Economic optimization of the apple investment and growing system alternatives in Republic of Macedonia

Abstract

Apple, among all fruits production, has traditional importance and contribution to the Macedonian economy. The favour agro-climatic conditions, combined with the long-lasting tradition, generated human capacity and expert knowledge offer huge potential for growing apples and development of this economic branch. The apple production in Republic of Macedonia is insufficient and uncompetitive on domestic and foreign markets as result of insignificant intensity of the growing system, poor productivity and high production and investment costs. In order to identify the optimum investment and supreme apple growing system alternative, the economic optimization analysis were performed. For the purposes of this analysis, a field study has been conducted on 39 apple producing farms in the Pelagonia region for the production years of 2009 and 2010. Additionally, the production information are updated with data for the years 2011, 2012 and 2013 based on rapid research, semi-structured interview with the main stakeholders in supply chain and official statistics. The investment calculations have been used to determine the comparative advantages of the investment in different growing system models. The economic justification to invest in the different growing system was assessed based on the standard indicators for investment evaluation as: internal rate of return, net present value and payback period. The findings show that economic performance of the apple farming depends on the apple growing system. Although, the highly intensive method of apple growing require much higher investment costs, it brings better results than the dominant extensive growing method with low plant density.