<%BANNER%>

The Economic Feasibility of Growing Bell Peppers, Strawberries, and Cucumbers in a Greenhouse as an Alternative to Field...

Permanent Link: http://ufdc.ufl.edu/UFE0018300/00001

Material Information

Title: The Economic Feasibility of Growing Bell Peppers, Strawberries, and Cucumbers in a Greenhouse as an Alternative to Field Production in Florida
Physical Description: 1 online resource (209 p.)
Language: english
Creator: Webb, James Edward
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 2007

Subjects

Subjects / Keywords: bellpeppers, cucumbers, economic, greenhouse, risk, strawberries
Horticultural Science -- Dissertations, Academic -- UF
Genre: Horticultural Science thesis, M.S.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: In 2005, Florida's fresh market vegetable (includes vegetables, watermelons and berries) industry ranked second in the U.S., with a value of $1.8 billion, grown on more than 190,900 acres (Florida Agricultural Statistical Directory, 2006). The state has a comparative advantage in the fresh market vegetable industry, due to its ability to produce in the winter off-season and its proximity to market. Florida vegetable farmers face competition from around the globe. An alternative for certain high value crops is production in greenhouses. The objective of this study was to analyze the economic viability of bell peppers, strawberries and cucumbers, produced in greenhouses in comparison to field production. Data were collected from government agencies, personal communication with commercial growers, and scientific literature. Greenhouse production of bell peppers, strawberries and cucumbers is an effective way for Florida growers to increase net profit, in a state that is plagued by rapid urbanization and rising land prices, along with increasing water and environmental restrictions. Furthermore, the probability of obtaining a positive annual net profit is significantly greater in greenhouse production versus field production of bell peppers, strawberries and cucumbers. When net profits of greenhouse production are compared to field production for the three commodities analyzed, it was determined that greenhouse-grown colored bell peppers net profit of $15,166/acre for yellow greenhouse bell peppers can have returns up to four and half times greater than field production net profit of $3,289/acre. Net profit for greenhouse-grown organic strawberries $23,316/acre can be up to nine and half times greater than field-grown $2,419/acre and non-organic greenhouse-grown strawberries $3,855/acre can be up to one and half times greater than the net profit of field-grown strawberries. Net profit for greenhouse-grown long-seedless cucumbers $72,775/acre can be up to 1,206 times greater than the net profit of field-grown slicer cucumbers $60/acre. This suggests that even with the significantly higher capital investment required for greenhouse production, the risk of failure is significantly lower than that of field production, excluding natural disasters and lack of technical knowledge of production. Total production costs of greenhouse-grown colored bell peppers $167,019/acre can be up to 20 times greater than that of field production $8,468/acre, organic greenhouse-grown strawberries $158,076/acre are up to six times higher than that of field production $25,602/acre and non-organic greenhouse-grown strawberry total production costs $168,951/acre can be up to six and a half times greater than field production costs. Total cost for greenhouse-grown long-seedless cucumbers $391,922/acre can be up to 70 times greater than that of field-grown slicer cucumber costs $5,620/acre. Although the initial costs are high for a greenhouse structure, the probability of decreased chemical use, higher yields and a price premium for greenhouse products the highest costs would be off-set, with higher yields and profits. It was concluded that greenhouse production of bell peppers, strawberries and cucumbers is an alternative for Florida's field producers of vegetables.
General Note: In the series University of Florida Digital Collections.
General Note: Includes vita.
Bibliography: Includes bibliographical references.
Source of Description: Description based on online resource; title from PDF title page.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Statement of Responsibility: by James Edward Webb.
Thesis: Thesis (M.S.)--University of Florida, 2007.
Local: Adviser: Cantliffe, Daniel J.
Electronic Access: RESTRICTED TO UF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE UNTIL 2017-08-31

Record Information

Source Institution: UFRGP
Rights Management: Applicable rights reserved.
Classification: lcc - LD1780 2007
System ID: UFE0018300:00001

Permanent Link: http://ufdc.ufl.edu/UFE0018300/00001

Material Information

Title: The Economic Feasibility of Growing Bell Peppers, Strawberries, and Cucumbers in a Greenhouse as an Alternative to Field Production in Florida
Physical Description: 1 online resource (209 p.)
Language: english
Creator: Webb, James Edward
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 2007

Subjects

Subjects / Keywords: bellpeppers, cucumbers, economic, greenhouse, risk, strawberries
Horticultural Science -- Dissertations, Academic -- UF
Genre: Horticultural Science thesis, M.S.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: In 2005, Florida's fresh market vegetable (includes vegetables, watermelons and berries) industry ranked second in the U.S., with a value of $1.8 billion, grown on more than 190,900 acres (Florida Agricultural Statistical Directory, 2006). The state has a comparative advantage in the fresh market vegetable industry, due to its ability to produce in the winter off-season and its proximity to market. Florida vegetable farmers face competition from around the globe. An alternative for certain high value crops is production in greenhouses. The objective of this study was to analyze the economic viability of bell peppers, strawberries and cucumbers, produced in greenhouses in comparison to field production. Data were collected from government agencies, personal communication with commercial growers, and scientific literature. Greenhouse production of bell peppers, strawberries and cucumbers is an effective way for Florida growers to increase net profit, in a state that is plagued by rapid urbanization and rising land prices, along with increasing water and environmental restrictions. Furthermore, the probability of obtaining a positive annual net profit is significantly greater in greenhouse production versus field production of bell peppers, strawberries and cucumbers. When net profits of greenhouse production are compared to field production for the three commodities analyzed, it was determined that greenhouse-grown colored bell peppers net profit of $15,166/acre for yellow greenhouse bell peppers can have returns up to four and half times greater than field production net profit of $3,289/acre. Net profit for greenhouse-grown organic strawberries $23,316/acre can be up to nine and half times greater than field-grown $2,419/acre and non-organic greenhouse-grown strawberries $3,855/acre can be up to one and half times greater than the net profit of field-grown strawberries. Net profit for greenhouse-grown long-seedless cucumbers $72,775/acre can be up to 1,206 times greater than the net profit of field-grown slicer cucumbers $60/acre. This suggests that even with the significantly higher capital investment required for greenhouse production, the risk of failure is significantly lower than that of field production, excluding natural disasters and lack of technical knowledge of production. Total production costs of greenhouse-grown colored bell peppers $167,019/acre can be up to 20 times greater than that of field production $8,468/acre, organic greenhouse-grown strawberries $158,076/acre are up to six times higher than that of field production $25,602/acre and non-organic greenhouse-grown strawberry total production costs $168,951/acre can be up to six and a half times greater than field production costs. Total cost for greenhouse-grown long-seedless cucumbers $391,922/acre can be up to 70 times greater than that of field-grown slicer cucumber costs $5,620/acre. Although the initial costs are high for a greenhouse structure, the probability of decreased chemical use, higher yields and a price premium for greenhouse products the highest costs would be off-set, with higher yields and profits. It was concluded that greenhouse production of bell peppers, strawberries and cucumbers is an alternative for Florida's field producers of vegetables.
General Note: In the series University of Florida Digital Collections.
General Note: Includes vita.
Bibliography: Includes bibliographical references.
Source of Description: Description based on online resource; title from PDF title page.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Statement of Responsibility: by James Edward Webb.
Thesis: Thesis (M.S.)--University of Florida, 2007.
Local: Adviser: Cantliffe, Daniel J.
Electronic Access: RESTRICTED TO UF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE UNTIL 2017-08-31

Record Information

Source Institution: UFRGP
Rights Management: Applicable rights reserved.
Classification: lcc - LD1780 2007
System ID: UFE0018300:00001


This item has the following downloads:


Full Text

PAGE 1

1 THE ECONOMIC FEASIBILITY OF GREENHOUSE-GROWN BELL PEPPER, STRAWBERRY AND CUCUMBER AS AN A LTERNATIVE TO FIELD PRODUCTION IN FLORIDA By JAMES EDWARD WEBB A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLOR IDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE UNIVERSITY OF FLORIDA 2007

PAGE 2

2 2007 James Edward Webb

PAGE 3

3 ACKNOWLEDGMENTS I would like to thank my wife, parents and all of my professors who supported and aided me in the completion of my research and th e pursuit of my m aster of science degree.

PAGE 4

4 TABLE OF CONTENTS page ACKNOWLEDGMENTS...............................................................................................................3 LIST OF TABLES................................................................................................................. ..........7 LIST OF FIGURES................................................................................................................ .......11 ABSTRACT....................................................................................................................... ............12 CHAPTER 1 INTRODUCTION..................................................................................................................14 Problem Statement.............................................................................................................. ....14 Objectives..................................................................................................................... ..........15 Testable Hypotheses............................................................................................................ ...15 Research Scope................................................................................................................. ......15 2 LITERATURE REVIEW.......................................................................................................17 Overview of Greenhouse Vegetable Production Industry......................................................17 United States.................................................................................................................. ..17 Mexico......................................................................................................................... ....19 Canada......................................................................................................................... ....21 The Netherlands...............................................................................................................23 Spain.......................................................................................................................... ......24 Italy.......................................................................................................................... ........27 Japan.......................................................................................................................... ......27 China.......................................................................................................................... ......28 Production of Greenhouse-Grown Be ll Peppers, Strawberries and Cucumbers in Florida....30 Bell Pepper.................................................................................................................... ..30 Strawberry..................................................................................................................... ..32 Cucumber....................................................................................................................... .33 Budget Simulation Modeling..................................................................................................36 Feasibility of Production...................................................................................................... ...37 Summary........................................................................................................................ .........37 3 THE ECONOMIC FEASIBILITY OF GREENHOUSE-GROWN BELL PEPPERS AS AN ALTERNATIVE TO FIELD PRODUCTI ON IN NORTH-CENTRAL FLORIDA......39 Field Production of Bell Peppers in Florida...........................................................................40 Probabilities and Risk for Greenhouse Co lored Type Bell Pepper Production Using SIMETAR in North Central Florida................................................................................42 Methods........................................................................................................................ ..........43

PAGE 5

5 The Use of Stochastic Variables in a Simulation Model to Estimate Key Output Variables (KOV)..........................................................................................................43 Greenhouse Structure Used in the Producti on of Color Type Bell Peppers in North Central Florida.............................................................................................................45 Crop Systems Used in the Production of Colored Type Bell Peppers............................46 Wholesale Bell Peppe r Fruit Prices.................................................................................46 Enterprise Budget Analysis of Greenhouse-Grown Colored Type Bell Peppers............48 Estimated Costs of Production for Growi ng Greenhouse Colored Type Bell Peppers...49 Sensitivity Analysis for the Production of Greenhouse-Grown Colored Type Bell Peppers........................................................................................................................ .51 Break-Even Analysis for the Production of Greenhouse-Grown Colored Type Bell Peppers........................................................................................................................ .51 Heat Loss Calculations for a 1.0 Acre Greenhouse Bell Pepper Production in North Central Florida.............................................................................................................51 Field Budget Analysis for Bell Peppers in Florida..........................................................54 Probabilities and Risk in Fi eld Production Using SIMETAR......................................55 Results........................................................................................................................ .............56 Scenario Analysis Used to Analysis Red, Yellow and Ora nge Greenhouse-Grown Bell Pepper Production System in North Central Florida............................................56 Probabilities and Risk Results fo r Greenhouse Colored Type Bell Pepper Production Using SIMETAR in North Central Florida............................................57 Analysis of Florida Field Budget Simulation..................................................................59 Probabilities and Risk in Fi eld Production Using SIMETAR......................................59 Discussion..................................................................................................................... ..........60 Summary........................................................................................................................ .........63 4 THE ECONOMIC FEASIBILITY OF GROWING ORGANIC AND CONVENTIONAL GREENHOUSE STRAWB ERRIES AS AN ALTERNATIVE TO FIELD PRODUCTION IN FLORIDA...................................................................................96 California and International Pressure on Florida Strawberry Production..............................97 The Production of Organic Strawberries as an Alternative to Conventional Production.......98 Methods........................................................................................................................ ..........99 The Use of Stochastic Variables in a Simulation Model to Estimate Key Output Variables (KOV)........................................................................................................100 Greenhouse Structure and Crop Systems Used in Growing Strawberries in North Central Florida...........................................................................................................100 Wholesale Strawberry Fruit Prices................................................................................101 Enterprise Budget Analysis of Greenhouse-Grown Strawberries.................................102 Estimated Costs of Strawberry Produc tion for a 1.0 Acre Greenhouse in North Central Florida...........................................................................................................103 Sensitivity Analysis for the Production of Organic and Non-organic Strawberries.....105 Break-Even Analysis for the Production of Organic and Non-organic GreenhouseGrown Strawberries...................................................................................................106 Heat Loss Calculations for a 1.0 Acre Gr eenhouse Strawberry Operation in North Central Florida...........................................................................................................106 Budget Analysis for Florida Fi eld Production of Strawberries.....................................107

PAGE 6

6 Scenario Analysis Used to Analyze Organic and Non-orga nic Greenhouse-Grown Strawberry Production System in North Central Florida...........................................108 Results........................................................................................................................ ...........109 Results from Scenario Analysis Used to Analyze Organic and Non-organic Greenhouse-Grown Strawberry Production System in North Central Florida..........109 Probabilities and Risk for the Production of Greenhouse-Grown Strawberries Using SIMETAR...............................................................................................................109 Field Strawberry Budget Simulation Analysis..............................................................111 Probabilities and Risk in St rawberry Field Production.................................................112 Discussion..................................................................................................................... ........112 Summary........................................................................................................................ .......115 5 THE ECONOMIC FEASIBILITY OF GREENHOUSE-GROWN CUCUMBERS AS AN ALTERNATIVE TO FIELD PRODUCTI ON IN NORTH-CENTRAL FLORIDA....154 Field Production of Cucumbers in Florida...........................................................................155 Methods........................................................................................................................ ........156 The Use of Stochastic Variables in a Simulation Model to Estimate Key Output Variables (KOV)........................................................................................................156 Greenhouse Structure Used in the Produc tion of Greenhouse-Grown Cucumbers in North Central Florida.................................................................................................158 Wholesale Greenhouse Cucu mber Fruit Prices.............................................................158 Enterprise Budget Analysis of Greenhouse-Grown Cucumbers...................................159 Estimated Costs of Production fo r Growing Greenhouse Cucumbers..........................160 Sensitivity Analysis for the Producti on of Greenhouse-Grown Cucumbers.................162 Break-Even Analysis for the Producti on of Greenhouse-Grown Cucumbers...............162 Heat Loss Calculations for a 1.0 Acre Greenhouse Cucumber Operation in North Central Florida...........................................................................................................162 Field Budget Analysis for Cucumbers in Florida..........................................................164 Results........................................................................................................................ ...........164 Simulation Analysis Used to Analyze a Greenhouse-Grown Cucumber Production System in North Central Florida................................................................................164 Probabilities and Risk for Greenhouse Cu cumber Production Using SIMETAR in North Central Florida.................................................................................................165 Analysis of Florida Field Budget Simulation................................................................168 Probabilities and Risk in Fi eld Production Using SIMETAR....................................168 Discussion..................................................................................................................... ........169 Summary........................................................................................................................ .......171 6 CONCLUSION.....................................................................................................................198 APPENDIX: ASSUMPTIONS....................................................................................................202 LIST OF REFERENCES.............................................................................................................204 BIOGRAPHICAL SKETCH.......................................................................................................209

PAGE 7

7 LIST OF TABLES Table page 3-1 Monthly average dollar per pound wholesal e price of colored bell peppers from select countries 1998-2005................................................................................................65 3-2 Value of U.S. imports, from vari ous countries, of bell pepper, 2000-2004.......................66 3-3 Wholesale greenhouse price comparison or red, yellow and orange bell peppers averaged from New York, Atlanta a nd Miami terminal markets 1998-2005....................67 3-4 Yield comparison of various color gree nhouse-grown bell pepper types used in the GRKS distribution function...............................................................................................68 3-5 Monthly marketable fruit yield, average wholesale market prices and gross revenues in a typical fall to spring greenhouse-grown red bell pepper crop in Florida with a total estimated yield of 1.96 lbs/ft2....................................................................................69 3-6 Monthly marketable fruit yield, average wholesale market prices and gross revenues in a typical fall to spring greenhouse-grown yellow bell pepper crop in Florida with a total estimated yield of 1.89lbs/ft2.....................................................................................70 3-7 Monthly marketable fruit yield, average wholesale market prices and gross revenues in a typical fall to spring greenhouse-grown orange bell pepper crop in Florida with a total estimated yield of 1.66 lbs/ft2....................................................................................71 3-8 Estimated fixed cost of production for a 1.0 acre greenhouse growing bell peppers in North Central Florida.........................................................................................................72 3-9 Estimated variable cost of production for 1.0 acre of greenhouse-grown bell peppers in North Central Florida.....................................................................................................75 3-10 Comparison of select simulated variab les of a 1.0 acre colored greenhouse-grown bell peppers operation........................................................................................................77 3-11 Sensitivity analysis for a 1.0 acre greenhouse-grown bell pepper operation in North Central Florida................................................................................................................ ...78 3-12 Estimated break-even prices for a range of marketable bell pepper fruit yields of 1 3.5 lbs/ft2............................................................................................................................79 3-13 Surface area of a 1.0 acre gr eenhouse of a saw-tooth design............................................80 3-14 Heat loss calculations require d for a 1.0 acre saw-tooth greenhouse................................81 3-15 Cost to obtain required BTU for 1 acre greenhouse in North Central Florida based on historical temperature data.................................................................................................82

PAGE 8

8 3-16 Probability of obtaining select prices for greenhouse grown red, yellow and orange bell peppers................................................................................................................... .....84 3-17 Probability of obtaining select yields for greenhouse grown red, yellow and orange bell peppers................................................................................................................... .....85 3-18 Probability of obtaining select net profits for 1.0 acre greenhouse operation growing: red, yellow and orange bell peppers..................................................................................86 3-19 Estimated costs of producing one acre of field bell peppers for fresh market, in Florida........................................................................................................................ ........87 3-20 Simulated 1.0 acre field pepper retu rn to land and owner in Florida................................89 3-21 Probability of obtaining select net profit for one acre of field bell pepper production in Florida.................................................................................................................... .......90 4-1 Values used to construct an em pirical distribution function for price.............................117 4-2 Values used to construct a GR KS distribution function for yield...................................118 4-3 Monthly marketable fruit yield, averag e wholesale market price and gross revenues in a typical fall to spring greenhouse non-orga nic strawberry crop in Florida with a total estimated yield of 2.25 lb./ft2...................................................................................119 4-4 Monthly marketable fruit yield, averag e wholesale market price and gross revenues in a typical fall to spring greenhouse organic strawberry crop in Fl orida with a total estimated yield of 1.58 lb./ft2...........................................................................................120 4-5 Annual non-organic strawberry wholesal e prices from 1998-2005 for select states and countries.................................................................................................................. ..121 4-6 Monthly non-organic strawberry wholes ale prices from 1998-2005 for select states and countries.................................................................................................................. ..122 4-7 Annual organic wholesale market values for select states and countries, 1998-2005.....123 4-8 Monthly organic wholesale market valu es for select states and countries, 1998-2005...124 4-9 Estimated variable cost of productio n for 1.0 acres of greenhouse-grown organic strawberries in Nort h Central Florida..............................................................................125 4-10 Estimated variable cost of production for 1.0 acres of greenh ouse-grown non-organic strawberries in Nort h Central Florida..............................................................................128 4-11 Estimated fixed cost of production fo r a 1.0 acre greenhouse grow ing strawberries in North Central Florida.......................................................................................................131

PAGE 9

9 4-12 Simulation results from a 1.0 acre gree nhouse strawberry operation in North Central Florida........................................................................................................................ ......135 4-13 Sensitivity analysis for a 1.0 acre organi c greenhouse strawberry operation in North Central Florida................................................................................................................ .136 4-14 Sensitivity analysis for a 1.0 acre nonorganic greenhouse strawberry operation in North Central Florida.......................................................................................................137 4-15 Estimated break-even prices for a range of marketable strawberry fruit yields 1.0-3.0 lb./ft2............................................................................................................................... ..138 4-16 Surface area of a 1.0 acre gr eenhouse of a saw-tooth design..........................................139 4-17 Heat loss calculations require d for a 1.0 acre saw-tooth greenhouse..............................140 4-18 Cost to obtain required BTU for 1.0 acre greenhouse in North Central Florida based on historical temperature data..........................................................................................141 4-19 Probability of obtaining select prices for organic and non-organic strawberries............143 4-20 Probability of obtaining select yields for organic and non-organic strawberries............144 4-21 Probability of obtaining select net profits for 1.0 acre greenhouse operation growing: organic and non-organic strawberries..............................................................................145 4-22 Estimated costs of producing one acre of field strawberries for fresh market, in Florida........................................................................................................................ ......146 4-23 Simulated net profit for 1.0 acre of field strawberries harveste d on land in different regions of Central Florida................................................................................................148 4-24 Probability of obtaining select net profit from field production of strawberries on 1.0 acre of land in three regions in Central Florida...............................................................149 5-1 Monthly average dollar per pound gr eenhouse-grown cucumber wholesale price; 1998-2005...................................................................................................................... ..173 5-2 Value of U.S. imports, from various countries, of fresh cucumbers; 2000-2004............174 5-3 Wholesale price for greenhouse-grown cucumbers from New York, Atlanta and Miami terminal markets; 1998-2005...............................................................................175 5-4 Annual yield of greenhouse-grown cucu mbers used in the GRKS distribution function....................................................................................................................... .....176 5-5 Monthly marketable fruit yield, average wholesale market prices and gross revenues in a typical greenhouse-grown cucumber ope ration in Florida w ith total estimated yield of 9.98 lbs/ft2..........................................................................................................177

PAGE 10

10 5-6 Estimated annual fixed cost of production for a 1.0 acre greenhouse growing cucumbers, in North Central Florida...............................................................................178 5-7 Estimated annual variable cost to produce 3 cucumber crops in a 1.0 acre greenhouse in North Central Florida................................................................................181 5-8 Comparison of select simulated variab les of a 1.0 acre greenhouse-grown cucumber operation, in North Central Florida..................................................................................184 5-9 Sensitivity analysis for a 1.0 acre gr eenhouse-grown cucumber operation in North Central Florida................................................................................................................ .185 5-10 Estimated break-even prices for a range of marketable cucumber fruit yields of 1-22 lb./ft2............................................................................................................................... ..186 5-11 Surface area of a 1.0 acre gr eenhouse of a saw-tooth design..........................................187 5-12 Heat loss calculations require d for a 1.0 acre saw-tooth greenhouse..............................188 5-13 Cost to obtain required BTU for 1.0 acre greenhouse in North Central Florida based on historical temperature data..........................................................................................189 5-14 Probability of obtaining select annual prices, yield, ne t profit and net present value for a 1.0 acre greenhouse-grown cucumber operation in North Central Florida............191 5-15 Probability of obtaining select seasonal prices an d yield for a 1.0 acre greenhousegrown cucumber operation in North Central Florida.......................................................192 5-16 Estimated costs of producing one acre of field cucumbers for fresh market, in Florida.193 5-17 Simulated Florida field-grown cucumber return to land and owner for one acre............195 5-18 Probability of obtaining select net profit for a one acre of field cucumber production in Florida..................................................................................................................... .....196 A-1 Average wholesale colored greenhou se vs. field pepper prices; 1998-2005...................202 A-2 Average Florida land cash rent........................................................................................203

PAGE 11

11 LIST OF FIGURES Figure page 3-1 Greenhouse vs. field grown red bell pepper average wholesale terminal market prices; 1998-2005.............................................................................................................. .91 3-2 Greenhouse vs. field grown yellow bell pepper average wholesale terminal market prices; 1998-2005.............................................................................................................. .92 3-3 Greenhouse vs. field grown orange bell pepper average wholesale terminal market prices; 1998-2005.............................................................................................................. .93 3-4 Comparison of average wholesale term inal market field-grown bell pepper prices; 1998-2005...................................................................................................................... ....94 3-5 Surface area of a 1.0 acre saw-tooth greenhouse...............................................................95 4-1 Shares of world fresh strawberry production by country, 2005/2006 growing season...150 4-2 Volume of U.S. imports of st rawberries from top countries, 1994-2004........................151 4-3 Monthly U.S. fresh strawberry imports, 2003.................................................................152 4-4 Organic vs. non-organi c monthly average wholesale strawberry prices, 1998-2005......153 5-6 Comparison of monthl y wholesale price between fiel d and greenhouse production of cucumbers; 1998-2005.....................................................................................................197

PAGE 12

12 Abstract of Thesis Presen ted to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Master of Science THE ECONOMIC FEASIBILITY OF GROWING BELL PEPPERS, STRAWBERRIES AND CUCUMBERS IN A GREENHOUSE AS AN A LTERNATIVE TO FIELD PRODUCTION IN FLORIDA By James Edward Webb August 2007 Chair: Dr. Daniel J. Cantliffe Major: Horticultural Sciences In 2005, Floridas fresh market vegetable indus try (includes vegetables, watermelons and berries) ranked second in the U.S., with a value of $1.8 bill ion, grown on more than 190,900 acres (Florida Agricultural Sta tistical Directory, 2006). The stat e has a comparative advantage in the fresh market vegetable industry, due to its abili ty to produce in the winter off-season and its proximity to markets. Florida vegetable farm ers face competition from around the globe. An alternative for certain high-value cr ops is production in greenhouses. The objective of my study was to analyze the economic viability of bell peppers, strawberries and cucumbers produced in gr eenhouses compared to those grown using conventional field production. Da ta were collected from government agencies, personal communication with commercial growers, and scientific literature. My study found that greenhouse production of bell peppers, strawberries and cucumbers is an effective way for Florida growers to increase ne t profit, in a state that is plagued by rapid urbanization and rising land prices, along with in creasing water and environmental restrictions. Furthermore, the probability of obtaining a positiv e annual net profit is si gnificantly greater in greenhouse production versus field production of these crops. Wh en net profits of greenhouse

PAGE 13

13 production are compared to field production for the three commodities analyzed, it was determined that greenhouse production yellow be ll peppers [net profit of $15,166/acre] can have returns up to four and half times greater than that of field production [n et profit of $3,289/acre]. Net profit for greenhouse-grown organic strawbe rries [$23,316/acre] can be up to nine and one half times greater than field-grown [ $2,419/acre] and non-organic greenhouse-grown strawberries [$3,855/acre] can be up to one and ha lf times greater than the net profit of fieldgrown strawberries. Net profit for greenhous e-grown long-seedless cucumbers [$72,775/acre] can be up to 1,206 times greater than the net profit of field-grown slicer cucumbers [$60/acre]. This suggests that even with the significantl y higher capital investment required for greenhouse production, the risk of failure is significantly lower than that of field production, excluding natural disasters and lack of technical knowledge of productio n. Total production costs of greenhouse-grown colored bell peppers [$167,019/acre] can be up to 20 times greater than that of field production [$8,468/acre] organic greenhouse-grown st rawberries [$158,076/acre] are up to six times higher than that of field production [$25,602/acre] and non-organic greenhousegrown strawberry total production costs [$168,951/acre] can be up to six and a half times greater than field production costs. Total cost fo r greenhouse-grown long-seedless cucumbers [$391,922/acre] can be up to 70 times greater than that of fieldgrown slicer cucumber costs [$5,620/acre]. Although the initial costs are hi gh for a greenhouse structure, the probability of decreased chemical use, higher yields and a price premiu m for greenhouse production may be off-set, with higher yields and profits. I concluded that gr eenhouse production of colored bell peppers, strawberries and cucumbers is a viable alterna tive for Floridas field producers of vegetables.

PAGE 14

14 CHAPTER 1 INTRODUCTION Imports of fresh bell peppers, tomatoes and cu cumbers have increased over the last decade. Since the enactment of the North American Fr ee Trade Act (NAFTA), the supply of vegetable imports from Canada and Mexico has increased, re sulting in decreased ma rket share for Florida growers. From 1995-2005, imports of cucumber s have increased by 66%, bell peppers by 78% and tomatoes by 66%. Countries such as Mexico, Canada, Israel, Spain and the Netherlands, are responsible for the increase in imports, many of which produce solely in greenhouses (U.S. Department of Agriculture, 2005). Productivity in European greenhouses is three to ten times that of Florida field production (Cantliffe et al., 2003). In ad dition to increased production per unit area, product quality is greater than field production. Due to increased consumer demand for high quality produce, countries which produce in greenhouses have been able to enter U.S. markets at relatively high prices. Historically, U.S. winter fresh-market vegetable supplies have been filled predominantly by Florida and Mexico, which have been in dire ct competition with each other for many decades, due to overlapping growing seasons. Problem Statement Any technology that could be used to increase quality, yield and profita bility of increased net profit would be welcomed by Florida growers. Florida vegetable growers are continually looking for new methods of stayi ng competitive in the U.S. and global fresh vegetable market. My study will identify whether or not the production of bell peppers strawberries and cucumbers can be produced economically in a greenhouse sett ing. Ultimately this study will also determine whether Florida growers can adopt this new technology while increasing net profit.

PAGE 15

15 Objectives The general objective of my study was to develop a tool to he lp identify potential color bell pepper, strawberry and cucumb er net profit advantages as a result of the adoption of new greenhouse technologies, and discusse d their risk of profitability. Th e specific objectives were: To construct an enterprise budget for gree nhouse-grown bell peppers, strawberries and cucumbers To determine which color bell pepper has the hi ghest profitability for Florida growers, in addition to determining the risk i nvolved for each colors net profit; To compare and determine whether organi c or conventional greenhouse strawberry production is more profitable To compare the profitability of greenhouse production with the profitability of field production of bell peppers, strawberries and cucumbers in Florida Testable Hypotheses Greenhouse production of bell peppers, strawbe rries and cucumbers are well documented in the literature. While the production of thes e commodities is well documented, the profitability and risk are not as clear. An assumption was ma de in this study that greenhouse production of bell peppers, strawberries and cucumbers results in increase d quality, yield and net profit compared to field production. Therefore, th e hypotheses studied we re the following: H1: Simulation software can be used to analy ze the profitability and risk of returns to management H2: The adoption of greenhouse technology will increase quality, yield and net profit compared to field production Research Scope Simulation software packages, such as SIMETAR, are commonly used to analyze complex systems with stochastic model. SIMETAR was used in this study to build a budget analysis model for greenhouse-grown bell peppers, strawberries and cucumbers. Results from

PAGE 16

16 previous greenhouse-grown vegetable and fruit pr oduction studies, which are highlighted in the following chapter, were used in this budget analysis model, to an alyze the profitability and risk involved in the production of greenhouse-grown bell peppers, st rawberries and cucumbers.

PAGE 17

17 CHAPTER 2 LITERATURE REVIEW While there is a vast body of research re lated to the production of greenhouse-grown vegetables, less research has been done speci fically on the economic feasibility of growing vegetables in a greenhouse. My review will concentrate on previous studies in four different areas. The first category gives an overview of the worlds gr eenhouse vegetable industry. The second category reviews literat ure related to production of greenhouse-grown bell peppers, strawberries and cucumbers. The third category lists previous studies which used simulation modeling to assess risk through th e use of stochastic variables. The last category examines studies which use budget analysis to determin e feasibility of production of greenhouse-grown vegetables. These studies were used as a basis for this studys simulation model. Overview of Greenhouse Vegetable Production Industry United States U.S. greenhouse vegetable production utilizes high-technology greenhouses. The U.S. ranks third in greenhouse producti on area in North America, be hind Mexico and Canada. In 2002, it was estimated that the U.S. produced 1,478 acr es of vegetables unde r protected culture. California [378 acres], Arizona [189 acres], Texa s [143 acres], Colorado [96 acres] and Florida [76 acres] are the leading producers of greenhouse ve getables in the U.S. (U.S. Department of Agriculture, 2003). High start up and maintenance costs and th e low prices of field-grown vegetables have created a difficult and compe titive market for greenhouse growers. The U.S. vegetable industry has remained profitable due to its ability to produce year round. U.S. growers are in continuous competition with Mexico in the winter and Canada in the summer. In 1998, the U.S. greenhouse cucumber production area was estimated to be 69 acres [total value of sales equal to $1 2,226,000], approximately 8% of th e total greenhouse vegetable

PAGE 18

18 production area [916 acres, total value of sale s equal to $222,624,000]. The leading greenhouse cucumber state in the U.S. was California [ 35 acres, total value of sales equal to $5,382,000] with Florida [22 acres, total value of sales equal to $5,517,000] in second place (U.S. Department of Agriculture, 2003). U.S. greenhouse pepper production area was estimate d to be 35 acres [total sales valued at $5,277,000], approximately 4% of the total green house vegetable production area. Leading states for greenhouse pepper production were Flor ida [24 acres, total sa les valued at $3,816,000] and California [5 acres, total sales valued at $662,000] (U.S. Department of Agriculture, 2003). In addition, U.S. greenhouse tomato production area was estimated to be 397 acres [total sales valued at $117,856,000], approximately 43.4% of the total greenhouse vegetable production area. Leading states for greenhouse to mato production are Colo rado [93 acres, total sales valued at $34,220,000] and California [67 acres, total sa les valued at $20,244,000] (U.S. Department of Agriculture, 2003). From 1996-2004, greenhouse production area in Fl orida has increased from 60 acres to 74 acres (Tyson et al., 2004). Florida greenhouse production area ha s fluctuated over the last decade, due to natural disasters and crop abandon ment. Over the last decade, the leading greenhouse crop has shifted from tomatoes to a greater interest in colored be ll peppers and herbs. This is probably due to the rise in Mexican tomato imports in th e mid-90s and the stabilization of that market by the end of the decade (Tyson et al., 2004). In 2000, greenhouse production of bell peppers [38 acres], tomatoes [18 acres], cucumb ers [12 acres] and lettuce [7 acres] were the principal crops produced in Flor ida, using both passively ventil ated and fan and pad cooling systems with predominately double-poly coveri ngs. Major greenhouse vegetable producing counties in Florida include: St Lucie [38 acres], Collier [14 acres], Dade [13 acres], Suwannee [5

PAGE 19

19 acres], Okeechobee [5 acres], Broward [4 acres], Hillsborough [3 acres] and Brevard [2 acres] (University of Florida, 2005). Florida greenhouse vegetable grow ers have several advantages over foreign competition such as: proximity to market, production knowledge, climate and ability to enter market when prices are high. Florida greenhouse grow ers also have several disadvantages such as: urban pressure, scarc ity of cheap labor, water and environmental restrictions. Mexico Mexico has been a strong competitor with U. S. vegetable growers since the introduction of the North American Free Trade Agreement (NAF TA), in 1994. NAFTA gave Mexican growers easier access to U.S. markets with lower import ta riffs. This gave way to the appearance of the first modern greenhouses in Mexico during the 1 990s. The states of Sinaloa, Jalisco, Yucatan and Queretaro were among the first to invest in commercial greenhouse st ructures. Since then, the growth of the Mexican greenhouse production area has increased substantially. In 1991, there was an estimated 124 acres of greenhouse vegetables in pr oduction, production area rose to an estimated 1,483 acres in 1999, in 2001 an estimated 2,348 acres, 3,756 acres in 2002 and in 2004 greenhouse production area was estimated to be 5,436 acres (Steta, 2004). In 2001, vegetable exports of greenhouse tomato es, peppers, cucumbers, melons and others were valued at $225 million (Steta, 2004). Of the 3,756 acres of greenhouse vegetables in production in 2002, it was estimated that 1,952 acres was greenhouse tomato production area, 292 acres was greenhouse cucumber producti on, and 519 acres was greenhouse bell pepper production. While it is believed th at the rapid growth of vegeta ble greenhouse production area in Canada and the U.S. is stabilizing, growth is st ill occurring in Mexico (Ministry of Agriculture, Food and Fisheries Industry Competitiveness Branch, 2003).

