viable outcomes for processing blackberry producers. Sensitivity analysis of profit to important production, marketing and technology-related parameters is as important as evaluating economic viability because farmers’ decision-making typically includes consideration of risk and generating minimum or threshold yields and output prices. Economic studies have also considered sensitivity analyses and breakeven points for single enterprises and between enterprises (Dillon, 1993). In this study, breakeven points were determined for selected variables for a wild blueberry enterprise.

Improvements in technical engineering of the mechanical harvesters can reduce harvesting costs and, ultimately, improve net farm returns. For example, Seavert and Whiting (2011) reported that manual hand-harvesting cost was US$0.55 kg⁻¹ for sweet cherry compared with mechanical harvesting cost at US$0.04 kg⁻¹ (i.e., 93% lower). Brondino et al. (2021) compared the economic performance of a prototype electric mechanical harvester with an existing commercial harvester (Easy Harvester®) and manual harvesting of highbush blueberries (Vaccinium corymbosum) in the Peidmont region of Northern Italy. They reported that the prototype mechanical harvester reduced overall harvesting cost by 39% relative to manual harvesting, compared with 52% using the Easy Harvester®. On the other hand, the mechanical harvesters required additional warehouse labor to clean and prepare the produce for marketing. The present study contributes to the growing set of economic analyses comparing net farm returns for production using an existing mechanical harvesting system with an improved alternative. Estimated full and accurate production costs (including opportunity cost) for the wild blueberry sector in Atlantic Canada and northeastern USA is a knowledge gap that this study contributes to. Enterprise budgets were developed as part of a larger economic research project. The profitability analysis considered detailed estimates of fixed and variable costs for production, accounting for both vegetative year and fruit year of the wild blueberry production cycle. Accurate economic cost information for both years is needed to optimize wild blueberry farm performance in alignment with producer objectives and constraints faced by farmers in Atlantic Canada and the northeastern USA. Government policy makers also need accurate production cost (including opportunity cost) information, such as when determining weather-induced income loss compensation from climate damage (as happened in a 2018 frost that damaged an estimated 70% of the wild blueberry crop in Nova Scotia (Khan et al., 2020). When farmers focus on basic financial metrics that represent variable costs and do not capture opportunity cost of wild blueberry production in their decisions, this underestimates the true total and economic cost (Fausett et al., 2015).

Methods

The differences in wild blueberry mechanical harvesters are linked primarily to differences in the biology and agronomy of the various blueberry species. For example, rabbiteye blueberry [V. virgatum (syn. V. ashei)] plant height ranges from 182.9 to 243.8 cm (Takeda et al., 2008). On the other hand, northern highbush blueberry (Vaccinium corymbosum) height ranges from 82.7 to 146.4 cm, compared with southern highbush blueberry (V. darrowi × V. corymbosum) plant height which ranges from 91.4 to 152.4 cm (Takeda et al., 2008). By comparison, mature wild blueberry plant height ranges from 5 to 25 cm (or, on average, about 15 cm high) (Chang et al., 2017).

In this analysis, production using the small box handling system was compared with the semi-automatic bin handling system as the new alternative. The small box handling system is a commonly used mechanical harvest handling system (among at least 50% of existing commercial farmers). Industry observation with the current incarnations of the mechanical harvesters indicates that commercial farmers with existing small box handling systems are among those considering upgrading to the improved harvester (Khan et al., 2021). On the other hand, manual harvesting with hand rakes is not common among commercial farmers and involves about 5–10% of mainly small-scale and hobby farmers (Khan et al., 2020). Thus, there is a lack of reliable technical data and information for production using hand rake harvesting. Therefore, net returns comparison using the semi-automatic bin handling system with manual hand raking, a declining and less used wild blueberry harvesting method in Atlantic Canada and the northeastern United States, will generate results not relevant to the commonly used production and harvesting technologies in the study area. In addition, given the limited use of this increasingly dated blueberry harvesting method, it was reasoned that profitability analysis using hand raking would not generate findings that are generalizable and relevant to most commercial wild blueberry farmers.

Study Design and Data

Wild blueberry production and machine harvest data were based on-farm trials conducted during 2017 and 2018 in Nova Scotia (NS), Canada. In 2017, field trials were conducted on August 27 and 28 on a 5-ha berry farm in central NS (45°42’65.59” N, −63°49’66.56” W). On-farm assessment of harvesting operations allowed for compiling data that reflects actual farming conditions. The harvesters fitted with the small box handling and semi-automatic bin handling systems were operated by harvester operators with similar skill and experience. Wild blueberry yields net of harvester-induced losses were determined by weighing at a produce receiving shed. By comparison, in 2018, field studies were conducted in two wild blueberry fields in Portapique (45°40’88.79” N, −63°72’35.65” W, 2-ha section of field) and Antigonish (45°55’71.51” N, −61°72’61.77” W, 2-ha section of field), both in Nova Scotia. The 2018 harvesting trials were carried out on August 19 and 20 in Portapique, and August 23 and 24 in Antigonish. A frost event in 2018 adversely affected wild blueberry yield throughout Atlantic Canada, resulting in weather-induced income support for the berry farmers. Consequently, the net returns comparisons were evaluated using the production data for 2017. Sensitivity analysis was conducted to understand the effects of changes in yield on economic viability.

