Thinking outside the box

Mike Gooder’s company has grown production from 12,000 square feet to 350,000 square feet over the last 31 years. As president of Iowa’s Plantpeddler Inc., a wholesale producer of spring liners, finished blooming potted crops and bedding plants, he keeps his company profitable by consistently thinking outside the box and trying new things.

Gooder was one of the keynote speakers at the Wisconsin Commercial Greenhouse Growers Association’s fall conference, held October 12, 2011, at Floral Plant Growers in Denmark, Wis. There he emphasized the need for growers to consider alternative crops and markets, as long-produced crops become unprofitable commodities.
 

Know your costs
At the conference, Gooder spoke about the need to know and control operational costs. Variable costs are those associated directly with growing a crop, such as seeds, soil and pots. If you stop producing a particular crop, these costs go away. Indirect or operational costs are those involved with producing a group or season of plants, costs that are not easily separated out. The more accurately you track costs, the better your decision-making becomes.

Fixed overhead costs are often referred to as “the cost of doing business.” These costs include depreciation, insurance, utilities, marketing and all the other costs associated with being in business, regardless of production success or failure. Fixed overhead costs are the ones that do not change regardless of how much you produce. Variable costs change depending on the number of units produced. Fixed costs include things like the manager’s salary and the building mortgage. Overhead is usually expressed as a “cost/square foot/week” calculation or percentage for each crop grown in a greenhouse. The overhead cost of crops varies, depending on the length of time each occupies greenhouse bench space.

All costs must be covered by crop sales, including the annual overhead. The more a greenhouse produces and sells, the farther the overhead is distributed. Growing and selling plants year round means the overhead expense can be spread out over 52 weeks (overhead expense divided by square feet, multiplied by 52). This may not seem like it would add up to a lot, but the difference is substantial. A 4.5-inch geranium produced in a greenhouse only open during the spring incurs overhead costs of $1.40. If we use the same input costs to produce the same geranium in a year round greenhouse, the overhead cost is reduced to 46 cents. The difference lies in profit to the grower.

So what are some of the ways a grower can reduce costs and make more money? A grower can try to reduce fixed costs, but this only goes so far as these are often core business costs. Growers don’t have much control over the price of plastic pots or seeds. A greenhouse can try to produce more plants at peak times when demand is great, but many growers are already producing as much as they can. Greenhouse overproduction usually causes the quality to suffer.
 

Embrace the shoulder season
Another solution is to improve production and sales in off-peak seasons or the “shoulder seasons” of autumn and early spring. These are times when, traditionally, growers have limited sales. A couple things to keep in mind: No.1, extra costs or investments to grow the shoulder crop can’t be added, and, No. 2, make sure you don’t neglect your most profitable peak ornamental crop. Make sure this shoulder crop doesn’t limit your ornamental profit center in any way.

Plantpeddler uses the extra capacity of the greenhouse, and even outside space, to broaden its offerings to sell with off-peak crops. In early spring they produce a “Dutch Patio Garden” of mixed spring bulbs, using core personnel during the slow period of January and February to plant. Pots can then be forced in cold greenhouses or empty coolers. These pots can also be finished outdoors to ship in early March or April along with naturally blooming bulbs outdoors. Customers will buy to plant in outdoor containers that are looking a bit drab after a long winter. Gooder has added new plants to complement his fall garden mum production by offering ornamental grasses, kale, Swiss chard ‘Bright Lights’ and fall colored celosias.

Specialty cut flowers production is another niche market some growers may want to explore. Most cut flowers don’t necessarily require any special equipment or inputs. Depending on your location you may have a florist, grocery store floral or food coop that would like to buy local flowers, especially at Valentine’s Day and Easter, several months before spring bedding plant sales take off. Perhaps existing customers also carry cut flowers. Cool season plants and bulbs such as delphinium, ranunculus and anemone are easy to grow in a cool greenhouse to force for cuts in early spring. Lilies and other bulbs can be lined out 15 to 20 in plastic shipping crates and in 90 to 120 days, a crop of cut lilies can be produced which sell for at least $2 to $3 per stem. Once the lilies are harvested, use the crates of media to grow something else, like vegetables.
 

