MSU Extension Farm Management

Executive Summary

While down from 2011, Michigan peach acreage is currently holding steady at about 2,250 bearing acres, with processing peach varieties making up about 25% of the total. Peaches continue to be an important part of growers’ crop portfolios, helping to spread the cost of tree fruit assets over a greater number of productive acres, and providing work for laborers to fill in summer gaps.

As of 2024, the costs of establishing peach orchards are estimated to be $9,167 per acre for processor peach orchards and $10,107 for fresh peach orchards (though more if high density approaches are taken). The ongoing costs of production, including operating costs, harvest costs, land control and an allocation for establishment costs, total $5,355 per acre for processor peach production and $7,587 per acre for fresh production. Operating costs are similar for fresh and processor peach production, but harvest costs are substantially higher for fresh.

About 75% of the total costs of production are variable, making Michigan peach production susceptible to input and labor cost shocks. For example, labor makes up 40% of fresh peach and 45% of processor peach production costs. A 10% increase in labor prices would therefore result in a 4% or 4.5% increase in total costs, respectively.

For fresh peach production, we focused on two categories. The first is farm-packed peaches, sold wholesale directly to retailers or farm market businesses. The profits for this category at current yields and prices are strong but rely on substantial labor resources and marketing acumen. The second category is peaches for sale to packers. Revenues at current prices for this category do cover economic costs and provide some level of profits, though not as strong as for direct marketing. Working with packers provides numerous benefits, however, including generating income for fruit produced beyond what farms can market themselves. Many farms have a mix of these two categories, so we provide related cost and profit analysis in the main report.

Processor peach production revenues are, at current yields and prices, sufficient to cover operating, harvest and ongoing overhead costs such as crop insurance and food safety expenses. However, processor peach revenues are not currently generating profits when allocations are made for the economic costs of establishment and land control (rent or land payments).

The budgets we developed for Michigan peach production are averages based on focus groups and numerous growers’ input. Adjustments to the budgets should be tailored to a specific farm’s circumstances. To facilitate this, tables are broken down into cost categories, and sensitivity analyses are included based on the different yields and prices that a grower might experience.