Tag: ROI

During an Indoor Ag-Conversations webinar on Aug. 26, Chris Higgins, president and co-founder of Hort Americas, joined a panel of industry experts, including Aaron Fields, CEO, Campo Caribe, and Richard Vollebregt, CEO, Cravo Equipment Ltd,  to discuss the practical challenges of controlled environment agriculture.

The session, Smart, Not Flashy: Building Profitable CEA with Low-Tech Systems, sparked several comments and questions from attendees, including a number that were not able to be covered during the broadcast.  These are included below with remarks from Chris and you can read more by going to his direct Hort Americas Blog Post  too.

Genetic manipulating + environment manipulating = maximum yields around the year to get maximum profit is perfect for control farming or future farming.

Possibly. This all depends on the cost of manipulating genetics and environment.

Not all crops have the opportunity to be high value. Also, buyers/consumers don’t value all crops the same.

The opportunities for concepts like this are found at the intersection of high value and high demand.

Comment (not question) Wageningen’s definition that high-tech = resource efficient is an oxymoron for CEA. Typically, we see high-tech as needing more resources to precisely control the environment. Or by “resources,” do they mean labor?

While it might be an oxymoron, it’s also a reality of the way commercial horticulture in the Netherlands operates. It’s our jobs as consumers of information to be able to take a step back and evaluate the information.

Ask ourselves questions such as:

• Why are they saying this?
• How does culture, geography, climate and resources (both human and natural) play into their comments?
• What is their financial motivation for saying this?
• How does local legislation impact perspective?

Aren’t you just saying that glass greenhouses don’t work efficiently if you have to deal with extreme climate variations?

No, what we are saying is that glass greenhouses don’t work in all climates. Also, the “farmer,” farm owner or investor needs to educate themselves on the best tools for their geography, climate and business.

It’s really disappointing that no low tech solutions are being discussed.

Our goal was to not make this a sales presentation. Our goal was to keep it high level and conceptual.

We (the panel) have asked Indoor Ag-Con to host another webinar. (You, as the audience, should encourage them to have us back.)

In the next panel we could break down technology into 3 or 4 categories.

1. Structures/Environment
2. Computers/AI
3. Irrigation/Water Tech
4. Labor/Automation

Do you see CEA fitting into an urban environment? How would that look?

Yes, BUT…

This is a business conversation.

Does your unique business idea fit in the urban environment you plan to operate in?

Can you size your business appropriately, so that you can produce enough crops to service the demand of your niche customer base, while also producing enough income to be profitable and afford you, your family or your investors the return you are looking for?

We can tell you that it will not work if you plan to sell to grocery stores.

Yet it should work if you can evaluate a niche market combined with a high-value client base that wants your product or service 12 months per year.

Can you achieve the same results (quality/yield) using low-cost structures like Cravo and low-tech controls systems like Wadsworth or electric mechanical controllers?

This is a difficult question to answer. It depends on crop, location and environmental manipulation needs.

Normally, the answer is no. But this also depends on many factors.

If you look at Profit $s/lb of production, the answer can be yes.

If you look at a yield in specific times of the year, the answer can be yes.

Based on your comments: Does growing crops in a greenhouse that overheats, opens windows and has to deal with pests & disease, humidity and temperature make sense???

The way that you write the question, no it does not make sense.

But, let’s assume you build a greenhouse that you can cool so it does not overheat. Plus, you also have insect screens on windows/vents and that you invested in the proper equipment to manage humidity to the best of your ability.

Then ask the question, does growing crops in a greenhouse make profit?

Our answer is, this depends GREATLY and is not a guarantee.

How about breaking down CEA categories to multi-layer and single layer. Where a single layer can use the sun, while multi-layer cannot.

We definitely could have done that. And the Japanese have done a great job in doing this over the years.

They call CEA “Plant Factories.” They say that a plant factory without sunlight is PFAL (Plant Factory with Artificial Light) and a plant factory with sunlight is a PFSL (Plant Factory with Sun Light).

What are the best lo-tech solutions currently available for indoor farms either greenhouse or sealed buildings?

This is something we cannot answer quickly.  We recommend you set up a call with Chris Higgins to discuss the specifics based on each option, your experience and location.

Are there any emerging methods of growing that have caught your eye to help maintain quality and lower cost?

Yes! Again, this varies significantly by crop and location.

But we are interested in new water technologies that help you control and irrigation for a wide variety of crops in a wide variety of circumstances. Built into this technology are new fertilizers (specifically for organic production), appropriate AI that allows you to pair irrigation with weather forecast and new sensors that allow you to pair data with appropriate AI.

We are also interested in:

• Equipment that allows you to lower labor costs.
• LEDs that continue to help you lower utility costs/usage. (This is no longer new technology.)
• And new genetics that allow you to grow successfully in a wider variety of climates.

