Incomes that are impossible to achieve with production of any other crop - technology of Delta Agrar's apple orchard in Čelarevo

It already becomes a tradition that web portal eKapija grants Aurea awards to the top investors of the year. This year`s awards ceremony will take place at the end of March. Since the new cycle is approaching, we paid a visit to the companies that were shortlisted for last year's award to check what state of business development they reached.

Delta Agrar,a part of Delta Holding, invested 5m EUR in 2008 in the technology and planting of apple seedlings at 100 ha in Čelarevo. The apple orchard is conceived to completely change the technology and method of apple production in our country, and some of its elements can put it in the group of the world`s most modern orchards.

The orchard, with 400,000 apple trees and six sorts of apple, is equipped with a modern system that comprises anti-hail and anti-frost systems, weather station, as well as the irrigation and fertilization system.

Slobodan Košutić, the Category Manager for Fruits and Vegetables in Delta Agrar, speaks in the interview for eKapija about investment returns, bit potentials of Russian market, the problems of fruit manufacturers, as well as the company`s plans for year 2010.

eKapija: What was the yield of the apple orchard in Čelarevo in 2009?

- We produced over 2,400 tons of apple last year. In 2009, parts of the orchard planted with Gala and Braeburn apple had record yields of 47.1 and 44.1 t/ha in the third year of production, although the projected yields for the third year of production, with such intensive apple growing technology, range between 30 and 35 t/ha.

In the parts of the orchard planted with Red Delicious and Golden Delicious apple trees, which are in their second year of production, the yields amounted to 17 and 14 t/ha, respectively, while the part of the orchard planted with Granny Smith apple trees had the yield of 19 t/ha.

eKapija: In what time do you expect to reach the maximum use of capacities and what will be the yields in that case?

- The orchard will reach its full production capacity in the fifth year of production. The expected yield will range between 60 and 80 t/ha and it will depend on the sort of apple. That means that the part of the orchard planted with apple trees in 2006 is going to reach the full production capacity in 2011. Such orchard can be used for minimum 15 years. With the application of right agricultural techniques, the yields in the years to come are expected to exceed 70 t/ha. We expect to produce over 6,000 tons of apple in our orchard in 2010.

eKapija: You invested 5m EUR in this orchard. How long does it take for such investment to be returned?

- The costs per hectare of this orchard range between 20,000 and 23,000 EUR, which covers procurement of 4,000 Italian high-quality apple seedlings, concrete poles, anti-hail net, irrigation and fertilization system, wires and other related equipment. The average annual maintenance costs range between 2,500 and 3,000 EUR. The orchard like this starts financing itself in the third year of production, while the investment is fully returned in the fifth year, after which the annual incomes are so big that they are impossible to achieve with the production of any other crop.

eKapija: How much apples did Delta Agrar export in 2009 and to what markets?

- We exported over 2,700 tons of apples in 2009, primarily to the market of Russia, while significantly smaller quantity was exported to the neighboring countries.

eKapija: Do you plan to start exporting apples to some new markets in the following period?

- The potentials of Russian market are . The official data show that total annual apple production in Serbia is not big enough to satisfy 2% of the annual needs for apples in Russia.Since Delta Agrar opened its distribution center in Moscow in early 2009 and established cooperation with several large retail chains in Russia, we will focus all our strength on supplying them with apples on regular basis.

eKapija: You`ve announced the enlargement of the orchard`s capacities. When do you plan to do that?

- We planted additional 25 ha with apple seedlings in 2009, so that total surface of Delta Agrar`s orchard is now 115 ha. Our intention is to increase the orchard`s surface to total of 600 ha.

eKapija: Apple orchard is equipped with modern technological solutions. What can not be "controlled" in the orchard?

- The whole production process is under supervision and the risk is, practically, reduced to a minimum thanks to the state-of-the-arts fruit growing technology that we introduced.

eKapija: What are the results in organic apple production in Delta Agrar? Is there demand for such fruit in our market? What are the prospects of such production?

- Delta Agrar has small number of Gold Rush apple trees in its orchard, and Gold Rush is produced as organic apple. The demand for organic apples in our market is small, partially because of the consumers` unawareness of the advantages of organic production and partially due to organoleptic look of such apple. Organically produced apples are primarily intended for choosy consumers in the countries of Western Europe. However, in general, the prospects of organic production are not that bright and they are not expected to improve significantly in our country. That can be a good business for small family farms. At global level, having in mind the growing population of the world and limited surfaces of agricultural land, the need for intensification of production is emerging, that is, the need for production as many agricultural products as possible in as small areas as possible.

eKapija: Have you invited Serbian fruit manufacturers to cooperate with you?

- The interest is big, but only few of them are really ready to start cooperation, primarily due to their impossibility to find the source of finance to cover the costs of one hectare of an intensive orchard, although it is one of the forms of agricultural production that definitely repays the banking loan and provides high and stable incomes for the manufacturers on long-term basis.On the other hand, much time is needed for the menthality of our farmers to change in order for them to accept modern technologies that bring long-lasting, solid and safe profit instead of traditional ones used by their fathers and grandfathers. If the state recognizes this project as essential for modernization of Serbian fruit growing sector and backs it, it is for sure that Serbian apples will become competitive in foreign markets.

eKapija: Many orchards remained unpicked in 2009. In your opinion, what problem does manufacturers in Serbia experience?

- The problem lies in the old technology of apple growing and old assortment, which, even in the years when the yields are exceptionally high, can not even cover the price of costs of production, let alone bring profit to manufacturers.

Over 60% of orchards in Serbia are planted with Ajdared apple trees, so that the market is saturated. Having in the mind the yields of 15 to 20 t/ha with 50% of first-class apples, which are achieved when traditional extensive method of production is applied, it is clear why many manufacturers gave up picking apples, which also represents a significant cost in the apple production process.

For the sake of comparison, in addition to exceptionally high yields, Delta Agrar`s apple orchard has over 85% of first-class apples in total production, which have the best price in the market.

eKapija: Is apple produced in Serbia competitive in global market?

- The are not competitive in the global market because of the old technology and assortment, high production price and absence of state`s subventions. The same was the case with Poland, which is our biggest competitor in the export of apples to Russian market. In order for Serbian apples to be competitive, it is necessary to achieve high yields with high percentage of first-class apples and lower the price of production, which is possible only with intensive apple production, the kind Delta Agrar organizes in the orchard in Čelarevo.

eKapija: What are the plans of Delta Agrar for year 2010?

- Delta Agrar will continue working on expansion and establishment of new partnership relations with agricultural manufacturers when it comes to joint production of field crops and vegetables. As far as our orchard is concerned, we plan to have new 50 ha planted with apple seedlings this year and finish construction of Ultra Low Oxigen cold storage plant with the capacity of 6,000 tons in the orchard.We also expect to finish implementation of our project for construction of hothouse in Bogatić, at the surface of 5 ha, which is situated near a geothermal spring. In addition, we will also do our best to increase export of domestic fruits and vegetables and other agricultural and food products to the market of Russia.

Delta Agrar d.o.o. Beograd

Delta Holding d.o.o. Beograd

eKapija.com Beograd

Aurea

Aurea 2010

Aurea 2009

Čelarevo

apple orchard

apple

apples

gala

breaburn

red delicious

golden delicious

granny smith

Moscow

gold rush

organic apple

orchard

organic production

Ultra Low Oxygen cold storage plant

Slobodan Košutić