Artin Demiri 1

VEGETABLE GREENHOUSE

EXPENSES (EXTRACT)

……cost of productionONTARIO

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Artin Demiri 2

ProductionTECHNOLOGY LABOR

The technology used to produce vegetables in greenhouses is considered to be about the average technology used in agriculture production. Except of this , it is very expensive and costful .

There are some factors that influence in that process and treating them efficently means to do that production profitable

Labor is the most crucial factor that does the technology efficient or non efficient , profitable or non profitable.

So , that process has to match very closely or precisely with tech.

Labor could not be neglected or abused . Efficiency of it is determinative over the production : quantity, quality and cost.

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Artin Demiri 3

Labor Organization of that process is necessary

to be done on time and in closely response with growth phases of plant in time . Otherwise it will be inefficient relating to the production and expenses.

Misusage of labor , means less production and more expenses.

So , harmonizing it on time will lead to progression and efficiency .

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Is it labor expensive? Depend from the

management of work force. If the management of it, does not match properly with the technology and phases of plant growth , it is abnormal. On the contrary it will be normal and progressive.

To do that explanation clear , I have used two kinds of functional units;-meter square(m2) and kilogram of production(kg/m2) .

Confusion on mixing those functional units with each other should lead misconception of expense and efficiency.

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Artin Demiri 5

Consideringnumbers

Judgment over the data of the last five consecutive years, will give us a better perception about expenses of labor process through years.

So , having that data considered , we could judge how much is the influence of labor over the cost of production.

-2009 16 cdn/m2 (100 min labor/m2)

- 2010 16,7 cdn/m2 (98 min labor/m2)

-2011 17.15 cdn/m2 (100.min labor/m2)

-2012 16.7 cdn/m2 (98 min labor/m2)

-2013 16.1 cdn/m2 (94 min labor/m2)

-2014 16.1 cdn/m2 (88 min labor/m2) N.O. because the minimal

wage vary, minutes of labor are a real measure of time Calculating ,based on the kg of production/ f. u , the efficiency of labor is increased around 9% through consecutive years.

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Artin Demiri 6

Labor and expense chart used in a meter square

2009 2010 2011 2012 20130

20

40

60

80

100

120

cdn/m2minutes

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Overall labor expenses(gross payroll) ------ -(unskill labor) ONTARIO

118.5 mi129.5 mil

143.5 mil153.5 mil

156.mil

20092010

20112012

2013

0

500

1000

1500

2000

2500

Series1

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General expensesEXPENSES/M 2 EXPENSE AND PROFIT/M2

CHART

-2009 68.25

-2010 65.07

-2011 63.2

-2012 59.9

-2013 58.3-2014 61

2009 2010 2011 2012 2013

0

10

20

30

40

50

60

70

80

90

expensesgross profit

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Expenses and acreage through years(6 consecutive years)Year acres op expense

2009 1824 503,813,560

2010 1919 505,373,445

2011 2067 528,928,240

2012 2272 551,136,170

2013 2400 566,112,994

2014 2550 628,528,706

Operative expenses chart

2009

2010

2011

2012

2013

460,00

0,000

480,00

0,000

500,00

0,000

520,00

0,000

540,00

0,000

560,00

0,000

580,00

0,000

operative expenses

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Labor and production/m2Labor and production/m2

chart

year

lLabor cdn/m2 Expenses

cdn/ m2 kg/m2

2009 16 68.25 42.35

2010 16.7 65.07 40.88

2011 17.15 63.2 41.66

2012 16.7 59.9 43.32

2013 16 58.3 42.23

2014 16 61 40.75/18/2015

2009 2010 2011 2012 2013

0

5

10

15

20

25

30

35

40

45

laborprod

Artin Demiri 11

Occupational personnelThere are two groups of occupational personnel that are work together to guarantee growing , maintenance and profit.So there are unskilled and skilled employees,.First group is composed by crop workers, pickers packers and cleaners . But how expensive is their labor ? They do the production.Their wage is minimum(11 cdn/hrs).But how many hrs of labor there are necessary for an acre to produce and to make the production ready for sale?

Let us calculate and estimate!

To calculate that I am refered to the latest number of employees of that sector in 2014.

The total number is 13000 people skilled and unskilled. But how many of them are unskilled?

Let us find out : there are expend 90 minutes/m2(1.5 hrs)….and for an acre there are necessary 6000 hrs annually.

