Vegetable greenhouse expenses

……cost of production
ONTARIO
5/18/2015 Artin Demiri 1

TECHNOLOGY LABOR
 The technology used to
produce vegetables in
greenhouses is considered
to be about the average
technology used in
agriculture production.
Except of this , it is very
expensive and costful .
 There are some factors
that influence in that
process and treating them
efficently means to do that
production profitable
 Labor is the most crucial
factor that does the
technology efficient or
non efficient , profitable or
non profitable.
 So , that process has to
match very closely or
precisely with tech.
 Labor could not be
neglected or abused .
Efficiency of it is
determinative over the
production : quantity,
quality and cost.

 Organization of that process is necessary to be
done on time and in closely response with
growth phases of plant in time . Otherwise it
will be inefficient relating to the production
and expenses.
 Misusage of labor , means less production and
more expenses.
 So , harmonizing it on time will lead to
progression and efficiency .

 Depend from the
management of work
force. If the
management of it, does
not match properly
with the technology and
phases of plant growth ,
it is abnormal. On the
contrary it will be
normal and progressive.
 To do that explanation
clear , I have used two
kinds of functional
units;-meter
square(m2) and
kilogram of
production(kg/m2) .
 Confusion on mixing
those functional units
with each other should
lead misconception of
expense and efficiency.

 Judgment over the data
of the last five
consecutive years, will
give us a better
perception about
expenses of labor
process through years.
 So , having that data
considered , we could
judge how much is the
influence of labor over
the cost of production.
 -2009 16 cdn/m2
(100 min labor/m2)
- 2010 16,7 cdn/m2
(98 min labor/m2)
-2011 17.15 cdn/m2
(100.min labor/m2)
-2012 16.7 cdn/m2
(98 min labor/m2)
-2013 16.1 cdn/m2
(94 min labor/m2)
-2014 16.1 cdn/m2
(88 min labor/m2)
N.O. because the minimal
wage vary, minutes of labor
are a real measure of time
Calculating ,based on the kg
of production/ f. u , the
efficiency of labor is
increased around 9%
through consecutive years.

0
20
40
60
80
100
120
2009 2010 2011 2012 2013
cdn/m2
minutes

0
500
1000
1500
2000
2500
118.5 mi
129.5 mil
143.5 mil
153.5 mil
156.mil
2009
2010
2011
2012
2013
Series1

EXPENSES/M 2 EXPENSE AND PROFIT/M2
CHART
-2009 68.25
-2010 65.07
-2011 63.2
-2012 59.9
-2013 58.3
-2014 61
0
10
20
30
40
50
60
70
80
90
2009
2010
2011
2012
2013
expenses
gross profit

Expenses and acreage
through years
(6 consecutive years)
Year acres op expense
2009 1824 503,813,560
2010 1919 505,373,445
2011 2067 528,928,240
2012 2272 551,136,170
2013 2400 566,112,994
2014 2550 628,528,706
 Operative expenses chart
460,000,000 480,000,000 500,000,000 520,000,000 540,000,000 560,000,000 580,000,000
2009
2010
2011
2012
2013
operative expenses

Labor and production/m2Labor and production/m2 chart
year
l
Labor
cdn/m2 Expenses
cdn/ m2 kg/m2
2009 16 68.25 42.35
2010 16.7 65.07 40.88
2011 17.15 63.2 41.66
2012 16.7 59.9 43.32
2013 16 58.3 42.23
2014 16 61 40.7
0
5
10
15
20
25
30
35
40
45
2009
2010
2011
2012
2013
labor
prod

Occupational
personnel
There are two groups of
occupational personnel that
are work together to
guarantee growing ,
maintenance and profit.
So there are unskilled and
skilled employees,.
First group is composed by
crop workers, pickers
packers and cleaners . But
how expensive is their labor
? They do the production.
Their wage is minimum(11
cdn/hrs).But how many hrs
of labor there are necessary
for an acre to produce and to
make the production ready
for sale?
 Let us calculate and estimate!
 To calculate that I am refered
to the latest number of
employees of that sector in
2014.
 The total number is 13000
people skilled and unskilled.
But how many of them are
unskilled?
 Let us find out : there are
expend 90 minutes/m2(1.5
hrs)….and for an acre there
are necessary 6000 hrs
annually.

 Knowing that in 2014 the
total acreage of vegetable
greenhouses in Ontario was
2550,easily we could find
out that 15300000 hrs were
necessary and knowing that
an unskilled worker works
in average 2500 hrs during a
year , there are necessary
around 6100 persons or
2.4workers/m2.
 How many of them
work directly in
greenhouse and how
many are packers?
Usually the hrs spent
for packing are equal
with hrs of picking
and the hrs of picking
with crop work are in
a ratio 70% crop
work/30% picking .So
, with a simple
arithmetic it is obvious
that for the packing
3500000 hrs are needed
or 1400 workers(23%
of all).

