CHAPTER X: ESTABLISHMENT OF A MODERN DATE PLANTATION

by A. Zaid and A. Botes
Date Production Support
Programme

1. Introduction

During the last ten years, reports have indicated the potential and viability
for a date production industry. Most of these reports focused on economics and
marketing of the date palm at national or regional level. This chapter will
concentrate on useful information in both technical and fi nancial aspects for
individual farmers. Technical establishment of a date plantation will cover the
following components: f easibility study, suitability of the site, selection of
varieties to be planted, site preparation, irrigation system and technical
practices, while fi nancial establishment will highlight the establishment and
operational costs and the cash fl ow statement.

2. Technical establishment of a date plantation

2.1 Feasibility study

After being convinced about the marketing potential of dates, and before
purchasing land or developing his/her own farm, a potential date grower must
seriously look at several factors and consequently conduct a feasibility study
before any physical date establishment. The feasibility study should focus on
the following:

- Survey of the area: with maximum information on its location (latitude,
longitude and altitude), vegetation, communications and infrastructure;

- Meteorological data: The date grower must contact the nearest weather
station to his plantation (within a circle of 30 to 50 km if possible) and
request the following data for at least 10 - 15 years:

* Daily values of maximum temperatures (°C);
* Daily values of average
temperature (°C);
* Daily values of minimum temperatures (°C);
* Daily
values of rain (mm);
* Daily values of evapotranspiration (mm);
*
Daily values of sunshine (Hr.);
* Daily values of wind (km);
* Daily
values of maximum humidity (%); and
* Daily values of minimum humidity
(%).

- Soil analysis: This is a primary factor since it will indicate the
success potential of the culture, and will also be used as a guideline for
future fertilisation programmes, and irrigation requirements.

- Water analysis: The most important factor to look at is the salinity
level along with the depth of the underground water table, if any.

- Mode of irrigation: Depending on water availability, its quality and also
taking into consideration all the above factors, a mode of irrigation system
will be selected. Flood irrigation is discouraged for a commercial plantation.
In order to ensure high water use-effi ciency the date grower should select
either drip or microsprayer systems.

- Economical analysis: A local and national market survey is to be
implemented to see how promising the market is.

- Climatic requirements: The two main climatic requirements for successful
cultivation of dates is a long, hot growing season and an absence of heavy
rain or high humidity during the ripening period. Frost incidence, is another
environmental factor to take into consideration. Details on climatic
requirements can be found in Chapter IV.

- Water availability: To maximise the probability of a successful date
plantation, long term water availability must be ensured. Salinity level must
not be too high (5 - 6 % at most) even though adult date palms can survive
higher levels (9 - 10 %).

- Soil type: Date palms are grown in a wide variety of soils. The optimum
soil should have a maximum water-holding capacity and good drainage. Sandy
soils require excessive fertilisation and irrigation and permit rapid leaching
of mineral nutrients. However, sandy soil that is underlined by more retentive
soil of fi ner texture in the first two metres is appreciated. Growth
development and fruit quality of dates are reduced under very saline soil
conditions.

- Labour requirements: Date palm culture is labour intensive during
pollination and harvesting/packing periods. Labour requirements for other
operations during the year (bunch thinning, pulling down and tying, covering
bunches, irrigation, pruning, fertilisa-tion, etc.) are lower.

2.2 Selection of varieties to plant

Local clones, which are exclusively of seed-origin, must be assessed for
their suitability for commercial production. Even though some of these seedlings
show signs of measuring up to the best internationally renown varieties, such as
Medjool, Bou Fegouss, Barhee, etc, these seedlings must be thoroughly evaluated
before large scale multiplication and planting can be initiated. The large scale
multiplication and plantation of international renown varieties is essential for
reaching the international market and getting high value from the
plantation.

2.3 Site preparation

Once all the above factors and conditions have been assembled, the date
grower must concentrate on the preparation of his/her site for the initiation
and establishment of the date plantation. To avoid repetition, the reader is
invited to refer to Chapter VI.

3. Financial establishment of a date palm plantation

3.1 Establishment cost

The introduction of a new enterprise to the farm business can be expensive.
However, diversifi cation into date production is seen as part of the bigger
existing farming business which will make use of existing infrastructure and
mechanisation. Careful planning is thus needed to allocate scarce resources
amongst the different farming activities, in a way that the best alternative
satisfi es the respective requirements. Detailed calculations are necessary for
the farmer to determine the capital needed to implement his/her plan and to
forecast its fi nancial result.

