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Final Report

Newark Greenhouse Capstone Project

Submitted to: City of Newark, Department of Economic Development

Developed by: Ryan Chan, Chris Santulli, Kesha Thomas McBeth, and Mark

Viehman

Advisor: Ivan Gonzalez

May 4, 2011

This Page Intentionally Left Blank

Newark Greenhouse Capstone Final Report 5-4-2011

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Table of Contents

1. Executive Summary ....................................................................................................................1

2. Introduction ...............................................................................................................................3

2.1 Scope of Work for the Project ...................................................................................................... 3

3. Demand Study ............................................................................................................................5

3.1 Demand Study Methodology Overview ........................................................................................ 6

3.2 Potential Clients ............................................................................................................................ 7

3.3 Description of Interest, by Potential Client................................................................................... 8

3.4 Potential Challenges to Meeting Demand .................................................................................. 13

3.5 Recommendations Based on the Demand Study ....................................................................... 14

4. Best Practices for the Successful Management of the Newark Greenhouse ................................ 17

4.1 Best Practices Study Methodology Overview ............................................................................. 18

4.2 Greenhouse Operations Overview.............................................................................................. 19

4.2.1 Newark Greenhouse Operations ........................................................................................ 23

4.3 Lessons Learned and Best Practices............................................................................................ 23

4.3.1 Operational Best Practices for Greenhouse Operations ..................................................... 23

4.3.2 Implementation Lessons learned ........................................................................................ 24

4.3.3 Client Relationship Management and Marketing ............................................................... 26

4.3.4 Production Management and Forecasting ......................................................................... 28

4.3.5 Transportation and Distribution ......................................................................................... 29

4.3.6 Addressing Other Barriers to Entry into the Institutional Market ...................................... 31

5 Budget Forecasting and Monitoring .......................................................................................... 35

5.1 Newark Greenhouse Production Information .................................................................................. 35

5.2 Production Model Description .......................................................................................................... 35

5.2.1 Revenue .............................................................................................................................. 35

5.2.2 Expenses .............................................................................................................................. 37

5.2.3 Startup Expenses ................................................................................................................. 37

5.2.4 Output Formula ................................................................................................................... 38

5.3 Budget Analysis ........................................................................................................................... 38

6. Considerations for the Future ................................................................................................... 40


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6.1 Expansion Options ...................................................................................................................... 40

6.2 Networking Options .................................................................................................................... 41

Appendix A —Meeting Notes ......................................................................................................... A-1

Catalog of Contacts ............................................................................................................................... A-1

Notes from Meeting with Robin Dougherty of Greater Newark Conservancy– 2-17-2011 ................. A-5

Notes from Meeting with Lorraine Gibbons of Garden State Urban Farms– 2-17-2011 ..................... A-7

Notes from Meeting with Vicky Dunn of Columbia Dining Services – 2-17-2011 ................................ A-9

Notes from Meeting with Patrick McKee of Finger Lakes Fresh – 3-9-2011 ...................................... A-11

Notes from Meeting with Larry Schembri from R Best – 3-10-2011 .................................................. A-14

Notes from Meeting with Benjamin Linsley of BrightFarms 3-18-2011 ............................................. A-15

Notes from Meeting with Kate Bayer and Steve Antin of Milestone Specialty Produce – 4-1-11 ..... A-16

Notes from Meeting with Barbara Mintz at Newark Beth Israel Medical Center -4/8/2011 ............. A-18

Notes from Meeting with Jan Zientek from the Rutgers Cooperative Extension – 4/8/11 ................ A-19

Notes from Meeting with Mary Donnell of GreenCity Growers - 4/14/2011 .................................... A-22

Notes from Meeting with Deb Bentzel of Farm to Institution – 4-19-2011 ....................................... A-24

Questionnaire Responses from Julie Aiello of Gourmet Dining, LLC. – 4-22-2011 ............................. A-26

Appendix B —Demand Study Survey ............................................................................................ A-28

Appendix C —Environmental Value Proposition Calculations ........................................................ A-34

Appendix D –Hypothetical Budget ................................................................................................ A-35

Appendix E—References .............................................................................................................. A-36


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1. Executive Summary The mission of Newark’s Department of Economic and Housing Development is to “create economic

opportunity for City residents and enhance the vibrancy of our city.” With its plans for the Newark

greenhouse, the Department hopes to further that mission by fostering the development of a

sustainable social enterprise in the community. The vision for this enterprise is two-fold: provide job

skills to disadvantaged Newark residents and develop a community-based approach to sourcing fresh

and healthy food. From a larger perspective, the Newark greenhouse may serve as a pilot of a more

comprehensive economic development strategy, along the lines of the model pioneered in Cleveland.

Commissioned by the City, this report seeks to lay the groundwork for the establishment of the Newark

greenhouse by distilling operational best practices in the hydroponic greenhouse industry and

understanding the local demand for produce. To these ends, the SIPA Capstone Team researched

greenhouse operations, interviewed greenhouse experts, and explored Newark-area produce demand.

Inspired in part by the on-going success of the Cleveland Foundation’s economic development work, the

City requested that the report’s demand study focus on the produce needs of community anchor

institutions. The goal of this focus is to explore a solid client base on which the Newark greenhouse and

subsequent iterations of the economic development strategy can grow.

Through a combination of interviews and academic research, the Team has identified five areas of

consideration that we believe are critical contributors to the viability of a greenhouse. (Notes from our

interviews are included as Appendix 1). The team has come to believe that to develop an economically

self-sustaining greenhouse that can achieve its environmental and social goals these items must be

addressed through comprehensive planning. These findings are elaborated upon and substantiated

throughout the remainder of the report. Nearly all of our recommendations directly address the issues

presented below:

1. It is difficult for hydroponic greenhouses to be profitable. Based on the experiences of other

non-profit operators and academic research, achieving profitability or break-even can be

extremely difficult, particularly in the initial years of operation. Possible strategies to mitigate

this risk include expanding implementation, funding or subsidizing initial operations, crafting a

market niche, and developing a sophisticated production planning and forecasting methodology.

2. Experienced personnel are critical. For a hydroponic greenhouse to be financially successful, it

is important for it to have a greenhouse manager/grower who is experienced in hydroponics,

food safety, and general greenhouse management. This expertise should extend to the

technical side of hydroponics, including temperature control, light monitoring, and

water/nutrient testing. In addition, it will be important for the greenhouse to employ an

experienced business manager who can oversee marketing activities and client relationship

management. Due to the competitive market and the needs of potential clients, this person

must understand the produce business.

3. The produce market is fiercely competitive. In addition to the corporate farming industry, the

Newark greenhouse will face competition from for-profit corporations who run large hydroponic


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operations, as well as other small, local farmers who also sell conventional and hydroponic

produce. The greenhouse must have a well-organized marketing strategy that clearly articulates

the three-pronged value proposition that it brings to the market and recognizes which potential

clients will respond to different aspects of that value proposition. The team believes that the

Newark greenhouse’s value proposition encompasses its social mission, the environmental

impact of local food, and the high quality of its produce.

4. The location and size of the greenhouse will be crucial to determining yields, which will in turn

be crucial in determining the financial success of the greenhouse. A variety of factors impact

crop yields. Optimal site selection can harness these factors to enhance crop yields. Conversely,

poor site selection can increase negative effects of these factors, damaging the viability of the

greenhouse. Light access, potential development in the area, water quality, and the site’s

previous use are essential considerations. Additionally, the Team believes that proposed size of

the greenhouse may not bring about sufficient yields to be profitable. Based on the experiences

of other non-profit operators and academic research, expansion was often necessary to reach

profitability. The Team believes that the City and greenhouse operators should consider options

for an expanded greenhouse, either at initial implementation or in subsequent years.

5. Operational and administrative requirements for supplying produce to an institutional market

are significantly different from requirements for supplying to restaurants or farmers markers.

These requirements present a challenge that the greenhouse must address through a variety of

strategies. In addition to operational and production considerations, marketing and selling to

institutional clients such as universities or hospitals generally requires product liability insurance

policies (in excess of general farm liability policies), safe food handling practices certification,

additional packaging and traceability concerns, and additional distribution methods.

To the above findings the Team adds the following high-level strategic recommendation: Many

interviewees warned of social missions crowding out sound business strategies. In order to develop an

economically viable Newark greenhouse, it will be crucial to maintain a sharply focused social mission. It

may be appropriate or necessary to limit the goals and/or definitions of success for the Newark

greenhouse. Missions focused on education, wellness, the environment, economic development, job

training, and environmental sustainability are admirable avenues for social enterprises, but in

attempting to address all of them the focus on economic viability could slip. For the Newark greenhouse

to be able to best pursue its social missions, it must retain a focus on financial sustainability. To

accomplish this, it may be important to hone or redefine the social mission.

Our recommendations throughout the remainder of the report are crafted to address the findings

described above.


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2. Introduction The SIPA Capstone Team has conducted research to develop recommendations regarding the launch

and on-going operation of a hydroponic greenhouse—a social enterprise supported by the City of

Newark. The goals of the greenhouse are to create a sustainable business while accomplishing its

mission to train and employ Newark residents (including the ex-offender population), as well as provide

transferrable job skills. Additionally, by encouraging local anchor institutions to buy local produce, the

Newark greenhouse hopes to be able to produce and distribute food in a manner that is

environmentally sound and contribute to the economic development of the City of Newark.

The Team’s work focused on three main efforts:

A demand study that analyzes the produce needs of anchor institutions that are potential clients

to the greenhouse in the City of Newark

An analysis of best practices for organizations similar to the greenhouse related to production,

distribution, and client/institutional partnerships

A production forecasting tool that the greenhouse operators can use to plan operations

The findings from these two efforts have enabled the Team to identify preferred strategies for the greenhouse to produce, sell, and market to potential client organizations. The Team also proposes ways in which the Newark greenhouse, or the business of urban farming in Newark through additional greenhouses, may expand in the future. This will provide opportunities to:

Expand green jobs in Newark

Scale-up production to meet the needs of additional clients

Promote urban farming as an instrument to build economic development and revitalize

communities

Create urban food security by providing sufficient and better quality food to those Newark

residents who may not have access to affordable, fresh, and nutritious food1

2.1 Scope of Work for the Project The SIPA Capstone Team identified the following elements for the scope of work required to develop

recommendations for the Newark greenhouse:

Conduct a demand study by researching the market and identifying and surveying anchor

institutions in the Newark area:

o Identify produce needs of potential anchor institution clients

o Examine product lines needed to satisfy the demand of anchor institutions

o Assess opportunities to market and sell local produce and promote the Newark

greenhouse’s social mission

1Community Food Security Coalition, (2003). Urban agriculture and community food security in the United States:

Farming from the city center to the urban fringe. Retrieved March 18, 2001 from: http://www.community-

wealth.org/_pdfs/articles-publications/urban-ag/report-brown-carter.pdf

http://www.community-wealth.org/_pdfs/articles-publications/urban-ag/report-brown-carter.pdf



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o Identify operational challenges that can be barriers to entry into the institutional market

Research similar greenhouse operations to identify successful business practices:

o Develop best practices and lessons learned as they apply to the Newark greenhouse’s

implementation and operation

o Analyze production and distribution processes

o Learn client relationship management strategies

o Identify strategies to overcome operational challenges to entering the institutional

market

o Consider possible paths to expansion

Develop a production forecasting tool to help the Newark greenhouse operators project

revenues and expenses on a weekly, monthly, and yearly basis based on variable expenses and

production.


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3. Demand Study A sound understanding of the market environment in which a social venture will operate is critical to

developing an economically sustainable business or social enterprise. Although the Newark greenhouse

will have a mission beyond that of a pure profit-making venture, achieving the economic development,

social, and environmental missions of the Newark greenhouse will depend, to some extent, on the

operation’s financial performance. To support the economic sustainability of this venture, the Team

conducted an analysis of the demand for locally grown produce among certain Newark-area institutions.

The primary focus of the study is to identify the demand among organizations referred to as “anchor

institutions” in the Newark area. In a report to the U.S. Department of Housing and Urban Development

(HUD), a Task Force led by the Penn Institute for Urban Research (2009) identified educational and

medical institutions (“Eds” and “Meds”) as the most prominent anchor institutions in American cities.

The Task Force noted that due to their size, community presence and connectedness, and socially driven

missions, “Eds and Meds are key to the revitalization of many of America’s communities, cities, and

metropolitan areas.”2

The report states:

Eds and Meds, as well as other anchors, are important resources in cities and metropolitan

areas and key to their development and improvement. Simply put, the serious, significant,

sustained engagement of Eds and Meds with their communities, cities and metro areas can be a

major force for positive change.3

The sizeable presence of these anchor institutions and their inherent rootedness in the cities they call

home positions them as ideal consumers of goods and services produced locally, thus contributing to

the local economy. Aligning the Newark greenhouse’s production strategy to the demand trends of

some of these institutions could provide a consistent, institutional customer base that can serve as a

foundation for future expansion and increased mission-oriented activities.

We expect that the demand for produce grown at the Newark greenhouse will not be driven solely by

the need of local institutions to purchase vegetables, but also by the desire of these institutions to serve

their community. The more interested an organization is in the missions of the greenhouse, the more

likely it will be to purchase produce from the greenhouse, even perhaps at a premium. The Team

therefore defines the “demand study” to encompass more than estimates of potential sales revenues; it

also includes the potential level of commitment from partner institutions relative to the social missions

of the greenhouse.

2 Penn Institute for Urban Research. (2009). Anchor institutions as partners in building successful communities and

local economies. In Retooling HUD for a catalytic federal government: A report to Secretary Shaun Donovan. University of Pennsylvania, Penn Institute for Urban Research. (p. 147). Retrieved February 6, 2011, from: http://penniur.upenn.edu/uploads/media_items/retoolinghud-chapter8-pdf.original.pdf. 3 Ibid, p. 150.

http://penniur.upenn.edu/uploads/media_items/retoolinghud-chapter8-pdf.original.pdf


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In order to assess the willingness of anchor institutions to purchase greens from the Newark greenhouse,

and the potential sales volume to each, the Team contacted several candidate institutions. During

interactions with these organizations, the Team inquired specifically about their desire to partner with

the Newark greenhouse because of its mission. This enabled the Team to assess the most likely partners

for the greenhouse, somewhat independently of the market price of the produce or other purely

economic factors.

Therefore, the demand study’s goals are to:

Understand or estimate how much each anchor institution values the multiple missions of the

greenhouse

Understand the relationships between the anchor institutions and current produce suppliers,

including the anchor institutions’ level of satisfaction

Understand the prices at which anchor institutions are purchasing produce

Understand the supply chain involved in the procurement of produce

Identify potential barriers to entry for the Newark greenhouse in the institutional market

The pages that follow present a demand study for the Newark greenhouse project. The subsections

below are organized in the following manner:

3.1 Demand study methodology overview: Describes the Team’s approach to conducting the

demand study

3.2 Potential clients: Briefly identifies and describes potential anchor institution clients

3.3 Description of interest, by potential client: Presents profiles of anchor institutions, and

evaluates their produce needs and how they are likely to value the Newark greenhouse’s

mission

3.4 Potential challenges to meeting demand: Identifies the barriers to entry that the Newark

greenhouse may face when entering the institutional market

3.5 Recommendations based on demand study: Presents recommendations developed based on

the demand study

3.1 Demand Study Methodology Overview Following initial consultations with the City of Newark, preliminary sector research, and discussions with

dining services operations at similar anchor institutions, the Team crafted an interview questionnaire for

potential anchor institution partners. Additionally, in the event that the anchor institution was unable

to grant a telephone interview or meet with the Team, the Team developed an online survey.

The interview questionnaire and the survey were designed to collect the information necessary to allow

the Team to create a demand profile for each institution. Each profile gives an overview of the

institution, information on current suppliers or operators, and a description of the extent to which the

institution values the social and environmental missions of the greenhouse.

After identifying the initial list of potential partners, the team contacted the directors of their dining

services and cafeteria operations. Team members performed an initial interview to determine if the


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institution was a potential partner. In the event the Team could not schedule an interview, we provided

our contact at the anchor institution access to the online survey. Where the dining services directors

were amenable, Team representatives visited the site to meet in person.

The survey is included as Appendix B.

3.2 Potential Clients The Team, in conjunction with the City of Newark, identified ten potential anchor institutions to

research. The table below provides a brief overview of each institution. Potential anchor institution

partners were selected based on their location in and around Newark, their social missions, and the size

of the population served/employed.

Figure 1: Potential Anchor Institution Partners Institution Location Presence and Volume Characteristics Beth Israel Hospital Newark 3,200 employees

800 physicians

150 volunteers

25,000 outpatient visits per year

300,000 admissions per year

Essex County College Newark 11,000 students

515 full-time staff

132 full-time faculty

Kean University Union 2,045 on-campus students

15,939 total student population


New Jersey Institute of Technology Newark 5,924 students


2,000 staff

Newark Public Schools Newark 39,440 students

7,000 staff

75 schools

The Prudential Headquarters Newark 4,700 staff

Rutgers University Newark 12,000 students


1,100 full-time staff

Seton Hall University South Orange 10,000 students


1,000+ staff

Seton Hall University Law School Newark 360 students


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Figure 1: Potential Anchor Institution Partners Institution Location Presence and Volume Characteristics The University Hospital Newark 3,132 full-time staff

19,000 admissions per year

215,000 outpatient visits per year

Serves 4,800 meals per day

In addition to the institutions listed above, the Team interviewed the Director of Columbia University

Dining Services and her staff and toured their facilities. Although Columbia University Dining is not a

likely client for the Newark greenhouse, Columbia University provided a presentation of a dining service

operation and granted the Team invaluable access to its internal operations.

3.3 Description of Interest, by Potential Client In the following pages, we profile each of the anchor institutions that responded to our requests for

information. As mentioned previously, the Team also interviewed Columbia University Dining Services,

and as an additional point of reference (and potential future anchor institution partner); thus, we have

also included a profile for Columbia University Dining Services.


