Posts Tagged: loss

CALCULATING THE VALUE OF A LEMON TREE LOSS

Etaferahu Takele, Area Farm Management Advisor, UCCE Southern California and Don Stewart, Staff Research Associate, Ag Issues Center

 

This article provides a sample estimate value of a lemon tree when a loss occurs due to fire or any other cause. Tree loss or damage by fire in southern California have occurred frequently (see a picture of an example of fire damage of citrus trees in southern California). Estimates may be needed for compensation.

The following example is calculated using the Trees and Vine Loss Calculator Excel Template Version 2.0.  the template is available for download at https://coststudies.ucdavis.edu/en/tree-vine-loss .   Tree loss values can be calculated in two options.  One, with replanting where loss is estimated until the replacement eventually generates equivalent income to what the old tree would have generat4ed.  The other option without replanting, the value of which is estimated over the expected life of the tree.  The reason for without replanting may be due to age of the orchard or there is an easement, tight of way, or other reason.

The template, as we described before requires only basic knowledge of Excel.  The formulas for calculations are embedded and a used guide/instruction page available with the template.  Only some data regarding the tree lost is needed which includes the age of the tree at loss; its productivity history; estimated life; product price; and some production costs such as harvest6ing and pruning (costs that will vary with age of trees: as well as a discount rate for calculating the net present value (NPV) of the loss.

The value of loss is provided in NPV which is a discounted cash flows due to the time value of money (TMV). TMV is the concept that money you have now is worth more than that expected in the future due to its earning potential through investment and changes caused because of inflation or other factors. The discount rate or the rate used to account for time, will depend on the type of analysis undertaken. The appropriate discount rate could be the opportunity cost of putting money to work elsewhere—simply put, it's the rate of return one could earn in the marketplace for an investment of comparable size and risk.

 

CALCULATING THE VALUE OF A LEMON TREE LOSS                                                                          

Option 1: With Replanting                

Assuming that a single tree in an orchard lost at age 7 and removed before harvest but too late to replant that year, and replanted the following year. The compensation is the sum of the annual differences between the net income that would have been realized if the tree had survived (had not been lost) and the net income that is realized from the replacement tree until the lost tree and the new planted tree reach the age of comparable yield.

Option 2: Without Replanting

The compensation is the present value of the net income that would have been realized if the tree had survived through its expected life. The expected annual loss from the lost tree equals the expected revenue minus the pruning and harvest costs that would have been incurred if the tree had not been lost. Costs for damage to investments such as irrigation systems or trellis systems are not included in this calculation and should be determined separately.                

Example:

In the example table below, The data for costs and income are based on the Sample Costs To Establish An Orchard And Produce Eureka Lemons study developed in 2020 for Ventura County. (https://coststudyfiles.ucdavis.edu/uploads/cs_public/38/fa/38fa8f9c-c93b-4c62-9740-a850bbc40df9/2020lemonsventuracounty.pdf. The loss value estimate was $436.70 for option with planting and 2,133.66 for option without replanting.

Data Entry and Printing                     

Data should only be entered into the yellow shaded cells in the General Data Input section. The spreadsheet is not password protected and should not be modified, otherwise the formulas will be messed up and the template will be out of use. The spreadsheet will automatically recalculate the net present value whenever new data is entered. Cells with zeros (0) in them will appear as blanks. The tree/vine spacing if not known or is on a non-square pattern, then the number of trees/vines per acre may be entered in the cell.   A default print page range is set in the spreadsheet so that the general input and cost sections will print when the print button is pressed. More instruction in the Template.       

fire citrus trunk burn

It's NOT Just Heat Stress, It's Lack of Water for Cooling

Plants lose water through their leaves and it's called transpiration.  People lose water off their skin and it's called evaporation or sweating.  When a plant stops losing water and when people cant produce enough sweat to cool off, both overheat.  The weather influences that drive this water loss - water that needs to be replaced or the bodies begin to go into heat stress - are the amount of light (day length, cloud cover), relative humidity (it dries faster when air is dry and slower when humid - think desert versus Florida),  and windy (more wind, more drying).  Temperature is important, but not as much as these other drivers. Think freeze-drying  - a very successful process for removing water from food.  Often humans respond more to temperature than these other factors and figure, when it's cool. it's not necessary to water their plants, themselves or their workers.

Heat stress is more complicated than this, of course, but below are some helpful guidelines to follow to avoid heat stress:

https://www.dir.ca.gov/dosh/heatillnessinfo.html

Cal/OSHA HEAT ADVISORY

When employees work in hot conditions, employers must take special precautions in order to prevent heat illness. Heat illness can progress to heat stroke and be fatal, especially when emergency treatment is delayed. An effective approach to heat illness is vital to protecting the lives of California workers.

