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.