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Figure 2: Institutional Demand Profile: Beth Israel Medical Center 201 Lyons Avenue Newark, NJ 07112 (973) 926-7000

Barbara Mintz [email protected] 973-926-2663

Overview

Beth Israel Medical Center is one of the largest hospitals in New Jersey. It has 695 hospital beds, and boasts one of the only facilities for pulmonary transplants in the State. At its two cafeterias (which Sodexo manages) the hospital serves approximately 1,500 meals per day. It also serves about 1,350 in-room meals per day to inpatients. Beth Israel currently operates a weekly farmer’s market on Thursdays that is organized by Lorraine Gibbons. The farmer’s market offers fresh produce and local food from a number of sources including Garden State Urban Farms. Beth Israel Medical Center is in the early planning stages of building its own urban greenhouse, also in coordination with Lorraine Gibbons. The goal of the Beth Israel greenhouse would be to educate the community about the importance of healthful foods while also providing access to those same foods. The greenhouse would also supplement Beth Israel’s Kids Fit programs in the Newark schools (George Washington Carver & Maple Avenue Schools). Barbara Mintz, RD, the project leader for the greenhouse, urged the Team to explore opportunities in Newark Public Schools in conjunction with Beth Israel’s wellness programs or through other pathways. With regards to Beth Israel purchasing from the Newark greenhouse, Ms. Mintz noted that she would have to investigate the leverage the medical center can have over Sodexo’s procurement process. Additionally, if Beth Israel’s greenhouse becomes operational, it would be its own supplier of local greens to the cafeterias.

Supplier Relationships

Produce Suppliers Beth Israel dining services is operated by Sodexo, Inc., which manages a

complex network of supplier relationships.

Mission Alignment

Staff at Beth Israel Medical Center is primarily interested in bringing nutritious food to underserved communities and to educating children about the value of eating healthily. While this may be a secondary mission for the Newark greenhouse, it is not the primary reason the City is starting the venture. The social objectives of the Beth Israel Medical Staff are not well aligned with those of the Mayor’s Office of Housing and Economic Development as they pertain to the Newark greenhouse.

mailto:[email protected]


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Figure 3: Institutional Demand Profile: Columbia University 519 W 114th St New York, NY 10027

Vicki Dunn, Director Dining Services [email protected] 212-854-8324

Overview

Columbia University Dining Services, located in Manhattan, serves 10,000 meals every day. In total, CU Dining purchases about 48 cases of lettuce per week (primarily romaine), usually at prices between $22 and $28 per case. In order to supply its lettuce, CU Dining managers are constantly searching for the cheapest vendor that provides quality produce, which is often Sysco. It also purchases specialty greens, such as spring mix and arugula, when they are in season. Occasionally, it acquires fair trade tomatoes from select growers in Florida. In order for the Newark greenhouse to sell to CU Dining, the Newark greenhouse would likely have to offer greens at or near competitive prices, while also emphasizing that they are locally grown (CU Dining advertises this to its students). The greenhouse would also have to meet the insurance and traceability standards outlined in section 4.3.6. Since Newark is relatively far from Columbia University, the best method for supplying to the University may be through its current suppliers, such as Sysco, R Best, or J. Kings.


Produce Suppliers Sysco

R Best

J. Kings

Baldor

AFI

US Foods

Mission Alignment

Director Vicki Dunn indicated that student preference is a critical factor in their purchasing efforts. Columbia students feel that sustainable, local, and fairly produced food is important. As such, CU Dining makes an effort to purchase locally grown produce when feasible. CU Dining works with the Columbia Food Sustainability Project (CFSP) to bring more local options to all of its locations. They serve locally grown apples and fresh apple cider, and work with a Long Island produce supply company to procure local fruits and vegetables from nearby farms.



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Figure 4: Institutional Demand Profile: Gourmet Dining, LLC. 285 Madison Avenue Madison, NJ 07940

Julie Aiello, Director of Marketing and Sustainable Development [email protected] (973) 443-8659

Overview

Gourmet Dining, LLC. is a Madison, New Jersey-based dining services corporation that provides catering to eight educational campuses in New Jersey. In addition, Gourmet Dining serves two corporate campuses and a number of correctional and mental health facilities. Among its clients, Gourmet Dining serves the following Newark-area institutions:

Kean University

New Jersey Institute of Technology

Seton Hall University

Gourmet Dining is excited about the prospect of purchasing produce from the Newark greenhouse. At Gourmet Dining-operated dining halls, the salad bar is a key feature, and the company expects student demand in this area to increase. On average the company purchases approximately 20 cases of lettuce per week at each school. Some schools, including those listed above, may purchase more than 50 or 60 cases each week. Gourmet Dining does not have a formal process to engage local farmers. The Newark greenhouse management would likely meet with the executive chefs at individual schools to determine volume needs and storage and transportation considerations. They are willing to pay a small out-of-season premium (20% to 30%) to purchase a portion of their lettuce locally from the greenhouse. In-season, Gourmet Dining generally pays about 10% more for local produce. Requirements for farms that supply Gourmet Dining include the following:

Product liability insurance

Simple packaging (cardboard box with plastic bag inside), dated on the day of harvest, and labeled with weight/quantity

Traceability is not required, but is preferable. Most of their products have tracking numbers associated.


Produce Suppliers Gourmet Dining purchases produce from a number of suppliers, including a

variety of local farms. The distributors they engage include AFI/PFG,

Plainfield produce, and Zone 7. (Zone 7 is discussed in Section 4.3.5 below)

Mission Alignment

Supporting the local agriculture community is important to Gourmet Dining. The emphasis it places on local foods is driven, in part, by its clients’ desire for local and seasonal foods, and also by its corporate commitment to reducing the company’s impact on the environment and a desire to support local farmers. According to Gourmet Dining’s Director of Marketing and Sustainable Development, the company sources produce from growers whose practices emphasize responsible “pesticide use *and+ water use *and+ respect for wildlife, soil health, and people.”4

4 Correspondence. Please refer to Appendix A.



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Figure 4: Institutional Demand Profile: Gourmet Dining, LLC. Gourmet Dining maintains a local food purchasing target of 30%. Including locally produced dairy and baked goods, the company regularly exceeds its goal. Yearly, it purchases approximately 30% of its produce from local suppliers. From June to December it estimates that 60% of its produce is sourced locally. According to the three-year Sustainability Action Plan available on the Gourmet Dining website, the company has partnered with a number of client institutions to build rooftop gardens and greenhouses to supply its kitchens with fresh herbs and vegetables.5

Institutional Contacts

Seton Hall University: Danny Costello, Executive Chef [email protected] (973) 761-9559

NJIT: Peter J Fischbach C.E.C, Executive Chef, Director [email protected] (973) 596-3136

Kean University: Mark Danubo, Executive Chef [email protected] (908) 737-1769

5Gourmet Dining, LLC. (2011). Three-Year Sustainability Plan. Retrieved 3/31/2011 from:

http://www.gourmetdiningllc.com/site/index.php?option=com_content&view=article&id=88&Itemid=119





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Figure 5: Institutional Demand Profile: Rutgers University Newark 350 Martin Luther King Jr. Blvd. Newark, NJ 07102

Paul Vazopolos, Food Service Director [email protected] (973) 353-5997

Overview

Rutgers University, Newark serves 12,000 full-time students on its campus. Aramark Higher Education currently operates its dining services. Unfortunately, the team was unable to secure a meeting with a representative from their dining services operation.


Produce Suppliers The team was unable to find information on supplier relationships at Rutgers University, Newark.

Mission Alignment

Through their Green Purchasing Program, Rutgers University demonstrates its commitment to environmentally sustainable and socially responsible procurement. Under the program, the University attempts to green its supply chain by favoring “those suppliers whose products meet the environmental objectives of Rutgers.” To this end, the University will favor companies that “provide environmentally friendly products and services or suppliers that are environmentally sensitive in their daily operations…”6 The program encourages purchasing officers to favor service providers that use sustainable practices. Of particular interest to the Newark greenhouse, the green purchasing program highlights producers that “provide support and add value to our local communities and *the communities+ of our supply chain” and “encourage members of our supply chain to add value in their communities.” Additionally, the program seeks to be environmentally responsible within the supply chains by encouraging the environmental responsibility of suppliers. The Green Purchasing Policy further instructs departments to purchase locally grown produce whenever possible, in order to minimize the environmental costs associated with shipping. Although the University’s Green Purchasing Program should make the Newark greenhouse an attractive supplier, Section 20.1.11 of the University policies and regulations gives Dining Services “limited purchasing authority” in order meet its unique purchasing needs. This exception could allow dining services to bypass some of the green purchasing requirements. It may also, however, allow the organization to bypass some of the university’s more onerous procurement regulations and allow the Newark greenhouse to sell to them more easily.

3.4 Potential Challenges to Meeting Demand Our research and interviews with anchor institutions clarified some challenges that the Newark

greenhouse may face to entering the institutional or wholesale market and to meeting institutional

demand. Some of these challenges, such as requirements for product liability insurance are easily

addressed. Others will require additional work to overcome.

The team has identified the following challenges:

6Rutgers, The State University of New Jersey. (2010). Green Purchasing Policy and Guidelines. Rutgers, The State

University of New Jersey: New Brunswick, NJ. Retrieved 3/31/2010, from: http://purchasing.rutgers.edu/green/index.html.


http://purchasing.rutgers.edu/green/index.html


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Engaging institutions: Without external introductions, it can be difficult to engage with the

dining service managers of these institutions. Without a track record of success and the proven

capacity to reliably meet fluctuating demand levels, many institutions may be reluctant to enter

into an agreement with a new greenhouse.

Price and volume: Lowering prices to become competitive with large-scale producers will be

important to engaging wholesalers. We believe that this concern may be partially mitigated by

the Newark greenhouse’s social mission and provision of local produce.

Insurance requirements and safety certification: Many institutions require that their suppliers

carry product liability insurance policies of up to $1 million. Others require that suppliers

comply with certain handling practices and be independently audited. As such, the Newark

greenhouse may have to implement additional operational procedures and expend funds to

purchase additional insurance.

Transportation and distribution: To engage wholesalers and to work directly with anchor

institutions, the Newark greenhouse must have an effective, reliable, enterprise-grade delivery

mechanism.

The Team’s findings above are echoed by the results of a 2008 Cornell University Cooperative Extension

study. The Extension conducted a study to determine the capability of local food producers to supply

institutional markets such as Cornell University, Ithaca College, and other associated institutions. The

report profiled a number of local producers and identified some important challenges that small, local

producers may face when entering the institutional market:

Knowledge of wholesale requirements may be limited

Local producers may lack infrastructure, such as coolers, vehicles for delivery, websites for

ordering, etc.

Local producers frequently lack the liability insurance and food safety protocols required by

larger buyers

Labor is a limitation for smaller producers

Some producers were reluctant to lower prices to be competitive in the wholesale market7

The Cornell study identified three possible strategies to overcome these challenges. We have included

and expanded upon these strategies in the recommendations and best practices presented in Section 4.

3.5 Recommendations Based on the Demand Study After meeting with several Newark institutions and researching their procurement policies, as well as

the procurement policies of institutions not interviewed, the Team has developed recommendations for

the City and the Newark greenhouse’s managers related to demand. These recommendations fall into

three categories: potential institutional clients, product lines and volumes, and pricing.

Potential institutional clients:

7Cornell University Cooperative Extension. (2008). Assessing the capacity of producers to supply institutional

markets. Ithaca, NY: Cornell University. Accessed on March 18, 2011, from: http://www.sare.org/MySare/ProjectReport.aspx?do=viewRept&pn=ONE07-074&y=2008&t=1

http://www.sare.org/MySare/ProjectReport.aspx?do=viewRept&pn=ONE07-074&y=2008&t=1


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o Gourmet Dining, LLC provides dining services to several local anchor institutions and has

stated its commitment to buying local food. According to its Director of Marketing and

Sustainable Development, the company is interested in purchasing from the Newark

greenhouse. It maintains a 30% local food-sourcing target and further demonstrates its

commitment to sustainability by installing rooftop gardens at universities to supply its

dining halls. The Team believes that this will be a vital relationship for the Newark

greenhouse manager to develop and maintain. We strongly recommend pursuing this

potential client. The team has conversed with the Director of Marketing and

Sustainable Development, Julianne Aiello, and recommends that the Newark

greenhouse establish contact with her in the near future.

Gourmet Dining provides dining services to numerous anchor institutions, including:

New Jersey Institute of Technology

Kean University


Seton Hall Preparatory School

Four correctional facilities

Two corporate offices (Hertz and Dress Barn)

o Rutgers University Newark’s contract with Aramark will likely make a partnership

difficult to achieve. The company’s size allows it to negotiate significant volume

discounts on produce, which would place the greenhouse at a price disadvantage. The

team recommends that Newark greenhouse managers pursue a partnership with

Rutgers University Newark, but remain aware of the relative unlikeliness of such a

partnership and adjust projections accordingly.

o Beth Israel Medical Center is not likely to be a long-term purchasing partner for the

greenhouse, as it plans to build its own greenhouse in the near future. However, the

Newark greenhouse could attempt to sell to Beth Israel’s dining services through Sodexo

for an interim period before Beth Israel’s greenhouse becomes operational. Further,

the City and the Newark Conservancy should explore opportunities to co-operate with

the Beth Israel greenhouse as both seek to expand operations. For instance, as the

network of greenhouses grows bigger, several greenhouses may be able to reduce costs

by partnering on distribution or packaging technologies.

Product lines and volumes:

o Remain flexible in production to cater to institutional and customer demands: If the

bulk of the Newark greenhouse’s demand stems from anchor institutions, the

greenhouse will likely need to cater to the needs of its clients. As such, the greenhouse

will have to be flexible in terms of its product mix. Clients might demand an array of

products, and the Newark greenhouse managers will have to make critical choices about

which greens to grow.

o Sell high-margin produce to subsidize primary operations: If the Newark greenhouse is

able to grow more produce than it can sell to anchor institutions, its managers should


16

consider growing higher-margin herbs to sell to local restaurants or at farmer’s markets

to boost revenues.

Pricing:

o Enter into profitable contract agreements with institutions wherever possible: Though

unlikely, the Newark greenhouse may be able to establish long-term purchasing

agreements at stable prices that the greenhouse managers negotiate with anchor

institutions. One possible tool to evaluate the viability of these prices for the

sustainability of the greenhouse is the production model that the Team included with

this report (see section 5 (below) and the accompanying Excel spreadsheet). In the

interest of financial sustainability, greenhouse managers should attempt to enter into

these contracts if they are at least at prices that guarantee that the greenhouse breaks

even. Before entering into these agreements, however, managers should be reasonably

certain that their costs would be consistent throughout the term of the contract in order

to avoid a financial loss.

o Managers should stay aware of pricing trends in the market to exploit profitable

opportunities: Our research has indicated that the market for lettuce can be starkly

competitive, and thus long-term pricing contracts are rare. It is more likely that the

greenhouse will have to sell at day-to-day or week-to-week market prices, which vary by

season and as a result of supply and demand shocks. For instance, Vicki Dunn from CU

Dining told us that the price of tomatoes spiked this winter due to a frost in Mexico that

damaged the tomato crop. Newark Greenhouse managers should keep abreast of

pricing trends in order to grow greens that help the greenhouse break even. We further

discuss the potential importance of understanding the price volatility of the greater

produce market from a marketing perspective in section 4.3.3 below.


17

4. Best Practices for the Successful Management of the Newark

Greenhouse Agriculture is a science: successful practitioners use sophisticated techniques and strategic approaches

that have taken them years to learn and customize to their specific ventures. When one adds the

complexities and intricacies of operating a hydroponic farming venture and locates that farm in an urban

setting, the level of expertise, training, and experience required to be successful only increases. In our

brief engagement with the Newark greenhouse project, the Team could not possibly attain the level of

sophistication or expertise with hydroponics sufficient to enhance the expertise of the proposed

greenhouse operations team. The Team, therefore, focused instead on obtaining a broad understanding

of best practices in hydroponics at urban greenhouses and understanding the business practices

required to enter the institutional marketplace. Through our research, we identified six areas in which

we believe we can add value and provide recommendations to the City of Newark and the Newark

greenhouse operators. The first two areas present lessons learned and best practices, and the final four

present strategies to overcome challenges to entering the institutional marketplace that were identified

in the demand study.

Operational best practices: Through interviewing greenhouse operators, reviewing the industry

literature, and meeting with academic experts, the Team has distilled a set of operational best

practices for hydroponic greenhouses.

Implementation lessons learned: In our interviews of greenhouse operators and industry experts,

we asked them to describe any lessons they learned through the implementation of their own

programs.

Client relationship management: Engaging anchor institutions and maintaining those relationships

place demands on a greenhouse’s operational practices, staffing organization, and marketing

approach.

Production management and forecasting: Growing for the institutional market will require a

greenhouse to be able to reliably produce at a certain level, or risk failing to deliver on a contract

and alienating a large client.

Transportation and distribution: A greenhouse that deals with institutional or wholesale clients

must have sufficient and reliable transportation, a delivery methodology, and the associated

refrigerated delivery vehicles.

Other barriers to entry into the institutional market: In selling to institutional clients, most

greenhouses have to meet a number of contractual requirements or industry standard practices.

These include obtaining a number of safety certifications as well as holding a product liability

insurance policy.

In the pages that follow, we present our business practices recommendations for the Newark

greenhouse. The subsections below are organized in the following manner:

4.1 Study methodology overview: Describes the best practices study methodology.


18

4.2 Greenhouse operations overview: Presents a brief overview of the operations of a

hydroponic greenhouse.

4.3 Lessons learned and best practices: Details the Team’s recommendations for best practices

and key recommendations for entering the institutional marketplace.