PAGE 20

20 Mexico is the largest producer and per cap ita consumer of fresh tomatoes in North America (Cook et al., 2006). Mexico is also th e second largest greenhouse tomato exporter to the U.S. and the largest tomato producer in North America (Steta, 2004). In 2003, it was estimated that Mexican greenhouse tomato production area was 2,348 acres, producing 148,300 metric tons. From this production, 125,970 metric tons of greenhouse tomatoes were exported to the U.S.[ 7% of total U.S. tomato import fr om Mexico] (Calvin et al., 2005). The Mexican greenhouse tomato industry overtook the U.S. industry in area plan ted in 1995 and surpassed the Canadian industry in 1999, reaching about 2,348 acres in operation in 2003. Since the end of the 1990s, a combination of rapid growth in Mexi can planted area and improving technology has combined to erode the gap in total production vo lume relative to that of the U.S. greenhouse tomato industry. However, Mexicos greenhouse to mato industry is still comprised mainly of low-yielding cherry tomato on the vine [TOV ]. In 2003, Mexicos average greenhouse tomato yield was estimated at 63 metric tons per acre, compared to the U.S. and Canada which have an average yield of 202 metric tons per acre (Cook et al., 2006). In 2005, 52% of Mexicos protected culture area was comprised of plastic greenhouses, 44% were shade houses, 2% glass greenhouses and 1% was classified as other (Calvin et al., 2005). The glass used in many European and Canadian greenhouses is not needed due to warmer climate of Mexico. Many of the greenhouses that are used in Mexico are imported from Israel, Canada, the Netherlands, Spain, France and the U.S. (Cantliffe et al., 2003). In Mexico, hydroponic production systems are predominately used in glass houses and a few plastic greenhouses have additionally begun to use th e soilless production system. Some of the advantages that Mexican growers have over Eur opean growers for entering U.S. markets are due to their proximity to the U.S., which decrease s transportation costs, their abundance of cheap

PAGE 21

21 labor and warm climate. However, the Mexican greenhouse industry is not without its problems, such as: the lack of government support, lag of food safety standards behind the international standards and lack of knowledge of greenhouse production (Steta, 2004). Canada The Canadian greenhouse vegetable industry is a large threat to U.S. growers and plays a major role in the agriculture sector in Ca nada. In 2000, the production of the Canadian greenhouse vegetable industry, consisting of a pproximately 85 commercial greenhouse vegetable operations, was valued at $505 million, with an es timated $290 million being shipped to the U.S. (U.S. Department of Agriculture, 2005). Ther e has been tremendous growth in the Canadian greenhouse production area over the last decade. From 1993-2003, the area of greenhouses producing vegetables has increased by 339% [ 1993 Canadian vegetable producing greenhouses equaled 158 acres, 2003 equaled 536 acres]. Even though Canada is a large country, greenhouse production is very concentrated. The major ity of greenhouse vegetable production takes place in Ontario, British Columbia, Quebec and Albert a. Ontario and British Columbia account for 90% [Ontario produces 66% and BC produces 24 %] of Canadian production (Ministry of Agriculture, Food and Fisheries Industry Competitiveness Branch, 2003). The Canadian greenhouse vegetable industry in the lower mainland, predominately uses a modern, Dutch, Venlo style glass greenhouse, wh ich is well suited for the regions moderate climate and lower light levels. In the interior northern and island re gions, a ridge and gutter poly greenhouse is predominately used, because they provide a higher insulative advantage for the colder regions and are more cost effective for the smaller growers in these areas. Larger greenhouses in these regions utilize very high technology and have sophisticated computerized climate control systems that continuously m onitor and regulate temperature, light, humidity, irrigation and nutrient levels. Canadian gree nhouse vegetable growers commonly use hot water

PAGE 22

22 boiler systems, which are predominantly fueled by natural gas, to heat the greenhouse. Most crops are grown hydroponically in soilless media w ith drip fertigation systems (Ministry of Agriculture, Food and Fisheries Industry Competitiveness Branch, 2003). The greenhouse vegetable industry in Canada predominately produces tomatoes (beefsteak, tomato on the vine (TOV) and cluster), cucumb ers (long English cucumbers), bell peppers (red, yellow and orange) and lettuce (butter lettuce). Canadian growers, w ith use of their high technology greenhouses, have achieved globally comp etitive annual yields per square foot of: tomatoes 14.95 lbs. /ft2, cucumbers 15 lbs/ft2, bell peppers 5.53 lbs. /ft2, lettuce 19 heads/ft2. In 2002, the productions of these five greenhouse co mmodities were valued at $240.4 million U.S. dollars (Ministry of Agriculture, Food and Fi sheries Industry Competitiveness Branch, 2003). In 2002, Canadian greenhouse tomato productio n had a production area of 1,191 acres and were harvested from March to November/Dece mber and accounted for 58% [24% beefsteak valued at $56.7 million, 34% tomato on the vine (TOV) valued at $84.4 million] of total sales volume of greenhouse vegetable production. Greenhouse bell peppers had an estimated production area of 430 acres and were harvested from March to November and accounted for 31% [valued at $74.7 million] of total sales vo lume, cucumbers had a production area of 492 acres and were harvested from February to November and accounted for 10% [valued at $23 million] of total sales volume and butter lettuce was harvested all year and accounted for 1% [valued at $1.6 million] of total sales volum e in 2002 (Ministry of Agriculture, Food and Fisheries Industry Competitiveness Branch, 2003). Unlike U.S. greenhouse vegetable production, Ca nadian production is regulated on a quota system. Due to the National Products Marketi ng (BC) Act, not just anyone can market greenhouse vegetables in Canada. In order to ma rket greenhouse vegetables in Canada, growers

PAGE 23

23 must apply for a quota that is controlled by the BC Ve getable Marketing Commission (BCVMC). In order for a grower to submit an application it must be supported by a marketing agency. Upon submission, the quotas are then re viewed and allocated on an annual basis. Currently, Canada has four marketing agenci es: BC Hot House Foods Inc., Global Greenhouse Produce Inc., Greenhouse Grown Foods Inc. and the Interior Vegetable Marketing Agency (Ministry of Agriculture, Food and Fisherie s Industry Competitiveness Branch, 2003). The U.S. is Canadas major export market. Canada exports approximately 75% of all greenhouse vegetables produced to the U.S. Th e Canadian greenhouse vegetable industry has significant competition within the U.S. market, with commodities coming from Mexico, Europe and domestic (U.S.) production. The Netherlands Over 60% of the land in the Netherlands is de fined as rural. Over the last 10 years the Dutch rural areas have decrea sed by 222,390 acres, due to development and urbanization. The area of land for agricultural us e (excluding greenhouse horticulture ) has decreased by 4%, during this same period. Most of this decrease is the result of the loss of valu able grassland, which has decreased by 8.2% from 1996-2004. In the Netherlands the one agricultural sector which is not decreasing, but has been rapidly expanding for th e last ten years is greenhouse horticulture. From 1996-2004, land used for greenhouse horticultu re has increased by 115% [32,123 acres in 1996 to 37,065 acres in 2004]. This growth of gr eenhouse horticulture under glass was entirely due to the ornamental plant cultivation; the area of greenhouse vegetabl es under glass decreased from 13,034 acres in 1971 to 10,946.53 in 2005. In the Netherlands, the average size of greenhouse operations is 2.97 acres a nd is expected to increase to 6.18 acres per operation within the next ten years (Berkhout et al., 2006). In the Dutch gree nhouse vegetable industry, the most

PAGE 24

24 important greenhouse crops are tomatoes, bell peppe rs and cucumbers. Crops are grown using a hydroponic system, which uses rockwool for media (Cantliffe et al., 2003). Unlike Mexico and Spain, which use both high and low technology greenhouses in vegetable production, the Netherlands uses almo st exclusively high technology greenhouses for vegetable production (Ministry of Agriculture Food and Fisheries Industry Competitiveness Branch, 2003). From 2004 to 2005, the value of greenhouse vegetable production increased by 9%. However, the cost of fuel has increased by more than 40% during this same period, which has put profitability of greenhouse vegetable prod uction under pressure. The average income of Dutch greenhouse vegetable growers has fallen from $33,333.33 in 2004 to $7,142.86 in 2005 (Berkhout et al., 2006). During the 1990s, the Dutch greenhouse vegeta ble industry suffered some setbacks such as: higher production costs compared to the Sp anish, emphasis on productivity levels led to an image problem with Germany, their largest impor ter of Dutch products, and the auction-type selling practices that did not allow them to adapt to changing consumer demand. Since 1996, Dutch growers have begun to overcome these obsta cles by creating an image showing that they have the ability to produce a year round supply of specific products with constant high quality, deliver small stocks of last minute products, and produce a product that is considered safe, products that are traceable with ce rtified producers. They have also been able to show retailers that they have a reliable supply ensured by very well controlled gr owing conditions and improvements of the harvest predictions (Boonekamp, 2004). Spain Until ten years ago, the Dutch vegetable grower s and organizations had underestimated the power of the Spanish vegetable industry, when it first entered the European Community. During this period, Spanish exports of vegetables ha d a growth rate of 10%, from 1992-1999. Spain

PAGE 25

25 accounts for the largest area of greenhouse vegeta ble production in Europe. In 2002, it was estimated that there was 172,970 acr es of greenhouse vegetable pr oduction. This is more than 117% larger greenhouse vegetable ac reage than the U.S. and 467% larger than the Netherlands greenhouse vegetable production. From 1998 to 2002, the amount of land used for greenhouse vegetable production in Spain increased mo re than 173% [90,000-100,000 acres in 1998 to 172,970 acres in 2002] (Cantliffe et al., 2003; Mini stry of Agriculture, Food and Fisheries Industry Competitiveness Branch, 2003). Spain is a major threat to the Dutch greenhouse vegetable industry. Although the Netherlands is the second largest in terms of greenhouse vegetable land area, it does not have the ava ilable source of cheap labor, from Africa and Morocco that is available to the Spanish. Howe ver, in comparing Spanish and Dutch production, the Spanish have yet to match the production per square foot that the Dutch are capable of producing. This is due to the use of low leve l technology which is char acteristic of most Mediterranean greenhouse industries. The prev ailing trend in Mediterr anean greenhouses, in recent decades, has been to adapt the plant to a sub-optimal environment. A consequence of this has been limited quality of the produce in some periods. Generally, Mediterranean greenhouses do not have climate control systems, which lim it potential yield, product quality, and the timing of production, but allows a low cost of produc tion compared with th e northern European greenhouse industry (Castilla, 2002). The majority of Spanish greenhouse production is centered around Almeria, Spain, which is along the coast of the Mediterr anean as well as Murcia to the East. Greenhouses in Spain are predominately of a Spanishstyle flat-roof green house, consisting mostly of shade cloth not glass. Currently a few Spanish producers have be gun to switch to Dutch gl ass as well as plastic houses. The average farm size in the Almeria re gion of Spain is 2.5-3.5 acres. Production of

PAGE 26

26 tomatoes, peppers, eggplants, cucumbers, muskmelons and watermelon are the dominant commodities produced in Spanish greenhouses. Th e Almeria area is known for its extremely arid climate, available sunshine, and a large influx of new growers to the area. It is estimated that half the production from the Almeria regi on is exported to Eur opean Union countries, especially Germany, France and the Neth erlands (Cantliffe et al., 2003). In the Almeria region of Spain, vegetable product ion is generally grown as either winter or summer crops. Winter crops, which consist of tomatoes, peppers, cucumbers, and certain squashes and have production peaks from December to January. Summer crops consist of various muskmelons, watermelons and green be ans and have a production which peaks from May to June. In 1998, tomatoes [20,250 acr es] and peppers [19,250 acres] had the most dedicated greenhouse production area (Cantliffe et al., 2003). Some of the factors that have lead to the success of th e Spanish greenhouse vegetable industry are: good climate conditi ons, the appearance of adapte d varieties (i.e...long-life tomatoes), lower cost of production compared to the Netherlands, devaluation of the Spanish peseta between 1992 and 1996 (cheaper export s), large subsidies of the EU and the modernization of the good marketing concepts for the vegetable industry. The Spanish greenhouse industry is not without its faults. Some of the problems with Spanish greenhouse production, which could prove to be detrimental to their future, in the European market is: the lack of knowledge of advanced growing principles and techniques, the fact that growers are not used to calculating the long-te rm return on investment, the Sp anish financial infrastructure (banks are mainly financing on a harvest-credit basis), the lack of independent extension service, lack of good research in Spain, low food safety, ove r use of pesticides, elevated problems with

PAGE 27

27 whitefly and thrips spread viruses, lack of good qua lity low cost labor and lastly, there is a lack of knowledge exchange and cooperati on among growers (Boonekamp, 2004). Italy In 2002, Italy had a total of 64,246 acres of greenhouse vegetables, with the island of Sicily [22,239 acres] comprising more than 35% of total greenhouse area. In 2002, seven crops covered about 90% of the total protected area in Italy: tomato (32%); strawberry (12%); melon (11%); pepper and squash (10% each); lettu ce (8%); eggplant (7%). The average size greenhouse operation ranges between 1 and 20 acres [3 acres on average], 90% were of the saddle roof construction type, using either si ngle or multi-span greenhouse types, while 10% were walk-in tunnels. Polyethylene film is the predominant cover material used, with structure materials being comprised of concrete, wood or st eel pipe. In Italy, hea ting devices and soilless culture are rarely used in gr eenhouse vegetable production. Producti on is generally in the soil covered with plastic mulch, using drip irriga tion and fertigation systems. However as technology advances, Italian production may shift to soilless cultivation as a solution to their brackish water problem and inefficient use of water (Barbi eri et al., 2002). Japan The Japanese greenhouse industry dates back to the 1600s, where oil-soaked paper and straw mats were used as insulation. Post WW II, the Japanese greenhouse industry has increased steadily [24,710 acres in 1969 to 132,238 acres in 1999]. Nearly all of Japans greenhouses are covered using plastic film, glass coverings only make up 4.4% of total greenhouse area. Japanese greenhouses are predominately used in the production of tomatoes, spinach, melons and cucumbers. Most of the greenhouse industry is located in the Kyushu ar ea and on the Pacific Ocean side of Honshu where the climate is rather mild with adequate winter sun. Recently, the greenhouse industry is expanding in the Hokkaido area (Ikeda, 2006).

PAGE 28

28 In 2001, the Japanese greenhouse vegetable industry had an area of 2,147 acres of greenhouses [Japanese greenhouse figures includ e rain shelters] and 88,682 acres of plastic houses in production. In 2003, 69% of the tota l greenhouse area [131,383 acres] was used for the production of vegetables [90,829 acres] (Ikeda, 2006). The Japanese greenhouse industry began usi ng soilless culture in the production of greenhouse-grown vegetables on a commercial scale, in the la te 1960s. In the 1970s, growers were introduced to the Deep Flow Technique (D FT) and later were introduced to NFT (nutrient film technique) in the 1980s. Today, most commercial operations use DFT and rockwool culture, followed by NFT and some substrate cu ltures using sand, gravel coir, peat moss and bark dust are used. Tomatoes, strawberries, mitsuba, welsh onions and butter head lettuce are the major Japanese crops using soilless culture. Strawberries are grown in elevated beds, using granulated rockwool, coir, peat moss or bark dust. Growers use the elevated beds to decrease stoop labor (Nukaya, 2006). China China has become the worlds largest producer of fruits and vegetables. In 2002, China produced 350-400 million tons of fruits and vege tables. The Chinese area of protected culture has increased from 24,710 acres in the 1980s to about 4,942,000 acres [figures include small tunnels]. Chinese greenhouse production is pred ominately located in th e Northern provinces (e.g. Shandong, Jiangsu and Liaoni ng). Plastic tunnels and solar greenhouses make up the majority of greenhouse production in China, wi th only about 988-1,730 acres being of modern greenhouse structure design. Sola r greenhouses are normally used in the production of tomatoes, cucumbers or peppers. Production is generally produced using soil as a growing media, only a small percentage of production uses soilless media [e.g. rockw ool or perlite] for production [2,520 acres] (Costa et al., 2004)

PAGE 29

29 Chinese production of vegetables has increase d about 700% over the last 3 decade. In 2001, the total production area, of all vegetables was estimated at 46,949 ,000 acres, with a total output of 350-400 million tons. Greenhouse producti on in China began in the early 1990s. In 1995, it was estimated that greenhouse acreage was 988,400 acres, predominately in plastic tunnels. In 2000, it was estimated that protect ed acreage had increased to 3,459,400 acres and in 2001, protected area of production varied between 4,200,700 5,189,100 acres (Costa et al., 2004). China produces a very diverse se lection of vegetables. Some of the most important are: Chinese cabbage, cucumber, tomato, cauliflower, glossy cabbage, purple cabbage, broccoli, eggplant, celery, potato, mini to mato, pepers, peas, lettuce, melons, mushrooms, chicory, Brussels sprouts, asparagus, onions a nd mini radish (Costa et al., 2004). China has an abundance of cheap labor for the production of labor intensive greenhouse crops. Even though China has an abundance of cheap labor, productivity is far below the world average. This is due, in part to poor instructions and ineffi cient management (Costa et al., 2004). Chinese growers, which are predominatel y made up of small growers, are given government incentives to produce ve getable crops. This, and th e lack of ability for small growers to access market prices, causes an overp roduction, driving market prices down. Due to this, Chinese fruits and vegetables are competitive in international markets. However, large scale exports of vegetables to western countries are limited, for two reasons. First standards, quality norms and postharvest handling are not up to western standards, and second, the domestic population is able to absorb most of the producti on. Chinas chief importers of vegetables are Japan, South Korea, Russia, Singapore a nd Indonesia (Costa et al., 2004).

PAGE 30

30 Production of Greenhouse-Grown Bell Peppers Strawberries and Cucumbers in Florida Currently, there are relatively few vegetables crops grown commercially in greenhouses in Florida. Florida greenhouse vegetable producti on is predominantly comprised of tomatoes, cucumbers, lettuce and colored bell peppers (Thomas, 2001). Bell Pepper Production area of Floridas gr eenhouse-grown bell peppers ha s been increasing over the last decade (Tyson et al., 2001). This increase d greenhouse production of specialty crops such as colored bell peppers can be partia lly attributed to the ban of me thyl bromide, increased urban sprawl and subsequent high prices fo r arable land (Jovi cich et al., 2004). Greenhouse-grown bell pepper fruit are generall y higher yielding and are of higher quality than that of field production. In addition, production is usually harv ested at a time of year when field production is low or not possible and market prices are at their highest. Marketable fruit yields for an individuals operation may va ry depending on greenhouse location, growing season, plant density, trellis system, cultivar, irrigation and fertilization management (Jovicich et al., 2004). Fruit yields of 1.6-3.0 lb./ft2 can be obtained in Florid a using passively ventilated greenhouses in Florida, w ith a potential of 4 lbs/ft2 with relatively low fuel costs. Hybrid cultivars, that mature to a re d, yellow or orange fruit, are th e most commonly used in greenhouse production of bell peppers. Red and yellow cultiv ars generally have a yield that ranges1.8-2.2 lbs/ft2, orange fruit yields generally have a range of 1.4-2 lbs/ft2 (Shaw et al., 2002). Pepper flowers are self pollinating, but the use of bumb lebees inside the greenhouse may be used to ensure the set of high quality fr uit, especially during the cool season when pollen viability is lower (Jovicich et al., 2004). Currently, Florida greenhouse bell pepper produ ction generally uses a soilless culture system. Over the last decade, greenhouse produc tion systems have shifted from using rockwool

PAGE 31

31 and nutrient flow techniques (NFT) to the use of perlite as the predominant soilless culture (Tyson et al., 2001). Plants are grown in perlite filled nursery pots aligned in either single or double rows, which leads to a plant p opulation density of 0.27-0.36 plants/ft2 (Jovicich et al., 2004). Pepper plants in soilless culture are fertig ated with a complete nutrient solution and fertigation frequency increases with plant growth. At time of tran splant, plants are irrigated 1040 times per day with about 1.3-2.5 fl oz per irrigation event and ma y increase during full production to volumes of 1.5 gallons per day, in No rth Central Florida. Due to the fact that greenhouse bell pepper cultivars ar e generally indeterminate, fr equent pruning and training is required. Peppers may be supported vertically on either a Dutch V or the Spanish trellis system (Jovicich et al., 2004). Florida greenhouse-grown bell pepper production season generally extends from July to May. Greenhouse-grown bell pepper have a long crop cycle [300 days] and are transplanted from the middle to end of July, and producing th e first harvest around the middle of October and generally ends towards the end of May. Duri ng this period, high temperatures in July and August are good for young plant growth but may also lead to higher incidence of blossom-end rot and fruit cracking. Likewise, colder temperatures from December to February may adversely affect the set of marketable fruit due to poor pollination and delayed maturation and earliness in production (Jovicich et al., 2004). During the harvest period, pepper fruit will ripen in flushes or waves throughout the production. If temperatures are warmer it is possi ble for crops to be harvested once or twice a week [up to 3 fruits per plant]. Marketable fr uit yields are graded by diameter, using grading standards set by the USDA. Larger fruits bring a higher price than their smaller counterparts.

PAGE 32

32 Insects are controlled predominately through th e use of biological c ontrol methods and the use of a fine mesh screen around the perimete r of the greenhouse. In greenhouse pepper production, melon aphids can be contro lled by releasing a parasitic wasp, Aphidius Colemai and two-spotted spider mites can be cont rolled by releasing a predatory mite, Neoseiulus Californicus (Jovicich et al., 2004). Biological contro l methods have many positive benefits to producers; pests do not build up resistance to bi ologicals as they do with other insecticides, reduced environmental impact. The use of biological control also allows gr owers to market their fruit as pesticide-free. Strawberry In the U.S. commercial greenhouse strawberry production has not gained popularity and is almost non-existent. Currently, countries such as Belgium, Italy, Spain, U.K., Australia, Israel and the Netherlands are producing strawberries under protected structures. Advantages of greenhouse production are: no methyl bromide need ed, increased water efficiency, protection from rain, cold weather, and bi rds, decreased stoop labor, decr eased pesticide use, increased quality and yield (Par anjpe et al., 2003). In Florida, strawberries are gr own under protected culture on less than two acres. Previous studies on greenhouse strawberry production from the University of Florida, show that strawberry cultivars adapted to Florida grow we ll within a temperature range of 60-80F, but plant growth slows down considerably below 50F (Paranjpe et al., 2003). Plug transplants are preferred over bare root transplants in protected strawberry cultivation, due to their survival rate, ability to become established and quick growt h. Plug transplants are grown in a glasshouse, using propagation trays used for plug production, from June 7 to September 15 [110 days]. In strawberry production, plants requir e a chilling period in order to induce an early flowering, thus plugs are transferred to a walk-in cold chamber for two weeks or are pu rchased from a nursery

PAGE 33

33 that has pre-chilled the plugs in order to obtai n the early flowering. In October, plugs are transplanted in the greenhouse in Hanging Bed-Pack trough syst ems (i.e..Polygal Hanging Bed-Pack troughs). Growing systems are arranged in a single horizontal tier [usually a northsouth direction], with a plant density of 2.26 plants per ft2. The soilless media used is a pine bark media, readily available in Flor ida. Plants are fertigated wi th 150 ml of a complete nutrient solution per day, through drip tape (Paranjpe et al., 2003). In field production, strawberry flowers are aided in pollination by wind, bees and other insects. Since a greenhouse is a protected envi ronment, bumblebees are required to pollinate the strawberry flowers. Bumblebee hives are adde d to the greenhouse as the onset of flowering occurs. In order to control insects and not ha rm the bumblebees, biologi cal control is used. Major pests in greenhouse strawberry production include: the two-spotted spider mite, cotton aphids and western flower thrips The two-spotted spider mite is controlled by the release of N. Californicus for aphids a parasitic wasp Aphidius Colemani is released and Amblyseius Cucumeris a predatory mite is released to control thrips (Paranjpe et al., 2003). As previously stated above, the use of biological control allows growers to mark et a pesticide-free product in addition to using a control that will not allow insect s to build up tolerances to, such as have been seen in many insecticides. Fruit is considered marketable when fruit has 80% color development and weighs more than 10 grams. Fruit is harvested at 4-5 day in tervals. Fruit yield [November to March] for a plant density of 2.26 plants/ft2 was estimated at 1.96 lb. /ft2 [7,115 12-lb. flats per acre]. Cucumber Production area of greenhouse-grown cucumbers in Florida has decreased over the last decade. This is partially due to the fact that greenhouse cucumbers were being marketed to

PAGE 34

34 Canada and an unfavorable exchange rate has re sulted in the shift from cucumbers to colored bell peppers that can be marketed prim arily in the U.S. (Tyson et al., 2001). The cucumber is a warm season crop with required growing conditions of 80-85F and plenty of sunlight. European seedless-type cucumber is the pr imary variety grown in Florida greenhouses. Mature fruit is harvested at a le ngth of 12-14 inches with a weight of about 1 pound (Hochmuth, 2001). In addition to the Europ ean seedless, smaller specialty cucumbers known as Beit Alpha are becoming popular in Florida (Shaw et al., 2004). Greenhouse cucumbers are self pollinating a nd are indeterminate in growt h, continually producing fruit on new growth. Minimum temperature for gr eenhouse-grown cucumbers should be kept approximately at 65F for sustained production. Extreme temperatures above 95F may also have adverse effects, by reducing fru it quality and production (Hochmuth, 2001). Generally, greenhouse cucumber production system s are in nursery pots using perlite or pine bark as media. Transplant s are ordinarily established in th e greenhouse as transplants using rockwool or foam blocks. Seed costs are hi gh compared to other gr eenhouse crops; a typical seed costs between $0.25-0.30 per seed (Hochmuth, 2001). Cucumber seeds have a rapid germination rate [2-3 days] at their optimum germination temperature of 84F Once tran splants have three to four tr ue leaves plugs are ready for transplanting (Hochmuth, 2001). Spacing is very important in greenhouse cucumb er production, due to th e large size of the plants, rigorous growth and large requirements of light. Plants may be spaced using a single or double row layout. Double row spacing requires approximately 5-6 feet between row centers and 2 feet between the double-row systems. Plants should be spaced 18-24 inches between

PAGE 35

35 plants. Single-spaced rows in a vertical cordon system should be approximately 4-5 feet between rows and 12-18 inches between plants (Hochmuth, 2001). The umbrella system is the most common pruning system for vertical cordon training system. This system prunes all lateral branches until the main stem reaches the overhead wire. The growing point of the main stem is then re moved when one or two leaves have developed above the wire. The growing point of each latera l is removed when near the ground. Fruits will then develop at the node of each leaf. Fruit on the first 30 inches of the main stem should be removed to allow for vigorous plant growth (Hochmuth, 2001). Fruits should be thinned if more than one fruit develops at each node (Hochmuth, 2001). Beit Alpha cucumber types are vigorous enough to support and develop multiple fruit per node (Shaw et al., 2004). Due to the rapid growth of greenhouse seedless cucumbers, nutrient requirements are very high. Thus, growers must implement a complete nutrient program making adjustments in the program as the crops demands change (Hochmuth, 2001). Just as in greenhouse bell peppe r and strawberry production, th e use of biological control systems is used against harmful insects in gr eenhouse cucumber crops. Green peach aphids [ Myzus Persicae ] are controlled usin g lady beetle larvae [ Hippodamia Convergens ] and parasitic wasps [ Aphidius Colemani ]. Two-spotted spider mite s are controlled by releasing predatory mites [ Neoselius Californicus ] (Shaw et al., 2004). When harvesting, growers should look for a uni form length, shape and diameter. Typical fruit length for European seedless fruit range s between 12 to 14 inches with a minimum USDA grade standard length of 11 inch es. European seedless cucumber types require frequent harvest intervals, usually three to four harvests per week. Plant yields during peak harvest periods

PAGE 36

36 generally range between 1 to 3 pounds of fruit per plant. Yields over th e entire crop cycle of approximately 12 weeks, have a range of 20 to 25 pounds per plant (Hochmuth, 2001). Harvesting of the Beit Alpha mini-cucumbers occurs about every other day from mid March to the end of May. Total plant yields range between 13 and 14 pounds per plant, during the approximate 9 to 10 week harvest period (Shaw et al., 2004). It is possi ble to have 3-4 crops per year, when producing cucumbers due to their short crop cycles. Budget Simulation Modeling One particular relevant study (Richardson et al ., 2003), to this paper, showed an example of building a dynamic simulation model for analyz ing the different input s for ethanol production for different sized facilities. Similar to this study the Richardson et al (2003) study applied stoc hastic variables to assess the risk of production for different sized plants using different input variables for the production of ethanol. The study used financial statements similar to the statements used in this study. Additionally the Richards on et al (2003) study uses the simulation program SIMETAR to simulate stochastic variables and determine risk of production using th e different stochastic variables. Just as in this study, the Richar dson et al (2003) study uses stochastic variables to represent historical monthly prices and production yields fo r different inputs through the use of scenarios placed in their financial budgets. Just as in this study, their simulation model results in key output variables [KOV], which are used in assessi ng the risk of each scenar io used in the study. The results of their stochastic feasibility study, show s an unbiased estimate of how risk of input and output prices affect the viability of the three di fferent sized ethanol production facilities in Texas. Using these results, the study was able to determine which sized facility was needed to generate a 100 percent probability for economic success.

PAGE 37

37 Feasibility of Production Previous studies on the feasibility of gree nhouse-grown bell pepper production have been performed by Jovicich et al (2005). Likewise si milar feasibility studies have been created for greenhouse strawberry production by Paranjpe et al (2004). All past greenhouse-grown vegetable production studies have fa iled to include a true estimate of the risks associated with greenhouse vegetable production, because they showed only a snap shot of a particular time for production costs returns, prices and yields and did not provide probabilities or risks of obtaining their given results. Those risks include high fuel harvest labor and mark eting costs along with low production yields and low market prices for production. In their analysis, Jovicich et al (2005) and Paranjpe et al (2004), failed to represent the stocha stic component of their variable input prices, market prices and production yields, by simply usi ng a stagnant average for these inputs. In their studies, Jovicich et al (2005), and Paranjpe et al (2004), provided the operational and construction costs for the production of gr eenhouse bell peppers and strawberries. These studies were then adapted for the production cost of greenhousegrown cucumbers. Thus, the analysis provided in this study is based on their operational and construction costs. Summary Florida vegetable growers are faced with increasing compe tition from around the world and can no longer rely solely on field production to maintain market share in the U.S. vegetable industry. Over the last decade, the U.S. has b ecome less reliant on Florida for the bulk of its fresh vegetables. U.S. consumers are shifting demand toward year round supply of high quality, greenhouse-grown vegetables. Due to this, countr ies such as Canada, Me xico, Spain, Israel and the Netherlands are filling the seasonal mark ets with fresh, predominantly greenhouse-grown vegetables.

PAGE 38

38 Greenhouse vegetable production may be one al ternative to Florida field production. Studies have shown that gree nhouse production offers increased quality and yield over field production and are not reliant on th e use of soil fumigants such as methyl-bromide. This study will look at the economic feasibility of gr eenhouse vegetable production of bell peppers, cucumbers and strawberries and determine the pot ential returns and costs of production of these commodities.

PAGE 39

39 CHAPTER 3 THE ECONOMIC FEASIBILITY OF GREENHOUSE-GROWN BELL PEPPERS AS AN ALTERNATIVE TO FIELD PRODUCTI ON IN NORTH-CENTRAL FLORIDA In Floridas 2003-2004 growing season, 18,300 acres of mostly green bell peppers were harvested primarily from fields with raised be ds using sub-seepage and some drip irrigation (Florida Agriculture Statistical Directory, 2005). Currently, domestic consumption of fresh bell peppers in 1979 was 661,000,000 lb. and rose to 2,090,000,000 lb. in 2005, an increase of 316%, while imports have increased 411% respectiv ely from 1979 to 2005 [143.7 million lb to 590 million lb (U.S. Department of Agriculture, 2005). Today, increased public demand for colored bell peppers has allowed other c ountries such as Canada, Mexic o, the Netherlands, Israel and Spain, which produce mostly colore d, mature, ripe bell peppers, to fill that demand in the United States. The U.S. is one of the few countries that sti ll produce the majority of its bell peppers as green colored grown in the field on raised beds with drip irrigation. Outside the U.S., bell peppers are produced in greenhouses producing matu re, colored peppers (J ovicich et al., 2005). In 2002, Canadas greenhouse bell pepper produc tion area was more than 470 acres (519 acres) greater than that of the U.S. (49 acres), while Mexico (430 acres ) is more than 381 acres greater than that of the U.S. (49 acres). (B.C. Minist ry of Agriculture, Food and Fisheries, 2003). Florida bell pepper producers are in direct competition with Me xico, Israel and Spain in the winter months, due to overlapping seasons; while Canada and Holland is able to enter the U.S. market in the spring, summer and fall months. Historically, consumers are wi lling to pay more for greenhou se-grown bell peppers, due to their high quality and seasonal av ailability, even though they co mmand a higher price than that of field grown bell peppers (Smither-Kopperl a nd Cantliffe, 2004). Countries that produce a high quality colored bell pepper acquire a high annual average price per pound of product for

PAGE 40

40 both field and greenhouse produced. From 19982005, colored greenhouse grown bell peppers from Israel acquired a 200% higher average pric e [$2.08/lb.] than Mexicos [$1.04/lb.] colored field peppers. Mexicos average price per pound, fo r colored field bell peppers, is also 48% less than that of the Netherlands greenhouse colore d bell peppers. Greenhous e-grown colored bell peppers in Mexico receive a 160% higher price [$1.66/lb] than fiel d bell peppers [$1.04/lb] from Mexico (Table 3-1) (U.S. Department of Agriculture, 2005). In 2004, 27.3% of domestic consumption in the U.S. was imported, at a value of $436,968,000 (U.S. Department of Agriculture, 2005). Mexico is Floridas biggest co mpetitor due to each area having the same growing seasons. In 2004, imports from Mexico had a value of $250,021,000 which accounted for 57% of the total value of imported bell peppers in to the U.S. The second largest exporter of bell peppers to the U.S. is Canada, which accounts for 21% of the total imported valued at $91,262,000 and the Netherlands comes in third with a valu e of $56,544,000 [13% of total] (Table 3-2). Field Production of Bell Peppers in Florida In Florida, bell pepper producti on is primarily on raised po lyethylene-mulched beds using drip irrigation and fumigated with the now restricted chemical me thyl-bromide. Florida has been a principle winter supplier of bell peppers, to the north-eastern and Midwestern United States (Jovicich et al., 2005). Most of Floridas bell pepper field produc tion is predominantly of the green pepper type. Florida is the second lead ing producer of bell pepp ers [567,300,000/lb] in the United States behind California [800,300,000/lb] (U.S. Department of Agriculture, 2005). In the 2002-2004 growing season, Florida harves ted 18,300 acres producing 567,308,000 lb. [20,261,000 bushels]. Total U.S. production of fr esh market bell peppers is valued at $576,375,000. The value of Floridas production [$218,411,000] accounts for 38% of the total value of the U.S. fresh market bell pepper pr oduction (U.S. Department of Agriculture, 2005)

PAGE 41

41 (Florida Agricultural Statis tical Directory, 2005). Florid a pepper producers harvest from November May, picking predominantly mature gr een peppers. Historically, field producers are offered a premium price for ma ture red [$.83/lb. .41]; yello w [$1.03/lb. .51] and orange [$1.43/lb. .70] colored peppers over mature gr een peppers [$.43/lb. .17]. However, by delaying harvest, field producers increase their ri sk, via reduced yield or loss from weather, disease, viruses or insects, whic h leads to unmarketable fruit. The goal of this research was to determine whether greenhouse production of colored bell peppers, in Florida, is an economically feasib le alternative to fiel d production. This was accomplished through the use of simulation models, us ing stochastic variables. In this study, the definition of a simulation model is a mathemati cal representation of a business or economic system that reflects sufficient detail of the syst em to address the questions at hand. The term simulation defines the process of solving a mathem atical simulation model, which represents an economic system comprised of a set of exogenous variables. Exogenous vari ables are defined as alternative management strategies and policy scenarios and are th e numerical representation of a What if ? question. Simulation models are fre quently solved to stat istically represent all possible combinations of the ra ndom variables in the system. The results from a simulation process are a large number of simu lated values for key output variab les (KOVs) of interest to the decision makers. The simulated values for a KOV represent an empirical estimate of the probability distribution for the variable and quantif y the risk associated with the variable. This type of answer is analogous to performing a large number of field trials on corn using the same dosage of product X to determine the mean a nd variance of a lethal dose (Richardson, 2006). Simulation models can be solved both determ inistically and stochastically. Deterministic Models are simulation models without risk and are solved using simple calculator arithmetic.

PAGE 42

42 Stochastic simulation models ar e solved a large number of times using one value for X to generate a sample of outcomes for the depende nt variable Y, recogni zing that X has risk. Because there is risk in the forecast for Y, it mu st be forecasted using a probability distribution rather than using a point estimate. The simulated distribution for Y informs the decision maker of the riskiness of the forecast for the KOV, the skewness of the outcome, and the chances of a favorable outcome, all answers not available from a deterministic or linear programming forecast (Richardson, 2006). Probabilities and Risk for Greenhouse Colored Type Bell Pepper Production Using SIMETAR in North Central Florida Stochastic simulation involves simulating unc ertain economic systems that are a function of risky variables, for the expr ess purpose of making better d ecisions. This study assumes that future risk mimics historical ri sk, so past variability is used to estimate parameters for the probability distributions of risky variables in the model. Probability distributions are simulated a large number of times to formulate probabilist ic projections for the risky variables. The interaction of the risky variable s with other variables in the m odel allows the projection of how risky a decision would likely be under alternative management stra tegies. In this way the model can provide useful information about the likely outcomes of alternative management decisions under risk (Richardson, 2006). In greenhouse production, just as in all agricultural ventures, risk is a major variable to consider. The higher the risk, in most instance s, the greater the return, likewise the lower the risk, in most instances, the lower the returns, however, the amount of risk a producer is willing to take on is entirely up to the produc er. Caution should be used when using this model to assess an individuals risk. This model is ju st a guide so that others may tailor it to their needs, in order to measure risk of yield and price. No model can measure all risks includ ing natural disasters,

PAGE 43

43 market prices, personal knowledge of plant produ ction or management. All prices are based on historical wholesale prices fr om New York, Atlanta and Miami terminal markets and are not necessarily the prices that all growers have received. The objective of this study wa s to determine the economic fe asibility of growing colored bell peppers in a greenhouse. In addition this study will make a comparison of the profitability between greenhouse and field production of be ll peppers, in North Central Florida. Methods This study describes and applies stochastic si mulation to a financial model of a 1.0 acre bell pepper greenhouse operation in No rth Central Florida. Stochast ic simulation is defined as a tool for addressing what if questions about a real economic system (Richardson 2002). This study uses a simulation engine that is an add-on to Excel in order to run stochastic simulations. This simulation engine has the ab ility to do the following tasks: generate pseudo random numbers, collect the output from simulati ons, and facilitate the analysis of simulation results by presenting the information in alternativ e forms that aid in the analysis and ranking of the scenarios. SIMETAR is a simulati on package that was used in this study. 1 The model simulates the economic activity of a greenhouse production area of 1.0 acre of red, with the assumption changes of input and output coefficients; it is also used to analyze yellow and orange bell pepper production. The Use of Stochastic Variables in a Simulati on Model to Estimate Key Output Variables (KOV) Deterministic results are a derivative of si mulation models that do not include risk. Stochastic models are deterministic simulation models that include variables which are not 1 SIMETAR was developed by Richardson, Schumann, and Feldman in the Department of Agricultural Economics, Texas A&M University It is an add-on to Microsoft Excel that was developed in Visual Basic for applications. It consists of both menu-driven and u ser-defined functions in Microsoft Excel (Gill, Richardson, Outlaw, Anderson, 2003).

