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COMPETITION

IN……

Greenhouse vegetable industry

Ontario

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Being competitive A greenhouse vegetables

business could not survive if it is not competitive. Competition is the most crucial tool toward the market and the market is the unique evaluator of the business.

So, that kind of business is not a hobby but a necessity to survive and to make profits, to be efficient on the investment

Neglecting the competition means failing the business. A healthy business, evaluates the competition uninterruptedly and in all the details; during the growing and sales. Tendency to separate growing from sales is negative .

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…..but how much negative? Let us explain!! Production is first phase of

competition and the most crucial of it. Without having quantitative and qualitative production to be represented with dignity to the market ,everything is unworthy . That part belongs to the growing team.

A well qualified growing team should be able to give the maximum to achieve the objective ; giving the desirable production , working with high efficiency ,reduce the cost of production and reducing the losses in general.

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Being efficient Being efficient means

to use all the tools in the same time and to find out the proportions between them.The secret of that efficiency is to keep up all the time and to chose wich is the most important to be done in a certain moment.The aim is to be faster than the time.

If the management of that situation is able to be faster than the time , and efficiency will be positive and will contribute having qualitative and quantitative production ; on the contrary the efficiency will be negative and the lowering of production will be evident.

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…….and laborTechnique…..

The techniques of fertigation , growing and creating an appropriate environment for the plants are almost the same on the hydroponic greenhouses . Computerized programs keep under control and monitor everything , differing very little from each other .In mid tech hydroponic greenhouses , those systems guarantee an average yield for f.u in tomatoes around 50 kg/m2 and bell peppers 25 kg/m2.

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….and techniqueLabor…..

Using labor with efficiency or deficiency could bring that yield 40-60 kg/m2 for tomatoes and 20-30 kg/m2 for bell peppers . But how could it happen ? With an appropriate management to keep up the time and to be ‘faster’ then the time .Emphasizing that ,I want to mean that is necessary to predict what to do to the plant before they ‘ask’ for a certain kind of maintenance or crop work. Neglecting crop work to favorize picking, is the most negative practice. Crop work is a priority and picking is a routine . Every attempt to displace them, has a negative impact over the yield and ….the competition.

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Examples During the growing

season , it is possible to harvest different amounts of production due to the maintenance of crops. A good crop work will lead to and abundant yield and vice versa. Finding out the manners how to be more flexible and more efficient will result in a positive impact.

As it was underlined above , the harvest of tomatoes could be 40-60 kg/m2 or even more and bell peppers 20-30 kg/m2 or even more within the same growing season.

The difference between minimal amount and maximal amount is 20 kg/m2 for tomatoes and 10 kg/m2 for bell peppers. In that case operative expenses are almost the same ,with a very small increase for maximal harvest due to a slightly excessive labor.t

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Using the labor with efficiency

All the management of labor should be based on giving the plants a good architecture and to proportionate the rate sink/source that means to create a very good balance vegetative/generative growth.

A good indicator of vegetative/generative growth(sink/source) is L.A.I.

L.A.I(leaf.area.index) is a very good indicator and comprehensive too..

In tomatoes that indicator should be between 2-2.5 and for bell peppers between 4-6,that means in a certain moment over a m2 ground there are 2 or 4 or 6 m2 leaves. That architecture helps the nutritients to move easily through the plant and the canopy to be well ventilated.

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Ventilation The ventilation in greenhouses is very important

especially in warm and hot seasons .The air movement in greenhouse should be between 2 – 5 m/sec, to guarantee the air exchange in a period of time So in the summer when the outside temp is higher than inside the greenhouse ,the total air volume of greenhouse is necessary to be replaced in two hrs but in the winter during steady conditions in around eight hrs.In the same time the air movement helps as an antiseptic to the fungal diseases and contribute to a good health to the plants.A non well ventilated greenhouse is indicated to have up to 30 % yield reduction.

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Management with efficiency Using the labor force with efficiency is the

golden key to guarantee a good yield and to cope over the unpleasant situations;to distress the plants and to give them the possibilities to use the nutritens with efficiency,sending more assimilates to the fruits;to enhance the power of photosynthesis and increase their inherent immunity.

