It is estimated that 1 in 3 people worldwide work in agriculture and 38% of the world’s land is used for agriculture. In an effort to truly connect with our colleagues in the greenhouse agriculture industry, Cherry Creek Systems is kicking off a 4-part blog series to discuss the top concerns of growers in 2016. According to Greenhouse Grower Magazine, the top 4 concerns for growers in 2016 were: rising production costs, the economy, government regulation and the weather. We start off with the ever-so complex topic of rising production costs.
WHAT COSTS GO INTO PRODUCTION?
If you’ve been in business for any amount of time, you know the immense cost that goes into producing a crop. How do you continue to turn a profit when your costs of production are undoubtedly growing at a rate you cannot keep up with? The cost of production can be easily outlined as the dollar value of all your inputs for growing a specific crop. Industry wide, the most well-known production costs for agriculture are: fuel, fertilizer, feed and seed. As we dive deeper, we see that there are several more costs that must be accounted for. Just a few examples are: diseases and pest control, irrigation, ATVs, company vehicles, insurance, taxes, repairs on buildings and irrigation systems, land, equipment, and gasoline. According to the USDA Economic Research Service, farmers only receive, on average, 19 cents out of every retail dollar spent on food. The remaining 81 cents is used towards processing, packaging, wholesaling, distributing, transporting and retailing. These increasing production costs are squeezing out margins and causing stress on many growers.
BALANCE & SUSTAINABILITY
For a grower to remain successful in any given industry, there has to be balance and sustainability. For example, coffee farmers historically were able to turn a profit when they earned substantial price premiums for quality based differentiation. It is difficult for a grower to have a variety of products because it increases the costs and makes it hard to differentiate. Buyers and wholesalers must understand that offering incentives to help a grower’s bottom line will help them be more sustainable, which in turns helps the buyers business as well. It’s widely reported that small growers are the most likely to be interested in greenhouse production, with herbs and vegetables having the largest growth area for growers in 2016. Obviously there will be different types of growers, with different efficiencies and different costs of production, but one thing remains the same- growers will only continue to grow if the cost of production allows them to be profitable and sustainable. Buyers of agricultural products who are looking for long term relationships must understand this simple fact if they want to continue to benefit from the fruit of the grower’s labor.
IMPROVED TECHNOLOGY
The impact of technology on production cost cannot be overlooked. Improved yields and efficiencies can make up for the invariable production costs that are plaguing growers across the world. Equally important is hiring management level staff and seasonal workers that are trained with a different strategy to increase profitability. A fine-tuned operation can save time, money, wasted product and materials. Automating your greenhouse operations with technologies such as booms and conveyers, allows you to reign in waste and inefficient practices. It is estimated that clients who use our compact space-saving boom irrigators experience a 7-15% increase in available greenhouse area by eliminating unnecessary aisles. Get more out of less, lower your labor costs, and regulate your crops with our proven, reliable, high-quality watering boom irrigators for greenhouses. Additionally, a controller allows you to program your greenhouse the exact way that makes sense for you. The need for easy-to-read and operate controls continues to be at the forefront of Cherry Creek’s design. Our Boom and ECHO greenhouse water controllers reduce and simplify day-to-day routine, increase capacity, and let you focus on building your success. Cherry Creek Systems works with our clients on a case by case basis to ensure that the technology you invest in, will in fact save you time and money. The ease-of-use and functionality of our products makes it a no-brainer to implement in your greenhouse operation.
We are confident that many of our growers can still reap the benefits of a profitable and sustainable operation in the years to come. The industry is always changing and adapting, but that’s what makes it so exciting. Feel free to reach out to Cherry Creek Systems if you are looking to add technologies to your greenhouse to combat the rising production costs!