Grow vegetables
Local food and sustainably produced vegetables are the next big thing and a huge trend for retail garden centers. Production techniques can be used to fast crop fruits and vegetables during early spring and into the fall and winter holiday entertaining season. Recycle and reuse pots and media from summer plantings to get another rotation out of these inputs and save money. Identify customers first, then test a few things to see what works best in your greenhouse and in your local market. Perhaps you already have a retail outlet and can expand your market this way. Create a farmers market atmosphere or gourmet food focus by including jars of locally produced honey, jams and salsa. Utilize tourism departments to become a “destination” and get on the map for visitors. In addition to local restaurants, groceries and hospitals, check local institutional food or restaurant vendors. Use their salespeople and trucks to distribute your products to a wider market. Team up with other local producers to broaden your product mix, customer base and develop a strong extended season program for your region.

Whatever you do, don’t jeopardize your profit center of premium ornamentals to become a vegetable farmer.

Gooder says, “A bad day in ornamentals is better than the best day in vegetables.”

Profit margins on vegetables can be quite low, but if it brings in some money, keeps employees working year-round and spreads out overhead costs, it’s worth it. That being said, you cannot have your vegetable price determined by the national produce market. Give customers a good price for high quality, fresh, locally and sustainably grown produce, and stick to it. Help stores market your product with “locally grown” stickers, labels and POP material.

Check with your state department of Agriculture regarding licensing requirements for selling food before beginning. Make sure your insurance policy specifically covers the liability associated with selling food. People rarely get ill from eating flowers but can get sick and even die from eating contaminated food. Documentation is critical when selling food, especially regarding pesticide use and other agricultural practices.

Some of the crops Plantpeddlar has been successful with include green beans planted in late summer in plastic tubs and harvested for fall and the holiday season. The plants are dried down, removed and spring plants follow in the same pots and media. Self-pollinating (no bees needed) Mediterranean cucumbers are very adaptable to greenhouse culture. A 10-week crop rotation is possible, similar to cut mums. Plantpeddlar picks up to 2,000 pounds of cucumbers per week and markets them bulk and in tray packs of six cukes per tray. Spinach, lettuce and lettuce blends are another easy and profitable crop to grow. A crop of lettuce or spinach can be produced in pots in as little as four weeks in the greenhouse. The greens are cut and harvested only once before the plants are cored in place and replanted. The greens are sold in bulk or plastic clams. Micro greens and sprouts are another fast turn crop. Swiss chard ‘Bright Lights’ can be sold as a colorful fall pot plant and excess grown for fresh sale. Move pots inside to unheated greenhouse space and harvest multiple times until the crop freezes out sometime in December. While everyone thinks of greenhouse tomatoes as the moneymaker, Plantpeddlar identified them as one of the most difficult crops to make a profit from.

Late summer to fall tub- and basket-planted raspberries and strawberries will be ready for harvest November through February for a premium price. The plants are then dried down, stored cool and allowed to go dormant. The plants themselves can be sold later in spring after breaking dormancy and greening.

What else does your local market need that would provide ‘shoulder season’ income and spread overhead? Perhaps you are in wine grape country and can grow rootstock or grafting material or vegetable transplants for local farmers. Do local nurseries need rooted liners for shrubs and trees? Bare root roses, lilacs and other flowering shrubs can be potted in early February, rooted out in a 45-degree greenhouse and grown on to bloom for Mother’s Day sales. Green roof plant production, reforestation and native plants, reclamation and Brownfield restoration might also be worth investigating.

A world of change requires us to think outside the box and consider alternative crops and markets we may never have thought of before, and it’s important to recognize growers like Gooder of Plantpeddlar who share information about what works in order to make our industry better and keep us all in business.

Kate Field is a horticulture instructor at Gateway Technical College in Kenosha, Wis. She can be reached at fieldk@gtc.edu.