4.1 Best Practices Study Methodology Overview In order to develop recommendations, the Team examined successful greenhouses to identify lessons

that can be applied to the Newark greenhouse. For the purpose of this study, we viewed greenhouses

on a spectrum of “success.” The Team considered the primary definition of a successful greenhouse as

one that reliably turns a profit or breaks even, and maintains a commitment to its social and/or

environmental mission, while generating economic benefit (i.e. employment) for the community in

which it is located. Lower on the spectrum, and perhaps from a more realistic perspective, the Team

views a successful greenhouse in one of three ways:

First, the Team considers “mission-subsidized greenhouses.” Mission-subsidized greenhouses

primarily maintain their commitment to a social or environmental mission, while working

towards maintaining its financial bottom line. They may not reliably make a profit, but

consistently strive to come as close to breaking even as possible. These greenhouses have the

ability to subsidize operations in a number of ways (including through institutional or research

connections, or foundation or government grant funding).

Second, the Team considers purely economically successful greenhouses. These may be solely

profit-driven ventures with no underlying social mission but with an environmental mission that

aligns with the business side of the operation.

Third, the Team views greenhouses whose social or educational missions are of primary

importance and whose fiscal performance is of significantly less or no concern. For instance, a

greenhouse built on the roof of a school may never be profitable and the operators may never

attempt to achieve this. Rather the educational potential of the site is the main concern.

We looked for greenhouses of similar size to the Newark greenhouse, of similar technology, and of

similar social and environmental missions. In total, we identified four greenhouses whose experience

we believe can impart some lessons to the Newark greenhouse:

1. Finger Lakes Fresh, a hydroponic greenhouse in upstate New York run by Challenge Industries

and started with the assistance of Cornell University.

2. Milestone Specialty Produce is a hydroponic greenhouse in Pennsylvania run by Milestone

Centers Inc., a non-profit community organization that serves people with behavioral and

intellectual challenges in Western Pennsylvania, and started with the assistance of Penn State

University.

3. Garden State Urban Farms is a for-profit hydroponic greenhouse in Orange, New Jersey run by

Lorraine Gibbons. GSUF works with local schools and non-profits to provide educational and

work opportunities, as well as low-cost, healthy food to urban neighborhoods.


19

4. Arthur & Friends, part of NORWESCAP, runs multiple greenhouses throughout New Jersey and

aims to provide employment opportunities to those with disabilities, as well as life skills and

economic self-sufficiency.

In addition, the Team used academic resources (where appropriate) and state and federal agency

resources to further develop our understanding of urban agriculture and, in particular, distribution

models of locally grown food. These additional sources include, but are not limited to:

The US Department of Agriculture’s (USDA) Agricultural Marketing Service, Agricultural Research

Service, and National Agricultural Library

New Jersey Department of Agriculture

Rutgers New Jersey Agricultural Experiment Station

Cornell Cooperative Extension

Ohio State University Extension

North Carolina Cooperative Extension

Arizona Cooperative Extension

All of our sources are included in the references section at the conclusion of this document.

4.2 Greenhouse Operations Overview To begin our research, the Team studied the basics of the hydroponic greenhouse techniques that will

be employed at the Newark greenhouse. The most popular technique is the nutrient film (flow)

technique, or NFT, which combines two types of systems: one that is categorized by where the roots are

located and the other that describes what happens to the nutrient solution.8 These systems include 1)

an aggregate culture system where the roots grow in an inert medium such as sand, gravel, Rockwool,

or foam and then are irrigated with a nutrient solution and 2) a closed system where the nutrient

solution is distributed from a reservoir to the plants, and after it has passed through the roots, it is

collected and reused.9 In the NFT, the roots of the plants often grow from Rockwool blocks and hang

into a tube or trough, where the nutrient solution is pumped through to pass the hanging roots and then

back to the reservoir.10 The tubes or channels used to grow the plants are plastic gutters that are

specifically designed and manufactured for this type of system and are available commercially. The

most commonly used gully is a white, rectangular channel made of plastic.11 A gully consists of holes,

which hold individual blocks from large planting plug trays. Gullies are typically 12 feet in length and

also built to accommodate different stages of production (described below).

8 University of Arizona Controlled Environment Agriculture Center. (2011). Introduction to Hydroponics and CEA.

Retrieved March 21, 2011 from: http://ag.arizona.edu/ceac 9Ibid.

10Ibid.

11 Resh, Howard. (2011). Hydroponic Services, Hydroponic Lettuce Production. Retrieved March 22, 2011 from:

http://www.howardresh.com/Hydroponic-Lettuce-Production1.html

http://ag.arizona.edu/ceac

http://www.howardresh.com/Hydroponic-Lettuce-Production1.html


20

Lettuce is the fourth most common vegetable crop grown hydroponically in greenhouses.12 Most

hydroponic lettuce is a “bibb” or European buttercrunch type. To produce 5-ounce (150 grams) heads

of this type of lettuce, the hydroponic system design would most likely consist of the following

production stages, which are briefly described below:

1. Germination Area Stage: This stage of production is typically scheduled for 0-21 days.13 “Plug

trays” with approximately 120 plugs are soaked with a diluted nutrient solution prior to

sowing,14 and then filled with seeds using a seed machine or dispenser. The seedlings are

typically grown for 14-21 days before they transplanted to NFT channels or “gullies”.

2. Transplanting Stage: During this stage, the lettuce seedlings are separated from the trays by

breaking them up into individual cubes. The cubes, with the individual seedling, are then placed

into the hydroponic NFT system gullies. At this stage, “nursery gullies” are used, which have 1

3⁄4” holes on 2 1⁄4” centers and 72 plant sites.15 When placed in the gully, the cubes are placed

so they touch the nutrient solution at the base. At this stage, the plants will receive constant

water and nutrients from the pump system. Within a couple of days, the roots extend out of the

cubes and into the solution.16

3. Spacing Stage: As the plants begin to grow and expand, they are “spaced” over the next couple

of weeks, allowing for adequate growth.17 At this stage, the plants are placed in “finishing

gullies”, which have 1 3⁄4” holes on 8” centers and 18 plant sites.18,19 This process is continued

until the plants are ready for harvest.

4. Harvesting Stage: After about 30 days, a head of lettuce weighs about five ounces.20 At this

stage, the plants can be harvested and prepared for delivery.

5. Packaging& Distribution:

a. Packaging: The type of packaging depends on the marketplace and buyer. Generally,

the lettuce is packaged in plastic bags (typically done for restaurants) or rigid plastic

clamshell containers (often used for sale in supermarkets).21

b. Distribution: Similar to packaging, the distribution method may vary depending on the

size of the greenhouse operation and potential clients:

i. Direct Farm Market: grower sells the product at a roadside stand or takes the

product to a farmer’s market.22

12

Resh, Howard. (2011). 13

Ibid. 14

Ibid. 15

American Hydroponics.(2011). GroClean NFT Channel- Specifications. Retrieved March 22, 2011 from: http://www.amhydro.com/index.php/Commercial/GroClean-NFT-Channel.html 16

Resh, H. (2011). 17

Cornell University Biological and Environmental Engineering, Controlled Environment Agriculture (2011). Lettuce Handbook. Retrieved March 22, 2011 from: http://www.cornellcea.com/Lettuce_Handbook/ 18

Resh, H. (2011). 19

American Hydroponics. (2011). 20

Cornell University Biological and Environmental Engineering, Controlled Environment Agriculture. (2011). 21

Resh, H. (2011). 22

University of Arizona Controlled Environment Agriculture Center. (2011).

http://www.amhydro.com/index.php/Commercial/GroClean-NFT-Channel.html

http://www.cornellcea.com/Lettuce_Handbook/


21

ii. Grower/Packer/Shipper: Similar to the method above, but on a larger scale where

the grower packs and ships their product to the client.23

iii. Sales Agent/Distributor: The grower usually pays this party a commission of 10% or

more. These agents/distributors sell directly to supermarkets, wholesalers, or a

“terminal market” (a central site under the jurisdiction of the USDA—often in major

metropolitan areas—that serves as an assembly and trading place for agricultural

commodities), or broker.24

iv. Wholesaler/Handler: These individuals operate within a terminal market, sell the

produce at a price, and “mark-up” agreed upon with the buyer.25

The process described above is shown in the workflow diagram presented in Figure 6. The workflow

describes the process for growing full-sized romaine lettuce heads and the process for growing smaller

greens such as spring mix or baby greens.

To achieve continuous production, the operation must include daily sowing of seeds, transplanting,

harvesting and cleanup of the growing system.26 Additionally, proper crop scheduling for hydroponic

lettuce production will ensure that the crop size will be uniform in size and quality.27 Furthermore,

many greenhouses use integrated pest management (IPM) systems to aid in the prevention and control

of pests and diseases by utilizing existing crop protection techniques and strategies, such as mechanical

(e.g. sticky traps) and hygienic measures.28

Equally important to maintaining the health of the crop is the attention given to the overall greenhouse

structure. This includes considering two critical factors, such as the site location and structural design:

Site location: Since plants require sunlight to grow, a region and location with high light

intensity year round is ideal. Otherwise, the plant’s ability to grow and yield a product will be

reduced.29 Additionally, growers should purchase more land than they anticipate using in the

beginning so they have the capability of expanding their operation in the future.30

Structural design: Greenhouses must have systems in place to address and control lighting,

temperature, humidity, and carbon dioxide enrichment.31 Having the proper technology,

equipment, and structure in place will help ensure optimum photosynthesis, growth, and yield,

and help the operation become economically viable.32

23

University of Arizona Controlled Environment Agriculture Center. (2011). 24

Ibid. 25

Ibid. 26

Resh, H. (2011). 27

Cornell University Biological and Environmental Engineering, Controlled Environment Agriculture. (2011). 28

University of Arizona Controlled Environment Agriculture Center. (2011). 29

Ibid. 30

Ibid 31

Ibid 32

Ibid


22

Figure 6: Process Flow


23

4.2.1 Newark Greenhouse Operations

Based on discussions with the Newark Conservancy and the consultant hired for the first year of

operations, the Newark greenhouse will be staffed by one full-time employee who will oversee day-to-

day operations, as well as four part-time employees. Additionally, throughout the year, trainees will

work at the greenhouse on a quarterly basis. As of now, a location for the greenhouse has not been

selected. For the first year of operations, Lorraine Gibbons from Garden State Urban Farms has been

retained as a consultant to the project and will advise the Conservancy on the operations of the

greenhouse. The greenhouse’s layout, size, and capacity will be similar to those of the Arthur & Friends

greenhouse in Hackettstown, NJ. The Conservancy will purchase a 30’ x 96’ greenhouse from Rimol

Greenhouse, Inc. and hydroponic infrastructure from American Hydroponics. Order time is estimated at

one month. Following a short construction period, the Newark greenhouse will be operational within six

weeks.

4.3 Lessons Learned and Best Practices As previously discussed, interviewing other successful greenhouses and conducting the demand study

led the Team to identify six areas to which our efforts can add value. The first two recommendation

areas synthesize the best practices and lessons learned we identified through researching successful

greenhouses. The following four recommendation areas focus specifically on gaining entry into the

anchor institution market (although many of those recommendations are also applicable to any

greenhouse operation).

The recommendations presented in the pages that follow are organized in the following manner:

4.3.1 Operational best practices

4.3.2 Implementation lessons learned

4.3.3 Managing client relationships

4.3.4 Managing and forecasting production

4.3.5 Arranging for transportation and distribution

4.3.6 Addressing other barriers to entry into the institutional market

4.3.1 Operational Best Practices for Greenhouse Operations

As our team conducted interviews and research on hydroponic greenhouses, there were several

emergent themes that were consistently stressed by both professionals in the field and the academic

literature with respect to running a sustainable greenhouse. These practices are highlighted below:

Hire an expert grower for ongoing operations: In our interviews with hydroponic greenhouse

operators and academics, everyone mentioned hiring an expert grower as essential to producing

successful crops. This is particularly the case when it comes to pest management issues because

if problems are not identified early and treatments are not applied within a certain time before

harvest, crops are likely to be ruined. Milestone Specialty Produce, which hired a master-level

grower when it first began operations, echoed this recommendation.

Hire a full-time Business Manager: As mentioned in our interview with Columbia University

Dining Services, there is often staff at these greenhouses whose main responsibility is to identify


24

and contact potential business partners. This proved to be a key position at Milestone as well:

representatives admitted that the company should have hired someone in this role in the

beginning. Lastly, a Rutgers’ representative mentioned that dealing with large vendors or

institutions requires quick responses to prices, inquiries, and offers; otherwise, it is easy to miss

out on many business opportunities. Therefore, hiring someone to manage business

relationships and to market the product is crucial if a greenhouse wants to be competitive in its

respective market.

Consult a third-party expert on appropriate greenhouse technology: Since the climate in the

Northeast is not conducive to producing ideal crop levels year round, a successful greenhouse

may need to invest in equipment that provides optimal growing conditions. This includes

cooling and heating systems to provide consistent and precise temperature monitoring and

control; lighting when the amount of daylight is shortened; and computer systems that regulate

the nutrients provided to the plants. All of these reduce the possibility of human error and/or

mitigate some issues that are beyond the grower’s control. While all of the greenhouses we

interviewed expressed concern over the increased costs this technology requires, it appears that

in order to run a sustainable greenhouse that produces reliable, high-quality crops in Newark,

this may be an unavoidable cost. As pointed out by a Rutgers’ representative, commercial

hydroponics requires proper lighting and temperature at all times, and therefore, it is hard to

avoid these added costs.

Understand packaging requirements for different types of clients: Our interviews revealed that

depending on the client, there may be different packaging considerations. For example, some

retailers and supermarkets require clamshell packaging for certain types of produce, which also

has higher costs. Wholesalers on the other hand require that produce be packaged in cases.

Lastly, greenhouses that want to sell to large institutions may need a technology/bar-coding

system that meets tracking requirements.

4.3.2 Implementation Lessons learned

The best way to avoid making mistakes is to learn from others’ experiences. In our interviews with

greenhouse operators and industry experts, we asked them to describe any lessons they learned

through the implementation of their own program.

Give special attention and priority to the greenhouse site location: Experts from BrightFarm

and Rutgers emphasized that proper site location could be the difference between whether the

greenhouse is successful or not. Securing the optimal site location will influence crops’

exposure to light, the greenhouse’s production capacity, and whether the facility will have the

proper utilities in place. Furthermore, consideration should be given to future construction near

the greenhouse as new buildings may reduce light exposure. In addition to lighting and utilities

concerns, the Team’s interviewees suggested the following site location issues:

o The size of the greenhouse land will depend not only on the physical size of the

greenhouse, but also on operational and distribution concerns. For instance, the site

must accommodate packaging space and parking facilities. In Cleveland, the GreenCity


25

Growers greenhouse needed to accommodate space for semi-trucks turn around, which

requires significant square footage.

o Also important to consider is the purpose for which the site was previously used. Public

perception of the site can be important; the City should avoid sites that may be

associated with heavy industrial processes. This is also important from an operational

perspective: although the greenhouse will not grow produce in soil, toxins in the soil at

the site still present a small risk.

o Although a recent law will expedite the use of public land for a greenhouse, the City

should ensure that the implementation process incorporates adequate time for the title

cleanup process. Title transfer of abandoned property can be a lengthy and

bureaucratic process.

o Although it may not be as relevant in the case of the Newark greenhouse, Mary Donnell

recommended researching the New Market Tax Credit program33 and HUD Section 10834

for program financing opportunities.

Test water quality: Mary Donnell of Cleveland’s GreenCity Growers strongly recommended that

the greenhouse conduct a water quality test as a component of site selection. According to Ms.

Donnell, an expert grower with years of experience, poor water quality will affect outputs for

the life of the greenhouse. She recommended sending a sample to Micro Macro Labs for

analysis. Micro Macro will conduct a greenhouse water analysis for approximately $45.35

Ensure that the facility has access to water and bathrooms: While these details seem obvious,

our interviewees mentioned that they are frequently overlooked when examining and securing

potential sites. Having access to an adequate water supply means that the facility has its own

source of water and does not rely on neighboring facilities for this resource.

Adjust budget for high cost overruns: Many operators we spoke to said that if there was one

thing they could do over again, it would be to increase their budgets during the implementation

phase and the first year. There are many unanticipated costs to operating a greenhouse,

particularly to utilities, replacement equipment and structural damage. Additionally, many of

our interviewees have had a difficult time becoming a sustainable business, some of which is

due to start-up and implementation costs.

Find a niche within the market: Our interviews with Lorraine Gibbons, Milestone, and Rutgers

suggested that greenhouse operators should find a niche within the market (whether it is an

institutional relationship or a specialty product) and capitalize on this during periods of low

demand and/or increased competition. Both Ms. Gibbons and Rutgers recommended

leveraging the diverse population of Newark and using the greenhouse to grow specialty greens.

For example, Jan Zietnek from Rutgers suggested growing kalaloo, a green similar to spinach

that is popular with many African immigrant groups.

33

Please refer to the following website for more information on the New Market Tax Credit Program: http://www.cdfifund.gov/what_we_do/programs_id.asp?programID=5 34

Please refer to the following website for more information on HUD section 108 program opportunities. http://www.hud.gov/offices/cpd/communitydevelopment/programs/108/ 35

Please refer to Micro Macro Labs website for more information: http://mmilabs.com/water-quality.html

http://www.cdfifund.gov/what_we_do/programs_id.asp?programID=5

http://www.hud.gov/offices/cpd/communitydevelopment/programs/108/

http://mmilabs.com/water-quality.html


26

4.3.3 Client Relationship Management and Marketing

Through the demand study and research into other greenhouses, the Team has identified a number of

recommendations related to developing and managing relationships with institutional clients and

marketing the Newark greenhouse’s produce.

