Assessment of the Economic Viability of High-Value Greenhouse Production

Project Overview

FW11-043
Project Type: Farmer/Rancher
Funds awarded in 2011: $14,743.00
Projected End Date: 12/31/2011
Region: Western
State: New Mexico
Principal Investigator:
Margaret C Campos
Comida de Campos

Commodities

  • Vegetables: tomatoes

Practices

  • Crop Production: crop rotation, double cropping, intercropping, irrigation, organic fertilizers
  • Education and Training: demonstration, display, extension, farmer to farmer, networking
  • Energy: energy conservation/efficiency, energy use, solar energy
  • Farm Business Management: whole farm planning, new enterprise development, budgets/cost and returns, marketing management, agricultural finance, market study, risk management
  • Pest Management: compost extracts, field monitoring/scouting, physical control, prevention, soil solarization, mulching - vegetative
  • Production Systems: holistic management, organic agriculture, transitioning to organic
  • Soil Management: earthworms, green manures, organic matter, soil analysis, nutrient mineralization, soil chemistry, soil quality/health
  • Sustainable Communities: local and regional food systems, new business opportunities, public participation, urban/rural integration, employment opportunities, sustainability measures

    Summary:

    The focus of this project was to evaluate the feasibility of year-around greenhouse production of high-value crops (namely cherry tomatoes) to improve product mix during the winter months. Sales at the local farmers’ market typically decline because consumers turn to their local grocer for vegetables that are normally shipped in during the winter months, including tomatoes. The project concluded that it is feasible to extend the cherry tomato growing season, and that the production would result in a return on investment of the heated greenhouse in approximately a two year period (optimally), most likely in five years, and up to seven years.

    As a producer, it was exciting to grow cherry tomatoes in the dead of winter and see the customers’ delight. But it was just as rewarding to know that we have increased production at a time when we need the cash-flow the most, to have done so cost-effectively, and that we have a product at a time when demand and prices are high. The system should last, with minimal maintenance, 15 years. So if you pay it off in two years, it is expected that you would continue to make a profit for another 13 years after it is paid for, and with proper maintenance, perhaps well beyond that.

    Introduction

    In order to invest in the product development, marketing and infrastructure necessary to expand the product mix, there has to be sufficient evidence of demand. This is important for an expectation for any farmer to assume that sort of risk of investment. In order for the expansion to be profitable, it will require that the farm be able to produce and harvest tomatoes throughout most of the entire year, in the most cost effective, economical method possible. The questions remained, how many tomatoes can we grow indoors, fall to spring, how long will it take to net a return on investment for infrastructure improvements and supporting systems, is there sufficient demand/price to justify the investment, and will we see a profit beyond the life of the greenhouse itself? These are the answers we searched for with our research, in the climate of our Northern Mexico region of Embudo, at approximately a 5,500 feet. elevation. In addition to the cost of infrastructure, we knew we would always have to supplement the heat and identify the cost of harvest before we could calculate the net profit, and thus identify how many years we needed to recoup the cost.

    Project objectives:

    This project provided the opportunity to see how long it will take to make the money back, by assessing the revenue potential against the cost of installing the necessary infrastructure for extended production of high value crops, such as cherry tomatoes; based upon market prices obtained during the winter months from both the wholesale and retail (farmers’) markets.

    1) Assess the demand and pricing for cherry tomatoes, sold in pints and half pints at local cooperative markets in Los Alamos, Taos and Dixon, which usually pay reasonable wholesale prices, but demand is low. And, in the process, assess the demand and pricing of sales at the Los Alamos Farmers’ market.

    2) Grow a test bed of cherry tomatoes during the fall of 2011 to measure the yield in a thermal-heated and cooled greenhouse, to calculate the return on investment based upon the cost of infrastructure and the price and demand generated for cherry tomatoes.

    3) The test bed will also help determine at what point the yield diminishes sufficiently to warrant the investment of in a new bed of tomatoes, thereby determining the re-planting interval specific to this area.

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.