Is Indoor Farming More Profitable? What’s Your Next Step?
The majority of fruits and vegetables worldwide are cultivated within open, un-divided fields. Approximately only 10% is actually cultivated within greenhouses. We are talking about an average of 500,000 hectares, of which 40,000 hectares are considered to be high-tech.
There are a lot of varieties of covered crops, from rather basic, poly tunnels, to more advanced types of greenhouses. We can also see a strong development towards the most high-tech concepts among plastic and glass. Characteristic of high-tech cultivation is growing on a substrate. The climate within the greenhouses is controlled through technical cooling or heating mechanisms. Even during the wintertime, artificial growing lights compensate for the lack of natural lighting.
The big question for a lot of us is; “What is the most efficient and durable growing method in the long run?”
A Brief History
Sometimes, the lessons for the future are gained from the past, therefore, I would like to share my background story as the son of a grower.
From my father’s side, my ancestors were farmers, and later on growers for generations. My roots are found within Westland (The Netherlands). About a 100 years ago, there were hardly any greenhouses to be found within this area. Most of the cultivation grounds were used for the benefit of the livestock sector and agriculture. Since the 19th century, a lot of families have made the switch to horticulture. The main reason was the fact that the businesses in this area were relatively small while they had large families. As a farmer in that time, you would need at least ten hectares of land, while you could generate a proper income from only one or two hectares in horticulture.
As far as I know, my grandfather was one of the first generations of horticulturists. He started with outdoor cultivation where he grew potatoes, cabbage, beans, and fruits. A rather diverse display of crops. He also kept a couple of pigs who were mostly fed with crop residues and fruits and vegetables of inferior quality.
My grandfather founded his company around 1910. Even though he started with outdoor cultivation, he built his first greenhouses in the 20s. His intention was to grow tomatoes. This way he extended the season, increased the production and gained a higher profit. Wandering around the Westland area, you will see a great number of greenhouses, while outdoor cultivation has completely disappeared. There is a good reason that these developments started relatively soon in The Netherlands, for if you have visited our country before, you will find that many seasons are too cold and rainy to produce fruit and vegetable crops in particular.
At our own company, the last bits of outdoor farming vanished in the 70s. Every square meter was covered with greenhouses. In the past fifty years I have witnessed these greenhouses become bigger, taller, more modern and more advanced. We began by growing on substrates, using energy screens to cultivate energy more efficiently, and with the introduction of artificial growing lights, we saw that year-round production also became a possibility in The Netherlands. If you compare the modern greenhouses to a picture of 100 years ago, you will find the same shape, but apart from that, it is like comparing an old-fashioned pushcart to the newest hybrid car.
In the same period of approximately 100 years, the production per square meter of, for example, a tomato, has increased by a factor 8.
How will (Protected) Horticulture Develop Further?
Progress in the greenhouse area seems to be a worldwide trend. I think that history repeats itself in a certain way. The switch to covered cultivation often takes place in a step-by-step manner. An outdoor cultivator of cucumbers, for instance, wants to develop a longer season to harvest, and a higher quality of the vegetables. For that reason, they choose to operate under a plastic roof and often start cultivation in substrates, sometimes even growing gutters. Apart from a higher and more qualitative production, gains are also made in work efficiency and the consumption of greenhouse accessories, water, and fertilizers even lessen per kilo of the product.
In conclusion, we can see horticultural entrepreneurs around the world who are ready to invest in better, more efficient, but also more expensive growing concepts. What drives them to do so?
Reducing the risk and producing more evenly: a longer season of cultivation decreases the costs per kilo of the product and reduces the risks.
Certainty in production: by increasing the use of technology, you gain more control over the growing process.
Cleaner products and improved quality: with internal cultivation, organic combat can help you to improve the management and overall control over illnesses and disease.
Marketing: a longer period of growing, or even year-round production, can commit retailers to your product.
Efficiency on water and nutrients: in a high-tech growing concept, there is a higher production of kilos per hectare, while the usage of water and fertilizers practically stay the same.
Efficiency in labor: just like water and nutrients, we can see a higher productivity in growing concepts, while the intensity of the labor hardly increases per kilo of the product.
A couple of matters are to be considered to determine the best concept for you.
In what climate zone is your growing operation active?
What are the demands of your buyers when it comes to quality?
What are the costs of water, nutrients, labor, and energy?
What crop do you grow?
The advantage of high-tech growing concepts is the efficiency and certainty it brings. However, it requires a significant investment. To help you with getting insight into how to relate these matters, I have gathered some information from Central Mexico to give you an example. I have chosen this area because they still grow tomatoes in this area, both outside as in so-called mid- and high-tech growing concepts.
Yield per m2
Extra investment per m2
5 – 12 kg
35 – 45 kg
50 – 100 US dollars
60 – 75 kg
200 – 300 US dollars
*In open fields, productions of 5 to 12 kilos per square meter can be met. Obviously, there are differences between the types and growing systems that are used.
**Mid tech greenhouses are modern plastic constructions with a limited heating and climate control system for cultivation on substrates.
***High tech is a high, modern greenhouse built from plastic or glass, in which the climate control is maximized while cultivating on substrates.
Even though there is an additional financial investment in growing in a greenhouse, the overall profit is higher per m2 in comparison to growing in an open field.
In all these matters, the necessary investments are highly impacted by the applied technology and greenhouse accessories, so differences can easily occur. There are several companies in Northern America and Europe within moderate climate zones, who produce between 90 to 100 kilos per square meter using artificial grow lights.
How Do You Stay Up To Date?
Matters like water, nutrients, energy, and labor are increasingly scarce and expensive. Apart from that, the consumer demands a cleaner product based on a high and consistent quality. This makes the period around 2022 a highly recommended time to consider if your growing concept is still not up to date. It might be time to rearrange the beacons and change the operational management to meet the current demands and expectations. This is what makes it interesting to be an entrepreneur while maintaining the health of your organization.