The Economics of Container Farms

From farming equipment to labor costs, there are many financial considerations that farmers make every single day. The farming business is one with tight margins, but it’s an essential industry that involves local communities worldwide. Agriculture has developed immensely since its inception in the fertile crescent of Mesopotamia, and the economic factors that influence the practice have followed that development. In this article, we’ll talk about the problems in traditional agriculture, how hydroponic container farms can help farmers adapt to changing conditions and some of the economic factors that make advances in the industry like container farming more appealing.

The Problem

Traditional agriculture has always been a compromise between farmers and consumers. As the practice developed, subsistence farming gave way to commercial agriculture, and modern equipment has made the process even more efficient. What once was an occupation for much of the population has been reduced to an afterthought career for those in the developed world.

Still, there are many ways in which traditional agriculture still struggles with the same problems that challenged their farming predecessors. Despite technological advances, there’s still a stunning lack of control for farmers working in traditional agriculture. Did you know that 33.7% of edible produce remains unharvested in farmers’ fields?

That happens because farmers know they’ll experience crop loss due to weather and pests. It’s an inevitable part of outdoor farming, so they plant more than they know they’ll harvest. If they didn’t do this, it’s possible that they might not make a profit from their efforts. Losses like this figure into the modern system of agriculture. Farmers must use high-waste methods of overproduction to hedge against risk and protect themselves in case of emergency.

This system creates waste at other stages of the distribution chain. Losses occur during packaging, transportation and when the produce finally arrives at a grocery store. Just like farm waste, this waste is inherent to the multinational supply chains we’ve created to maximize the economic efficiency of the agriculture industry. Produce can be harvested in India and shipped to the Philippines for processing and packaging before it arrives in an American grocery store.

Economic factors heavily influence this chain. For instance, farmers must harvest crops before they’re ripe. If they reach full growth, the number of crops lost to spoilage will increase. Early harvesting results in less nutritious produce. Most produce loses 30 percent of nutrients in just three days after harvest. Still, it’s seen as the most economically efficient way to time the harvest so that everyone involved can profit.

Supply and Demand

Farmers can tell you that their work is determined more by market forces than almost any other factor. There’s a demand for fresher produce, demonstrated by the exponential growth in local farmers markets. Produce bought at farmers markets is more expensive than store-bought crops but is more nutritious. Customers also have a more personal connection with the people that produce those crops, allowing them to have a deeper understanding of where their food comes from.

Still, there’s problems at farmers’ markets too. When farmers grow crops for farmers’ markets, they can sell their produce at a higher profit per pound. Depending on their local market’s number of customers, selling to them might be less financially viable than a large grocery store. Farmers markets can charge a booth fee, which is usually proportional to the popularity of that market. Some markets are only open on certain days or weeks, meaning they’re less reliable for farmers than traditional grocery stores.

There’s a growing demand for fresher produce, and it’s clear that long international supply chains lead to an unacceptable amount of waste. Recent advances in hydroponic technologies, or the process of growing plants without soil, have opened opportunities for this problem to be minimized.

Grow Clean – Pure Greens!

Pure Greens hydroponic container farms has been researching these advances and has developed a container farm model that allows farmers to optimize growth while controlling the environment’s temperature and humidity. These considerations make our container farms more versatile in varied environments. Hydroponic systems cut water usage down by about 70-90%. In addition to reducing water use, container farms also decrease pesticide use. Because of their indoor growing environments, pests have more difficulty getting inside. That decreases the number of crops lost due to infestation.

According to Artemis, the three most significant challenges for indoor farms are:

• Access to working capital
• Sales
• Managing and hiring labor

While container farms tend to produce less volume than other indoor farming facilities, their quality is unparalleled, giving them opportunities for higher prices per pound of produce. This leads container farm growers to target restaurants and retailers as customers. Because of this, they can demand higher prices than they would with wholesalers or distributors. If located close to where their produce is sold and consumed, growers can minimize their distribution costs while raising the price they can get for every harvest.