It should be kept in mind that costs will vary from one farm to another,
depending on the current setup in terms of existing infrastructure and
machinery, source of water supply, irrigation system to be used, etc. Costs
given are based on a Namibian Date Palm Project (80 ha at Naute/Keetmanshoop),
quotations and some estimates of the authors.

In light of possible existing scenarios, the following costs are not
included: acquisition of land; source of water supply; mechanisation; and
marketing cost. Additional costs needed for date production will be
highlighted.

The breakdown of cost items in this paper should be used as a guideline and
need to be adapted for each specifi c situation. Table 61 gives an outline of
the establishment costs involved per hectare, for a modern plantation of at
least 20 ha. The spacing is 10 × 8 m and 125 palms are planted per hectare, of
which 5 are males.

TABLE 61
Establishment costs per ha for a modern date plantation
(US$)

COST ITEM

COST IN US$

Land Preparation:

1. cleaning and levelling

20

2. ripping

60

Water Supply Line

1,600

On-land Irrigation System

1,200

Establishment of Plantation:

3. plant material

(US$ 22 × 120)

2,640

4. fertilisers

24

5. labour

(4 × US$ 2 × 5 days)

40

6. hardening of plants

16

TOTAL COST

5,600

The irrigation system to be installed in a modern plantation should be such
that effi ciency is at maximum (at least 85 %) and that volume of water per palm
can be controlled. A well planned and effective irrigation system, based on the
use of microsprayers or drippers, together with proper management and production
practises will result in optimum yields.

The smaller producer establishing only 1 to 5 ha will not install such an
expensive irrigation system and it is estimated that the establishment cost
might be in the order of US$ 3,200 per ha. This amount includes US$ 2,640 for
plant material, US$ 80 for labour, fertiliser and pesticides, and US$ 520 for
water supply.

Table 62 gives an outline of additional capital expenses needed to build and
equip a modern packing house, for a larger commercial plantation of at least 40
ha. The international food market is very competitive and quality control and
hygiene criteria are strict. Thus, to enter the export market successfully and
to sustain the supply of quality fruit, the facilities mentioned are
essential.

Realising the magnitude of the total costs involved, the immediate question
is whether the project will survive. This question will be answered in the
sections to follow. It should be kept in mind that date production is a long
term project and generates only income from year four or fi ve from
establishment. Measures should thus be taken to maintain a cashfl ow during that
period.

Various options exist, and the farmer, as a manager, should decide what
option best fi ts his skills and business. The following can be successfully
implemented as an intercrop: vegetable production; lucerne and citrus. An
intercrop will however increase capital investment.

TABLE 62
Additional capital expenses (US$): buildings and
equipment of a packing house

COST ITEM

COST IN US$

INFRASTRUCTURE

Packing House/Shed structure

300,000

(office, ablution, packing room, cold rooms, etc.)

Labour Houses

140,000

IMPLEMENTS

Tractor and trailer

24,000

Pick-up

16,000

Equipment

tools

200

plastic crates for harvesting

3,400

grading/sorting line/Table

3,000

washing Table

1,000

packing line/Table

2,000

electronic scale

1,000

press for pitted dates

1,000

vacuum packer

5,000

TOTAL

496,200

One of the advantages of a date plantation is that it creates a special micro
climate favourable for other crops. Some plantations in the northern hemisphere,
for instance, successfully produce citrus as an intercrop. Because of the high
costs of needed facilities, i.e. packing house, cold rooms, labour houses, etc.,
it seems almost essential to have other crops also utilising these facilities.
Other crops sharing these capital expenses have not been considered in the
sections to follow.

3.2 Operational cost

Operational expenses represent those expenditures that occur only if
production is undertaken. Capitalisation of the investment cost is dependent
upon the production process. Each activity to improve yield and quality costs
money and the manager should decide how much, of which activity and at what cost
to apply.

A carefully worked out balance of inputs in relation to outputs is needed
since maximum production does not necessarily result in maximum profi t.

Tables 63 and 64 represent the activities involved in date production,
packaging and marketing with their respective costs over a 10- year period, for
large and small commercial date plantations, respectively. Cost indications in
Table 63 is per hectare and refl ects the Naute Date project (Namibia), while
Table 64 represents activities and respective cost estimates to be encountered
by the small date producer (5 ha plantation).

