Growers planning to add production space

By the time growers arrive at this year’s OFA Short Course in Columbus, Ohio, July 10-13, they should have a good feel for the success of their spring season. Based on the results of a Greenhouse Management & Production State-of-the-Industry Survey that was conducted during May, results indicate many growers did well this spring. The survey inquired as to growers’ plans to expand their production space this year. More than 9,000 growers indicated they expect to do some type of expansion.

Bill Vietas, commercial division manager at Rough Brothers, said that by the end of July his company should know exactly what growers are going to do in regards to expansion.

“Last year was the year of less expensive building,” Vietas said. “People who needed to build did build, but there were less dollars invested per square foot. We saw growers putting up lower-end style greenhouses as well as doing curtain, benches and cooling system updates.”

Vietas said more growers who are calling for quotes are asking for more options.

“We have a few more people looking at glass this year,” he said. “People will call and ask me to give them a quote on a glass, gutter-connected open roof and then ask for other glazing options with polycarbonate, acrylic and double poly.”

Matt Stuppy, president of Stuppy Inc. and president of the National Greenhouse Manufacturers Association said there appears to be two camps when it comes to growers and greenhouse construction.

“There is a group of growers who will do it with low capital investment costs and they make it work. They may end up paying higher day-to-day operating costs,” Stuppy said. “There are a lot of big growers who don’t put a lot of sophistication into their operations and it works for them,” Stuppy said.

“Then you have others who are investing more money and doing the automation. They’re spending the money upfront looking to recover their return on investment over time. We are seeing growers who are weighing what they need versus what they want. They are looking at when the ROI comes, how soon it comes and how much it is.”

According to results from the GMPro survey, 38 percent of the growers who were planning to expand were looking to add less than 75,000 square feet. Most growers (27 percent) indicated they would add less than 10,000 square feet. About 7 percent indicated they would increase production by 75,000 square feet or more.

“This year we are seeing more traditional builds,” Vietas said. “Last year a grower may have had an opportunity with a big-box store and put up quonsets because he didn’t want his risk to be too high. This year, the grower may have the same opportunity and is more confident that the business will be there for a while, so he chooses what he wants to build. We are seeing more sophistication in terms of the types of systems growers are looking to install.”

Looking to make changes
Scott Thompson, executive vice president at X.S. Smith Inc., said that part of the reason growers are having a good year is due in part to internal consolidation.

“They have done some restructuring with their staffs. Some have cut back on their overall production,” Thompson said. “Bottom line is they are probably making money, but it’s not at the level they would like to be at.”
Vietas said his company is seeing more bids. “It’s more back to normal, but it’s not 100 percent because the big-box stores are doing less building and banks are tighter on loans.”

Of the growers in the GMPro survey who will be expanding production, about 54 percent plan to spend less than $25,000 on their additions. About 24 percent plan to spend between $25,000 to $100,000 on their projects. Nearly 22 percent have indicated they will spend more than $100,000.

Thompson said most growers are not making large overall changes to their operations like they may have done 10 years ago.

“People are hunkering down. They are trying to do what they can to survive in the unique business cycle we are in,” Thompson said. “The days of just trying something new to check out whether it would work are over. We are encouraging people to try new things on a small scale — certain growing practices or equipment changes. If there is no return on their investment, then they aren’t even going to consider it.”

John Pound, owner of Agra Tech Inc., said there has been a limited amount of expansion and retrofitting occurring within the horticulture sector on the West Coast.

“It’s pretty minimal,” Pound said. “Most growers are trying to put a Band-aid over it and keep using it for another year if they can. More of our business has been around specialized non-hort users. School districts are putting up greenhouses. I’m happy to get some of my tax money back. But as a taxpayer, it’s indicative of the current financial problems that are occurring.”

