The global fruit and tree nuts farming market is projected to reach $479 billion by 2027, growing at a CAGR of 3.1% from 2020 to 2027 according to Allied Market Research. With demand for fresh, locally grown produce on the rise, starting an orchard can be a profitable small business opportunity.

Source

Despite handling delicate fruit crops vulnerable to weather and pests, with proper planning and care, orchard owners can yield bountiful harvests. Site selection, cultivar selection, planting, pruning, and pest management are key components in maintaining a thriving orchard.

This guide will walk you through how to start an orchard. Topics include market research, registering an EIN, forming an LLC, obtaining business insurance, proper accounting techniques, marketing, and more.

1. Conduct Orchard Market Research

Market research is an important step in the orchard-starting process. It offers insight into your target market, trends in the orchard industry, market saturation, and more.

Source

Some details you’ll learn through fruit tree and organic matter market research include:

• Demand drivers include increasing health consciousness amongst consumers seeking fresh produce high in nutrients, as well as the booming farm-to-table movement.
• Locally grown fruit from small specialty orchards directly meets consumer demand for ripe, flavorful varieties often lacking in mass-market fruit due to early picking and long supply chains.
• Beyond fresh eating, opportunities exist in value-added products like cider, jams, baked goods, wine, and liquor for wholesale channels.
• The artisanal food and beverage sector is growing at a 15% annual rate.
• Local wineries and distilleries present an obvious customer segment to supply fruit for fermented products.
• Despite the growing opportunity, startup costs can deter new orchard plantings.
• Establishment costs run $15,000 per acre.
• Harvesting equipment, fencing, irrigation, and land preparation contribute significantly to capital outlays.
• Planting smaller, higher-density orchards with dwarf rootstock can reduce land costs.
• Capitalizing on direct retail sales channels like farmers’ markets and farm stands can boost margins considerably.

While upfront orchard investment is substantial, increasing consumer demand for fresh, locally grown produce coupled with higher potential margins selling direct-to-consumer signal an attractive opportunity for new specialty growers. Capitalizing on value-added products provides supplemental income during the establishment years before trees reach full maturity.

2. Analyze the Competition

Carefully evaluating nearby competing orchards allows new entrants to carve out a unique market niche. Walking competing farm stands and speaking directly with owners provides insights that generic market research cannot replicate.

Some ways to get to know nut and fruit orchard competitors include:

• Analyze pricing, product mix, operations, and branding during these visits. For example, Cornell University found that prices at farmers’ markets average double conventional wholesale rates.
• Online research can uncover operational data like acreage, tree counts, planted varieties, staffing levels, and services like PYO.
• Satellite imagery from Google Earth allows the measurement of planted acres. Estimate yield potential based on visible spacing.
• Insights into ownership, background, values, and brand identity often live on the farm’s website.
• Social platforms like Facebook and Instagram reveal community engagement levels and real-time insight into products and events.
• Subscribe to email newsletters to learn key sales windows.
• Review their online visibility across Google, Yelp, and industry sites. Install Google Analytics to benchmark web traffic and conversion rates.

With careful competitive evaluation, farm startups can select targeted varieties and tactical marketing plans tailored to local demand. Differentiation forms through specialty production methods, unique varieties, agritourism offerings, artisanal value-added products, or superior customer service.

3. Costs to Start an Orchard Business

When starting an orchard (or really any kind of plant nursery or floral business), the primary start-up costs stem from land preparation, planting, and equipment. The reality is that it takes years after planting before orchards generate positive cash flow, requiring business plans that accurately estimate expenses.

