The typical cost of produce grown in a greenhouse in North America is four to 6 times the cost of the same produce field-grown. The most significant contributors to this cost of production differential are the cost of heating and lighting. However, other costs include growing medium, water systems and infrastructure operating and capital costs for items like the greenhouse itself, transportation & distribution and scalability.
In northern climates, like Canada, those operating costs rise enormously, but seasonal variations in prices of goods from southern growing regions also rise significantly in winter months. The gap between the two wholesale costs narrows by about 15-20%.
Since 2018, vegetable and fruit wholesale prices in many Canadian areas have risen by 13-28%, making the potential for growing some crops locally more appealing. Additionally, between 2016-2020, the American protectionist attitudes have soured a great many Canadians to buying American goods, so homegrown has an emotional appeal, at this time.
Still, whether you are in Canada or the USA, the lure of having fresh, local produce in mid-winter is attractive, but most consumers will not pay the huge price premium.
Therefore, if vegetables and fruits are to be grown in local areas that have harsh winter climates, the gap between conventional field-grown and greenhouse-grown goods must be closed in a huge way.
There are multiple areas where new technology, combined with a return to old methods, will narrow the wholesale price spread.
Distribution costs have been cited in many greenhouse business plans as a disadvantage for greenhouse operations. The rationale is that having a multitude of outlets for one’s goods, and a route with many clients, reduces cost of transportation per unit. However, this can be convoluted logic.
If a greenhouse is built as a community-driven and community-based operation, then local retailers my willingly buy locally, for at least a portion of their purchases. It is akin to the smaller organic section of a produce department, with its higher prices. This may be a niche market, but buying local, known-to-be-fresh goods is very appealing for many consumers.
The local operation holds another advantage over distant suppliers. It can operate a cooperative style of distribution model, in tandem with its wholesale division. It also can sell many (but not all) of its vegetables and fruit directly, in a store-front operation.
Pooling of resources to build and operate a greenhouse can drive down operating costs, as well. If a greenhouse is built on contributed (for a price) land of a local farmer, in exchange for a share in the business, savings can be realized. That land may already have other resources, or additional farmer shareholders may. These may be access to feedstocks for heating infrastructure (e.g. biomass), a water system that can be tapped, or a ready use for the waste materials produced. It may also supply organic fertilizers.
The heating costs are one of the largest costs for greenhouse operations. Geothermal is an excellent option, but biodiesel, biogas and gasification also can cut heating costs by 60-70%.
The lighting systems of yesterday are being replaced by modern systems, with LED lighting using less than 15% of what a conventional incandescent bulb would use. Not only does this reduce operating costs, but it eliminates the need for the costly installation of three-phase power that would be needed by a conventional greenhouse with electric heat and light.
Innovative design options can reduce heating costs and even capital costs by more than 60%. A straw-bale north wall, an earth-bermed greenhouse or a passive het collection system each will shave thousands of dollars off building costs, while reducing heating costs further.
Lastly, government and environmental group financial assistance for such projects may drop your initial costs by 10%.
Overall, innovative design and operation, in a community-owned greenhouse may not make winter produce 100% comparable to field-grown southern imports, but the gap can be narrowed, bringing wholesale costs to within 50% of imported goods, rather than the average 500% difference. That is a difference that would, without doubt, be appealing to local consumers.
Note: Currently, we are developing a template business plan for greenhouse design and operation for rural communities. If you are interested in learning more, or in participating in the plan development, please visit our blogs under the “Share It” menu.