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Economics of High Tunnel Economics of High Tunnel ProductionProduction
Bill EvansMi i i i A i lMississippi Agriculture
and Forestry Experiment Station Truck Crops Branch
wbe@ra.nospam.msstate.edu
High Tunnels/Hoop HousesHigh Tunnels/Hoop Houses
Usually unheated greenhouses with passive ventilation p
Kit or home built $1 $4 per sq ft $1 - $4 per sq. ft. Intended for season extension and
d t f t t timoderate frost protection
GeneralitiesGeneralities
Hobby vs. vocation Planning Planning Record keeping
Ni t f t ’t b Nine out of ten new growers won’t be growing 5 years after they come into
ffi !my office!• What? How can he say that?
Farms need at least three employees!• What? How can he say that?
GeneralitiesGeneralities
Costs– Fixed don’t change with activities andFixed don t change with activities and
must be accounted for even if you sit on the porch
– Variable result from activities and change (vary) all the time and with each season
A few Fixed CostsA few Fixed Costs
Land– Has value in time and spaceHas value in time and space
Insurance The Tunnels The Tunnels Tractors, truck payments, etc. Buildings, sheds
A Few Variable CostsA Few Variable Costs
Labor Seeds Seeds Fuels
F tili FertilizersWater Electricity Boxes crates Boxes, crates
Salaries and WagesSalaries and Wages
Make sure your budgets include a proper wage and return for you and p p g yother “owners”
Wages vary based on activitiesWages vary based on activities, yields, etc.
Remember to budget for benefits and Remember to budget for benefits and labor management (accounting etc.) someplace in your farm plansomeplace in your farm plan
Farm Plan?Farm Plan? What’s that?What’s that?
Spend some evenings writing a farm plan and/or a business planp p
Use this as a guide for your endeavorsendeavors– Where do you want the business to be
in one year, five years?in one year, five years?– How do the tunnels fit into that system?
• Tunnel economics would be part of theTunnel economics would be part of the overall farm/business plan
– (bankers love plans!)
Gu, et al., 2010
Aesop.Rutgers.edu/~horteng
High Tunnel Construction CostsHigh Tunnel Construction Costs
Tunnel Kit– Ground posts/foundationGround posts/foundation– Frame– DoorsDoors– Glazing/cover– Hardware– Hardware
High Tunnel Construction CostsHigh Tunnel Construction Costs
Site Prep– Dirt workDirt work– Tree work– DrainageDrainage– Irrigation
High Tunnel Construction CostsHigh Tunnel Construction Costs
Tunnel Construction– Farm family vs. Paid workersFarm family vs. Paid workers– Tools
• Cordless drills and drivers• Post driver• Lift and or ladders
– Supplies• Additional hardware• Wood for rails and door frames
High Tunnel Construction CostsHigh Tunnel Construction Costs
After Construction – Seeds and planting stockSeeds and planting stock– Planting equipment and supplies– Irrigation and fertigation suppliesIrrigation and fertigation supplies– Sprayers, hand tools, ….– Harvest buckets and bins– Harvest buckets and bins– Repair tape
Aesop.Rutgers.edu/~hortengSite prep
Aesop.Rutgers.edu/~hortengStakes, mulch, sprays, cooling, weeding
Opening and closing, heat
Production and ReturnsProduction and Returns
To win in high tunnels: Think like a greenhouse growerg g
Manage for profit, not just yield Time is money in a structure that costs Time is money in a structure that costs
over $43,000 per acre per year to build and maintainand maintain
Empty space could be money lost. It d t b t d f i thneeds to be accounted for in the
budget
Thinking like a GreenhouseThinking like a GreenhouseThinking like a Greenhouse Thinking like a Greenhouse GrowerGrower These days, I think in:
DOLLARS/SQUARE FOOT/DAY
Economics of Crop MixesEconomics of Crop Mixes
Not every crop is going to be the biggest revenue producergg p
Just because a crop is expensive to grow does not mean it is the leastgrow does not mean it is the least profitable
Just because a crop is cheap to grow Just because a crop is cheap to grow does not mean it is the most profitable
Hypothetical Gross ReturnsHypothetical Gross ReturnsValue/ Value/ Value/ Days in Value/day/
Crop SpacingValue/plant
Value/sf
Value/tunnel
Days in tunnel
Value/day/tunnel
Lettuce 10 X 10 in (0.7 sf)
1.00-4.00 1.45-5.80 2,543-10,092 50 50-202
Collards 18 X 18 in. (2.25 sf)
2.00-5.00 0.88-2.22 1,056-2,664 70 15-37
Tomatoes 18 X 48 in (6.0 sf)
15.00-40.00 2.50-6.66 3,000-7,992 120 25-67
Summer Squash
24 X 48 in. (8.0 sf)
12.00-24.00 1.50-3.00 1,800-3,600 80 23-45
Basil 12 X 12 in. (1.0 sf)
3.00-5.00 3.00-5.00 3,600-6,000 70 51-86
Zinnias 6 X 6 in.(0.25 sf)
2.00-6.00 8.00-24.00 9,600-38,400 150 64-256
Assumes a 2000 sf tunnel, 1200 sf (60%)space utilization, direct high end markets
MarketingMarketing
Don’t start to grow if you don’t know where you are going to sell and that you have reasonable expectations of selling your cropexpectations of selling your crop
Direct, retail Indirect, wholesaleIndirect, wholesale On farm, farmers markets, restaurants, fruit
stands, supermarkets, caterers Value added: processed, bundled, pesticide free,
local Example: farms south of Hope Example: farms south of Hope
ResourcesResources
– MSUCARES.COM/crops/hightunnels– The MSU Budget Generator g– Hightunnels.org– Attra.orgg– UARK/OSU Horticulture Industries
Show
This project was supported by the Agricultural Food Research Initiative of the National Institute of Food and Agriculture, USDA, Grant # 2009-55618-05169.US , G a t 009 556 8 05 69
Additional support for this presentation has come from the Mississippi Agriculture and Forestry Experiment Station, the Mississippi Department of Agriculture and Commerce Specialty Crops Block Grant Program, and my hosts today, the University of Arkansas and Arkansas Extension.
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