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……continuing Knowing that in 2014 the

total acreage of vegetable greenhouses in Ontario was 2550,easily we could find out that 15300000 hrs were necessary and knowing that an unskilled worker works in average 2500 hrs during a year , there are necessary around 6100 persons or 2.4workers/m2.

How many of them work directly in greenhouse and how many are packers? Usually the hrs spent for packing are equal with hrs of picking and the hrs of picking with crop work are in a ratio 70% crop work/30% picking .So , with a simple arithmetic it is obvious that for the packing 3500000 hrs are needed or 1400 workers(23% of all).

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Skilled employeesIn that group there is growing and management staff and maintenance ,that are in charge to grow and to make the production ready for sale . Those personnel is qualified and professional ; production is dependent by their abilities . There are growers , ass growers ,supervisors, scouters etc . They have to be adaptive an creative.

But how might be their number for a normal growing and for keeping a accurate budget?

Let us calculate it for a 60 acres greenhouse facility.

-1 head grower 100000 cdn -2 ass growers 2x50000 -4supervisors 4x30000 -2 scouters 2x30000 -4 maintenance 4x45000 -1 labor manager 40000….around 2.5 cdn /m2.That structure

could be organized in a different way , but the expenses should not be more . Due to the technology and labor management , that staff determines the results; more or less.

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Artin Demiri 14

Production increase-management dependency Greenhouse production

during those 5 last years is increased in two ways from building new greenhouses and increasing yields per functional unit(kg/m2)

acre kg/m2 2009 1824 42.35 2010 1919 40.88 2011 2067 41.66 2012 2272 43.32 2013 2400 42.23 2014 2550 40.7

Based on that data , percentage increase of area and yield is calculated.

There is an increase 24 % in area and …no in yield.

So the increase of production in those years is contributed considerably from the increase of area and very few from the yield for m2.5/18/2015

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Explanations The production expenses

during those years are diminished by 15% but labor expenses are the same.

From the other side production/m2 is increased by around 4%. Relating the unskilled labor expenses, the percentage over the overall expenses , is increased . So the percentage of labor expenses had been smaller in 2009(23 %) compared to 2013(27 %).

Based on that fact, the efficiency of work force usage was diminished . On the other side , production was increased by around 4 % and combing them together , the efficiency had been in stagnation ; no progression , no regression and using a differential calculation,21 cdn/m2 labor was used for one ready product tomato,15 cdn/peppers and 12 cdn/cucumbers.(wage 11 cdn/hrs)

Based on my data and for the wage 10.25 the amount of labor in $ is given below

crop work &picking cdn/hrs 10.25 Tomato 50kg/m2 9 Peppers

25kg/m2 6 Cucies 120 pc/m2 8.5 $

(packing expense is 30 % more)

So, calculating hourly equivalence…53.3 kg tomatoes are produced/hrs40 kg bell peppers/hrs135 pc cucumbers/hrs

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CommentsThe greenhouse area that is increased was a positive factor that has influenced too much over the total farm gate value through years. On the contrary ,there was very small influence due to the yield increase.Comparing the farm gate value of 2009 with 2013,there is an increase by 23 %.....and only around 7 % is the influence of yield.So , increasing area has had 93 % positive influence.

Comparative chart of area and yield.

2009

2010

2011

2012

2013

0

500

1000

1500

2000

2500

areakg/m2

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Influence factors

There are three factor that have influence (positive or negative) over the gross profit : area , yield and price.

The production that comes from area and yield is concretized by the price . But how much is the influence of price and how much the yield increase guarantees gross profit?

To make that evident , let us compare gross profit/m2 2012-2013;as well as yield/m2.

There was a gross profit increase by 9 %/m2 in 2013 compared with 2012 and there was only 0.5% yield increase . So doing a precise calculation, yield guarantee over the profit had been only 5%. (0.5/9=5).

It means that , gross profit had been 95% dependent by the market and area to have that gross profit by 7.3 cdn/m2 from 2012 to 2013.

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Area influenceIn 2012greenhouse acreage had been 2272 and in 2013 area was increased by 5.5% to be 2400 acres . So , a considerable part of profit increase was as a result of production of new greenhouses . But how much was that part? Let us calculate:5,5/95=58%.

So , it means that the profit was guaranteed 58% from building new greenhouses ,37% from the price and 5% from yield.

Percentage profit chart(sharing parts)

58%37%

5%

profit

areapriceyield

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Increasing yield and ISM(integrated scientific management)

MANAGEMENT PROFESSIONALISM Increasing yield and

keeping an appropriate budget, needs an integrated scientific management. A professional staff will guarantee a good performance and high production . Experience and adapt people are necessary

But not only those . Professionally educated people will be competent to manage successfully production because empirical experience has no chance to help progression. A clear vision how to make a good performance is a golden key and a guarantee for good results.