Costs of production and output price associated with the wild blueberry systems were based on local (i.e., Nova Scotia) market prices. All prices and costs were measured in 2018 Canadian dollars. Financial and other economic data were obtained from various sources. For example, cost data for agronomic practices were obtained from local farm input retailers. Tractor and wild blueberry harvester price and usage data (e.g., fuel consumption) were obtained from a mechanical harvester manufacturer located in Collingwood, Nova Scotia. Rental and custom berry harvesting rates were 2018 industry rates obtained from local wild blueberry farmers. Wild blueberry prices were obtained from Statistics Canada (2018), and Wild Blueberry Producers Association of Nova Scotia. The interest rates on loans were based on Bank of Canada and commercial banking rates (Statistics Canada, 2018).

Harvester Acquisition and Service Scenarios

Alternative mechanical harvester acquisition and harvester services available to wild blueberry farmers in Atlantic Canada and the northeastern USA include ownership from outright purchase, harvester rental, and custom hiring. The alternative chosen for individual farms depends on factors such as the harvester investment cost, eligibility for government cost-share support programs, labor scarcity, and income-risk associated with a harvesting operation (Kay et al., 2016).

Custom harvesting and ownership through outright purchase are the most common options for acquiring the use of wild blueberry mechanical harvesters in Atlantic Canada and the northeastern USA. Farmers who face labor constraints during the critical blueberry harvest season and limited investment capital to buy the improved harvester technology tend to prefer custom hiring. Custom harvesting services also provide supplemental income to wild blueberry farmers with excess machinery capacity. Personal communication with farmers and harvester manufacturers indicates that the price paid to custom hire contractors is based on a sliding pricing scale according to berry volume harvested Esau et al. (2019). For example, in 2018, farmers paid CAD$0.26 kg⁻¹ to custom contractors for their harvesting services for wild blueberry yield of 4300 kg ha⁻¹ or above. The prices paid for custom harvesting is based on sliding price scale according to field yield (Esau et al., 2019).

Some wild blueberry farmers in Atlantic Canada rent harvesters for a relatively short time, ranging from a few days at a time to an entire harvesting season, depending on the size of the harvestable area. The harvester rental rate depends on the type of harvesting system. For example, in Nova Scotia, the small box handling harvester’s 2018 average monthly rental rate translates to CAD$150 per hour, compared with CAD$180 per hour for the semi-automatic bin handling system (Esau et al., 2019). Rental harvesting cost includes the tractor and harvesting machine only, while the berry farmer pays for fuel cost, operator and labor cost, and minor repair and maintenance costs. The rental contractor is responsible for transportation cost of the harvester to the farm, but the farmer pays for the empty boxes and transporting the filled berry boxes to the produce weighing and receiving shed. Farmers in Atlantic Canada who own large wild blueberry fields prefer to buy their own harvesting machinery/equipment. Such farmers can also optimize the use of their harvesters by renting or providing custom services to other farmers.

Wild Blueberry Production System Costs

Wild blueberries differ in some ways from the production of other fruit crops. It is a perennial that is traditionally managed as a biennial crop. Vegetative growth occurs during the first year, followed by berry fruit production in the second year (Esau et al., 2019; Kinsman, 1993). The management and agronomic operations for a typical two-year wild blueberry cropping cycle is summarized in Table 1. Input costs for fertilizer, insecticide, fungicide, and herbicide for the wild blueberry cropping systems were obtained from local farm input retailers. Application rates for inputs assumed to be used were based on official recommended rates. The prices of key inputs used in the analysis, such as fertilizer, herbicides, fungicides, and insecticides, and application rates are summarized in Tables 2 and 3. Input costs were obtained by multiplying the input rates by 2018 input prices obtained from local farm input retailers. Pruning and pollination costs were obtained from actual farmers and industry representatives (Table 4).

Table 1. Sequence and timing of wild blueberry management and production practices for Nova Scotia.

