THE FULL REPORT
This is a summary of the full research report - "A market and Economic Assessment of Carob Agroforestry in the Loa Rainfall Murray Valley Region" by A. Curtis, D. Race and W. Booth (1997) as a feasibility report for the joint Venture Agroforestry program - RIRDC/LWRRDC/FWPRDC.

Economically feasible returns were generated when trees had access to adequate water through medium rainfall or low rainfall with irrigation, and the grower had access to both the carob bean gum and powder markets. As the current Australian demand for carob bean gum exceeds demand for carob powder, growers may require cross-subsidisation for the excess pod pulp produced or the markets for carob powder (derived from pod pulp) to be considerably increased. Carobs offer the possibility of providing a positive return on the grower’s investment, however, this relies on securing access to the pulp powder market. Carobs also provide another option for plantings which will increase the aesthetic value of the property. This research suggests, that a viable carob industry will involve a relatively small area of plantings (5,405 ha or less). Small scale plantations are unlikely to have a strong influence on regional groundwater levels. Nevertheless, landholders should view carob production as an important tree crop option, with an opportunity for enterprising individuals/companies to develop a successful niche industry.
 

Background

This project aimed to complete the first comprehensive feasibility study for the development of a viable low rainfall (400–700 mm/year) carob industry in Australia. The research focused upon the Murray Valley and combined an assessment of market competitiveness, production economics and biotechnology. The project principals drew together an experienced Project Team representing major stakeholders in carob production, processing and marketing. The Project Team also combined expertise in biotechnological research, agricultural economics and socio-economic research.

Preliminary investigations indicate that carob pod-seed mix has considerable commercial value as a fodder supplement ($150/ha), as a thickener in canned products such as pet food ($1,600/ha) and as an ingredient in confectionery ($900/ha). Carob trees are suited to the marginal land in the Murray Valley and can produce a commercial harvest after 7 years. Carob has a deep root system enabling production with just 230 mm rainfall/year, although ideal conditions require at least 500 mm (Esbenshade & Wilson 1986).

A viable carob industry (considered to be 1,080–5,405 ha) could improve agricultural productivity and diversify farm incomes, assist in the localised management of land and water degradation (extensive and increasing dryland salinity emerging in this region of MDB), contribute to regional industry development and import replacement ($3–5 m/year for major importer and $10 m/year Australia-wide). The importance of investigating carob agroforestry feasibility is heightened by the relative lack of options for low rainfall agroforestry.

This project had strong industry links with committed support from Uncle Ben’s, Australia’s largest carob importer (based at Wodonga) and experienced carob growers, researchers and importers (interested in developing an Australian processing industry).

The feasibility study was conducted between August 1996 and May 1997.

Key project findings

This research indicates there are areas in the Murray Valley where the environmental characteristics (eg. rainfall, soil type) are suitable for carob production. However, a viable carob agroforestry industry will require reliable yields that can only be achieved with rainfall of 500 mm or greater. In areas of low (<500 mm/year) or unpredictable rainfall (most rainfall needed during the spring-summer period), irrigation will be necessary to achieve required yields. While carob are reported to be tolerant of moderately saline water (<30,000 ppm), it is uncertain what impact this has upon yield. Best practice horticulture suggest correct silviculture and fertiliser applications will also be required to achieve optimum yields, although the extent these practices will enhance carob agroforestry remains uncertain.

The carob tree is cultivated primarily for the two commercial products that are derived from the mature fruit. These are from the:

Seeds; and Pod or pulp.

The carob fruit is valued for a range of products derived from the seed (also termed bean or kernel) and the pod (also termed pulp or flesh). The seed represents about 10% of the total fruit weight. Endosperm is extracted from seeds to produce a galactomannan which forms a gum (termed carob bean gum or LBG). This is a valuable natural food additive. The pulp is used for high energy stock feed (although high tannin content can limit its consumption) or the human food industry (with cocoa products and syrups).

Carob bean gum is used extensively in Australia as an emulsifier for canned pet food products. Other uses include chemical and paper manufacture, cosmetics and pharmaceutical drugs. World demand for the gum equates to approximately 35,000 tonne of carob seed, with current Australian imports valued at $10 million/year. The current Australian demand for carob bean gum is estimated at 1,200 t/year for ‘pet food’ and ‘technical’ grade, plus 200 t for ‘food’ grade. Assuming a plant with modern processing techniques was built in Australia, the current Australian carob bean gum demand could be met with approximately 2,250 t of carob seed (seed value at $1,600/t). This equates to 22,500 t of pods, or the yield from 562,000 trees (at 104 trees/ha) on 5,405 ha with medium rainfall, low technology management (40 kg/tree); or 225,000 trees (at 208 trees/ha) on 1,080 ha with supplementary irrigation and fertilising (100 kg/tree).