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ResultsAs a thumb rule , it goes undisputable that the results show how the production performance had been . The scientific expertise of staff is crucial . All the members should accomplish perfectly their duties but supervisor are focal points on the management and performance. They should give clear , comprehensive and concise instructions

given by superiors . So , the instruction chain should be finalized at the workers without any loss . If the order given by the superior hierarchy is understood in the same way by the workers everything will be fine.

A professional experienced educated supervisor , will customize and put in the same page labor , time ,worker and knowledge .

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PERSONAL EXPERIENCE(working in a team)But let us analyze a real experience and find out the results ; as well as week points and strong points . Let us try to compare the performance of the team with the average results in Ontario for the year 2009(performance is realized in 2009 and for that reason is necessary to freeze that ; to make compare exactly )-production area m 2 target realizeTomato 52500 60 kg/m2 61.25 Peppers 24300 25 27.5 Cucumbers 6500 114pc/m2Workforce 13 cdn/m2 12 cdn/m2 on budgetProduction was realized 50.53 kg/m2 compared to average of Ontario for 2009 that was 42.35 kg/m2;so we produced 19% more. So…..both indicators of performance , production and budget were positive.CONCLUSION POSITIVE

There was a hard situation due to botrytis and canker in tomato and if that situation had not been dominated,25% of production had been lost .But based in scientific expertise and responsibility there was not any negative impact and the target was accomplished successfully.

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QUALITIESEDUCATION

RESPONSIBILITY

Having the professional education background our team was able to be accommodated in different situation , to judge and to solve them in advance based in scientific experience and not in a short minded way , the average production of vegetables grown in facility was 50.53 kg/m2,16% higher than average of Ontario for the 2009.(year of reference).

Being involved directly in the business of company , our steps ahead were diligent and in a close follow to the policy of company . The production situation was under control every hour to solve problems immediately based on working discipline .

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MANAGEMENTDue to the efficient management , we had those results accomplished We guaranteed and generated a considerable profit.If the production had been sold with average price in Ontario for that year of reference , gross profit had been 91 cdn/m2 and gross margin had been around 40% compare with the Ontario average by 17% during 2009.That is a big difference and makes the business more and competitive. So , the rate input/output was improved drastically.

As a final correction of the performance indicators , gross profit has to be considered with prevalence. Below the summary of Ontario average gross margin percentage for five consecutive years is displayed

2009 17 2010 21 2011 24 2012 18 2013 28 In average gross margin

percentage had been around 22 %

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Factors It is evident the

fact that during those years , gross margin percentage was increased . But which factors were being responsible for that increase ? Let us find it out reading behind the numbers!

Based on my calculations it seems to be the cost reduction/m2 over those five years. Cost of production was diminished as below

2009 68.25 cdn/m2 2010 65.07 2011 63.2 2012 59.9 2013 58.3 If the cost/m2 had not

been reduced , gross margin had been 13 %

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SO??? The cost reduction

had contributed around 40% over the increase of gross margin percentage.

12.8/21.6 around 40%

A very small percentage increase was due to the increase of yield(around 1-2%)

On my opinion reducing cost and increasing the yield ,depend from the work and mind of growing and management staff ,that works within the greenhouse . Positive solutions and progressions there are in their hands.

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PROFITABILITY Being profitable means

to be more competitive on the market environment . Guarantee of profitability gives the possibility being flexible to the market and more independent to the price In that context , gross margin is the only comprehensive indicator that shows real situation how it is.

As a summary , it was not my intention to bring data of the vegetable greenhouse industry , but to make evident that is crucial the methodology and strategy of interpreting them ; so to make data work for us and to be able to read behind numbers; doesn't matter a big or a small facility

Let do it having a clear picture and vision and everything will be guaranteed

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THANK YOU----- to the team members that I have worked

I THANK EVERYONE THAT WITH A PASSIONATE WORK AND GOOD IDEAS IS DOING PROGRESSION ON THE VEGETABLE GREENHOUSE INDUSTRY IN ONTARIO.

LET ME FINISH THAT PRESENTATION WITH AN INDIAN PROVERB When somebody has a dream , it is a

dream. when an other has the same dream is a dream too ;so for the third and so on, but when 15 people have the same dream , it should be turned to reality.

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