Agronomic/management practice	Time
a) Vegetative year
Emergence of plants	May
Fertilizer application	May
Vegetative growth of plant stem	May – July
Fungicide application	July – August
Development of floral buds	August-October
Leaves begin to drop after first killing frost	October – November
b) Fruit year
New plant dormant buds begin to swell	April
Buds break, bloom and growth of new leaves occur	May
Fungicide application	April -June
Pollination	May – June
Berry size increases and blue color begins to develop	July
Insecticide application	July
Harvesting season	August-September
Leaves begin to drop after first frost	Fall
Pruning (and mowing) after first frost	October-November

Table 2. Fertilizer and herbicide prices, application rates, and associated costs.

(i)	Fertilizer (granular) Trade name	Product chemical name	Unit Price^a ($ kg^−1)	Application Rate^b (kg ha^−1)	Input Cost^c ($ ha^−1)
	(9-30-11) Micro-Essentials® SZ/(Mesz)	Monoammonium phosphate + sulfur and zinc	.76	224.07	17.29
	(12-22-15) Micro-Essentials® SZ/(Mesz)	Monoammonium phosphate + sulfur and zinc	.71	224.07	159.09
	11-52-0 (MAP)^d	Monoammonium phosphate	.70	168.05	117.64
	18-46-0 (DAP)^e	Diammonium phosphate	.68	168.05	114.28
(ii)	Fertilizer (foliar)		Price ($ L^−1)	Application Rate (L ha^−1)	Input Cost ($ ha^−1)
	Calcium	n.a.^f	1.00	4.94	49.40
	Zinc	n.a.	1.00	4.94	49.40
	Boron	n.a.	13.00	1.23	16.05
	Iron	n.a.	1.00	4.94	49.40
	Magnesium	n.a.	1.00	3.70	37.05
(iii)	Herbicide (granular)		Pricea ($ kg^−1)	Application Rateb (kg ha^−1)	Input Costc ($ ha^−1)
	Velpar® DF	Hexazinone	85.00	1.97	167.96
	Wh
	Ultim 75 DF	Nicosulfuron	1165.00	.03	39.13
	Chateau® WDG	Flumioxazin	364.00	.41	152.84
(iv)	Herbicide (foliar)		Price ($ L^−1)	Application Rate (L ha^−1)	Input Cost ($ ha^−1)
	Sinbar® WDG	Terbacil	145.00	2.00	29.10
	Venture® L	Fluazifop-P-butyl and S-isomer	42.50	1.97	83.98
	Poast® Ultra	Sethoxydim	73.00	1.12	82.04
	Merge®	Sufactant	6.70	1.97	13.24
	Option® 2.25 OD	Foramsulfuron	36.35	1.55	56.56
	UAN	Urea ammonium nitrate	3.00	1.55	4.67
	Callisto® 480SC	Mesotrione	105.00	.29	31.12
	Kerb^™ SC	Propyzamide	93.00	4.44	413.48
	Ignite SN	Glufosinate ammonium	17.50	4.94	86.45
	Authority® 480	Sulfentrazone	159.00	.29	46.42

Notes.

^aPrice data for fertilizers and herbicides obtained from local farm input retailers.

^bApplication rates are based on recommended rates.

^cInput cost obtained by multiplying unit price by application rate.

^dMAP denotes Monoammonium phosphate.

^eDAP denotes Diammonium phosphate.

^fn.a. denotes not applicable.

Table 3. Fungicide and insecticide prices, application rates, and associated costs.

	Trade name	Chemical name	Price^a ($ kg^−1)	Application Rate^b (kg ha^−1)	Input Cost^c ($ ha^−1)
(i)	Fungicide (granular)
	Switch® 62.5 WG	Cyprodinil/fludioxinil	235.00	.86	203.15
	Cabrio® EG	Pyraclostrobin	131.50	1.39	183.83
	Captan Supra 80 WDG	Captan	27.00	2.24	6.68
			Price ($ L^−1)	Application Rate (L ha^−1)	Input Cost($ ha^−1)
(ii)	Fungicide (foliar)
	Aprovia®	Benzovindiflupr	18.50	4.94	91.39
	Proline® 480 SC	Prothioconazole	153.00	.35	54.79
	Allegro® 500 F	Fluazinam	114.00	2.23	255.11
	Pivot® 418	Propiconazole	75.00	.29	22.23
	Fontellis^™	Penthioprad	76.50	1.72	132.26
	Quilt®	Azoxystrobin	33.00	1.00	33.01
			Pricea ($ kg^−1)	Application Rateb (kg ha^−1)	Input Costc ($ ha^−1)
(iii)	Insecticide (granular)
	Imidan® 70-W	Phosmet	53.00	1.58	83.78
	Assail 70 WP	Acetamiprid	817.50	.16	131.25
	Delegate® WG	Spinetoram	415.00	.19	82.93
			Price ($ L^−1)	Application rate (L ha^−1)	Input Cost ($ ha^−1)
(iv)	Insecticide (foliar)
	Decis 5 EC	Deltamethrin	89.00	.12	11.21
	Success 480 SC	Soinosad	212.00	.18	38.54
	Sevin® XLR	Carbaryl	26.25	4.00	105.04

Notes.

