Energy costs have increased in the last few years. At a whopping increase of 103% since 2003, gasoline has increased the most, but other types of energy have all gone up as well. In a mature with intense competition, this is a concern for many greenhouse operators. How big is the cost of energy? In a survey of 30 greenhouse businesses, I looked at total costs and found that energy costs averaged 8.5% of sales. This includes heating fuel, gas/diesel, electricity, and trucking costs.
How can producers deal with high energy costs in their greenhouses? Since profit = price – cost, to increase profits, either cut costs or increase prices. The options include:
Reduce fuel costs
Evaluate alternative or additional fuel sources or heating systems
Change production practices
Use space wisely
Evaluate costs to look for places to cut
Profits may not be the only objective of the business. Producers will also want to analyze how these alternatives address the firm´s other objectives. They should include the employees in the planning and evaluation process. Employees are often closer to problems than owners/managers. They often can contribute to recommendations and solutions to problems. Knowing that their opinion is valued also can improve their job satisfaction and productivity.
Selecting the final strategy may involve trade-offs among various objectives. One alternative may offer the greatest financial returns, but it may be inconsistent with other objectives. At this point, producers must decide which objectives are most important.
|2007 National Extension Risk Management Education Conference