Carob also has value for livestock producers with the kibble (pod pulp) being a useful fodder supplement, particularly during times of drought. However, in some areas pod drop may not coincide with the seasonal fodder shortages or drought period. Under these circumstances it is likely that pods will have to be collected (probably harvested before dropping) and stored. If this happens, it would probably be worth kibbling (grinding the pulp), with the seeds sold to carob bean gum processors and the pod pulp retained as a fodder supplement. Kibble is valued at approximately $150/t, having a similar nutrition value to feed barley. Kibbling costs the grower 25% of the product value for processing and 15% for marketing, therefore returning approximately $90/t for carob pulp.

Carob powder is commonly used as a substitute for cocoa. The current Australian market for this product is between  60–100 t/year. Growth of this market for domestic carob growers is viewed with scepticism as surpluses of this product frequently exist within the Mediterranean. Carob pulp powder imported to Australia is valued at $1,500/t. Processing and marketing would amount to approximately 40% of this value. The returns to growers are estimated at $900/t for powder. Processing losses are estimated at 2% of pulp weight.

A kibbling and/or carob bean gum processing industry would need to be established. A kibbling industry could be established with a centralised kibbling (as suggested by this study), or by growers obtaining on-farm kibbling facilities. This study estimated that a carob bean gum plant processing 1,500 t of seed/year would require an investment of $2 million. Processing costs are estimated at $500/t of seed processed.

The project team was involved in the first large-scale mechanical harvesting of carob in Australia. Mechanical harvesting has the potential to halve the current harvesting costs (currently 30% of total production costs) and will considerably increase the viability of carob agroforestry. The mechanical harvesting trial proved effective in efficiently collecting ripe pods. However, further monitoring of trees is required to determine the impact upon long term flowering capabilities, and therefore yields. This trial has aroused considerable interest within the carob industry in Spain and Portugal, where harvesting still occurs by hand.

This project analysed 4 farm scenarios with two water supply options for each scenario. Therefore for each of the farm scenarios presented below, analysis was conducted assuming either:

mini sprinkler irrigation;
medium rainfall (500 – 700 mm/year).
Economic scenario 1
100 ha orchard (tree spacing 6 m ¥ 8 m)
Economic scenario 2
20 ha orchard (tree spacing 6 m ¥ 8 m)
Economic scenario 3
Linear plantings around 100 ha paddock (single row 6 m tree spacing for irrigated and 12 m for rainfall).
Economic scenario 4
Linear plantings around 20 ha paddock (single row 6 m tree spacing for irrigated and 12 m for rainfall).

The market prices used in the analyses are $1,600/t for seed, $900/t for powder, $150/t for stockfeed (whole pod and kibble). The calculated financial returns under the various scenarios varied considerably depending on the nature of the carob markets. The best financial returns depend on consistent access to the pulp powder market. A summary of the key outcomes of the economic analyses are provided in Table 1.

Table 1: Summary of indicator 30-year IRRs* for each of the production scenarios in the economic analyses
 
 
Irrigated orchard 100 kg/tree
Linear planting irrigated 100 kg/tree
Medium rainfall orchard 100 kg/tree
Medium rainfall linear 100 kg/tree
 
100 ha
20 ha
100 ha
20 ha
100 ha
20 ha
100 ha
20 ha
Seed + powder
18.1%
16.8%
15.5%
15.2%
17.9%
16.5%
13.9%
11.5%
Seed + stockfeed
2%
0.3%
0.1%
Ð1%
1.1%
1%
1.7%
4.4%
Stockfeed only
3.3%
5.6%
5.2%
7.1%
5.3%
7.8%
7%
11%

* IRR (Internal rate of return) calculates the percentage return the investment is capable of generating after allowing for expenses and capital recovery at the end of the stated period. The IRR represents the maximum interest rate the investor is capable of meeting as a result of borrowed capital.

Economic scenario 1

100 ha orchard with mini-sprinkler irrigation
Estimated costs for capital expenditure, operating expenditure and overheads of $4,737,000 were used ($4,737,000 is the present value of the total project costs over 30 years discounted by a factor of 7%).

When the scenario was calculated with yields of 20.8 t/ha (100 kg/tree) with unlimited access to seed and powder markets, an IRR of 18.1% over the 30 year period resulted. However, when calculated with access only to seed and stockfeed markets the IRR was 2.0% over the 30 years. With just access to the stockfeed market the IRR was –3.3%.

