artin demiri1

Ontario’s greenhouse vegetables future

Opinions

12/11/2016

artin demiri

2

For what reason do we have to be worried about the future? Because it is necessary to predict the

production and the profit for being as flexible as it can possible to be adjustable to the market policy.

Being independent from the market means to have more freedom for the business.

A healthy business, can win the struggle in the market; otherwise a weaker business can loose that struggle.

12/11/2016

3

artin demiri

Greenhouse business wants to produce as much production as is possible with a lower cost and staying within budget.

A good output insures a good profit.

Gross profit….or...........gross margin leads to a pleasant cash flow.As high the cash flow is, stronger the business will be.

12/11/2016

artin demiri

4

But…how strong that kind of business is? In average the

greenhouse vegetables industry in Ontario has a gross profit 20%.

That profit is not yet a net profit. To have the net profit, it is necessary to calculate the cost of production as a summary of variable cost and fix cost….and everything depend on yield.

If there is a comparative yield that is above average and is competitive on market, we could say that the business is going healthy. Otherwise, the business is doing steps back.

12/11/2016

artin demiri

5

Knowing the situation Without a good

yield in quantity and quality, the business early or lately is going to collapse and the collapse could happen abruptly or slowly.

The market will judge that process

The market is not interested to know such details as there is good crop, we used that fertigation strategy, that kind of IPM,that kind of management etc.

The market equation is simple: what is the yield, what is the price.

12/11/2016

artin demiri

6

What is the yield? In the beginning we

have to know the general situation, the average yield and after to compare with the specific yield of a certain business.

Based on the statistics, in Ontario for 5 consecutive last years the yield had been…..

2011---44.84 kg/m2 2012---41.95 kg/m2 2013---42.06 kg/m2 2014---40.73 kg/m2 2015---38.07 kg/m2 Of course that yield is

average of all the 230 greenhouses(2014)(in 2010 greenhouse farmers had been 240) that grow vegetable in Ontario. In some greenhouses that yield is higher and in some that number is lower

12/11/2016

artin demiri

7

So…? Out of business!!! During five

consecutive years we see that 10 businesses were collapsed, because were not able to be competitive in the battle of market. In that topic there is not any excuse. The market is the criteria of a healthy business.

….but let us see how much was the average production during those years.

year

011

012 013 014 015

Milkg

348,443640

385,452990

408498857

420340993

415998335

12/11/2016

8

artin demiri

During those years, the amount if total production was increased till 2014,but in 2015 there was a very tiny decrease.

During those years all the increase of production was guaranteed by building and putting in production new greenhouses.

…and the yield?The yield was decreased and even the increase of harvesting are, in 2015 the amount of production was smaller than a year before.Onthast context, even the total production in absolute terms was increased, in relative terms was decreased.So if we se the difference of the amount between two consecutive years, becomes smaller and smaller and in 2015 is negative .So the increase of harvesting area was not able to maintain the increase of production.

12/11/2016

artin demiri

9

Let us do a graph Year(vertical)production(horizontal)

011012

013 1415

Difference between years

12/11/2016

artin demiri

10

Difference between years Let us compare The difference of

production between 2012 and 2011 had been 37 mil kg,diff between 2013 and 2014 had been 23 mil kg,between 2014 and 2013 21 mil kg but between 2015 and 2014 -5 mil kg;so in a consecutive year the amount of production had been smaller than the previous year

….in percentage the difference decrease had been

2011 N/A 2012 14 2013 11 2014 17 2015 -1

12/11/2016

11

artin demiri

Why that decrease ?

Because even though the acreage of greenhouses was increased around 150 acres/year , the yield was decreased around 15% between 2011 to 2015.

…let us continueTo calculate some other data relating to the increase of yield and production in total.

12/11/2016

artin demiri

12

If the yield were the same of 2011 In 2014 the yield

had been 44.84 kg/m2.

But how much had been the production if we were able to maintain the yield of 2011considerin the acreage increase?

year

011 012 013 014 015

acre 2067

2270

2400

2550

2700

ProMilkg

348 412 435. 463 490

12/11/2016

artin demiri

13

If there were an increase for f.u.(m2)

If we are going to use good an d best varieties, the average yield is going to be increased by 0.7% yearly. But based in the yield of 2011 by 44.84 kg/m2,the yields in consecutive years should have been…..

