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Economic Feasibility of Fresh Cut Flower Production in Tobacco Transplant Greenhouses

Farm Management Update, April1997

By Eric Eberly

Tobacco is the primary income producing crop grown on about 6,600 farms in Virginia. Over the past seven years, many of these farmers have invested in greenhouse structures to produce their tobacco transplants. Today, these greenhouses cost on average $30,000 to build and are used only 3 to 4 months of the year. Tobacco transplant producers have expressed the need to utilize this asset more efficiently.

Fall and winter production of cut flowers has been suggested as an alternative use of these greenhouses. Under the direction of Jon Vest, Extension Agent, Agriculture in Roanoke County, a grant was received from the Virginia Agricultural Council. One of the objectives of this grant was to explore the economic feasibility of producing cut flowers in tobacco transplant greenhouses.

The research project began in the fall of 1996 on the tobacco farm of Connell McEnhimer in Franklin County. The greenhouse is 35 feet wide and 200 feet long. It is typical of many greenhouses used for tobacco transplant production. The decision was made to grow only snapdragons in the first year. The marketing plan was to sell the cut flowers through a flower broker at wholesale prices. Raised growing beds were constructed, utilized for four months, and removed prior to the conversion back to tobacco transplant production in March, 1997.

Economic Analysis

The cost and expected returns of fresh cut flower production were projected and then compared to actual figures. The gross revenue was projected to be $7,650 (18,681 plants provided 1,700 bunches of 10 stem @ $4.50 per bunch). The gross revenue (Table 1) could vary between $5,950 and $9,350 based on the stem length of the snapdragons. Just as harvest began, the plant support mesh system failed causing a complete loss of saleable stems. This disaster could have been prevented with adequate bracing and additional layers of support mesh.

The budgeted cash production expenses (Table 2) to produce the snapdragons was $6,684. A balance of $966 ($7,650 - $6,684) remains to pay for labor, bed construction, and management. The bed construction material costs were estimated to be $3,467. The annual payment of this amount if financed for 5 years at 10% interest would be $711. The projected labor requirements for the enterprise were 470 hours. Clearly, to be profitable, either gross revenue has to be substantially increased, production expenses have to be substantially decreased, or both.

Looking at the actual expenses of producing the snapdragons, several expenses were under- budgeted. Seedling plugs which were budgeted at $800, cost $1,552 and was $752 over the budgeted amount. This initial cost overrun set the tone of cost minimization though all remaining expenditures. The second, and knockout blow for this enterprise, was heating gas. L.P. Gas was budgeted at $800, cost $3,481: $2,681 over the budgeted amount. All other cash production expenditures were in line with the budgeted amounts.

Total labor requirements was budgeted at 470 hours (Table 3). It took less time to construct the beds, but more time to prepare for and plant the plugs as compared to the budget. It took 18 hours of labor to prepare the soilless media for planting and 52 hours to plant the plugs. It took 56 hours (15 minutes twice per day) to monitor the greenhouse and 40 hours (2.5 hours per week) to operate the irrigation and fertilization system. Some of the time could have been used in other activities if available. There was no data collected on harvest labor.

First Year Conclusions

Snap Dragons could be produced from October through February. Very little production problems were encountered; all of which could be controlled with timely applications of fungicides and insecticides. Monitoring of minor nutrients (boron) is needed to prevent premature petal drop. However to be profitable, considerable production costs will need to be trimmed.

The construction of raised beds was thought to be necessary to facilitate their quick removal from the greenhouse. The beds, as constructed, were too heavy to be removed from the greenhouse with the growing media still stored them. The beds also needed to be turned on their side to be removed through the door of the greenhouse. The expense of the beds was probably unnecessary when compared to current production technology.

This project proved that increased investment was needed in the plant support system. However, the increased expense to add two more layers of plant support along with additional bracing far exceeded the loss of potential cut flower sales.

The cost of heating the tobacco transplant greenhouse is a major limiting factor to the profitability of any cut flower enterprise. Starting plants earlier in the greenhouse would serve to reduce fuel costs, but this change would require direct labor allocation conflict with tobacco production. To be profitable, additional flower species that have a higher potential gross value will need to be considered.

Table 1. Projected Gross Revenue

Yield Wholesale Price per Bunch
1500 80% $5,250 $6,000 $6,750 $7,500 $8,250
1700 90% $5,950 $6,800 $7,650 $8,500 $9,350
1800 96% $6,300 $7,200 $8,100 $9,000 $9,900

Table 2. Fresh Cut Flower Expense Analysis

Expense Description Budget Actual Difference
Production Expenses
Buckets $80.00 $78.82 $1.18
Electricity $300.00 $342.16 ($42.16)
Fertilizer $240.00 $207.01 $32.99
Fungicide $100.00 $21.95 $78.05
L.P. Gas $800.00 $3,480.97 ($2,680.97)
Growth Regulator $100.00 $0.00 $100.00
Insecticides $100.00 $14.80 $85.20
Irrigation $920.00 $720.61 $199.39
Preservatives $100.00 $0.00 $100.00
Seedlings $800.00 $1,551.52 ($751.52)
Soilless Media $3,144.00 $3,000.00 $144.00
Sub-Total Production $6,684.00 $9,417.84 ($2,733.84)
Bed Construction
Lumber $1,750.00 $1,600.44 $149.56
Bottom Wire $1,078.00 $689.70 $388.30
Mesh $300.00 $211.45 $88.55
Nails $0.00 $50.99 ($50.99)
Polyfilm $139.00 $131.96 $7.04
Staples $0.00 $36.99 ($36.99)
Equipment Rental $200.00 $170.71 $29.29
Sub-Total Bed $3,467.00 $2,892.24 $574.76
Total Expenses $10,151.00 $12,310.08 ($2,159.08)

Table 3. Fresh Cut Flower Labor Analysis

Activity Budget Actual
Construction of Growing Beds 100 Hours 29 Hours
Soilless Media Prep 0 Hours 18 Hours
Planting 30 Hours 52 Hours
Install Irrigation System 0 Hours 10 Hours
Install Mesh Support 0 Hours 10 Hours
Operation of Irrigation & Fertilization 10 Hours 40 Hours
Monitoring Labor 0 Hours 56 Hours
Pest Control Labor 0 Hours 2 Hours
Harvest Labor 170 Hours 0 Hours
Packing Cut Flowers 50 Hours 0 Hours
Delivery to Market 70 Hours 0 Hours
Clean-up & Storage of Benches 20 Hours 18 Hours
Sanitation of Greenhouse 20 Hours 1 Hour
TOTAL Labor 470 Hours 236 Hours

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