When does CEA technology reach the point that people will not pay the price required? Is the quality worth the price?

We have been there for years. The answer is crop dependent, culture dependent, legislative dependent and economic dependent.

I’ve been working for 15 years producing horticulture with Priva and I’ve had almost no or very few problems with the system, and the yields are very high due to precision in both climate and irrigation and fertilization. Don’t you think that’s really what they should be going in?

That’s great, but we don’t think that’s the goal. We believe profit and return on capital is the goal. So if your company is financially healthy, we think you are doing it correctly.

How does elevation make a difference in deciding the type of technology that can be used 365 days a year without major problems?

Elevation can be very important, especially for certain crops like greenhouse tomatoes.

If you are in a warm climate, elevation can help to provide nighttime low temperatures that offset the daytime highs.

I have seen small to medium-sized operations turn good profits with a well-built greenhouse and an attentive grower (no automation or controller). I see how larger operations cannot necessarily do this. At what scale (square foot/meter) do you think investing in additional technology will truly benefit the operation? What would be the first “tech” advancement would you recommend operations add?

Again, the answer to this question is crop dependent. The higher value the crop, the smaller the farm could be to justify the investment.

What you need to consider is the profit per pound of product. Then multiply that by the total pounds harvested per year and see if that is a number you can run your business off of.

A microgreen farm in the right market might make sense at 3,000 to 5,000 ft2 of production area, while a tomato greenhouse might require 10-20 acres of production area (minimum.)

Do high-technology farms (more active, high degree of climate control throughout the season, more expensive) require that cultivators have more knowledge/skill/experience than low tech?

Simple answer, yes. Because of the high cost of capital investment, there is less room for mistakes.

I’m wondering if you can run a poll for the farmers and growers to show how many years in the trade. 1 -3 year 5 year 10 plus year.

That’s a great idea. If they allow us a follow-up, we will add more polls.

Good genetics is the starting point and that’s what De Ruiter, Syngenta, and Rijk Zwann are for. The introduction of AI in production will help in the control of variables and predictions in production.

We don’t disagree that good genetics are a good starting point. But we are not here to endorse any companies.

Also, AI is only as good as the data that goes in. Data that goes in is based on the programmers adding the data. Programmers get their data from climate-specific research. This does not always translate. We have seen plenty of instances where AI does not work and those where it does.

What does a good balance between technology and people’s knowledge look like?

A good balance is one where the farm can optimize profits by better utilization of resources and inputs while maximizing output and yield. This balance will look different everywhere.

The title of your talk is misleading. It should have been “Technology needs to be used or purchased only if needed to be profitable.”

Fair point.

In Chennai, India and coastal regions, temperature and humidity remain high, and both naturally ventilated and climate-controlled polyhouses are not performing well. What mistakes are farmers making in vegetable cultivation, how can they manage the climate, and which structures or components should be added to make it suitable for crops that need below 35°C and 60–70% humidity, while these regions face 80%+ humidity and above 35°C?

We don’t have any direct experience working in Chennai, India. So we will just make some educated guesses and hopefully they are helpful.  Before we do, we have some questions for you.

1. Can you define “not performing well”?
2. Can you tell us exactly what crops are being grown?
3. Can you show us any photos of the greenhouses? And can you tell us the purpose of the greenhouses?

Without knowing the answers to these questions, we can only guess that mistakes revolved around expectations related to greenhouse capability and the seeds/plants selected to grow in the greenhouse.

Remember, heat and humidity are the two most difficult things to manage in a greenhouse.

We’ve seen farm/restaurant combos work in an urban environment better than just pure farms. How are farms attracting investment to be able to get a capital intensive start up going?

We don’t think we are the best people to answer these questions. We are not experts in raising capital.

Could you discuss the impact of different substrates in decision making?

Yes, simply put, all substrates can work. What you need to understand is the volume of substrate combined with the water holding capacity and airfill porosity of the substrate. Then you need to pair that with the design of your irrigation equipment and the water room.

If done right, they can all work. The success then depends on the operator’s ability to steer the crop based on those variables.

Any advice on finding a consultant to help architect a CEA environment that will be built into an urban development? I would prefer to talk to a consultant about general strategy before working with a sales person.

Please reach out to Chris Higgins.  He has a vast network of consultants he can pair you with.

Several large scale hydroponic operations have gone out of business in the last few years and the U.S.’s largest aquaponics farm switched to land-based salmon only. What is the top reason these companies fail? Labor, energy cost, pest/disease?

The reasons are vast and you cannot point to just one variable. Let’s just say that these farms all targeted high-volume, low-profit markets. There is little room for error in this equation.

It is a reality that climate is a restriction just like water. Therefore, the future is technology, at least for horticultural farmers.

Yes, it really is.

For more information, reach out to Chris Higgins here.