The first step in cost accounting for a business is typically to divide expenses into two categories: Variable and Fixed. Variable expenses, also called direct or allocated expenses in some situations, are those that vary with the amount of crop you are growing. Variable expenses typically include pots, plugs, seed, substrate, labels, chemicals, etc. Fixed costs are those expenses that have to be paid whether or not a crop is produced, including depreciation, insurance, marketing, management salaries, etc. One method for allocating fixed costs to individual crops is called the dollars per square feet week method ($/ft²/week). The total fixed costs are divided by the total amount of useable space in the greenhouse by the number of weeks the space is used. Greenhouses that keep their spaces full and grow crops in a fast, efficient manner tend to be more profitable, which is reflected by a low $/ft²/week figure. Some growers use $/unit (flat, pot, basket, stem) and divide total fixed cost by number of units. Other use $/unit labor and divide total fixed cost by number of hours or dollars of labor. Either of these methods may be easier for you to use or may make more sense for your operation.
For more information see the following article published in "Greenhouse Grower" magazine:
- Calculating Crop Costs by John Dole and Brian Whipker, North Carolina State University.
Resources for developing budgets and yield information for various greenhouse crops:
- Example of Greenhouse Costs of Production with interactive worksheet (Rutgers University)
- How Much Does it Cost to Grow a Greenhouse Crop (Rutgers University)
- Budget for Greenhouse Tomatoes (Mississippi State University)
- Organic Greenhouse Vegetable Production (ATTRA)
- Wholesale Ornamental Crop Report (Wholesale prices of flowers and plants - Boston Market)
- Specialty Cut Flower Flowers (Book by Armitage and Laushman)
Information on field and greenhouse cut flowers including yields.
Compiled in 2011, reviewed 2015