Start-up Costs

• Acquisition or long-term lease of suitable acreage with adequate water access runs $5,000-10,000 per acre depending on locale and whether existing irrigation is in place.
• Fruit trees cost $15+ each from nurseries for potted 4-6’ trees suitable for planting.
• With the typical spacing of 100-150 trees per acre for modern high-density orchards, tree costs can surpass $10,000 for plantings over just 5 acres.
• Clearing existing vegetation, ripping compacted subsurface layers, plowing, disking, and fumigating for pest pressure comprises typical ground preparation with custom tractor work running $150-250 per acre, while attentions plantings add $200 per acre.
• Whether micro sprinklers, drip irrigation, or small movable pipe, systems average around $2,000 per irrigated acre.
• Wells, pumps, excavation, and parts can multiply costs on properties needing new water access.
• Perimeter fencing prevents deer and elk browsing damage with costs ranging from $3,000 per acre for basic field fences up to $15,000 per acre for 8’ high-tension deer installations.
• Fruit trees produce best when supported and trained via trellis systems. Materials plus installation labor tallies up to $4,000 per acre generally.
• Beyond fencing and irrigation, producers require storage space for equipment, chemicals, and harvested fruit. Pole barns start around $10/sq.ft., so a modest 800 sq. ft. unit totals $8,000.Insulated structures with refrigeration and offices catering to direct marketing activities approach $100,000. Portable packing stations offer flexible covered space when starting.Final startup costs include licensing, insurance, and basics like recordkeeping software, office computers, and printers ($2,000+).Liability insurance averages $600 annually but product liability additions raise costs significantly for agritourism operators.

Equipment that may add to your startup costs for planting trees that produce fruit and nuts include:

• Spray rig to apply fertilizers, and pesticides ($3,000+)
• Brush hog for vegetation management ($2,000 to $6,000)
• Chainsaws, pole saws, pruning gear ($1,000)
• Ladder, picking bags, packing supplies ($500)
• Refrigeration equipment if storing harvested fruit ($2,000+)

Ongoing Costs

Switching to ongoing annual expenses, key cost centers include:

• Ongoing tasks like pruning, mowing, pest management, and irrigating cost $15 hourly for skilled labor including taxes. This makes costs approach $2,000 per acre even when the owner handles some tasks.
• Fertilizers, pesticides, equipment fuel, and minor parts can run $500-800 per acre.
• Expect repairs like tire replacement, and engine & transmission services averaging around $800/acre annually.
• Electric, gas, and water bills vary based on irrigation methods, refrigeration equipment, and structures on the property. However, most orchard sites average $250/acre annually.
• Beyond product and liability policies, producers insure buildings and equipment via farm policies ($1,000+ yearly).
• Hiring bookkeeping assistance and production consultants keeps the focus on growing. Expect $2,000-5,000 annually for these skilled specialists.

The bottom line shows establishment costs running $25,000+ per acre over the first few years before achieving positive cash flow. Once yielding, well-operated orchards can generate over $10,000 gross profit per acre.

4. Form a Legal Business Entity

When starting an orchard venture, properly establishing the legal business entity protects personal assets and supports long-term growth goals. The four primary options each carry distinct tax treatments, legal protections, and operating implications.

Sole Proprietorship

A sole proprietorship represents the easiest and cheapest option since no formal registration is required outside routine business licensing. However, the owner faces unlimited personal liability for debts and legal claims against the business. Income and losses also pass to the owner’s tax return. This high-risk approach threatens personal assets like houses or retirement accounts.

Partnership

Forming a partnership spreads risk across multiple owners, while still avoiding complex registration steps. The partnership files an informational return but profit/loss passes through to partner tax filings. However, personal assets remain vulnerable from a liability perspective. Disagreements between partners can also trigger messy dissolutions.

Corporation

Establishing a new orchard as a C-corporation requires filing articles of incorporation with the state to form the business entity. Corporations offer the highest level of personal liability protection but face double taxation on company profits. Complex recordkeeping and tax compliance impedes small farm corporations.

Limited Liability Company (LLC)

For most agricultural startups today, forming a limited liability company (LLC) offers the best of all worlds. The LLC protects personal assets and allows pass-through taxation to the member level like partnerships. Unlike corporations, no ownership stock gets issued and profit/loss passes to members proportional to ownership stake.

5. Register Your Business For Taxes

While sole proprietors can use Social Security numbers for federal tax ID purposes, all other business structures including LLCs require applying for an Employer Identification Number (EIN) from the IRS for tax and banking needs.

Thankfully obtaining an EIN proves straightforward when applying online. The online process takes just minutes to complete. Simply navigate to the EIN Assistant and select “View Additional Types, Including Tax-Exempt and Governmental Organizations” on the landing page.

On the following page, select “Started a New Business” for the reason applying. Provide the business’s legal name and mailing address when prompted. Finally, specify whether employees will be hired within the next 12 months to complete the questionnaire.

After reviewing all entries for accuracy, provide the owner’s personal information like name, SSN, and DOB. Then submit the form to instantly receive the new EIN.