2012 45.15 2013 45.47 2014 45.79 2015 46.11 And the production

should have beenyear 011 012 013 014 015

acre 2067

2072 2400

2550 2700

prod 414 442 472 504

12/11/2016

artin demiri

14

Let us do a summary Comparing the actual production and

how much should have been based on different options.

year 2011

2012 2013 2014 2015

acre 2067

2270 2400 2550 2700

actual 348.4

385.5 408.5 480.3 416

2011 yield

N/A 412 435 463 490

0.7%increase

N/A 414 442 472 504

12/11/2016

artin demiri

15

Yield decrease The decrease of

yields had caused the decrease of production in relative terms and on the last year in absolute terms.

Let us compare the yield of 2015---38.07 with the yield of 2003,12 years ago…..46 kg/m2.almost 13% less.

Why that situation? As a matter of the

facts, we are 12 years ahead. In 2015 the technology was more advanced, more technical institutions there were, more consultancy were given and so on.

…..but the yield was decreased !!!!

12/11/2016

artin demiri

16

Yield decreasing tendency Let us see based on

the average of yields for five consecutive years(2011-2015).

According to that trend, the yield should be not able to be more than 385 mil kg,equal the quantity of 2012.

Why that???! On my opinion

everything should be defined as an appropriate management in general and of the labor in specific terms.

Labor is able to move around all other technical factors and will produce good or bad results.

12/11/2016

artin demiri

17

Labor management An appropriate agro

technical level will produce good yield or bad one depend from the labor management……but that labor management in a great deal of cases is underestimated.

The results of that mismanagement are connected closely with yield decrease on recent years and logically the profit for f.u.is decreased, giving a negative impact to the health of business.

12/11/2016

artin demiri

18

Being out of the business The situation of

being not able to maintain a healthy business, is calling collapse. That is the reason that for five consecutive years 2010-2014,10 greenhouse vegetable businesses were out of the business.

They were not competitive to the market and no justification is valuable.

Market does not buy justifications; it buys products and the amount and quality of it depends from the skillful and educational managers and level of growers.

12/11/2016

artin demiri

19

Their experience is decisive Competence of

that staff will give the business more strength to cope with the market and to win the battle to be competitive to it. But how was the situation in 2015?

In 2015 gross profit /f.u. had been 75.07 doll.

The cost of production, based on variable cost+fix cost is calculated to be in average 72 doll/f.u.

As a result the businesses over 72 doll/f.u. had been competitive. Higher that amount, healthier had been.

12/11/2016

artin demiri

20

Being real The average amount of

money received after selling the average production 38.06 kg/f.u. had been 75.07 doll. The difference between that number and the cost of production will give to us net profit and having that number we will judge how healthier is our business or otherwise.

If the business is not able to cope the cost of production, it can only survive and in some cases collapse.

If a business collapse another will take advantage on it and so on.

E.G,in 2015 the average yield had been 38.06 kg-75.07 doll/f.u.C alc ulating with average farm gate prices in 2015…..

12/11/2016

artin demiri

21

…..let us see and judge! The cost of

production in average should have been 72 doll/f.u.

With that money 42 kg tomato,24 kg bell peppers and 45 kg cucumbers. Those vegetables vary related to operative expenses; so bell peppers needs less labor etc.

So yield is 42,24 and 45(arranging with labor expenses).That yield presents the collapsing level(that is relative).More yield, better is; less yield worse is.

Less yield will worsen the health of business and early or late the bankruptcy will knock at the business door.

12/11/2016

artin demiri

22

Last considerations

Increasing yield is very important to keep the business healthy but a yield increase without maintain the appropriate cost of production,does’nt value. Not being within the budget means to be negatively decompensated on the rentability price…..

…and is the same thing as a lower yield.

So, the yield and cost, should be kept in the same balance with the aim to be winner in the market. Otherwise, loosing the battle with the market is evident.

12/11/2016