Knowing the Operating Costs of your Commercial Greenhouse

How well do you know your Greenhouse Operating Costs?

I just finished reading an article on Farmer's Forum called The Profit Prince By Brandy Harrison.

It tells the story of an Ontario farmer who won the Most Profitable Acre competition that was put on by the Agricultural Management Institute (AMI).

The AMI promotes new ways of thinking about farm business management and aims to increase awareness, understanding and adoption of beneficial business management practices by Ontario farmers. They have various funding initiatives available at the AMI Website.

Mark Brock won the competition because of the cost accounting records he keeps, and his overall business minded strategy to running an agricultural business. The Cost of Production Spreadsheets calculate input costs per crop, the Sales Spreadsheets record historical quantities sold and prices, and historical data including crop yields, soil samples, and GPS data is also recorded.

These three spreadsheets merged together help forecast business potential and keep him on track. Brock is quoted in the article as saying “Instead of looking at farming more land, maybe we can do a better job farming what we have.”

So, greenhouse growers, I challenge you to ask yourselves how good are you at monitoring, documenting, analyzing your greenhouse operating costs:

Do you know the input costs for every greenhouse crop you grow?

• Seed, soil, fertilizer, pot, cardboard, etc.
• Water cost per crop
• Heating costs per crop
• Greenhouse Labour costs per crop
• Greenhouse space overhead allocation broken down by crop
• Sales costs, and distribution

Years ago I had a very profitable growing customer tell me that he had one crop in his greenhouse that he just loved to grow, but every year when he ran the numbers he found it cost him more to grow this greenhouse crop than he earned in revenue for growing it. He knew his decision to grow that particular greenhouse product was emotional; he knew for more than 3 years that his decision to continue growing in the greenhouse was a poor business decision. He did eventually give up that particular greenhouse plant, and took the money he saved to take his family on vacation. Today he is more profitable for it, and all the plants in his greenhouses are grown with business in mind.

We would love to hear if you have a story to share about how looking at the costs of operating your greenhouse benefited you.