100 ha orchard with medium rainfall
(500–700 mm/year)
Carob production with this option could be expected to yield 10.4 t/ha of pods. The marketing option which involved the further processing of the pod into carob powder and the seed sold for carob bean gum manufacture resulted in a positive NPV after 30 years. This option had an IRR of 17.9%. With only access to the seed and stockfeed markets, the IRR dropped to 1.1%; and with only the stockfeed market, the IRR was
–5.3% over 30 years.
 

Economic scenario 2

20 ha orchard with mini-sprinkler irrigation
It was estimated that an initial capital investment of $277,500 in year 1 is required for this scenario. This equates to an average cost of $13,875/ha which is consistent with other horticultural plantings. The yield of 20.8 t/ha was used in this analysis. This is the same target yield per tree as used in Spanish orchards. At this yield and access to the seed and pulp powder markets an IRR of 16.8% over 30 years was calculated. However, if only the seed and stockfeed markets are accessed, then the IRR over 30 years is 0.3%, and with access just to the stockfeed market only returns –5.6%.

20 ha orchard with medium rainfall
(500–700 mm/year)
An initial capital investment of $123,800 in year 1 is required for this scenario. With an average yield of 10.4t/ha and access to seed and pulp powder markets, an IRR of 16.5% over 30 years was calculated. Seed and pulp powder. However, if only the seed and stockfeed markets are accessed, then the IRR over 30 years is –1%, and with access just to the stockfeed market only returns
–7.8%.
 

Economic scenario 3

Linear plantings around 100 ha with mini-sprinkler irrigation
Only one row is planted because of the windbreak capacity of the species and large canopy cover per tree at maturity. A yield of 20.8 t/ha is applied to the area covered by trees only. For this option, selling seed to the carob bean gum market and the pulp powder market resulted in an IRR of 15.5% over 30 years. However, if only the seed and stockfeed markets are accessed, then the IRR over 30 years is 0.1%, and with access just to the stockfeed market only returns
–5.2%.

inear plantings around 100 ha with medium rainfall (500–700 mm/rainfall)
A yield of 10.4 t/ha is applied to the area covered by trees only. For this option, selling seed to the carob bean gum market and the pulp powder market resulted in an IRR of 13.9% over 30 years. However, if only the seed and stockfeed markets are accessed, then the IRR over 30 years is –1.7%, and with access just to the stockfeed market only returns –7.0%.
 

Economic scenario 4

Linear plantings around 20 ha with mini-sprinkler irrigation
A yield of 20.8 t/ha is applied to the area covered by trees only. For this option, selling seed to the carob bean gum market and the pulp powder market resulted in an IRR of 15.2% over 30 years. However, if only the seed and stockfeed markets are accessed, then the IRR over 30 years is –1.0%, and with access just to the stockfeed market only returns –7.1%.

Linear plantings around 20 ha with medium rainfall (500–700 mm/year)
A yield of 10.4 t/ha is applied to the area covered by trees only. For this option, selling seed to the carob bean gum market and the pulp powder market resulted in an IRR of 11.5% over 30 years. However, if only the seed and stockfeed markets are accessed, then the IRR over 30 years is –4.4%, and with access just to the stockfeed market only returns –11%.
 

Recommendations

This research was based upon field observations, discussions with key stakeholders, and a review of Australian and international literature. While it has been possible to develop indicative parameters of a viable carob agroforestry industry, there remains some uncertainty about the precise potential due to information gaps. In particular, attention should be given to research and development in the areas of:
Identifying the optimum biophysical conditions for reliable commercial yields, in terms of response to:
  Tree breeding (increasing carob varieties, propagation techniques);
Assessing the impact of mechanical harvesting on flowering and subsequent yield;

Developing monitoring guidelines to assist commercial growers record varietal agronomic characteristics (eg. bearing age, yield, regularity of yield, growth habit, harvesting ease, disease resistance).

Increased effort to market carob syrup. This should link market research with product development;

Improving information exchange between growers and prospective growers via by expanding the availability of the Western Australian carob growers’ occasional newsletter ‘Algarrobo’, and producing “carob growing” information notes.

Conducting socio-economic research to identify communities likely to adopt carob production;
Promoting the value of growers aggregating supplies to support industry development (eg. growers association/cooperative);

Increased collaboration with international carob research and development efforts.
 

For further information contact:

Rural Industries Research and Development Corporation
PO Box 4776
Kingston ACT 2604
Tel: (02) 6272 4539
Fax: (02) 6272 5877
Email: rirdc@netinfo.com.au
Internet: http://www.rirdc.gov.au

Carob Grower’s Association
‘Mackerode’
Box 82
Burra
SA 5417

Experienced growers and experimental processors
A & J Gebhardt
73 Wasley Street
North Perth
WA 6006
Tel: (089) 328 5317
Informative newsletter published