Analysing Table 63, it is clear that the expensive activities are packaging
and export marketing. In year 10, full production, pre-harvest costs are about 6
cent (US) per kg and harvest costs are US$ 0.524 of which packaging material is
US$ 0.496. At this point of the production cycle, one should decide whether to
export in bulk, thus achieving lower prices, or whether to target the retail
stores and pre-pack the date fruit in attractive "glove boxes", achieving higher
prices.

TABLE 63
Operational cost per ha for a large commercial date
plantation (US$)

YEAR

ACTIVITY

1

2

3

4

5

6

7

8

9

10

Pre-harvest Cost:

· water

28

28

28

28

28

28

28

28

28

28

· fertilisers

24

24

24

24

24

24

24

24

24

24

· labour (*)

6

12

12

12

14

17

20

24

29

32

· mechanisation

10

10

10

10

10

10

10

10

10

10

· protection:

bags:

plastic

100

100

100

shade net

400

400

400

400

400

400

pesticides

10

10

15

15

20

20

20

30

30

30

SUB-TOTAL (1)

78

84

89

89

596

499

602

516

621

524

Harvest Costs:

· labour

5

10

30

60

80

100

120

· mechanisation

5

10

20

30

40

40

40

Packing Costs

· packaging material:

packages

480

960

960

2,400

2,400

2,40

3,36

cartons

62

124

217

310

310

0

0

labour (**)

4

5

20

40

55

310

800

70

80

SUB-TOTAL (2)

556

1,109

7,967

2,840

2,885

2,920

4,400

Marketing Costs:

· cold Storage/electricity

1,000

1,000

1,400

1,400

1,600

1,600

2,000

Local marketing:

· transport

36

72

126

180

180

180

252

· agency fees

97.2

194.4

340.2

486

486

486

486

Export marketing:

· transport:

road

84

168

294

420

420

420

588

air/sea

840

1680

882

1,260

1,260

1,26

1,76

· agency fees

277.2

554.4

970.2

1,386

1,386

0

4

1,386

1940.4

SUB-TOTAL (3)

2,334.4

3,708.8

4,012.4

5,132

5,332

5,332

7,224.8

TOTAL(1 + 2 + 3)

78

84

89

2,979.4

5,373.8

6,478.4

8,574

8,733

8,873

12,148.8

(*) Labour includes weeding, pruning, pollination, thinning and orchard
maintenance.
(**) Labour includes sorting, cleaning, de-stoning, packing and
packing house maintenance.

The calculations in Table 63 for marketing costs are based on the assumption
that 30 % of the harvest will be marketed locally and 70 % will be for the
export market. Estimated marketing costs are in the order of US$ 0.86 per kg. In
the calculations for transport to Europe, air transport is used only during the
first two years of production. Air transport is quite expensive, but since
volumes to be exported are low in the initial stages of production, sea
transport cannot be considered. Total operational cost as outlined in Table 63
amounts to US$ 1.446 per kg (Naute Project during 1997).

TABLE 64
Operational cost for a small date plantation (1 ha);
(US$)

YEAR

ACTIVITY

1

2

3

4

5

6

7

8

9

10

Pre-harvest Cost:

· water (***)

120

120

120

120

140

140

160

160

160

200

· fertilisers

24

24

24

24

24

24

24

24

24

24

· labour (*)

6

12

12

12

14

17

20

24

29

32

· mechanisation

10

10

10

10

10

10

10

10

10

10

· protection:

bags: plastic

100

100

100

shade net

400

400

400

400

400

400

pesticides

10

10

15

15

20

20

20

30

30

30

SUB-TOTAL (1)

170

176

181

181

708

611

734

648

753

696

Harvest Cost:

· labour

5

10

30

60

80

100

120

· mechanisation

5

10

20

30

40

40

40

Packing Costs

· packaging material:

35

70

130

180

180

180

250

· labour (**)

4

5

20

40

55

70

80

SUB-TOTAL (2)

49

95

200

310

355

390

490

Marketing Cost:

· cold storage

40

40

60

60

80

80

100

· transport

120

240

420

420

420

420

840

SUB-TOTAL (3)

160

280

480

480

500

500

940

TOTAL (1+2+3)

170

176

181

390

1,083

1,291

1,524

1,503

1,643

2,126

(*) Labour includes weeding, pruning, pollination, thinning and orchard
maintenance.

(**) Labour includes sorting, cleaning, de-stoning, packing and packing house
maintenance.

(***) Higher water cost for small date plantation due to the fact that water
is usually supplied from a borehole and pumped with a diesel engine at high
cost.

