Margins slim for producers, says Alberta report

March 18, 2019
Written by Alberta Agriculture and Forestry
Information on the Economics of Production and Marketing Greenhouse Crops in Alberta has been published. It captures the 2017 costs and returns of greenhouse crop production in the province. Emmanuel Anum Laate, senior crop economist with Alberta Agriculture and Forestry (AF), looks at its findings.

"The report shows that the average investment cost per square metre ranged from about $113 for greenhouses that produces cucumbers to about $321 per sq. m for bedding plants/ornamentals producing greenhouses," says Laate.

"The total production costs ranged from a low of approximately $72 per sq. m for tree seedlings to $139 per sq. m for bedding plants/ornamentals."

The report found the most significant cost items were:
  • Labour - hired and operator.
  • Material inputs - growing media, seeds/cuttings, fertilizer and chemicals, trays, boxes and other packaging materials.
  • Marketing.
  • Natural gas.
Laate notes that the estimated gross margins were positive for all crops except peppers, which had a negative margin. "Greenhouses that produce bedding plants/ornamentals showed the highest gross margin of approximately $35 per sq. m followed by tree seedlings at approximately $24 per sq. m."

The average returns to unpaid labour, investment and equity were positive for all crops except peppers.

He adds that the results show that margins have become slim for the majority of producers when compared with previous studies. "Based on the results of the 2017 study, the gross revenue generated by Alberta's greenhouse industry in 2017 was estimated at approximately $179.9 million with an investment or total asset value of about $328.5 million."

Selected greenhouse operators across the province were interviewed via farm visits to obtain their 2017 cost of production information on cucumbers, tomatoes, peppers, bedding plants/ornamentals and tree seedlings. The report details the blended or weighted average data from these growers who provided their information.

"In total, 47 completed questionnaires covering a total production area of approximately 397,498 sq. m or 98 acres was surveyed," says Laate. "The data collection was sponsored by Growing Forward 2."

Laate says that growers can use this report to help make profitable management decisions, and new growers can use it to increase their understanding of greenhouse production costs and returns. "In addition, it will serve as a guide to government when developing and evaluating programs and policies for the greenhouse crop industry."

Since the 1970s, the Economics Section of AF in collaboration with the Alberta Greenhouse Growers Association have periodically monitored the provincial greenhouse industry.

The full report is available here.

For more information, contact:
Alberta Ag-Info Centre
310-FARM (3276)

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