A well-considered client relationship management approach will be important as the greenhouse

attempts to sell produce to the institutional marketplace. Our interviews and research show that in

order to successfully engage this market, the greenhouse’s production planning process must be

informed and influenced by the produce needs of its clients. Educational institutions’ dining services

operations frequently plan their menus months in advance and may rotate through menu cycles

throughout the semester. If the greenhouse manages its client relationships well and maintains stability,

it has the opportunity to forecast the demand of individual institutions and plan production levels and

produce lines accordingly. If not, it could be at the mercy of the volatility of the open market. To help

ensure the Newark greenhouse’s successful management of client relationships, the Team recommends

the following:

Meet with institutional clients at regular intervals: As previously mentioned, the Team

recommends that the Newark greenhouse employ a dedicated sales resource. If the

greenhouse is able to develop relationships with anchor institutions, the sales manager should

have discussions at regular intervals with institutional dining services managers. Because many

of these institutions plan their menus months in advance, these meetings can factor into the

overall production planning process.

Determine the feasibility of entering into a contract pricing agreement: Many institutional

dining services rely on contract pricing rather than signing exclusive contracts with specific

produce growers. Contract pricing provides a fixed price at which a supplier will deliver a

product over the course of a year. Because of the number of produce suppliers, institutions can

switch suppliers from week to week or day to day. The team recommends that the Newark

greenhouse operators consider offering contract pricing to their customers, if they believe that

production costs can be managed and remain consistent over the course of a year.

The Newark greenhouse must develop a marketing approach that distinguishes the greenhouse’s

produce from the rest of the marketplace, while leveraging the environmental and social missions of the

greenhouse. The marketing effort to create a “brand” for the greenhouse involves the following:

In the face of volatile market prices, use the greenhouse’s comparatively smooth production

and pricing as a marketing opportunity: According to our meetings with various anchor

institutions, the price of lettuce spiked in early 2011 due to rare weather conditions in the

Southwest of North America. The prospect of purchasing greens at stable prices appealed to CU

Dining Services. As the greenhouse markets its produce to institutional clients, the stable price

(compared to the more volatile national market price) should be highlighted as a benefit.

Leverage the social and environmental mission of the Newark greenhouse to craft a clear

value proposition: The social mission of the greenhouse is a clear selling point. Many potential

institutional clients value suppliers that employ sustainable practices and focus on adding value


27

to the community; in their procurement policies, some institutions give preference to those

suppliers. The greenhouse should therefore leverage its social and environmental value

proposition when pitching to potential clients. Briefly, the team believes that the social and

environmental value propositions of the Newark greenhouse can be summarized as follows:

o Social value proposition: The Newark Conservancy implemented the Newark

greenhouse with assistance from the City of Newark Office of Economic and Housing Development. In addition to contributing to the Conservancy’s green space-enhancing mission in the City, the greenhouse supports the City’s ex-offender programs. The greenhouse provides job skills training to ex-offenders as a part of the City’s larger re-entry program. The job skills building program uses the Arthur & Friends training curriculum, which is designed to foster the development of transferable skills and increase future employment opportunities for program participants. Finally, and perhaps most importantly, the Newark greenhouse furthers the goal of distributing fresh, healthy food throughout the community.

o Environmental value proposition: Currently in vogue throughout the United States, the local food movement is more than a passing fad. Purchasing locally produced fruits and vegetables can contribute to the reduction of a dining services operation’s carbon footprint by reducing the miles traveled by the produce (“food miles”). A majority of commercially available lettuce, for instance, comes from Arizona, California, and Mexico. This lettuce is transported by heavy-duty truck over distances generally exceeding 2,800 miles. Using data from the EPA36, the University of Iowa37, 38, 39 and the Bureau of Transportation Statistics40, the Team estimates that transporting locally produced lettuce emits 83% less CO2 and other greenhouse gasses than conventionally grown lettuce. The Team’s calculations are included as Appendix C.

As the City and the greenhouse operators are aware, the social and environmental missions of the greenhouse are central to marketing the greenhouse’s produce to institutions and other clients. To paraphrase Pat McKee at Fingerlakes Fresh: “the greenhouse’s mission can open the door, but it won’t keep it open.” As mentioned elsewhere, there is no substitute for the quality of the produce as its own selling point.

36

Environmental Protection Agency. (2005). Emission Facts: Average Carbon Dioxide Emissions Resulting from Gasoline and Diesel Fuel. Retrieved on 4/15/2011 from: http://www.epa.gov/oms/climate/420f05001.htm 37 Pirog, M. and Benjamin, A. (2003). Checking the food odometer: Comparing food miles for local versus

conventional produce sales to Iowa institutions. Retrieved from: http://www.leopold.iastate.edu/pubs/staff/files/ food_travel072103.pdf 38 Pirog, M. and Benjamin, A. (2005) Calculating food miles for a multiple ingredient food product. Retrieved from:

http://www.farmland.org/programs/localfood/documents/foodmiles_Leopold_IA.pdf 39

Priog, R., Van Pelt, T., Enshayan, K., and Cook, E. (2001). Food, Fuel, and Freeways: An Iowa perspective on how far food travels, fuel usage, and greenhouse gas emissions. Retrieved from: http://www.leopold.iastate.edu/pubs/staff/ppp/food_mil.pdf 40 Bureau of Transportation Statistics. (2009). Combination Truck Fuel Consumption and Travel. Retrieved from:

http://www.bts.gov/publications/national_transportation_statistics/html/table_04_14_m.html

http://www.epa.gov/oms/climate/420f05001.htm

http://www.leopold.iastate.edu/pubs/staff/files/%20food_travel072103.pdf


http://www.farmland.org/programs/localfood/documents/foodmiles_Leopold_IA.pdf

http://www.leopold.iastate.edu/pubs/staff/ppp/food_mil.pdf

http://www.bts.gov/publications/national_transportation_statistics/html/table_04_14_m.html


28

4.3.4 Production Management and Forecasting

The greenhouse’s ability to effectively forecast its production levels is critical to developing relationships

with clients who have a large demand or need for reliable, stable sourcing. For instance, CU Dining

Services noted that they could direct one of their suppliers (Sysco) to purchase from a particular local

source. However, Sysco would not engage with a producer unless they could produce 20 cases of lettuce

a week (and unless Sysco’s clients purchase 20+ cases a week). To develop production management and

forecasting recommendations, we asked other greenhouses what lessons they can impart to the Newark

greenhouse. The team has developed a production model which may help the greenhouse

management team in forecasting and deciding what to grow and how much of it to grow (see section 5

below).

Forecasting will require preparation and flexibility: Some greenhouses forecast six to eight

weeks out when determining what and how much to grow. However, most non-profit

greenhouses do not forecast demand or production capability. The greenhouses that do

forecast demand and production capability said that they came to this conclusion only after

years of experimenting and lost revenue. It must be noted that forecasting demand will depend

to a large extent on the type of clients the greenhouse will sell to. The Team has learned that

institutional and large retail clients are more consistent in their orders than smaller clients, like

restaurants and community supported agriculture (CSAs) organizations. Production forecasting

will largely depend on the type of technology available to the Newark greenhouse operators,

the site location, and the skill level of the greenhouse manager. Note that a lighting system will

greatly increase greenhouse yields.

Monitor price and produce trends: Additionally, an experienced greenhouse manager will track

produce trends around the country and will be able to plan production around what he/she

believes will be the competitive advantage of the greenhouse. As the Team learned through

interviews, educational institutions are concerned about prices and freshness. The Newark

greenhouse operators will need to know how weather around the country is affecting lettuce

production and prices and use that information to plan production. For example, Deb Bentzel

from Farm to Institution suggested that recent frost in the South affected lettuce production.

The Newark greenhouse operators will need to monitor how these weather changes affect

market prices, which in turn will influence what they will grow.

Plan for demand changes based on institutional seasonality: Educational institutions operate

primarily from September to May. Since most of the anchor institutions we identified are

universities or schools, any business strategy that relies on these institutions must develop plans

and contingency production scenarios to offset the shortage of demand from schools during the

summer.

Variety is important to customers: Every greenhouse we spoke to told us that variety is key in

deciding what to grow. Customers like to have a choice in what they can purchase. Additionally,

by diversifying what it grows, the greenhouse’s profits will not be susceptible to the cancellation

of one large order of one type of product. Diversification also allows the greenhouse to sell to

higher-end clientele such as restaurants, who will pay higher prices than supermarkets or


29

institutional clients. All of our interviewees told us that they make up a large part of their

revenue from selling higher-end greens to restaurants and caterers.

Keep in mind what types of produce are more cost efficient: While meeting client demand is

important, this must be balanced with the costs of production. There are certain items that will

bring a larger profit margin to the greenhouse than others. As some of our interviewees

mentioned, the most popular product can also be the least cost efficient. One interviewee

mentioned that their large retail client asks for large orders of bibb lettuce; however, the margin

on bibb lettuce is relatively small. All of our interviewees mentioned that fresh herbs and salad

bouquets bring in larger profit margins than regular heads of lettuce. They sell just as well as

other products but cost less to produce. The greenhouse should keep this in mind when

deciding what to grow and how much to grow.

Use the Internet to connect the greenhouse to customers: There are resources available to

local farmers to connect directly to customers. By using websites like www.locallygrown.net,

local farmers can tell potential customers what they have to sell and customers can tell local

farmers what produce they will need in the upcoming weeks.

4.3.5 Transportation and Distribution

Efficient transportation and delivery of the Newark greenhouse’s produce will be a critical component of

establishing and maintaining relationships with clients. The movement of produce from the farm to the

kitchen should seamless to the customer. The highly competitive marketplace leaves no room for error,

particularly in an area so visible to the client. The institutional marketplace brings added transportation

challenges. For universities and hospitals located in dense, urban areas, kitchen space can be a scarce

resource. This may require increased frequency of produce deliveries due to minimal walk-in

refrigerator space.

Through our interviews and outside research, we have identified the following four options for produce

distribution. Although we were not able to interview a specific distributor in the Newark area, the Team

strongly recommends that the Newark greenhouse operators explore values-based food distribution

opportunities in New Jersey.

Values-based food distributors—Values-based food distribution can provide small and mission-

oriented farms the ability to efficiently distribute products without making significant economic

or mission concessions. The values based distribution chain differs from traditional food supply

chains in two ways: product differentiation (emphasizing food quality and functionality, and

environmental and social attributes) and organizing as strategic partnerships for smaller

businesses or social enterprises. Steve Stevenson of the Center for Integrated Agricultural

Systems at the University of Wisconsin-Madison suggests that “in successful value chains,

commitments are made to the economic welfare of all strategic partners.”41 Throughout the

United States, there is a growing demand for local distributors to deliver locally grown food.

The Team has identified one such values-based distributor that operates in central New Jersey:

41

Stevenson, S. (2009). Values-based food supply chains. Madison, WI: Center for Integrated Agricultural Systems. Retrieved April 29, 2011 from: http://www.agofthemiddle.org/pubs/vcexecsum.pdf

http://www.locallygrown.net/

http://www.agofthemiddle.org/pubs/vcexecsum.pdf


30

Zone 7. Zone 7 works with small farmers to distribute their produce to local restaurants,

schools, and groceries. In addition, across the Northeast, there are a number of organizations

that assist farmers with marketing and/or distributing their produce to local restaurants and

supermarkets, while not reducing their profit margin in the same manner that a traditional

wholesaler would. Elsewhere, local marketers like Red Tomato, in Massachusetts, assist local

farms in finding clients in their area, while local distributors like Heritage Foods USA in New York,

Farm to Chef Express in Upstate New York, and Fair Food Philly in Pennsylvania and Southern

New Jersey assist local farms in the distribution of their produce to local markets and

restaurants. In the course of our research, the Team contacted Fair Foods Philly, which operates

a “Farm-to-Institution” program designed to connect local farmers with the institutional market.

We would recommend contacting this program once the greenhouse is up and running.

Purchase or lease a vehicle for the sole purpose of distribution—Although it would give the

Newark greenhouse significant independence in its distribution decisions, purchasing or leasing

a used refrigerator truck requires a large upfront cost. Our research has shown that purchasing

a used refrigerated truck in the Tri-state area can cost between $15,000 and $40,000.42 Renting

a 6’x8’ refrigerated trailer for a one to three-day period costs $574 per rental.43 The Newark

greenhouse would have to securely store the truck on site and would need to ensure

maneuverability for the truck at the site. Maintenance, fuel, and insurance costs may combine

to make this option ineffective. One of our interviewees currently has a refrigerator truck for its

deliveries. However, the truck is owned by an associated non-profit organization and the

greenhouse relies on the truck only once a week, to deliver to their one large client. Other

interviewees were concerned about the logistics of managing a fleet of delivery trucks.

Although this may be a viable option if the Newark greenhouse expands, purchasing a truck

would require revisiting the budget and/or seeking funding from outside sources.

Develop relationships with wholesalers: One way for the Newark greenhouse to reach its

clients is to sell to wholesalers, who in turn will deliver produce to specified clients. This option

actually raises additional challenges, because many wholesalers require that growers deliver

produce to their warehouses. Like the institutions they supply, wholesalers generally require

growers to carry product liability insurance. Wholesalers may also require additional tracking

systems and packaging. One of the wholesalers we interviewed, R Best, indicated that it is

typical for producers to put a unique label on each case, so that it can be traced back to the

grower if there ever is a problem.

Wholesalers may provide an inroad to additional clients. For instance, R Best distributes to many

private schools in the New York area. Larry Schembri, a manager at the company, said that the

purchasing staff at these schools frequently requests locally grown food and that the schools are

willing to pay a premium for such a product. But the Team was cautioned against wholesalers

42

Please refer to the following website for more information on price options for refrigerated trucks: http://www.truckertotrucker.com/ 43

Please refer to the following website for more information on prices for leasing refrigerated trailers: http://www.polarleasing.com/rental-calculator.php

http://www.truckertotrucker.com/

http://www.polarleasing.com/rental-calculator.php


31

by a number of interviewees because of the low prices they pay. Two of our interviewees began

their operations relying on wholesalers to handle their distribution, but eventually changed their

business model because they believed that the wholesalers took too much out of their profit

margins.

Use private vehicles—To rein in costs, small farms often use the vehicles of owners, managers,

or employees to transport produce. The Team believes that this option would be inefficient and

potentially unreliable.

4.3.6 Addressing Other Barriers to Entry into the Institutional Market

Developing relationships with anchor institutions, developing rigorous forecasting techniques, and

implementing a sound and efficient approach to delivery and distribution will help position the Newark

greenhouse well as it seeks to enter the institutional market. However, the Team identified a number of

additional obstacles to be addressed before the greenhouse will be able to effectively sell to

institutional clients. In particular, we identified two areas in which the greenhouse will likely have to

conform to industry standards or contractual requirements in order to be a viable supplier to the

institutional market:

Food safety practices certification

Insurance

4.3.6.1 Food Safety Practices Certification

Through our research, the team identified a number of certifications that the Newark greenhouse could

pursue. These certifications can enhance the marketability of its produce and provide added exposure to

the greenhouse through its inclusion on lists of certified producers. Specifically, we recommend that

the operators pursue GAP certification and participate in the Jersey Fresh quality grading and marketing

programs. Each is discussed briefly below.

4.3.6.1.1 Good Agricultural Practices (GAP) Certification

A number of the producers we contacted in the course of this study noted that they use the USDA’s

Good Agricultural Practices (GAP) at their facilities. Additionally, some wholesalers and institutions

suggested that they prefer or require their suppliers to be GAP certified.

The USDA’s Agricultural Marketing Service (AMS) operates the Good Agricultural Practices (GAP) and

Good Handling Practices (GHP) Audit Verification Program. The program verifies compliance with the

USDA’s Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and Vegetables.

Academic studies suggest that GAP has two key benefits for producers: (1) economic risk reduction and

(2) improved market access opportunities. Economic risk is reduced primarily through the

implementation of good practices that reduce the likelihood of a food borne disease outbreak

originating from the farm. NCA&T notes that the risk of large losses “such as a catastrophic drop in sales,

damage to the farm’s reputation, and potential lawsuits” is also reduced with GAP certification. The


32

second benefit, improved market access, occurs because many retailers and food service buyers require

third-party GAP certification as a condition of purchasing goods from a producer.44

New Jersey offers a voluntary audit program that allows growers, packers and shippers of fresh produce

to verify that they are growing, harvesting, packing, and shipping their product in a safe and sanitary

manner. State departments of agriculture, with USDA's assistance, have developed an audit-based

program that helps the U.S. produce industry confirm voluntary adherence to FDA and USDA

recommendations. In New Jersey, the process is as follows:

1. Growers complete a self-evaluation and adjust food safety plans to comply with federal

recommendations.

2. The Rutgers New Jersey Agricultural Experiment Station (NJAES) works with growers at their

request to review their food safety plans and facilities.

3. A third party conducts an audit of food safety plans and operations. Many growers in New

Jersey have the NJDA's auditors perform the audit.

4. Once the audit is successfully completed, the grower receives a certificate of completion. In

addition, the grower's information is placed on the USDA website so that buyers can easily

determine which farm operations have been audited.

5. The grower is able to apply for the Jersey Fresh Quality Grading and Marketing Program.

The team recommends that the Newark greenhouse seek GAP certification once it is operational. The

third party audit will cost approximately $375-450 ($75 per hour for a 5-6 hour audit).45 Developing and

implementing the food safety plan will likely require the most effort.

4.3.6.1.2 Jersey Fresh Quality Grading and Marketing Program

In addition to GAP certification, the team recommends that the Newark greenhouse participate in the

Jersey Fresh Quality Grading and Marketing Program.

The New Jersey Department of Agriculture established the Jersey Fresh Marketing and Quality Grading

Program in 1985. The program allows farmers to label their produce with a sponsored “Jersey Fresh”

label after passing a third-party audit and applying for the program. After registering with the Quality

Grading Program, growers are licensed to use the Jersey Fresh logo on their packages. The logo

indicates that the contents have been inspected and meet the highest quality standards.

