Competition in greenhose vegetable industry ontario

Greenhouse vegetable industry
Ontario
March 5.2017 1windsor

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 .

…..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.

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.

…….and labor
Technique…..
 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.

….and technique
Labor…..
 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.

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

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.
March 5.2017 windsor 8

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.

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.

….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.

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

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.

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.

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.

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.

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.

…..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.

…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.

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/m2
2012-59.9 cdn/m2
2013-58.3 cdn/m2
2014-60.9 cdn/m2
2015-58.5 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.

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.

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.

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.

……pric
e
Market….
 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.

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

………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.

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!!!

Competition in greenhose vegetable industry ontario

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