Economic Profitability of Growing Lettuce and Tomato in Western Washington under High Tunnel and Open-field Production Systems Suzette P. Galinato1, Carol A. Miles2, and Debra Inglis2 1IMPACT Center, School of Economic Sciences, Washington State University, Pullman, WA 2Washington State University Mount Vernon NWREC, Mount Vernon, WA Cost per unit of total production area (continued) High tunnel production also had higher material cost and higher capital investment cost per square foot than open-field production (Table 3). Sensitivity of potential profit to crop yield and price Lettuce: Assuming all other factors were constant, net returns were positive for open-field production for all yield and price combinations (Fig. 2). For high tunnel production, the average price received during the entire season was $2/head. To breakeven, the average price received must be $2.01/head when yield is 20% less than the base yield, $1.72/head when yield is equal to the base yield, and $1.53/head when yield is 20% greater than the base yield. Tomato: Production in both high tunnel and open-field systems was profitable. Net returns of open-field production were positive for all yield and price combinations, assuming all other factors were constant. The average price received for high tunnel production during the entire season was $3.50/lb. To breakeven, the average price received must be $2.05/lb when yield is 20% less than the base yield, $1.71/lb when yield is equal to the base yield, and $1.49/lb when yield is 20% greater than the base yield. Introduction Lettuce (Lactuca sativa) and tomato (Solanum lycopersicum) are popular fresh market vegetable crops. In western Washington, there is interest in high tunnel production systems because of the region’s mild, coastal climate. A high tunnel offers many benefits to growers in addition to an increase in yield, such as protection from environmental stresses that affect crop quality and marketability, including hail, frost, heavy rain, and high wind. The objectives of this study were to: Compare the potential economic profit of growing lettuce and tomato in 3- season high tunnel and open-field production systems. Identify the main factors that affect the profitability of each crop within each production system. Table 2. Estimated annual production costs and returns for lettuce and tomato in open-field and 3-season high tunnel production systems in western Washington in 2011. Crop and System Production cost Net returnsy Totalz Per ft2z Lettuce Open field $16,159 $0.30 $17,966 $0.33 High tunnel $2,965 $1.54 $442 $0.23 Tomato $25,983 $0.48 $65,097 $1.20 $7,399 $3.85 $6,749 $3.52 Price per unit: Open-field lettuce: $1.75/head High tunnel lettuce: $2.50/head (early season), $1.75/head (midseason), $1.75/head (late season) Open-field tomatox: $3.00/lb High tunnel tomatox: $4.00/lb (early season), $3.00/lb (midseason), $3.50/lb (late season) Methodology Economic data for this study were collected in 2011 by interviewing experienced lettuce and tomato growers in western Washington during focus group sessions. Focus group participants had: Knowledge and experience in growing lettuce or tomato in open field or high tunnel; Good and best management practices for the region; Direct marketing experience, including farmers market, food co-operative, and/or community supported agriculture. For each crop enterprise budget, farm assumptions were defined and the types of inputs were itemized based on the production system and the crop. Baseline production specifications were established by focus group participants (Table 1). zNumbers were expressed as total for the given total production area: 1.5 acres [0.61 ha (65,340 ft2)] for open-field lettuce; 1.25 acres [0.506 ha (54,450 ft2)] for open-field tomato; and one tunnel =1920 ft2 (178.4 m2) for high tunnel lettuce and high tunnel tomato; $1.00/acre = $2.4711/ha, $1000/tunnel = $0.5208/ft2 = $5.6062/m2, $1.00/ft2 = $10.7639/m2. yNet returns = (price per unit · marketable yield) – production cost. For high tunnel lettuce and tomato, net returns were calculated by taking into account the different prices and crop yield during the early, middle and late harvest seasons: net returnsj = k (price per unitjk • marketable yieldjk) – production costj, where j = high tunnel-grown lettuce or tomato, and k = early season, midseason, or late season. x$1.00/lb = $2.2046/kg. Table 3. Estimated total production costs for lettuce and tomato. Field activity Total production costsz Open-field lettuce ($/ft2) High tunnel lettuce ($/ft2) Open-field tomato ($/ft2) High tunnel tomato ($/ft2) Field operations-Labor 0.02 0.09 0.19 0.49 Field operations-Materials and customy 0.01 0.06 0.27 Harvest and postharvest-Labor 0.12 0.34 0.11 1.48 Harvest and postharvest-Materials 0.03 0.04 0.05 Maintenance and repairs Tunnel operation and maintenance 0.00 0.46 0.91 Other variable costs 0.28 Total fixed costs 0.29 0.30 Table 1. Baseline production values for lettuce and tomato in the open-field and 3-season high tunnel systems in western Washington in 2011. Fig. 2. Estimated net returns at different prices and yields in western Washington of (A) lettuce produced in open field, (B) lettuce produced in high tunnel, (C) tomato produced in open field, and (D) tomato produced in high tunnel. Field specification Lettuce Tomato Open field High tunnelz Total production areay,x 1.5 acres 1,920 ft2 1.25 acres Growing areay,w 1 acre 1,597 ft2 480 ft2 Growing season Apr. to Oct. Feb. to mid-Oct. Feb. to Sept. 1 Feb. to 1 Oct. Harvest season June to Oct. Apr to mid-Oct. Aug. to Sept. June/July to 1 Oct. In-row