In this scenario the small scale producer will sort and grade the fruit, but
sell in bulk to a packing house. As a result, the expensive activities, i.e.
pre-packing and export, are covered by someone else. This strategy will reduce
production cost from US$ 1.446 per kg to US$ 0.236 per kg. Obviously the price
to be received will also be much lower, as will be the risks involved in
exporting.

3.3 Cash flow statement

The function of cash fl ow is to provide information on the timing and
magnitude of cash (infl ows and outfl ows). Both cash fl ow statements here
below summarise the cash fl ows for large (40 ha) and small scale (5 ha) date
plantations, over a period of 10 years. For the calculations in Tables 65 and
66, the following average production potential per palm in kg is considered.

YEAR

LARGE SCALE

YEAR

SMALL SCALE

1 - 3

1 - 4

4

10*

5

15

5

20

6

30

6

35

7 - 8

35

7 - 9

50

9

40

10

70

10

50

* For a well maintained large scale modern date plantation, production could
start one year earlier than the small scale one and be over 100
kg/palm/year.

An estimated cashfl ow statement for the large scale modern date plantation
is given in Table 65. The costs indicated are calculated as follows:

* gross income:

-

30 % of production at US$ 2.4/kg

-

70 % of production at US$ 3/kg

* development cost:

-

plantation: 20 % own capital and rest as loan over 10 years at 18
%.

-

infrastructure: established only in year 4 with 20 % as own capital and
rest as loan over 10 years at 18 %.

TABLE 65
Cash flow statement for 40 ha date plantation
(US$)

Year

Prod.

Gross
Income

Development Cost

Operational

Management

Net

Balance

kg

US$

Plantation

Infrastructure

Cost

& Overheads

Income

1

44,000

3,120

40,000

-87,120

-87,120

2

40,000

3,360

40,000

-83,360

-170,480

3

40,000

3,560

40,000

-83,560

-254,040

4

48,000

135,360

40,000

96,600

119,176

40,000

-160,416

-414,456

5

96,000

270,720

40,000

89,000

214,952

40,000

-113,232

-527,688

6

168,000

473,760

40,000

89,000

259,136

40,000

45,624

-482,064

7

240,000

676,800

40,000

89,000

342,960

40,000

164,840

-317,224

8

240,000

676,800

40,000

89,000

349,320

40,000

158,480

-158,744

9

240,000

676,800

40,000

89,000

354,920

40,000

152,880

-5,864

10

336,000

947,520

40,000

89,000

485,952

40,000

292,568

286,704

11

336,000

947,520

40,000

89,000

485,952

40,000

292,568

579,272

12

336,000

947,520

89,000

485,952

40,000

332,568

911,840

13

336,000

947,520

89,000

485,952

40,000

332,568

1,244,408

14

336,000

947,520

89,000

485,952

40,000

332,568

1,576,976

15

336,000

947,520

485,952

40,000

421,568

1,998,544

The Table 65 cash fl ow statement suggests that net income is positive only
as of year six, while the accumulating balance is negative up to year nine.
Total costs in year 10 totals to US$ 1.95 per kg. Although costs can be
recovered over the 15- year period with proper production techniques, planning
and management, attention should be focused to improve the cashfl ow situation
in years 1 to 5.

TABLE 66
Cash fl ow statement for 5 ha date plantation
(US$)

Year

Prod. Kg

Gross Income US$

Development Cost

Operational Cost

Net Income

Balance

1

16,000

850

-16,850

-16,850

2

880

-880

-17,730

3

905

-905

-18,635

4

905

-905

-19,540

5

9,000

9,000

3,540

5,460

-14,000

6

18,000

18,000

3,055

14,945

945

7

21,000

21,000

3,677

17,323

18,268

8

21,000

21,000

3,240

17,760

36,028

9

24,000

24,000

3,765

20,235

56,263

10

30,000

30,000

3,480

26,520

82,783

Analysing costs at a smaller scale (Table 66), it can be seen that
operational costs can already be covered in the first year of production (year 5
after establishment). The accumulated balance, however, is only positive in year
6. In calculating the cashflow, an income of US$ 1 per kg is assumed,
considering that financing management and administration costs are taken into
account. Investment in a 5 ha date plantation might thus result in a net income
of US$ 26,520 in year 10 with a yield of 50 kg per palm at US$ 1 per kg.

When comparing the cost of production of 1 kg of dates for a large scale
modern plantation and that for a small producer, one would like to suggest that
a nucleus-regional packing