Making Cents of Greenhouse Production Cost

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Making Cents of Greenhouse Production Cost

• Ben Beale
• Extension Educator-MCE
• St. Marys County

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Why do we care?

• Rising population base of affluent suburbanites
  in reach of Maryland growers

Source Census 2000 analyzed by the Social
Science Data Analysis Network (SSDAN).
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1953-Agricultural land
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1982
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1992
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ERS Data. in 1000. Greenhouse and Nursery Crops
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Now for the Bad News!

• The majority of small businesses fail within the
  first 2 years.
• Most folks starting a greenhouse do so because
  they enjoy growing, not the business side.

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Does all this math have you stressed out??
Try ancient yoga techniques
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Does all this math have you stressed out??
Try ancient yoga techniques
or Alabama yoga techniques
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Typical Cost Example

• 30ft. X 100ft. Poly house
• Raise bedding plants by the flat
• House filled in February and empty by June 10.
• 2 rounds of typical plants on 6 week schedule

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Space per House

• 3 ft isle down center.
• 2 ft isle on ends
• 7 walkways 1 ft. wide

13.5
12
30
100
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Space Utilization/Flats per House

• 30ft. 100ft 3000 sq. ft.
• Isle ways are 408 sq. ft.
• Usable space is 2592 sq. ft
• 86 space efficiency ratio

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Flats per House

• Standard 1020 flats are 11 x 22 inches, or 1.7
  sq. feet
• 2592 available sq. ft. divided by 1.7 sq. ft. per
  flat 1520 flats
• Considering a plan for 2 rounds of plants, we
  will estimate total production at 3040 flats

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Gross Income Potential
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Plant Material

• Wide variety of plant material available
• Assuming annual plug plants grown from seed and
  transplanted to flats
• Impatiens 490 tray 33.20

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Plant Material

• Impatiens 490 tray 33.20
• 490 plugs will fill how many flats?
• 490 tray will fill 10 flats
• 33.20 per tray / 10 flats 3.32

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Flats and Inserts

• Standard 1020 flats
• Sold by case of 100
• 51.00 per case or 51 cents a piece
• Inserts
• Available in multiple size combinations
• Size description 606, 806, 1206-
• First of trays Second Cells per tray
• 27.20 per case or 27 cents a piece

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Substrate

• High quality soil-less substrate is critical
• Using peat base potting soil with Bacillus
  subtilis for increased root rot protection
• Bedding Plant type potting soil will contain
• Peat Moss
• Perlite
• Vermiculite
• Wetting Agent
• Bacillus subtilis
• Macro and micro nutrients
• Lime

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Determining Amount of Potting Soil Needed

• Using the chart, 3.8 cu ft bag will fill 53 806
  flats
• 3040 flats will require 58 bags
• (3040 / 53 57.3 bags)

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Fertilizer Cost

• Using a constant feed 100 ppm N program
• Will use a standard 20-20-20 at rate of 6.7 ozs.
  per 100 gallons water
• Estimate 4 applications per week over 12 weeks
• Estimate water use at ½ gallon water per square
  foot

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Fertilizer Cost

• ½ gallon per sq ft times 2600 sq ft 1300
  gallons per watering
• 1300 gallons applied 4 times a week for 12 weeks
  is (1300x4x12) 62,400 gallons
• At a rate of 6.7 ozs per 100 gallons, you will
  need 4180 ozs. (62,400/100 x 6.7) or 261 lbs or
  11 bags of 20-20-20 fertilizer

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Greenhouse Plastic

• Assuming 4 year plastic replacement value.
• Using Tufflite IV 6 mil fro top
• Using Tufflite IV 6 mil infrared for bottom
• 30 ft wide house will need 40 wide foot plastic
• Total cost 640.00 over 3 years213.00 year

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Crop Management Products

• Will vary for each operation, depending upon
  season, management, climate, luck, etc
• Estimates provided are for an average season with
  average problems.

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Crop Management Products

• Disease Control
• Clearys 3336
• Heritage
• Daconil
• Insect Control
• Marathon

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Heating Expenses

• Most accurate estimates are from past experience
  in each house.
• Seasonal variation will change fuel usage
  dramatically
• Example uses LP gas through 1 heater
• Assume seasonal use of 800 gallons total

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Fixed Cost

• Those items that do not change with level of
  production
• Often Calculated with DIRTI-5 Method
• Depreciation
• Interest
• Repairs
• Taxes
• Insurance

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Depreciation

• 18,000 greenhouse construction cost
• Expected life of 10 years
• Value at 10 years 2,000
• 16,000 / 10 1600

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Insurance

• 600.00 for general liability and hazard policy
  for equipment

Taxes

• Includes property tax rate of 300 and license
  fee of 100 for total of 400

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Repairs

• Can be significant, especially in an emergency
• Plan for at least 10 construction cost each year
• 1800 per year

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Interest

• Include interest on total money invested
• In this example, assume an interest payment of 7
  times 20,000 investment 1400

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Enterprise Budgets

• Determine profitability of one enterprise versus
  another.
• Understand breakeven cost and pricing points for
  that enterprise
• Understand input structure such as labor inputs,
  shelf space pricing structure, raw material
  inputs, fixed equipment cost per dollar returned.
• Plan crop rotation schedules and product mix

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Enterprise Budget
Price (Revenue)
Contribution
Variable Costs
Break-even
Fixed Costs
Profit
Slide Adapted from Dr. Wen-fei Uva Department
of Applied Economics and Management Cornell
University
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Revenue

• Price x Units Sold Gross Revenue

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Variable costs Cost items that vary with
production volume.
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Fixed Cost (Overhead) Expenses that do not vary
with level of production
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Net Profit Revenue-Variable Cost-Fixed Cost
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Break Even Analysis
Slide Adapted from Dr. Wen-fei Uva Department
of Applied Economics and Management Cornell
University
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Breakeven Analysis
Slide Adapted from Dr. Wen-fei Uva Department
of Applied Economics and Management Cornell
University
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Remember good financial management can help avoid
surprises
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Remember good financial management can help avoid
surprises
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http//aede.ag.ohio-state.edu/people/moore.301/ind
ex.htm
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So get ready, hold on and enjoy the ride. The
trying is half the fun.
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And after all the hard work, you get to reap the
benefit of your efforts!
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The End