The EIN should be integrated into every aspect of the business from tax documents to bank accounts. Since the number matches tax records, consistently using it prevents notices from the IRS.

Orchard businesses also need to complete state-level sales tax registration to collect and remit excise taxes on retail sales. The Streamlined Sales Tax Program conveniently centralizes the registration process regardless of which state the business operates within. Expect paying $20+ covering the permit fees depending on location.

6. Setup Your Accounting

With significant upfront investments in land, trees, and equipment coupled with years until profitability, orchard owners must implement robust accounting practices from day one. Tracking revenues, cost basis, depreciation schedules, and profit/loss statements provide critical visibility as the business scales.

Accounting Software

Implementing small business accounting software like QuickBooks automates the categorization of every transaction from bank accounts and credit cards. QuickBooks syncs seamlessly with bank feeds to automatically download expense data. Inventory management features help track the cost of goods sold.

Hire an Accountant

Beyond software, partnering with an accountant from the start provides experienced guidance on capturing all deductible expenses and structuring the business to minimize tax liability. Bookkeepers handle data entry and reconciliations so owners focus on growing the business. Expect costs between $800-2,000 to have a bookkeeper compile financial reports monthly.

Open a Business Bank Account

Strictly separating personal and business transactions simplifies recordkeeping and prevents IRS scrutiny. Open dedicated small business bank accounts and credit cards solely for company purposes. Never pay owners draws or distributions from personal accounts, always transfer funds to personal accounts from the business.

Apply for a Business Credit Card

Applying for a small business credit card also builds credibility with suppliers while earning rewards points on recurring expenses. Business cards do not use personal credit scores for approval – underwriters focus on business revenue and industry risk factors when assigning credit limits. Have your EIN and income documentation handy when completing applications.

7. Obtain Licenses and Permits

Before hosting customers, orchard businesses must complete proper registrations to legally and safely conduct commercial activities. Find federal license information through the U.S. Small Business Administration. The SBA also offers a local search tool for state and city requirements.

At the local level, all commercial properties require clearing zoning hurdles before launching. Permitted activities differ widely between regions. Many counties restrict on-farm sales without special event permits or agricultural exemptions. Zoning boards also govern what types of new structures get approved on farmland surrounding residential zones.

Applications should outline parking provisions, ingress/egress routes, waste management plans, and protocols for minimizing noise/dust issues with neighbors. Hearings may impose limitations on operating hours or occupancy capacity during agritourism events. Ensure plans adhere to detailed Right to Farm Acts protecting common agricultural practices.

Orchards selling products direct-to-consumer necessitate local Health Department inspections centered around food safety similar to grocery stores and markets. Inspectors ensure proper refrigeration, sanitation procedures, and handler hygiene.

County Agricultural Commissioners play a distinct oversight role focused on pest prevention and appropriate chemical handling/labeling. Acting as enforcement arms for the USDA at the local level, they conduct routine audits while responding to complaints from neighboring properties.

Compliance certifications like PrimusGAP, GlobalGAP, or Harmonized Standards provide third-party validations requested by discerning wholesalers. Most orchard products ship into wider supply chains requiring such food safety verifications even for certified organic brands.

8. Get Business Insurance

Operating an orchard carries substantial risks that business insurance mitigates through affordable policies tailored to agricultural ventures. Despite the perceived invincibility of youth, failing to secure coverage threatens hard-won gains from years of patient investment.

A freak hail storm devastates 30 acres of mature apple trees days before harvest, destroying the entire crop. An employee accidentally spills herbicide that leaches into groundwater, triggering environmental fines and costly remediation. Without insurance, these scenarios directly hit cash reserves.

General liability protection defends against visitor injury lawsuits and product recall expenses that could exceed millions without a strong legal defense. Orchard policies add key agriculture riders covering produce spoilage, fences/barn damage, and replacement tree costs should disaster strike.

Today multiple carriers offer tailored orchard and vineyard insurance, blending property, liability, and crop coverages. Quotes compare favorably to other commercial policies given lower risks associated with tree fruits versus volatile commodities. Expect roughly $500 per acre for a base policy with added branding, employment, and processing capabilities.

The application process begins by detailing current operations – acres, varieties, yield volumes, staffing levels, infrastructure investments, etc. Insurers also review any regulatory violations, safety incidents, and claims against previous policies across the past 5-10 years. Providing evidence of robust processes demonstrates good management.