The New Jersey Department of Agriculture suggests that these programs translate to monetary returns

for participating farms and retailers:

Market surveys show that participating farmers regularly receive better prices for quality-graded

products… *and+ retailers have profited by the program because consumers have been pleased

44

Rejesus, Roderick M. (2009). GAP certification: Is it worth it? Raleigh, NC: North Carolina Cooperative Extension. Retrieved February 18, 2011 from: http://www4.ncsu.edu/~rmrejesu/Food_Safety_Risk/ag-709%20final%20printed.pdf 45

New Jersey Department of Agriculture. (2006). Food Safety Questions and Answers. Retrieved April 26, 2011 from: http://www.state.nj.us/agriculture/divisions/md/pdf/foodsafetyQ&A.pdf

http://www4.ncsu.edu/~rmrejesu/Food_Safety_Risk/ag-709%20final%20printed.pdf


http://www.state.nj.us/agriculture/divisions/md/pdf/foodsafetyQ&A.pdf


33

with the high-quality produce and are willing to pay more for it. By offering Jersey Fresh quality

graded produce, retailers can be assured of providing their customers with the high-quality

produce they desire. In-store promotional efforts often emphasize Jersey Fresh produce,

pointing consumers to the locally grown produce they enjoy.46

4.3.6.1.3 Leafy Green Marketing Agreements

As a possibility for future exploration, the Team recommends that the greenhouse consider researching

the Leafy Green Marketing Agreements (LGMA) in California and Arizona. Created in 2007, the LGMA

provides specific best practices criteria used to audit growers. The LGMA covers the following products:

arugula, butter lettuce, chard, escarole, iceberg lettuce, red leaf lettuce, spinach, baby leaf lettuce,

cabbage (green, red and savoy), endive, green leaf lettuce, kale, romaine lettuce, and spring mix.

Because the Newark greenhouse will compete primarily with growers from California and Arizona,

employing the exact same food safety standards may also offer a marketing opportunity.

In addition, the USDA recently proposed the creation of a voluntary National Leafy Green Marketing

Agreement (NLGMA). The proposed rule was released on April 29, 2011, too late for a considered review

in this report. More information can be found at the Leafy Green Marketing Agreement page on the

agricultural marketing services website47 and in the Federal Register, Vol. 76, No. 83.48

4.3.6.2 Liability Insurance

Selling produce to wholesalers or to large institutional clients such as universities or hospitals can create

a number of challenges for a greenhouse. In researching greenhouse operations and conducting the

demand study, one of these challenges became clear: in order to sell to wholesalers or anchor

institutions, the greenhouse will likely be required to have a product liability policy. Product liability

insurance is a common requirement of larger institutions. Columbia University Dining Services required

such a policy and the Team expects that other institutional dining services operations do as well.

Purchasing a product liability policy can significantly reduce risk to growers. Insurance Coverage Options

for Fresh Produce Growers, an NCA&T publication, identifies several risks that produce growers face due

to food borne illness outbreaks:

Consumers can take legal action against growers to claim monetary damages due to illness (also

called liability risk).

Regulators can issue a product recall or warning because of the outbreak, causing a catastrophic

drop in sales and damaging the farm’s or product’s reputation.49

46

New Jersey Department of Agriculture. (2006). Jersey Fresh Quality Grading Program. Retrieved March 18, 2011 from: http://www.state.nj.us/agriculture/divisions/md/prog/jfqgp.html 47

Please refer to http://www.ams.usda.gov/AMSv1.0/leafygreensagreement for updated information. 48

Please refer to http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5090647 to view the proposed rules. 49

Rejesus, Roderick M. (2009). Insurance Coverage Options for Fresh Produce Growers. Raleigh, NC: North Carolina Cooperative Extension. Retrieved February 18, 2011 from: http://www4.ncsu.edu/~rmrejesu/Food_Safety_Risk/ag-710%20final%20printed.pdf

http://www.state.nj.us/agriculture/divisions/md/prog/jfqgp.html

http://www.ams.usda.gov/AMSv1.0/leafygreensagreement

http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5090647



34

Among several types of insurance, the NCA&T document identifies Product Liability Insurance as the

most important for the Newark greenhouse’s purposes. General farm liability insurance usually does

not protect against claims of injury from contaminated produce. A product liability insurance policy

protects against consumer claims of injury caused by a defective or hazardous product such as

contaminated fresh produce. Food product liability insurance strictly covers claims of injured parties

and not recall costs.

Most retail outlets “require” that food products have at least a $1 million policy (in some cases, $2

million) of product liability coverage before they will sell them to their customers.50 As an example,

Iowa State University’s Farm to Dining Services Program requires a $1 million food safety liability

insurance policy.51

Holland identifies annual premiums for a $1 million product liability insurance policy as ranging from

$500 to $20,000. The average annual premium was estimated at $3,000. There is no standard rate for

food product liability insurance:

Most insurance companies that offer this coverage provide an estimate only when growers

submit a detailed description of their product and business operations (production, distribution,

and marketing plans)…The most significant factors contributing to the premium charged are:

level of gross sales or annual payroll, prior claims (claims history), level of coverage, type of

product, type of market, and recall plan.52

Other insurance options for fresh produce growers include the following:

General Farm Liability Insurance Policy: protects against bodily injuries or property damages that

occur on farm premises or as a result of operations. These policies cover accidents that affect

farmers, employees, guests, and customers. They do not replace workers compensation

insurance.

Product Recall Insurance Policy: covers actual or direct costs associated with a product recall.

Accidental or Product Contamination Policy: covers direct and indirect costs associated with a

recall.

Malicious Tampering Policy: covers losses from criminal tampering.

We believe that the Newark greenhouse will likely have general farm liability insurance and strongly

recommend that the Conservancy purchase a product liability insurance policy. The other three policy

categories should be explored further.

50

Holland, R. (2007). “Food Product Liability Insurance.” Center for Profitable Agriculture Info.# 11, University of

Tennessee, Knoxville, TN. 51

Iowa State University. (2007). Farm to ISU Guidelines for Potential Produce Growers/Producers. Retrieved

February 27, 2011 from: http://www.dining.iastate.edu/farm/docs/produce-guidelines.pdf. 52 Rejesus, Roderick M. (2009). p. 1.

http://www.dining.iastate.edu/farm/docs/produce-guidelines.pdf


35

5 Budget Forecasting and Monitoring To assist Newark greenhouse managers, the Team developed a production model that is provided with

this report. The Microsoft Excel-based model allows managers to explore a variety of production

assumptions and scenarios to determine the appropriate lettuce mix for the Newark greenhouse. The

model is based on information included in the initial Newark greenhouse proposal, conversations with

the Conservancy’s Robin Dougherty and consultant Lorraine Gibbons, data gathered through interviews

with other greenhouse operators, and findings from the demand study.

5.1 Newark Greenhouse Production Information The Newark greenhouse will likely have 44 propagation trays, 240 finishing channels, and 60 nursery

channels:

Propagation: The site will include two propagation tables, with 22 propagation trays on each

table. Each tray will hold a planting block consisting of 162 holes. The capacity of each hole is 3

or 4 seeds.

Nursery stage: The greenhouse will contain 60 nursery gullies. Each gully consists of 72 holes,

which will hold individual blocks from the larger planting block.

Finishing stage: The greenhouse will contain 200 finishing gullies. During this time, the plants

will receive the same water and nutrient mix they received during the nursery stage.

Representatives from Garden State Urban Farms and Arthur & Friends estimated that for the Newark

greenhouse to break even, each gully would have to earn between $3-6 per week. These experts

further estimated that at full production, a 2,900 square-foot greenhouse could earn $1,500 per week.

The similarly sized greenhouse run by Arthur & Friends, for example, could produce 200-240 pounds of

Allstar lettuce each week if it dedicated its full operations to this one crop. This greenhouse currently

charges $8-9 for each pound of lettuce, depending on the fluctuations in production costs and market

price conditions. The Newark greenhouse may also grow baby lettuce, which has a growth period of 14-

21 days and can be sold for $8-10 per pound.

5.2 Production Model Description The production model allows for the testing of a variety of production scenarios. The Team designed it

to enable Newark greenhouse managers to enter production information and receive an estimate of

revenues, costs, and profits or losses.

5.2.1 Revenue

The “Revenue” tab of the production model is designed to help managers project revenues. To estimate

revenue and weight figures, managers enter the following inputs into the spreadsheet:

Month

Whether the greenhouse is using lights

Total number of nursery gullies

Total number of finishing gullies


36

An expected percentage of unsellable, damaged, or lost crop

As the grower and business manager develop the production plan, they will enter the following

information for each type of lettuce into the “Revenue” tab:

The market price

The number of nursery gullies it currently occupies

The number of finishing gullies it currently occupies

The “Revenue” tab of the model takes these inputs and converts them to the following projected

outputs for each lettuce type:

Percentage of nursery gullies occupied

Percentage of finishing gullies occupied

Average weekly pounds produced

Average weekly revenue

Average monthly pounds produced

Average monthly revenue53

Annual pounds produced

Annual revenue

In addition, the model provides total expected annual revenue and total expected pounds of output. In

order for the model to work appropriately, greenhouse operators will need to input some data in the

second tab, titled “Assumptions.” For each type of lettuce, they should input the following:

The number of pounds that each harvested gully of lettuce produces

The number of “Optimal Growth Days,” defined as: the number of days it takes for a plant to

reach the harvesting stage under the best possible conditions (e.g. in the June sun), from the

day it reaches the nursery stage (i.e. excluding the propagation period)

Whether the lettuce is harvested during the nursery stage or during the finishing stage

The model makes the following other assumptions:

Production is highest in June due to the number of sunlight hours. It falls to 70% of its June peak

in December. Other months are a linear approximation between the two, for example,

production in March is assumed to be 84% of what it would be in June (assuming the

greenhouse is not using grow lights).

Temperature is kept constant throughout the year.

Nutrients do not vary throughout the year.

53

Weekly and monthly estimates are averages, since it takes some plants more than a month to grow. For instance, if the entire greenhouse is harvested in one day, revenue for that week will be very high, but will be low for several weeks following.


37

Annual output is calculated by multiplying a week’s output in March by 52, as sunlight in March

is roughly the average of what the Newark greenhouse will experience all year.

If the greenhouse uses lights, production is assumed to be at June levels in each month. If lights

are run late into the night, output could exceed projected numbers.

5.2.2 Expenses

The “Budget” tab includes a three-year expense and revenue projection for the Newark greenhouse.

The expense build-up included in the production model is based primarily on data from the proposal

that the Newark Conservancy submitted to the City of Newark, with additions and augmentations based

on the Team’s research. Detailed and adjustable information on startup costs is included in the tab

labeled “startup.” The expense projection includes the following assumptions:

The greenhouse structure and equipment are purchased per the specification included in the

proposal: 30’ x 96’ greenhouse from Rimol Greenhouse, Inc. and hydroponic infrastructure from

American Hydroponics.

The greenhouse management uses a personal vehicle to deliver produce.

Seed purchases increase over time as productivity increases.

There is zero growth in personnel cost in years one through three.

Per the proposal budget, miscellaneous management expense and operating cushion is

calculated from total expense (personnel and OTPS).

The cost for the greenhouse grower consultant is only included in year one.

Out-year supplies costs are 75 percent of year one cost.

Hydroponic system supplies cost approximately $4900/year (per conversation with American

Hydroponics).

The greenhouse continues to employ trainees through the projected years.

The Arthur & Friends license is a yearly cost.

A site plan and site prep cost of $1,000.

A restroom is not budgeted.

Should the Newark greenhouse operators or the City choose a larger greenhouse or adjust any other

component, they can easily update the expense projection to ensure that the model remains accurate.

5.2.3 Startup Expenses

The “Start Up” tab includes cost estimates directly related to startup expenses. The Team took most of

these costs directly from the Conservancy’s initial proposal to the City. However, there are a number of

cost items that we adjusted from the initial figures in the Conservancy’s proposal. These adjustments

increased the overall startup expense. These adjustments include:

Based on conversations with American Hydroponics, the hydroponic system and supplies cost

was increased

A backup generator cost was added

A site planning cost was included

An optional input for grow lights was added


38

5.2.4 Output Formula

To calculate projected average weekly pounds for a given type of lettuce, the model uses the following

formula (which can be found in cells V6-V16 in the spreadsheet):

Average weekly pounds =

Where, for each type of lettuce:

is the number of pounds of produce harvested from one gully

is the number of finishing gullies in which each type of lettuce is grown

is the number of nursery gullies in which each type of lettuce is grown

is the optimal number of growth days, as defined above

is the percentage of damaged or lost crop

is the sunlight factor (a number between .7 and 1, depending on the month; or 1 if lights are used)

is a harvesting stage variable, which is equal to .25 if the plant is harvested from the nursery stage, and 1 if it is harvested from the finishing stage

To calculate weekly revenue, the model multiplies the weekly pounds by the market price for a given type of lettuce. To find monthly pounds, the model multiplies the above formula for weekly pounds by the number of weeks in any given month. Monthly revenue is found by multiplying this value by the market price. Annual pounds are found by multiplying the above formula by 52, assuming is equal to .84 (the sunlight factor in March). Finally, annual revenue is found by multiplying this number by the market price.

5.3 Budget Analysis As Appendix D we have included a preliminary analysis of projected revenue and expenses under an optimistic, yet realistic revenue projection of $98,000 in years two and three. This budget reflects a preliminary financial projection for the Newark greenhouse. Given that revenue projections from the model are based on several unverifiable assumptions (e.g., the days it will take to grow at given type of lettuce at the Newark greenhouse), it is difficult to use the model to make accurate revenue projections at this time. However, once the greenhouse is operational and greenhouse managers have more information about growing ability, market pricing, and lighting usage, the model’s predictions will be reliable.

At this point, however, it may be useful for the City of Newark and the future operators of the greenhouse to have an understanding of how many pounds the greenhouse will need to produce to break even in the second and third years at various average prices. Figure 7 is a table of these break-even pounds and prices. It suggests that, for instance, at a weighted average price of $7.00 per pound, the greenhouse would need to produce about 24,100 pounds of lettuce in a year in order to support itself financially.


39

Figure 7: Break-Even Analysis

Annual Pounds of Lettuce Needed to Break Even

Weighted Average Price54

33,689.25 $ 5.00

28,074.38 $ 6.00

24,063.75 $ 7.00

21,055.78 $ 8.00

18,716.25 $ 9.00

16,844.63 $ 10.00

54

A “weighted average price” is an average price that is based on the relative number of pounds of each type of lettuce that is grown. For example, suppose the greenhouse grows two types of lettuce, Romaine, which it sells for $5.00/lb and Spring Mix, which it can sell for $10.00/lb. If the greenhouse’s annual production was 20,000 lbs of Spring Mix and 5,000 lbs of Romaine, then the greenhouse’s production composition is 80% (20,000/25,000) Spring Mix and 20% (5,000/25,000) Romaine. Therefore, the weight average price is the product of these percentages times the corresponding prices:

(80%)*$10.00 + (20%)*$5.00 = $9.00 The weighted average price for this greenhouse would be $9.00. According to the above table and greenhouse’s hypothetical production of 25,000 lbs, it would be earning a profit.


40

6. Considerations for the Future In conducting this project, the team largely confined our inquiry into the implementation and initial

operations of the Newark greenhouse and the institutional demand for produce grown by the

greenhouse. However, through our research we also looked beyond the initial years of the greenhouse

and towards the future.

6.1 Expansion Options The current plan is to build a 30’ x 96’ plastic tunnel-style greenhouse. The production model and many

of the recommendations included herein are constructed according to such a plan. However, a number

of interviewees at greenhouses and other academic institutions strongly urged us to consider

constructing a larger greenhouse. The most frequent reason expressed by these interviewees was that a

greenhouse of this size would have significant issues breaking even financially. Two of the greenhouses

we spoke to, Finger Lakes Fresh and Milestone Specialty Produce, had recently expanded or hoped to do

so in the future in order to overcome financial issues.

The team presents two potential expansion options that we would recommend to the City. Each has its

own drawbacks and advantages:

Build a larger greenhouse: The City and Conservancy could opt to purchase and build a larger

greenhouse structure and hydroponic infrastructure. The currently planned 30’ x 96’

greenhouse structure is projected to cost approximately $23,300. For a 48% higher upfront

investment in the greenhouse structure and hydroponic infrastructure, the Newark greenhouse

could increase yearly projected capacity by 50%.55

o Advantages: This option will allow for an increase in output. Additionally, we believe

that the associated increase in per unit operational costs will be proportionally less than

the increase in output (i.e., the greenhouse can develop small economies of scale

through an expansion).

o Disadvantages: The greenhouse will require a greater up-front investment and will

increase on-going operational costs.

Expand at a later date on the same site: In the future, the greenhouse operators could build a

twin greenhouse at the same site. This could conceivably double output once the greenhouse

has established institutional arrangements and laid the groundwork for expansion.

o Advantages: Capital expenditures are delayed until demand and capacity to meet

demand has been proven.

o Disadvantages: This option would completely replicate most implementation capital

costs at a later date.

55

American Hydroponics. (2011). 30x144 NFT System Quotation. Retrieved April 26, 2011 from: http://www.amhydro.com/ Quotes/30x144_rimol_amhydro_quote.pdf

http://www.amhydro.com/%20Quotes/30x144_rimol_amhydro_quote.pdf


41

6.2 Networking Options An alternative or complementary expansion option was raised by a number of interviewees. Specifically,

many of those interviewed envisioned a network of similar greenhouses throughout the Newark area.

Although our analysis of this option is purely speculative, we believe that the City could play an integral

role in fostering the development of such a network.

Developing a network of urban greenhouses in Newark could deliver benefits well beyond those

associated with providing more locally grown food. The City and the urban agriculture community in

Newark could realize the following benefits:

Economies of scale in the Newark greenhouses: Perhaps the most important benefit from the

operational point of view of the Newark greenhouse is the potential to develop economies of

scale among the farming ventures in the network. This echoes the Cornell University

institutional supply study in which they recommended developing collaborative arrangements

“such as hubs for packing, cooling, and distribution; labor pools or shared equipment; websites

for ordering arrangements.”56 The member farms would have the opportunity to pool

packaging and distribution resources. Specifically, the members, with the support of the City

could work to develop an urban local food distribution model in the Northern New Jersey area.