PAGE 44

44 known with certainty but have a known probability distribution. A stochastic model is simulated a large number of times using ra ndomly selected values for the risky variables to estimate the probable outcomes for key output variables (KOVs). The simulated sample of values for each KOV constitutes an estimate of the variables probability distributi on which can be used to make decisions in a risky environment (Richardson, 2006). The stochastic variables used in the greenhous e model are price and yield. A description of the methods used to develop parameters for si mulation of the stochastic variables is provided as follows. A major stochastic variable in this model is price, since price is a moving variable that moves with the supply and demand curve. Its mean and parameters for this economic analysis model were gathered from the U.S. De partment of Agriculture (U.S. Department of Agriculture, 2005). A second and e qually important stochastic va riable is yield, since yield changes from month to month during a crop cycle. The means and parameters for yield were estimated from experiments conducted at the Pr otected Agriculture Project, University of Florida, Florida (Jovicich et al., 2004, Jovici ch et al., 2005, Shaw et al., 2002, Smither-Kopperl et al., 2004). Price was simulated using a uniform probab ility distribution. A uniform probability distribution function was used because each obs ervation of the random variable between the minimum and maximum has an equal chance of occurrence. The parameters for the uniform probability distribution [PDF] ar e the minimum value for the di stribution, the maximum value for the distribution, and the uniform standard devi ate [USD]. The USD variable X is distributed over the range of 0 to 1 and is denoted as X ~ U (0, 1). Uniform standard deviate is simulated in SIMETAR using the command =UNIFORM ( ). Th e uniform probability distribution function for the uniform distribution given a and b can be explained through the function:

PAGE 45

45 In the function above a is equal to the minimum wholesale price and b is equal to the maximum wholesale price. The wholesale price input va riables [min, max, USD] for conducting a uniform probability distribution for each color scenario are shown in Table 3-3. Do to a limited data set; yield was simulated using the GRKS distribution. GRKS stands for the names of the creators of the distribu tion, Gray, Richardson, Klos e, and Schumann It was developed to simulate subjective probability distributions based on minimal input data (Richardson et al., 2006). Business managers can provide estimates of three points on a dist ribution of possible outcomes (min, midpoint, max), but they often admit things could be worse or better than they expect. The GRKS distribution is a continuous probability dist ribution for sampling from a minimum data population. Given a minimum, mi ddle and a maximum value to describe the population, the GRKS function is a continuous dist ribution substitute for the triangle distribution. The GRKS distribution is a closed form distri bution. The GRKS distribution is simulated in SIMETAR with =GRKS (min, midpoint, max) (Richardson et al., 2006). The lb/ft2 input variables [min, mid, max] for conducting a GRKS di stribution for each of the color scenarios can be found in Table 3-4. Greenhouse Structure Used in the Production of Color Type Bell Peppers in North Central Florida Experiments were performed in passively ve ntilated high roof gree nhouse units of a sawtooth design, located at the Prot ected Agriculture Project, Univer sity of Florida, Plant Science Research Unit Citra, Florida (Jovicich et al., 20 05). Total floor area of the structure is 43,560 ft2 (1.0 acre). The multiple-bay high-roof greenhouse structure was covered with polyethylene and

PAGE 46

46 had retractable side walls and saw-tooth roofs wi th a roof vent on every bay. All openings were screened with a 50-mesh insect-proof screen. Du e to the location [North Central Florida] of the greenhouses, minimum heating from November to the beginning of March wa s required in order to have good plant growth with high quality fr uits. Heating was primarily done to prevent freezing. Annual heating requirements will be addre ssed later on in this chapter. This model used Diesel-fueled heaters to reduce fuel costs, even though the University of Florida Protected Agriculture Project, Citra, Flor ida uses propane. Dies el-fueled heaters serve dual purposes. The heaters in conjunction with aluminized ther mal screens were used to keep greenhouse temperatures to a minimum 50F, while they al so had the ability to lower temperatures by improving ventilation, when used in conjunction with the sidewall openings, fans and aluminized screens, during the months of August-October an d from March-May, in the passively ventilated structure (Jovicich et al., 2005). Crop Systems Used in the Producti on of Colored Type Bell Peppers Large portions of data (including planting, yi eld, crop cycle, fertilization and pollination) used in this enterprise budget and model are based on research tr ials done at the University of Floridas Plant Science Research Unit, Citra Fl orida (Jovicich et al.,2005, Shaw et al., 2002). Crop cycle lasted 298 days from seeding to remova l of the crop. Plug tran splants were grown in plug trays for 35 days then transplanted in Augus t. Harvesting started at the end of October (usually one harvest per week, w ith a total of 30 harvests), until the end of March (Shaw et al., 2002). Wholesale Bell Pepper Fruit Prices Historical fruit prices for mature colored fru it were gathered from the U.S. Department of Agricultures USDA Fruit and Vege table Market News Portal (U.S Department of Agriculture, 2005). Daily price data was gathered for the la st seven years (1998-2005) from three different

PAGE 47

47 terminal markets (New York, Atlanta and Miami) to calculate a maximum, minimum and mean dollar per pound wholesale fruit price used in th e budget analysis model. Means and standard deviation were calculated for diffe rent price series. Fruit prices were sorted by color, origin and weight of packaging. Fruit from Spain, Israel and the Netherlands were used to calculate greenhouse pepper prices, since these countries ship only mature, ripe, colored bell peppers to the U.S., while fruit from Florida, California, Ge orgia and Mexico were used to calculate field prices. Once historical daily prices fo r red, yellow and orange bell peppe rs were collected, the data were sorted, matched and cropped from January 1998 to December 2005. An annual model is used in this study so the daily data was averaged to generate an annual average dollar per pound price for the three scenarios of re d, yellow and orange bell peppers. Historically, prices of colore d greenhouse bell peppers have been two to three times higher than those of field-grown peppers. Annual av erage wholesale price for greenhouse-grown red bell peppers is $1.89/lb., versus average annual fiel d prices of $0.83/lb (Figure 3-1). The annual average wholesale price of greenhouse yellow peppe rs is $2.00/lb. compared to the field $1.03/lb (Figure 3-2). Annual average greenhouse price fo r orange is $2.12/lb. comp ared to the field at $1.43/lb (Figure 3-3). Even though colored pepper s historically obtain a higher price per pound, green bell peppers are the predominate type prod uced in fields. The annual average field price for green bell peppers is $0.43/lb (Figure 3-4). Annual average wholesale price of field green bell peppers is 193% lower than red, 240% lower th an yellow and 333% lower than orange fieldgrown bell peppers. Monthly gr eenhouse prices for colored be ll peppers peak between March and May, with the highest price in April [r ed $2.34/lb., yellow $2.45/lb., orange $2.66/lb.]. Colored field bell pepper prices peak in Ma y [red $0.94/lb., yellow $1.18/lb., orange $1.81/lb.]

PAGE 48

48 and July [red $0.86/lb., yellow $1.15/lb., orange $1.53 /lb.] (Figure 3-1, Fi gure 3-2, Figure 3-3). The annual average wholesale greenhouse price fo r all [red, yellow, orange] colors is $2.00/lb. compared to the annual average wholesale field price for all [red, yellow, orange] colors of $1.04/lb. Mature colored bell peppers from a greenhouse demanded a $0.96/lb. greater price than that of field production (U.S. Department of Agriculture, 2005). Enterprise Budget Analysis of Gree nhouse-Grown Colored Type Bell Peppers Common financial statements were developed and used for each of the three color types of bell peppers. There was no cost difference to produce any of th e three pepper types so the only changes necessary in the simulation were price a nd yield (Jovicich et al., 2005). An enterprise budget was constructed consisting of gross revenue, costs [initial investment, variable and fixed] and profit that is associated with a 1.0 acre pepper gree nhouse operation in North Central Florida. Budget Tables consisted of items, qua ntities, units and prices used. This section describes the generic model and, when appropriate indicates changes in the variables for the different colored peppers. Annual receipts [gross revenue] were derived by multiplying the annual stochastic dollar per pound price by the volume of peppers produced [gross revenue = sales volume x price, sales volume = yield x usable greenhouse area] for th e October March harvest period (Table 3-5, Table 3-6, Table 3-7). Total fruit yield for re d bell pepper were estimated to be 1.96 lb. /ft2, yellow bell pepper yields were estimated to be 1.89 lb./ft2 and orange bell pepper yields were estimated to be 1.66 lb./ft2, based on the technology and practices used and the length of the crop cycle (Shaw et al., 2002). Costs and revenue were predominantly based on unit area of the total greenhouse area [1.0 acre]. The formula used to calculate gross revenue was: gross revenue ($/ft2) = yield (weight per ft2) x stochastic price ($/lb.).

PAGE 49

49 Estimated Costs of Production for Growin g Greenhouse Colored Type Bell Peppers Fixed costs are defined as co sts that the producer would in cur even if no crop was being grown in the greenhouse at the time. All items have been depreciated over their expected useful life, with a straight line deprec iation method. Straight line depreci ation is defined as a procedure for depreciating long-lived assets that recognizes equal amounts of depreciation in each year of the assets useful life. Useful lif e of an asset is defined as the number of years an asset can be used before the asset deteriorates to the point when repairs are not econo mically feasible. The usefulness of a long-lived asset is largely de termined by technological advancements, which could at any time render certain long lived assets obsolete. For this reason, all items in this study were assumed to have zero salvageable value at the end of their useful life. Fixed production costs were derived from the sum of depreciation and other costs. Annual fixed costs came to $39,660 [$0.91/ft2] (Table 3-8). The fixed costs to depreciate [initial] inve stment required for a 1.0 acre greenhouse venture was determined by compiling all co nstruction, materials, equipmen t, labor, and durables needed up front to start a greenhouse enterp rise. Initial investme nt is part of the estimated annual fixed cost. Initial investment cost c onsisted of the land, greenhouse stru cture and cover materials, site preparation costs, greenhouse perm its, construction supervision, h ead house structure, fruit size grading machine, backup generator, heating and ve ntilation systems, nutrient injector and climate control systems, nutrient solution tanks, weathe r station, computer software, training to use computer software, water filters, valves and pressure regulators, irrigation emitters, stakes, tubing, polyethylene pipe, pipe conn ectors, nursery pots, electrical drainage system, bulk storage tanks, trellis accessories, automobile, and a fork lift A summary of these initial investment costs can be found in Table 3-8.

PAGE 50

50 Variable costs are defined, as it pertains to this model, as operati ng costs that would be incurred only if the crop was grow n. Variable production costs [$/ft2] were taken from Table 3-9 except for electricity and gas costs, which will be discussed later in the chapter. Variable costs were derived by summing preharvest costs, harv est costs and package and marketing costs. Annual variable costs for a 1.0 acre greenhouse operation came to $127,359 [$2.92/ft2] (Table 39). Profit was calculated by subtrac ting total cost from gross revenue. The formula used for calculating profit: (profit = gross revenue [yield (weight per ft2) x stochastic price ($/lb.)] total costs [variable + fixed (depreciat ion + other durables)]). Net present value [NPV] is defined as the present value of cash inflows less present value of cash outflows. It is also said to be the increase in wealth accruing to an investor when he or she undertakes an investment. Net present value was calculated using Excel The function used was: =N PV ((interest rate, Cash Flow [array t=1 thru t=20]) + Initial Investment). Cash flows were calculated using an initial investment of $441,384, with a book value at the end of its 20 year life expectancy of $22,069 with an assumed interest rate of 8.35% (Farm Credit, 2006). After tax cash flows were then calculated with the following formula: ATCF = (profits [$19,417] depreciation [$39,660] = Earnings before taxes [EBT= -$20,243] ta xes [$0] + depreciation [$39,660]) = $19,417. Net present value [NPV] was then calculated using the formula: NPV = sum (cash flows x present value interest factor [PVIF]). Net present value was then simulated using SIMETAR, after simulating each color pepper scen ario n=500 iterations, it was determined that all scenarios have a negative NPV, the results can be found in Table 3-10. The internal rate of return [IRR] is defined as the discount rate at which the investments net present value [NPV] equals zero. As it pert ains to this model, IRR was calculated using

PAGE 51

51 Excel and can be viewed in the following form ula: =IRR (Cash Flow [array t=0 thru t=20], discount rate). The sum of the cas h flows was not greater than the initial investment, resulting in negative NPV and IRR for all three scenarios. Since the NPV was negative for all three scenarios there can be no discount rate that will work perfectly in calculating an IRR. Sensitivity Analysis for the Production of Greenhouse-Grown Colored Type Bell Peppers Sensitivity analysis was used to analyze the effect on income when a change in one of the input variables is invoked. Ne t returns were calculated in the sensitivity analysis with marketable fruit yields ranging from .20 4.10 lb. /ft2 and wholesale market prices ranging from $1.80 $2.40/lb. (Table 3-11). Accord ing to the Shaw et al., (2002) study marketable fruit yield ranged from 1.41 2.31 lb. /ft2 during an October March harvest period (Table 3-4). Break-Even Analysis for the Production of Greenhouse-Grown Colored Type Bell Peppers A break-even analysis was crea ted to show the different co mbinations of yield and the price required to break-e ven in a 1.0 acre bell pepper greenhous e venture. For example, a yield of 3 lb./ft2 would require a price of $1.28/lb. to breakeven, anything over this price at 3 lb./ft2 would be considered profit or return to mana gement, anything lower would make the venture unprofitable (Table 3-12). The break-even analys is was calculated using the following formula: break-even price = total cost [var iable + fixed costs] / sales volume [yield x usable greenhouse area (43,560 ft2)]. Heat Loss Calculations for a 1.0 Acre Greenhous e Bell Pepper Production in North Central Florida There are many different types of heating syst ems available to heat greenhouses, some of these choices include: unit space heaters, hot wa ter systems, steam heating systems, unit radiant heaters, solar radiant systems or poly-tube system s. In choosing a heating system a grower must consider the location of producti on, the size of the growing area and type of structure and

PAGE 52

52 materials used in construction of the struct ure. Future expansion, along with the minimum temperature in which is acceptable for fruit grow th for his/her particular crop being produced should also be considered. This section will disp lay the steps used to calculate energy required to heat the 1.0 acre greenhouse in north central Florida. The choi ce of type of heating system a grower should choose is up to the grower and is not included in this section. Minimum temperature is a major variable to consider when grow ing vegetables in a greenhouse. Many plants cease to grow at te mperatures lower than 55F and below 45F chilling injury can occur. A grower must wei gh the expense in their decision whether to keep temperature above 55F for adequate fruit growth or just try to keep the plant alive by maintaining temperatures at 55F. From 2000-2006, hourly data from the FAWN databa se [University of Fl orida, Institute of Food and Agricultural Sciences], was gathered a nd sorted for University of Floridas Plant Science Research Unit, Citra, Florida. The greenhouses are high roofed [46 ft], saw-tooth design, constructed of a single laye r of polyethylene film. Minimu m temperature, as it pertains to this model was kept at 50F. Average hours below 50F base temperature are listed monthly in Table 3-15. To determine the temperature needed to achieve the 50F, the expected minimum adverse temperature for the location is subtracted from the desired temperature in the greenhouse to obtain the differential, of the desired ba se temperature inside the greenhouse from the expected minimum adverse temperature for the lo cation, in F. The expected minimum adverse temperature was calculated by averaging the minimu m daily temperature in January for the last six years [44F]. The first step in determining heat loss is to calculate surface area, in square feet, of the greenhouse. Total surf ace area for the greenhouse came to 60,515 ft2 (Table 3-13) (Figure 3-5).

PAGE 53

53 In a greenhouse, heat is lost in three ways : conduction, air infiltra tion, and perimeter heat loss. Conduction heat loss is the estimated en ergy losses through cover material from the high temperatures inside the greenhouse to the colder temperatures outsi de. This can be explained in the formula: Qc = A x (Ti To)/R where Qc equals the total conduction heat loss in Btu/hr, R = the overall heat transfer coefficient in Btu/(ft2F hr), A = the total expos ed roof and wall area in ft2, Ti = the inside greenhouse temperature F, and To = the outside air temperature F (Jones, 2001). Calculated values used in the formula were: Qc = Area [60,515 ft2] (base temperature [50F] (average minimum January temperature [44F] difference between inside and outside temperature [15F]))/Resistance to heat flow coefficient [1.43]. Annual conduction heat loss was calculat ed to be 888,681.82 Btu/hr for the 1.0 acre greenhouse (Table 3-14). Air infiltration heat loss is used to estimate the loss due to infiltration air exchange. The air infiltration formula used is: QA = .015 V C (Ti To) (Worley, 2005) (Jones, 2001). When calculated, the air infiltr ation formula appears as follows: QA = air exchange per hour [1.5 for single layer polyethylene] x gree nhouse volume in cubic square feet [589,199.52] x overall heat transfer coeffici ent [1] x (base temperature [50F] (average minimum January temperature [44F] T [15F])). Air infiltration losse s equal 185,597.85 Btu/hr (Table 3-14). Perimeter heat losses are th e estimated loss of energy lost to the ground un derneath and beside a greenhouse. The perimeter heat loss formula is as follows: QP = P x L x ( T) (Worley, 2005). When calculated appears as: QP = perimeter heat loss coeffici ent, Btu/ft F hr [.8] x distance around perimeter [842] x (base temper ature [50F] (average minimum January temperature [44F] T [15F])). Perimeter heat loss e quals 14,145.60 Btu/hr (Table 3-14). The formula used to determine total heat loss is: QT = QC + QA + QP. Total heat loss for the 1.0 acre greenhouse used in this model equaled 1,088,425.27 Btu/hr.

PAGE 54

54 To determine the estimated annual cost of ener gy, total heat required was multiplied by the number of average hours per month the temper ature fell below 50F, and then summed those totals to get an estimated number of annual Btu required for a 1.0 acre greenhouse (Table 3-15). There are many different sources of fuel to cr eate energy, and all have different estimated efficiencies (Buffington et al., 2002). This study uses diesel fuel heaters [estimated 70% efficient, producing 138,000Btu/gal], it was esti mated that it would require 8,266.20 gallons of diesel fuel to heat the greenhouse, with a base temperature at 50F. To obtain an estimated annual cost for fuel, the total annual number of gallons of fuel required was multiplied by the current local price of agricultural diesel fuel [$2.20/gallon or $0.000016/Btu (Grimsley Oil, 2005. Personal Communication.)] (Table 3-15). The estimated annual cost to heat a 1.0 acre greenhouse is $18,185.63 (Table 3-15). In addition, to determine the most efficient fuel source for heating the greenhouse, fuel requirements for both propane and electric heaters were determined. It was estimated that propane heater s [propane has an estimated efficiency of 80%, with a heat value of 92,000 BTU/gallon] would re quire 18,533.63 gallons of fuel annually, at an annual cost of $30,580.50 [$1.65/gallons or $0.000018/BTU (Energy Information Administration, 2006)]. Electric heat ers [electricity has an estimated efficiency of 100%, with a heat value of 3,413 BTU/hr] would require 499,588.15 kWh, at an annual cost of $39,967.05 [$0.08/kWh or $0.000023/BTU (Florida Po wer & Light (FPL). 2005. Personal Communication.)] (Table 3-15). Field Budget Analysis for Bell Peppers in Florida Common financial statements were created by the University of Florida, Food and Resource Economics Department, for field bell peppe r production in the stat e of Florida (Smith, 2005). These financial statements were modified to create a model using stochastic variables and scenarios. As in the greenhouse model, the field budget has stochastic variables in place for

PAGE 55

55 both yield and price. In addition, five scenarios were used to determine the effect of increased land prices in the State of Florida, on the estimated annual net profit that a grower might receive. Gross revenue was calculated by multiplying average yield per acre by the average wholesale market price taken from the Florida Agricultural Statistical Directory 2005 from 1994 (Table 3-19). Variable costs, as defined previously, are thos e costs that a grower will incur only if a crop is being grown. Variable costs for one acre of bell peppers in Florida we re calculated to be $2,772/acre (Table 3-19). Fixed costs are costs that a grower will incu r whether or not a crop is being produced. Fixed costs were calculated to be $3,759/acre (Table 3-19). Postharvest costs include harv esting and marketing costs. Total harvesting and marketing costs were calculated to be $4,708/acre (Table 3-19). Total costs were calculated by summing total va riable costs, fixed costs and harvest and marketing costs. Total costs equal $8,468/acre. Probabilities and Risk in Field Production Using SIMETAR As mentioned in the previous risk section, the program SI METAR, was used to assess the probabilities and risk involve d in field production of green be ll peppers in five different regions of Florida. Just as in greenhouse production, caution should be used when using any method of assessing risk. This m odel does not assess the risk of lo sses due to natural disasters or lack of grower knowledge. In th is model, the stochastic prices and yields are derivatives of average prices and yields that Florida growers have obtained from 1994-2004 (Florida Agricultural Directory, 2005).

PAGE 56

56 Results Scenario Analysis Used to Analysis Re d, Yellow and Orange Greenhouse-Grown Bell Pepper Production System in North Central Florida Three scenarios were set-up in this model in order to discover the different risks involved in producing colored bell peppers in a greenhouse, through simulation. Each color of bell pepper has its own distinctive price range and respective yield, a nd therefore its own levels of risk. For this reason, three scenarios were created: red, yello w and orange bell pepper colors. As stated previously, the model is set up with stochastic pr ice and yield, through the use of scenarios, each color was simulated simultaneously. The benefit of using scenario s in SIMETAR is that, the program runs the model multiple times using exac tly the same random deviates (risk) for each scenario. Thus, the analysis guarantees that each scenario was simulated using the same risk and the only difference is due to the differences in the scenario variables (Richardson et al., 2006). Price and yield were the only st ochastic variables in the model; however the model was set up so that as the stochastic yi eld and price moved along its defi ned distribution, the models net profit and net present value moved accordingly. Each scenarios stochastic variable was simulated at 500 iterations. Th e number of iterations used in the model was calculated by simulating the model for a range of iteration numbers (25, 50, 75, 100, 200, 500, 1,000, and 5,000) and then the summary statistics were compared to the stochastic a nd key output variables. The standard deviation for the key output vari ables were compared across the alternative iterations. As the number of iterations increased, th e standard deviation fo r the output variables changed until it reached equilibrium. The itera tion number where the standard deviation stabilized was the minimum number of iterations used for the model. Results from the simulation showed an a nnual mean price for greenhouse-grown red peppers to be $2.09/lb. 0.14, mean yields equal to 1.98 lb./ft2 0.20, annual net profit mean

PAGE 57

57 equals $13,693 18,292 for a 1.0 acre greenhouse produc ing red bell peppers. Annual mean yellow bell pepper prices equal $2.2 1/lb. 0.14, yields equal 1.90 lb./ft2 .18, annual net profit mean equal to $15,166 18,027 for a 1.0 acre greenhouse. Annual mean orange prices equal $2.37/lb. 0.15, yields equal 1.63 lb. /ft2 .14, annual net profit mean equals $3,855 15,962 for a 1.0 acre greenhouse producing orange bell peppers (Table 3-10). Probabilities and Risk Results for Greenhouse Colored Type Bell Pepper Production Using SIMETAR in North Central Florida Historical average wholesale price for gree nhouse-grown orange bell pepper [average $2.38/lb.] have been more than 114% higher than that of greenhouse-grown red bell peppers [average $2.09/lb.]. This can be partially explained by the fact that there is more risk involved in producing orange over red bell peppers. The reason fo r this risk is that pe ppers are vulnerable to the lightest injury during the two weeks from the time the fruit reaches mature green to the time it turns full color. Once the pepper begins to turn full color, its resistance to damage and ability to heal surface wounds is minimal. Any damage to the fruit surface from bacteria, insects, sunburn or physical injury cause s the peppers marketab le yield to drop qu ickly (Katz, 2006). Orange colored peppers are more susceptible to sunburn than re d colored fruit (Katz, 2006). This leads to a lower marketable yield, when simulated, for orange [1.63 lb. /ft2 .14] compared to red [1.98 lb./ft2 .2] fruit (Table 3-8) (Shaw et al., 2002). SIMETAR can be used to assess some risk, by estimating the probability that a simulated variable might be achieved. Price and yield were set as stochastic variables in the model, with defined parameters for the specific distribution function used. Table 316 shows select prices within the distribution ra nge that were used to calculate th e probability of obtaining the select price or lower, based on historical pricing data and the simulation software. The probability that a grower would get a price for a greenhouse-gr own red bell pepper below the minimum end of

PAGE 58

58 the distribution [$1.85/lb.] or a price above the maximum end [$2.34/lb.] is 0%. There is a 69% probability that the estimated price receive d would be greater than $2.00/lb. and a 31% probability that it would be equal to or less than $2.00/lb. The proba bility that the price received for yellow greenhouse-grown bell peppers would fa ll outside the parameters of the minimum [$1.97/lb.] or maximum [$2.458/lb.] parameter is 0%. There is a 94% probability that the price will be greater than $2.00/lb. and a 6% probability that the price will be less than or equal to $2.00/lb. Orange greenhouse-grow n bell peppers have a paramete r range of $2.11 $2.64/lb. It has a 100% probability of being greater than $2.00/l b. and a 0% probability of being less than or equal to $2.00/lb. (Table 3-16). The method for determining the probability of yield works much in the same manner as it did for price. Stochastic pr ice used a uniform probability distribution function [minimum, maximum value, uniform standard deviant], wh ereas yield uses a GRKS distribution function [minimum, middle, maximum value, uniform sta ndard deviant]. Table 3-17 displays select yields and their probabilities of obtaining those yields. There is a 0% probability, that the estimated yield for red greenhouse-grown bell peppe rs will fall outside th e parameter range of 1.18 2.48 lb./ft2. There is a 98% probability that the yield will be greater than 1.5 lb./ft2 for red greenhouse bell peppers and a 2% chance that the yi eld would be equal to or less than 1.5 lb./ft2. Yield parameters for yellow bell peppers are 1.25 2.33 lb. /ft2 and 1.33 2.14 lb. /ft2 for orange peppers (Table 3-17). It would be logical for a grower to want to produce the commodity that gets the highest price and the highest yield. However, the commod ity that consistently obtains the highest price is the orange bell pepper, but it also has the lowest yield. Red greenhouse-grown bell peppers have the highest yield but the lo west price. Thus, a grower mu st look at what combination of

PAGE 59

59 these variables will yield the greatest net profit. Table 3-18 shows that the mean net profit for yellow bell peppers is the highest of the three colors [$15,166] with a 22% probability of making more than $30,000 or a 1% probability of ma king more than $50,000 with a 1.0 acre greenhouse operation. Red bell peppers, whic h have the largest yield, have a mean simulated net profit of $13,693 and a 19% probability of making more than $30,000 and a 2% probability of making more than $50,000. Orange, the color that demands the highest price, ha s a simulated mean net profit of $3,855 and a 6% probability of making more than $30,000 and a 1% probability of making more than $50,000 (Table 3-18). As shown in this model, risk plays an important role in selecting the commodity a grower should produc e and when looking at risk among red, yellow and orange bell peppers, grown in greenhouses, it is apparent that yellow has the lowest risk involved, followed by red then orange bell peppers. Analysis of Florida Fiel d Budget Simulation The enterprise budget model was simulated using the average land cash rent price representing the average rental price of irrigated cropland in Fl orida, as defined in Appendix A2. Counties that produce bell peppers are Suwa nnee, Columbia, Union, Alachua and Putnam, Hardee, Lee, Collier, Palm Beach and Martin countie s (Florida Agricultural Statistical Directory, 2005). This model used the same stochastic yi eld and price variables as the greenhouse model and was simulated at 500 iterations. Estimated average net profit for a one acre fi eld operation in Florid a producing mature green bell peppers was $3,289 1,427 (Table 3-20). Probabilities and Risk in Field Production Using SIMETAR Both stochastic price and yield variables we re set up using a GRKS distribution function. The parameters needed for a GRKS distributi on function, is a minimum, middle and a maximum value. Simulation results display a 0% probability of a negative net profit. This also calculates a

PAGE 60

60 100% probability of a positive net present value. There was an 82% probability of a net profit greater than $2,000/acre. The proba bility for a net profit greater than $4,000/acre was 29%. The probability for a net profit greater than $6,000/acre was 4% (Table 3-21). Discussion Due to new and ever changing trade policies, Florida bell pe pper producers must compete with many other countrie s for market share. Countries su ch as Canada, Mexico, Israel, the Netherlands and Spain are quickly filling the in creasing demand for colored bell peppers in the United States (Cantliffe et al., 2001). Florid a growers, which have predominantly grown bell peppers in fields on raised beds, must adapt to the shifting market demand for colored bell peppers in order to maintain a substantial market share. In the U.S., consumption of red, orange and yellow bell peppers has increased dramatically during the last decade (U.S. Department of Agriculture, 2006). From 1995-2005, per capita consumption of fresh bell peppers has increase d from 6.2 lb to 7.1 lb (U.S. Department of Agriculture, 2005). In addition, over the last decade the U.S. population has increased from 267 million to 294 million (U.S. Departme nt of Agriculture, 2005). Unlike field production, the greenhouse envir onment uses a soille ss production system which avoids weeds, soil-borne pathogens or pl ant parasitic nematodes. Screened structures greatly reduce the presence of insects, and thos e that are present can be controlled using biological control. Additionally, there is increas ed efficiency in use of fertilizer and water, which can be recycled within the system (Smithe r-Kopperl et al. 2004). Met hyl bromide is a soil fumigant that is used to cont rol soil-borne pathogens, plan t parasitic nematodes and weeds (Smither-Kopperl et al., 2004). Field production in Florida is heavily dependant upon the use of methyl bromide. The ban on methyl bromide and the greater demand for high quality colored bell peppers has created an opportunity for grower s to produce bell peppers in a greenhouse.

PAGE 61

61 The most common greenhouse bell pepper produc tion season extends from mid-July or early August to May. Floridas temperate clim ate requires minimum heating for the production of bell peppers in a greenhouse compared to other re gions of the U.S. With ever increasing fuel prices, this will allow Florida gr owers to stay competitive in the bell pepper production industry. This allows growers to produce over extended pe riods depending on fruit prices and on the quality of the fruits harvested. These factors may allow produc tion to extend until June (U.S. Department of Agriculture, 2005). This project determined that greenhouse production of bell peppers can produce a net profit four times greater than field production. Results from Jovicich et al (2005) also reveal that greenhouse production is a profitable venture for Flor ida bell pepper producers. Jovicich et al (2005) estimated that returns to management and capital equaled $1.66/ft2 and a yield of 1.6 lb. /ft2 was required to break-even. Results from Jovicich et al (2005) and Smith (2005) were used to compare to the findings in this project. Jovicich et al (2005) reported that greenhouse production is a profitable venture, however variations were found between this and his study. Jovicich et al (2005) found a positive IRR and no net present value was determined. Possi ble reasons for this variation in results could be attributed to the use of land prices in the budg et analysis, differences in the definition of fixed versus variable costs, and a difference in pr ice and amount of fuel required for heating a greenhouse. Yield quantities presen ted in Jovicich et al (2005) we re gathered from Jovicichs own experimental data, where as yi elds used in this project was de termined by Shaw et al (2002). Field budgets constructed by Smith (2005) were used to compare field returns with this studies greenhouse production return. Results from th e comparison showed th at greenhouse production

PAGE 62

62 of bell peppers [$15,166/acre] can be up to four times higher than returns from field production [$3,289/acre]. Three simulation scenarios were used, re d bell pepper production, yellow bell pepper production and orange bell pepper production. Through the use of the program SIMETAR, budgets were set up in a manner in which net profit could be compared in different scenarios. Simulation of these scenarios enables the user to calculate risks and probabilities associated with each. Simulated scenarios for greenhouse-grown colo red bell peppers illustrated that yellow bell pepper price and yield combinati ons would earn growers the highest net profit, compared to the red with its highest yield, or the orange with the highest average wholesale price. The break-even fruit yields and required pr ices for profit determined by this study are attainable for Florida bell pepper growers. Current experimental and commercial crops are obtaining yields of 2 3 lb/ft2 and historical prices of colo red bell peppers range from $1.54 $2.54/lb. (Jovicich et al., 2005) (U.S. Department of Agriculture, 2006). Yields and market values such as these are sufficient to ma ke greenhouse bell pepper production profitable according to the results of this study. Greenhouse enterprises are variable in size, composition and management. Thus growers seeking to undertake the producti on of bell peppers in a greenhous e setting should use this study as a guide and calculate budgets for their own en terprise. This study used a greenhouse size of 1.0 acre, greenhouses with a differe nt size, construction material or configuration may differ in cost of initial investment and in cost of productio n. However, investment per unit area is always considered high compared investme nts in field vegetable production. Florida vegetable growers are currently faced with many challenges, from natural disasters to international competition which is able to ship year round. Fl orida growers must find ways to

PAGE 63

63 surmount obstacles such as urbanization [loss of warm weather, costal farm land], labor shortages [labor shifting to stea dy higher-paying jobs such as c onstruction], water restrictions, and the loss of methyl-bromide. For some gr owers seeking to produce high value specialty crops, such as colored bell peppers, soilless gree nhouse production may be an alternative that can overcome some of these obstacles Summary Florida fresh market vegetable growers ar e faced with increased pressure from urbanization, water and chemical restrictions, and foreign competition. Grow ers are in need of a clear alternative to field production that can off-set these growing obstacles. Past research has suggested that greenhouse vegeta ble production could be one alte rnative to field production. These studies have created ente rprise budgets for the production of greenhouse bell peppers. Additionally, studies have examined the pressure on the U.S. vegetable market from foreign countries. Additional research is needed to as sess the risk and potential earnings that growers can obtain in greenhous e vegetable production. The objective of this study wa s to determine the costs and benefits associated with greenhouse pepper production. Through the use of SIMETAR and Excel software, a budget analysis model was created for the production of greenhouse-grown bell peppers. Using this model, cost of production, net pr ofit and risk have been simulated and compared to field production. Variable cost from a greenhouse bell pepper venture was $128,362/acre [$2.95/ft2] compared to $2,772/acre for field production. Fixed costs were $39,659/acre annually for greenhouse production and $5,695/acre for field production. Although greenhouse production requires a sign ificantly larger capital investment compared to field production [field net profit : $3,289/acre], potential profits from growing colored peppers have been determined to be as much as four times greater in greenhouse

PAGE 64

64 production [greenhouse net profit s:$15,166/acre yellow]. These ar e significant findings for Florida growers searching for alternatives to field production. Greenhous e production may allow them to stay competitive in the U.S. fresh vegetable market. This study has determined that not only is it economically feasible to grow bell peppers in a greenhouse setting, but it has also shown that potential profit is significantly gr eater for greenhouse-grown bell peppers compared to field-grown bell peppers.

PAGE 65

65Table 3-1 Monthly average dollar per pound wholesale price of colored bell pepp ers from select countries 1998-2005Y Avg $/lbz CANADA ISRAEL MEXICOx NETHERLANDS SPAIN U.S.w Average Jan $1.71 $1.93 $1.72 $2.40 $1.94 $0.81 $1.75 Feb $2.01 $1.81 $2.26 $1.96 $0.81 $1.77 Mar $1.59 $2.27 $1.94 $2.38 $2.17 $0.89 $1.87 Apr $2.26 $2.46 $1.98 $2.48 $2.91 $0.97 $2.18 May $2.22 $1.71 $2.23 $0.97 $1.78 Jun $2.01 $0.85 $1.91 $0.87 $1.41 Jul $1.83 $1.80 $0.92 $1.52 Aug $1.71 $1.63 $0.83 $1.39 Sep $1.35 $0.91 $1.73 $0.68 $1.17 Oct $1.46 $1.79 $0.74 $1.33 Nov $1.70 $1.80 $1.39 $2.09 $0.87 $1.57 Dec $2.07 $1.98 $2.60 $2.30 $1.99 $0.95 $1.98 Annual Average $1.81 $2.08 $1.66 $2.08 $2.19 $0.86 $1.78 W Monthly wholesale market prices for the U.S. are an average of field and greenhouse bell peppers from California, Florida, Tex as and Georgia. X Wholesale market price for greenhouse-grown colored bell peppers, average annual whole sa le price for field bell peppe rs, from Mexico, was $1.04. Y Wholesale prices are derive d from New York, Atlanta and Miami terminal markets from 1998-2005. Z Wholesale prices are an average of daily terminal market wholesale prices. (U.S. Department of Agriculture, 2005)

PAGE 66

66 Table 3-2 Value of U.S. imports, fro m various countries, of bell pepper, 2000-2004Z Year Canada Mexico Netherlands Other World ----$1,000---2000 49,098 134,773 48,928 20,602 253,401 2001 64,424 188,042 50,195 25,835 328,497 2002 71,417 132,727 56,844 29,601 290,589 2003 78,661 158,147 63,735 38,136 338,679 2004 91,262 250,021 56,544 39,142 436,968 Z Value of colored and green bell peppers (U.S. Dept. of Agriculture, 2005)

PAGE 67

67 Table 3-3 Wholesale greenhouse pr ice comparison or red, yellow and orange bell peppers averaged from New York, Atlanta and Miami terminal markets 1998-2005 $/lb RedX YellowX OrangeX Mean $1.89 $2.00 $2.12 StDev 0.248 0.242 0.299 95 % LCI 1.705 1.822 1.897 95 % UCI 2.071 2.179 2.339 Min $1.54 $1.68 $1.69 Median $1.87 $1.98 $2.19 Max $2.34 $2.45 $2.66 W Average annual wholesale pri ce is in dollars per pound units XGreenhouse-grown colored bell pepper prices are an average from Canada, Israel, Netherlands and Spain YLCI = Lower Confidence Interval ZUCI = Upper Confidence Interval (U.S. Dept of Agriculture, 2005)

PAGE 68

68 Table 3-4 Yield comparison of various color greenhouse-grown bell pepper types used in the GRKS distribution function RedX YellowX OrangeX Mean 1.9579 1.8877 1.6590 StDev 0.2278 0.2503 0.2816 95 % LCI 1.8410 1.5843 0.9800 95 % UCI 2.0747 2.1911 2.3380 Min 1.5361 1.4747 1.4132 Median 2.0174 1.9355 1.5976 Max 2.3144 2.1915 1.9662 W Average yield is in pounds per foot squared units X Annual marketable yield Y LCI = Lower Confidence Interval Z UCI = Upper Confidence Interval (Shaw, 2002.)