^aPrice data for fungicides and insecticides were obtained from local farm input retailers.

^bApplication rates are based on recommended rates.

^cInput cost were obtained by multiplying unit price by application rate.

Table 4. Summary of unit costs for wild blueberry pollination and pruning.

(i)	Pollination service	Cost (CAD$ ha^−1)
	Honeybee hives	321.10
	Bumble bee quads	864.50
(ii)	Pruning method
	Flail mower	172.90
	Rotary mower	172.90
	Rotary and flail mower	345.80
	Sickle bar and burning	296.40
	Straw burning	642.20
	Oil burning	642.20

Data source: Pruning and pollination costs were obtained from local retailers.

In Nova Scotia, a single granular fertilizer application of Micro-Essentials® SZ (Mesz) is recommended and was assumed to be applied in early May (during the first year of vegetative growth). Traditional herbicide applications typically consisted of Hexazinone and a tank mix of Mesotrione and Fluazifop-P-butyl and S-isomer. Cost for fungicides included one application of Benzovindiflupyr, Difenoconazole, and Prothioconazole, and two applications of Prothioconazole and Pyraclostrobin during the vegetative year. Insecticide cost was for Phosmet application.

To determine machinery fixed and variable costs, it was assumed that the wild blueberry crop was managed on a representative 40 ha farm, the average wild blueberry farm size in Nova Scotia (Statistics Canada, 2018). Half of the area (i.e., 20 ha) was assumed to be managed during the vegetative growth year, and the remaining half was managed in the fruit production year, consistent with farmers’ practice. Details of enterprise budgets developed for the representative farm using the two mechanical harvesting systems are reported in Khan et al. (2020). Variable costs excluding machinery costs were based on equipment use assumed to allow field operations to be completed on the representative farm within typical or average working days in a season without yield loss. Thus, the costs estimated at a whole-farm level reasonably reflect differences in the equipment investment and mechanical harvesting system costs (Yiridoe and Weersink, 1994).

Machinery Variable Cost

Machinery variable costs include fuel consumption, oil and lubrication, repairs and maintenance cost, and based on equipment usage. Fuel cost was calculated by multiplying average hourly fuel consumption by operating hours. Oil and lubrication costs were assumed as 15% of total fuel costs (Kay et al., 2016). Repair and maintenance costs were estimated using American Society of Agricultural and Biological Engineers (ASABE) standards (American Society of Agricultural and Biological Engineers ASABE, 2015) and estimated the useful life of the tractors and mechanical harvesters. The wage rate of the tractor operator was CAD$15 per hour, and CAD$12 per hour for the second farm worker, based on 2018 Nova Scotia labor market prices.

Machinery Fixed Cost

Fixed costs such as annual depreciation, interest on investment loans, and housing and insurance do not vary with machinery and equipment usage. The diminishing balance method was used to calculate the annual depreciation of machinery and equipment, with a rate of 15% applied to powered machines (e.g., tractor and harvester) and 10% for non-powered equipment (Yiridoe and Weersink, 1994). The interest rate on investment (i.e., both tractor and harvester) was based on the assumption that 70% of depreciation value was equity and the remaining 30% was debt (Yiridoe et al., 1993). Insurance and housing cost was assumed to be 1.5% of the purchase price of the equipment (Kay et al., 2016).

Data Analysis

Total net returns to land and management associated with wild blueberry production using the two mechanical harvest handling systems were determined by subtracting the total production cost from the associated gross returns. Net returns were compared for the three alternative harvester services acquisition and ownership scenarios for both small box and semi-automatic bin handling systems. Total net returns for production using the two mechanical harvesting systems and three harvester services acquisition types were determined assuming a representative 40 ha farm. Net returns were calculated by subtracting the total production cost from total revenues. Total revenue was obtained by multiplying wild blueberry yield obtained from the field trials by the farm gate prices received by Nova Scotia farmers.

The total cost includes input costs (fertilizer, herbicide, fungicide, and insecticide costs), cost of management practices (pruning and pollination), harvesting costs (fixed and variable costs) and costs associated with transporting berries from the field to the receiving shed. A more efficient wild blueberry harvesting technology will allow for harvesting a given area in a shorter period, which may translate into cost savings, and, ultimately, higher net returns.

