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Marketing and Economics


Economics-Tomatoes • The Bottom line in Greenhouse Tomato production-ARE 18, Sept.1999: http://www.agecon.ncsu.edu/publistres.htm • Extension reportSuwanee Valley AREC 91-20 Costs of production for NFT-pipe greenhouse tomatoesin North Florida Order form: http://nfrecsv.ifas.ufl.edu/greenhouse_rpts.htm • California: Total estimated coststo produce 1 lb orl kg of fruit: $0.77/lb $1.70/kg; total estimated production: 25 lbs/plant; 4 ft2/plant. • British Columbia Finance and Business Management enterprise budgets: http://fbminet.ca/bc/pfp/veg.htm


Economics-Tomatoes • British Columbia Finance and Business Management enterprise budget 1993: http://fbminet.ca/bc/pfp/veg.htm – Target production: 47 kg/m2 (=104 lbs/1.2yd2=10lbs/ft2) – Target price: CD$1.60/kg (=$0.72CD/lb=$0.43US/lb (@0.60 US=1.0 CD_ – Income attarget values CD$76/m – Break-even costs: $8.50CD/6.8 kg (15 lb) tray pack (1998)


Hydro-serres, Mirabel, Quebec


Economics-Lettuce • British Columbia Finance and Business Management enterprise budgets:($10CD/case of 24 head of buttercrunchlettuce) http://fbminet.ca/bc/pfp/veg.htm • Economic Evaluation of Hydroponics…* – Fixed costof 3 gutter connected 9.14 x 40.2 m with ventilation,lighting,heating cooling, back-up generator:$82,970 (20 yearlife) – Hydroponic system for 3 greenhouses: $17,150 – Total annual variable costs forlettuce (90 harvests): $168,350 – Breakeven price forlettuce: $13.18/box *HortScience 2000 35:993-999


Economics-Peppers • British Columbia Finance and Business Management enterprise budget 1993: http://fbminet.ca/bc/pfp/veg.htm – Target production: 21 kg/m2 – Target price: CD$4.00/kg – Break-even costs (1998) $12.50CD/5 kg box – Target grades: 44% X-large; 36% large – Income attarget values CD$75/m 2


Greenhouse Peppers


Economics-Cucumbers • British Columbia Finance and Business Management enterprise budget1996: http://fbminet.ca/bc/pfp/veg.htm – Target production: 115 (6.4 cases)/m2 – Target price: CD$10.33/case of 18 – Income attarget values: CD$66/m2 – Break-even costs: 580,000/ha or $CD9.00/case of 18 (1998)

• 1992 US data* – Production costs/box $9.84 US (Tucson)-$12.91 (Columbus, Ohio) – reflects differences in transportation,labor, heating,lighting *J. Prod. Agr.5:438-444


Economics-Herbs • Economic Evaluation of Hydroponics…* – Fixed costof 3 gutter connected 9.14 x 40.2 m with ventilation,lighting,heating cooling, back-up generator:$82,970 (20 yearlife) – Hydroponic system for 3 greenhouses: $17,150 – Total annual variable costs forbasil(90 harvests): $159,260 – Break-even price for basil: $0.58/plant

• http://www.attra.org/attra-pub/ghveg.html#hydroeconomic evaluation of organic herb production & some general cost data


Economics-melons • Suwanee Valley Research Report 96-17 – Cultivar:Gallicum, green-fleshed muskmelon – Grown 2 or 3/perlay-flat perlite bag – Supported fruitin sling – Produced 1.8 fruit/plant (1.4 marketable) – Average frt weight 3.3 lbs


Melonsin Chinese Greenhouses


Economics-Eggplants • British Columbia Finance and Business Management enerprise budget 1992: http://fbminet.ca/bc/pfp/veg.htm – Target production: 26.5 kg/m2 – Target price: CD$1.46/kg – Target grades: 15-20% premium over field eggplant – Income attarget values CD$39/m 2


Sparr’s Greenhouses -near Sanford


General Considerations for Alternative Crops • • • • •

Marketing, marketing, marketing Use only cultivars recommended for greenhouse production Pesticide registrationslimited Check if PLU# is available forwholesale market Determine if you (ora partner)have the patience and resourcesto experiment • Try to avoid expensive, specialized systems • Consideragri-tourism-charging tour groups to visit(senior citizens, schools, cooking clubs)


To get started: • Make market arrangements • Conducttrials • Startsmall • Increase production with demand • Develop sufficient quality for high end markets, direct marketing


Success Factors for Marketing • Enough volume • Uniformity and quality of produce • Dependable supply • Competitive pricing • Identify to add value


How to Cope!


Conclusions-Cover Your Costs* • Greenhouse structure and equipment cost$4.80/sq.ft on average • Totalfor 20,000 sq.ftis $96,000 (includes frame, construction labor,heaters,fans, cooling,irrigation,pump and well,electrical, and tools) • Operating cost average is $4.63/sq.ft(includes labor estimate of 20 h/week for a 24x96 foot greenhouse (2304 sq.ft) *University of California publication 21575. Com mercial Greenhouse Vegetable Handbook. 1998. BC Estimate:for Venlo-style greenhouse need minimu m gross return of $60CD/m2 ($30US/m2 or $3.00/ft2)(note below US costs)


44.3% Cost Increases in Last 20 Years1 Item (% Increase)

% Actual Item Total (% Increase)

% Actual Total

Labor (28)

20

5.6

7

10.5

Structures (20)

10

1

Energy costs (100-150) Transportation (25) Chemicals (40)

6

1.5

2

0.8

Plant material (30-50) Fertilizers (30)

30

12

1

0.3

Extra labor for getting 1 productready for market (400) Equipment (20) 3

4

Packaging and labelling (400)

8

1Greenhouse

2

0.6

Canada, Energy issues force us to refocus. March 2001, p. 50.


How to Cope? • Use heated space more efficiently (more plants/m2; buy transplants) • Check heatsource efficiency • Check inflation of double poly (4”) • Close doors/compartments with differenttemperatures & from outside • Inspectfans to insure shuttersclose properly • Don’t sethumidity controltoo low during cold weather or heating and ventilation systems will go on atthe same time (also wears outequipment)


How to Cope? (con) • Raise irrigation watertemperature • Place temperature sensor where the crop is • Minimize condensation because itreducesincoming energy & light • Use heat curtainsin glass houses • Don’t compromise crop quality • Raise prices 10-15%!


Greenhouse Economics