PAGE 69

69 Table 3-5 Monthly marketable fruit yield, av erage wholesale market prices and gross revenues in a typical fall to spring greenh ousegrown red bell pepper crop in Florida w ith a total estimated yield of 1.96 lbs/ft2. Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Oct-March Yield Y (lbs/ft2) 0.326 0.326 0.326 0.326 0.326 0.326 End 1.96 Price Z ($/lbs) $1.59 $1.54 $1.60 $1.84 $2.05 $1.95 $1.87 $2.07 $2.34 $2.20 $1.87 $1.76 $1.90 Gross Revenue ($/ft2) $0.52 0.60 0.67 0.64 0.61 0.67 3.71 Gross Revenue ($/acre) $22,692.43 26,132.93 29,183.60 27,700.51 26,520.36 29,400.75 161,630.59 Y Monthly fruit yields estimated from experimental crops at the University of Flor ida (Shaw et al., 2002). Z Average wholesale price (1998-2005) for greenhousegrown bell peppers at the Miami, New York and Atlanta terminal markets (Appendix A-1)

PAGE 70

70 Table 3-6 Monthly marketable fruit yield, av erage wholesale market prices and gross revenues in a typical fall to spring greenh ousegrown yellow bell pepper crop in Florida with a total estimated yield of 1.89lbs/ft2. Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Oct-March Yield Y (lbs/ft2) 0.315 0.315 0.315 0.315 0.315 0.315 End 1.89 Price Z ($/lbs) $1.68 $1.69 $1.78 $1.97 $2.16 $1.99 $2.05 $2.26 $2.45 $2.22 $1.95 $1.80 $2.03 Gross Revenue ($/ft2) $0.56 0.62 0.68 0.63 0.65 0.71 3.84 Gross Revenue ($/acre) $24,374.30 26,938.30 29,580.08 27,287.98 28,111.34 31,012.17 167,304.17 Y Monthly fruit yields estimated from experimental crops at the University of Flor ida (Shaw et al., 2002). Z Average wholesale price (1998-2005) for greenhousegrown bell peppers at the Miami, New York and Atlanta terminal markets (Appendix A-1)

PAGE 71

71 Table 3-7 Monthly marketable fruit yield, av erage wholesale market prices and gross revenues in a typical fall to spring greenh ousegrown orange bell pepper crop in Florida with a total estimated yield of 1.66 lbs/ft2. Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Oct-March Yield Y (lbs/ft2) 0.277 0.277 0.277 0.277 0.277 0.277 End 1.66 Price Z ($/lbs) $1.69 $1.72 $1.85 $2.18 $2.27 $2.22 $2.20 $2.49 $2.66 $2.27 $1.99 $1.88 $2.20 Gross Revenue ($/ft2) $0.51 0.60 0.63 0.62 0.61 0.69 3.65 Gross Revenue ($/acre) $22,231.19 26,234.08 27,330.96 26,791.81 26,468.35 29,982.87 159,039.26 Y Monthly fruit yields estimated from experimental crops at the University of Flor ida (Shaw et al., 2002). Z Average wholesale price (1998-2005) for greenhousegrown bell peppers at the Miami, New York and Atlanta terminal markets (Appendix A-1)

PAGE 72

72 Table 3-8 Estimated fixed cost of production for a 1.0 acr e greenhouse growing bell peppers in North Central Florida Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Percent Cost of Total Investment Land cash rent 572.00 0.013 1 572.00 0.01 0% Site preparation z Labor leveling, compacting 11,056.80 0.254 3% Lime rock and milling 3,317.04 0.076 1% Water piping to greenhouse complex 2,764.20 0.063 1% Site electrical/communi cations to complex 11,056.80 0.254 3% Total site work 28,194.84 0.647 30 939.83 0.02 6% Greenhouse permit z 829.26 0.019 20 41.46 0.00 0% Greenhouse structure and cover materials z Columns, arch, gutters, polyethylene locking profiles 47,875.94 1.099 20 2393.80 0.05 11% Access gates, four pavilions 1,879.66 0.043 10 187.97 0.00 0% Side-wall and roof-vent motors 8,237.31 0.189 10 823.73 0.02 2% Insect proof netting, 50-mesh (all openings) 2,133.96 0.049 10 213.40 0.00 0% Polyethylene cover 4,831.82 0.111 3 1610.61 0.04 1% Thermal and shading screen 23,108.71 0.531 10 2310.87 0.05 5% Freight overseas-Gainesville 5,528.40 0.127 20 276.42 0.01 1% White ground cover 2,918.99 0.067 7 417.00 0.01 1% Total greenhouse structure and cover materials 96,514.80 2.216 22% Greenhouse erection and concrete (by contractor) z 88,454.39 2.031 20 4422.72 0.10 20% Construction supervision z 3,317.04 0.076 20 165.85 0.00 1% Head house structures (26'x32' ft) 5,897.98 0.135 20 294.90 0.01 1% Fruit size grading machine z 2,764.20 0.063 10 276.42 0.01 1% Refrigeration room z 11,056.80 0.254 20 552.84 0.01 3% Backup generator z 2,211.36 0.051 12 184.28 0.00 1%

PAGE 73

73 Table 3-8 Continued Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Percent Cost of Total Investment Heating and ventilation systems z 6% Floor mounted heating units (diesel) 0% 20 heating units 80 ,639 kcal each 28,537.60 0.655 10 2853.76 0.07 0% Polyethylene convection tube (62 x 984 ft per roll) 735.28 0.017 3 245.09 0.01 0% Diesel tank (2,996 Gal) with shading roof 1,990.22 0.046 8 248.78 0.01 2% Site diesel plumbing 1,658.52 0.038 10 165.85 0.00 9% Air circulation fans (60 units) 6,634.08 0.152 8 829.26 0.02 Total heating and ventilation systems 39,555.70 0.908 1% Irrigating and climat e control systems 3% Water well and pumps 5,528.40 0.127 15 368.56 0.01 3% Water tanks (2 x 14,979 Gal) 14,373.84 0.330 15 958.26 0.02 1% Nutrient injector and climate control systems 14,647.49 0.336 10 1464.75 0.03 1% Nutrient solution tanks (6 x 528 Gal) 2,819.48 0.065 10 281.95 0.01 1% Weather station and temperature and humidity sensors 4,422.72 0.102 10 442.27 0.01 0% Computer and software 2,764.20 0.063 5 552.84 0.01 0% Training for using control systems 829.26 0.019 0% Water filters 386.99 0.009 10 38.70 0.00 3% Valves and pressu re regulators 1,596.05 0.037 5 319.21 0.01 0% Irrigation emitters, stakes, and tubing 12,480.36 0.287 5 2496.07 0.06 0% Polyethylene pipe (18,700 ft) 875.15 0.020 5 175.03 0.00 1% Pipe connectors and adaptors 304.06 0.007 5 60.81 0.00 2% Other irrigation parts and labor 2,764.20 0.063 5 552.84 0.01 16% 3 Gallon nursery pots 8,126.75 0.187 5 1625.35 0.04 Total irrigation and climate control systems z 71,918.95 1.651

PAGE 74

74 Table 3-8 Continued Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Percent Cost of Total Investment Electrical z 44,227.19 1.015 10 4422.72 0.10 10% Drainage system (troughs, pipes, pump)z 1,724.86 0.040 5 344.97 0.01 0% Bulk storage tanks (three tanks of 2,008 gal each)z 6,799.93 0.156 10 679.99 0.02 2% Trellis accessories z Cables for plant support (17,717 ft) and "U" clamps 3,095.90 0.071 10 309.59 0.01 1% Poles for plant support (13 per row) 3,593.46 0.082 10 359.35 0.01 1% Stem ring clips 580.48 0.013 2 290.24 0.01 0% Total trellis accessories 7,269.85 0.167 2% Automotive (medium-duty delivery truck) 14,539.69 0.334 10 1453.97 0.03 3% Fork lift 6,634.08 0.152 10 663.41 0.02 2% Other durables z Scales 829.26 0.019 5 165.85 0.00 0% Sprayer and fogger 1,105.68 0.025 5 221.14 0.01 0% pH meter 82.93 0.002 5 16.59 0.00 0% Electrical conductivity meter 138.21 0.003 5 27.64 0.00 0% Ion meters for nitrate and potassium 386.99 0.009 4 96.75 0.00 0% Harvest trolleys 829.26 0.019 6 138.21 0.00 0% Harvest bins 3,317.04 0.076 6 552.84 0.01 1% Tools 2,211.36 0.051 4 552.84 0.01 1% Total other durables 8,900.72 0.204 2% Total investment $441,383.62 $10.13 $39,659.56 $0.91 Z (Jovicich et al., 2005)

PAGE 75

75 Table 3-9 Estimated variable cost of production for 1.0 acre of greenhouse-grown bell peppers in North Central Florida Bell Peppers Unit Quantity Price Amount Total Items (no. units) ($.unit) ($/acre) ($/acre) ($/ft2) Percent of Total Variable Cost Production costs Preharvest Fertilizer X 7,747.97 0.18 6.08% 1.06 lbs/plant used in 298 days lbs 11,464.00 0.68 7,747.97 Biologicals Y 1,691.08 0.04 1.33% A. colemani (10.8/ft2) 2 releases x500 20.83 22.55 469.80 N. califonrnicus (107/ft2) 1 release x1000 34.90 31.83 1,110.76 B. thuringiensis 2 drain applications 2.5-Gal 1.04 106.10 110.52 Pollinators y 466.84 0.01 0.37% Bumble Bees 50-bee hive 2.00 233.42 466.84 Other material inputs X 10,758.91 0.25 8.45% Twine spool x 9842.5 ft 4.00 13.79 55.17 Double hooks unit 8,333.00 0.01 88.41 Bleach Gallon 20.00 1.06 21.20 Seedling trays Unit 57.00 3.18 181.43 Media seedlings ft3 22.00 2.10 46.27 Seeds unit 11,375.00 0.37 4,224.11 Media for pots (perlite) ft3 4,780.00 1.20 5,744.45 Sticky cards (insect pest monitoring) box x 100 15.00 26.53 397.88 Energy 19,435.66 0.45 15.26% Diesel Gallon 8,266.20 2.20 18,185.63 Electricity kWh 15,625.34 0.08 1,250.03 Labor X 2,818.55 0.06 2.21% Seeding and seedling growing h 1.00 52.00 52.00 Preparation greenhouse h 1.00 80.00 80.00 Transplanting h 1.00 25.00 25.00 Plant support with twines and hooks h 30.00 50.00 1,500.00

PAGE 76

76 Table 3-9 Continued Unit Quantity Price Amount Total Items (no. units) ($.unit) ($/acre) ($/acre) ($/ft2) Percent of Total Variable Cost Removal of cull fruits, old leaves and shoots h 30.00 25.00 750.00 Fertilizer preparation h 30.00 1.00 30.00 Solution monitoring and filter cleaning h 30.00 2.00 60.00 Scouting (pests, diseases and beneficials) h 30.00 3.00 90.00 Removal of plants and cleaning h 1.00 80.00 80.00 Polyethylene cover change (every 3 years) h 0.33 35.00 11.55 Empting and washing pots (every 2 years) h 35.00 4.00 140.00 Total Labor h 2,177.17 Total preharvest costs 42,919.02 0.99 33.44% HarvestX Pick labor (75 h/harvest x 30 harvests) h 1,170.00 7.50 8,775.00 Total harvest costs 8,775.00 0.20 6.84% Packing and MarketingX Pack labor (1,442 h) lbs 99,357.16 0.06 5,858.79 4.56% Cartons, dividers and labels lbs 99,357.16 0.08 7,661.50 Marketing and miscellaneous packing lbs 99,357.16 0.10 10,365.56 Vehicle operation Miles 5,178.21 0.32 1,666.70 Sale transaction expenses (15% of Total Sales) 28,115.81 Total packing and marketing costs 53,668.37 1.23 41.81% Other Variable Costs Repairs and Maintenance 8,000.00 Taxes and Licenses 2,000.00 Greenhouse Insurance 5,000.00 Vehicle Insurance 2,000.00 Telephone 3,500.00 Misc 2,500.00 Total Other Expenses 23000.00 0.53 Total production costs $128,362.39 $2.95 X (Jovicich et al., 2005) Y (Koppert Biological Systems, 2006)

PAGE 77

77 Table 3-10 Comparison of select simulated variables of a 1.0 acre colored greenhous e-grown bell Peppers operation Red Yellow Orange Price V $2.09 $2.21 $2.37 StDev 0.142 0.139 0.153 CV Z 6.759 6.276 6.449 Min $1.85 $1.97 $2.11 Max $2.34 $2.45 $2.64 YieldW 1.981 1.895 1.634 StDev 0.197 0.182 0.141 CV Z 9.949 9.593 8.604 Min 1.180 1.247 1.332 Max 2.483 2.325 2.136 Net Profit X $13,693.09 $15,166.20 $3,855.18 StDev 18292.44 18027.23 15962.14 CV Z 133.59 118.86 414.04 Min ($41,387.92) ($43,276.41) ($29,908.96) Max $65,070.33 $64,664.70 $67,261.85 NPV Y ($306,088.09) ($291,976.00) ($400,115.35) StDev 174690.95 172215.27 152549.92 CV Z -57.07 -58.98 -38.13 Min ($832,928.96) ($850,997.31) ($723,102.69) Max $178,328.63 $174,564.13 $198,667.15 V Simulated average (mean) price W Simulated average (mean) yield X Simulated average (mean) net profit for 1.0 acre greenhouse Y Simulated average (mean) net present value Z Coefficient of Variation

PAGE 78

78 Table 3-11 Sensitivity analysis for a 1.0 acre greenhouse-grown bell pepper operation in North Central Florida Yield Wholesale Market Price ($/lbs) (lbs/ft2) $1.80 $1.90 $2.00 $2.10 $2.20 $2.30 $2.40 ----------------------------------------Net Revenue ($/ft2)------------------------------------0.20 (3.47) (3.45) (3.43) (3.41) (3.38) (3.36) (3.34) 0.41 (3.10) (3.06) (3.02) (2.98) (2.94) (2.89) (2.85) 0.61 (2.73) (2.67) (2.61) (2.55) (2.49) (2.42) (2.36) 0.82 (2.36) (2.28) (2.20) (2.12) (2.04) (1.95) (1.87) 1.02 (2.00) (1.89) (1.79) (1.69) (1.59) (1.48) (1.38) 1.23 (1.63) (1.51) (1.38) (1.26) (1.14) (1.01) (0.89) 1.43 (1.26) (1.12) (0.97) (0.83) (0.69) (0.54) (0.40) 1.64 (0.89) (0.73) (0.57) (0.40) (0.24) (0.07) 0.09 1.84 (0.53) (0.34) (0.16) 0.03 0.21 0.40 0.58 2.05 (0.16) 0.05 0.25 0.46 0.66 0.87 1.07 2.25 0.21 0.44 0.66 0.89 1.11 1.34 1.56 2.46 0.58 0.82 1.07 1.31 1.56 1.81 2.05 2.66 0.95 1.21 1.48 1.74 2.01 2.28 2.54 2.87 1.31 1.60 1.89 2.17 2.46 2.75 3.03 3.07 1.68 1.99 2.29 2.60 2.91 3.22 3.52 3.28 2.05 2.38 2.70 3.03 3.36 3.69 4.01 3.48 2.42 2.76 3.11 3.46 3.81 4.16 4.50 3.69 2.78 3.15 3.52 3.89 4.26 4.63 5.00 3.89 3.15 3.54 3.93 4.32 4.71 5.10 5.49 4.10 3.52 3.93 4.34 4.75 5.16 5.57 5.98

PAGE 79

79 Table 3-12 Estimated break-even prices for a range of marketable bell pepper fruit yields of 1 3.5 lbs/ft2 Yield v Price w (lb/ft2) ($/lbs) 1.00 3.83 1.25 3.07 1.66x 2.31 1.89y 2.03 1.96z 1.96 2.50 1.53 3.00 1.28 3.50 1.10 V Marketable greenhouse-grown colored bell pepper yield ranged from 1.66-1.96 lb/ft2 (Shaw et al., 2002) W Wholesale fruit price for colored bell peppers range from $1.54-$2.54/lb, New York, Atlanta and Miami Terminal markets 1998-2005 (U.S. Department of Agriculture, 2005) X Average annual fruit yield for orange greenhouse-grown bell peppers Y Average annual fruit yield for yellow greenhouse-grown bell peppers Z Average annual fruit yield for red greenhouse-grown bell peppers

PAGE 80

80 Table 3-13 Surface area of a 1.0 acre greenhouse of a saw-tooth design Surface Area of Greenhouses (ft2) End Walls in ft2 5,640.00 Side Walls 4,416.00 Roof 43,347.00 Vent End 776.00 Vent Side 6,336.00 GH Sub Total Surface Area 60,515.00

PAGE 81

81 Table 3-14 Heat loss calculati ons required for a 1.0 acre sawtooth greenhouse Heat Loss Calculations Q=A(Ti-To)/R Q = Heat loss, BTU/hr A = Area of greenhouse surface, sq ft R = Resistance to heat flow (Ti-To) = Air temperature differ ence between inside and outside Conduction Heat Loss, Qc: Qc = Area x T/R 888,681.82 BTU/hr Volume ft3: 589,199.52 Air Infiltration Losses, QA: QA: 0.20 x Volume x C x T C = Number of air exchanges per hour 185,597.85 BTU/hr Perimeter Heat Loss, QP: QP: P x L x ( T) P = Perimeter heat loss coefficient, BTU/ft F hr L = Distance around perimeter 14,145.60 BTU/hr Total Heat Loss, QT: QT = QC + QA + QP Heat Required: 1,088,425.27 BTU/hr Heat Required for 1 acre: 1,088,425.27 BTU/hr 318,905.73 Watts or 318.91 kWh Heat required is based on an Aver age Minimum daily January temperature of 44F and keeping the temper ature at a level of 50F

PAGE 82

82 Table 3-15 Cost to obtain required BTU for 1 acr e greenhouse in North Central Florida based on historical temperature data Months Hours Heat is needed S BTU Required T Gallons of Diesel V Cost of Diesel Y Jan 294.83 320,900,421.46 2,325.37 $5,115.80 Feb 177.33 193,010,452.59 1,398.63 $3,076.98 Mar 110.17 119,911,811.66 868.93 $1,911.64 Apr 59.80 65,087,830.97 471.65 $1,037.63 May 3.33 3,624,456.14 26.26 $57.78 Jun 0.00 0.00 0.00 $0.00 Jul 0.00 0.00 0.00 $0.00 Aug 0.00 0.00 0.00 $0.00 Sep 0.00 0.00 0.00 $0.00 Oct 29.20 31,782,017.80 230.30 $506.67 Nov 94.00 102,311,975.10 741.39 $1,631.06 Dec 279.40 304,106,019.59 2,203.67 $4,848.07 Annual 1,048.06 1,140,734,985.31 8,266.20 $18,185.63 Months Hours Heat is needed S BTU Required T kWh Required W Cost of Electricity Z Jan 383.5 417,411,089.89 122,300.35 $9,784.03 Feb 278.17 302,767,256.52 88,710.01 $7,096.80 Mar 179.4 195,263,492.90 57,211.69 $4,576.94 Apr 115 125,168,905.70 36,674.16 $2,933.93 May 16.5 17,959,016.91 5,261.94 $420.96 Jun 0.00 0.00 0.00 $0.00 Jul 0.00 0.00 0.00 $0.00 Aug 0.00 0.00 0.00 $0.00 Sep 1 1,088,425.27 318.91 $25.51 Oct 53 57,686,539.15 16,902.00 $1,352.16 Nov 170.2 185,249,980.44 54,277.76 $4,342.22 Dec 369.8 402,499,663.73 117,931.34 $9,434.51 Annual 1,566.57 1,705,094,370.50 499,588.15 $39,967.05

PAGE 83

83 Table 3-15 Continued Months Hours Heat is needed S BTU Required T Gallons of Propane U Cost of Propane X Jan 383.5 417,411,089.89 4,537.08 $7,486.18 Feb 278.17 302,767,256.52 3,290.95 $5,430.06 Mar 179.4 195,263,492.90 2,122.43 $3,502.01 Apr 115 125,168,905.70 1,360.53 $2,244.88 May 16.5 17,959,016.91 195.21 $322.09 Jun 0.00 0.00 0.00 $0.00 Jul 0.00 0.00 0.00 $0.00 Aug 0.00 0.00 0.00 $0.00 Sep 1 1,088,425.27 11.83 $19.52 Oct 53 57,686,539.15 627.03 $1,034.60 Nov 170.2 185,249,980.44 2,013.59 $3,322.42 Dec 369.8 402,499,663.73 4,375.00 $7,218.74 Annual 1,566.57 1,705,094,370.50 18,533.63 $30,580.50 S Hours based on historical weather temperatures taken from Citra, FL 2000-2006 T BTU figures are based on the heat needed to heat a 1 acre greenhouse U Estimated Propane Efficiency is 80% with a heat value of 92,000 BTU/gal (Buffington et al., 2002) V Estimated Diesel Fuel Effi ciency is 70% with a heat value of 138,000 BTU/gal (Buffington et al., 2002) W Estimated Electricity Efficiency is 100% with a heat value of 3,413 BTU/kWh (Buffington et al., 2002) X Price of Propane = $1.65/gal (Energy Information Administration, 2006) Y Price of Diesel Fuel = $2 .20/gal (Grimsely Oil, 2005) Z Price of Electricity = $0.08/kWh (FPL, 2005)

PAGE 84

84 Table 3-16 Probability of obt aining select prices for greenhouse grown red, yellow and orange bell peppers. Price RedX Yellow Y Orange Z x1-value $1.80 $1.80 $1.80 Prob(X<=x1) 0% 0% 0% x2-value $2.00 $2.00 $2.00 Prob(X<=x2) 31% 6% 0% x3-value $2.10 $2.10 $2.10 Prob(X<=x3) 51% 27% 0% x4-value $2.40 $2.40 $2.40 Prob(X<=x4) 100% 90% 55% x5-value $2.45 $2.45 $2.45 Prob(X<=x5) 100% 100% 64% X Probability of obtaining select price or lower based on simulated distribution of a minimum of $1.85/lbs and maximum of $2.34/lbs. Y Probability of obtaining select price or lower based on simulated dist ribution of a minimum of $1.97/lbs and maximum of $2.45/lbs. Z Probability of obtaining sel ect price or lower based on simulated distribution of a minimum of $2.11/lbs and maximum of $2.64/lbs.

PAGE 85

85 Table 3-17 Probability of obt aining select yields for greenhouse grown red, yellow and orange bell peppers. Yield Red X Yellow Y Orange Z x1-value 1.25 1.25 1.25 Prob(X<=x1) 0% 0% 0% x2-value 1.50 1.50 1.50 Prob(X<=x2) 2% 3% 15% x3-value 2.00 2.00 2.00 Prob(X<=x3) 47% 69% 99% x4-value 2.25 2.25 2.25 Prob(X<=x4) 94% 99% 100% x5-value 2.45 2.45 2.45 Prob(X<=x5) 100% 100% 100% X Probability of obtaining select yield or lower based on simulated distribution of a minimum of 1.18 lbs/ft2. Mean of 1.98 lbs/ft2 and a maximum of 2.48 lbs/ft2. Y Probability of obtaining select yield or lo wer based on simulated distribution of a minimum of 1.25 lbs/ft2. Mean of 1.90 lbs/ft2 and a maximum of 2.33 lbs/ft2. Z Probability of obtaining select yield or lo wer based on simulated distribution of a minimum of 1.33 lbs/ft2 mean of 1.63 lbs/ft2 and a maximum of 2.14 lbs/ft2.

PAGE 86

86 Table 3-18 Probability of obtaini ng select net profits for 1.0 acre greenhouse operation growing: red, yellow and orange bell peppers. Net Profit Red X Yellow Y Orange Z x1-value $0.00 $0.00 $0.00 Prob(X<=x1) 23% 19% 46% x2-value $20,000.00 $20,000.00 $20,000.00 Prob(X<=x2) 61% 57% 84% x3-value $30,000.00 $30,000.00 $30,000.00 Prob(X<=x3) 81% 78% 94% x4-value $40,000.00 $40,000.00 $40,000.00 Prob(X<=x4) 93% 93% 97% x5-value $50,000.00 $50,000.00 $50,000.00 Prob(X<=x5) 98% 99% 99% X Probability of obtaining select net profits or lo wer based on combinations of simulated price and yield variables. Y Probability of obtaining select net prof its or lower based on combinations of simulated price and yield variables. Z Probability of obtaining select net profits or lower based on combinations of simulated price and yield variables.

PAGE 87

87 Table 3-19 Estimated costs of producing one acre of field bell peppers for fresh market, in Florida Y Quantity Unit $/Unit Total GROSS RETURNS Bell Peppers (55-lb bushel) 1107.81 55-lb bushel $10.90 $12,080.15 Item Unit Quantity Price Value Cash Expenses, Preharvest: Plants 1000 14.00 77.00 1078.00 Lime, applied ton 0.50 33.00 16.50 Fertilizer, mixed cwt. 10.00 10.13 101.30 Side-Dress Fertilizer cwt. 2.00 15.00 30.00 Plastic Mulch rolls 2.80 120.00 336.00 Mulch Removal acre 1.00 75.00 75.00 Herbicide acre 1.00 4.70 4.70 Insecticide acre 1.00 66.34 66.34 Fungicide appl. 5.00 9.54 47.70 Tractor + Machinery acre 1.00 66.55 66.55 Truck (pickup) mi. 20.00 0.19 3.80 Labor hr. 8.00 7.00 56.00 Irrigation appl. 1.00 408.00 408.00 Land Rent acre 1.00 70.00 70.00 Interest on Oper. Cap. $ 2289.88 0.07 160.29 Total Preharvest Cash Expenses 2520.17 Interest on Variable Costs 10% 252.02 Total Variable Cost 2772.19 Fixed Costs, Preharvest: Tractor + Machinery acre 1.00 74.58 74.58 Truck (pickup) mi. 20.00 0.18 3.60 Irrigation acre 1.00 85.00 85.00 Overhead and Management $ 2520.17 0.10 252.02 Land Cash Rent Z acre 1.00 572.00 572.00 Total Preharvest Fixed Costs 987.20 Total Preharvest Costs 3759.39 Harvest and Marketing Costs: Picking and Hauling 55-lb bushel 1107.81 1.25 1384.77 Grading and Packing 55-lb bushel 1107.81 1.75 1938.67 Boxes 55-lb bushel 1107.81 0.70 775.47 Marketing 55-lb bushel 1107.81 0.55 609.30 Total Harvest and Marketing Costs 4708.21 Total Costs 8467.60 RETURN TO OPERATOR LABOR, LAND, CAPITAL, & MGT. 3,612.56

PAGE 88

88 Table 3-19 Continued Quantity Unit $/Unit Total Operator and Unpaid Family Labor hrs. 40 $ 8.00 320.00 RETURN TO OPERATOR LABOR, LAND, CAPITAL, & MGT. $3,292.56 X (Florida Agricultural Statistical Directory, 2005) Y (Smith, 2005) Z (Florida extension agent estimates)

PAGE 89

89 Table 3-20 Simulated 1.0 acre field pepper return to land and owner in Florida Net Profit Mean Y $3,288.81 StDev 1,427.31 CV Z 43.399 Min ($237.49) Max $7,971.94 Y Average annual simulated return to land and owner Z CV = Coefficient of Variation

PAGE 90

90 Table 3-21 Probability of obtai ning select net profit for one acre of field bell pepper production in Florida Net Profit x1-value $0.00 Prob(X<=x1) 0% x2-value $2,000.00 Prob(X<=x2) 18% x3-value $4,000.00 Prob(X<=x3) 71% x4-value $6,000.00 Prob(X<=x4) 96% x5-value $10,000.00 Prob(X<=x5) 100%

PAGE 91

91 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 JanFebMarAprMayJunJulAugSepOctNovDec MonthDollars per Pound ($) Red Greenhouse Red Field Figure 3-1 Greenhouse vs. field grown red bell pepper average wholesale terminal market prices; 1998-2005 (U.S. Department of Agriculture, 2006)

PAGE 92

92 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 JanFebMarAprMayJunJulAugSepOctNovDec MonthDollars per Pound ($) Yellow Greenhouse Yellow Field Figure 3-2 Greenhouse vs. field grown yellow bell pepper average wholesale term inal market prices; 1998-2005 (U.S. Department of Agriculture, 2006)

PAGE 93

93 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 JanFebMarAprMayJunJulAugSepOctNovDec MonthDollars per Pound ($) Orange Greenhouse Orange Field Figure 3-3 Greenhouse vs. field grown orange bell pepper average wholesale te rminal market prices; 1998-2005 (U.S. Department of Agriculture, 2006)

PAGE 94

94 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 $2.00 JanFebMarAprMayJunJulAugSepOctNovDec MonthsAverage Dollar Per Pound Price ($/lb) Green Red Yellow Orange Figure 3-4 Comparison of aver age wholesale terminal market field-grown be ll pepper prices; 1998-2005(U.S. Department of Agriculture, 2006)

PAGE 95

95 Figure 3-5 Surface area of a 1.0 acre saw-tooth greenhouse

PAGE 96

96 CHAPTER 4 THE ECONOMIC FEASIBILITY OF GROWING ORGANIC AND CONVENTIONAL GREENHOUSE STRAWBERRIES AS AN AL TERNATIVE TO FIELD PRODUCTION IN FLORIDA In Floridas 2003-2004 growing season, 7,100 acres of fresh strawberries were planted in fields under plastic mulch on raised beds, irriga ted using drip irrigation (Florida Statistical Directory, 2005). Florida is th e second largest fresh market st rawberry producing state in the U.S. behind California. In 2005, Floridas fres h market strawberry value [$1.10/lb.] per pound [lb.] exceeded that of California [$0.62/lb.] (U .S. Department of Agriculture, 2006). In 20042005, the value of production of Florida fresh ma rket strawberries was $196,790,000 [16% of the total value of fresh market st rawberries in the U.S., valu ed at $1,235,122,000] the second highest value behind California [$977,985,000, which is 80% of the total value of U.S. fresh market strawberry production]. Florida strawberry grower s have been able to maintain their market share because of their ability to produce in th e winter months. Currently, the per capita consumption of strawberries has increased 275% [1.97 lb. in 1980 to 5.41 lb. in 2004], while imports, of fresh market strawberries, have increased 743% [12.7 million lb. to 94.4 million lb.] from 1980 to 2004 (U.S. Department of Agricu lture, 2005). Today, increased demand for strawberries has allowed other coun tries such as Mexico and Chile to fill some of the demand in the U.S. (U.S. Department of Agriculture, 2005). Florida strawberry growers are faced with many challenging obstacles such as: the loss of methyl-bromide, urbanization in key production areas, weather, water re strictions and bird damage. The objective of this chapter was to create a model determining the feasibility of greenhouse production of strawberri es, both conventionally and organically, as an economical alternative for Florida strawberry grow ers, competing in a global economy.

PAGE 97

97 California and International Pressure on Florida Strawberry Production The U.S. is the leading producer of strawber ries in the world. In the 2005-2006 growing season the world production of fresh strawber ries equaled 5,782,725,137 lb. The U.S. produced 41% [2,380,992,432 lb.] of the worlds production of strawberries in 2005, followed by China producing 25% [1,424,186,214 lb.] and Spain pr oducing 11% [650,363,673 lb.] (Foreign Agricultural Service, Counselor and Attach Reports, Official Estimates, USDA Estimates, 2006) (Figure 4-1, Figure 4-2). Both consumption and imports of fresh strawb erries are on the rise in the U.S. (U.S. Department of Agriculture, 2005). From 1980 to 2004, domestic consumption increased by 359%. Domestic consumption in 1980 wa s 447.7 million pounds and rose to 1,606.3 million pounds in 2004. During that same time period [1980-2004] imports of fresh strawberries increased by 743% [12.7 million pounds in 1980 to 94.4 million pounds in 2004] (U.S. Department of Agriculture, 2005). Mexican imports of fresh st rawberries overlap with Fl oridas strawberry production November to March (Perez et al., 2006) (Bertele sen et al., 1995). The highest U.S. strawberry import volume peaks in March [18,116,000 lb.] a nd April [19,212,000 lb.] (Figure 4-3) (U.S. Department of Agriculture, 2005). Mexico is one of Floridas largest interna tional competitors for strawberry production due to overlap of growing seasons (Perez et al ., 2006). From 1993 to 2004, the volume of fresh strawberries imports, from Mexico has increased 342% [fresh: 26,455,472/lb. in 1993 to 90,389,528/lb. in 2004]. In 2004, the value of Mexi can fresh strawberry imports equaled $60 million (U.S. Department of Agriculture, 2006).

PAGE 98

98 The Production of Organic Strawberries as an Alternative to Conventional Production The production of organic strawberries is an al ternative to the need for methyl bromide use for strawberries. Organic producer s do not use methyl bromide or any other synthetic pesticide or fertilizer in the production of certified organic strawberries Instead they use organically acceptable production methods to control or suppre ss weeds, plant pathogens, and nematodes. Included are, the use of plastic mulches coupl ed with supplemental hand weeding to suppress weeds, soil solarization, good sanita tion practices, biological control fungi and/or organic matter, hot water treatments, crop rotation, various other cultural controls. These techniques are part of an overall integrated pest management (IPM) program (U.S. Environmental Protection Agency, 2006). The production of organic agriculture is rapi dly growing in the United States. Consumer interest in organic products co ntinues to increase, which lead s to new organic production and marketing systems. The USDA implemented the national organic standards in 2002, these standards allowed organic production to spread across the country, as consumer demand and grower awareness increased (U.S. Department of Agriculture/AMS, 2006). During the last halfcentury, growers developed rigorous standards and management-intensive production systems for organic farming. Prior to the implementa tion of the USDAs national organic standards, many States and most organic dist ributors required thirdparty certification to ensure that organic farmers adhered to organic production standa rds. USDAs new rules make certification according to the national standards mandatory, if growers want their product to display the USDA Certified Organic label (U.S. Department of Agriculture, 2003). However, many growers do label their products organic without displaying the USDA certified label, when selling at farmers markets or local stands.

PAGE 99

99 The advantages of organic agriculture are: elimination of synthetic fertilizers and pesticides and the building of h ealthy soil. Organically grown st rawberries can be sold at a higher price than conventional strawberries, which does not nor mally offset the lower yield. While only a small percentage of the Florida strawberry crop is produced organically, price premiums for certified organic strawberries pr ovide a considerable incentive for growers to consider organic production techniques in th e future. Organic stra wberry production also eliminates environmental stress caused by pesticide use, thus increasing so il biotic diversity and beneficial organisms (U.S. Envi ronmental Protection Agency, 2006). Organic production has many advantages wh ich offer growers an alternative to conventional production, since the loss of methyl bromide. Howe ver, it is unlikely that all strawberry farms will switch to organic production, doing so woul d cause a shift in the price premiums that organic production has over conventi onal production. If all la rge growers did shift to organic production practices, the price di fferential between conventional vs. organic strawberries would decrease along with some of the price incen tives to convert to organic production practices. Instead, without methyl bromide, most conve ntional (non-organic) Florida strawberry producers probably would be able to use a variety of ot her pesticides to help improve yields over those obtained under organic system s alone (U.S. Environmen tal Protection Agency, 2006). The present study compares the economic f easibility of organic st rawberry production to conventional production in a greenhouse. Methods This study describes and applies stochastic si mulation to a financial model of a 1.0 acre strawberry greenhouse operation in North Central Florida (see Chap ter 3 for detailed information regarding stochastic simulation).