Sensitivity Analysis and Breakeven Points

Sensitivity analysis was conducted to assess the effects of changes in selected variables on total net returns for the small box and semi-automatic bin handling systems. The sensitivity analysis focused on market factors which affect berry economic viability, namely: yield and price received by farmers (Gallardo and Zilberman, 2016). Sensitivity analysis of the effect of wild blueberry yield on net returns was based on a framework proposed by (Fonsah et al., 2008) for three yield scenarios: optimistic, average, and pessimistic yield scenarios. The historical farm gate price of wild blueberries in Atlantic Canada was lowest at CAD$0.55 kg⁻¹ in 2017 and highest at CAD$2.30 kg⁻¹ in 2008. Therefore, the sensitivity of the effect of changes in wild blueberry price on total net returns was investigated using a price range from CAD$0.55 to CAD$2.30 kg⁻¹.

Besides sensitivity analysis, breakeven points assuming a wild blueberry enterprise were also determined by mathematical manipulation of the profit equation (Dillon, 1993):$EA\left(m^2/g\right)=\frac{2\times 2.303\times O{D}_{500}}{\theta LC}$; where P is the output price, Y denotes the berry yield, FC represents the fixed cost, and VC denotes the variable cost of production. For example, breakeven output price was determined by setting π = 0 and solving for price. Similarly, breakeven variable cost was determined by setting π = 0 in the relationship: $\mathrm{Y}=85.17\hspace{0.17em}+1.88\mathrm{A}+6.06\mathrm{B}+2.58\mathrm{C}-1.77\mathrm{A}\mathrm{B}-1.49\mathrm{B}\mathrm{C}-2.13{\mathrm{A}}^2-4.14{\mathrm{B}}^2$. Similar breakeven points were determined for fixed cost and total cost.

Results and Discussion

Cost Comparison

Total costs were highest using custom harvesting services and lowest with purchase ownership of the harvesters (Table 5). Custom harvesting was CAD$862 ha⁻¹ for both the small box and semi-automatic bin handling systems. On the other hand, rental harvesters (excluding costs to the farmer such as fuel and operator labor) depended on the harvest handling system type; CAD$542 ha⁻¹ for the small box handling system and CAD$531 ha⁻¹ for the semi-automatic bin handling system. Total costs were lower for the semi-automatic bin handling system than the small box handling system. The technical efficiency associated with the semi-automatic bin handling harvester allowed for harvesting more yield per unit time (Khan et al., 2020).

Table 5. Summary of variable and fixed costs (CAD$ ha⁻¹).

	Outright purchase			Rental Services			Custom harvesting
Item	SB^a	BHS^b		SB^a	BHS^b		SB^a	BHS^b
(a) Variable costs
Chemical inputs^c	550.42	550.42		550.42	550.42		550.42	550.42
Pruning	86.45	86.45		86.45	86.45		86.45	86.45
Pollination	160.55	160.55		160.55	160.55		160.55	160.55
Spraying	27.56	27.56		27.56	27.56		27.56	27.56
Transportation	143.69	143.69		143.69	143.69		143.69	143.69
Machinery^d	176.11	157.45		176.11	157.45		n.a.	n.a.
Interest on operating expenses	43.50	42.85		43.50	42.85		34.55	34.55
Total Variable cost	1188.29	1171.25		1188.29	1171.25		1005.48	1005.48
(b) Machine services acquisition
Rent	n.a.	n.a.		541.50	531.00		n.a.	n.a.
Custom harvesting	n.a.	n.a.		n.a.	n.a.		862.19	862.19
(c) Fixed cost
Machinery	323	252.64		n.a.	n.a.		n.a.	n.a.
Total cost	1511.29	1423.89		1729.69	1702.25		1867.67	1867.67

Notes.

^aSB denotes small box handling system.

^bBHS denotes semi-automatic bin handling system.

^cChemical inputs includes fertilizer, herbicides, fungicides, and insecticides.

^dn.a. denotes not applicable.

Total variable cost, including chemical inputs, pruning, and pollination account for about 55% of total cost, while harvesting cost accounts for about 45% of the total costs for the small box handling systems managed under outright purchase scenarios. By comparison, harvesting cost accounts for 44% of the total cost of production using the semi-automatic bin handling system under the outright purchase scenario. For production using the semi-automatic bin handling system, fixed costs (including depreciation, interest costs on investment, and housing and insurance), accounted for about 40% of the total harvest cost.

Net Returns Comparison

Effect of Mechanical Harvest Handling System Type on Profitability

Net returns are reported according to the mechanical harvest handling system type for the three harvester services acquisition methods considered (Figure 2a). Net returns were higher for production using the semi-automatic bin handling system than for the small box system, consistent for all three harvester services acquisition types. For example, under outright purchase of harvesters, net returns was CAD$322 ha⁻¹ using the semi-automatic bin handling system, and CAD$281 ha⁻¹ for the small box system, a difference of $41 ha⁻¹.