Skilled
employees
In that group there is
growing and
management staff and
maintenance ,that are in
charge to grow and to
make the production
ready for sale . Those
personnel is qualified
and professional ;
production is dependent
by their abilities . There
are growers , ass
growers ,supervisors,
scouters etc . They have
to be adaptive an
creative.
 But how might be their number for
a normal growing and for keeping
a accurate budget?
 Let us calculate it for a 60 acres
greenhouse facility.
 -1 head grower 100000 cdn
 -2 ass growers 2x50000
 -4supervisors 4x30000
 -2 scouters 2x30000
 -4 maintenance 4x45000
 -1 labor manager 40000
….around 2.5 cdn /m2.That structure
could be organized in a different
way , but the expenses should not
be more . Due to the technology
and labor management , that
staff determines the results;
more or less.

 Greenhouse production
during those 5 last years is
increased in two ways
from building new
greenhouses and increasing
yields per functional
unit(kg/m2)
 acre kg/m2
 2009 1824 42.35
 2010 1919 40.88
 2011 2067 41.66
 2012 2272 43.32
 2013 2400 42.23
 2014 2550 40.7
 Based on that data ,
percentage increase of
area and yield is
calculated.
 There is an increase 24 %
in area and …no in yield.
 So the increase of
production in those years
is contributed
considerably from the
increase of area and very
few from the yield for m2.

 The production expenses
during those years are
diminished by 15% but
labor expenses are the
same.
 From the other side
production/m2 is increased
by around 4%. Relating the
unskilled labor expenses,
the percentage over the
overall expenses , is
increased . So the
percentage of labor
expenses had been smaller
in 2009(23 %) compared to
2013(27 %).
 Based on that fact, the efficiency of work
force usage was diminished . On the
other side , production was increased by
around 4 % and combing them together ,
the efficiency had been in stagnation ; no
progression , no regression and using a
differential calculation,21 cdn/m2 labor
was used for one ready product
tomato,15 cdn/peppers and 12
cdn/cucumbers.(wage 11 cdn/hrs)
 Based on my data and for the wage 10.25
the amount of labor in $ is given below
crop work &picking cdn/hrs 10.25
Tomato 50kg/m2 9
Peppers 25kg/m2 6
Cucies 120 pc/m2 8.5 $
(packing expense is 30 % more)
So, calculating hourly equivalence…
53.3 kg tomatoes are produced/hrs
40 kg bell peppers/hrs
135 pc cucumbers/hrs

Comments
The greenhouse area
that is increased was a
positive factor that has
influenced too much
over the total farm gate
value through years. On
the contrary ,there was
very small influence due
to the yield increase.
Comparing the farm
gate value of 2009 with
2013,there is an increase
by 23 %.....and only
around 7 % is the
influence of yield.
So , increasing area has
had 93 % positive
influence.
 Comparative chart of area
and yield.
0
500
1000
1500
2000
2500
area
kg/m2

 There are three factor that
have influence (positive or
negative) over the gross
profit : area , yield and
price.
 The production that comes
from area and yield is
concretized by the price .
But how much is the
influence of price and how
much the yield increase
guarantees gross profit?
 To make that evident , let
us compare gross
profit/m2 2012-2013;as
well as yield/m2.
 There was a gross profit
increase by 9 %/m2 in
2013 compared with 2012
and there was only 0.5%
yield increase . So doing a
precise calculation, yield
guarantee over the profit
had been only 5%.
(0.5/9=5).
 It means that , gross profit
had been 95% dependent
by the market and area to
have that gross profit by
7.3 cdn/m2 from 2012 to
2013.

Area
influence
In 2012greenhouse acreage had
been 2272 and in 2013 area was
increased by 5.5% to be 2400
acres . So , a considerable part
of profit increase was as a
result of production of new
greenhouses . But how much
was that part? Let us
calculate:5,5/95=58%.
So , it means that the profit was
guaranteed 58% from building
new greenhouses ,37% from
the price and 5% from yield.
 Percentage profit
chart(sharing parts)
58%
37%
5%
profit
area
price
yield

MANAGEMENT PROFESSIONALISM
Increasing yield and
keeping an appropriate
budget, needs an
integrated scientific
management. A
professional staff will
guarantee a good
performance and high
production . Experience
and adapt people are
necessary
 But not only those .
Professionally educated
people will be competent to
manage successfully
production because
empirical experience has no
chance to help progression.
A clear vision how to make
a good performance is a
golden key and a guarantee
for good results.