PAGE 100

100 The Use of Stochastic Variables in a Simulati on Model to Estimate Key Output Variables (KOV) Price was simulated using an empirical probab ility distribution, a distribution function in SIMETAR. An empirical distribution was used because the empirical di stribution has a finite minimum and maximum based on the observed values so it is a closed form. The shape of the distribution is defined by the data. The f unction assumes a conti nuous distribution so it interpolates between the specifi ed points on the distribution (Si) using the cumulative distribution probabilities (F(Si)). Si represents an array of N sorted random values including the min and max, F(Si) cumulative probabilities for the Si values, including the end points of zero and one, the use of a uniform standard deviate [USD ] is optional, but was used in this model. It should be noted that i = n [n = number of random variables] for the Si and F(Si) parameters, which denotes that these are ranges and not individual values. The wholesale price input variables [Si, F(Si), [USD]] for conducting an empirical probability distribution for each scenario are shown in Table 4-1. Yield was simulated using the GRKS distribut ion (Richardson et al., 2006). The lb. /ft2 input variables [min, mid, max] for conducting a GRKS distribution for each of the greenhouse production method scenarios are shown in Table 4-2. For detailed information on stochastic models, key output variables (KOV) and GR KS distributions refer to Chapter 3. Greenhouse Structure and Crop Systems Used in Growing Strawberries in North Central Florida Experiments by Paranjpe et al (2004) were performed in a 1.0 acre passively ventilated high roof greenhouse unit of a saw-t ooth design, located at the Prot ected Agriculture Center, part of the University of Florida Plant Science Rese arch Unit in Citra, Florida. For additional information on total floor area of greenhous e or heaters used see Chapter 3).

PAGE 101

101 Planting, yield; crop cycle and fertilizati on data for this model were taken from experiments performed at the University of Fl oridas Horticultural Science Research Unit, Gainesville, Florida (Paranjpe et al., 2004). The study that this model was based on used hanging bed-pack containers. These containers were designed for strawberry producti on and could hold 1.02 plants per linear foot. Containers were arranged parallel to each ot her and were spaced 20 inches apart. The combination of plant and row spacing used in the experimental trials yielded a plant density of 2.04 plants/ft2. The study determined the average yield to be 2.25 lb./ft2 for non-organic production from November through March (Table 43). Organic strawberry yield was estimated to be 1.58 lb./ft2, from November to March, by assumi ng a 30% yield decrease over the nonorganic strawberry yield (Ames et al., 2006) (Table 4-4). Wholesale Strawberry Fruit Prices Historical fruit prices for strawberry fruit we re gathered from the U.S. Department of Agricultures USDA Fruit and Vege table Market News Portal (U.S Department of Agriculture, 2005). Daily price data were gathered for the la st seven years (1998-2005) from three different terminal markets (New York, Atlanta and Miami) to calculate a maximum, minimum and mean dollar per pound wholesale fruit price used in th e budget analysis model. Means and standard deviation were calculated for different price seri es. Fruit prices were sorted by long or short stem, origin and weight of packaging. Once historical daily prices for no stem strawb erries were collected, the data was sorted, matched and cropped from January 1998 to December 2005. An annual model is used in this study so the daily data was averaged to genera te an annual average dollar per pound price for the two scenarios organic and non-organic strawberries.

PAGE 102

102 Historically, annual average prices of organic fruit have been more than one and a half times higher than that of non-organic fruit. A nnual average wholesale price for non-organic fruit is $1.55/lb. .13 (Table 4-5), versus average annu al organic price of $2.53 .45 (Table 4-7). Monthly non-organic prices peaked between November [$2.41 1.25] and December [$2.51 1.18] (Table 4-6). Organic fruit prices p eaked between February [$3.46 0.67] and March [$3.31 1.47] and again in September [$3.18 0.70] (Table 4-8) (Figure 4-4). The study used in this model had a harvest period of November to March. The average wholesale price during the November to March harvest period was $1.76 /lb. (Table 4-3) for non-organic and $2.60/lb. (Table 4-4) for organic. Enterprise Budget Analysis of Greenhouse-Grown Strawberries An enterprise budget was constructed consisting of gross revenue, costs [initial investment, variable and fixed] and profit th at is associated with a 1.0 ac re strawberry greenhouse operation in North Central Florida. Budget tables consiste d of items, quantities, un its and prices used. This section describes the generic model and, when appropriate, indicates changes in the variables for the different st rawberry production scenarios. Common financial statements were devel oped and used for organic and non-organic strawberries. In creating the financial statements one fixed cost and one variable cost statement was made. Scenario functions were substituted in the variable cost statement for fertilizer, organic certification, pick labor, number of packagi ng flats, number of fl ats cooled, and number of flats transported. These scenario functions allowed comparisons between organic and nonorganic production to be made, by simulati ng each production method with its own set corresponding variable costs. In the organic scenario total fertilizer cost was $763/acre, nonorganic fertilizer cost was estimated at $1,346/acre. Organic certi fication was equal to $400/acre, not required for non-organic production. Organic pick labor was estimated at 199

PAGE 103

103 hours required; non-organic pick labor was estimate d at 285 hours. Number of flats required to be packaged, cooled and transported was estim ated to be 6,605 for organic, and 9,437 for nonorganic. Additionally, price and yield scen arios were set up for organic and non-organic financial statements. Annual receipts [gross revenue] were derived by multiplying the annual stochastic dollar per pound price by the volume of strawberries pr oduced [gross revenue = sales volume x price, sales volume = yield x usable greenhouse area] for the November May harvest period (Tables 4-3 and 4-4). Total fruit yiel d was estimated to be 2.25 lb./ft2 for non-organic and 1.58 lb./ft2 for organic production, based on th e technology and practices used and the length of the crop cycle (Paranjpe et al., 2004). Fr uit yields, costs and revenue were based on unit area of the total greenhouse area [1.0 acre]. The formula used to calculate gross revenue was: gross revenue ($/ft2) = yield (weight per ft2) x stochastic price ($/lb.). Estimated Costs of Strawberry Production for a 1.0 Acre Greenhouse in North Central Florida Variable costs are defined, as it pertains to this model, as operati ng costs that would be incurred only if the crop was grow n. Variable production costs [$/ft2] were taken from Table 4-9 and 4-10 except for electricity and gas costs, which will be discussed later in the chapter. Variable costs were derived by summing prehar vest costs, harvest costs, packaging and marketing costs. Annual variable costs fo r a 1.0 acre organic greenhouse operation came to $110,340 [$2.53/ft2]; annual variable costs for a non-or ganic were estimated to be $121,215 [$2.78/ft2] (Table 4-9, 4-10). Fixed costs are defined as co sts that the producer would in cur even if no crop was being grown in the greenhouse at the time. All items have been depreciated over their expected useful life, with a straight line deprec iation method. Straight line depreci ation is defined as a procedure

PAGE 104

104 for depreciating long-lived assets that recognizes equal amounts of depreciation in each year of the assets useful life. Useful lif e of an asset is defined as the number of years an asset can be used before the asset deteriorates to the point when repairs are not econo mically feasible. The usefulness of a long-lived asset is largely de termined by technological advancements, which could at any time render certain long lived assets obsolete. For this reason, all items in this study were assumed to have zero salvageable value at the end of their useful life. Fixed production costs were derived from the sum of depreciation and other costs. Annual fixed costs came to $47,736 [$1.10/ft2] (Table 4-11). These costs may vary each year, due to the fact that not all items have the same useful life expectancy. The fixed costs to depreciate [initial] inve stment required for a 1.0 acre greenhouse venture was determined by compiling all co nstruction, materials, equipmen t, labor, and durables needed up front to start a greenhouse enterp rise. Initial investme nt is part of the estimated annual fixed cost. Initial investment cost c onsisted of the land, greenhouse stru cture and cover materials, site preparation costs, greenhouse permits, construc tion supervision, head house structure, backup generator, heating and ventilati on systems, nutrient injector and climate control systems, nutrient solution tanks, weather station, computer softwa re, training to use computer software, water filters, valves and pressure regulators, irrigati on emitters, stakes, tubing, polyethylene pipe, pipe connectors, troughs, electrical, drainage system, bulk storag e tanks, trellis accessories, automobile, and a fork lift. A summary of these initial investment costs can be found in Table 411. Profit was calculated by subtrac ting total cost from gross revenue. The formula used for calculating profit was: profit = gro ss revenue [yield (weight per ft2) x stochastic price ($/lb.)] total costs [variable + fixed (depreciation + othe r durables). Net present value [NPV] is defined

PAGE 105

105 as the present value of cash inflows less present valu e of cash outflows. It is also said to be the increase in wealth accruing to an investor when he or she undertakes an investment net present value was calculated using Excel The function used was: =N PV ((interest rate, Cash Flow [array t=1 thru t=20]) + Initial Investment).Ca sh flows were calculated using an initial investment of $508,368 with a book value at the e nd of its 20 year life expectancy of $25,418 with an assumed interest rate of 8.35% (Farm Credit, 2006). After tax cash flows were then calculated with the following formula: ATCF = (profits [$9,906] depreciation [$47,736] = Earnings before taxes [EBT= -$37,830] ta xes [$0] + depreciation [$47,736]) = $9,906. Net present value [NPV] was then calculated using the formula: NPV = sum (cash flows x present value interest factor [PVIF]). Net presen t value was simulated using SIMETAR, after simulating each production system scenario n= 500 iterations, it was determined that both scenarios have a negative NPV, th e results can be found in Table 4-12. The internal rate of return [IRR] is defined as the discount rate at wh ich the investments net present value [NPV] equals zero. As it pertains to this model, IRR was calculated using Excel and can be viewed in the following formula: =I RR (Cash Flow [array t=0 thru t=20], discount rate). The sum of the cash flows was not greater than the initial investment, resulting in negative NPV and IRR for both scenarios. Since the NPV was negative for both scenarios there can be no discount rate that will work perfectly in calculating an IRR. Sensitivity Analysis for the Production of Organic and Non-organic Strawberries Sensitivity analysis was used to analyze the effect on income when a change in one of the input variables is invoked. Ne t returns were calculated in the sensitivity analysis with marketable fruit yields ranging from .10 3.00 lb./ft2 and wholesale market prices ranging from $1.51 $3.28/lb. for organic production and $1.17 $2.34/lb. for non-organic production. These prices reflect the average wholesale prices that could be obtained during the harvest period of

PAGE 106

106 November May. Using the organic and non-organic scenarios two separate sensitivity analyses were created using different costs of production for the two production practices (Tables 4-13 and 4-14). Break-Even Analysis for the Production of Organic and Non-organ ic Greenhouse-Grown Strawberries A break-even analysis was created to compare th e different combinations of organic versus non-organic yield and the price required to break-even in a 1.0 acre strawberry greenhouse venture. For example, a yield of 2.25 lb./ft2 would require a price of $1.61/lb. for organic production and $1.72/lb. for non-organic production to break-even, any price over $1.61/lb. for organic production and $1.72/lb. fo r non-organic produc tion at 2.25 lb./ft2 would be considered profit or return to management, anything lowe r would make the ventur e unprofitable (Table 415). The break-even analysis was calculated us ing the following formula: break-even price = total cost [variable + fixed costs] / sales vo lume [yield x usable greenhouse area (43,560 ft2)]. Heat Loss Calculations for a 1.0 Acre Greenho use Strawberry Operation in North Central Florida The two most expensive variab les in greenhouse production are labor and energy. Just as in chapter two of this study (The economic feas ibility of greenhouse-grown bell peppers as an alternative to field production in North Central Florida), annual heat cost were estimated using formulas to determine conduction, air infiltra tion and perimeter heat loss on a 1.0 acre greenhouse in North Central Florida. This study used a minimum base temperature inside the greenhouse of 41F, for adequate plant growth. Just as in chapter three, calcu lations, in this model, are based on the surface area of on 1.0 acre greenhouse. It was determined that, in order to maintain the 41F minimum base temperature, an estimated 507,818.18 BTU/hr was need ed to offset conduction heat loss. Air infiltration heat losses requi red 106,055.91 BTU/hr and perimete r heat loss required 8,083.20

PAGE 107

107 BTU/hr. Total heat required to maintain the 41F minimum bass temperature was 193,589.76 BTU/hr for a 1.0 acre saw-tooth greenhouse with a total surface area of 60,515 ft2 (Table 4-16 and 4-17). For calculation procedures refer to Chapter 3 of this study. Based on historical temperatur e data it was determined that the temperature outside the greenhouses in Citra, Florida fell below the 41 F minimum base temperature for an average of 421.54 hours annually. Thus, an estimated 262,179,878.31B TUs are required annually to heat the greenhouse (Table 4-18). This model uses di esel heaters in order to lower costs. An estimated 1,899.85 gallons of diesel fuel annually are required to generate the needed BTUs, at a cost of $4,179.68 [$2.20/gal or $0.000016/BTU (Grimesl y Oil, 2005)] (Table 4-18). In addition, estimated fuel costs for propane and electricity h eaters are examined to determine the most cost efficient fuel source to heat the greenhouses. Electric pow er source would require 76,818.01 kWh at a cost of $6,145.44 [$0.08/kWh or $0.000023/BTU (FPL, 2005)]. A propane fuel source would require 2,849.78 gallons at a cost of $4,702.14 [$1.65/gallon or $0.000018/BTU (Energy Information Administration, 2006)] (Table 4-18). Budget Analysis for Florida Field Production of Strawberries Common financial statements were created by the University of Florida, Food and Resource Economics Department, for field strawbe rry production in the St ate of Florida (Smith, 2005). These financial statements were modified to create a model using stochastic variables. As in the greenhouse model, the field budget has st ochastic variables in place for both yield and price. Gross revenue was calculated by multiplying average yield per acre by the average wholesale market price taken from the Flo rida Agricultural Statistical Directory 2005 from 1994 (Table 4-22). Variable costs, as defined previously, are thos e costs that a grower will incur only if a crop is grown. Variable costs for production of one acre of strawberries in Central Florida were calculated to be $7,612 /acre (Table 4-22).

PAGE 108

108 Fixed costs are costs that a grower will incur whether or not a crop is being produced. Fixed costs were calculated to be $3,430/acre (Table 4-22). Total costs were calculated by summing total va riable costs, fixed costs, harvesting and marketing costs. Total cost s equal $25,602/acre (Table 4-22). Scenario Analysis Used to Analyze Or ganic and Non-organic Greenhouse-Grown Strawberry Production System in North Central Florida Two scenarios were set-up in this model in orde r to discover the diffe rent risks involved in producing organic and non-organi c strawberries in a greenhouse, through simulation. Both organic and non-organic strawb erry production has its own di stinctive price ranges and respective yield, and therefore th eir own level of risk. For th is reason, two scenarios were created: organic and non-organic strawberries. As stated previously, th e model was set up with stochastic price and yields, through the use of scenarios, both production methods were simulated simultaneously. The benefit of using scenarios in SIMETAR is that, the program runs the model multiple times using exactly the sa me random deviates (risk) for each scenario. Thus, the analysis guarantees that each scenario was simulated using the same risk and the only difference is due to the differences in the s cenario variables (Ric hardson, Schumann, Feldman, 2006). Price and yield were the only st ochastic variables in the model; however the model was set up so that as the stochastic yield and price moved along their defined distribution, the models net profit and net present value moved accordingly. Each scenarios stochastic variable was simulated at 500 iterations (see Chapter 3 for mo re information on how the number of iterations was determined). In greenhouse production, just as in all agricultural ventures, risk is a major variable to consider. The higher the risk, in most instance s, the greater the return, likewise the lower the risk, in most instances, the lower the returns, however, the amount of risk a producer is willing to

PAGE 109

109 take on is entirely up to the produc er. Caution should be used when using this model to assess an individuals risk. This model is ju st a guide so that others may tailor it to their needs, in order to measure risk of yield and price. No model can measure all risks includ ing natural disasters, market prices, personal knowledge of plant produ ction or management. All prices are based on historical wholesale prices fr om New York, Atlanta and Miami terminal markets and are not necessarily the prices that all growers have received. Results Results from Scenario Analysis Used to Analyze Organic and Non-organic GreenhouseGrown Strawberry Production System in North Central Florida Simulation showed an annual mean wholesale price for organic strawberry production to be $2.66/lb. .48, mean yiel ds equal to 1.58 lb./ft2 .14, annual net profit mean equals $23,316 31,318 for a 1.0 acre greenhouse producing organic strawberries. Annual mean wholesale price for non-organic strawberries eq ual $1.76/lb. .51, yields equal 2.25 lb./ft2 .20, annual net profit mean equal to $3,855 51,885 for a 1.0 acre greenhouse producing non-organic strawberries (Table 4-12). Probabilities and Risk for the Production of Greenhouse-Grown Strawberries Using SIMETAR Historical organic strawberry average annual wholesale prices [average $2.60/lb.] has been more than 148% higher than that of non-organic strawberries [average $1 .76/lb.] (Table 4-1). This can be partially explained by the fact that there is more risk involved in producing organic over non-organic strawberries. The reason for this risk is that insec ticides, fungicides and synthetic fertilizer are strictly regulated and in many cases pr ohibited in organic production. This leads to a lower marketable fruit yield, when simulated, organic strawberry yields [1.58 lb./ft2 .14] compared to non-organic yields [2.25 lb./ft2 .2] (Table 4-12) (Paranjpe et al., 2004) (Ames et al., 2006).

PAGE 110

110 SIMETAR can be used to assess some risk, by estimating the probability that a simulated variable might be achieved. Price and yield were set as stochastic variables in the model, with defined parameters for the specific distribution function used. Table 419 shows select prices within the distribution ra nge that were used to calculate th e probability of obtaining the select price or lower, based on historical pricing data and the simulation software. The probability that a grower would get a wholesale price for an or ganic strawberry below the minimum end of the distribution [$1.38/lb.] or a price above the ma ximum end [$3.46/lb.] is 0%. There is a 93% probability that the estimated pr ice received would be greater than $2.00/lb. and a 7% probability that it would be equal to or le ss than $2.00/lb. The probability th at the wholesale price received for non-organic strawberry would fall outside th e parameters of the minimum [$1.13/lb.] or maximum [$2.56/lb.] parameter is 0%. There is a 28% probability that th e price will be greater than $2.00/lb. and a 72% probability that the pri ce will be less than or equal to $2.00/lb. The probability of obtaining a price gr eater than $2.50/lb. for organic strawberries is 54% [46% probability of equal to or less than $2.50/lb.] and for non-organic the probability of a price greater than $2.50/lb. is 21% [79% probability of equal to or less than $2.50/lb.] (Table 4-19). The method for determining the probability of yield works much in the same manner as it did for price. Stochastic price used an empirical probability distribution function [Si, F(Si), uniform standard deviant], whereas yield uses a GRKS distribution function[minimum, middle, maximum value, uniform standard deviant]. Table 4-20 displays se lect yields and the probabilities of obtaining those yi elds. There is a 0% probability that the estimated yield for organically-grown strawberries will fall ou tside the parameter range of 1.15 2.01 lb./ft2. There is a 70% probability that the yiel d will be greater than 1.50 lb./ft2 for organic strawberries and a 30% probability that the yield would be equal to or less than 1.50 lb. /ft2. Yield parameters for

PAGE 111

111 non-organic strawberries is 1.66 2.85 lb./ft2, which after simulation is calculated to have an 89% probability of a yiel d greater than 2.00 lb./ft2 or a 11% probability of yield being less than or equal to 2.00 lb./ft2 (Table 4-20). It would be logical for a grow er to want a production method that gets the highest price and the highest yield. However, the production method that consistently obtains the highest price is organic production, but it also has the lowest yield. N on-organic strawberry has the highest yield but the lowest pric e. Thus, a grower must look at what combination of these variables will yield the greatest net profit. Tabl e 4-21 shows that the mean net profit for organic production is the highest of the two production methods [$23,316/acre] with a 21% probability of making more than $50,000 or a 7% probability of making more than $75,000 with a 1.0 acre greenhouse operation. Non-organic strawberry production, which ha s the greatest yield, has a mean simulated net profit of $3,855/acre and a 22% probability of making more than $50,000 and a 13% probability of making more than $75,000 (Table 4-21). As shown in this model, risk plays an important role in sele cting the commodity a grower s hould produce and when looking at risk between organic and non-or ganic greenhouse strawberry produc tion, it is apparent that organic production has both the lowest and high est risk. In terms of profitability, organic production has the lowest risk, due to its high ma rket price and low competition. On the other hand organic production has some of the highest risks of production, since the use of synthetic fertilizers and pesticides are proh ibited, risk of low marketable yield or crop loss is much higher than non-organic production. Field Strawberry Budget Simulation Analysis The enterprise budget model was simulated using the average land cash rent price representing the average rental price of irrigated cropland in Fl orida, as defined in Appendix A-

PAGE 112

112 2. The strawberry field models used the same stochastic yield and pri ce variables, and were simulated at 500 iterations, as in the greenhouse model. Estimated average net profit for a one acre fres h strawberry field opera tion in Florida was $2,419 3,414 (Table 4-23). Probabilities and Risk in Strawberry Field Production As mentioned in the previous risk section, the program SI METAR, was used to assess the probabilities and risk involved in field production of strawberries in Florida. Just as in greenhouse production, caution should be used when using any method of a ssessing risk. This model does not assess the risk of losses due to natural disasters or lack of grower knowledge. In this model, the stochastic prices and yields are derivatives of average prices and yields that Florida growers have obtained from 19942004 (Florida Agricultural Directory, 2005). Both stochastic price and yield variables we re set up using a GRKS distribution function. The parameters needed for a GRKS distributi on function, is a minimum, middle and a maximum value. Simulation results display a 25% probability of a negative net profit. This also calculates a 75% probability of a positive net profit in Florida. In addition there was a 68% probability of a net profit greater than $500/acre, while the probability for a ne t profit greater than $5,000/acre for Florida cropland wa s 21% (Table 4-24). Discussion As per capita consumption of strawberries increases in the U.S., Florida strawberry production is presently able to maintain a substan tial market share in the fresh market strawberry industry, due to its ability to produce in winter m onths when California production is at a low. In the future, this may not be enough to compete with the rising imports of strawberries into the U.S. from countries such as Mexico and incr easing production in California. If California

PAGE 113

113 growers, with their high quality and volume, move their production into tunnels to extend their season, Florida strawberry production may be over. Florida strawberry producers must pursue new te chnologies in order to maintain an edge in the fresh strawberry market. In order to do this Florida growers which currently harvest December through March, must find new methods in which to produce and harvest earlier, in the key winter months of November and December. Currently, the largest harvest month in Florida is in March, which has the lowest prices (Flori da Agriculture Statisti cal Directory, 2005). Unlike field production, the greenhouse envir onment uses a soille ss production system which avoids weeds, soil-borne pathogens or pl ant parasitic nematodes. Screened structures greatly reduce the presence of insects, and thos e that are present can be controlled using biological control. Screened in structures also protect against birds, whic h have in recent years have accounted for large fruit lo sses. Additionally, th ere is increased efficiency in use of fertilizer and water, which can be recycled wi thin the system (Smither-Kopperl et al. 2004). Methyl bromide is a soil fumigant that is used to control soil-borne pathogens, plant parasitic nematodes and weeds (Smither-Kopperl et al., 2 004). Field production in Florida is heavily dependant upon the use of methyl bromide. The ban on methyl bromide has created an opportunity for greenhouse strawber ry growers to obtain a significan t market share in the U.S. strawberry industry. Current strawberry field pr oduction season extends from December to early April. Floridas temperate climate requi res minimum heating for the production of strawberries in a greenhouse compared to other regions of the U.S. With ever increasing fuel prices, this will allow Florida growers to stay competitive in th e strawberry production industry. Additionally, Floridas climate may allow grower s to produce earlier in the seas on when prices are highest and

PAGE 114

114 may also allow producers to grow over extende d periods depending on fruit prices and on the quality of the fruits harvested (U .S. Department of Agriculture, 2005). This project determined that organic gree nhouse production of strawberries can produce a net profit nine times greater than field produc tion and non-organic greenhouse production can be up to one and half times greater than field production. Results from Paranjpe et al (2004) also reveal that greenhouse production is a profitable venture for Fl orida strawberry producers. Paranjpe et al (2004) estimate d that non-organic returns to ma nagement and capital equaled $0.35/ft2 at an average yield of 2.3 lb. /ft2. Results from Paranjpe et al (2004) and Smith (2005) were used to compare to the findings in this project. Paranj pe et al (2004) reported that greenhouse production is a profitable venture, however variations were found between th is and his study. Paranjpe et al (2004) did not determine an IRR or net present value for his study. Other variations in re sults can be attributed to the use of land prices in th e budget analysis, differences in the definition of fixed versus variable costs, and a difference in price and am ount of fuel required fo r heating a greenhouse. Field budgets constructed by Smith (2005) were used to compare field returns with this studies greenhouse production return. Results from th e comparison showed th at greenhouse production of non-organic strawberries [$3,855/ acre] can be up to one and a ha lf times higher than returns from field production [$2,419/acre] and organi c greenhouse-grown strawberries [$23,316/acre] can be up to nine and a half times hi gher than non-organic field production. Two simulation scenarios were used, orga nic and non-organic st rawberry greenhouse production. Through the use of the program SIM ETAR, budgets were set up in a manner in which net profit could be compared in different s cenarios. Simulation of these scenarios enables the user to calculate risks a nd probabilities associated with each. Simulated scenarios for

PAGE 115

115 greenhouse-grown strawberries illustrated that or ganic strawberry price and yield combinations would earn growers the highest net profit, compared to non-organic which had the highest yield. The break-even fruit yields and required pr ices for profit determined by this study are attainable for Florida strawberry growers. Curre nt experimental crops ar e obtaining yields of 2 3 lb./ft2 and historical prices range from $1.36 $3.46 /lb. for organic strawb erries and $1.13/lb. $2.56/lb. for non-organic strawberries (Paranjpe et al., 2004) (U.S. Departme nt of Agriculture, 2006). Yields and market values such as thes e are sufficient to make greenhouse strawberry production profitable according to the results of this study. Greenhouse enterprises are variable in size, composition and management. Thus growers seeking to undertake the producti on of strawberries in a greenhous e setting should use this study as a guide and calculate budgets for their own en terprise. This study used a greenhouse size of 1.0 acre, greenhouses with a differe nt size, construction material or configuration may differ in cost of initial investment and in cost of productio n. However, investment per unit area is always considered high compared investme nts in field vegetable production. Florida vegetable and berry growers are currently faced with many challenges, from natural disasters to internationa l competition which is able to ship year round. Florida growers must find ways to surmount obstacles such as ur banization [loss of warm weather, coastal farm land], labor shortages [labor shif ting to steady higher-paying jobs such as construction], water restrictions, and the lo ss of methyl-bromide. For some gr owers seeking to produce high value specialty crops, such as organic strawbe rries, soilless greenhouse production may be an alternative that can overcom e some of these obstacles Summary Florida fresh market strawberry growers are faced with increased pressure from urbanization, water and chemical restrictions, and California and forei gn competition. Growers

PAGE 116

116 are in need of a clear alternativ e to field production that can off-se t these growing obstacles. Past research has suggested that gr eenhouse vegetable production coul d be one alternative to field production. These studies have created enterprise budgets for the production of greenhouse strawberries. Additionally, studies have examin ed the pressure on the U.S. vegetable market from foreign countries. Additional research is needed to assess the risk and potential earnings that growers can obtain in gr eenhouse strawberry production. The objective of this study wa s to determine the costs and benefits associated with greenhouse strawberry production. Through the use of SIMETAR and Excel software, a budget analysis model was created for the pr oduction of greenhousegrown organic and nonorganic strawberries. Using these models, cost of production, net profit and risk have been simulated and compared to field production. This study found that although greenhouse producti on requires a significan tly larger capital investment [total costs organic: $158,076/acre; non-organic:$168,951/acre] compared to field production [total costs: $25,602/acre], potenti al profits of greenhouse-grown organic strawberries [$23,316/acre]have been determined to be as much as nine and half times greater than field production and non-organic greenhouse-gr own strawberries [$3,855/acre] have been determined to be up to one and a half times greater than field produc tion [$2,419/acre]. These are significant findings for Flor ida growers searching for alte rnatives to field production. Greenhouse production may allow them to stay compe titive in the U.S. fresh strawberry market. This study has determined that not only is it eco nomically feasible to grow strawberries in a greenhouse setting, but it has al so shown that potential profit is significantly greater for greenhouse-grown strawberries compar ed to field-grown strawberries.

PAGE 117

117 Table 4-1 Values used to cons truct an empirical distribution function for price Price ($/lb.) Organic Non-Organic Mean X $2.60 $1.76 StDev 0.703 0.611 95 % LCIY 1.841 1.106 95 % UCIZ 3.352 2.419 Min $1.36 $1.13 Median $2.52 $1.80 Max $3.46 $2.56 W Summary statistics derived from wholesale market price of strawberries from Nov-March from New York, Atlanta and Miami terminal markets, 1998-2005, (U.S. Department of Agriculture, 2005) X Mean equals the average dollar per pound price from 1998-2005 Y LCI equals lower confidence interval Z UCI equals upper confidence interval

PAGE 118

118 Table 4-2 Values used to constr uct a GRKS distribution function for yield Yield (lbs/ft2) Organic V Non-Organic W Mean X 0.20 0.28 StDev 0.104 0.148 95 % LCIY 0.084 0.120 95 % UCIZ 0.307 0.438 Min 0.04 0.06 Median 0.20 0.28 Max 0.31 0.44 V Organic yields were derived from a 30% reduction of non-organic yields (Ames et al., 2006) W (Paranjpe et al., 2004) X Mean equals the average monthly pounds per square foot Y LCI equals lower confidence interval Z UCI equals upper confidence interval

PAGE 119

119 Table 4-3 Monthly marketable fruit yield, av erage wholesale market price and gross re venues in a typical fa ll to spring greenho use nonorganic strawberry crop in Florida with a total estimated yield of 2.25 lb./ft2 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Nov-Mar Yield X (lbs/ft2) Tw 0.09 0.54 0.59 0.63 0.40 End 2.25 Price ($/lb.) $2.56 $2.56 $1.83 $1.80 $1.26 $1.20 $1.13 $2.00 Gross Revenue ($/ft2) $0.23 $1.38 $1.08 $1.13 $0.50 $4.51 Gross Revenue Z ($/acre) $10,036.22 $60,217.34 $47,031.73 $49,397.04 $21,954.24 $188,636.58 W Transplanting plugs: 1 Oct; harvest pe riod: Nov-March; termination: 1 April X Monthly fruit yields estimated from experimental crops at the University of Florida (Paranjpe et al., 2004) Y Average wholesale prices (1998-2 005) for strawberries at the New York, Atlanta and Miami terminal markets, (U.S. Department of Agriculture, 2005) Z Gross revenue calculated using a usable greenhouse area of 43,560 ft2

PAGE 120

120 Table 4-4 Monthly marketable fruit yield, av erage wholesale market price and gross re venues in a typical fa ll to spring greenho use organic strawberry crop in Florida with a total estimated yield of 1.58 lb./ft2 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Nov-Mar Yield X (lbs/ft2) Tw 0.06 0.38 0.41 0.44 0.28 End 1.58 Price ($/lb.) $2.81 $2.28 $1.36 $3.46 $3.31 $2.52 $2.42 $2.59 Gross Revenue ($/ft2) $0.18 $0.86 $0.56 $1.53 $0.93 $4.09 Gross Revenue Z ($/acre) $7,711.43 $37,541.75 $24,466.78 $66,466.46 $40,371.41 $176,557.83 W Transplanting plugs: 1 Oct; harvest period: Nov-March; termination: 1 April X Monthly fruit yields estimated from experimental crops at the University of Florida (Paranjpe et al., 2004) Y Average wholesale prices (19982005) for strawberries at the Ne w York, Atlanta and Miami terminal markets, (U.S. Department of Agriculture, 2005) Z Gross revenue calculated using a us able greenhouse area of 43,560 ft2

PAGE 121

121 Table 4-5 Annual non-organic strawberry wholesale pr ices from 1998-2005 for select states and countries. Year CALIFORNIA FLORIDA MEXICO AVERAGE $/lb. Std $/lb. Std $/lb. Std $/lb. Std 1998 $1.54 0.76 $1.50 0.60 $1.89 0.77 $1.55 0.72 1999 $1.55 1.12 $1.22 0.64 $1.07 0.87 $1.45 1.01 2000 $1.42 0.96 $1.12 0.62 $0.96 0.34 $1.34 0.89 2001 $1.58 1.18 $1.45 1.02 $1.15 0.67 $1.54 1.13 2002 $1.62 1.10 $1.46 1.07 $1.32 0.69 $1.55 1.07 2003 $1.67 0.93 $1.60 0.96 $1.76 1.22 $1.69 0.97 2004 $1.73 0.87 $2.01 0.86 $1.35 1.03 $1.77 0.90 2005 $1.43 0.65 $1.68 0.75 $1.75 0.66 $1.53 0.69 Average $1.57 0.11 $1.51 0.27 $1.41 0.35 $1.55 0.13 Y Average wholesale market prices obtained from New York, Atlanta and Miami terminal markets 1998-2005, (U.S. Department of Agri culture, 2005) Z Average wholesale market prices are an average of non-organic prices

PAGE 122

122 Table 4-6 Monthly non-organic strawberry wholesale prices from 1998-2005 for sele ct states and countries. CALIFORNIA FLORIDA MEXICO AVERAGE $/lb. Std $/lb. Std $/lb. Std $/lb. Std Jan $2.10 0.99 $1.71 0.86 $1.46 0.63 $1.82 0.91 Feb $2.16 1.26 $1.54 0.70 $1.68 0.64 $1.80 1.00 March $1.56 0.70 $0.98 0.54 $1.06 0.58 $1.26 0.69 April $1.30 0.75 $0.97 0.42 $0.82 0.36 $1.20 0.69 May $1.15 0.55 $1.29 0.29 $0.54 0.38 $1.13 0.55 June $1.09 0.43 $1.09 0.43 July $1.14 0.66 $1.14 0.66 Aug $1.34 0.69 $1.34 0.69 Sept $1.52 0.86 $1.52 0.86 Oct $1.52 0.70 $1.50 $1.53 0.70 Nov $2.43 1.31 $1.99 0.63 $2.35 0.92 $2.41 1.25 Dec $2.76 1.10 $2.20 1.16 $2.85 1.36 $2.51 1.18 Average $1.67 0.55 $1.53 0.48 $1.53 0.77 $1.56 0.49 Y Average wholesale market prices obtained from New York, Atlanta and Miami terminal markets 1998-2005, (U.S. Department of Agri culture, 2005) Z Average wholesale market prices are an average of non-organic prices

PAGE 123

123 Table 4-7 Annual organic wholesale market valu es for select states and countries, 1998-2005 Year CALIFORNIA MEXICO Average $/lb. std $/lb. std $/lb. std 2003 $2.01 0.61 $2.01 0.61 2004 $2.52 1.63 $2.52 1.63 2005 $2.61 0.89 $0.40 0.30 $2.47 1.02 2006 $3.49 0.91 $2.60 1.27 $3.11 1.15 Average $2.66 0.61 $1.50 1.56 $2.53 0.45 Y Average wholesale market prices obtained from Ne w York, Atlanta and Miami terminal markets 1998-2005, (U.S. Department of Agriculture, 2005) Z Average wholesale market prices are an average of organic prices

PAGE 124

124 Table 4-8 Monthly organic whol esale market values for sele ct states and countries, 19982005 Year CALIFORNIA MEXICO Average $/lb. std $/lb. std $/lb. std Jan $1.36 1.29 $1.36 1.29 Feb $3.46 0.67 $3.46 0.67 Mar $3.42 1.55 $3.13 1.39 $3.31 1.47 Apr $2.52 0.95 $2.52 0.95 May $2.46 0.79 $2.20 0.69 $2.42 0.78 Jun $2.13 0.98 $2.13 0.98 Jul $1.86 0.66 $1.86 0.66 Aug $2.53 0.74 $2.53 0.74 Sep $3.18 0.70 $3.18 0.70 Oct $2.76 1.32 $1.06 $2.72 1.32 Nov $3.49 2.13 $0.39 0.20 $2.81 2.28 Dec $5.75 3.17 $0.30 0.26 $2.28 3.26 Average $3.05 1.05 $1.41 1.09 $2.55 0.61 Y Average wholesale market prices obtained from Ne w York, Atlanta and Miami terminal markets 1998-2005, (U.S. Department of Agriculture, 2005) Z Average wholesale market prices are an average of organic prices

PAGE 125

125 Table 4-9 Estimated variable cost of pr oduction for 1.0 acres of greenhouse-grown organi c strawberries in North Central Florida Unit Quantity Price Amount Total (no. units) ($.unit) ($/acre) ($/acre) ($/ft2) Production costs Preharvest Fertilizer R 763.40 0.02 Gallon 51.43 14.85 763.71 Biologicals S 7,728.15 0.18 Neoseiulus Californicus 4 releases/year x1000 161.94 7.50 1,214.57 Aphidius Colemani 3 release/year x5000 12.15 145.00 1,761.13 Amlysieus Cucumeris 3 releases/year x500 99.11 47.95 4,752.44 Pollinators S 1,020.24 0.02 Bumble Bees 100-bee hive 4.86 210.00 1,020.24 Other material inputs T 14,850.50 0.34 Drip Tape (2 emitter spacing) ft 26,539 0.02 647.13 Poly-pipe (3/4 inch), fittings, etc.) ft 1,329 0.05 60.73 Transplants unit 89,068.83 0.14 12,469.64 Soilless Media (Pine Bark) ft3 3,461 0.24 825.91 Sticky cards (insect pest monitoring) box x 800 1.97 429.64 847.10 Organic Certification Fee U $50 1st time application fee, $150 ce rtification fee, $200 inspection fee 400.00 400.00 0.01 Energy 5,425.40 0.12 Diesel Gallon 1,899.85 2.20 4,179.68 Electricity kWh 15,571.47 0.08 1,245.72