Figure 2a. Effect of harvest-handling system and harvester services acquisition type on net returns (CAD$ ha⁻¹).

Note: Net returns are based on 40-ha representative wild blueberry farm.

Compared with the small box handling system, the high efficiency increased net returns despite an additional $30,000 capital investment in the semi-automatic bin handling system. In addition, the semi-automatic bin handling system can harvest the same acreage in less time (354 minutes per ha for a semi-automatic bin handling system compared with 433 minutes per ha for small box handling system) (Khan et al., 2020), and helps to moderate the additional investment cost of the semi-automatic bin handling system.

Effect of Harvester Services Acquisition Type

Net returns were highest (and positive) for production with harvester purchase, followed by renting harvester services, and lowest (and negative) under custom harvester services (Figure 2: panel a). Harvesting cost paid by farmers to custom services contractors was the same for a small box and semi-automatic bin handling systems but varied according to a sliding field yield range and price scale. Net returns for production using the small box harvester system decreased by 78% from CAD$280.62 ha⁻¹ (under outright purchase) to CAD$62.53 ha⁻¹ using harvester rental services (Figure 2: panel a). The higher small box harvesting equipment costs included a rental fee of CAD$150 per hour compared with CAD$180 per hour for the semi-automatic bin handling system, along with fuel cost, lubrication cost, repair and maintenance cost, and labor cost. For production using rental services for the semi-automatic bin handling system, net returns decreased by 72%, from CAD$322.23 ha⁻¹ (under outright purchase) to CAD$89.92 ha⁻¹. For the small box harvesting system, net returns were -CAD$75.71 ha⁻¹, and imply that production using custom harvesting services was not financially viable (Figure 2a). The high custom harvesting cost combined with the existing low berry market price to producers exacerbated the poor returns to farmers.

Sensitivity Analysis Results and Breakeven Points

Sensitivity of Net Returns to Changes in Yield

As expected, net returns were highest under the optimistic yield scenario and lowest for the pessimistic yield scenario, consistent for both small box and semi-automatic bin handling systems, and across harvester services acquisition types (Figure 3). However, the magnitude of the difference depended on harvester services acquisition type. For example, when blueberry production increased from typical (6,517 kg ha⁻¹) to optimistic yield condition (7,561 kg ha⁻¹) under outright purchase of the semi-automatic bin handling system, net returns increased by 89% from CAD$322 ha⁻¹ to CAD$609 ha⁻¹. By comparison, the increase was 102% (from CAD$281 ha⁻¹ to CAD$568 ha⁻¹) using the small box handling system under the two yield scenarios. On the other hand, assuming that wild blueberry yield decreased from typical (6,517 kg ha⁻¹) to a pessimistic yield (5473 kg ha⁻¹), net returns decreased from CAD$322 to CAD$35 ha⁻¹ (representing a 89% reduction) for the semi-automatic bin handling system (Figure 3a). By comparison, net returns decreased by 102% from CAD$281 to -CAD$6 ha⁻¹ using the small box handling system under the two yield scenarios. A similar trend in net farm returns was found using rental services (Figure 3b) and custom harvesting services (Figure 3c). Furthermore, berry production using rental and custom harvesting was not viable (with negative net returns) under pessimistic yields conditions.

Figure 3. Effects of alternative yield scenarios on net returns ($ ha⁻¹) using, (a) outright purchase of harvester; (b) harvester rental services; (c) custom harvesting services.

Note: Custom harvesting charges were the same for both small box system and semi-automated bin handling system, at CAD$0.12 lb⁻¹ or CAD$0.26 kg⁻¹.

Sensitivity of Net Returns to Changes in Price

Existing wild blueberry price is at a historically low trend. As expected, net returns increased with blueberry price. However, farmers are especially interested in proportional changes in farm returns for a given change in producer price. For example, when berry price increased from CAD$0.55 to CAD$0.99 kg⁻¹ (by 80%), net returns increased by 448% (from CAD$322 ha⁻¹ to CAD$1,763 ha⁻¹) for production under the outright purchase of the semi-automatic bin handling system (Figure 4a), and CAD$281 ha⁻¹ to CAD$1722 ha⁻¹ (or 513%) for the small box handling system. For a similar percentage increase in berry price for production using rental harvester services, net returns increased from CAD$90 to CAD$1,531 ha⁻¹ (i.e., by 1,601%) using the semi-automatic bin handling system (Figure 4b). By comparison, net returns for production using the small box handling system increased by more than a proportionate amount from CAD$63 to CAD$1,504 ha⁻¹ (or 2,287%). On the other hand, the percentage increase in net returns was highest with custom harvesting, at 1,837% (or -CAD$76 to CAD$1,366 ha⁻¹) for both the small box and semi-automatic bin harvest handling systems (Figure 4b).

