The Productivity of Greenhouses

The Productivity of Greenhouses

October 9, 2013

Greenhouse tomatoes have taken a greater share of the U.S. fresh-market tomato industry, according to the USDA ERS Vegetables and Pulses. They are available year round, and now more than ever, so are other normally seasonal field fruits and vegetables grown in greenhouses. This availability and great taste for retailers and customers is matched with less carbon foot printing and reduced land use. A greenhouse also uses less water, 25% less than a traditional field, which addresses the peril of water shortages (See The Food Journal: How Much Water Does It Take?). The ability to control the light, nutrients, water and carbon dioxide allows operators to seek maximum productivity to other key attributes they seek. 

Despite the EPA statistics that the average US farm rounds out to 418 acres while greenhouse operations average 72 acres per operation and make three times the money in sales, greenhouses don't do away with the need for cultivation in fields. Greenhouse technology isn't best for all crops, or for that matter, all vegetables. Broccoli, cauliflower and carrots should always be field as they don’t benefit from greenhouse growing. Greenhouses also require much more capital investment than field based systems.

It’s Big Business:

The business has changed in the last 30 years. Small family-owned operations have been replaced by bigger operations servicing chains. It’s not a cheap enterprise. It’s big business, and growers more than ever have to watch their bottom line.

Windset Farms’ greenhouse operations are still owned and operated by brothers Steven and John Newell, who founded the company twenty years ago when the financier of their parents' poultry company took them to a greenhouse vegetable operation. They now currently market just under 900 acres including their BC, California, Nevada and Mexican growing operations. The Food Journal asked Founder, CEO and President Steven Newell of Windset Farms what advice he would give a burgeoning entrepreneur in the greenhouse business: “You have to be a master of many: finance, construction, people management, entomology, marketing, machinery. The key characteristic, though, is tenacity. You have to be extremely tenacious and never quit and never take no for an answer because there are so many obstacles all the time. That is why a lot of companies go bust in our business. A lot of things are out of your control no matter how much you manage your business. We have pests and diseases to deal with, markets can go up and down like a yo yo, and weather has an effect to some degree. Operationally speaking any one of these can have a big impact to your bottom line. The costs of running a greenhouse are huge, and they don’t stop. I compare it to running an airline or a hotel business.” Interview with Steven Newell – Founder, CEO and President of Windset Farms  

This is indicated in the second and final bankruptcy for Eurofresh, bought by competitor NatureSweet Ltd. The company blamed the bankruptcy on a widespread pricing decline in the industry resulting from increased greenhouse acreage in the U.S. and Canada, increased tomato exports from Mexico, and extremely mild weather.  

The Urban Innovators:

BrightFarms “hopes to supply supermarket chains with enough roof-grown fruits and vegetables to stock their shelves for at least 10 years,” states The Lempert Report.  It costs the supermarket nothing but the contract for the produce and that produce is fresher and grown “for quality, taste and nutrition.”  

The Food Journal spoke directly to BrightFarms CEO Paul Lightfoot about the long-term purchase agreement models he put into place to help BrightFarms finance, build and operate local greenhouses at no cost to the retailer:  “To roll this out in a way that makes a difference that changes the produce industry, we really need to scale a number of these projects. We can’t do it like most farmers who build farms and then sell the food. We did it the other way around, selling the food first. BrightFarms signed long-term agreements with retailers for 70 million dollars worth of produce, which has enabled us to attract project financing for the greenhouses. This is what is enabling us to scale quickly. We borrowed this model from the energy business, the solar business.” 

CEO Paul Lightfoot was always dedicated to sustainability and was pleased the business model could address the effects on the environment of a weak supply chain. “In most of the US, tomatoes and lettuces are coming from thousands of miles away – the supply chain is long and complex, and it is bad for the environment.  We are replacing a long complex supply chain with a short and simple one, offering better - fresher and tastier - produce at competitive pricing.” Interview with Paul Lightfoot - CEO – BrightFarms

In Japan, reports Food News Today, “Daiwa House, Japan's largest homebuilder has introduced the Agri-Cube, a line of prefabricated hydroponic vegetable factories, aimed at housing complexes, hotels, and top-end restaurants.” Daiwa claims each unit can grow about ten thousand servings of fruits and vegetables per year at an operational cost of about $4,500, or about 45 cents per head of lettuce. Agra-Cube can help avoid difficulties presented by conventional small farms and gardens, measuring less than 16 feet in length and eight feet wide. It can be brought to a site on the bed of a light truck. This is a perfect solution for urban farming. 

Growers Rely On Software:

Greenhouse growers need to keep up with the big chain store demands, and software programs that manage profits and scheduling are essential tools. Sharon Nuss, president of Starcom Computer Corp, told Greenhouse Grower that, “The chain stores add a whole new challenge. They are demanding more growers take responsibility for replenishment analysis. To be able to really quickly distribute inventory and create replenishment shipments that integrate into the growers’ internal shipping and internal availability is the new frontier. More and more capabilities are going mobile with integration on your tablet or phone.” The USDA Agricultural Research Service developed one called Virtual Grower 3.0 that is free. The software calculates “the total and per square foot estimated monthly heating and lighting costs (based on yearly weather averages for your geographical region), number of weeks to flower and weight at flowering for each plant variety.” Another software, Flowers on Time,is offered by the University of Florida, Michigan State University (MSU) and University of Minnesota. MSU also sells a DVD, Estimating the Production Costs of Greenhouse Crops.

Food Safety in a Controlled Environment:

Food safety is on the minds of all retailers. Nobody wants to be responsible for the next round of tainted produce that makes thousands of people ill and potentially causes deaths. Greenhouse growing with its controlled environment greatly lessens the possibility of sickness. The FDA issued a Guidance for Industry: Guide to Minimize Microbial Food Safety Hazards of Tomatoes. The Guidance does contain a section on Greenhouse Production. Alternatively, their Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and Vegetables does not address greenhouses specifically and deals mainly with field practices.

Both Windset Farms and BrightFarms see the greenhouse as a safer bet to retailers and food chains when it comes to the potential of a widespread illness. Village Farms, in Florida and B.C., dedicated a page on their website to Benefits for Food Safety, listing as reasons why their practices “grow the safest produce you can buy”: no dirt, no pests, no animal waste fertilizers, no disease, no acid rain or tainted runoff, no nasty weather and independent food safety monitoring.