PAGE 126

126 Table 4-9 Continued Unit Quantity Price Amount Total (no. units) ($.unit) ($/acre) ($/acre) ($/ft2) Labor T Total h 3,162.85 0.07 Preparation greenhouse h 0.52 7.83 4.06 Filling growing system with soilless media (3.048 s/ft) h 22.67 7.83 177.52 Planting strawberry transplants (allowing 7 s per plant) h 173.28 7.83 1,356.78 Removal of cull fruits, old leaves and shoots h 1.04 7.83 8.13 Fertilizer preparation h 77.73 7.83 608.65 Solution monitoring and filter cleaning h 15.57 7.83 121.92 Scouting (pests, diseases and beneficials) h 68.02 7.83 532.57 Releasing N. Californicus (3 min/1000 mites) h 10.12 7.83 79.25 Releasing A Colemani (3 min/1000 wasp) h 6.07 7.83 47.55 Releasing A Cucumeris (3 min/1000 mites) h 6.07 7.83 47.55 Removal of plants and cleaning h 22.67 7.83 177.52 Polyethylene cover change (every 3 years) h 0.17 7.83 1.34 Total Labor h 403.94 Total Preharvest costs 33,350.54 0.77 Harvest V Pick labor (242,508.49lbs) (4,041.07lbs per harvest x 60 harvest) h 199.39 7.83 1,561.23 Total harvest costs 1,561.23 Packing and Marketing Flat with eight, 1.3-lbs clamshells W flat 6,605.20 2.00 13,210.40 Pre-cooling X flat 6,605.20 0.75 4,953.90 Vehicle operation Y flat 6,605.20 0.60 3,963.12 Sale transaction expenses (15% of total sales) 25,959.96 Total packing and marketing costs 48,087.38 1.10

PAGE 127

127 Table 4-9 Continued Unit Quantity Price Amount Total (no. units) ($.unit) ($/acre) ($/acre) ($/ft2) Other variable costs Z Repairs and maintenance 8,161.54 Taxes and licenses 2,176.41 Greenhouse insurance 5,441.03 Vehicle insurance 2,040.38 Telephone 6,121.15 Other expenses 3,400.64 Total other variable costs 27,341.15 0.63 Total production costs $110,340.30 $2.53 R Organic fertilizer requires 51.4 gallons per 180/d crop cycle at a cost of $763.40 (Smart World Organics Inc, 2006), the non-o rganic fertilizer requires 2,119.79 gallons per 180/d crop cycle at a cost of $1,346.07 (Paranjpe et al.,2004) S (Koppert Biological Systems, 2006) T (Paranjpe et al., 2004) U Organic Certification costs are $400.00 (Quality Certificati on Services, 2006), non-organic strawbe rries requires $0.00 certification fees V Organic production will require 1,561.23 hrs of pick labor, non-organic production w ill require 2,230.47 hrs of pick labor W Organic production will require 6,605.2 fl ats, non-organic production will require 9,436.6 flats X Organic production will require 6,605.2 flats to be cooled, non-organic production will require 9,436.6 flats to be cooled Y Organic production will require 6,605.2 flats to be transported, non-organic production will require 9,436.6 flats to be transported Z (Jovicich et al., 2004)

PAGE 128

128 Table 4-10 Estimated variable cost of pr oduction for 1.0 acres of greenh ouse-grown non-organic strawber ries in North Central Fl orida Unit Quantity Price Amount Total (no. units) ($.unit) ($/acre) ($/acre) ($/ft2) Production costs Preharvest Fertilizer R 1,346.07 0.03 (2.1 oz. Fert. or nutrient soln. at 5 fl. oz. per plant per day x 180 d) Pounds 2,119.86 0.64 1,356.71 Biologicals S 7,728.15 0.18 Neoseiulus Californicus 4 releases/year x1000 161.94 7.50 1,214.57 Aphidius Colemani 3 release/year x5000 12.15 145.00 1,761.13 Amlysieus Cucumeris 3 releases/year x500 99.11 47.95 4,752.44 Pollinators S 1,020.24 0.02 Bumble Bees 100-bee hive 4.86 210.00 1,020.24 Other material inputs T 14,850.50 0.34 Drip Tape (2 emitter spacing) ft 26,539 0.02 647.13 Polypipe (3/4 inch), fittings, etc.) ft 1,329 0.05 60.73 Transplants unit 89,068.83 0.14 12,469.64 Soilless Media (Pine Bark) ft3 3,461 0.24 825.91 Sticky cards (insect pest monitoring) box x 800 1.97 429.64 847.10 Organic Certification Fee U $50 1st time application fee, $1 50 certification fee, $200 inspection fee 0.00 0.00 0.00 Energy 5,425.40 0.12 Diesel Gallon 1,899.85 2.20 4,179.68 Electricity kWh 15,571.4 7 0.08 1,245.72

PAGE 129

129 Table 4-10 Continued Unit Quantity Price Amount Total (no. units) ($.unit) ($/acre) ($/acre) ($/ft2) Labor T Total h 3,162.85 0.07 Preparation greenhouse h 0.52 7.83 4.06 Filling growing system with soilless media (3.048 s/ft) h 22.67 7.83 177.52 Planting strawberry transplants (allowing 7 s per plant) h 173.28 7.83 1,356.78 Removal of cull fruits, old leaves and shoots h 1.04 7.83 8.13 Fertilizer preparation h 77.73 7.83 608.65 Solution monitoring and filter cleaning h 15.57 7.83 121.92 Scouting (pests, diseases and beneficials) h 68.02 7.83 532.57 Releasing N. Californicus (3 min/1000 mites) h 10.12 7.83 79.25 Releasing A Colemani (3 min/1000 wasp) h 6.07 7.83 47.55 Releasing A Cucumeris (3 min/1000 mites) h 6.07 7.83 47.55 Removal of plants and cleaning h 22.67 7.83 177.52 Polyethylene cover change (every 3 years) h 0.17 7.83 1.34 Total Labor h 403.94 Total Preharvest Costs 33,533.21 0.77 Harvest V Pick labor (242,508.49lbs) (4,041.07lbs per harvest x 60 harvest) h 284.86 7.83 2,230.47 Total harvest costs 2,230.47 Packing and Marketing Flat with eight, 1.3-lbs clamshells W flat 9,436.60 2.00 18,873.20 Pre-Cooling X flat 9,436.60 0.75 7,077.45 Vehicle operation Y flat 9,436.60 0.60 5,661.96 Sale transaction expenses (15% of total sales) 26,497.98 Total packing and marketing costs 58,110.59 1.33

PAGE 130

130 Table 4-10 Continued Unit Quantity Price Amount Total (no. units) ($.unit) ($/acre) ($/acre) ($/ft2) Other variable costs Z Repairs and maintenance 8,161.54 Taxes and licenses 2,176.41 Greenhouse insurance 5,441.03 Vehicle insurance 2,040.38 Telephone 6,121.15 Other expenses 3,400.64 Total other variable costs 27,341.15 0.63 Total production costs $121,215.43 $2.78 R Organic fertilizer requires 51.4 gallons per 180/d crop cycle at a cost of $763.40 (Smart World Organics Inc, 2006), the non-o rganic fertilizer requires 2,119.79 gallons per 180/d crop cycle at a cost of $1,346.07 (Paranjpe et al.,2004) S (Koppert Biological Systems, 2006) T (Paranjpe et al., 2004) U Organic Certification costs are $400.00 (Quality Cer tification Services, 2006), non-organic stra wberries requires $0.00 certification f ees V Organic production will require 1,561.23 hrs of pick labor, non-organic production will require 2,230.47 hrs of pick labor W Organic production will requir e 6,605.2 flats, non-organic production will require 9,436.6 flats X Organic production will require 6,605.2 flats to be cooled, no n-organic production will require 9,436.6 flats to be cooled Y Organic production will require 6,605.2 flat s to be transported, non-organic productio n will require 9,436.6 flats to be trans ported Z (Jovicich et al., 2004)

PAGE 131

131 Table 4-11 Estimated fixed cost of production for a 1.0 acre greenhouse growing strawberries in North Central Florida Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Land cash rent Y 571.88 0.01 1 571.88 0.01 Site preparation X Labor leveling, compacting 11,014.22 0.25 Lime rock and milling 3,304.27 0.08 Water piping to greenhouse complex 2,753.56 0.06 Site electrical/communi cations to complex 11,014.22 0.25 Total site work 28,086.27 0.64 30 936.21 0.02 Greenhouse permit X 2,040.38 0.05 20 102.02 0.00 Greenhouse structure and cover materials X Columns, arch, gutters, polyethylene locking profiles 47,691.58 1.09 20 2,384.58 0.05 Access gates, four pavilions 1,872.42 0.04 10 187.24 0.00 Side-wall and roof-vent motors 8,205.60 0.19 10 820.56 0.02 Insect proof netting, 50-mesh (all openings) 2,125.74 0.05 10 212.57 0.00 Polyethylene cover 4,813.21 0.11 3 1,604.40 0.04 Thermal and shading screen 23,019.72 0.53 10 2,301.97 0.05 Freight overseas-Gainesville 5,507.11 0.13 20 275.36 0.01 White ground cover 2,907.75 0.07 7 415.39 0.01 Total greenhouse structure and cover materials 96,143.14 2.21 Greenhouse erection and concrete (by contractor) 88,113.78 2.02 20 4,405.69 0.10 Construction supervision X 3,304.27 0.08 20 165.21 0.00 Head house structures (49 x 33 ft) Z 8,591.09 0.20 20 429.55 0.01 Refrigeration room Z 8,591.09 0.20 20 429.55 0.01

PAGE 132

132 Table 4-11 Continued Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Backup generator 2,202.84 0.05 12 183.57 0.00 Heating and ventilation systems X Floor mounted heating units (diesel) 10 heating units 80 ,639 kcal each 28,427.71 0.65 10 2,842.77 0.07 Polyethylene convection tube (62 x 984 ft per roll) 732.45 0.02 3 244.15 0.01 Diesel tank (2,996 gal) with shading roof 1,982.56 0.05 8 247.82 0.01 Site diesel plumbing 1,652.13 0.04 10 165.21 0.00 Air circulation fans (60 units) 6,608.53 0.15 8 826.07 0.02 Total heating and ventilation systems 39,403.38 0.90 Irrigation and climat e control systems Water well and pumps 5,507.11 0.13 15 367.14 0.01 Water tanks (2 x 14,979 gal) 14,318.49 0.33 15 954.57 0.02 Nutrient injector and climate control systems 14,591.09 0.33 10 1,459.11 0.03 Nutrient solution tanks (8 x 528 gal) 2,808.63 0.06 10 280.86 0.01 Weather station and temperature and humidity sensors 4,405.69 0.10 10 440.57 0.01 Computer and software 2,147.77 0.05 5 429.55 0.01 Training for using control systems 1,591.50 0.04 Water filters 385.50 0.01 10 38.55 0.00 Valves and pressu re regulators 1,589.90 0.04 5 317.98 0.01 Irrigation emitters, stakes, and tubing 12,432.30 0.29 5 2,486.46 0.06 Polyethylene pipe (18,700 ft) 871.78 0.02 5 174.36 0.00

PAGE 133

133 Table 4-11 Continued Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Pipe connectors and adaptors 302.89 0.01 5 60.58 0.00 Other irrigation parts and labor 2,753.56 0.06 5 550.71 0.01 Growing System Z Hanging bed-pack troughs (65,551 ft) 24,267.21 0.56 7 3,466.74 0.08 [270 rows, each 98.4ft long spaced 1.64 ft apart] Materials to set up growing system (steel wire, etc.) 1,417.00 0.03 7 202.43 0.00 Labor to set up and hang the growing system 8,089.07 0.19 7 1,155.58 0.03 (based on 4 hr per 98.4 ft long row @ $7.50/h) Total irrigation, growing system and climate control systems 97,479.48 2.24 Electrical 44,056.89 1.01 10 4,405.69 0.10 Drainage system (troughs, pipes, pump) 1,718.22 0.04 5 343.64 0.01 Bulk storage tanks (three tanks of 2008 gal each) 6,773.75 0.16 10 677.37 0.02 Trellis accessories Cables for plant support (17,717 ft) and "U" clamps 3,083.98 0.07 10 308.40 0.01 Poles for plant support (13 per row) 3,579.62 0.08 10 357.96 0.01 Stem ring clips 578.25 0.01 2 289.12 0.01 Total trellis accessories 7,241.85 0.17 Automotive (medium-duty delivery truck) 42,440.00 0.97 10 4,244.00 0.10 Fork lift 12,732.00 0.29 10 1,273.20 0.03 Other durables X Scales 1,591.50 0.04 5 318.30 0.01

PAGE 134

134 Table 4-11 Continued Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Sprayer and fogger 2,122.00 0.05 5 424.40 0.01 pH meter 159.15 0.00 5 31.83 0.00 Electrical conductivity meter 265.25 0.01 5 53.05 0.00 Ion meters for nitrate and potassium 742.70 0.02 4 185.68 0.00 Harvest trolleys 1,591.50 0.04 6 265.25 0.01 Harvest bins 8,161.54 0.19 6 1,360.26 0.03 Tools 4,244.00 0.10 4 1,061.00 0.02 Total other durables 18,877.64 0.43 Total investment $508,367.95 11.67 $47,736.13 $1.10 X (Jovicich et al., 2004) Y (Average estimated land rent per acre) (Appendix A-2) Z (Paranjpe et al., 2004)

PAGE 135

135 Table 4-12 Simulation results from a 1.0 acre greenhouse strawberry operation in North Central Florida Price ($/lb.)V Organic Z Non-Organic Z Mean $2.66 $1.76 StDev 0.480 0.509 CVX 18.031 28.912 Min $1.37 $1.13 Max $3.46 $2.56 Yield (lb./ft2)W Mean 1.577 2.253 StDev 0.144 0.204 CVX 9.124 9.072 Min 1.146 1.663 Max 2.006 2.852 Net Profit (1.0/acre) Mean $23,316.28 $3,854.71 StDev 31317.678 51884.969 CVX 134.317 1346.013 Min ($57,990.65) ($75,861.47) Max $103,161.98 $137,669.11 NPV Y Mean ($281,501.60) ($468,565.64) StDev 297335.034 492704.833 CVX -105.625 -105.152 Min ($1,058,088.23) ($1,229,069.25) Max $467,848.70 $788,095.07 V Simulated prices are a derivative of average historical wholesale market prices from New York, Atlanta and Miami terminal markets, 1998-2005, (U.S. Department of Agriculture, 2005) W Simulated organic yield is a 30% reduction in non-organic yield (Ames et al., 2006), non-organic yield (Paranjpe et al., 2004) X CV equals coefficient of variation Y NPV equals net present value Z All variables were simulated using SIMETAR at n=500 iterations

PAGE 136

136 Table 4-13 Sensitivity analysis for a 1.0 acre orga nic greenhouse strawberry operation in North Central Florida Yield Market Price ($/lb.) (lbs/ft2) $1.51 $1.76 $2.02 $2.52 $2.77 $3.02 $3.28 ----------------------------------Net Revenue ($/ft2)--------------------------------0.10 (3.21) (3.18) (3.16) (3.11) (3.08) (3.06) (3.03) 0.20 (3.06) (3.01) (2.96) (2.86) (2.81) (2.76) (2.70) 0.30 (2.91) (2.83) (2.76) (2.60) (2.53) (2.45) (2.38) 0.40 (2.76) (2.65) (2.55) (2.35) (2.25) (2.15) (2.05) 0.50 (2.60) (2.48) (2.35) (2.10) (1.97) (1.85) (1.72) 0.60 (2.45) (2.30) (2.15) (1.85) (1.70) (1.55) (1.39) 0.70 (2.30) (2.13) (1.95) (1.60) (1.42) (1.24) (1.07) 0.80 (2.15) (1.95) (1.75) (1.34) (1.14) (0.94) (0.74) 0.90 (2.00) (1.77) (1.55) (1.09) (0.87) (0.64) (0.41) 1.00 (1.85) (1.60) (1.34) (0.84) (0.59) (0.34) (0.08) 1.10 (1.70) (1.42) (1.14) (0.59) (0.31) (0.03) 0.24 1.20 (1.55) (1.24) (0.94) (0.34) (0.03) 0.27 0.57 1.30 (1.39) (1.07) (0.74) (0.08) 0.24 0.57 0.90 1.40 (1.24) (0.89) (0.54) 0.17 0.52 0.87 1.23 1.50 (1.09) (0.71) (0.34) 0.42 0.80 1.18 1.55 1.60 (0.94) (0.54) (0.13) 0.67 1.08 1.48 1.88 1.70 (0.79) (0.36) 0.07 0.92 1.35 1.78 2.21 1.80 (0.64) (0.18) 0.27 1.18 1.63 2.08 2.54 1.90 (0.49) (0.01) 0.47 1.43 1.91 2.39 2.86 2.00 (0.34) 0.17 0.67 1.68 2.18 2.69 3.19 2.10 (0.18) 0.34 0.87 1.93 2.46 2.99 3.52 2.20 (0.03) 0.52 1.08 2.18 2.74 3.29 3.85 2.30 0.12 0.70 1.28 2.44 3.02 3.60 4.17 2.40 0.27 0.87 1.48 2.69 3.29 3.90 4.50 2.50 0.42 1.05 1.68 2.94 3.57 4.20 4.83 2.60 0.57 1.23 1.88 3.19 3.85 4.50 5.16 2.70 0.72 1.40 2.08 3.44 4.12 4.80 5.49 2.80 0.87 1.58 2.28 3.70 4.40 5.11 5.81 2.90 1.02 1.76 2.49 3.95 4.68 5.41 6.14 3.00 1.18 1.93 2.69 4.20 4.96 5.71 6.47

PAGE 137

137 Table 4-14 Sensitivity analysis for a 1.0 acre no n-organic greenhouse strawberry operation in North Central Florida Yield Market Price ($/lb.) (lbs/ft2) $1.17 $1.44 $1.62 $1.80 $1.98 $2.16 $2.34 ----------------------------------Net Revenue ($/ft2)--------------------------------0.10 (3.46) (3.44) (3.42) (3.40) (3.38) (3.36) (3.35) 0.20 (3.35) (3.29) (3.26) (3.22) (3.18) (3.15) (3.11) 0.30 (3.23) (3.15) (3.09) (3.04) (2.99) (2.93) (2.88) 0.40 (3.11) (3.00) (2.93) (2.86) (2.79) (2.72) (2.65) 0.50 (3.00) (2.86) (2.77) (2.68) (2.59) (2.50) (2.41) 0.60 (2.88) (2.72) (2.61) (2.50) (2.39) (2.29) (2.18) 0.70 (2.76) (2.57) (2.45) (2.32) (2.20) (2.07) (1.94) 0.80 (2.65) (2.43) (2.29) (2.14) (2.00) (1.85) (1.71) 0.90 (2.53) (2.29) (2.12) (1.96) (1.80) (1.64) (1.48) 1.00 (2.41) (2.14) (1.96) (1.78) (1.60) (1.42) (1.24) 1.10 (2.29) (2.00) (1.80) (1.60) (1.40) (1.21) (1.01) 1.20 (2.18) (1.85) (1.64) (1.42) (1.21) (0.99) (0.78) 1.30 (2.06) (1.71) (1.48) (1.24) (1.01) (0.78) (0.54) 1.40 (1.94) (1.57) (1.31) (1.06) (0.81) (0.56) (0.31) 1.50 (1.83) (1.42) (1.15) (0.88) (0.61) (0.34) (0.07) 1.60 (1.71) (1.28) (0.99) (0.70) (0.42) (0.13) 0.16 1.70 (1.59) (1.13) (0.83) (0.52) (0.22) 0.09 0.39 1.80 (1.48) (0.99) (0.67) (0.34) (0.02) 0.30 0.63 1.90 (1.36) (0.85) (0.51) (0.16) 0.18 0.52 0.86 2.00 (1.24) (0.70) (0.34) 0.02 0.38 0.74 1.09 2.10 (1.13) (0.56) (0.18) 0.20 0.57 0.95 1.33 2.20 (1.01) (0.42) (0.02) 0.38 0.77 1.17 1.56 2.30 (0.89) (0.27) 0.14 0.56 0.97 1.38 1.80 2.40 (0.78) (0.13) 0.30 0.74 1.17 1.60 2.03 2.50 (0.66) 0.02 0.47 0.92 1.36 1.81 2.26 2.60 (0.54) 0.16 0.63 1.09 1.56 2.03 2.50 2.70 (0.42) 0.30 0.79 1.27 1.76 2.25 2.73 2.80 (0.31) 0.45 0.95 1.45 1.96 2.46 2.96 2.90 (0.19) 0.59 1.11 1.63 2.16 2.68 3.20 3.00 (0.07) 0.74 1.27 1.81 2.35 2.89 3.43

PAGE 138

138 Table 4-15 Estimated break-even prices for a range of marketable strawberry fruit yields 1.0-3.0 lb./ft2 Yield X Price Organic Non-Organic (lbs/ft2) ---------($/lb.)--------1.00 $3.63 $3.88 1.30 $2.79 $2.98 1.58Y $2.30 $2.45 1.76 $2.06 $2.20 1.79 $2.03 $2.17 2.25Z $1.61 $1.72 2.50 $1.45 $1.55 2.75 $1.32 $1.41 3.00 $1.21 $1.29 X Yield is based on a useable area of 43,560/ft2 Y Estimated annual yield for organic strawberries Nov-May Z Estimated annual yield for non-organic strawberries Nov-May

PAGE 139

139 Table 4-16 Surface area of a 1.0 acre greenhouse of a saw-tooth design Surface Area of Gr eenhouse (ft2) End Walls in ft2 5,640 Side Walls 4,416 Roof 43,347 Vent End 776 Vent Side 6,336 GH Total Surface Area 60,515

PAGE 140

140 Table 4-17 Heat loss calculat ions required for a 1.0 acre saw-tooth greenhouse Q=A(Ti-To)/R Q = Heat loss, BTU/hr A = Area of greenhouse surface, sq ft R = Resistance to heat flow (Ti-To) = Air temperature differ ence between inside and outside Conduction Heat Loss, Qc: Qc = Area x T/R 507,818.18 BTU/hr Volume ft3: 589,199.52 Air Infiltration Losses, QA: QA: 0.20 x Volume x C x T C = Number of air exchanges per hour 106,055.91 BTU/hr Perimeter Heat Loss, QP: QP: P x L x ( T) P = Perimeter heat loss coefficient, BTU/ft F hr L = Distance around perimeter 8,083.20 BTU/hr Total Heat Loss, QT: QT = QC + QA + QP Heat Required: 621,957.30 BTU/hr Heat Required for 1 acre: 621,957.30 BTU/hr 182,231.85 Watts or 182.23 kWh Heat required is based on an Average Minimum daily January temperature of 44F and keeping the temperature at a level of 41F

PAGE 141

141 Table 4-18 Cost to Obtain Requi red BTU for 1.0 acre Greenhouse in North Central Fl orida Based on Historical Temperature Data Months Hours Heat is Needed BTU Required T Gallons of Diesel V Cost of Diesel Y Jan 147.17 91,533,455.17 663.29 $1,459.23 Feb 62.83 39,077,576.87 283.17 $622.98 Mar 30.17 18,764,451.60 135.97 $299.14 Apr 9.5 5,908,594.31 42.82 $94.19 May 0 0.00 0.00 $0.00 Jun 0 0.00 0.00 $0.00 Jul 0 0.00 0.00 $0.00 Aug 0 0.00 0.00 $0.00 Sep 0 0.00 0.00 $0.00 Oct 7.5 4,664,679.72 33.80 $74.36 Nov 36.2 22,514,854.09 163.15 $358.93 Dec 128.17 79,716,266.55 577.65 $1,270.84 Annual 421.54 262,179,878.31 1,899.85 $4,179.68 Months Hours Heat is Needed BTU Required T kWh Required W Cost of Electricity Z Jan 147.17 91,533,455.17 26,819.06 $2,145.52 Feb 62.83 39,077,576.87 11,449.63 $915.97 Mar 30.17 18,764,451.60 5,497.93 $439.83 Apr 9.5 5,908,594.31 1,731.20 $138.50 May 0 0.00 0.00 $0.00 Jun 0 0.00 0.00 $0.00 Jul 0 0.00 0.00 $0.00 Aug 0 0.00 0.00 $0.00 Sep 0 0.00 0.00 $0.00 Oct 7.5 4,664,679.72 1,366.74 $109.34 Nov 36.2 22,514,854.09 6,596.79 $527.74 Dec 128.17 79,716,266.55 23,356.66 $1,868.53 Annual 421.54 262,179,878.31 76,818.01 $6,145.44

PAGE 142

142 Table 4-18 Continued Months Hours Heat is Needed BTU Required T Gallons of Propane U Cost of Propane X Jan 147.17 91,533,455.17 994.93 $1,641.63 Feb 62.83 39,077,576.87 424.76 $700.85 Mar 30.17 18,764,451.60 203.96 $336.54 Apr 9.5 5,908,594.31 64.22 $105.97 May 0 0.00 0.00 $0.00 Jun 0 0.00 0.00 $0.00 Jul 0 0.00 0.00 $0.00 Aug 0 0.00 0.00 $0.00 Sep 0 0.00 0.00 $0.00 Oct 7.5 4,664,679.72 50.70 $83.66 Nov 36.2 22,514,854.09 244.73 $403.80 Dec 128.17 79,716,266.55 866.48 $1,429.69 Annual 421.54 262,179,878.31 2,849.78 $4,702.14 S Hours based on historical weather temperatures taken from Citra, FL 2000-2006 T BTU figures are based on the heat n eed to heat 2.47 acres of greenhouse U Estimated Propane Efficiency is 80 % with a heat value of 92,000 BTU/gal (Buffington et al., 2002) V Estimated Diesel Fuel Effi ciency is 70% with a heat value of 138,000 BTU/gal (Buffington et al., 2002) W Estimated Electricity Efficiency is 100% with a heat value of 3,413 BTU/kWh (Buffington et al., 2002) X Price of Propane = $1.65/gal (Energy Information Administration, 2006) Y Price of Diesel Fuel = $2.20/gal (Grimsely Oil, 2005) Z Price of Electricity = $0.08/kWh (FPL, 2005)

PAGE 143

143 Table 4-19 Probability of obt aining select prices for organic and non-organic strawberries Price Organic Y Non-Organic Z x1-value $0.00 $0.00 Prob(X<=x1) 0% 0% x2-value $1.10 $1.10 Prob(X<=x2) 0% 0% x3-value $2.00 $2.00 Prob(X<=x3) 7% 72% x4-value $2.50 $2.50 Prob(X<=x4) 46% 79% x5-value $3.40 $3.40 Prob(X<=x5) 92% 100% Y Probability of obtaining select price or lower based on simulated distribution of a minimum of $1.37/lb. and a maximum of $3.46/lb. Z Probability of obtaining select price or lower based on simulated distribution of a minimum of $1.13/lb. and a maximum of $2.56/lb.

PAGE 144

144 Table 4-20 Probability of obt aining select yields for organic and non-organic strawberries Yield Organic Y Non-Organic Z x1-value 0 0 Prob(X<=x1) 0% 0% x2-value 1.5 1.5 Prob(X<=x2) 30% 0% x3-value 2 2 Prob(X<=x3) 100% 11% x4-value 2.25 2.25 Prob(X<=x4) 100% 50% x5-value 2.5 2.5 Prob(X<=x5) 100% 89% Y Probability of obtaining select yield or lower based on simulated distribution of a minimum of 1.15 lbs/ft2, mean of 1.58 lb./ft2, maximum of 2.01 lb./ft2 Z Probability of obtaining select yield or lower based on simulated distribution of a minimum of 1.66 lbs/ft2, mean of 2.25 lb./ft2, maximum of 2.85 lb./ft2

PAGE 145

145 Table 4-21 Probability of obt aining select net profits for 1.0 acre greenhouse operation growing: organic and non-organic strawberries Net Profit Organic Y Non-Organic Z x1-value $0.00 $0.00 Prob(X<=x1) 22% 51% x2-value $50,000.00 $50,000.00 Prob(X<=x2) 79% 78% x3-value $75,000.00 $75,000.00 Prob(X<=x3) 93% 87% x4-value $100,000.00 $100,000.00 Prob(X<=x4) 100% 96% x5-value $150,000.00 $150,000.00 Prob(X<=x5) 100% 100% Y Probability of obtaining select net profit or lower based on combinations of simulated price and yield variables Z Probability of obtaining select net profit or lower based on combinations of simulated price and yield variables

PAGE 146

146 Table 4-22 Estimated costs of producing one acre of field strawberries for fresh market, in Florida Y Quantity Unit $/Unit Total GROSS RETURNS X X Strawberries (Flats) 2763.50 flat $ 10.26 $28,348.20 (Flat=12 lb.) OPERATING COSTS ----Dollars---Transplants 1,837.50 Fertilizer 468 Fumigant 883.2 Fungicide 547.44 Herbicide 125.07 Insecticide 559.38 General Farm Labor 44.5 Machinery Variable Cost 491.3 Tractor Driver Labor 283.59 MISCELLANEOUS Transplant Labor 330 Plastic Disposal 100 Cut Runners, Hoe and Hand Weed 150 Farm Vehicles 116.31 Drip Tube 400 Plastic Mulch 320 Scouting 55 Predatory Mites 150 Crop Insurance 100 Interest on Operating Capital 651.07 Total Operating Cost 7,612.36 FIXED COSTS Land Cash Rent Z 571.88 Machinery Fixed Cost 173.65 Overhead 2,684.53 Total Fixed Cost 3,430.06 TOTAL PREHARVEST COST 11,042.42

PAGE 147

147 Table 4-22 Continued HARVEST AND MARKETING COSTS Pack and Sell 8,060.00 Harvest Berries 6,500.00 Total Harvest and Marketing Cost 14,560.00 TOTAL COST 25,602.42 RETURN TO OPERATOR LABOR, LAND, CAPITAL, & MGT. $2,745.78 Operator and Unpaid Family Labor hrs. 40 $8.00 320.00 RETURN TO OPERATOR LABOR, LAND, CAPITAL, & MGT. $2,425.78 X (Florida Agricultural Statistical Directory, 2005) Y (Smith, 2005) Z (Average estimated Florida land rent) (Appendix A-2)

PAGE 148

148 Table 4-23 Simulated net profit fo r 1.0 acre of field strawberries harvested on land in differen t regions of Central Florida Net Profit ($/acre) Mean Y $2,419.14 StDev 3413.992 CVZ 141.124 Min ($4,482.34) Max $14,627.22 Y Average simulated net present value of a 1.0 acre field strawberry operation Z Coefficient of Variation

PAGE 149

149 Table 4-24 Probability of obtai ning select net profit from field production of strawberries on 1.0 acre of land in three regions in Central Florida Net Profit ($/acre) Z x1-value $0.00 Prob(X<=x1) 25% x2-value $500.00 Prob(X<=x2) 32% x3-value $1,000.00 Prob(X<=x3) 41% x4-value $2,000.00 Prob(X<=x4) 54% x5-value $5,000.00 Prob(X<=x5) 79% Z Probability of obtaining select net profit or lower based on combinations of simulated price and yield variables

PAGE 150

150 Italy 3% Japan 7% Spain 11% Mexico 6% Canada 1% United States 41% China 25% Poland 6%Source: Foreign Agricultural Service, Counselor and Attache Reports, Official Estimates, USDA Estimates, 2006World Fresh Strawberry Production 2005/2006 = 2,623,000 Metric Tons Figure 4-1 Shares of worl d fresh strawberry production by country, 2005/2006 growing season

PAGE 151

0 50000 100000 150000 200000 250000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 YearsVolume of Fresh & Frozen Strawberries (1,000 Pounds) Mexico Chile China Argentina Ecuador Others World Figure 4-2 Volume of U.S. imports of strawberries from top countries, 1994-2004

PAGE 152

0 5000 10000 15000 20000 25000 Jan.Feb.Mar.Apr.MayJuneJulyAug.Sep.Oct.Nov.Dec. MonthsU.S. Fresh Strawberry imports (1,000 pounds) Strawberries Figure 4-3 Monthly U.S. fr esh strawberry imports, 2003

PAGE 153

0 0.5 1 1.5 2 2.5 3 3.5 4 JanFebMarchAprilMayJuneJulyAugSeptOctNovDec MonthsMonthly dollar per pound Price ($/lb) Non-Organic Organic Figure 4-4 Organic vs. non-or ganic monthly average wholesal e strawberry prices, 1998-2005

PAGE 154

154 CHAPTER 5 THE ECONOMIC FEASIBILITY OF GREENHOUSE-GROWN CUCUMBERS AS AN ALTERNATIVE TO FIELD PRODUCTI ON IN NORTH-CENTRAL FLORIDA In Floridas 2003-2004 growing season, 10,700 acres of fresh slicing cucumbers were harvested primarily from fields with raised be ds using sub-seepage and some drip irrigation (Florida Agriculture Statistical Directory, 2005). The term slicing refers to cucumbers that are sold fresh for immediate consumption as a salad item. Slicing cucumbers are grown as a first crop on raised soil beds in the field or as a second crop, generally following a Solanaceae crop (Jovicich et al., 2005). Both cons umption and imports of fresh cu cumbers are on the rise in the United States (U.S. Department of Agricultu re, 2005). Domestic consumption of fresh cucumbers in 1970 was 577.9 million pounds and rose to 1,851.6 million pounds in 2004, an increase of 320%, while imports have increa sed 651% from 1970 to 2004 [143.3 million lb. to 933.3 million lb.] (U.S. Department of Agricultu re, 2005). This increase can partially be explained by the increase in popularity of the European long seedless type cucumber. Today increase in public demand for fresh cucumbers has allowed other countries such as Canada, Mexico, Honduras, Guatemala and the Netherla nds to fill that demand in the U. S. Many countries have begun growing high qual ity, high yielding, long, seedless, European greenhouse cucumber types, at a premium price. In 2002, the estimated greenhouse cucumber area was 61.78 acres in the U.S., 291.58 acres in Mexico and 491.73 in Canada (Ministry of Agriculture, Food and Fisheries Industry Competitiveness Branch, 2003). Even though greenhouse-grown cucumbers comm and a higher price than field-grown cucumbers, consumers are willing to pay for th e higher quality and seasonal availability the greenhouse cucumbers offer. Countries that produce high quality greenhouse cucumbers acquire a high annual average price pe r pound of product. From 1998-2005, greenhouse cucumbers from

PAGE 155

155 Canada acquired a 465% higher average price [$0.93/lb.] than Floridas [0.20/lb.] field cucumber. Greenhouse-grown cucumbers from Me xico received a 241% higher price [$0.82/lb.] than field cucumbers [$0.34/lb.] from Mexico (Table 5-1) (U.S. Department of Agriculture, 2005). Canada competes with Florida cucumber pr oduction due to overlapp ing seasons in the spring and fall crops. Mexican cucumber producti on is dominant in the winter, when it is not economical for Canada to produce, due to the hi gh costs required to heat greenhouses. In 2004, 50% of domestic consumption in the U.S. was im ported. In 2004 the value of all U.S. cucumber imports, was $348,689,000 (U.S. Departme nt of Agriculture, 2005). In 2004, imports from Mexico had a value of $279,760,000 which accounted for 80% of the total value of imported fresh cucumbers into the U.S. The second largest exporter of fresh cucumbers to the U.S. was Canada, which accoun ted for 17% of the total imported valued at $59,537,000 and the Netherlands came in third with a value of $8,552,000 [2% of total] (Table 5-2) (U.S. Department of Agriculture, 2005). Field Production of Cucumbers in Florida In Florida, cucumber production is primarily on raised polyethylene-mulched beds using drip irrigation and fumigated with the now restricted chemical me thyl-bromide. Florida has been a principal winter supplier of cucumbers to the United States. In 2005, Florida was the leading producer of fresh cucumbers [283,500,000 lb.] in the United States ahead of Georgia [280,000,000 lb.]; together they produce 55% of th e U.S. cucumber output (U.S. Department of Agriculture, 2005). In the 2002-2004 growing season, Florida harvested 10,700 acres producing 251,515,000 lb. [4,573,000 bushels]. Total U.S. production of cucumbers is valued at $212,734,000. The value of Floridas production [$50,552,000] accounts for 24% of the total value of the U.S. fresh cucumber production (U.S Department of Agriculture, 2005) (Florida

PAGE 156

156 Agricultural Statistical Direct ory, 2005). Florida fresh cu cumber producers harvest from November May, with the bulk of the harves ts being done in November, April and May. Historical annual average field pr ice offered to producers is $0.28/l b. .10 for slicer cucumbers. The objective of this study was to determine the economic feas ibility of growing European long-seedless cucumbers in a greenhouse, as we ll as make a comparison of the profitability between greenhouse and field production of cucumber s, in North Central Florida. This will be accomplished through the use of simulation models, using stochastic variables. For detailed explanations for the use of simulation modeling and stochast ic variables see Chapter 3. Methods This study describes and applies stochastic si mulation to a financial model of a 1.0 acre cucumber greenhouse operation in North Ce ntral Florida (see Chapter 3 for detailed information)2. The Use of Stochastic Variables in a Simulati on Model to Estimate Key Output Variables (KOV) Price was simulated using a normal probability distribution, a distribution function in SIMETAR. The normal distribution produces a be ll shaped probability distribution function with set probabilities. The normal function reaches to plus and minus infinity so it is an open distribution. This model used a truncated normal distribution, since it is unlikely that a negative price will ever be obtained. By truncating the normal distribution function the minus infinity was replaced with a variable of zero. The paramete rs for the normal probab ility distribution [PDF] are the mean of the distributi on, the standard deviation of th e distribution and the uniform standard deviate [USD]. Norm al distribution function is simu lated in SIMETAR using the 2 SIMETAR was developed by Richardson, Schu mann, and Feldman in the Department of Agricultural Economics, Texas A&M University. It is an add-on to Microsoft Excel that was developed in Visual Basic for applications. It consists of both menu-driven and u ser-defined functions in Microsoft Excel (Gill, Richardson, Outlaw, Anderson, 2003).

