Strawberry Production Costs in Greenhouse

One of the frequently asked questions is “how much does it cost to produce strawberry hydroponically in greenhouses”.  The following is an example cost analysis based on Tucson, Arizona.  Cost analysis often requires a set of assumptions to extrapolate available data including results obtained in a university setting to an enterprise operation.  Therefore the values reported here can be very different for different types of operation, cultivar to use, growing system, and other material and utility cost structures. The following is the summary of the approach as well as the result of the analysis.  For additional information, please contact Dr. Chieri Kubota.

Assumptions made in this analysis.

Greenhouse operation. A hypothetical existing greenhouse with 10,000 sq foot floor area located in Tucson, Arizona was considered.  The greenhouse is equipped with twin-wall acrylic glazing, pad-and-fan cooling system and overhead natural gas heating system. Available water source is municipal water due to its semi-urban location. A hypothetical situation was that the greenhouse owner wanted to start off-season strawberry production (harvesting from November through April) to distribute his/her fruit in local markets. Greenhouse is in good shape and the only new capital costs that the owner needed to consider were those needed to start strawberry production (strawberry-specific capital items). 80% of the floor area was considered useful for growing plants (a total of 6148 plants).

Description of the costs.

Capital costs. The cost items we consider in this category includes 1) ground cover plastic over the greenhouse floor ($396.05 per 4,500 ft2), 2) 100 sq ft Walk-in cooler for harvested fruits ($61.41 per ft2), 3) strawberry troughs (unit price $4.00), and 4) new irrigation equipment ($8,346.22 for the whole setup). 8.10% sales tax was considered when applicable, but no shipping costs were considered. Based on the useful life of each item and a 4% interest rate, amortized costs were computed using annuity approach, where we also assumed that salvage value for equipment was zero.

Labor costs. In our estimate, we considered that the average labor input over the entire growing period (a total of 39 weeks, planting in September) was the owner’s full time contribution as well as additional labor (40 hours week at  $7.90/h with 25% employee related expense). The owner’s time was not considered as a labor cost in this analysis.

Utility costs. Electric energy use was computed based on the average use in a similar type of greenhouse at the University of Arizona (recorded average 0.00433 kWh/ft2/d from November through March). Electric energy use by the cooler was estimated based on the energy balance. Electricity rate of $0.11/kWh was used in this analysis.  For water, the costs were estimated based on the expected amount of water use in this greenhouse and Tucson Water rate. Heating costs were estimated based on the heating requirement at the target night time set point temperature and expected outside temperature using a Virtual Grower software. 

Consumable materials costs. The material costs included 1) plastics used as mulching, 2) IPM agents, 3) disinfectant, 4) bees, 5) planting materials, 4) substrate, and 5) fertilizers. The necessary amounts of each item were estimated based on typical usage for strawberry in at the University of Arizona. Substrate considered was a commercial substrate mix amended by adding perlite at 50:50 volume ratio.  Fertilizers were considered as mixed by the owner using different salts to meet the elemental concentrations of Yamazaki formula. The price of planting materials is based on those available for dormant runner plants, but this cost can be possibly higher when growers attempt to obtained plug plants.

Results.

Estimated capital costs and annual variable costs are shown in the tables together with their breakdown costs. 

Breakeven price.

Strawberry yields are dependent on the production techniques, systems, and greenhouse environmental conditions. However, using our yield of 9 kg/m2 (1.84 lb/ft2) obtained in our greenhouse, the breakeven price at the above mentioned costs was $2.59 per lb.  Reduction of labor costs (accounting for 40% of total annual variable costs) and utilities (20% of total annual variable costs) as well as possible re-use of substrate (7.6% of total annual variable costs) may be a strategy to reduce the costs and thereby reduce the breakeven price further.  Increasing planting density has also been attempted in commercial settings to increase the revenue.  However, when such an approach is taken, growers need to carefully design the high density production system so that light interception per plant is not reduced. Vertical growing systems are often considered an effective way to increase the density; however, it is often overlooked that light intensity declines almost exponentially from top to lower layers, decreasing average amount of light (daily light integral – DLI) received per plant significantly.  Another consideration is the proportional increase in some of the costs (such as labor and most items of consumable materials) with increasing number of plants. Carefully designed, scenario based costs analyses are needed to develop strategies to reduce the costs and increase the profit. 

Table 1.Capital costs estimated for a 10,000 sq ft greenhouse strawberry production.

Table 2. Variable costs ($ per sq ft) for a 10,000 sq ft greenhouse strawberry production in Tucson, AZ.

Updated (8/31/2015)