Profitability of Beekeeping Operations: The Role of Commercial Pollination

 

Background

Commercial pollination has increasingly become an important source of farm income to a growing number of Canadian beekeepers.  The increasing demand for pollination by producers of pollination-dependent crops (canola seed, alfalfa & clover, berries, many fruits and vegetables) has stimulated this segment of the beekeeping industry.  Every year, about 300 thousands hives (60% of total number of hives) are mobilized to pollinate canola plants for seed production. Also 80 thousands hives (16% of total number of hives) are moved east every year to pollinate blueberries. 

Though seems lucrative and offers beekeepers with cash flows when no honey is yet produced, not all beekeepers render pollination services.  There are many reasons why some beekeepers decide not to use their hives for commercial pollination.  Preparing hives for pollination is labour intensive and also requires different skills and knowledge from those required for managing hives only for honey production.  Due to high economies of scale in transporting hives, many beekeepers opt out commercial pollination because their operation size is not big enough to reap these economies.  High transaction costs associated with searching for and contracting with producers also can serve as barriers to entry.  Anecdotal evidence that extensive use of bees for commercial pollination jeopardizes their health (exposure to pesticides and contagious diseases, change of environment and weather conditions, foraging on poor monoculture diet etc.) deters some beekeepers from using any of their hives for pollination

Beekeepers who choose to render pollination services must decide the number of pollination sets per season i.e. the number of pollination services per season and the number of hives used for each service.  The same factors that affect the decision to render pollination services can also affect the number of sets, but not in the same way necessarily.  For example, while high transaction costs are expected to decrease the likelihood to render the pollination service and the number of services, they are expected to increase the number of hives used for pollination.  The same can be said about the effect of logistics and transportation costs.

Objectives

This project will  answer several important research questions such as: What are the factors that affect beekeepers decision to render pollination services and how do they affect it?  What are the factors that affect the number of pollination services and the size of these services and how do they affect them?  What are the marginal effects of providing pollination services, the number of services, and service size on operation’s net profit?  What is the net profit differential between honey-specialized operations (no commercial pollination) and a more diversified operation (honey plus pollination service)? And, for diversified operations, what is the net profit differential between operations with different number of sets (number and size of the service)?