The USDA has promoted the development of local food networks or local food hubs throughout

the country.57 This can involve various avenues of distribution. A larger network would involve

the creation of a large, local facility that local farmers in the area can bring their produce to, and

the managers of the facility would handle the distribution of the produce. However, these

networks can also include the creation of local Community Supported Agriculture (CSA)

operations and farmers markets to sell local produce. However, some of these endeavors could

require large amounts of start-up funding as well as buy-in from various parties.

Reclamation of brownfields or vacant lots: A network of greenhouses and urban agriculture

sites could leverage the City’s relatively high incidence of unused property, reducing the number

of brownfields and vacant lots.

Increase in city employment: Should a network of urban agriculture prove viable, the network

would serve as a natural employment vehicle for those trained through the Newark

greenhouse’s ex-offender job skills program.

We believe that the City of Newark could be instrumental in promoting food grown through a local

network of urban farms. In particular, the team believes that the City’s influence could help the

network to develop a branding solution similar to the New Jersey Department of Agriculture’s Jersey

Fresh program. We believe that a City-sponsored “Newark Grown” branding campaign would attract

positive press for the city and additional demand for any network members. Figure 8 on the following

age presents mock-up of a potential Newark Grown brand logo.

56

Cornell University Cooperative Extension. (2008). 57

Bragg, E. & Barham. ((2010). Regional Food Hubs: Linking Producers to New Markets. Washington, DC: USDA Agricultural Marketing Service. Retrieved on April 26, 2011 from http://www.ams.usda.gov/AMSv1.0/ getfile?dDocName=STELPRDC5088011

http://www.ams.usda.gov/AMSv1.0/%20getfile?dDocName=STELPRDC5088011



42

Figure 8: Newark Grown Branding


A-1

Appendix A—Meeting Notes

Catalog of Contacts


A-2

Report Contacts

Name Organization Status Initial Contact

Initial Meeting Contact

Demand Study Contacts

Larry Schembri R. Best Conducted telephone interview

3/5/2011 3/10/2011 [email protected] (718) 617-8300

Vicki Dunn Columbia University Dining

Conducted in-person interview and subsequent follow up interviews

2/17/2011 [email protected] (212) 854-8324

Barbara Mintz Beth Israel Newark

Conducted in-person interview

3/10/2011 4/8/2011 [email protected] (973) 926-2663

Gourmet Dining Services


No direct contact. Contact established through Gourmet Dining

3/3/2011 N/A [email protected] (973) 761-9559

N/A Seton Hall Law Unable to establish contact N/A N/A N/A

Tonya Riggins, Director

Newark Public Schools

Unable to establish contact 3/3/2011 N/A [email protected] (973) 733-7172

Betty Perez, Food and Nutrition Services Rose Durning, Asst. Dir. Food

Service Operations

The University Hospital

Unable to establish contact 3/3/2011 N/A [email protected] (973) 972-6152;

[email protected]

(973) 972-4026

N/A Prudential HQ Unable to establish contact N/A N/A N/A

Paul Vazopolos, Food Service Director

Rutgers Newark Unable to establish contact 3/3/2011 N/A [email protected] (973) 353-5212

Peter Fischbach, CEC, Food Services Director

NJIT No direct contact. Contact established through Gourmet Dining

3/3/2011 N/A [email protected] (973) 596-3136








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Report Contacts



Marylyn Rutherford, Purchasing officer Gloria Hardin, Assistant Director of Purchasing

Essex County College

Unable to establish contact

3/3/2011 N/A [email protected]

[email protected]

Julie Aiello, Marketing and Sustainable Business Development

Gourmet Foods Conducted telephone interview and followed up with questionnaire

4/6/2011 4/22/2011 [email protected] (973) 879-7367

Deb Bentzel, Farm to Institution Program Manager

Fair Food Philly Conducted telephone interview

4/7/2011 4/19/2011 [email protected] (215) 386-5211 x 102

Best Practices Contacts Lorraine Gibbons Garden State

Urban Farms Multiple contacts 2/11/2011 2/17/2011 [email protected]

(973) 885-3894

Robin Dougherty Greater Newark Conservancy

Multiple contacts 2/9/2011 2/17/2011 [email protected] (973) 642-4646

Wendie Blanchard Arthur and Friends

Multiple contacts 2/11/2011 2/17/2011 [email protected] (973) 579-3080

Pat McKee Fingerlakes Fresh Conducted telephone interview

3/1/2011 3/10/2011 [email protected] (607) 272-6483

Benjamin Linsley BrightFarm Systems


3/11/2011 3/18/2011 [email protected]

Kate Bayer & Steve Antin

Milestone Conducted telephone interview

3/7/2011 4/1/2011 [email protected] (412) 371-7391 x116

Josh Amata Formerly of Evergreen


2/11/2011 2/16/2011 [email protected] (212) 854-1421



tel:215-386-5211









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Report Contacts



Jan Zientek Rutgers Agricultural Extension


3/16/2011 4/7/2011 [email protected]

Mary Donnell Cleveland Foundation / Green City Growers

Conducted telephone interview

4/6/2011 4/14/2011 [email protected] (216) 685-2010

Diane Alexander & Nick Smith

Greenleaf Industries

Unable to schedule meeting 3/7/2011 N/A [email protected] (541) 472-8903 (541) 474-0571

N/A Manhattan School for Children

Calls placed no response 3/14/2011 N/A N/A

Ted Howard, Executive Director

Democracy Collaborative / Cleveland Foundation

Unable to schedule meeting 3/31/2007 N/A [email protected] (216) 685-2007



tel:%28216%29%20685-2010



tel:216-685-2007


A-5

Notes from Meeting with Robin Dougherty of Greater Newark Conservancy– 2-

17-2011 Team members met with Robin Dougherty at 930 am on Thursday February 17 to discuss the Newark Greenhouse from the point of view of the Conservancy, to obtain a better understanding of anticipated greenhouse operations (from the Conservancy’s perspective), and to review the draft expense and revenue projection that we developed from the Conservancy’s proposal.

Origins of the project: Community gardening focus of the Conservancy. Spike in interest in community gardens.

New administration makes it easier to get land, work with the city government

Ex offenders and Job training is something they recently got into through green initiatives.

Jobs in urban farming as well as jobs in landscaping and tree management (arborists) are an avenue to increase employment

Looking at programs that can offer year-round employment o Built off of their experience in vacant land management o Managing and using vacant properties.

Measurement of Success

Somewhat self-sufficient as a stand-alone project.

Understands that this may not be feasible and that for this to occur, they will have to sell to large institutions, such as those identified.

Open to having the greenhouse serve as a pilot for further programs within the context of Green Neighborhood initiatives.

Generate some level of employment for citizens.

Risk: Crime, vandalism is recognized as a potential risk. Managing the day-to-day operations

There is a F/T Conservancy project manager assigned—Will oversee several different part time people.

Lorraine is a consultant, overseeing implementation and year 1 operations o Construction o Initial training

Trainees, employment, etc

PSD will refer trainees through the Newark Office of Re-Entry o May have to go elsewhere (other than PSD) to get referrals. o The conservancy is starting a program working with younger (18-24) ex offenders that

might be a potential source.

Conservancy doesn’t place people in jobs formally, although they do assist in placement/referrals. They vouch for trainees and former employees

Provide basic job readiness training, not through a formal course of study, but through building experience in a work environment

At this point, the Job training component is ONLY ONE YEAR.


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o The grant funding the project was one year, and that is the anticipated length… o If the trainee stipend will continue, funds will have to come from other sources.

Draft Revenue and Expense Projection

Missing an overhead calculation (this may or may not be included in the 15% operating cushion.

Arthur and friends license is perpetual

Hydro system supplies needs to be explored further.

Vehicle expense needs to be explored in detail

Much of the implementation projections come from Wendie: There is room for exploring this. o We need guidance on this point.

Utilities: estimate $600-700/month on utilities.

Startup expenses: o Not married to the concrete floor o Should insert items for a site planning and site plan prep costs

Misc:

What Robin would ask the team to look at: o When interviewing other greenhouses for best practices: o Look at the positives and negatives:

o Barriers that other operators faced in startup/What went wrong o What would they have done differently o Lessons learned profile

Greenhouse plan: o Perhaps an expanded greenhouse. o Ways to expand production

Stacking the gullies Look at the cost profile of a greenhouse that is twice the size, does it requires 2x

the staff?, etc

They apparently have a relationship with Whole Foods, locally


A-7

Notes from Meeting with Lorraine Gibbons of Garden State Urban Farms– 2-

17-2011 Team members met with Lorraine Gibbons of Garden State Urban Farms at 9:30am to discuss the science of hydroponic farming and to get a better understanding of what is envisioned for the Newark greenhouse.

Meeting with Lorraine: GSUF: Stages of production:

o Propagation Trays with ~160 holes ($5/sheet)

20 sheets/box

$0.30/sheet wholesales 3-4 seeds/hole; use a seed sorter and funnel to plant seeds, then move to

propagation stage Lettuce takes about 1 week Arugula takes about 2+ weeks ($8-10/lbs.) Germination rate 30-40% faster

Some plants 98%, 86% (lettuce), others 80% Costs about $3,000 for propagation set-up ~10% of plants don’t grow

o Nursery Transplant each hole to the nursery Plants spend about one week in this phase (but depends on the plant)

o Finishing: One week or more before harvest 5 weeks for lettuce

Green living technology costs about $120; could be used for strawberries, radishes

$6-8/lb. for specialty greens

$1/lb. of lettuce

Bills: o ~$29 for water o ~$200 for electric o Simple technology so costs are low

Controlled environment: o Greens like cool weather o Low-light crops o Tomatoes need more light temperature not so much an issue o Newark greenhouse will have similar structure but with concrete floor (GSUF uses gravel,

which is cheaper)

Crop selection: o Market o In order to be sustainable, greenhouse must have a mix of specialty greens and produce

to serve to clients

Scaling-up possibility: parking garages o Consider developing signage to recruit more clients


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o Think about ways to rename “urban farming” to make more appealing to funders o St. Phillips Academy in Newark o Challenge is to get more farmers to come to Newark to provide fresh food

Labor: o 4 hours/day o 4 staff members o Each process only requires ~1person

Takes ~5-10 minutes to transfer plants from finishing stage to harvest

Equipment/supplies: o Gullies last about 15-20 years o Sump pump cost about $100; replace more often than other equipment o Nutrient mix:

More or less the same mixture for each plant Spinach is a “fussy green” that needs more pH (5 ½ -6 pH) 2/3 of Nutrient mix used per week (or 1/week)

$50/box @ ~3 boxes/year

pH: 3/month?

o Clean trays once/month (4-6 weeks in the winter/summer?) o $35 for lady bugs and $75 for lace wings to eat algae and control other pests to plants

Information management: o Involves Pricing, Timing, Invoicing o GSUF (and A & F) currently uses Excel spreadsheet

Potential clients: o Universities, hospitals o Restaurants o Schools

Ex. St. Benedicts: currently works with GSUF Relationship with schools are important

Gets produce to kids and their families

Locate close to schools

Funding: o Lorraine concerned that not enough training dollars, especially in the first year o Prodigal Sons and Daughters currently looking for additional funding for proposed

Newark Greenhouse


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Notes from Meeting with Vicky Dunn of Columbia Dining Services – 2-17-2011 On Thursday, February 17th, team members met with Vicky Dunn, director of Dining Services at Columbia, and a few members of her staff. Below is a collection of what we learned.

Pricing and Quantity A bad frost in Mexico has recently pushed the price of tomatoes up to $60/case

Typical price of a case of lettuce: $22-28. (Currently ~$40)

In John Jay hall they receive about 24 cases of lettuce/week (primarily romaine)

Vicky’s managers examine prices everyday

CU Dining does not sign any contracts, instead they get contract pricing, which simply is a statement of a price that a supplier will deliver a product for over a year

CU Dining asks for quantity discounts everyday

Sysco will deliver if you order more than 20 cases per month

Sources and Buying Practices

CU orders greens that are in season (e.g., spring mix, arugula)

CU buys some of its tomatoes from Fair Trade sources in Florida

Sysco tends to be the cheapest supplier

Local is important to Vicky, because it is important to her clients

They receive deliveries at least once every two days

Most produce comes from Mexico & California, though certain items are grown in New York, PA, and NJ

SATUR farms grows fresh herbs hydroponically in New York (though this might be incorrect)

CU dining would never pick up anything they purchased; all have to be delivered by supplier

Purchasing Determinants

Local & Sustainable are important to them, but not at unreasonable prices

Allergies are an important consideration for them

Students demand locally grown food

Safety/Insurance is an important consideration for them, as an illness can spread quickly at a University

Students drive the demand for food at CU; might be true for corporations, hospitals

Service is important to the CU team o Not only timeliness, but delivering correct quality

Other Management Issues

Vicky and team look at weekly P&Ls

John Jay’s season is basically September to May

The schedule of meals for a semester is set at the beginning of the semester, but has some flexibility in the specific details

There is very little storage space at CU

Sysco tracks its lettuce through a tagging system

Distributors to CU Food Services: o AFI: http://performancefoodservice.com/AFI/Pages/default.aspx

http://performancefoodservice.com/AFI/Pages/default.aspx


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o J. Kings: local farms page: http://www.jkings.com/LongIslandFarmspage.htm o US Foods: http://www.usfoodservice.com/ o R Best: http://www.rbest.com/ o Baldor:

http://www.baldorfood.com/ Baldor has a Local Farm Fresh Program: http://www.baldorfood.com/local-farms.htm

o Others

Miscellaneous

In general, about a 90 mile radius is considered sustainable

Rutgers-Newark is a self-run shop

NJIT is run by Aramark

Local food is tough for Sodexo and Aramark, because it undermines their business plans

NJ colleges have to bid for their suppliers every year (every 3 years?)

Some corporations subsidize the food and put an emphasis on sustainable & local, etc. (e.g. Google)

Hospitals have both tray feeding and cafeteria. There is also a push to move to a room service model.

Vicky gets 5-10 calls from vendors per day o Need to know audience to sell product

Vicky thinks it would be important for the greenhouse to have a salesperson

Board of health of NYC governs much of the safety of the food. Who does this in Newark?

http://www.jkings.com/LongIslandFarmspage.htm

http://www.usfoodservice.com/

http://www.rbest.com/

http://www.baldorfood.com/

http://www.baldorfood.com/local-farms.htm


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Notes from Meeting with Patrick McKee of Finger Lakes Fresh – 3-9-2011

On Wednesday, March 9, 2011, team members interviewed Patrick McKee, President of Challenge Industries, and the operator of Finger Lakes Fresh, via teleconference. Finger Lakes Fresh (“FLF”) was originally a small research facility run by Cornell University’s Controlled Environment Agriculture program. Challenge Industries had to build up the facility after taking it over from the university. Originally, Challenge had approached the university to develop a workforce training program within the facility for the community which Challenge serves, the mentally disabled. Once they took over the quarter-acre facility, they underestimated the time and money needed to make a research facility into a breakeven proposition for Challenge. To develop the capacity needed, they’ve worked with another greenhouse built on a facility operated by the Northern Tier Solid Waste Facility in Pennsylvania. That facility is powered by energy generated by the facility. They are currently still looking to build more greenhouses. One part of the business they have been able to control is to centralize packaging and labeling operations. From the onset, Mr. McKee warned us that he has not seen a successful enterprise that revolves around a social mission that did not have years of subsidies for the first few years of its existence. This, in his opinion, is the result of an institution having too many social missions that it tries to accomplish with limited resources. Additionally, operationally, there are always issues with the need for supplemental lighting as well as it being difficult to compete against companies with shipping advantages. The hydroponic produce market is quite competitive, with many large commercial producers like the ones in Tennessee and New Jersey. He advised us that we should probably look at the high end market. He thinks selling to a combination of grocery stores, restaurants, colleges and co-ops might be the best way to make the venture profitable. For the grocery stores, the greenhouse would have to deliver to their distribution centers. If the greenhouse were to sell to restaurants, colleges and co-ops, produce can be shipped in bulk and would not require packaging. He advised that farmers lose a lot to middlemen, so the greenhouse needs someone who understands the produce business. Finger Lakes Fresh had to learn the produce business with no assistance. However, this does not mean the greenhouse can afford to not have a technical expert on staff. Hydroponics is difficult and the US is behind Europe in understanding how the technology works and what it can do. Currently, Finger Lakes Fresh does not produce the volume to break even. They plan on opening a new facility, a 50,000 square foot facility and believe this will get them to a breakeven point. Operationally, Mr. McKee believes that the more variety, the better. Customers like to have variety. We questioned what their production capability would be if they dedicated their facility to one type of lettuce. Their most popular type of lettuce is Boston lettuce. He believes that if they dedicated the facility to producing only that, they could produce 2000 heads a day. As part of its operations, they only use Finger Lakes Fresh as the nursery and the facility in Pennsylvania to grow out the crop. The major costs of operations are labor and energy. A sophisticated greenhouse will have a lighting system and use a pond table for its hydroponic system. Costs run higher in the winter and summers because they need to heat and cool the crops during these seasons, respectively.