spacing (inches)y 10 24 12 Between-row spacing (inches)y 36 60 42 Densityv 26,000 heads/acre 2,300 heads/tunnel 5,500 plants/acre 480 plants/tunnel Marketable yieldv 19,500 heads/acre 1,725 heads/tunnel 30,360 lb/acre 4,320 lb/tunnel Early season (% of total)u NA 30 15 Midseason (% of total) 100 55 Late season (% of total) u 25 Marketable yield/ft2t 0.36 head/ft2 0.9 head/ft2 0.56 lb/ft2 2.25 lb/ft2 z Production costs were for square foot of total production area: 65,340 ft2 [1.5 acres (0.61 ha)] for open-field lettuce; 54,450 ft2 [1.25 acres (0.506 ha)] for open-field tomato; and 1920 ft2 (178.4 m2) for both high tunnel lettuce and high tunnel tomato; $1.00/ft2 = $10.7639/m2. yCustom field work included both the material applied on the field and labor involved. This category was present only in the open-field production of lettuce and tomato. Conclusion Generally, it is more expensive to grow lettuce and tomato in a high tunnel than in the open field in western Washington as more labor and physical capital investment are needed to operate the relatively smaller growing area in a high tunnel. High tunnel production has negative profitability when crop prices are low, i.e., below $2.01/head and $2.05/lb for lettuce and tomato, respectively, and whenever yield of either crop is 20% below the base yield. In contrast, open-field production is profitable for all price and yield combinations assumed in the study. It costs two times more to grow tomato than lettuce in a high tunnel. However, the return from high tunnel-grown tomato is 15 times greater than from high tunnel-grown lettuce due to greater tomato yield and extended harvest period, both early and late in the season, as a result of elevated temperature in high tunnels. Relative cost of each field activity within a production system Harvest and postharvest activities comprised a substantial portion of the total cost of production: 64% in open-field lettuce, 24% in high tunnel lettuce, 32% in open-field tomato, 39% in high tunnel tomato (Fig. 1).. Tunnel operation and maintenance comprised the first and second largest proportions, respectively, of the total production cost of high tunnel lettuce (30%) and high tunnel tomato (23%). Total labor cost comprised more than 50% of the total production costs of lettuce and tomato in both the high tunnel and open-field systems. The percentage of total labor cost was similar in both the high tunnel and open- field production for lettuce (58%), but was higher in high tunnel tomato production (73%) than in the open field (63%). zHigh tunnel size was 20 x 96 ft (6.1 x 29.3 m). High tunnel was set up in mid-April and taken down in November. y1 acre = 0.4047 ha, 1 ft2 = 0.0929 m2, 1 inch = 2.54 cm.. xTotal production area included the growing area and area not devoted to direct production of the crop (road, walkpath, etc.). wGrowing area was the total crop production area and excluded alleyways, processing station, and other utility areas. v1 head/acre = 2.4711 heads/ha, 1000 heads/tunnel = 0.5208 head/ft2 = 5.6062 heads/m2, 1 plant/acre = 2.4711 plants/ha, 100 plants/tunnel = 0.0521 plants/ft2 = 0.5605 plant/m2, 1 lb/acre = 1.1209 kg∙ha-1, 1000 lb/tunnel = 0.5208 lb/ft2 = 2.5429 kg·m-2. uNA = not applicable. tMarketable yield per square foot of total production area; 1 head/ft2 = 10.7639 heads/m2, 1 lb/ft2 = 4.8824 kg∙m-2. Participating growers identified main production categories and estimated costs of production. Each focus group reached a consensus on average cost by production category. Variable production costs: soil preparation, fertilizer and chemical applications, planting, other labor, harvest and postharvest activities, maintenance and repairs of irrigation system, machinery and/or equipment, overhead, and interest on operating capital. Fixed production costs: depreciation and interest on physical capital, interest and tax on land, farm insurance, and farm management.. Production costs were tabulated and reviewed by focus group participants and extension specialists for vegetable production. Limitations of the Study The study’s data and profitability analyses were based on information provided by focus groups of tomato and lettuce growers in western Washington. Production costs and returns by individual growers may differ, thus the results cannot be generalized to represent the population of farmers. Possible economies of scale that may be obtained,(e.g., due to tunnel size, size of farm operation, and grower’s experience) were not examined in the current study but are worthy of exploration in a future study. Analysis of Economic Feasibility Cost per unit of total production area Costs of production varied by crop and production system. Findings indicated that it was five times more costly to grow lettuce and eight times more costly to grow tomato in a high tunnel than in the open field in western Washington (Table 2). For lettuce, the labor cost per square foot of growing area was found to be 6 times greater in a high tunnel than in the open field; and for tomato, labor costs were 10 times greater in a high tunnel than in the open field (Table 3). Additional Information This study is funded by the NIFA Specialty Crops Research Initiative, USDA SCRI- SREP Grant Award No. 2009-02484. The full study is published: Galinato, S.P., and C.A. Miles. “Economic Profitability of Growing Lettuce and Tomato in Western Washington under High Tunnel and Open-field Production Systems.” HortTechnology (in press). Fig. 1. Fixed costs and variable costs of 3-season high tunnel and open-field production for tomato and lettuce in western Washington in 2011.