Assessment of the Economic Viability of High-Value Greenhouse Production

View the project final report

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

New Mexico has the second highest food insecurity in the nation, and its second largest industry is agriculture. Agricultural production is mainly cattle (calves), hay, pecans, chile, and greenhouse and nursery products. Other than dairy, very little of it ends up on the average New Mexicans' daily table. Even with the advent of recent marketing distribution channels such as CSAs, farmers’ markets and cooperative stores, the great majority of agricultural production in NM is still sold though the wholesale commodity markets, processed elsewhere and feeds the large-scale agriculture model, doing little for the local agricultural economy.

The problem is one of production and marketing; without viable marketing channels during the winter months where farmers can garner retail prices, or a reasonable wholesale price, there is not much incentive to invest in the infrastructure necessary to produce during those months when the typical farmers’ market is closed for the season. The few farmers’ markets that operate during the winter do not draw the same number of consumers; due to a lack of abundance and variety in produce and products, markets in the winter are a shadow of their summer selves. Farmers' markets lack the convenience of distribution and product mix that traditional supermarkets have trained the mainstream consumer to seek. So the choice for small producers is to improve the product mix to make the current distribution channels (farmers’markets) more attractive in the winter months; be willing to accept commodity prices from local grocers and restaurants for longer periods of time to reap a return on investment on costly infrastructure necessary for growing during those periods; or live on what one can produce during the traditional growing season.

At the traditional family farm owned and operated by Margaret and Eremita Campos, the body of knowledge comes from generations of farming in the region. However, on their farm, they have been researching a variety of crops and methods for marketing and distribution since they began collaborating in 1987, upon Eremita’s retirement. Margaret has been living of the farm since 2006, supplementing her income as a Professor of Project Management at Northern NM College. The two have been growing a variety of produce: everything from asparagus, leaks, bok choy and quince to more traditional crops like corn, chile, beans and berries; all of which are marketed locally or are used to attract folks that come on the farm for cooking events. At these events visitors learn to cook traditional Northern NM recipes utilizing farm fresh produce and traditional horno ovens. Always innovative, from their research in production (blueberries and almonds in northern New Mexico) and value-added product development to attempts at various marketing and distribution channel’s (CSAs, wholesale grocers, restaurants and of course farmers’ markets), the most successful of their enterprises is the agri-tourism operation that has been hosting visitors for cooking events since 1999 and operates under the name Comida de Campos, Inc. The farm is also supported by the line of value-added products, jams and jellies marketed since the mid-‘80s. The farm has had a certified commercial kitchen since that time.

The current state of the economy has resulted in more vendors at farmers’ markets and fewer customers spending less money; thus the growing need to attract more customers. These venues must be viewed as a necessary stop for people's daily needs and not simply the special event one goes to in the summer. In general, processed or ready-to-eat foods usually net a higher profit margin than do the sales of commodity produce, have been test marketed and have been found to have high demand. The plan is to expand the product mix in the form of packaged ready-to-eat salad greens, offering the convenience customers have become accustomed to at the local grocer. Growing salad greens and other cold hard plants have been demonstrated to be profitable, but what’s a salad without tomatoes? So, last winter on Margaret & Eremita’s Farm (Comida de Campos, Inc.), the two performed a trial to test the feasibility and cost effectiveness of growing tomatoes during the winter months and produced tomatoes in the dead of winter utilizing the technology demonstrated. However, during the spring and fall or transition periods, a greenhouse will have to be heated at night to prevent plants from freezing when temperatures go down into the single digit. And at the same time, during the sunny New Mexico days, greenhouse temperatures will soar above 120 degrees if left unchecked. Thus, temperature variances are greater than healthy plants can grow and develop under, usually resulting in a lack of yield or bud drop, and requiring not only costly infrastructure and heating systems to prevent freeze, but additional equipment to cool in the day.

How many tomatoes must a good farmer grow to pay for all that infrastructure, is it worth the investment, and will the equipment need replacement by the time a profit is shown?

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 to expect 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 on a continual basis the entire year, in the most cost effective, economical method possible. The question(s) remain how many tomatoes can we grow indoors fall to spring, and 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 investment?

The farm is conducting a pilot study to:

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 Santa Fe 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 in order 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 does the yield diminish sufficiently to warrant the investment in a new bed of tomatoes, thereby determining the re-planting interval specific to this area.

The objective of this research is to develop a pilot study to evaluate the economic viability of expansion necessary to grow the nine months outside of the traditional growing season, six of those months which will also require cooling systems over and above the heating systems needed during the dead of winter.