The British Columbia Apple industry, primarily located in the Southern Interior of the province, has undergone varying levels of tree removal and replanting as growers attempt to maximize profits. This study models their behaviour by using econometrics in a supply response model. The economic environment of the fruit industry is described. The variables affecting acreage responses to removals and replanting of new and traditional apple varieties are estimated using Ordinary Leased Squares in three separate equations. Data are pooled and aggregated at the regional level. Several versions of the original model are run to test for robustness of the variables and of the original model. The econometric models illustrated that the plantings of new varieties increases when expected profits from vintage trees decline. However, planting and removals of traditional varieties are positively related to excepted profits from vintage trees and this does not follow apriori expectations. More striking in the model is the regional differences and their responsiveness to removals and replanting. Regions with younger, better educated farmers replant to new varieties at a faster rate than other regions. Replant programs are shown to have a negative effect on the rate of replanting. These programs maintain basic criteria for their eligibility to funding and seemingly decreased the acres replanted. Increasing the monetary value of the replant grants results in the effect of increasing the acreage of traditional varieties being planted. Policy implications are examined in a post modelling analysis. The effects of top loading subsidy effects are shown to have decreased the acreage of trees replanted over time. These effects are shown to cause a dead weight loss to society of approximately $13 million over 20 years.

The British Columbia Apple industry, primarily located in the Southern Interior of the province, has undergone varying levels of tree removal and replanting as growers attempt to maximize profits. This study models their behaviour by using econometrics in a supply response model. The economic environment of the fruit industry is described. The variables affecting acreage responses to removals and replanting of new and traditional apple varieties are estimated using Ordinary Leased Squares in three separate equations. Data are pooled and aggregated at the regional level. Several versions of the original model are run to test for robustness of the variables and of the original model. The econometric models illustrated that the plantings of new varieties increases when expected profits from vintage trees decline. However, planting and removals of traditional varieties are positively related to excepted profits from vintage trees and this does not follow apriori expectations. More striking in the model is the regional differences and their responsiveness to removals and replanting. Regions with younger, better educated farmers replant to new varieties at a faster rate than other regions. Replant programs are shown to have a negative effect on the rate of replanting. These programs maintain basic criteria for their eligibility to funding and seemingly decreased the acres replanted. Increasing the monetary value of the replant grants results in the effect of increasing the acreage of traditional varieties being planted. Policy implications are examined in a post modelling analysis. The effects of top loading subsidy effects are shown to have decreased the acreage of trees replanted over time. These effects are shown to cause a dead weight loss to society of approximately $13 million over 20 years. / Land and Food Systems, Faculty of / Graduate

The objective of this study is to determine the cost of producing apples in British Columbia and Washington State and then compare the estimated costs between the two regions. A conventional 'cost of production model, whereby long-run costs (i.e. depreciation costs) have been included, is developed to determine the average per acre and per pound cost of producing apples. The model assumes a representative orchard for British Columbia and Washington State. A set of characteristics, along with a set of management schedules, are defined for each of the representative orchards. In keeping with the assumption that the representative orchards include mature as well as trees in various establishment stages, each management schedule defines a set of operations for trees of a specific age. There are nine schedules representing trees age one through mature. Aside from the type of operations performed, each management schedule also specifies the number of times an operation is executed, the type of machine(s) used, the machine and labour time required, and the material/service cost involved. From the information provided in the management schedules, a corresponding set of production cost schedules is developed. These schedules show the depreciation, opportunity, insurance, repair and maintenance, fuel and lubricant, labour and material/service costs associated with each operation. The theory of Capital Budgeting is used here to provide a consistent and accurate estimation of the per hour or annual cost of machinery, equipment and buildings. For each schedule, the sum of the total cost per operation plus the overhead charges, interest on operating capital, and rent and tan on land yield the per acre cost of producing apples. A comparison based on the per acre cost by tree age is performed to determine cost differences that may exist at this level. On average (average of orchard block) per acre cost is determined for British Columbia and Washington State based on the proportion of trees of a specific age and its total cost. This average per acre cost is compared, as well as the individual categories of costs (i.e. labour) to determine where differentials exist between the two regions. Based on an average per acre yield, per pound cost of producing apples is also calculated. The efficiency ratio, total ouput value/total input value, is calculated and compared to provide an insight into British Columbia's producer’s ability to extract profits from inputs. / Land and Food Systems, Faculty of / Graduate