Economics of Establishing and Producing Pitaya in Southern Florida: A Stochastic Budget Analysis
2011
Evans, Edward A. | Huntley, Jordan
Pitaya (Hylocereus spp.), a climbing vine of cactus species native to the tropical forest regions of Mexico, Central America, and South America, has gained the attention of many southern Florida growers. Between 2006 and 2010, pitaya production has grown 6-fold. Several factors are responsible for the increased attention being given to this crop; chief among these is the promise of high net returns stemming from the current strong demand for the fruit within an increasing U.S.–Asian population and among mainstream health-conscious U.S. consumers who are lured by the high antioxidant properties and other reported health benefits associated with the fruit. However, the downside risk associated with producing and marketing the fruit needs also to be taken into consideration before dedicating a significant amount of resources to large-scale plantings of pitaya. This article provides information on the financial feasibility of establishing and operating a 5-acre pitaya orchard in southern Florida and assesses the risks of doing so. In conducting our analysis, we use deterministic and stochastic budgeting models, including stochastic yields and prices, to calculate the financial returns. Both the deterministic and simulation risk analysis results suggest that operating a pitaya orchard would likely be profitable over a 20-year planning horizon. Despite the favorable outcome of the analysis, southern Florida growers are advised to proceed with caution, as the market for the crop could easily be oversupplied by domestic and foreign competitors.
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