Figure 4. Effects of wild blueberry price on net returns ($ ha⁻¹) using: (a) outright purchase of harvester; (b) harvester rental services; (c) custom harvesting services.

Note: Custom harvesting charges were the same for both small box system and semi-automated bin handling system, at CAD$0.12 lb⁻¹ or CAD$0.26 kg⁻¹.

Breakeven Points

Breakeven points focus on minimum levels of output price and berry yield, and maximum levels of variable cost, fixed cost, and total cost. Summary statistics from the initial analysis and the estimated breakeven points are reported in Table 6. As noted earlier, wild blueberry farm gate price (CAD$0.55) was based on the 2017 average price received by farmers, while yield (6,517 kg ha⁻¹) represents the average yield from the on-farm wild blueberry harvesting study for 2017 near Debert, central Nova Scotia. Overall, the total variable and fixed costs were higher for the small box handling system due to lower harvest efficiency than the semi-automated bin handling system. The high initial investment cost of semi-automated was offset by higher harvest efficiency by covering more hectares (Khan et al., 2020). For example, the total fixed cost was CAD$321 ha⁻¹ for the small box harvesting system under outright purchase compared with CAD$253 ha⁻¹, representing a 22% decrease.

Table 6. Summary statistics and breakeven analysis results for wild blueberry enterprise, according to harvester acquisition service scenarios.

	Outright purchase			Rental Services			Custom harvesting
	SB^a	BHS^b		SB	BHS		SB	BHS
(a) Summary statistics
Output price ($ kg^−1)	0.55	0.55		0.55	0.55		0.55	0.55
Avg. Yield (kg ha^−1)	6517.00	6517.00		6517.00	6517.00		6517.00	6517.00
Variable costs ($ ha^−1)	1188.29	1171.25		1188.29	1171.25		1005.48	1005.48
Fixed costs ($ ha^−1)	321.00	252.64		541.50	531.00		862.19	862.19
Total costs ($ ha^−1)	1511.29	1423.89		1729.69	1702.25		1867.67	1867.67
(b) Breakeven point for:
Output price ($ kg^−1)	0.23 (−58.2)^c	0.22 (−60.0)		0.27 (−50.9)	0.26 (−52.7)		0.29 (−47.3)	0.29 (−47.3)
Yield (kg ha^−1)	2744.16 (−57.9)	2588.89 (−60.3)		3145.07 (−51.7)	3095.00 (−52.5)		3395.76 (−47.9)	3395.76 (−47.9)
Variable costs ($ ha^−1)	3263.35 (174.6)	3331.71 (184.5)		3042.85 (156)	3053.35 (160.7)		2722.16 (170.7)	2722.16 (170.7)
Fixed costs ($ ha^−1)	2396.06 (646.0)	2413.10 (855.1)		2396.06 (342.5)	2413.10 (354.4)		2578.87 (199.1)	2578.87 (199.1)
Total costs ($ ha^−1)	3584.35 (137.2)	3584.35 (151.7)		3584.35 (107.2)	3584.35 (110.6)		3584.35 (92.0)	3584.35 (92.0)

Notes.

^aSB denotes small box handling system.

^bBHS denotes semi-automatic bin handling system.

^cNumbers in parentheses represent percentage change from corresponding summary statistic.

A summary of breakeven estimates are summarized in panel b (Table 6). Given that breakeven budget component considered can move in a lower or higher direction, percentage deviations in the budgeted items are also reported (Table 6, panel b). To illustrate this point, for the harvester outright purchase scenario, wild blueberry price declined by about 58% (from CAD$0.55 to CAD$0.23 kg⁻¹) for the small box handling system and 60% (from CAD$0.55 to CAD$0.22 kg⁻¹) for the semi-automatic bin handling system to still generate non-negative net returns above total cost. By comparison, for the rental harvesting scenario, breakeven wild blueberry price was CAD$0.27 kg⁻¹ (or 51% lower than actual price (CAD$0.55 kg⁻¹) for the small box handling system and CAD$0.26 kg⁻¹ (or 53% lower than actual price CAD$0.55 kg⁻¹) for the semi-automated bin handling system. A higher breakeven price was observed under custom harvesting: CAD$0.29 kg⁻¹ for both small box and semi-automated bin handling system. Custom harvesting charge paid by farmers was the same for both small box and semi-automatic bin handling systems.

Breakeven yields under the outright purchase scenario represent a 58% reduction (from 6,517 to 2,744 kg ha⁻¹) for the small box handling system and 60% for the semi-automated bin handling system (from 6,517 to 2,589 kg ha⁻¹). Similarly, under harvester rental, breakeven yield can drop by up to 52% for the small box handling system and 53% for the semi-automatic bin handling system. The breakeven yield point was highest at 3,396 kg ha⁻¹ under custom services scenarios for small box and bin handling systems, consistent with the breakeven price results.