In summary, orchard owners are already brave against pest pressures and weather uncertainty impacting yields. Risk management through insurance makes basic sense, protecting the bottom line from events exceeding day-to-day hazards. A few thousand dollars annually seems minor if a disaster ever strikes compared to the fallout of seeing your livelihood go up in smoke uninsured.

9. Create an Office Space

Beyond the fields and orchards, growers require administrative space for business functions like bookkeeping, marketing planning, and customer service during the off-season. There are a few office options for businesses that produce fruit and nuts.

Home Office

Home offices certainly minimize costs and commutes early on. Dedicate space exclusively for the business, outfitting it with essentials like computers, filing cabinets, and accounting software. However, distractions hamper productivity. As the company grows, homes struggle to accommodate employees or visitors. Infrastructure limitations also constrain scaling.

Coworking Office

For orchard owners seeking professional environments without costly overheads, coworking spaces like WeWork provide turnkey solutions. Open layouts allow flexible seating arrangements accommodating staff and collaborative sessions. They also supply critical infrastructure, high-speed broadband, conference lines, printing/copying, front desk reception, security, and janitorial services that fall under a single monthly rate ($300+ per desk).

Retail Center

Enterprises embracing agritourism or direct retail need customer-facing storefronts for tastings and sales beyond the farm itself. Producers can either lease space in existing retail centers or repurpose ranch outbuildings closer to the activity. Expect buildout costs starting around $100/sq.ft. for permitted commercial spaces with ADA accessibility.

10. Source Your Equipment

From planting to harvest, orchard enterprises require specialized gear for efficient operations – tractors, sprayers, chainsaws, packing supplies, and cold storage infrastructure prove essential. Growers optimize limited startup capital by buying used equipment, renting for seasonal use cases, and exploring lease-to-own programs on larger purchases.

Buying New

Buying new means assuming the highest prices but comes with warranties plus customization options on critical implements like tractors. Local farm equipment dealers offer certified sales/service support as needs arise. Expect 30%+ premiums compared to used inventory. Dealer financing helps manage large purchases with longer repayment timelines and favorable spring marketing promotions.

Buying Used

Used equipment through private, dealer, and online marketplace channels cuts acquisition costs substantially. Search sites like Craigslist and Facebook Marketplace using zip code and keyword filters to pinpoint local inventory for inspection before purchasing. Utilize dealer trade-in options for commercial equipment like tractors and sprayers ensuring proper maintenance.

Rent

Renting proves practical for equipment used only periodically each season like orchard shredders, larger lifts for pruning, or apple harvesting modules attached to tractors. Rental shops offer daily and weekly rates including damage waivers and supplemental liability starting around $100. Avoid risks associated with infrequent or seasonal use case equipment by renting rather than buying those assets.

Lease

Leasing offers another alternative for securing essential equipment without heavy upfront capital expenses. Lease programs extend 3-5-year terms with flexible buyout clauses to transition equipment ownership once cash flow stabilizes in future seasons. This preserves working capital today for higher return investments like additional acreage or diversified plantings.

11. Establish Your Brand Assets

Beyond producing delicious fruit, memorable branding sets thriving orchards apart from forgettable farms barely eking out survival. While the initial focus rightly targets planting, cultivating, and successfully harvesting crops, matching world-class horticulture with professional marketing builds customer loyalty driving higher margins for decades.

Get a Business Phone Line

Securing a unique business phone number from RingCentral lays the foundation for presenting a unified brand image across sales and marketing initiatives. Expect starting plans from $30 monthly including an 800 number, call forwarding, and basic analytics.

Design a Logo

A polished logo ties together disparate elements into an identifiable visual signature for the company. Symbols encapsulating core values make strong orchard marks. Graphic design marketplaces like Looka offer DIY tools starting around $20 to develop icons, typefaces, color palettes branding print literature, product packaging, and digital assets.

Print Business Cards

Consistently displaying signage in fields and on packing sheds coupled with business card distribution at farmers’ markets means more impressions for the budding brand. Vistaprint produces affordable promotional materials like banners, posters, and rack cards alongside stylish cards showcasing orchards’ unique graphics and product offerings.

Buy a Domain Name

Registering a domain name that matches the farm builds credibility and universal recognition. Short, memorable words without hyphens or numbers rank best for amplification across verbal and written formats. Services like Namecheap secure website URLs affordably from $9 yearly.