California law requires employers to identify and evaluate workplace hazards and take the steps necessary to address them. The risk of heat illness can be significantly reduced by consistently following just a few simple steps. Employers of outdoor workers at temporary work locations must be particularly alert and also plan for providing first aid and emergency medical services should they become necessary. All workers should be accounted for during and at the end of the work shift. Heat illness results from a combination of factors including environmental temperature and humidity, direct radiant heat from the sun or other sources, air speed, and workload. Personal factors, such as age, weight, level of fitness, medical condition, use of medications and alcohol, and acclimatization effect how well the body deals with excess heat. 

Heat Illness Risk Reduction

1. Recognize the Hazard. There is no absolute cut-off below which work in heat is not a risk. With heavy work at high relative humidity or if workers are wearing protective clothing, even work at 70oF can present a risk. In the relative humidity levels often found in hot areas of California (20 to 40 percent) employers need to take some actions to effectively reduce heat illness risk when temperatures approach 80 F. At temperatures above 90 F, especially with heavy work, heat risk reduction needs to be a major concern.

    2. Water. There must be an adequate supply of clean, cool, potable water. Employees who are working in the heat need to drink 3-4 glasses of water per hour, including at the start of the shift, in order to replace the water lost to sweat. For an eight-hour day this means employers must provide two or more gallons per person.  Thirst is an unreliable indicator of dehydration. Employees often need ongoing encouragement to consume adequate fluids, especially when the workload or process does not encourage breaks.

3. Shade. The direct heat of the sun can add as much as 15 degrees to the heat index. If possible, work should be performed in the shade. If not, employers where possible, should provide a shaded area for breaks and when employees need relief from the sun. Wide brimmed hats can also decrease the impact of direct heat.

1.  Acclimatization. People need time for their bodies to adjust to working in heat. This “acclimatization” is particularly important for employees returning to work after (1) a prolonged absence, (2) recent illness, or (3) recently moving from a cool to a hot climate. For heavy work under very hot conditions, a period of 4 to 10 days of progressively increasing work time starting with about 2 hours work per day under the working conditions is recommended. For less severe conditions at least the first 2 or 3 days of work in the heat should be limited to 2 to 4 hours. Monitor employees closely for signs and symptoms of heat illness, particularly when they have not been working in heat for the last few days, and when a heat wave occurs. 
2.  Rest Breaks. Rest breaks are important to reduce internal heat load and provide time for cooling. Heat illness occurs due to a combination of environmental and internal heat that cannot be adequately dissipated. Breaks should be taken in cooler, shaded areas. Rest breaks also provide an opportunity to drink water.
3.  Prompt Medical Attention. Recognizing the symptoms of heat illness and providing an effective response requires promptly acting on early warning signs. Common early symptoms and signs of heat illness include headache, muscle cramps, and unusual fatigue. However, progression to more serious illness can be rapid and can include unusual behavior, nausea/vomiting, weakness, rapid pulse excessive sweating or hot dry skin, seizures, and fainting or loss of consciousness. Any of these symptoms require immediate attention.

Even the initial symptoms may indicate serious heat exposure. If medical personnel are not immediately available on-site, and you suspect severe heat illness, you must call 911.

Regardless of the worker's protests, no employee with any of the symptoms of possible serious heat illness noted above should be sent home or left unattended without medical assessment and authorization.

7. Training. Supervisors and employees must be trained in the risks of heat illness, and the measures to protect themselves and their co-workers. Training should include:

• Why it is important to prevent heat illness
• Procedures for acclimatization
• The need to drink approximately one quart per hour of water to replace fluids.
• The need to take breaks out of the heat
• How to recognize the symptoms of heat illness
• How to contact emergency services, and how to effectively report the work location to 911.

Photo: Heat Stress to avocado leaves.

heat damage to avocado leaves

How to Assess Fire Damage

Avocado is a tree that has a good ability to respond to fire damage, if it is not too extensive. However, often a tree will recover only to collapse later on in the year or years because of the damage. So a tree may appear to do well and then suddenly collapse. In an orchard setting, fire damage can kill one tree completely, whereas the one just beside it recovers completely. This poses a major problem with irrigation management. How to irrigate the slowly regenerating tree that gradually needs more water, less frequently, next to trees that are recovering at a different rate or not at all. This becomes a management nightmare. Often the result of the difficulty of water management, the remaining trees develop root rot and they eventually die from that and not the original fire damage.

There is a general rule of thumb I have learned and used – when more than 50% of the trees have succumbed, it is best to replace the whole orchard. This is due to the issues of irrigation management and the loss of return from the unused portion of the grove.

So, from a pure economic management aspect, where there is any fire damage, that area should be considered a loss. If you look at your aerial survey and just measure the areas that show fire damage and take that as a proportion of the total planted area, you should be able to assess the extent of the damage incurred in the fire. So measuring the brown areas relative to green should give you a good assessment of the damage incurred in the fire.

It may be possible to nurse back individual trees with a lot of attention and if it's a small enough area, go ahead. But on commercial scale of acres, it often doesn't pay from a management point of view to nurse the orchard to an economic production level.

Fire Information:

http://ceventura.ucanr.edu/Agricultural_Threats/Fire_Information/

IMG 2035

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