Breakeven points for variable, fixed, and total costs indicate that the percentage trend in breakeven points (for all three types of costs) is higher for the semi-automatic bin handling system than for the small box handling system, and consistent across harvester acquisition type. Increased harvest efficiency of the semi-automatic bin handling system moderated the higher capital investment costs. For example, with berry production under outright purchase of harvest handling system, total cost can increase up to 137% (from CAD$1511 ha⁻¹ to CAD$3584 ha⁻¹) for the small box system and 152% (from CAD$1171 to CAD$3584) for the semi-automated bin handling system and still generate non-negative net returns. Overall, the percentage increase associated with breakeven point for total costs was lowest for custom harvesting (92%) and highest under outright purchase.

Effect of Cost-Share Harvest Efficiency Program on Profitability

The government support program is expected to increase farm returns relative to the base analysis without the program. However, the magnitude of the effect was unknown. The cost-share program reduced production costs from 44% to 29% of total harvest costs (Figure 2b). In addition, net farm returns increased from CAD$280.62 to CAD$368.27 ha⁻¹ (or 31%) when the provincial cost-share harvest efficiency program is applied to the capital purchase and semi-automatic bin harvester upgrade (Figure 2b). As reported earlier, without the government cost-share program, outright purchase and upgrade costs translate to 15% increase in cost.

Figure 2b. Effects of alternative harvester on net returns ($ ha⁻¹), with outright purchase of harvester.

Summary and Farm Management Implications

Although studies have evaluated the economic performance of various berry species, especially for US farming conditions, the profitability of wild blueberry production has not been investigated for the predominant production region of northeastern USA and Atlantic Canada. Harvesting cost accounts for a significant proportion of blueberry production cost and, ultimately, influences economic viability. Existing commercial wild blueberry mechanical harvesters are differentiated mainly by the type of handling system; (i) traditional small box; and (ii) semi-automatic bin handling. The economic viability of wild blueberry production using alternative mechanical harvesting systems for farming conditions in Atlantic Canada and the northeastern USA is a knowledge gap. In addition, growers who focus on berry operating costs without accounting for opportunity costs may underestimate true economic costs of wild blueberry production. Wild blueberry farmers’ decision-making involves consideration of profits and farm survival and attaining threshold levels of yield and output prices.

Net returns above land and management were positive with berry production using outright purchase of harvester and harvester rental services, while net returns were negative using custom harvesting services. Wild blueberry profitability sensitivity to selected parameters was as important as breakeven points needed to generate non-negative net returns above the total cost. The implications of the findings for wild blueberry farmers are linked to the observation that although producers often consider several factors in the choice of mechanical harvesting technology, most farmers account for important costs and returns associated with the investment. This study provided detailed economic (including opportunity) cost estimates for wild blueberry production. Agricultural commodity price and price support programs are often linked to the cost of production. Thus, production cost estimates provide useful technical information for wild blueberry farmers in the study region who are concerned that current market prices for both fresh and frozen wild blueberries are below the levels needed to break even. Berry farmers incur both variable and fixed costs. Although fixed costs do not vary with output level, wild blueberry producers can manage the level of variable inputs and, ultimately, variable costs and profits. Decisions about what level of variable inputs to apply are a significant determinant of the profitability of production. The detailed variable cost and fixed cost estimates would be useful for farmers and government policy analysts seeking reliable information to inform support programs such as the Nova Scotia “Wild Blueberry Harvest Efficiency Program 2019–2020.”

Breakeven yield levels estimated can be used to gauge weather-induced potential yield loss that can be tolerated, such as the 2018 frost damage to blueberries across Nova Scotia. Similarly, the breakeven output price provides insights and (potential) impacts on marketing decisions under variable price conditions. Although the breakeven point results provide insights on economic viability and risk in wild blueberry production, other factors that are important in decision-making such as cash flow and participation in eligible federal and provincial business risk management programs, while important, are beyond the scope of the present study.

Disclosure statement

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Additional information

Funding

This research was supported by funding from the Natural Sciences and Engineering Research Council (NSERC), Doug Bragg Enterprises Ltd., New Brunswick Canadian Agricultural Partnership and Wild Blueberry Producers Association of Nova Scotia. The authors would like to thank Stephen Bragg (President, Doug Bragg Enterprises Ltd.) for providing harvester and semi-automatic bin handling systems for the study, and Joe Slack (President, Slack Farms) for field use and help during data collection. The authors would also like to thank the Dalhousie University Precision Agriculture Research Team for their help with field data collection.