Design a Website

From there, owners can utilize website builders like Wix for DIY sites or hire pros from marketplaces such as Fiverr to handle technical complexities. Well-designed pages prominently featuring orchards’ logo and contact info ensure customers easily access offerings and seamlessly reach sales teams. Expect $300 for custom mobile-friendly designs.

12. Join Associations and Groups

Beyond independence allures, orchard startups benefit immensely from plugging into established local agricultural associations and trade groups. Industry pioneers openly share proven techniques and insider supplier relationships that newcomers would otherwise waste years struggling to unlock solo.

Local Associations

Local associations like the Washington State Fruit Commission provide grower education seminars, and field days showcasing innovative technologies alongside networking with seasoned territory professionals. Memberships start around $100 annually including quarterly publications detailing the latest production advancements.

Local Meetups

Regular meetups facilitated by Meetup also foster connections with fellow growers battling similar clay soil conditions or apple scab outbreaks unique to the county. Expect free monthly gatherings centered around business planning, spray technique demos, and even happy hours venting seasonal frustrations! Veteran voices share proven solutions that translate into thousands of dollars saved.

Facebook Groups

Facebook groups like Hobby Fruit Growers and Grow All The Fruits comprise fruit-growing experts. Some groups might offer tips on specific plants like dwarf trees, on caring for tree roots and soil amendments, or on avoiding soil-borne diseases and broadleaf weeds.

13. How to Market an Orchard Business

Before a single apple gets plucked, implementing deliberate marketing strategies targets buyer segments valuing uber-local, tree-ripened fruits. Most fruit trees cause growers to leverage personalized promotion backed by targeted advertising to better compete against mega-producers.

Source

Referral Marketing

An orchard’s best brand advocates come from delighted existing patrons. Providing exceptional service earns referrals as devotees proudly recommend their new favorite farm stand to friends and online communities. Simple incentives like 10% discounts for new customers mentioning referrals motivate sharing.

Digital Marketing

Digital tactics effectively engage modern patrons actively managing households online:

• Launch Google and Facebook ads geo-targeting nearby suburbs to drive site traffic and email list sign-ups
• Start an email newsletter with seasonal harvest updates, new product launches, and upcoming events
• Post engaging social content highlighting behind-the-scenes orchard operations
• Collaborate with regional influencers to produce sponsored harvest tours for their audiences
• List signature products on niche marketplaces like Barn2Door connecting with conscious resellers
• Develop a YouTube channel sharing organic growing tips for aspiring backyard orchardists

Traditional Marketing

Traditional channels also boost local visibility:

• Sponsor booths at summer street fairs and farmers markets displaying signage and samples
• Distribute printed flyers to area schools, libraries and community boards
• Run 30-second radio spots on local stations aligning with the target listener demographic
• Place ads in regional farm trade publications and seasonal event programs

While digital platforms and paid advertising efficiently deliver highly targeted promotion, nothing substitutes face-to-face interaction cultivating customer loyalty. Blending both online and in-person tactics ensures maximum exposure introducing the orchard to new patrons discovering their new favorite cidery or apple festival draw.

14. Focus on the Customer

Beyond nurturing flawless fruit, stellar customer service ensures delighted patrons return for years while referencing the orchard to friends and online communities. Familiar shoppers appreciate dedicated cashiers recalling favorite varieties and proactively setting aside first picks of early crop Honeycrisps.

Source

Visitor expectations heighten when directly interacting with passionate growers onsite. Personalized consultations inspire novice gardeners to craft small backyard orchards replicating fertility strategies for tricky antique varietals.

Cideries thrill fans by unveiling early sneak peeks of experiments pressing heirloom blends echoing the orchard’s founding era. Event venues shine when directors enthusiastically tailor parties around blooming cycles coinciding with proposals and reunions.

By delighting customers with education and hospitality exceeding assumptions, orchards cultivate their best brand advocates. Appreciative patrons proudly boast about discoveries of hidden gem orchards producing unparalleled fruit while fostering lasting connections.

Even modest incentives like 10% referral rewards for new customer mentions validate patrons and encourage word-of-mouth marketing.

Thoughtful gestures like complimentary cider tastings and signing holiday fruit baskets for top patrons keep relationships blossoming across seasons. Savvy growers realize devoted cheerleaders prove infinitely more valuable than focusing on frictionless digital transactions alone.