PAGE 157

157 command =NORM(Mean, Std Dev, [USD]) The PDF for the normal distribution given (mean) and (standard deviation) can be explained through the function: In the function above (x) describes the distribut ion function, is equal to the mean wholesale price and is equal to the standard deviation of the wholesale price, x desc ribes the independent variable, describes the residual error and the is an error term or an arbitrarily small positive number used in regression. Since this model is based three crop cycl es annually the function =(NORM(Mean, Std Dev, [USD]))+ (NORM(M ean, Std Dev, [USD]))+ (NORM(Mean, Std Dev, [USD])), was used to simulate an annual three crop cycle yield. The uniform standard deviate variable X is distributed over the range of 0 to 1 and is denoted as X ~ U (0, 1). Unifor m standard deviate is simulate d in Simetar using the command =UNIFORM ( ). The uniform probability distri bution function for the uniform distribution given a and b can be explaine d through the function: In the function above, (x) describes the dist ribution function, a is equal to the minimum wholesale price, b is equal to the maximum w holesale price and x describes the independent variable. The wholesale pri ce input variables [min, max, USD] for conducting a normal probability distribution for cucu mbers are shown in Table 5-3. Yield was simulated using the GRKS distributio n (Richardson et al., 2006). The yield [lb. /ft2] input variables [min, mid, max] for constructing a GRKS dist ribution for cucumbers can be found in Table 5-4. For detailed information on st ochastic models, key output variables (KOV) and GRKS distributions refer to Chapter 3.

PAGE 158

158 Greenhouse Structure Used in the Production of Greenhouse-Grown Cucumbers in North Central Florida Experiments by Shaw et al., (2000) and Shaw et al., (2004) were performed in a passively ventilated high roof greenhouse unit, of a saw-t ooth design, located at th e Protected Agriculture Center, part of the University of Florida Hortic ultural Research Unit in Gainesville, Florida. These trials consisted of both Beit Alpha or mini cucumber and the European long-seedless cucumber. This study was based on the Eur opean long-seedless cucu mber. For additional information on total floor area of greenhous e or heaters used see Chapter 3). Large portions of data (including planting, yield, crop cycle and fertilization) used in this enterprise budget and model are based on research trials done at the University of Floridas Horticultural Research Unit, Ga inesville, Florida (Shaw et al., 2000, Shaw et al.,2004). The Shaw et al., (2000) trials consisted of a fall and spring crop cycle. This st udy used a third winter crop cycle and yields will be derived by taking a 60% reduction from th e spring crop cycle of long-seedless type cucumbers, this is base d on personal communication with a commercial grower Bellibasis, (2005). Crop cycles lasted 10 5 days from seeding to removal of the crop. Plug transplants were grown in evaporative-cool ed pad and fan glasshouse and transplanted in February, June and Octobe r (Shaw et al., 2004). Wholesale Greenhouse Cucumber Fruit Prices Historical fruit prices for gree nhouse-grown fruit were gathered from the U.S. Department of Agricultures USDA Fruit and Vegetable Ma rket News Portal (U.S. Department of Agriculture, 2005). Daily price data was gathered for the la st seven years (1998-2005) from three different terminal markets (New York, Atlanta and Miami) to calculate a maximum, minimum and mean dollar per pound wholesale fruit price used in the budget analysis model. Fruit prices were sorted by vari ety [greenhouse verses field], orig in and weight of packaging.

PAGE 159

159 Prices of greenhouse fruit were taken from Ca nada, Honduras, Mexico, the Netherlands, Spain, Ohio and Florida. Once historical daily prices for greenhouse cucumbers were co llected, the data was sorted, matched and cropped from January 1998 to December 2005. An annual model is used in this study so the daily data were averaged to gene rate an annual average dollar per pound price for greenhouse-grown cucumbers. Historically, prices of greenhouse-grown longseedless cucumbers have been three times higher than those of field-grown cucumbers. Annual average wholes ale price of greenhousegrown cucumbers is $0.87/lb., versus average an nual field prices of $0.28/lb. (Figure 5-1). Monthly greenhouse prices peak between November and February, with the highest price in January [$1.06/lb.]. Monthly greenho use prices are at th eir lowest April, May, July and October (Figure 5-1). Greenhouse-grown cucumbers demand a $0.59/lb. greate r price than that of field production (U.S. Department of Agriculture, 2005). Enterprise Budget Analysis of Greenhouse-Grown Cucumbers Common financial statements were developed and used for greenhouse type of cucumber. An enterprise budget was constructed consisting of gross revenue, costs [initial investment, variable and fixed] and profit th at is associated with a 1.0 acre cucumber greenhouse operation in North Central Florida. Budget tables consisted of items, quantities, units and prices used. Annual receipts [gross revenue] were derived by multiplying the annual stochastic dollar per pound price by the volume of cucumbers produced [gross revenue = sales volume x price, sales volume = yield x usable greenhouse ar ea] for the fall [August October], winter [December February] and spring [April June] ha rvest periods (Table 5-5). Total fruit yield for three crop cycles were estimated to be 9.98 lb./ft2 based on the technology and practices used and the length of the crop cycle (Shaw et al., 200 0). Fruit yields, costs and revenue were based

PAGE 160

160 on unit area of the total greenhouse area [1.0 acre]. The formula used to calculate gross revenue was: gross revenue ($/ft2) = yield (weight per ft2) x stochastic price ($/lb.). Estimated Costs of Production for Growing Greenhouse Cucumbers Fixed costs are defined as co sts that the producer would in cur even if no crop was being grown in the greenhouse at the time. All items have been depreciated over their expected useful life, with a straight line deprec iation method. Straight line depreci ation is defined as a procedure for depreciating long-lived assets that recognizes equal amounts of depreciation in each year of the assets useful life. Useful lif e of an asset is defined as the number of years an asset can be used before the asset deteriorates to the point when repairs are not econo mically feasible. The usefulness of a long-lived asset is largely de termined by technological advancements, which could, at any time, render certain long-lived assets obsolete. For this reason, all items in this study were assumed to have zero salvageable valu e at the end of their useful life. Fixed production costs were derived from the sum of depr eciation and other costs. Annual fixed costs, for the 3 crop cycles, came to $46,762 [$1.07/ft2] (Table 5-6). The fixed costs to depreciate [initial] inve stment required for a 1.0 acre greenhouse venture was determined by compiling all co nstruction, materials, equipmen t, labor, and durables needed up front to start a greenhouse enterp rise. Initial investme nt is part of the estimated annual fixed cost. Initial investment cost c onsisted of the land, greenhouse stru cture and cover materials, site preparation costs, greenhouse permits, construc tion supervision, head house structure, backup generator, heating and ventilati on systems, nutrient injector and climate control systems, nutrient solution tanks, weather station, computer softwa re, training to use computer software, water filters, valves and pressure regulators, irrigati on emitters, stakes, tubing, polyethylene pipe, pipe connectors, nursery pots, electr ical, drainage system, bulk stor age tanks, trellis accessories,

PAGE 161

161 automobile, and a fork lift. A summary of these initial investment costs can be found in Table 56. Variable costs are defined, as it pertains to this model, as operati ng costs that would be incurred only if the crop was grow n. Variable production costs [$/ft2] were taken from Table 5-7 except for electricity and gas costs, which will be discussed later in the chapter. Variable costs were derived by summing pre-harvest costs, harv est costs, and package and marketing costs for the 3 crop cycles. Annual variable costs fo r a 1.0 acre greenhouse ope ration, producing 3 crops, came to $345,160 [$7.92/ft2] (Table 5-7). Profit was calculated by subtrac ting total cost from gross revenue. The formula used for calculating profit was: profit = gro ss revenue [yield (weight per ft2) x stochastic price ($/lb.)] total costs [variable + fixed (depreciation + ot her durables)]. Annual ne t profit for a 1.0 acre greenhouse operation, producing 3 crops, came to $72,775. Net present value [NPV] is defined as the present value of cash inflows less present valu e of cash outflows. It is also said to be the increase in wealth accruing to an investor when he or she undertakes an investment. Net present value was calculated using Excel The function used was: =N PV ((interest rate, Cash Flow [array t=1 thru t=20]) + Initial Investment). Cash flows were calculated using an initial investment of $441,684, with a book value at the end of its 20 year life expectancy of $22,084 with an assumed interest rate of 8.35% (Farm Credit, 2006). After tax cash flows were then calculated with the following formula: ATCF = (profits [$72,588] depreciation [$46,762] = Earnings before taxes [EBT= $25,826] taxes [$775] + depreciation [$46,762]) = $71,813. Net present value [NPV] was then calculated to usin g the formula: NPV = sum (cash flows x present value interest factor [PVIF]). Net present value was simulated using SIMETAR, after simulating greenhouse cucumber scenario n=500 ite rations, it was determined that the average

PAGE 162

162 simulated NPV of a 1.0 acre greenhouse cucumb er operation, was $85,928. The results can be found in Table 5-8. The internal rate of return [IRR] is defined as the discount rate at which the investments net present value [NPV] equals zero. As it pert ains to this model, IRR was calculated using Excel. IRR was calculated as being 15% for this model with an assumed interest rate of 8.35% (Farm Credit, 2006). Sensitivity Analysis for the Produc tion of Greenhouse-Grown Cucumbers Sensitivity analysis was used to analyze the effect on income when a change in one of the input variables is invoked. Ne t returns were calculated in the sensitivity analysis with marketable fruit yields ranging from 1 30 lb. /ft2 and wholesale market prices ranging from $0.63 $1.17/lb. (Table 5-9). These prices reflect the average whol esale prices that could be obtained during the fall, wint er spring harvest periods. Break-Even Analysis for the Produc tion of Greenhouse-Grown Cucumbers A break-even analysis was crea ted to show the different co mbinations of yield and the price required to break-eve n in a 1.0 acre cucumber greenhouse ve nture. For example, a yield of 10 lb./ft2 would require a price of $0.90/lb. to breakeven, anything over this price at 10 lb./ft2 would be considered profit or return to mana gement, anything lower would make the venture unprofitable (Table 5-10). The break-even analys is was calculated using the following formula: break-even price = total cost [var iable + fixed costs] / sales volume [yield x usable greenhouse area (43,560 ft2)]. Heat Loss Calculations for a 1.0 Acre Greenho use Cucumber Operation in North Central Florida The two most expensive variab les in greenhouse production are labor and energy. Just as in chapter two of this study (The economic feas ibility of greenhouse-grown bell peppers as an

PAGE 163

163 alternative to field production in North Central Florida), annual heat cost were estimated using formulas to determine conduction, air infiltra tion and perimeter heat loss on a 1.0 acre greenhouse in North Central Florida. This study used a minimum base temperature inside the greenhouse of 60F, for adequate plant growth. Just as in chapter three, calcu lations, in this model, are based on the surface area of on 1.0 acre greenhouse. It was determined that, in order to maintain the 60F minimum base temperature, an estimated 1,311,863.64 BTU/hr was need ed to offset conduction heat loss. Air infiltration heat losses requi red 273,977.78 BTU/hr and perimete r heat loss required 20,881.60 BTU/hr. Total heat required to maintain the 60F minimum bass temperature was 1,606,723.01 BTU/hr for a 1.0 acre saw-tooth greenhouse with a total surface area of 60,515 ft2 (Table 5-11 and 5-12). For calculation procedures refer to Chapter 3 of this study. Based on historical temperatur e data it was determined that the temperature outside the greenhouses in Citra, Florida, fell below the 60 F minimum base temperature for an average of 2,247.87 hours annually. Thus, an estimated 3,611,704,459.60 BTUs are required annually to heat the greenhouse (Table 5-13). This model used diesel heaters in order to lower costs. An estimated 26,171.77 gallons of diesel fuel annually are required to generate the needed BTUs, at a cost of $57,577.90 [$2.20/gallon or $0.000016/BTU (Gri mesly Oil, 2005)] (Table 5-13). In addition, estimated fuel costs for propane and elec tricity heaters are examined to determine the most cost efficient fuel source to heat the gr eenhouses. Electric power source would require 1,058,219.88 kWh at a cost of $84,657.59 [$0.08/kWh or $0.000023/BTU (FPL, 2005)]. A propane fuel source would require 39,257.66 ga llons at a cost of $64,775.13 [$1.65/gallon or $0.000018/BTU (Energy Information Admi nistration, 2006)] (Table 5-13).

PAGE 164

164 Field Budget Analysis for Cucumbers in Florida Common financial statements were created by the University of Florida, Food and Resource Economics Department (Smith, 2005), for fresh field cucumbers production in the state of Florida. These financial stat ements were modified to create a model using stochastic variables and scenarios. As in the greenhouse model, the field budget has stochastic variables in place for both yield and price. In addition, five scenarios were used to determining the effect of increased land prices, in the state of Florida, on the estimated annual net profit that a grower will receive. Gross revenue was calculated by multiplying average yield per acre by the average wholesale market price taken from the Florida Agricultural Statistical Directory 2005 from 1994 (Table 5-16). Variable costs, as defined previously, are thos e costs that a grower will incur only if a crop is being grown. Variable costs for one acre of cucumbers in Florida were calculated to be $1,521/acre (Table 5-16). Fixed costs are costs that a grower will incu r whether or not a crop is being produced. Fixed costs were calculated to be $1,303/acre. Total harves ting and marketing costs were calculated to be $2,824/acre. Total costs were calculated by summing total variable costs, fixed costs, and harvest and marketing costs. Total costs equal $5,6 20/acre (Table 5-16). Results Simulation Analysis Used to Analyze a G reenhouse-Grown Cucumber Production System in North Central Florida Price and yield were the only st ochastic variables in the model; however the model was set up so that as the stochastic yield and price moved along their defined distribution, the models net profit and net present value moved accordingly. Each stochastic variable was simulated at 500 iterations (For more information on determini ng number of iterations refer to Chapter 3).

PAGE 165

165 Results from the simulation showed an annual mean price for greenhouse-grown long-seedless cucumbers to be $0.90/lb. 0.12, mean yields equal to 10.23 lb./ft2 2.75, annual net profit mean equaled $72,775 89,977 and net present value mean equaled $85,928 652,295 for a 1.0 acre greenhouse producing cucumbers (Table 5-8). Average seasonal price for winter equaled $1.04 0.03, spring equaled $0.78 0.05 and fall equaled $0.83 0.04. Average monthly yield for the winter harvest period equaled 0.59 lb/ft2, spring equaled 1.48 lb/ft2 and fall equaled 1.25 lb/ft2 (Table 5-5). Probabilities and Risk for Greenhouse Cucumb er Production Using SIMETAR in North Central Florida Stochastic simulation involves simulating unc ertain economic systems that are a function of risky variables, for the expr ess purpose of making better d ecisions. This study assumes that future risk mimics historical ri sk, so past variability is used to estimate parameters for the probability distributions of risky variables in the model. Probability distributions are simulated a large number of times to formulate probabilist ic projections for the risky variables. The interaction of the risky variable s with other variables in the m odel allows the projection of how risky a decision would likely be under alternative management stra tegies. In this way the model can provide useful information about the likely outcomes of alternative management decisions under risk (Richardson, 2006). In greenhouse production, just as in all agricultural ventures, risk is a major variable to consider. The higher the risk, in most instance s, the greater the return, likewise the lower the risk, in most instances, the lower the returns, however, the amount of risk a producer is willing to take on is entirely up to the produc er. Caution should be used when using this model to assess an individuals risk. This model is ju st a guide so that others may tailor it to their needs, in order to measure risk of yield and price. No model can measure all risks includ ing natural disasters,

PAGE 166

166 market prices, personal knowledge of plant produ ction or management. All prices are based on historical wholesale prices fr om New York, Atlanta and Miami terminal markets and are not necessarily the prices that all growers have received. SIMETAR can be used to assess some risk, by estimating the probability that a simulated variable might be achieved. Price and yield were set as stochastic variables in the model, with defined parameters for the specific distribution function used. Table 514 shows select annual prices within the distribution range that were us ed to calculate the prob ability of obtaining the select price or lower, based on historical pricing data and the simulation software. The probability that a grower would get a wholes ale price for a greenhouse-grown, European, longseedless cucumber below the minimum end of th e distribution [$0.54/lb.] or a price above the maximum end [$1.26/lb.] is 0%. There is a 90% probability that the esti mated price received would be greater than $0.75/lb. a nd a 10% probability that it w ould be equal to or less than $0.75/lb. There is a 19% probability that the pri ce received will be greater than $1.00/lb. and an 81% probability that the price will be equal to or less than $1.00/lb. (Table 5-14). Since cucumbers are a relatively short crop, it is possibl e to have up to 4 crop cycles per year, although this study only used 3 crop cycles per year. Table 5-15 displays the probability of obtaining select seasonal prices. In th e winter [December, January, Febr uary] harvest season the average wholesale price for long-seedless cucumber s was $1.04/lb. with a range of $1.01 $1.07/lb. During the winter harvest season simulation yi elded a 12% probability of obtaining a price greater than $1.05/lb and an 88% probability of obtaining a price less than or equal to $1.05/lb. During the spring [April, May, June] harvest pe riod the average wholesale price was $0.78/lb. with a range of $0.63 $0.93/lb. Simulation of spri ng prices resulted in a 36% probability of obtaining a price greater than $0.80/lb. and a 64% pr obability of obtaining a price less than or

PAGE 167

167 equal to $0.80/lb. There is a 100% probability th at the price will be smaller than $0.90/lb. During the fall [August, September, October] ha rvest season the average wholesale price was $0.83/lb. with a range of $0.79 $0.86/lb. Simulati on resulted in a 99% probability of a price greater than $0.80/lb. and a 1% prob ability that the pric e will be equal to or less than $0.80/lb. Additionally there is a 10 0% probability that the price will be less than $0.90/lb. (Table 5-15). The method for determining the probability of yield works much in the same manner as it did for price. Stochastic pri ce used a normal probability dist ribution function [mean, standard deviation, uniform standard deviant], whereas yield uses a GRKS distribution function [minimum, middle, maximum value, uniform sta ndard deviant]. Table 5-14 displays select annual yields and their probabilities of obtai ning those yields for European long-seedless cucumbers. There is a 0% probability that th e estimated yield for greenhouse-grown cucumbers will fall outside the paramete r range of 2.6 19.7 lb. /ft2. There is a 54% probability that the yield will be greater than 10 lb./ft2 and a 46% chance that the yield would be equal to or less than 10 lb./ft2. There is a 4% probability that the yield will be greater than 15 lb. /ft2 and a 96% probability that the yield will be equal to or less than 15 lb. /ft2 (Table 5-14). Table 5-15 shows the probability of obtaining select seasonal yields Simulation results for the winter harvest season show that the average yield was 1.78 lb. /ft2. There was a 6% probability of obtaining a yield of zero and a 76% probability of obtaining a yield greater than 1.0 lb/ft2 (Table 5-15). The probability of obtaining a winter yield greater than 2.0 lb/ft2 was 42% with a 58% probability of obtaining a yield less than or equal to 2.0 lb/ft2 (Table 5-15). During the spring harvest season the average yield was 4.45 lb. /ft2 (Table 5-15). There is a 65 % probability of obtaining a spring yield greater than 4.0 lb. /ft2 and a 35% probability of obtaining a yield less than or equal to 4.0 lb/ft2. The average fall harvest seas on yield is equal to 3.75 lb. /ft2 (Table 5-15). There is a 94%

PAGE 168

168 probability of obtaining a fall yield greater than 2.0 lb. /ft2 and a 6% probability of obtaining a yield less than or equal to 2.0 lb. /ft2 (Table 5-15). There is a 41% probability of obtaining a fall yield greater than 4.0 lb. /ft2 and a 59% probability of obtaining a yield less than or equal to 4.0 lb. /ft2 (Table 5-15). Table 5-8 states the mean net profit for 1.0 acre of greenhouse-grown cucumbers to be $72,775. The probability that the ne t profit will be negative is 22% with a 78% probability that it will be positive. The probability of a net profit above $50,000 is 56%, above $100,000 is 46% and above $150,000 is 21% (Table 5-14). The probability of a negative net present value [NPV] for 1.0 acres greenhouse-grown cucumbers is 50%. There is a 47% probability of an NPV greater than $100,000 and a 53% probability of an NPV equal to or lower than $100,000. The probability of an NPV greater than $500,000 is 26% and greater than $1,000,000 is 8% (Table 5-14). Analysis of Florida Fiel d Budget Simulation The enterprise budget model was simulated using the average land cash rent price representing the average rental price of irrigated cropland in Fl orida, as defined in Appendix A2. This field model used stochas tic yield and price variables a nd was simulated at 500 iterations. Simulated average yield per acre was 29,865 lb./acre [543 bushels/ acre] and price an estimated at $0.19/lb. [$10.48/bushel]. Estimated average net profit for a one acre field operation in Florida was $60 964 (Table 5-17). Probabilities and Risk in Field Production Using SIMETAR As mentioned in the previous risk section, the program SI METAR, was used to assess the probabilities and risk involve d in field production of cucumber s in Florida. Just as in greenhouse production, caution should be used when using any method of a ssessing risk. This model does not assess the risk of losses due to natural disasters or lack of grower knowledge. In

PAGE 169

169 this model, the stochastic prices and yields are derivatives of average prices and yields that Florida growers have obtained from 19952004 (Florida Agricultural Directory, 2005). Both stochastic price and yield variables we re set up using a GRKS distribution function. The parameters needed for a GRKS distributi on function, is a minimum, middle and a maximum value. Simulation results display a 50% probability of a negative net profit in Florida. This also calculates to a 50% probability of a positive net present value. There was a 29% probability of a net profit greater than $500/acre. The probabi lity for a net profit greater than $1,000/acre was 19% (Table 5-18). Discussion Due to new and ever changing trade policies, Florida cucu mber producers must compete with many other countrie s for market share. Countries such as Canada, Mexico and the Netherlands are quickly filling the increasing de mand for fresh cucumbers in the United States (Cantliffe et al., 2001). Florida growers, which have predominantly grown slicer cucumbers in fields on raised beds, must adapt to the sh ifting market demand for fresh market seedless cucumbers in order to maintain a substantial market share. In this model, budgets for both the greenhouse and field have been examined. A large portion of cucumbers consumed in the U.S. are im ported [50% of total consumption is imported] (U.S. Department of Agriculture, 2005). Cucu mbers from the greenhouse historically demand an average annual price up to thr ee times higher than that of fi eld production (Figure 5-1). Unlike field production, the greenhouse envir onment uses a soille ss production system which avoids weeds, soil-borne pathogens or pl ant parasitic nematodes. Screened structures greatly reduce the presence of insects, and thos e that are present can be controlled using biological control. Additionally, there is increas ed efficiency in use of fertilizer and water, which can be recycled within the system (Smithe r-Kopperl et al. 2004). Met hyl bromide is a soil

PAGE 170

170 fumigant that is used to cont rol soil-borne pathogens, plan t parasitic nematodes and weeds (Smither-Kopperl et al., 2004). Field production in Florida is heavily dependant upon the use of methyl bromide. The ban on methyl bromide and the greater demand for high quality fresh, seedless cucumbers has created an opportuni ty for growers to produce cucumbers in a greenhouse. The most common greenhouse cucumber produc tion season extends from September to June (Larson et al., 2003). Fl oridas temperate climate requires minimum heating for the production of cucumbers in a greenhouse compared to other regions of the U.S. With ever increasing fuel prices, this will allow Florida gr owers to stay competitive in the fresh market cucumber production industry. This allows gr owers to produce over extended periods depending on fruit prices and on the quality of the fruits harvested. These factors may allow production to extend to year round production. This project determined that greenhouse production of cucumbers can produce a net profit 1,206 times greater than fi eld production. Results from Smith (2005) were used to compare to the findings in this project. Field budgets constructed by Smith (2005) were used to compare field returns with this studies gr eenhouse production return. Results from the comparison showed that greenhouse production of cucumbers [$72,775/acre] can be up to 1,206 times higher than returns from field production [$60/acre]. The break-even fruit yields and required pr ices for profit determined by this study are attainable for Florida cucumber growers. Current experimental and commercial crops are obtaining yields of 20 25 lb. /pla nt and historical prices of l ong seedless cucumbers range from $0.54 $1.26/lb. (Hotchmuth, 2001) (U.S. Department of Agriculture, 2006). Yields and market

PAGE 171

171 values such as these are sufficient to make greenhouse cucumber producti on profitable according to the results of this study. Greenhouse enterprises are variable in size, composition and management. Thus growers seeking to undertake the producti on of cucumbers in a greenhous e setting should use this study as a guide and calculate budgets for their own en terprise. This study used a greenhouse size of 1.0 acre, greenhouses with a differe nt size, construction material or configuration may differ in cost of initial investment and in cost of productio n. However, investment per unit area is always considered high compared investme nts in field vegetable production. Florida vegetable growers are currently faced with many challenges, from natural disasters to international competition which is able to ship year round. Fl orida growers must find ways to surmount obstacles such as urbanization [loss of warm weather, costal farm land], labor shortages [labor shifting to stea dy higher-paying jobs such as c onstruction], water restrictions, and the loss of methyl-bromide. For some gr owers seeking to produce high value specialty crops, such as long seedless cucumbers, soil less greenhouse production may be an alternative that can overcome some of these obstacles Summary Florida fresh market vegetable growers ar e faced with increased pressure from urbanization, water and chemical restrictions, and foreign competition. Grow ers are in need of a clear alternative to field production that can off-set these growing obstacles. Currently there has been very little research performed to de termine the economic feasibility of greenhouse cucumber production. However, there have been studies that have examined the pressure on the U.S. vegetable market from foreign countries. A dditional research is needed to assess the risk and potential earnings that growers can obtain in gr eenhouse vegetable production.

PAGE 172

172 The objective of this study wa s to determine the costs and benefits associated with greenhouse cucumber production. Through the us e of SIMETAR and Excel software, a budget analysis model was created for the prod uction of greenhouse-grown cucumbers. Using this model, cost of production, net profit and ri sk have been simulated and compared to field production. This study found that although greenhouse producti on requires a significan tly larger capital investment [total cost: $391,922/acre] compared to field production [tot al costs: $5,620/acre], potential profits have been determined to be as much as 1,206 times greater in greenhouse production [$72,775/acre] than in th e field [$60/acre]. These are significant findings for Florida growers searching for alternat ives to field production. Green house production may allow them to stay competitive in the U.S. fresh vegetable ma rket. This study has determined that not only is it economically feasible to grow cucumbers in a greenhouse setting, but it has also shown that potential profit is significantly greater for greenhouse-grown cucumbers compared to fieldgrown cucumbers.

PAGE 173

173 Table 5-1 Monthly average dollar per pound gr eenhouse-grown cucumber wholesale price; 1998-2005 Canada Florida Honduras Mexico Netherlands Ohio Spain Average -----------------------------------------------------$/lb.------------------------------------------------------Jan $1.14 $1.14 $0.77 $1.16 $1.10 $1.06 Feb $1.03 $1.03 $0.88 $1.03 $1.40 $0.71 $1.17 $1.04 Mar $0.85 $0.88 $0.69 $0.82 $1.18 $0.50 $0.82 Apr $0.79 $0.82 $0.73 $0.74 $0.92 $0.58 $0.76 May $0.80 $0.78 $0.73 $0.71 $0.73 $0.75 Jun $0.80 $0.80 $0.68 $1.06 $0.67 $1.04 $0.84 Jul $0.75 $0.75 $0.63 $0.71 $1.12 $0.63 $0.76 Aug $0.75 $0.70 $1.02 $0.82 Sep $0.79 $0.76 $1.03 $0.86 Oct $0.77 $0.73 $0.49 $1.13 $0.79 $0.84 $0.79 Nov $1.00 $0.87 $0.78 $1.23 $0.90 $0.96 Dec $1.08 $0.96 $0.90 $1.03 $1.33 $0.79 $1.01 Average $0.88 $0.85 $0.76 $0.82 $1.10 $0.66 $0.97 $0.87 Z Average dollar per pound long seedless greenhouse cucumbers from the New York, Atlanta and Miami terminal markets 1998-2005 (U.S. Department of Agriculture, 2005)

PAGE 174

174 Table 5-2 Value of U.S. imports, from vari ous countries, of fresh cucumbers; 2000-2004 Year Canada Mexico Chile Netherlands Other World ---------------------------------------$1,000----------------------------------------------2000 22,417 150,040 58 782 3,999 177,296 2001 29,457 165,536 0 1,121 4,435 200,548 2002 26,468 168,565 0 298 5,436 200,767 2003 45,275 219,443 0 1,412 6,505 272,635 2004 59,537 279,760 0 839 8,552 348,689 (U.S. Department of Agriculture, 2005)

PAGE 175

175 Table 5-3 Wholesale price for greenhouse-grown cucumbers from New York, Atlanta and Miami terminal markets; 19982005 $/lb. GH Cucumbers X Avg Price W $0.90 StDev 0.115 95 % LCIY 0.811 95 % UCIZ 0.990 Min $0.81 Median $0.85 Max $1.12 W Average annual wholesale price is in dollars per pound units X Greenhousegrown prices of cucumbers are an av erage from Canada, Florida, Honduras, Mexico, the Netherland s, Ohio and Spain. Y LCI = Lower Confidence Interval Z UCI = Upper Confidence Interval*(U.S. Department of Agriculture, 2005)

PAGE 176

176 Table 5-4 Annual yield of greenhouse-grown cucumbers used in the GRKS distribution function (Shaw et al., 2000) lb./ft2 GH Cucumber W Mean V 3.33 StDev 1.13 95 % LCIY 0.60 95 % UCIZ 6.05 CVX 33.98 Min 1.78 Median 3.75 Max 4.45 V Average annual yield in lb./ft2 W Annual marketable yield of Greenhouse European Long-Seedless Cucumbers X CV = Coefficient of Variation Y LCI = Lower Confidence Interval Z UCI = Upper Confidence Interval

PAGE 177

177 Table 5-5 Monthly marketable fruit yield, average wholesale market prices and gro ss revenues in a typica l greenhouse-grown cucu mber operation in Florida with total estimated yield of 9.98 lbs/ft2 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Annual Yield X (lb./ft2) 0.59 0.59 0.59 1.48 1.48 1.48 1.25 1.25 1.25 9.98 Price Y ($/lb.) $0.96 $1.01 $1.06 $1.04 $0.82 $0.76 $0.75 $0.84 $0.76 $0.82 $0.86 $0.79 $0.87 Gross Revenue ($/ft2) $0.57 $0.60 $0.63 $1.13 $1.11 $1.25 $1.03 $1.08 $0.99 $8.38 Gross Revenue ($/acre)Z $24,811.76 $26,104.04 $27,489.12 $49,303.22 $48,425.58 $54,322.09 $44,818.24 $46,954.02 $43,015.50 $365,243.58 W Winter crops harvested from December-February, Spring crops harvested April-June, and Fall crops harvested August-October. X Monthly fruit yields (Shaw et al., 2000) Y Average wholesale price (1998-2005) for greenhouse cucumbers at th e New York, Atlanta and Miami te rminal markets (U.S. Departm ent of Agriculture, 2005) Z Gross Revenue $/acre is base d on a usable area of 43,560/ft2

PAGE 178

178 Table 5-6 Estimated annual fixed cost of production for a 1.0 acre greenhouse growi ng cucumbers, in North Central Florida Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Land Cash Rent Y 871.88 0.02 1 871.88 0.02 Site preparation Z Labor leveling, compacting 11,056.80 0.25 Lime rock and milling 3,317.04 0.08 Water piping to greenhouse complex 2,764.20 0.06 Site electrical/communi cations to complex 11,056.80 0.25 Total site work 28,194.84 0.65 30 939.83 0.02 Greenhouse 829.26 0.02 20 41.46 0.00 Greenhouse structure and cover materials Z Columns, arch, gutters, polyethylene locking profiles 47,875.94 1.10 20 2393.80 0.05 Access gates, four pavilions 1,879.66 0.04 10 187.97 0.00 Side-wall and roof-vent motors 8,237.31 0.19 10 823.73 0.02 Insect proof netting, 50-mesh (all openings) 2,133.96 0.05 10 213.40 0.00 Polyethylene cover 4,831.82 0.11 3 1610.61 0.04 Thermal and shading screen 23,108.71 0.53 10 2310.87 0.05 Freight overseas-Gainesville 5,528.40 0.13 20 276.42 0.01 White ground cover 2,918.99 0.07 7 417.00 0.01 Total greenhouse structure and cover materials 96,514.80 2.22 Greenhouse erection and concrete (by contractor)Z 88,454.39 2.03 20 4422.72 0.10 Construction supervision 3,317.04 0.08 20 165.85 0.00 Head house structures (8x 33 ft) 5,897.98 0.14 20 294.90 0.01 Fruit size grading machine 2,764.20 0.06 0 Refrigeration room 11,056.80 0.25 20 552.84 0.01 Backup generator 2,211.36 0.05 12 184.28 0.00

PAGE 179

179 Table 5-6 Continued Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Heating and ventilation systems Z Floor mounted heating units (diesel) 25 heating units 80 ,639 kcal each 28,537.60 0.66 10 2853.76 0.07 Polyethylene convection tube (19 x 300 m per roll) 735.28 0.02 3 245.09 0.01 Diesel tank (2,995 gal) with shading roof 1,990.22 0.05 8 248.78 0.01 Site diesel plumbing 1,658.52 0.04 10 165.85 0.00 Air circulation fans (60 units) 6,634.08 0.15 8 829.26 0.02 Total heating and ventilation systems 39,555.70 0.91 Irrigation and climat e control systems Water well and pumps 5,528.40 0.13 15 368.56 0.01 Water tanks (2 x 14,975 gal) 14,373.84 0.33 15 958.26 0.02 Nutrient injector and climate control systems 14,647.49 0.34 10 1464.75 0.03 Nutrient solution tanks (8 x 528 gal) 2,819.48 0.06 10 281.95 0.01 Weather station and temperature and humidity sensors 4,422.72 0.10 10 442.27 0.01 Computer and software 2,764.20 0.06 5 552.84 0.01 Training for using control systems 829.26 0.02 Water filters 386.99 0.01 10 38.70 0.00 Valves and pressu re regulators 1,596.05 0.04 5 319.21 0.01 Irrigation emitters, stakes, and tubing 12,480.36 0.29 5 2496.07 0.06 Polyethylene pipe (18,701 ft) 875.15 0.02 5 175.03 0.00 Pipe connectors and adaptors 304.06 0.01 5 60.81 0.00 Other irrigation parts and labor 2,764.20 0.06 5 552.84 0.01 3-Gal nursery pots 8,126.75 0.19 5 1625.35 0.04 Total irrigation and climate control systems Z 71,918.95 1.65

PAGE 180

180 Table 5-6 Continued. Cost Projected Life Depreciation per year Invested item ($/acre) ($/ft2) (years) ($/acre) ($/ft2) Electrical 44,227.19 1.02 10 4422.72 0.10 Drainage system (troughs, pipes, pump) 1,724.86 0.04 5 344.97 0.01 Bulk storage tanks (three tanks of 2,007 gal each) 6,799.93 0.16 10 679.99 0.02 Trellis accessories Z Cables for plant support (17,717 ft) and "U" clamps 3,095.90 0.07 10 309.59 0.01 Poles for plant support (13 per row) 3,593.46 0.08 10 359.35 0.01 Stem ring clips 580.48 0.01 2 290.24 0.01 Total trellis accessories 7,269.85 0.17 Automotive (medium-duty delivery truck) 14,539.69 0.33 10 1453.97 0.03 Fork lift 6,634.08 0.15 10 663.41 0.02 Other durables Z Media for pots (Pine Bark) 20,908.80 0.48 3 6,969.60 0.16 Seedling trays 181.66 0.00 5 36.33 0.00 Twine 57.25 0.00 2 28.63 0.00 Double hooks 88.08 0.00 2 44.04 0.00 Scales 829.26 0.02 5 165.85 0.00 Sprayer and fogger 1,105.68 0.03 5 221.14 0.01 pH meter 82.93 0.00 5 16.59 0.00 Electrical conductivity meter 138.21 0.00 5 27.64 0.00 Ion meters for nitrate and potassium 386.99 0.01 4 96.75 0.00 Harvest trolleys 829.26 0.02 6 138.21 0.00 Harvest bins 3,317.04 0.08 6 552.84 0.01 Tools 2,211.36 0.05 4 552.84 0.01 Total other durables 8,900.72 0.20 Total investment $441,683.50 10.14 $46,761.62 $1.07 Y Average Florida land rent (Appendix A-2) Z (Jovicich et al., 2004)