Here are the main areas container farm growers like our customers must think about to run and expand their business and how we’ve developed ways to assist them.

1. Operational Optimization

• Farming is a tight-margin industry, and growers know optimizing their operations is crucial to staying ahead of the competition and maintaining flexibility. You can optimize hydroponic container farms for packaging with specialized packing space that’s clean and seperated from the growing operation. Even though containers can be located close to their customers on-site, they may want to sell other produce to farmers markets or everyday consumers, giving the grower flexibility in choosing who to sell to.
• We offer a large selection of modification and custom container options, including packaging spaces and sterile vestibules to ensure your produce maintains its stellar quality from farm to fork.
• In addition, Pure Greens container farms utilize controlled environment agriculture (CEA), with temperature control, humidity control and more. This allows growers to harvest more crops and keep more money in their pockets.

2. Planned Expansion

• Expanding is the aspiration of any business, but in traditional agriculture, it can be expensive and complicated. Initially, you must purchase land and prepare it for cultivation. With Pure Greens hydroponic container farms, we’ve done some of the heavy lifting for you.
• Our enterprise solutions offer an entire production complex, condensing a whole farm into a more compact size. Whether you start with one container or several, expanding and growing at your own pace is easy.

3. Growing quality, in-demand produce

• When growers consider what crops to plant in their container farms, they must consider their local market. What crops are in demand? What crops are over-supplied? It’s impossible to know exactly what to grow without knowing the conditions of the community that’s buying produce.
• In Arizona, for example, it wouldn’t make sense to grow lettuce because the crop is already produced in abundance there. When you decide on a high-value crop, you can rest assured that with regular maintenance, your container farms will be highly efficient food factories.

  

Localizing Supply Chains

Here’s the average distance between farm and market for some common fruits and vegetables, and some as-the-crow-flies distance comparisons to emphasize how wasteful our current agriculture system can be.

• Beans: 766 miles (Roughly the distance between New York City and Atlanta)
• Winter Squash: 781 miles (Roughly the distance between Seattle and Fresno)
• Greens: 889 miles (Roughly the distance between Denver and Milwaukee)
• Tomatoes: 1,369 miles (Roughly the distance between Los Angeles and Houston)
• Apples: 1,555 miles (Roughly the distance between Boston and Dallas)
• Peaches: 1,674 miles (Roughly the distance between Detroit and Boise)
• Lettuce: 2,055 miles (Roughly the distance between Portland and New Orleans)
• Grapes: 2,143 miles (Roughly the distance between Las Vegas and Philadelphia)

These chains aren’t only wasteful in the large distances they travel but also in the fuel used to transport them from production centers to consumption centers. Foods with a short shelf life are typically transported by airplane, which keeps produce fresher, but massively increases both produce cost and fuel usage.

Consider how much food waste we could reduce if we locate food production closer to processing locations. Hydroponic container farms allow producers to grow nutritious produce from anywhere in the world. Whether you’re in a desert or a tundra, urban or rural, so long as there’s a power connection, you can cultivate crops that would have never grown naturally in that environment.

If a container farm is located at a grocery store, as with Walmart’s Plenty, efficiency can be improved at every step. That means more high-quality food can escape the trash bin. That sounds like a better system for everyone involved!

Summary

In this article, we discussed the problems with our current agricultural system, notably that it wastes resources that you could put to more efficient economic use. We discussed how these systems have developed longer supply chains involving countries all over the world. Optimizing production in a container farm can shorten those supply chains. That relocates the food system back to where it belongs, close to consumers.

If you’re curious about starting your hydroponic container farming journey, talk with us at Pure Greens. We’d be happy to assist you in finding the right container farm for your needs.

Related Blogs

Want to learn more? Here are three relevant blogs to lead you forward on your container farming journey:

1. What Are Modular Farms? 
2. Hydroponic System Costs
3. Prefabricated Greenhouses or Container Farms: Which is Right for You?