Economics of blueberry farming in Fraser Valley ~ Part 1

Posted by Sapan Behar

June 11, 2007

Are you considering buying a blueberry farm in the Fraser Valley?

Since I am a Realtor in the Surrey and Langley communities of BC, and being a berry farmer, I figure that I am a good person to write about this.
With blueberry demand and prices skyrocketing year after year; most people feel that getting into the blueberry business is a sound investment. I agree. It is a sound investment, however, it probably is not a sound investment for everyone. In this post, let us consider how the cost of land effects your success as a blueberry farmer.

Buy land, they don’t make it anymore
The Lower Mainland and Fraser Valley account for about 95% of the cultivated blueberry production of Canada. This area is very well suited for blueberry production due to our mild winters (but enough chilling hours) and warm (but not hot) summers. Blueberries thrive on peat, with low pH (4.5 - 5.2), excellent drainage and a good water supply for irrigation.

The biggest expense when starting a blueberry farm is the price of land.The price of one acre of agricultural land, in the Lower Mainland or the Fraser Valley, suitable for blueberry production is anywhere from $100, 000 to $150, 000, depending on the location. This is just the land, no blueberries plants, no house, no irrigation, no other improvements done. Typically a 10 acre parcel of land that is away from the urban centres goes for around $1.1 M to $1.2 M.

As a Realtor, I can tell you that this is the absolute minimum you can expect to pay for a 10 acre parcel of land. There are more buyers for smaller parcels of land; hence they pay a premium to beat out other buyers. In the Fraser Valley, the cheapest parcel of land would be found in the Eastern Fraser Valley, east of Chilliwack.
You can also consider a parcel of land in either the Lower Mainland or the Fraser Valley that may not be blueberry ready out of the box. The land may need to be leveled, or drainage may need to be improved, pH may have to be lowered. You could find such parcels of land going for around $75, 000 to $90, 000 per acre.

But then you have to figure in the costs involved per acre for “improving the land”. You also have to factor in the time “lost” making these improvements. For example, if you have to lower the pH, typically you would incorporate Sulfur into the land and then have to wait for about a year to bring the pH to acceptable levels. At the end of the day, you may not have saved much taking this approach.

Some people also consider buying land in areas outside of the Lower Mainland or the Fraser Valley. In my opinion this is a big gamble for a long list of reasons. Top of that list is the location of processing plants. Very few farmers are involved in direct sales and most ship to the processors, where the berries are sorted. Almost all of the processors are located in the Lower Mainland or the Fraser Valley. So if you plan to cultivate blueberries in Kamloops, you have to ship them daily to the either the Lower Mainland or the Fraser Valley. This is going to take a huge chunk out of your bottom line. Next consider the travel time, and the time to unload when you are at a processing plant. Typically, most farmers ship in the evening, as such the line ups at the processors can be huge at the end of the day. Also consider the weather; it probably will not be suitable for most of the top producing varieties.

So how does the cost of land dictate my chances of success as a blueberry farmer?
Let us assume that you buy a 10 acre parcel in the Fraser Valley, for a bargain at $1 Million. You take out a mortgage for $750, 000 at 6% per annum, compounded semi-annually, at a 30 year amortization with monthly payments. Your monthly payment would be around $4500.

Typically blueberry plants reach full production in their 8th year after planting. The first year there is no production, the second you can expect about 2000 pounds per acre and then it grows exponentially till they reach full production. Clearly you can see that the first three years are the toughest. You have made a huge investment and won’t see any significant return on it till the fourth year after planting.

Are you able to make the payments during these tough years when there is no income from your farm? These are just the mortgage payments. We have not factored in other costs, such as the cost of plants, insecticides, pesticides, labour etc. Consider how buying a parcel that is not suitable for blueberry farming is going to effect you long term. You may find it to be cheaper at the outset, but almost every single time it will end up costing you more over a number of years.

You may consider buying a Fraser Valley blueberry farm that is already in production. Guess what? The cost per acre is much higher than $100, 000 to $150, 000 that an acre of bare land goes for. The seller had the same things to consider. And if the seller’s motive was to start the farm and then sell; what corners did they cut and what compromises did they make? In the next post, I will explain why developing your own blueberry farm from scratch is better than buying a farm already in production.

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