Pound said some of the hardest hit cities in regards to unemployment are located in California. He said flower growers in southern California are reporting declines in production of up to 50 percent along with lower returns.
“What I have seen this year is an increase in the small jobs, the small cold frame houses,” Pound said. “We have received some large job bids, but I don’t know if those are going to happen or not.”

Thompson said his company is seeing the greatest interest in the major areas of controls, including greenhouse coverings and screen systems, heat and ventilation and material handling.

“What we are finding more than ever is people aren’t ready to make tremendous changes. They want to fine tune — take a look at their largest expenditures in their operations and chip away at those,” Thompson said. “If it is heating fuel costs or the ventilation electric bill, what options are available to lower those costs?”

Becoming more efficient
Sylvia Courtney, south central regional sales manager at Ludy Greenhouse Mfg. Co., has been involved in the horticulture industry for 30 years. She is primarily seeing growers try to make existing facilities more efficient.

“Everybody is trying to produce more in what they are already paying to heat and cool — to make that space as efficient as possible,” Courtney said.

She said growers, especially in northern states, have been trying to take advantage of state and federal rebates related to increasing energy efficiency.

“Last fall and early winter, a lot of growers were putting in high-efficiency unit heaters to reduce their fuel consumption and to receive rebates,” she said.

Courtney said Modine offers a Heat Savings Calculator that growers can use to determine the savings on its Effinity 93 high-efficiency unit heater. She said for growers in northern states, the payback can be less than a couple of years, depending on heat load.

Vietas said fewer growers are looking at biofuels now that the cost of natural gas has come down.

“Natural gas is at a good price right now,” he said. “People are still talking about biofuels. They are still a part of the conversation. It usually comes down to return on investment and right now the ROI is not there on biofuel systems.”
Stuppy said those growers who are making low cost investments are not making changes based on higher fuel costs. He said it is counter to their strategy.

“You can show someone how they are going to save money on a day-to-day basis if they invest the money today, and they still struggle with the investment decision,” Stuppy said. “It’s going to have to be very compelling to them. There’s going to have to be some real pain in their immediate future for them to do it. The number one thing that would make growers change is if their resources all of sudden became scarce or impossible to come by. What growers are facing in California in regards to water availability is a good example.”

Nearly three-quarters of the growers in the GMPro survey indicated they would install unit heaters in their expanded production facilities. Hot water heat was the choice of 23 percent of respondents.

Covering considerations
Courtney said growers are also looking more at energy-saving screens and glazing materials. Growers who may not have considered some type of insulated glazing in the past are now looking at these coverings because of increased fuel costs, she said.

Thompson said polyethylene film continues to be the glazing of choice for most growers. He said anyone in an area that has significant heating degree days needs to consider installing an infrared film.

“We tell people, if they are going to put poly film on their house and they are going to be pumping heat into it, that they are going to lose money if they don’t choose some kind of IR longer-term film.”

Courtney said that more growers are now using IR films.

“If you look at the charts comparing energy savings between IR and non-IR films, the Btu savings with the IR film covers the additional cost,” she said. “It’s kind of a no-brainer. There are still some people who won’t spend the extra money for the IR film because they are on tight budgets. But when you look at the Btu reduction, especially during a cold winter, it usually pays for itself.”

Courtney said some growers who have glass houses are considering replacement with a rigid glazing such as acrylic or polycarbonate. She said few growers using polyethylene are considering switching to a rigid plastic because there is a minimal reduction in energy costs by making the switch.

“For growers using poly and considering a switch to a rigid glazing, it’s a matter of coming up with the money,” she said. “When a grower with poly makes the switch to a rigid material, there is an investment in the extrusions [the bars and caps] that has to be made. Also, the grower may not have the money upfront to invest in a 20-year rigid material, so that’s why there is still a lot of poly being used.”

Courtney said concerns over disposal of discarded poly, rising landfill fees and the labor involved with film replacement could cause more growers to consider rigid glazing materials. She said that rebates and energy-savings grants that cover a portion of the rigid glazing costs could also be an incentive.

