by Tamara Scully
As cold weather sets in, greenhouse growers are already preparing for the spring season. Efficiently managing greenhouse crops means knowing your market’s needs and meeting those needs in the most cost-effective manner. Producing quality crops while minimizing the cost of operation is crucial, yet figuring out how to do so, in an environment with so many variables, can be a daunting task.
Greenhouse growing is complex. There are a variety of inputs to consider, as well as equipment, labor and market considerations. Factors such as greenhouse temperature and daylight hours impact plant growth. Deciding whether it is more cost efficient to plant your own seeds, purchase small or large plug trays, or buy in larger size plants depends upon many variables.
Luckily, growers don’t have to figure out all of the complexities on their own. Tools exist which can assist growers in performing these calculations. The USDA’s Agricultural Research Service’s free software, “Virtual Grower 3.0,” and its companion manual, are a comprehensive tool designed to assist greenhouse growers with understanding the factors which impact overall cost of greenhouse production. The software allows users to input their unique data, and calculate anticipated energy use and cost, accounting for numerous variables.
Many factors impact overall energy use, which in turn impacts cost of production. Greenhouse design and location-specific factors also influence plant growth and productivity. Virtual Grower’s software offers producers a real look at the impact of growing conditions, greenhouse design, heating source and cost, lighting selection, and crop productivity.
Infrastructure and Energy
Greenhouse design and materials will impact the initial cost of erecting a greenhouse. But they also affect ongoing costs of production. Air infiltration leads to heat loss and also to lack of ability to precisely control the growing environment, leading to less efficiency of production and higher energy costs. Virtual Growers helps producers calculate the impact of these factors, even before determining the cost of various fuel sources and heating systems.
Heating fuel options range from fossil fuels — gas, oil, coal — to renewable sources such as solar or wind, wood, biodiesel corncobs, geothermal or even compost-generated heat. Virtual Grower has a section for selecting various fuels, imputing their local costs, and customizing how heat is regulated — constant temperatures, variable temperatures day/night, hourly temperatures, or no supplemental heating.
Calculations determine energy use and cost, taking into account the heater type, ventilation system, and the system’s overall maintenance and age. Both conduction — the transfer of energy through the greenhouse, and convection — the transfer of heat mixing with cooler outside air, are accounted for in the models.
Lighting is another energy concern for growers. Supplemental lighting increases energy costs, but also assists with plant growth. Under optimal lighting conditions, plants are of better quality. Factors to consider include lighting output, uniform lighting, and energy efficiency. Virtual Grower allows lighting system variables to be customized to reflect each user’s actual or proposed design.
Plant Growth and Crop Costs
Virtual Grower allows users to predict plant growth and time to flower based on their specific greenhouse heating, lighting and location data, as well as crop information. It also lets them count backward, from desired maturity for market, and analyze growing conditions and start dates. There is the option of using real weather forecast predictions to better calculate start times, growing conditions, and energy costs.
Growing conditions in the greenhouse, as well as the optimal conditions for any given crop, will impact energy use. Increasing greenhouse temperatures can speed up crop growth. Is it more productive to increase the temperature, or to allow the crops more time at cooler temperatures? Should you purchase larger size starter plants, rather than seeding or purchasing plug trays, to reduce energy costs?
Another tool which can assist growers in determining cost of production is the University of Arkansas’s Fact Sheet, “Starting a Greenhouse Business (Part 2): Estimating Income Potential,” by Gerald Klingaman and Jim Robbins, Extension Horticulturists. It offers producers a worksheet for calculating indirect and direct costs of growing. These calculations can further assist growers in determining whether plug production, seed starting or purchasing larger plants to finish is the most cost-productive option, given their greenhouse and market characteristics.
Indirect costs are those which are fixed whether or not the greenhouse is in use, or what crop it is producing. Rent, loan payments, taxes, any energy use, repairs and licenses are some examples. Depending on end-market, some of these may vary, such as greenhouse labor needs, while the cost of taxes, repairs and insurance will remain constant no matter whether growing for retail or wholesale markets.
Indirect costs must then be determined on a per square foot basis. Square footage of actual growing space, crop turnaround time, and the number of weeks the crop is grown are all factored into the equation. The overall indirect costs of operating the greenhouse can then be divided proportionately per crop, and the actual indirect per foot cost of any given crop can be calculated.
Direct costs per crop include: flat and liner costs, seed, plug or starter plant costs, fertilizer, heat, lighting, water, advertising, and other costs directly related to producing the crop. The actual price received, and the amount of units sold, will determine gross crop sales.
Gross sales, divided by the crop’s individual total cost of production, indicates the profit – or loss- per square foot. This is done by adding the crop’s direct cost for each growing scenario, to it’s indirect costs per square foot. Knowing a crop’s individualized cost per square foot allows a grower to calculate whether growing from plugs, direct seeding or growing out a larger size plant results in higher or profit or loss per square foot.
With a variety of production equipment available today, automating some aspects of the growing environment can be an option. The initial expense of equipment, plus ongoing maintenance and energy costs needs to be considered in relation to any offset in labor costs, or other factors that can change the cost per square foot, and therefore the overall profit margin. Another consideration is whether or not the equipment will soon be obsolete, due to rapidly changing technology.
The fact sheet advises that growers consider the impacts of significant system changes, such as cost of production of plugs versus finishing larger plants, rather than focus on smaller details like fertilizer costs. Labor involved in all aspects of greenhouse production is a significant factor, and greenhouse layout can impact labor costs and productivity.
Calculating the initial and ongoing costs of operation, based on greenhouse, heating and lighting system design, allows producers to more precisely calculate their cost of production. Effective greenhouse management requires many decisions be made, keeping the cost of production low, quality high, and customers satisfied.