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….and efficiency

Management…..

Management of all complex factors of growth and production,lead to an effective way of reducing the cost but not reducing the yield.Instead of that,an increase of yield will be evident if the management is diligent.Being diligent about the expenses,is necessary to emphasize that the summer is the most difficult season because the heat effect is too hard for the plants and the yield and on the other side the farm sale gate in average is quite minimal.

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Excessive labor and….profit Based experience, to

produce a kg tomato it is necessary one minute of labor(crop work and harvest).So , calculating for the minimum wage of 2016 in Ontario ,it is necessary one hrs. of labor for 60 kg/m2(11.40 cdn)or 2/3 hrs. for 40 kg/m2(around 8 cdn).

On the other side let us calculate the gross profit/m2 according to the farm sales gate for 2015.The average farm gate price in Ontario for 2015 had been 1.71 cdn/kg.

40 kg=69.6 cdn 60 kg=104.4 cdn

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Bell peppers calculations Depending for the management of labor ,the

harvest of bell peppers could variate for 20-30 kg/m2.Based on my experience the most accurate time to produce a kg of bell peppers is 1.65 minutes(including crop work and harvest).So for 20 kg/m2 there are necessary 33 minutes of labor and for 30 kg/m2 there are necessary around 50 minutes.So…

20 kg=6.3 cdn 30 kg=9.5 cdn The fam gate sales price for 2015 had been

3.01 kg;so 20 kg=62 cdn and 30 kg=90 cdn.March 5.2017

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Tomatoes

Peppers

Difference

In tomatoes the gross profit difference between minimal and maximal yield is around 34 cdn and for bell peppers around 28 cdn. That difference does’nt need any big difference on operative expenses; only a slight excessive amount on .

In 2015 the average yield for tomatoes had been 44.8 kg/m2 and gross profit around 80 cdn/m2.For bell peppers the average yield had been 24.09 kg/m2 and the gross profit 72.5 cdn/m2.

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Rentability and price

Comparing

To compare which one of them is more profitable than other,it is necessary to have a clear picture about the equivalence between them.

Knowing the operative expenses , and the labor usage ; as well as the appropriate management,I have calculated than a yield 55 kg/m2 for tomatoes is equivalent with a bell peppers yield 25 kg/m2…and in that way we could find the equivalence of cucumbers.

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Tomatoes and bell peppers In the greenhouses of Ontario for 2015 the average yield of tomatoes had been 44.8 kg/m2 and the average farm gate price 1.74 that means a gross profit around 80 cdn/m2

But this is average yield and gross profit;there were companies with high yield and companies with lower yield….!!!

On the other side ,the average Ontario greenhouse bell peppers yield for 2015 had been 24.09 kg/m2 and the average farm gate price had been 3.01 cdn/kg.So the gross profit/m2 had been 72.5 cdn/m2.

As in tomatoes that yield had been average…and there were companies with higher and lower yields.

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What happens??!!! The companies with higher yields are more

competitive and more flexible to the farm gate price and are more confident and healthier compare to the companies with lower yields that survive with difficulties toward the market.Their competition is negative and the business future goes step by step to collapse.

Between 2011-2014 around 7 greenhouse farmers were out of the business mainly due to the fairly and negative competition as well as not having a good balance on the expenses and profits.

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…..having a good management

Keeping a tight budget..

Keeping a tight and appropriate budget during the management of growing , is an important indicator how well the general situation could be . Having every day picture will help to tack all the crop work, picking , IPM etc. in the same step.So, following the right strategy of deleafing in tomatoes,will help the ventilation of plants,speeding the picking,fighting botrytis due to the air movement etc.The same situation will happen in bell peppers and cucumbers.In the same time,doing smth that will haver three or four effects in the same time,will save the labor and money.March 5.2017

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…and gross profit

Operative expenses….

Being efficient during all the year,will help to reduce the cost of growing within the greenhouse.