About 65 percent of growers in the GMPro survey indicated they would be covering their new production area with polyethylene film. Polycarbonate was the glazing chosen by nearly 17 percent of the respondents followed by shade cloth at 14 percent.

Courtney said some growers also are considering light-altering poly films that filter out certain wavelengths or diffuse incoming light so there is more uniform light penetration into the plant canopy.

Screen savings
An increasing number of growers are looking at natural ventilation to cool their greenhouses. While much of the discussion has been about lowering heating costs, the summer electric bill is also an area where growers are looking to reduce expenses. For those with naturally ventilated houses, screens are becoming a more important component.

“The screens are being used for a combination of cooling and energy savings,” Thompson said. “More often than not, the screens are for heat retention, but growers are finding they also benefit them during the summer.”
Courtney said a curtain or screen is the best investment a grower can make.

“They can immediately respond to the light conditions,” she said. “If a grower puts a [stationary] shade curtain over a structure on the outside during the summer, he’s not going to take it down. There are going to be periods of cloudy and sunny weather. A screen system is the best tool based on weather conditions and being able to provide the plants with the light conditions that they need. For growers in the South, it’s just as important as a cooling tool as it is a heat reduction tool.”

Thompson said growers who have installed screens inside their houses know the value of those systems because they have seen the crop response.

“Growers have seen the return on investment and they know installing screens is the way to go,” Thompson said. “That is why we encourage people to make their houses taller even if they are individual houses. There is more air volume, and growers have more room overhead to do more within that controlled environment.”

The GMPro survey found natural ventilation is the major cooling choice of growers (62 percent) planning to build additional structures. Exhaust fans (30 percent), pad-and-fan cooling (14 percent) and mist systems (9 percent) were their other choices.

Gaining greater control
As growers look to improve efficiencies in heating and cooling systems, they also are investing more in the equipment to control these systems.

“Whether a grower builds a multi-span complex or individual houses that have natural ventilation and screen systems, then he is going to have to have the controls to operate them,” Thompson said.

Courtney said growers can realize substantial savings by adding or upgrading their control systems.

“I worked with a grower who had seven individual growing areas and everything was done manually,” Courtney said. “He put in controllers and told me that he saved $7,000 last year because of the controls. They allowed him to operate the equipment when it needed to. He said the controllers not only gave him more time to do other things, but also enabled him to save significantly on his fuel consumption.”

Nearly 63 percent of growers in the GMPro survey said they planned to install thermostats and timers as their major means of equipment control. About 30 percent planned on using some type of computer controls and 7 percent were going to use step controllers.

A major consideration when choosing a control system is choosing one that the grower can understand.

“People want to use the technology that they can afford,” Thompson said. “They don’t want to be overwhelmed or burdened by it. Growers want a control system that is going to provide them with the information that they need and is going to help them be more efficient. At the same time, it isn’t going to create substantial down time or ongoing operational issues if it’s not working right.”

Thompson said certain growers who have strong maintenance staffs are comfortable with the technology that’s available, readily study it and are engaged with it on a daily basis. He said these tend to be the growers who are pursuing the newer technological opportunities with the control companies whether it be to monitor temperature, light, moisture or other parameters.

“We try to help growers model their production cycle so they can justify having the control out there,” he said. “They don’t want to add people because that can create labor issues and they’re trying to reduce their costs. We are encouraging growers to use the same staff of people that they have, properly educate them so their skill level moves up, and to invest in the equipment that allows them to be smarter growers and business people.”

Stuppy said growers are receiving great value now for structures and equipment.

“It’s still value relative to the quality of what growers are getting,” he said. “It’s not where someone is getting high-end greenhouses, greenhouse equipment and systems for low-end prices. Growers need to know they definitely aren’t overpaying right now. Even though some prices are going up, it’s very competitive based on what raw material costs are, which have gone up and will continue to go up.”