PAGE 181

181 Table 5-7 Estimated annual variable cost to produce 3 cu cumber crops in a 1.0 acre gree nhouse in North Central Florida Items Unit Quantity Price Amount Total (no. units) ($/unit) ($/acre) ($/acre) ($/ft2) Percent of Total Variable Cost Production Costs Preharvest Fertilizer W 15,681.60 0.36 4.54% 15,681.60 Biologicals X 6,891.84 0.16 2.00% A. Colemani 9 releases/year x500 74.19 22.55 1,673.04 H Convergens 9 release/year x4500 33.02 14.18 468.28 O. Insidious 6 releases/year x500 99.07 47.95 4,750.52 Pesticides 220.05 0.01 0.06% Fungicides (Azoxystrobin) oz 65.97 2.19 144.48 Fungicides (Myclobutanil) oz 14.99 5.04 75.57 Other material inputs Y 9,552.62 0.22 2.77% Bleach Gallon 21.00 1.06 22.26 Media seedlings ft3 22.00 2.10 46.20 Seeds unit 26136.00 0.33 8,624.88 Sticky cards (insect pest monitoring) box x 800 2.00 429.64 859.28 Energy 60,654.82 1.39 17.57% Diesel Gallon 26171.77 2.20 57,577.90 Electricity kWh 38461.54 0.08 3,076.92 Labor Z Times Total h 5,218.05 0.12 1.51% Seeding and seedling growing h 3.00 52.00 156.00 Preparation greenhouse h 3.00 156.00 468.00 Transplanting h 3.00 25.00 75.00

PAGE 182

182 Table 5-7 Continued. Items Unit Quantity Price Amount Total (no. units) ($/unit) ($/acre) ($/acre) ($/ft2) Percent of Total Variable Cost Plant support with twines and hooks h 35.00 50.00 1,750.00 Removal of cull fruits, old leaves and shoots h 35.00 60.00 2,100.00 Fertilizer preparation h 35.00 1.00 35.00 Solution monitoring and filter cleaning h 35.00 2.00 70.00 Scouting (pests, diseases and beneficials) h 35.00 3.00 105.00 Removal of plants and cleaning h 3.00 90.00 270.00 Polyethylene cover change (every 3 years) h 0.33 35.00 11.55 Pesticide application h 35.00 4.00 140.00 Empting and washing pots (every 2 years) h 0.50 75.00 37.50 Total Labor h 553.00 5,218.05 Total preharvest costs (Fa ll, Winter, Spring Crops) 98,218.98 2.25 28.46% Harvest Z Pick & Pack labor (92 h/harvest x 81 harvests/yr) h 3000.00 8.00 24,000.00 Total harvest costs 24,000.00 0.55 6.95% Marketing Y Cartons, dividers and labels lb 729945 0.08 58,395.60 Marketing and miscellaneous packing lb 729945 0.10 72,994.50 Vehicle operation Mile 12747 0.32 4,079.04 Sale transaction expenses (15% of total sales) 60,131.16 Total packing and marketing costs 195,600.30 4.49 56.67% Other Variable Costs Repairs and maintenance 8,161.54 Taxes and licenses 2,176.41 Greenhouse insurance 5,441.03 Vehicle insurance 2,040.38

PAGE 183

183 Table 5-7 Continued. Items Unit Quantity Price Amount Total (no. units) ($/unit) ($/acre) ($/acre) ($/ft2) Percent of Total Variable Cost Telephone 6,121.15 Other expenses 3,400.64 Total other variable costs 27,341.15 0.63 Total Production Costs $345,160.44 7.92 W (Chaudhary, 2001) X (Koppert Biological Systems, 2006) Y (Jovicich et al., 2004) Z (Bellibosi, 2006)

PAGE 184

184 Table 5-8 Comparison of select simulated variables of a 1.0 acre greenhousegrown cucumber operation, in North Central Florida Price V Yield W Net Profit NPV X Mean Y $0.90 10.230 $72,774.46 $85,928.05 StDev 0.115 2.752 89977.345 652294.661 CVZ 12.770 26.898 123.639 759.117 Min $0.54 2.610 ($134,747.09) ($1,438,988.04) Max $1.26 19.708 $390,880.40 $2,374,934.32 V $/lb. W lb./ft2, 3 crops annually X NPV = Net Present Value Y Mean equals average of simulated variables Z Coefficient of Variation

PAGE 185

185 Table 5-9 Sensitivity analysis for a 1.0 acre greenhouse-grown cucumber operation in North Central Florida Yield Market Price ($/lb.) (lb./ft2) $0.63 $0.72 $0.81 $0.90 $0.99 $1.08 $1.17 --------------------------------------Net Revenue ($/ft2)-------------------------------------1 (8.40) (8.30) (8.20) (8.10) (8.00) (7.90) (7.80) 2 (7.80) (7.60) (7.40) (7.20) (7.00) (6.80) (6.60) 3 (7.20) (6.90) (6.60) (6.30) (6.00) (5.70) (5.40) 4 (6.60) (6.20) (5.80) (5.40) (5.00) (4.60) (4.20) 5 (6.00) (5.50) (5.00) (4.50) (4.00) (3.50) (3.00) 6 (5.40) (4.80) (4.20) (3.60) (3.00) (2.40) (1.80) 7 (4.80) (4.10) (3.40) (2.70) (2.00) (1.30) (0.60) 8 (4.20) (3.40) (2.60) (1.80) (1.00) (0.20) 0.60 9 (3.60) (2.70) (1.80) (0.90) 0.00 0.90 1.80 10 (3.00) (2.00) (1.00) 0.00 1.00 2.00 3.00 11 (2.40) (1.30) (0.20) 0.90 2.00 3.10 4.20 12 (1.80) (0.60) 0.60 1.80 3.00 4.20 5.40 13 (1.20) 0.10 1.40 2.70 4.00 5.30 6.60 14 (0.60) 0.80 2.20 3.60 5.00 6.40 7.80 15 0.00 1.50 3.00 4.50 6.00 7.50 9.00 16 0.60 2.20 3.80 5.40 7.00 8.60 10.20 17 1.20 2.90 4.60 6.30 8.00 9.70 11.40 18 1.80 3.60 5.40 7.20 9.00 10.80 12.60 19 2.40 4.30 6.20 8.10 10.00 11.90 13.80 20 3.00 5.00 7.00 9.00 11.00 13.00 15.00 21 3.60 5.70 7.80 9.90 12.00 14.10 16.20 22 4.20 6.40 8.60 10.80 13.00 15.20 17.40 23 4.80 7.10 9.40 11.70 14.00 16.30 18.60 24 5.40 7.80 10.20 12.60 15.00 17.40 19.80 25 6.00 8.50 11.00 13.50 16.00 18.50 21.00 26 6.60 9.20 11.80 14.40 17.00 19.60 22.20 27 7.20 9.90 12.60 15.30 18.00 20.70 23.40 28 7.80 10.60 13.40 16.20 19.00 21.80 24.60 29 8.40 11.30 14.20 17.10 20.00 22.90 25.80 30 9.00 12.00 15.00 18.00 21.00 24.00 27.00

PAGE 186

186 Table 5-10 Estimated break-even prices for a range of marketable cucumber fruit yields of 1-22 lb./ft2 Yield X Price Z (lb./ft2) ($/lb.) 1 $9.00 2 $4.50 3 $3.00 4 $2.25 5 $1.80 6 $1.50 7 $1.29 8 $1.12 9 $1.00 10Y $0.90 11 $0.82 12 $0.75 13 $0.69 14 $0.64 15 $0.60 16 $0.56 17 $0.53 18 $0.50 19 $0.47 20 $0.45 21 $0.43 22 $0.41 X Annual marketable greenhouse-grown cucumber yield ranged from 2.6-19.7 lb./ft2 (Shaw et al., 2000) Y Average yield per crop cycle for greenhouse-grown cucumbers was 10 lb./ft2 annually Z Wholesale fruit price for greenhouse-grown cucumbers ranged from $0.54$1.26/lb. (U.S. Department of Agriculture, 2005)

PAGE 187

187 Table 5-11 Surface area of a 1.0 acre greenhouse of a sawtooth design Surface Area of Greenhouses (ft2) End Walls in ft2 5,640.00 Side Walls 4,416.00 Roof 43,347.00 Vent End 776.00 Vent Side 6,336.00 GH Total Surface Area 60,515.00

PAGE 188

188 Table 5-12 Heat loss calculati ons required for a 1.0 acre sawtooth greenhouse Q=A(Ti-To)/R Q = Heat loss, BTU/hr A = Area of greenhouse surface, sq ft R = Resistance to heat flow (Ti-To) = Air temperature differ ence between inside and outside Conduction Heat Loss, Qc: Qc = Area x T/R 1,311,863.64 BTU/hr Volume ft3: 589,199.52 Air Infiltration Losses, QA: QA: 0.20 x Volume x C x T C = Number of air exchanges per hour 273,977.78 BTU/hr Perimeter Heat Loss, QP: QP: P x L x ( T) P = Perimeter heat loss coefficient, BTU/ftF hr L = Distance around perimeter BTU/hr 20,881.60 Total Heat Loss, QT: QT = QC + QA + QP Heat Required: 1,606,723.01 BTU/hr Heat Required for 1 ha: 1,606,723.01 BTU/hr 470,765.61 Watts or 470.77 kWh Heat required is based on an Average Minimum daily January temperature of 44F and keeping the temperature at a level of 60F

PAGE 189

189 Table 5-13 Cost to obtain required BTU for 1.0 acre greenhouse in North Central Florida based on historical temperature data Months Hours heat needed BTU Required T Gallons of Diesel V Cost of Diesel Y Jan 479.17 769,893,466.22 5,578.94 $12,273.66 Feb 379.67 610,024,526.41 4,420.47 $9,725.03 Mar 281.17 451,762,309.61 3,273.64 $7,202.01 Apr 184.4 296,279,723.63 2,146.95 $4,723.30 May 60.8 97,688,759.20 707.89 $1,557.36 Jun 0.00 0.00 0.00 $0.00 Jul 0.00 0.00 0.00 $0.00 Aug 0.00 0.00 0.00 $0.00 Sep 10 16,067,230.13 116.43 $256.14 Oct 112.83 181,286,557.58 1,313.67 $2,890.08 Nov 290.33 466,479,892.41 3,380.29 $7,436.64 Dec 449.5 722,221,994.42 5,233.49 $11,513.68 Annual 2,247.87 3,611,704,459.60 26,171.77 $57,577.90 Months Hours heat needed BTU Required T kWh Required W Cost of Electricity Z Jan 479.17 769,893,466.22 225,576.76 $18,046.14 Feb 379.67 610,024,526.41 178,735.58 $14,298.85 Mar 281.17 451,762,309.61 132,365.17 $10,589.21 Apr 184.4 296,279,723.63 86,809.18 $6,944.73 May 60.8 97,688,759.20 28,622.55 $2,289.80 Jun 0.00 0.00 0.00 $0.00 Jul 0.00 0.00 0.00 $0.00 Aug 0.00 0.00 0.00 $0.00 Sep 10 16,067,230.13 4,707.66 $376.61 Oct 112.83 181,286,557.58 53,116.48 $4,249.32 Nov 290.33 466,479,892.41 136,677.38 $10,934.19 Dec 449.5 722,221,994.42 211,609.14 $16,928.73 Annual 2,247.87 3,611,704,459.60 1,058,219.88 $84,657.59

PAGE 190

190 Table 5-13 Continued. Months Hours heat needed BTU Required T Gallons of Propane U Cost of Propane X Jan 479.17 769,893,466.22 8,368.41 $13,807.87 Feb 379.67 610,024,526.41 6,630.70 $10,940.66 Mar 281.17 451,762,309.61 4,910.46 $8,102.26 Apr 184.4 296,279,723.63 3,220.43 $5,313.71 May 60.8 97,688,759.20 1,061.83 $1,752.03 Jun 0.00 0.00 0.00 $0.00 Jul 0.00 0.00 0.00 $0.00 Aug 0.00 0.00 0.00 $0.00 Sep 10 16,067,230.13 174.64 $288.16 Oct 112.83 181,286,557.58 1,970.51 $3,251.33 Nov 290.33 466,479,892.41 5,070.43 $8,366.22 Dec 449.5 722,221,994.42 7,850.24 $12,952.89 Annual 2,247.87 3,611,704,459.60 39,257.66 $64,775.13 S Hours based on historical weather temperatures taken from Citra, FL 2000-2006 T BTU figures are based on the heat needed to heat a 1 acre greenhouse U Estimated Propane Efficiency is 80% with a heat value of 92,000 BTU/gal (Buffington et al., 2002) V Estimated Diesel Fuel Efficiency is 70% with a heat value of 138,000 BTU/gal (Buffington et al., 2002) W Estimated Electricity Efficiency is 100% with a heat value of 3,413 BTU/kWh (Buffington et al., 2002) X Price of Propane = $1.65/gal (Energy Information Administration, 2006) Y Price of Diesel Fuel = $2 .20/gal (Grimsely Oil, 2005) Z Price of Electricity = $0.08/kWh (FPL, 2005)

PAGE 191

191 Table 5-14 Probability of obtai ning select annual prices, yiel d, net profit and net present value for a 1.0 acre greenhouse-grown cu cumber operation in North Central Florida Price W Yield X Net Profit Y NPVZ x1-value $0.00 0 $0.00 $0.00 Prob(X<=x1) 0% 0% 22% 50% x2-value $0.75 5 $50,000.00 $50,000.00 Prob(X<=x2) 10% 3% 44% 53% x3-value $1.00 10 $100,000.00 $100,000.00 Prob(X<=x3) 81% 46% 64% 55% x4-value $1.10 15 $150,000.00 $500,000.00 Prob(X<=x4) 96% 96% 79% 74% x5-value $1.30 20 $200,000.00 $1,000,000.00 Prob(X<=x5) 100% 100% 92% 92% W Probability of obtaining select price or lower based on simulated distribution of a minimum of $0.54/lb and a maximum of $1.26/lb. X Probability of obtaining select yield or lo wer based on a simulated distribution of a minimum of 2.6 lb./ft2 and a maximum of 19.71 lb./ft2 Y Probability of obtaining select net profit or lower based on simulated distribution of a minimum of ($134,747) and a maximum of $390,880 Z Probability of obtaining select net present value or lower based on simulated distribution of a minimum of ($1,438,988)and a maximum of $2,374,934

PAGE 192

192 Table 5-15 Probability of obtai ning select seasonal prices and yield for a 1.0 acre greenhousegrown cucumber operation in North Central Florida Price Yield Winter U Spring V Fall W Winter W Spring Y Fall Z x1-value $0.70 $0.70 $0.70 0.00 0.00 0.00 Prob(X<=x1) 0% 3% 0% 6% 0% 0% x2-value $0.80 $0.80 $0.80 1.00 1.00 1.00 Prob(X<=x2) 0% 64% 1% 24% 0% 1% x3-value $0.90 $0.90 $0.90 1.50 1.50 1.50 Prob(X<=x3) 0% 100% 100% 40% 1% 2% x4-value $1.00 $1.00 $1.00 2.00 2.00 2.00 Prob(X<=x4) 0% 100% 100% 58% 2% 6% x5-value $1.05 $1.05 $1.05 4.00 4.00 4.00 Prob(X<=x5) 88% 100% 100% 98% 35% 59% U Probability of obtaining select seasonal price or lower based on simulation distribution range of $1.01 $1.07/lb., Winter months consist of Dec, Jan and Feb. V Probability of obtaining select seasonal price or lower based on simulation distribution range of $0.63 $0.93/lb., Spring months consist of Apr, May and June.W Probability of obtaining select seasonal price or lower based on simulation distribution range of $0.79 $0.86/lb., Fall months consist of Aug, Sept and Oct. X Probability of obtaining select seasonal yield or lower based on a simulated distribution range 0.0 5.111 lb./ft2 Y Probability of obtaining select seasonal yield or lower based on a simulated distribution range 0.803 7.759 lb./ft2 Z Probability of obtaining select seasonal yield or lower based on a simulated distribution range 0.315 7.208 lb./ft2

PAGE 193

193 Table 5-16 Estimated costs of producing one acre of field cucumbers for fresh market, in Florida Y CATEGORY Quantity Unit $/Unit Total GROSS RETURNS Fresh Cucumber: 542.77X 55 lb. Bushel $10.48X 5687.17 OPERATING COSTS -------------Dollars------------Seed Fertilizer $83.94 Fungicide $292.00 Herbicide $146.15 Insecticide $20.77 General Farm Labor $219.79 Machinery Variable Cost $95.40 Tractor Driver Labor $325.70 $45.85 MISCELLANEOUS Farm Vehicles Plastic Mulch Disposal $18.22 Clean Ditches $163.35 Bee Hive Rental $20.00 Interest on Operating Capital $30.00 $60.05 Total Operating Cost $1,521.22 FIXED COSTS Land Cash Rent Z $571.88 Machinery Fixed Cost $50.84 Farm Management $302.40 Overhead $378.00 Total Fixed Cost $1,303.12 TOTAL PREHARVEST COST $2,824.34

PAGE 194

194 Table 5-16 Continued. CATEGORY Quantity Unit $/Unit Total HARVEST AND MARKETING COSTS Sell Cucumbers $150.00 Pack Cucumbers $1,110.00 Harvest and Haul Cucumbers $1,080.00 Cucumber Boxes $456.00 Total Harvest and Marketing Cost $2,796.00 TOTAL COST $5,620.34 RETURN TO OPERATOR LABOR, LAND, CAPITAL, & MGT. $66.83 X (Florida Agricultural Statistical Directory, 2005) Y (Smith, 2005) Z (Appendix A-2)

PAGE 195

195 Table 5-17 Simulated Florid a field-grown cucumber return to land and owner for one acre Yield X Price Net Profit Mean Y 542.763 $10.48 $60.36 StDev 70.907 1.208 964.08434 CVZ 13.064 11.532 1597.2467 Min 357.672 $5.48 ($2,325.25) Max 798.198 $12.81 $2,853.03 X 55-lb bushels/Acre Y Average annual simulated yield (bushel/acre), price ($/bushel) and return to land and owner/acre Z CV = Coefficient of Variation

PAGE 196

196 Table 5-18 Probability of obtaining sele ct net profit for a one acre of field cucumber production in Florida Yield X Price Y Net Profit Z x1-value 0 $5.50 $0.00 Prob(X<=x1) 0% 0% 50% x2-value 400 $7.00 $500.00 Prob(X<=x2) 1% 1% 71% x3-value 500 $9.00 $700.00 Prob(X<=x3) 29% 13% 77% x4-value 600 $10.00 $900.00 Prob(X<=x4) 79% 30% 80% x5-value 700 $11.00 $1,000.00 Prob(X<=x5) 98% 57% 81% X 55-lb bushels/Acre, distribution range of 358-798/bushels/acre Y Price ($/bushel), distribution range of $5.48-$12.81/bushel Z Net Profit/acre, distribution range of ($2,105) $3,072

PAGE 197

197 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 JanFebMarAprMayJunJulAugSepOctNovDec MonthsPrice (Dollars per Pound) FIELD GREENHOUSE Figure 5-6 Comparison of monthly wholesale price between field and gr eenhouse production of cucumbers; 1998-2005

PAGE 198

198 CHAPTER 6 CONCLUSION This study offers an economic analysis of one solution for Florida growers that are actively seeking out economically viable alternatives to field production. There are many benefits of greenhouse vegetable production fo r Florida growers, the primary benefit being increased profits. Other benefits include: controlled cl imate, reduced dependence on insecticides, no methyl bromide, water conservation, increased quality and increased marketable yield, greater number of sunny days, low fuel costs or no fuel costs if producing in south Florida, and proximity to market. This study includes an economic analys is of growing bell peppers, strawberries and cucumbers in a greenhouse compar ed to field production. In addition, based on historical data probabilities, or likely-hood of obtaining select vari ables such as: price, yield and net profit, were examined in orde r to give growers a be tter understanding of the risk and benefits of greenhouse production compared to field production. The results from the simulation models of greenhouse-grown bell peppers, strawberries and cucumbers suggest that the risk of production, market price and return to management can be analyzed through the use of simulation software, but most importantly they show that even with the high capital investment needed for greenhouse production in Florida, growers can increase their net profit per acre dramatically over conventional field produc tion. Florida greenhouse vegetable producers would have an advantage ov er greenhouse producers from other regions of the country, due to Floridas warm winter clim ate, high number of sunny days and proximity to distribution markets. Fuel costs are lower or non-existent for south Flor ida compared to other regions in the U.S., due to the warm winter clim ate in Florida. In addition, Florida greenhouse growers costs are lower due to the increased number of sunny days over other regions in the country, which allows them to start or extend gr owing seasons without th e need for supplemental

PAGE 199

199 lighting, this allows th em to produce during times when ma rket prices are high. Florida greenhouse producers also have an advantage of lower tr ansportation costs. Ever increasing fuel costs gives Florida producers an advantage, due to the proximity to the Mid-Western and Eastern U.S. markets. Greenhouse production of bell peppers, strawberries and cucumbers is an effective way for Florida growers to increase net profit, in a stat e that is plagued by rapi d urbanization and rising land prices, along with increasi ng water and environmental rest rictions. Furthermore, the probability of obtaining a positive annual net pr ofit is significantly greater in greenhouse production versus field production of bell peppers, strawberries and cucumbers. When net profits of greenhouse production are compared to field production for the three commodities analyzed, it was determined that greenhousegrown colored bell pepp ers [net profit of $15,166/acre for yellow greenhouse bell peppers] can have returns up to four and half times greater than field production [net profit of $3,289/acre]. Net profit for greenhouse-grown organic strawberries [$23,316/acre] can be to ni ne and half times greater than field-grown [$2,419/acre] and non-organic greenhouse-grown st rawberries [$3,855/acre] can be up to one and half times greater than the net profit of field-grown strawb erries. Net profit for greenhousegrown long-seedless cucumbers [$72,775/acre] can be up to 1,206 times greater than the net profit of field-grown slicer cucu mbers [$60/acre]. This suggests that even with the significantly higher capital investment required for greenhouse pr oduction, the risk of failure is significantly lower than that of field pr oduction, excluding natural disaster s and technical knowledge of production. Total production co sts of greenhouse-grown colored bell peppers [$167,019/acre] can be up to 20 times greater than that of field production [$8,468/acr e], organic greenhousegrown strawberries [$158,076/acre] are up to six times higher than that of field production

PAGE 200

200 [$25,602/acre] and non-organic greenhouse-grow n strawberry total production costs [$168,951/acre] can be up to six and a half times greater than fiel d production costs. Total cost for greenhouse-grown long-seedless cucumber s [$391,922/acre] can be up to 70 times greater than that of field-grown slic er cucumber costs [$5,620/acre]. Whether or not growers should adopt the new technology of greenhouse production depends heavily on grower knowledge, location, pr oximity to market and market prices. The results of budget analysis simulation models s uggest that adoption of the new technology of greenhouse production depends not only on the possibili ty of a better net pr ofit, but also on the cost of the technology and grower production of using this technology. The bottom line is that Florida growers will have a greater chance of earning more money and enlarging their market share if greenhouse technology is adopted for the production of be ll peppers, strawberries and cucumbers. Overall, this research suggest s that the opportunity for Florid a growers to increase quality and yields, leading to more marketable volume, will result in higher revenues and margins if Florida growers decide to adopt greenhouse pro duction technology. These findings will prove to valuable to growers that are faced with ti ghter restrictions and increasing land prices. Implications. The volume and value of colored bell peppers, strawberries and cucumbers sold and consumed in the U.S. is substantial. The shift of consumer demand to high quality, year round supply of fresh vegetables has significantly in creased over the last decade. Therefore, the opportunity to fill U.S. market demand with Fl orida greenhouse-grown vegetables exists. However, one key thing Florida pr oducers will have to pay atten tion to is the supply of fresh vegetables from foreign countries which could result in depressed market prices and could have

PAGE 201

201 an adverse result on the profitabi lity of Florida greenhouse produc tion, since capital investment is so high compared to field production. This research quantifies the costs and benef its associated with effectively implementing greenhouse production of bell peppers, strawberries and cucumbers in Florida. These methods can also be adopted for the use of other fresh vegetable commodities that have a demand for high quality. This budget analysis simulation model can be adapted and applied to other commodities. Finally, further research, using the simulati on approach, is warranted to study different sized operations and combinations of commodities that would yield an increased net profit. Suggestions for further research would be to expand the model to measure the risk and profitability of productio n at different economies of scale, through the simulation of different sized greenhouse operations. Additi onally, suggestions for future research would be to adapt the model to determine a combination of commoditie s, in a double cropping operation, that would yield growers the highest potential net profits.

PAGE 202

202APPENDIX ASSUMPTIONS Appendix A-1 Average wholesale colored greenhouse vs. field pepper prices; 1998-2005 $/lb Green Red Yellow Orange Annual Average Month Field Y GH X Field Y GH X Field Y GH X Field Y GH X Field Y Jan $0.49 $1.95 $0.77 $1.99 $0.93 $2.22 $1.03 $2.05 $0.91 Feb $0.45 $1.87 $0.82 $2.05 $1.02 $2.20 $1.42 $2.04 $1.09 Mar $0.49 $2.07 $0.87 $2.26 $1.11 $2.49 $1.89 $2.27 $1.29 Apr $0.38 $2.34 $0.97 $2.45 $1.16 $2.66 $1.65 $2.48 $1.26 May $0.40 $2.20 $0.94 $2.22 $1.18 $2.27 $1.81 $2.23 $1.31 Jun $0.39 $1.87 $0.83 $1.95 $1.01 $1.99 $1.10 $1.94 $0.98 Jul $0.44 $1.76 $0.86 $1.80 $1.15 $1.88 $1.53 $1.81 $1.18 Aug $0.42 $1.59 $0.76 $1.68 $0.98 $1.69 $1.65 $0.87 Sep $0.39 $1.54 $0.62 $1.69 $0.82 $1.72 $1.65 $0.72 Oct $0.41 $1.60 $0.66 $1.78 $0.91 $1.85 $1.74 $0.78 Nov $0.47 $1.84 $0.86 $1.97 $0.98 $2.18 $0.79 $1.99 $0.88 Dec $0.38 $2.05 $1.03 $2.16 $1.06 $2.27 $1.67 $2.16 $1.25 X Wholesale Colored Greenhouse Pepper Prices Canada, Israel, Netherlands and Spain 1998-2005 Y Wholesale Colored Field Pepper Prices California, Florida, Georgia and Mexico 1998-2005 Z Average monthly wholesale prices were take n from Miami, New York and Miami terminal markets (U.S. Dept. of Agriculture, 2006)

PAGE 203

203 Appendix A-2 Average Florida land cash rent County Average Cash Land Rent/Acre Source Charlotte $375 Gene McAvoy, Extension Specialist Collier $375 Gene McAvoy, Extension Specialist Glades $375 Gene McAvoy, Extension Specialist Hendry $375 Gene McAvoy, Extension Specialist Lee $375 Gene McAvoy, Extension Specialist Palm Beach $1,175 Darin Parmenter, Arthur Kirstein, Extension Specialist Manatee $275 Phylis Gilreath, Extension Specialist Hillsboro $1,250 Alicia Whidden, Extension Specialist Average $572

PAGE 204

204 LIST OF REFERENCES Ames, G., Born and H., Guerena, M. 2006. Strawb erries: organic and IPM options horticulture production guide. ATTRA, National Sustainable Agriculture Information Services. 23 June 2006. . Barbieri, G., La Malfa, G., Leonardi, C., Ma ggio, A. and Tognoni, F. 2002. Some aspects of the vegetable industry in Italy. Proc. Conf Medit. Hort. Acta Hort. 582. ISHS 2002. Berkhout, P. and Van Bruchern, C.. 2006. Agricu ltural economic report 2006 of the Netherlands: summary. Agricultural Economics Resear ch Institute (LEI). 8 July 2006. . Bertelesen, D. 1995. The U.S. strawberry indust ry. U.S. Department of Agriculture. Economic Research Service. Statistical Bulletin Number 914. 15 June 2006. . Boonekamp, G. 2004. Significant changes in th e European greenhouse vegetable industry. Alberta Government. Agriculture, Food and Rural Development. Canadian Greenhouse Conference. 22 November 2004. . Buffington, D.E., Bucklin, R.A., Henley, R.W. and McConnell, D.B. 2002. Heating greenhouses. Agricultural and Biological Engineering Depa rtment, Florida Cooperative Extension Service, Institute of Food and Agricu ltural Sciences, University of Florida. AE11(EDIS). 8 July 2006. . Calvin. L. and Cook, R. 2005. Greenhouse tomatoes change the dynamics of the North American fresh tomato industry. U.S. Department of Ag riculture. Economic Research Service. Economic Research Report Number 2. 10 March 2006. . Cantliffe, D. and VanSickle, J. 2003. Compe titiveness of the Spanish and Dutch greenhouse industries with the Florida fresh vegetable industr y. University of Florida. Institute of Food and Agricultural Sciences. EDIS HS918. 11 March 2006. . Cantliffe, D. and VanSickle, J. 2003. Mexican co mpetition: now from the greenhouse. University of Florida. Horticultural Sc ience Department. Food and Resource Economics Department. 21 March 2006. . Castilla, N. 2002. Current situation and future prospects of protec ted crops in the Mediterranean region. Proc. Conf. Medit. Hort. Acta Hort. 582, ISHS. Chaudhary, N. 2001. The economics of producti on and marketing of greenhouse crops in Alberta. Alberta Agriculture, Food and Rura l Development. Economics and Competitiveness Division. 18 March 2006. . Cook, R. and Calvin, L. 2006. Mexican greenhouse tomato industry. U.S. Department of Agriculture and Resource Economics. Pract ical Hydroponics and Greenhouses. 12 April 2006. .

PAGE 205

205 Costa, M. and Heuvelink, E. 2004. Greenhouse hortic ulture in China situation and prospects. Rpt. on a study tour, March 2003. Horticultu ral Production Chains Group. Wageningen, The Netherlands. Energy Information Administration, 2006. Propane c onsumer grade prices by sales type. 5 April 2006. . Gill, R., Richardson, J., Outlaw, J. and Anderson, D. 2003. An analysis of ethanol production in Texas using three ethanol facil ity sizes and their relative opti mal subsidy levels. Southern Agricultural Economics Association 35th Annual Meeting. Mobile, Alabama. Hochmuth, R.C. 2001. Greenhouse cucumber pr oductionFlorida greenhouse vegetable production handbook Vol 3. Florida Cooperative Extens ion Service Electroni c Data Info. Source (EDIS), University of Florida, Gainesville. 5 March 2006. . Ikeda, H. 2006. Greenhouse growing of vegetable crops. Horticulture in Japan 2006. Osaka Prefecture University. Japanese Society for Horticultural Sciences. V-2 p287-294. 2006. Jones, P.H. 2001. Greenhouse environmental de sign considerations Florida greenhouse vegetable production handbook, Vol. 2. Florida Coope rative Extension Service Electronic Data Info. Source (EDIS), University of Florida, Gainesville. 4 March 2006. . Jovicich, E., Cantliffe, D., Sargent, S. a nd Osborne, L. 2004. Production of greenhouse-grown peppers in Florida. Florida Cooperative Extens ion Service Electronic Data Info. Source (EDIS), University of Florida, Ga inesville. 5 March 2006. . Jovicich, E., D.J. Cantliffe, S.A. Sargent, and L.S. Osborne. 2004. Production of greenhousegrown peppers in Florida. Florida Cooperative Ex tension Service Electron ic Data Info. Source (EDIS), University of Florida, Gainesville. 6 March 2006. . Jovicich, E., Cantliffe, D., Simonne, E. and Stof fela, P. 2005. Comparative water and fertilizer use efficiencies of two production systems for cucu mbers. University of Florida. Horticultural Science Department. 22 February 2006. . Jovicich, E.J., D.J. Cantliffe, and J.J. Vansickle. 2004. U.S. imports of colored bell peppers and the opportunity for greenhouse produ ction of peppers in Florida. Acta Horticulturae. 659:81-85. Jovicich, E., Cantliffe, D., VanSickle, J. and Stoffela, P. 2005. Greenhouse-grown colored peppers: a profitable alte rnative for vegetable production in Florida? HortTechnology 15(2) P. 355-369. Katz, M. 2006. A rainbow of opport unity, but colored peppers also carry risks, so weigh both sides carefully. The Grower Mag., October 2006, p.22-26.

PAGE 206

206 Larson, B., Mossler, M., and Nesheim, N., 2003. Florida crop/pest management profiles: cucumbers. Florida Cooperative Extension Se rvice Electronic Data Info. Source (EDIS), University of Florida, Ga inesville. 8 March 2006. . Ministry of Agriculture, Food and Fisher ies Industry Competitiveness Branch. 2003. An overview of the greenhouse vegetable industry. British Columbia. 9 March 2006. . Nukaya, A. 2006. Soilless culture. horticulture in Japan 2006. Shizuoka University. Japanese Society for Horticultura l Sciences. V-4 p297-302. 2006. Paranjpe, A. and Cantliffe, D. 2004. Economic fe asibility of producing strawberries in a passively ventilated greenhouse in North-Cent ral Florida. Fla. State Hort. Soc. 117:27-37.2004. Paranjpe, A., Cantliffe, D., Chandler, C., Sm ither-Kopper, M., Rondon, S. and Stansly, P. 2004. Protected culture of strawberry as a methyl-bromide alternative: cultivar trial. University of Florida, IFAS, Protected Agriculture Project. Perez, A and Pollack, S. 2006. Fruit and nut outl ook. U.S. Department of Agriculture. Economic Research Service. FTS-322. 25 May 2006. . Quality Certification Services. 2006. Specific trade practices. 23 May 2006. . Richardson, J. W. 2006. Simulation for applied risk management with an introduction to SIMETAR. Department of Agricultura l Economics. Texas A&M University. Richardson, J., Schumann, K. and Feldman, P. 2006. SIMETAR simulation and econometrics to analyze risk. Texas A&M University. 12 February 2006 . Smart World Organics, Inc. 2006. Product listing. 11 November 2006. . Shaw, N., Cantliffe, D., Rodriguez, J., Taylor S. and Spencer, D. 2000. Beit alpha cucumber an exciting new greenhouse crop. Proc Fla. State. Hort. Soc. 113:2000. Shaw, N. and Cantliffe, D. 2002. Brightly colo red pepper cultivars fo r greenhouse production in Florida. University of Florida. Horticultu ral Science Department. Institute of Food and Agricultural Sciences. Proc. Fla. State Hort. Soc. 120:2002. Shaw, N., Cantliffe, D., Funes, J. and Shine III, C. 2004. Successful beit alpha cucumber production in the greenhouse using pine bark as an alternative soilless media. HorthTechnology 14(2).

PAGE 207

207 Smith, S. 2005. Bell pepper: estimated production costs, 2004-2005. 16 January 2006. . Smith, S. 2005. Cucumber: estimated production costs, 2004-2005.11 June 2006. . Smith, S. 2005. Strawberries: estimated production costs in the Plant City area, 2004-2005. 9 June 2006. . Smither-Kopperl, M. and D.J. Cantliffe. 2004. Pr otected agriculture as a methyl bromide alternative? Current reality and future prom ise. Proc. Fla. State Hort. Soc. 117:21-27. Steta, M. 2004. Mexico as the new major player in the vegetable greenhouse industry. Agros S. A. de C.V. Proc. VII is on prot. cult. mild winter climates. Acta Hort. 659. Thomas, W. D. 2001. Alternative greenhouse cr ops Florida greenhouse vegetable production handbook, Vol 3. Florida Cooperative Extension Se rvice Electronic Data Info. Source (EDIS), University of Florida, Ga inesville.12 March 2006. . Tyson, R.V., Hochmuth, R.C., Lamb, E.M., Ho chmuth, G.J., Sweat, M.S. 2001. A decade of change in Floridas greenhouse vegetable indus try: 1991-2001. Proc. Fla. State Hort. Soc. 114:280-283. Tyson, R. Robert, H., Lamb, E., McAvoy, E., Olczyk, T. and Lamberts, M. 2004. Greenhouse vegetables in Florida mild wint er climate 2004 Update. Proc V II Is on Prot. Cult. Mild Winter Climates. Acta Hort. 659. U.S. Department of Agriculture. 2003. 2002 Ce nsus of agriculture. National Agricultural Statistics Service. 4 March 2006. . U.S. Department of Agriculture. 2003. Me xico strawberries annual 2003. USDA Foreign Agriculture Service, Gain Report. MX3137. U.S. Department of Agriculture. 2003. Organi c agriculture gaining ground. Economic Research Service. Amber Waves, February 2003. Vol. 1. Issue 1. U.S. Department of Agriculture. 2005. Ec onomic research service. 21 December 2005. . U.S. Department of Agriculture. 2005. Economic research service. Vegetable and melon outlook. 10 August 2006. . U.S. Department of Agriculture. 2005. Foreign ag ricultural services U.S. trade internet system (FASonline). 10 August 2006. .

PAGE 208

208 U.S. Department of Agriculture. 2005. Noncitrus fruits and nut s 2005 Summary. National Agricultural Statistics Service. 4 August 2006. . U.S. Department of Agriculture. 2006. Briefi ng room: Mexico. Economic Research Service. 9 September 2006. . U.S. Department of Agriculture. 2006. Gree nhouse-grown bell pepper production. Agriculture Research Service. 9 August 2006.. U.S. Department of Agriculture/AMS. 2006. National organic program. 12 October 2006. . U.S. Environmental Protection Agency (EPA). 2006. Organic strawberry production as an alternative to methyl bromide. Oz one depletion rules & regulations. 2 May 2006. .

PAGE 209

209 BIOGRAPHICAL SKETCH James E. Webb grew up in the small town of Wa uchula, Florida. He pursued a bachelor of science degree at the University of Florida in Food and Resource Economics and graduated in December of 2000. He returned to school in 2004, after teaching two years of high school agriculture, to pursue a Master of Scie nce in Horticultural Sciences.