In the same time we will have all the possibilities to increase the yield with the same amount of money given for operative expenses.

Flexibility on management , will guarantee that efficiency.

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Operative expenses and the gross profit/m2

Operative expenses…but let us see the amount of operative expense for some consecutive years.

2011-63.2 cdn/m22012-59.9 cdn/m22013-58.3 cdn/m22014-60.9 cdn/m22015-58.5 cdn/m2.

Gross profit 2011-83.4 cdn/m2 2012-73.2 cdn/m2 2013-80.5 cdn/m2 2014-81.3 cdn/m2 2015-76 cdn/m2

So,during those five consecutive years the average operative expenses had been 60.3 cdn/m2 and gross profit 78.9 cdn/m2.

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Harvested area and yield It is an evident fact that in

consecutive years the harvested are is increased.

2011-2067 acres 2012-2272 acre 2013-2400 acres 2014-2550 acres 2015-2700 acres 2016-2850 acres

….and the yield? 2011-41.65 kg/m2 2012-41.91 kg/m2 2013-42.66 kg/m2 2014-40.73 kg/m2 2015-38.09 kg/m2 (n.o.)the average yield

is the quantity of tomatoes,bell peppers and cucumbers harvested for a m2 in total.

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Cost of production Variable cost There are included all the

expenses for the direct production in the greenhouse and for packing;as well as growing expenses calculated in general as operative expenses that could vary from season to season.

Fix cost. There are fixed

expenses no matter how was the production in general.

Fix cost represents in average 20-25% over operative expenses.So if operative expenses are 60 cdn/m2,it is necessary to add 12-15 cdn more to calculate the cost of production.

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Output/input ratio To calculate how efficient

had been the investment for a certain year ,it is necessary to use that ratio . For example if it is an output 100 cdn and the input had been 70 cdn, the ratio is 30%;so the efficiency of investment had been 30%.In that case, the rentability price was 30% higher that the cost of production.

But the rentability depends from the farm gate price.It varies from the demand of the market for the production because everyone wants to sell the products as dear as can.In the market,there is not any interest about the growing techniques or computers that are used,the maintenance of plants etc.

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……priceMarket….

Finally the market decides over the rentability of a certain business and how competitive it could be.A healthy business could be steady on the fluctuations of market price due to the abundance of production and in that case could shrunk the rentability price.On the contrary ,an unhealthy business should’nt be able to support the pressure of the market price when it is lower and it destiny is to loose and collapse.During five consecutive years,the average farm gate price had been….

2011-1.97 cdn/kg 2012-1.76 cdn/kg 2013-1.9cdn/kg 2014-1.91 cdn/kg 2015-1.97 cdn/kg with an average price by 1.9 cdn/kg.

Between 2010-2014,7 greenhouse vegetable businesses collapsed and were put off the business.March 5.2017

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Reasons??? Reasons could have been

different but one thing is evident;they were not strong enough to have a good and abundant yield to support themselves in the market.So their competition ability was 0 and the market had dominated over them not giving any possibility to survive.

Farm gate sales price

In 2015 the average farm gate sales price had been 1.97 cdn/kg,respectively…

1.74 cdn/kg tomatoes 3.01 cdn/kg bell peppers 1.6 cdn/kg cucumbers

Respective yield had been….

44.8 kg/m2 tomatoes 24.09 kg/m2 bell pepper 47.9 cucumbers

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………and profit

Price…..

The average farm gate sale price had been 1.97 cdn/kg.But how much had been net profit for one kg production?Was the profit according to the rentability price?Lower,higher or constant?

If we want to calculate over 30 % rentability price as in our example,the cost of production should have been 1.37 cdn/kg and the profit should have been 0.6 cdn/kg.Of course it variates business to business and so on.

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Artin Demiribachelor of agriculture science

Let us compare the situation of our business and estimate ourselves based on data collected for the production and the market , how much competitive we are to survive in the market. Comparing the strength of our business with the others means to evaluate the competition as the moving force that push ahead to dominate the real situation and not to collapse ever!!!

March 5.2017