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They do not handle distribution themselves and use a local distributor to handle it. To get customers, they spoke to their local grocery store and got information for the national chain. They leveraged their contacts and made sure they had samples to give to potential customers. They leveraged any free and local publicity to could manage to spread the word about their brand. Once they get customers buy the product, they promote their brand through the packaging, which tells the Challenge Industries story. They also sell through a local CSA that started in their office. However, after selling the lettuce based on the story, he emphasized that the lettuce has to hold up on its own. If the lettuce is not a high quality product, people with not buy it again. He mentioned packaging in the context that besides their Boston lettuce, which is packaged without the roots attached, all of their produce, both institutional and retail, are packaged with the roots left on because of the longer shelf life it affords the produce. In deciding how they forecast production, previously, they had relied on experimentation, seeing what would be bought by the markets. However, they had a feasibility study done this past December which helped them identify which products were most likely to sell and to whom to sell it to. There are constraints that must be accounted for when determining what types of produce they can grow. One, the choice of the produce must keep in mind whether it is compatible with the existing nutrient system used in the pond. It would be very costly to have to change the nutrient system if you choose to switch crops that required a different system. Two, shelf life is very important to customers so you need to choose a hearty crop that can last for awhile. Three, along with shelf life, the crop needs to be attractive to a consumer. These are all considerations that they took when they experimented as well as after the conducted the feasibility study. In terms of profitability, selling in bulk is the most profitable since there are no packaging costs. Additionally, selling herbs are also very profitable since you can charge a premium for fresh herbs and they require less space. In terms of advice, he believed that Newark should have the population density for the greenhouse to be successful and that if the greenhouse could tap into the premium restaurant market in New York City, it could be successful. He had been approached to supply to New York area restaurants but could not do it. He said he doesn’t have a full time employee for marketing & selling but does have a consultant to handle that task. In terms of expansion, as discussed, they do not currently make a profit but they believe that by expanding into a new 50,000 square foot facility, if they keep their expenses where they are currently at, they can break even. Currently, the cost of growing lettuce, per head, is too high. He reiterated that they underestimated how hard it was for them to turn a research facility into a productive business. They are still figuring out ways to break even. They need to hire the right person to manage the greenhouse, someone who has a strong understanding of the technical aspects of hydroponic farming. You need someone who understands the market and need to work with the right distributor. He cautioned that originally, their greenhouse added too much to labor costs. Finger Lakes Fresh takes food safety requirements quite seriously. They use the GAAP approach and recommends that the greenhouse establish policies and procedures immediately. They are inspected one-two times a year. Some retailers require that they have these procedures. Much of the procedures


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require training employees properly and water testing. They received a lot of help from the Cornell agriculture school to implement the policies and procedures. There are a lot of requirements to adhere to and they need to have a system of recall in place, though their low volume makes this easier for their operations. They did not accurately price out how much this would cost them when they started. In terms of customer relationships and contractual relationships, most grocery stores will give suppliers a contractual obligation, so they may be a client who can provide a steady stream of income. The feasibility study conducted in December told Finger Lakes Fresh to aim at universities due to the push by students for local and sustainable produce. However, be careful when working with companies like Sysco because they are really tight and will attempt to undercut your prices. Additionally, there commitment may not last. However, this is also true for CSAs. If you want to work with a CSA, they usually have a social enterprise director who will be in charge of purchasing. Lastly, farmer’s markets are very strict with what type of products they allow to be sold at the markets. They don’t have a formal forecasting system in place, though they are working are it and hope to have it in place soon. Mr. McKee advised that we have to always keep in mind that this is still farming and that it is very difficult. If they need assistance, the SUNY system has a hydroponics program and he believes that Rutgers has a hydroponics expert. He reminded us that Cornell made an initial grant to the greenhouse but start up was negligible. Since then, they’ve invested close to $1.8 million, using loans, USDA guarantees and foundation money, in the greenhouse. He ended the call by warning us to not let the greenhouse become a place for people with energy conservation research. It is still a business and you don’t to use unproven technology.


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Notes from Meeting with Larry Schembri from R Best – 3-10-2011

On March 10, one team member spoke with Larry Schembri from R Best, a wholesale produce distributor to find out the requirements for a farmer to use their services.

Requirements to sell to R Best o Product Liability Insurance o The ability to track a product back to producer

This typically involves having a unique label on each case of lettuce sold o A competitive price o A high quality product o A grower has to deliver its produce to R Best’s warehouse for them to distribute it. One

of those warehouses is in Hunts Point, Bronx.

R Best does not have many small producers o Mr. Schembri thinks this is because they cannot produce at a scale that lowers the price

enough o Mr. Schembri also said that they like to be able to fill an order for one client from one

grower, so they do not have to assemble it piecemeal

R Best is a produce wholesaler that mainly distributes to grocery stores, but Mr. Schembri is charge of the company’s food services business, so he handles schools and institutions

o Mr. Schembri said that many of the schools he sells to are constantly looking for locally grown food and that they are willing to pay a little bit more for it

o These are mainly private schools in New York City o He said he does not distribute to NYC public schools because there is “too much politics”

involved and a wholesaler would have to bid contracts 6 months to a year ahead of time He does not believe that the public schools are interested in local produce

Mr. Schembri said that one of their largest suppliers is Hydroperfect Village Farms (http://www.villagefarms.com/)

Mr. Schembri emphasized that having consistently good quality and delivering the specified on time, every time would be a requirement if the greenhouse wanted to get into any type of long-term contract supply contracts. He generally finds that competition in the marketplace is too vigorous to support these types of contracts.

http://www.villagefarms.com/


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Notes from Meeting with Benjamin Linsley of BrightFarms 3-18-2011

On March 18th, team members met with Benjamin Linsley of BrightFarms to discuss hydroponic technology and the running of a hydroponic greenhouse. Brightfarms were initially a not for profit that provided greenhouse implementation consulting services. They later moved to a for profit consultancy model. More recently, Brightfarms merged with another firm and adjusted changed business model to focus on building and operating commercial greenhouses, particularly on the roofs of supermarkets. Our main takeaways include the following: Expertise of Growers

Hydroponic agriculture, like all agriculture, is a science. It requires well-trained experts to run the operation. The grower must be extremely knowledgeable and experienced.

It is important to align the goals of the grower with that of the owner of the greenhouse. There are many ways to do this. One is with a profit sharing compensation scheme as opposed to a straight salary. Tie monetary incentives to productivity and/or yield.

Yield:

Mr. Linsley informed the team that yield data is the “intellectual property” of the industry and that most players will not part with this data.

Furthermore, even if he could provide us with yield data, it is subject to extreme variability due to a number of factors:

o Skill of the grower o Amount of light which is affected by geographic location as well as the specific location

of the site o Greenhouse technology

Site:

Mr. Linsley suggested multiple times that one of the most important considerations is the site. Any credible projection we could make about greenhouse operations will depend greatly on the location of the site and the plan for the greenhouse.

Consider longer-term implications of the site. Could a tall building be built next-door? That could significantly change the lighting and thus the yield.

At a greenhouse that they operate, a part of the greenhouse is in the shade during some parts of the day. That portion of the greenhouse has a 30% lower yield.

Other:

Recommended engaging an expert grower.

Recommended consulting with the NJ Experiment Station or engaging a third party consultant.


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Notes from Meeting with Kate Bayer and Steve Antin of Milestone Specialty Produce –

4-1-11

On April 1st, one team member spoke with Kate Bayer and Steve Antin of Milestone Specialty Produce, the operator of a hydroponic greenhouse in Western Pennsylvania. Ms. Bayer is the Director of Development at Milestone Centers Inc, a local human service non-profit that works with people with behavioral and intellectually challenges. Mr. Antin is the Director of Business Administration at Milestone Centers Inc. The Milestone greenhouse was created in 1998 after the state of Pennsylvania deinstitutionalized many individuals. Seeing a role for Milestone Centers in helping the deinstitutionalized to develop job skills, they purchased 3.5 acres of land in Buena Vista, PA, with the goal of a portion of the land to be used for the greenhouse. The site was selected because a University of Pittsburgh economic impact study concluded that a hiking trail within the purchased property was a potential source of constant economic growth and a successful avenue to sell the produce. Originally, the greenhouse was not supposed to by a hydroponic greenhouse. Milestone hired consultants who told them that hydroponics was a way to grow plants year round and would possibly make the venture successful. The greenhouse grows microgreens, a decision that was based on local demand from high end restaurants. Additionally, to grow microgreens, there is not a need for a large labor force, it is simpler to grow and that it is a heartier crop year-round. The greenhouse is 28’ by 128’, smaller than the proposed Newark greenhouse. It is located in an area that prevents the expansion of the greenhouse. As mentioned, the thought of expansion did not occur to Milestone when purchasing the original land. The greenhouse uses a NFT system, with a closed circulation pond. The greenhouse is 3000 square feet and can grow up to 10,000 heads per month. It utilizes an overhead haylight system, which they run all winter for 14 hours a day and costs roughly $15,000 per month. One cost that they didn’t anticipate would be the need for a roof replacement because of light damage over the years. They currently have a greenhouse manager who learned the job over the years. However, when they originally started, they had to hire a master-level grower who cost them $60,000 a year. They highly recommend that the Newark greenhouse hire someone who knows hydroponics and who knows how to grow vegetables. Lastly, the greenhouse is run by a highly sophisticated computer system that runs and monitors the produce. In selling the produce, they highlight the quality of the produce. While they use the value proposition of Milestone Centers as a starting point, eventually, the produce has to stand up on its own merits for others to continue purchasing the lettuce. They harvest the lettuce live, with the roots on. In selling the product, they highlight the freshness of the product. Demand is set by the market and they determined what type of lettuce the greenhouse grows. Their most popular product, though not the most cost effective product, is bibb lettuce. It costs them .75 cents per head to grow, and if selling to a retailer, it costs .25 cents per head to package. Their main clients are restaurants, one large supermarket chain and local CSAs. They had originally worked with a produce wholesaler, however, as a business decision, it was too cost prohibitive to use the wholesaler. They forecast 6-8 weeks out when determining what and how much to grow. As mentioned, most of the demand is determined by the restaurants and their one supermarket. Steve manages these


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relationships on a daily basis, though the greenhouse manager plays a role in that as well. They highly recommend that someone with a business background handle this role. One thing to note when it comes to delivery: Milestone Centers has its own delivery truck, which the greenhouse uses one day a week to ship its goods. They are able to do this only because they have one major client. As for advice for the Newark greenhouse, Kate recommended we overcapitalized. They started with $320,000 and she said she would not start this venture again without $1.5 million dollars. They are still not breaking even despite being in business for 6 years. The greenhouse relies on Milestone Centers to provide extra capital to stay in business. Steve said we need to determine what market we want to sell in and what niche we fit in that market. Additionally, he recommends we sell the mission. They took years before they hired someone to market and advertise their produce, which they regret. As for insurance issues, most of their clients don’t require it. They had attempted to sell to Whole Foods but they require limited liability insurance that their sales did not justify. Some will require it, some will not. The one thing they noted was that the greenhouse, while not a money maker, generates a lot of publicity for Milestone. It has made Milestone a more well known name is the human services field in Pittsburgh and in some ways, has justified the money Milestone has put into it to sustain it as a business. As mentioned, bibb lettuce is a low margin product because it is prone to disease and requires more space to grow. A higher margin crop would be local herbs which are popular amongst Milestone’s clientele. Like Finger Lakes Fresh, they asked us to question, “are you running a business or a program?” It must be run like a business. They recommended that we do not use the greenhouse to “chase after” grant money and to operate it as a self-sustaining business. We ended the call with Kate telling us that we need a well thought out business plan, that we need a devil’s advocate to question our ideas and that we cannot listen to everyone as people will try to do.


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Notes from Meeting with Barbara Mintz at Newark Beth Israel Medical Center -

4/8/2011

On Friday, April 08, 2011 two team members met with Barbara Mintz, MS, RD, Assistant Vice President, Wellness at Newark Beth Israel Medical Center to discuss potential partnership opportunities for the Newark greenhouse. Lorraine Gibbons facilitated the contact.

Beth Israel has 695 beds.

Beth Israel Dining Facilities o Operated by Sodexho o Two cafeterias: Staff and patient/visitor: 1500 meals at cafeterias o In room dining services for patients: Approximately 400 – 500 patients served daily ~

1350 meals/day.

Ms. Mintz was excited to learn about the greenhouse project and eager to explore opportunities for partnership with the greenhouse and the city.

Beth Israel currently operates a weekly farmer’s market on Thursdays that is organized by Lorraine Gibbons. The farmer’s market offers fresh produce and local food from a number of sources including Garden State Urban Farms.

Ms. Mintz’s interest in the greenhouse project primarily centers on the wellness mission: educating the community about the importance of healthful foods while also providing access to those healthful foodstuffs.

Ms. Mintz and Ms. Gibbons are in the initial stages of putting together a plan to open a hydroponic [?] greenhouse on Beth Israel property. It appears that it was in the context of this greenhouse that Ms. Mintz hoped to engage the team and subsequently the City. The Beth Israel (BI) greenhouse will provide a source of fresh food to the farmers market and other sources while serving as an educational facility.

This dovetails well with BI’s Kids Fit programs in Newark schools (George Washington Carver & Maple Avenue Schools). Ms. Mintz urged the Team to explore opportunities in Newark Public Schools in conjunction with BI’s wellness programs or stand alone.

About the Newark greenhouse potentially selling produce to BI dining services, Ms. Mintz noted that she would have to investigate the procurement process (Sodexho could be difficult to force to engage a local firm) and that if BI opened a greenhouse they would obviously want to purchase internally first.

Ms. Mintz’ primary interest seems to lie in establishing a partnership with the city to open greenhouses.

Additionally, Ms. Mintz urged the Team to recommend that any stand-alone sales operations accept WIC payments for produce.

We discussed the idea of cooperative partnerships between greenhouses, which seems to be the most likely area of interest for BI.

Additionally, the team shared with Ms. Mintz the following: o Should the city work with GSUF, the Conservancy, and other growers to establish a

network of greenhouses, a possible opportunity for synergies would be to develop a branding strategy similar to the Statewide Jersey Fresh program. Something like official “Newark Grown” labeling and certification.


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Notes from Meeting with Jan Zientek from the Rutgers Cooperative Extension –

4/8/11

One team member met with Jan Zientek on April 8th to discuss hydroponics, the proposed business plan the Team has drafted, best practices and other barriers to entry the Newark greenhouse may face.

What Rutgers does: o Education

Pest management Nutrient management

o Jay Both: consulting around greenhouse operations; helps operations develop a management plan

Proposed size of Newark greenhouse is not sustainable: o Won’t make money o Will need to find other things to grow in the summer because of increased competition o Should look in to Green Grows in PA

Focuses on retail but slowly looking to get out of restaurant business because there is not a lot of money. At the end of the day, restaurants want to make money so hard client to work with

o Must focus on the development of agriculture, otherwise a waste of time o Lettuce sells for about $1.50/head

Takes up about 1 sq. ft. of space Price good mid-September - March

o 3000 sq. ft. of space is really about 2400 sq. ft. once you build a walkway o “You can put a greenhouse anywhere and make it work, but you will never turn a profit

with something this size” o Should also consider selling to CSA’s: community service agriculture

Buy/sell shares, grower gets money up front

Hydroponic farming is a 7-days a week operation, or as much as is needed o Labor intensive and knowledge intensive o Important to have someone who knows what they are doing, especially when it comes

to pest management Must understand when to apply treatments to produce, and how long before

they are ready to be sold o Arthur & Friends have experience and would be a good resource o Red flag if we encounter producer who will not share yield information:

Should have numbers readily available, otherwise their numbers are bad Is a legitimate question to ask for production history and should push to get

information How you achieve production/yield rates is proprietary—not the actual numbers

o Is a very competitive market: Difficult to find institutional support

Eventually comes down to price

Huge market for organic Must figure that greenhouse will only produce about 10 – 11 crops a year

because they will be training new people


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Even though production rates for lettuce is about 30 days, that is assuming that optimal conditions are in place

Greenhouse Operations/Practices: o Access to water:

Will the city charge? Also used for cooling

o Technology: Electrical lights—huge cost but you must have lighting Heating is also expensive With hydroponics, it’s hard to find ways to save money on technology to meet

large production needs Energy is the main cost

o Structural considerations: Hoop house: cheaper to build and would allow the greenhouse to make more

money Rigid structure (what Arthur & Friends has)

Seasonal growing: o Winter:

Spinach is okay Elliot Coleman, The Organic Grower: may be a good resource for learning ways

to produce winter crops in the Northeast o Summer :

Difficult to compete with field-grown lettuce

Low cost

Prime growing season

Field growing now more efficient, therefore lower cost Greenhouse will have to look at price fluctuations during the year

Other lessons to be learned: o Unavoidable costs: proper training, emergency equipment o Find a niche vegetable/market

Newark has a large, very diverse ethnic population Higher return per sq. ft. Example: Kalaloo, similar to spinach, popular with some African groups

o Production model: good resource and probably already exists somewhere (e.g. USDA) o “Everyone wants to do urban agriculture but historically it hasn’t worked”: trends have

gone up and down over the years o Sales: important to understand the other end of the business

May be more useful to train workers about the business and how to sell to hospitals, restaurants, co-op’s, etc.

Skills in sales are more transferable and what workers really need o If he were to go into a business where you make a little money from what you put in, he

wouldn’t choose hydroponic farming The industry currently heavily relies on subsidies for providing a social service Must eventually decide if you’re running a business or training program

o Investors of project should pay someone who has been doing this work for years, and not someone who wants to get into the business

Follow up:


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o Will put us in touch with consultant in Sussex county who may know yield information o Will ask colleague, J. Both, about:

Production capacity of proposed greenhouse How much can be harvested?


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Notes from Meeting with Mary Donnell of GreenCity Growers - 4/14/2011

On 4/14/2011, team members had a conference call with Mary Donnell. Ms. Donnell is on the leadership team at GreenCity Growers Co-op in Cleveland, which is building a 4-acre greenhouse as part of Evergreen Cooperatives.

The GreenCity Growers Cooperative greenhouse: Approximately 4-acres of greenhouse

o Requiring a total of 10 acres of site

Planning to break ground in the middle of the summer

Land assembly was difficult.

Project costs have been a bit high o Some/largely due to city construction / build-out costs o Leveraging new market tax credit o Complex financing

Lessons learned from the implementation of previous greenhouses and the GreenCity Growers Cooperative greenhouse: Land Assembly:

o The size of the greenhouse land will depend not only on the physical size of the greenhouse. For instance, in Cleveland, they needed to accommodate semi-truck turnarounds, etc.

o Assembling the land was challenging, especially in an urban environment o Cleveland had city land-bank land, but also had to go after nearby land o *The land acquisition process was extended by the title cleanup process. Cleaning up titles is

difficult and can take a while. o *Identify property with access to utilities, access to highways. o With open views south so that you can orient the greenhouse north and south o The more the land is assembled and ready to go the faster the greenhouse will go up o Be wary of public perception of site; steer clear of places that is associated with toxins, industrial

production, etc

Site prep, identifying site

o The better the site, the lower building costs. Be cognizant of what it will take to clean a site up… Explore challenges. Do you have to dig out?

o What are the soils, how has it been treated [chemically?] over time?

