Economics of CUPS and IPCs

Ernie NeffCUPS, Economics, HLB Management

Individual protective covers on young citrus trees can prevent HLB infection.

At Citrus Expo, economist Ariel Singerman discussed the economics of producing citrus under protective screen (CUPS) and covering young trees with individual protective covers (IPCs). The primary purpose of both strategies is to exclude HLB-spreading Asian citrus psyllids. Singerman is with the University of Florida Institute of Food and Agricultural Sciences (UF/IFAS).

Singerman calculated that a CUPS grower who insures a structure costing $45,000 per acre containing high-density plantings could achieve an internal rate of return of 6.59 percent over an 8-to-9-year period. On the other hand, “If the grower decides to self-insure, and the cost of the structure is $30,000 per acre, that internal rate of return would be close to 15 percent,” he said. Bottom line: CUPS growers would make a profit under the assumptions Singerman made.

The economics of IPCs are more challenging. “The experiment only started about 1.5 years ago, so there is still a lot of uncertainty around what is going to be the benefit of using those bags and what are the costs,” Singerman said. “It is important to realize that they (growers) would be better off just making the calculations for themselves … They know better than I what they do in their own groves.”

Singerman did say that using the numerous assumptions he made, “If it’s (IPC) for a reset, then it is only going to be profitable … if they (growers) have high savings; that is, if they use a lot less chemicals by using the bags.”

“Under a solid-set scenario,” he added, “it’s profitable under a two-use bag scenario and also under a one-use bag, but only if they achieve high (chemical) savings.”

UF/IFAS scientists have been studying CUPS for growing high-value fresh citrus for several years. Other UF/IFAS scientists more recently began studying the use of IPCs. Both CUPS and IPCs have been used by commercial growers within the past few years.

Hear more from Singerman:

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Ernie Neff

Ernie Neff

Senior Correspondent at Large