Results
As a thumb rule , it goes
undisputable that the
results show how the
production performance
had been . The scientific
expertise of staff is
crucial . All the members
should accomplish
perfectly their duties but
supervisor are focal
points on the
management and
performance. They
should give clear ,
comprehensive and
concise instructions
given by superiors . So , the
instruction chain should be
finalized at the workers
without any loss . If the order
given by the superior
hierarchy is understood in the
same way by the workers
everything will be fine.
A professional experienced
educated supervisor , will
customize and put in the
same page labor , time
,worker and knowledge .

PERSONAL EXPERIENCE(working in a team)
But let us analyze a real experience and find
out the results ; as well as week points and
strong points . Let us try to compare the
performance of the team with the average
results in Ontario for the year 2009(performance
is realized in 2009 and for that reason is
necessary to freeze that ; to make compare
exactly )
-production area m 2 target realize
Tomato 52500 60 kg/m2 61.25
Peppers 24300 25 27.5
Cucumbers 6500 114pc/m2
Workforce 13 cdn/m2 12 cdn/m2
on budget
Production was realized 50.53 kg/m2 compared
to average of Ontario for 2009 that was 42.35
kg/m2;so we produced 19% more.
So…..both indicators of performance ,
production and budget were positive.
CONCLUSION POSITIVE
 There was a hard
situation due to
botrytis and canker in
tomato and if that
situation had not been
dominated,25% of
production had been
lost .But based in
scientific expertise and
responsibility there
was not any negative
impact and the target
was accomplished
successfully.

EDUCATION
RESPONSIBILITY
 Having the professional
education background our
team was able to be
accommodated in
different situation , to
judge and to solve them in
advance based in scientific
experience and not in a
short minded way , the
average production of
vegetables grown in
facility was 50.53
kg/m2,16% higher than
average of Ontario for the
2009.(year of reference).
 Being involved directly
in the business of
company , our steps
ahead were diligent and
in a close follow to the
policy of company . The
production situation
was under control every
hour to solve problems
immediately based on
working discipline .

MANAGEMENT
Due to the efficient
management , we had those
results accomplished We
guaranteed and generated a
considerable profit.
If the production had been
sold with average price in
Ontario for that year of
reference , gross profit had
been 91 cdn/m2 and gross
margin had been around 40%
compare with the Ontario
average by 17% during
2009.That is a big difference
and makes the business more
and competitive. So , the rate
input/output was improved
drastically.
 As a final correction of the
performance indicators , gross
profit has to be considered with
prevalence. Below the summary of
Ontario average gross margin
percentage for five consecutive
years is displayed
 2009 17
 2010 21
 2011 24
 2012 18
 2013 28
 In average gross margin
percentage had been around 22 %

 It is evident the fact
that during those
years , gross margin
percentage was
increased . But
which factors were
being responsible for
that increase ? Let us
find it out reading
behind the numbers!
 Based on my calculations it
seems to be the cost
reduction/m2 over those
five years. Cost of
production was diminished
as below
 2009 68.25 cdn/m2
 2010 65.07
 2011 63.2
 2012 59.9
 2013 58.3
 If the cost/m2 had not been
reduced , gross margin had
been 13 %

 The cost reduction
had contributed
around 40% over the
increase of gross
margin percentage.
 12.8/21.6 around 40%
 A very small
percentage increase
was due to the
increase of
yield(around 1-2%)
 On my opinion
reducing cost and
increasing the yield
,depend from the
work and mind of
growing and
management staff
,that works within the
greenhouse .
Positive solutions
and progressions
there are in their
hands.

 Being profitable means to
be more competitive on the
market environment .
Guarantee of profitability
gives the possibility being
flexible to the market and
more independent to the
price In that context ,
gross margin is the only
comprehensive indicator
that shows real situation
how it is.
 As a summary , it was not
my intention to bring
data of the vegetable
greenhouse industry , but
to make evident that is
crucial the methodology
and strategy of
interpreting them ; so to
make data work for us
and to be able to read
behind numbers; doesn't
matter a big or a small
facility
 Let do it having a
clear picture and
vision and
everything will be
guaranteed

 I THANK EVERYONE THAT WITH A PASSIONATE WORK AND
GOOD IDEAS IS DOING PROGRESSION ON THE VEGETABLE
GREENHOUSE INDUSTRY IN ONTARIO.
 LET ME FINISH THAT PRESENTATION WITH AN INDIAN
PROVERB
 When somebody has a dream , it is a dream. when an
other has the same dream is a dream too ;so for the third
and so on, but when 15 people have the same dream , it
should be turned to reality.


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