Consider site location in terms of funding/economic development o New markets tax credit zones58 may or may not be appropriate o HUD section 108 locations o These may be may be appropriate depending on size and /or scope o The designation can help financing

Demand identification

58 http://www.cdfifund.gov/what_we_do/programs_id.asp?programID=5


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Traditional anchor institutions may not be the target customers. For GCG, for lettuce and herbs, they are not huge users of the products that they are producing.

o Ii is realistic to think outside of those anchors o Food service and retail value local food and want a steady local producer

Important to have anchor support, but you may not be able to not hit the volume necessary o May not be true in Newark due to size of greenhouse.

Stick with the leafy greens

Staffing Have someone who knows how to grow lettuce hydroponically.

o Not the same as gardening o Not the same as growing in the soil in a hoop house o You can have crop failures o Someone who knows

Integrated pest management FOOD SAFETY

o Someone who has managed a greenhouse of a similar size.

Misc Test Water:

o Get a sample from a perspective site and send to the water to MicroMacro 59to test. o They will test quality. o If the water quality was poor the greenhouse will be fight water a long time

59 http://www.mmilabs.com/


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Notes from Meeting with Deb Bentzel of Farm to Institution – 4-19-2011

On April 19th, two team members spoke with Deb Bentzel of Farm to Institution to discuss the Farm to Institution program and what they have learned about barriers into the educational institution market as well as possible distribution strategies.

Farm to Institution, a program of Fair Food Philly

Dedicated to bringing local food to the wholesale market.

Connecting chefs to local farmers

A funder was interested in having the group looking at larger markets… i.e. the institutional market.

They work with UPenn to get a lot of local food

Work with institutions to help them understand the local/small farm market

Barriers

Liability insurance

Getting people over the mental hump of paying a bit more o Explaining to them how they can end up saving on the local food

when things haven’t been sitting on a truck they have a longer shelf life Waste factor Can be cheaper because we’re not packaging in the same way…

o Education around seasonality of foods… we have a good argument for being able to grow in all seasons.

o Institutions have rebate programs with their larger distributors o Every time they get X lbs of produce they can get a discount (kickback/rebate)

If they are buying local, they will get less o In the end people are generally happy with the product

It is important to educate buyers

Nicely poised to sell lettuce with the selling point of you will

Be sensitive to high food costs in general with new clients

Changing the way that they craft their menus

On issues that small/local farms face such as o Volume o Timing o Price point

Value space distributor

Smaller aggregation / distributor

Connecting mid-small sized farmers to markets they can serve

Food Hub?

Supply chain as it exists, but with values added

Farmers paid in a timely fashion and paid a fair price to what they pay

Traceability for customer to farm

Well labeled


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Larger distributors may not pay on time, etc.

Sometimes they take on some of the liability insurance…

Good food handling practices / trucks ready, etc.

Consider talking to: o Zone 7 o Angelos?

General:

Consider talking to the Rutgers Eco Complex

The greenhouse is nicely poised to sell lettuce with the selling point that buyers will not have to deal with volatile prices

Be sensitive to high food costs in general with new clients

Use existing infrastructure… Don’t reinvent the wheel

Consider Robert Wood Johnson

Independent school market can be ideal buyers.


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Questionnaire Responses from Julie Aiello of Gourmet Dining, LLC. – 4-22-

2011 The team reached out to Julie Aiello, Director of Marketing and Sustainability for Gourmet Dining, LLC.

Ms. Aiello responded to a questionnaire prepared by the Team.

1. How important is purchasing local foods to Gourmet Dining? Do you have purchasing targets for local foods?

Local purchasing is SUPER important for Gourmet Dining. We would not be the company we are without

being able to source from our amazing local NJ, NY, PA and northeast regional farmers and producers.

There are many great reasons for Gourmet Dining to source local. Top few reasons:

It is very important to us that we respect and support our local farmers.

It is important to our clients to support local farmers. They like eating local, seasonal delicious

foods like tomatoes, blueberries, corn and all sorts of vegetables and fruits from our area.

Support our local farmers! I will say it again because without these farms, New Jersey will

continue to lose its pastoral lands to development, and we would not have access to some of

the best tasting produce in the country.

Reduce our impact on the environment- of course it is better to buy anything locally rather than

from far away, to build our local communities and depend less on oil. Also with respect to the

environment, we source from growers that grow with respect to the environment in terms of

pesticide use, water use, and respect for wildlife, soil health and people.

Our targets for local food purchasing last year was 30% We well exceeded that number, if we include

local dairy and local baked goods. We purchased about 30% of our produce for the entire year from

local suppliers, with at least 60% of our produce from June- December being sourced locally.

2. Can you estimate the demand for local greens at your educational operations?

Huge demand. Our salad bar is one of our staple features in all of our dining halls. As we continue to

encourage healthy eating, and students preferences continue to move in “healthy” direction, we will

experience even more demand. At this point, we buy at least 20 cases a week of lettuce per school. At

some places, like Seton Hall, NJIT and Kean, we buy 50 or 60 cases a week at a minimum.

3. How could a smaller operation such as the Newark greenhouse become a supplier for Gourmet Dining? Is there a formal process?

We could easily accommodate Newark greenhouses into our purchasing. There is no official formal

process. We would meet with the chefs in the area- Executive Chef Pete Fischbach at NJIT and Executive

Chef Mark Dabundo at Kean, and we would decide upon how much is being grown and available to us,


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methods of storage and transportation. I foresee this being a very simple process with NJIT because of

proximity. With Kean, we would have to arrange a way for the food to get to Kean or for us to pick it up.

Our chefs jump at the opportunity to use local products. They are excited about this project and will be

work together with the greenhouse coordinators to find a solution for purchasing, pricing and

distribution.

4. Is Gourmet Dining willing to purchase local produce at a premium? (i.e., can the local and environmental value-add of local produce provide an extra incentive if the price is equal or higher)? Do you have a percent over market price that you will consider?

Yes. At the moment, we are paying up to 30% more for local produce. When in season, we pay only

about 10% more for local produce, but as the season winds down, or ramps up, we tend to pay more.

We are willing to consider paying 20-30% more for local greens from Newark, as long as this is not our

primary source for greens. Since we have such a high usage of greens, it’s possible this kind of up-charge

for our total greens usage would be too much. However, if this is to be ¼ or ½ of our supply, I am

confident we could use the Newark supply.

5. Does Gourmet Dining have corporate requirements that a supplier such as the Newark greenhouse would have to meet? (e.g. product liability insurance, labeling and tracking, etc)

Yes we do have requirements. The product would need to have liability insurance because it is being

served at schools. That goes for all of our products.

The product needs to be packaged- something simple- cardboard box with plastic bag inside.

Product needs to be dated on day of harvest; hopefully it is packaged on the same day.

Tracking is not necessary but most of our products do have tracking numbers. It would be

helpful but not necessary.

Also needs to be labeled with weight /quantity of items.

6. Do your local producers deliver food to each of your facilities?

Our produce is delivered by a few distributors- none directly by the producer.

Some of our smaller suppliers like our honey supplier, local cheese and fish vendors will deliver

directly to us.

However with produce, we use distributors like AFI/PFG, Plainfield Produce, and Zone 7. They all

have warehouses and we would be willing to contact them on your behalf if you need help with

warehouse storage.


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Appendix B —Demand Study Survey


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Appendix C —Environmental Value Proposition Calculations

In order to quantify the environmental benefits of growing and selling locally grown produce, in

comparison to purchasing produce grown in California, the team conducted research and calculated the

carbon emission savings from buying locally grown produce.

60 Priog, R., Van Pelt, T., Enshayan, K., and Cook, E. (2001). Food, Fuel, and Freeways: An Iowa perspective on how

far food travels, fuel usage, and greenhouse gas emissions. Retrieved from:


61 Environmental Protection Agency. (2005). Emission Facts: Average Carbon Dioxide Emissions Resulting from

Gasoline and Diesel Fuel. Retrieved on 4/15/2011 from: http://www.epa.gov/oms/climate/420f05001.htm 62

Priog, R. et al. (2001).

CO2 Emission Impact Conventional Sourcing Local Sourcing

Vehicle Type Heavy Truck (semi) Light Truck

Approximate Distance (mi) 2,800 65

MPG60 6.1 (diesel) 17.2 (gasoline)

CO2 / gallon (LB)61 22.2 19.4

Freight Weight62 38,000 1,635

Heads/Load 76,000 3,270

Gal. Fuel / Vehicle* 459.016 3.779

CO2 lb / Vehicle 10190.164 73.314

Gallons / Head 0.00604 0.00116

CO2 / Head 0.13408 0.02242

Percent Fuel Reduced* NA 80.87%

Percent CO2 Reduced NA 83.28%

* Heavy truck fuel consumption is calculated using diesel fuel, light truck using gasoline




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Appendix D –Hypothetical Budget

Year 1 Year 2 Year 3

Seed Grant 251,000.00$

Projected Sales (from "revenue" tab) 98,000.00$ 98,000.00$ 98,000.00$

Total Revenue 349,000.00$ 98,000.00$ 98,000.00$

# Rate

Program Coordinator 1 35,000.00$ 35,000.00$ 35,000.00$ 35,000.00$

Fringe benefits/taxes 1 10,000.00$ 10,000.00$ 10,000.00$ 10,000.00$

PTEs (greenhouse mgrs) 4 7,500.00$ 30,000.00$ 30,000.00$ 30,000.00$

Trainee Stipend (20 hrs/wk) 20 1,600.00$ 32,000.00$ 32,000.00$ 32,000.00$

Total 107,000.00$ 107,000.00$ 107,000.00$

Total Personnel Costs 107,000.00$ 107,000.00$ 107,000.00$

Start Up Expenses (see "startup expense" sheet) 99,934.00$ -$ -$

Direct Operations Expense

Arthur and friends license (only year 1? 10,000.00$ 10,000.00$ 10,000.00$

Seeds (year two and ongoing) NA 2,500.00$ 2,500.00$

Hydro System Supplies (6 mo for y1, full ongoing) 2,450.00$ 4,900.00$ 4,900.00$

Travel mileage for delivery 1,500.00$ 1,500.00$ 1,500.00$

Office and Misc Expense

General Office Supplies (in startup funds yr 1) -$ 1,875.00$ 1,875.00$

Marketing materials 2,000.00$ 2,000.00$ 2,000.00$

Insurance (general liability) 5,000.00$ 5,000.00$ 5,000.00$

Product liability insurance 3,000.00$ 3,000.00$ 3,000.00$

Miscellaneous 5,000.00$ 5,000.00$ 5,000.00$

Utilities

Water 700.00$ 700.00$ 700.00$

Gas and Electric 3,000.00$ 3,000.00$ 3,000.00$

Annual light electricity est. -$ -$ -$

Professional Services

Consultant 25,000.00$ -$ -$

Total 157,584.00$ 39,475.00$ 39,475.00$

Total OTPS 157,584.00$ 39,475.00$ 39,475.00$

Total Expense 264,584.00$ 146,475.00$ 146,475.00$

Total Expense + Management/Operation Cushion 15% 304,271.60$ 168,446.25$ 168,446.25$

Operating Surplus/Deficit 44,728.40$ (70,446.25)$ (70,446.25)$

Revenue

Expenses

Personnel Expenses

OTPS


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Appendix E—References

American Hydroponics. (2011). 30x144 NFT System Quotation. Retrieved April 26, 2011 from:

http://www.amhydro.com/ Quotes/30x144_rimol_amhydro_quote.pdf

American Hydroponics. (2011). GroClean NFT Channel- Specifications. Retrieved March 22, 2011 from:


Bragg, E. & Barham. ((2010). Regional Food Hubs: Linking Producers to New Markets. Washington, DC:

USDA Agricultural Marketing Service. Retrieved on April 26, 2011 from

http://www.ams.usda.gov/AMSv1.0/ getfile?dDocName=STELPRDC5088011

Bureau of Transportation Statistics. (2009). Combination Truck Fuel Consumption and Travel. Retrieved

April 26, 2011 from: http://www.bts.gov/publications/national_transportation_statistics/

html/table_04_14_m.html

Community Food Security Coalition, (2003). Urban agriculture and community food security in the

United States: Farming from the city center to the urban fringe. Retrieved March 18, 2001 from:


Cornell University Biological and Environmental Engineering, Controlled Environment Agriculture (2011).

Lettuce Handbook. Retrieved March 22, 2011 from: http://www.cornellcea.com/Lettuce_Handbook/

Cornell University Cooperative Extension. (2008). Assessing the capacity of producers to supply

institutional markets. Ithaca, NY: Cornell University. Accessed on March 18, 2011, from:


Environmental Protection Agency. (2005). Emission Facts: Average Carbon Dioxide Emissions Resulting

from Gasoline and Diesel Fuel. Retrieved on 4/15/2011 from:


Gourmet Dining, LLC. (2011). Three-Year Sustainability Plan. Retrieved 3/31/2011 from:

http://www.gourmetdiningllc.com/site/index.php?option=com_content&view=article&id=88&Itemi

d=119

Holland, R. (2007). “Food Product Liability Insurance.” Center for Profitable Agriculture Info.# 11,

University of Tennessee, Knoxville, TN.

Iowa State University. (2007). Farm to ISU Guidelines for Potential Produce Growers/Producers.

Retrieved February 27, 2011 from: http://www.dining.iastate.edu/farm/docs/produce-

guidelines.pdf.

New Jersey Department of Agriculture. (2006). Food Safety Questions and Answers. Retrieved April 26,

2011 from: http://www.state.nj.us/agriculture/divisions/md/pdf/foodsafetyQ&A.pdf

http://www.amhydro.com/%20Quotes/30x144_rimol_amhydro_quote.pdf



http://www.bts.gov/publications/national_transportation_statistics/%20html/table_04_14_m.html

http://www.bts.gov/publications/national_transportation_statistics/%20html/table_04_14_m.html


http://www.cornellcea.com/Lettuce_Handbook/







http://www.state.nj.us/agriculture/divisions/md/pdf/foodsafetyQ&A.pdf


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New Jersey Department of Agriculture. (2006). Jersey Fresh Quality Grading Program. Retrieved March

18, 2011 from: http://www.state.nj.us/agriculture/divisions/md/prog/jfqgp.html

Penn Institute for Urban Research. (2009). Anchor institutions as partners in building successful

communities and local economies. In Retooling HUD for a catalytic federal government: A report to

Secretary Shaun Donovan. State College, PA: University of Pennsylvania, Penn Institute for Urban

Research. Retrieved February 6, 2011, from: http://penniur.upenn.edu/uploads/

media_items/retoolinghud-chapter8-pdf.original.pdf.

Priog, R., Van Pelt, T., Enshayan, K., and Cook, E. (2001). Food, Fuel, and Freeways: An Iowa perspective

on how far food travels, fuel usage, and greenhouse gas emissions. Retrieved from:


Pirog, M. and Benjamin, A. (2003). Checking the food odometer: Comparing food miles for local versus

conventional produce sales to Iowa institutions. Retrieved from:

http://www.leopold.iastate.edu/pubs/staff/files/ food_travel072103.pdf

Pirog, M. and Benjamin, A. (2005) Calculating food miles for a multiple ingredient food product.

Retrieved from: http://www.farmland.org/programs/localfood/documents/

foodmiles_Leopold_IA.pdf

Rejesus, Roderick M. (2009). GAP certification: Is it worth it? Raleigh, NC: North Carolina Cooperative

Extension. Retrieved February 18, 2011 from: http://www4.ncsu.edu/~rmrejesu/

Food_Safety_Risk/ag-709%20final%20printed.pdf

Rejesus, Roderick M. (2009). Insurance Coverage Options for Fresh Produce Growers. Raleigh, NC: North

Carolina Cooperative Extension. Retrieved February 18, 2011 from:


Resh, Howard. (2011). Hydroponic Services= Hydroponic Lettuce Production. Retrieved March 22, 2011

from: http://www.howardresh.com/Hydroponic-Lettuce-Production1.html

Rutgers, The State University of New Jersey. (2010). Green Purchasing Policy and Guidelines. Rutgers,

The State University of New Jersey: New Brunswick, NJ. Retrieved 3/31/2010, from:

http://purchasing.rutgers.edu/green/index.html.

Stevenson, S. (2009). Values-based food supply chains. Madison, WI: Center for Integrated Agricultural

Systems. Retrieved April 29, 2011 from: http://www.agofthemiddle.org/pubs/vcexecsum.pdf

University of Arizona Controlled Environment Agriculture Center, Introduction to Hydroponics and CEA.

(2011). Retrieved March 21, 2011 from: http://ag.arizona.edu/ceac

http://www.state.nj.us/agriculture/divisions/md/prog/jfqgp.html

http://penniur.upenn.edu/uploads/%20media_items/retoolinghud-chapter8-pdf.original.pdf

http://penniur.upenn.edu/uploads/%20media_items/retoolinghud-chapter8-pdf.original.pdf



http://www.farmland.org/programs/localfood/documents/%20foodmiles_Leopold_IA.pdf

http://www.farmland.org/programs/localfood/documents/%20foodmiles_Leopold_IA.pdf

http://www4.ncsu.edu/~rmrejesu/%20Food_Safety_Risk/ag-709%20final%20printed.pdf

http://www4.ncsu.edu/~rmrejesu/%20Food_Safety_Risk/ag-709%20final%20printed.pdf


http://purchasing.rutgers.edu/green/index.html

http://www.agofthemiddle.org/pubs/vcexecsum.pdf

http://ag.arizona.edu/ceac

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