Seeking Solutions Abroad
At a time when energy costs continue to soar while profits decline, greenhouse growers have two choices: get creative or get left behind. What steps can growers across the country take now — and in the long haul — to increase their operations' energy efficiency, curb costs and, ultimately, remain competitive? Part of the answer, according to two Michigan State University (MSU) researchers, will require some strategic thinking and teamwork, as well as a willingness to explore new grounds.
Stephen Harsh, professor of agricultural economics, and Erik Runkle, associate professor of horticulture, are researching ways to combat the impact rising fuel prices are having on Michigan's multimillion-dollar floriculture industry. Since 2004, energy costs have escalated by 30 to 50 percent, reducing the profitability of the state's greenhouse industry by more than $20 million in 2005, according to a recent MSU press release.
The situation contributed to a few large operations filing for bankruptcy in the last year alone. For those growers that remain in business, rising heat bills and transportation costs places them at a distinct disadvantage compared to growers in warmer regions (although they're feeling the impact, too). Still, Harsh and Runkle agree that by taking an innovative and proactive approach, the greenhouse industry has a promising future ahead — it just might look a little different.
The drastic spike in natural gas prices about three years ago was what really fueled their research efforts, Harsh says, and led to a fact-finding research trip to the Netherlands in 2006, among other projects. "The huge spike [in natural gas prices] caught the attention of our greenhouse industry. We needed to come to grips with how we could better manage our energy use."
Lessons from the Netherlands
In the fall of 2006, six MSU staff members and 16 leading Michigan growers boarded a plane to the Netherlands — one of the top-ranking countries in the world in greenhouse crop production — on a weeklong fact-finding trip. "They're doing some really innovative things there in terms of how they manage their greenhouses and the technology they're using," Harsh says.
Their goal was to learn how the Dutch greenhouse industry is responding to a government-imposed mandate to reduce greenhouse emissions by 30 percent from their 1990 levels, which means cutting down significantly on energy use. Even more ambitious is the Dutch government's aim to prohibit growers from building new greenhouses that use any fossil fuels by 2015. As a response to these regulations, the country implemented an aggressive policy regarding the use of alternate energy sources and conservation methods; brainstorming approaches that have the potential to transform the way we operate our greenhouses in the United States — if we take note.
The trip opened their eyes to several exciting technologies and concepts that encouraged participants to take action back at home, both as individual growers and as an industry, Harsh says.
"Being creative and looking at others is generally how we have progress. We're going to have to be very innovative, very creative, and look at all the different options available," he adds. "There are a lot of potential ways, we just need to put our heads together."
Thinking Outside the Box
A particularly promising method the group discovered in the Netherlands was the concept of the "no-heat greenhouse," a technique in which greenhouses capture solar energy during the warmer months by using heat exchangers in the greenhouses and storing it in aquifers. During cool months, the stored energy is used to heat the greenhouses, Runkle explains.
Although there are factors to consider when trying to replicate such a system in the United States (for example, aquifers in the Netherlands are stationary, whereas in Michigan they typically flow), it's possible that with some adjustments, it could work, he says. "I think there are possible ways to adapt what the Dutch are doing to the situation here." In fact, Mark Elzinga, a greenhouse owner near Kalamazoo, has just built a geothermal system similar to the Dutch model.
Another technique that's proving successful in the Netherlands is "cogeneration," a method used to produce heat and carbon dioxide for the greenhouses and electricity for the town at the same time. In order for a similar system to work in the United States, current energy policy regulations would need to be changed so that power companies could pay growers reasonable rates for their electricity, Harsh says. "We could use that technology tomorrow," he says. "But we have to have policy change to make that happen."
Other alternative energy technologies used in the Netherlands include wind energy, biomass, other alternative fuels and different types of glass or plastic.
There's no magic answer in the quest to become more energy efficient, says Runkle. "We have to be creative. There's no single way to reduce energy use. There are dozens of ways growers can chip away at energy bills," he says. "We have to look at what's possible, what the economics are behind these possibilities."
A key factor in the success the Netherlands is having in this area is the country's willingness to work toward a common goal. "A lot of these things in the Netherlands are interdisciplinary. You have plant physiologists, agricultural engineers and economists working as a team, instead of just isolated problem solving."
Back in Michigan, the cost of energy is increasingly a top concern for growers, ranking only behind immigration and labor. "When they get their monthly fuel bills, it's in their faces time and again," Runkle says. "They're thirsty for information. What can they do to maintain production so they're able to still produce a good crop in an economical manner and compete with growers in the South?"
And besides worrying about heating their greenhouses, they also worry about the cost of moving product long distances. "A lot of these products move quite a ways. We're talking about going 200 to 300 miles to the box stores in Ohio and Kentucky and middle Illinois. The cost of diesel fuel is really having an impact as well," says Harsh.
Inside the walls of Michigan State University, promising research is under way. Runkle is researching methods to reduce greenhouse energy costs by developing a better understanding of how crops respond to temperature. Because the temperature and light inside a greenhouse determine how long it will take a crop to reach full maturity, plants grown in cooler temperatures will take longer to develop than those grown in warmer conditions.
By managing the greenhouse temperatures, growers can find the balance between production costs and energy costs without jeopardizing plant quality. Runkle and graduate student Matthew Blanchard are trying to identify the optimum temperature to achieve the best results. Funding for this research is provided by the Fred C. Gloeckner Foundation, the American Floral Endowment and Michigan's plant agriculture iniative, Project GREEEN.
Runkle, along with researchers at the University of Minnesota and the University of Florida, are working to generate a simple crop scheduling software program to help growers lower costs without sacrificing crops' quality, he says.
Along the same lines, Runkle is also working with the USDA in Toledo, Ohio, on their Virtual Grower software. The free software allows growers to create virtual replicas of their greenhouse structures, complete with identical dimensions and characteristics, such as size, height, glazing, temperature and fuel use. Growers can test out different scenarios and find out how much it would cost to heat with different fuels, heating schedules, heaters, building designs and materials, he describes. The program simulates a fuel bill that is often an almost identical match to the real deal.
Runkle is working to incorporate common plant data into Virtual Grower, allowing growers to look at different scenarios. The exercise will hopefully increase growers' awareness of the role of temperature and light on energy consumption and plant quality.
As critical as energy use is, growers should look beyond this single area to identify different ways to reduce greenhouse costs, or ways to produce unique products that command a higher price, Runkle says. "Growers need to keep an open mind and see how they can continue to produce high-quality product at a profit."
The University also has an anemometer loan program in place and has loaned out four wind-measuring devices to local greenhouse operations seeking ways to offset electricity use. "It looks like, in some cases, they'll get very good return on investments," Harsh says.
An energy-auditing program that allows growers to assess their current expenses and explore ways to make cost-effective changes toward more energy efficiency is also in the works and appears promising. "There are a lot of things available to the greenhouse industry. Some of it is still in research stages, but I think most of that research is going to come up with very positive results," he adds.
Neither Runkle nor Harsh advocate growers implementing new technologies or concepts that don't make financial sense. In the end, it's important that the financial benefits of your investment offset the costs of implementing them. "I'm an economist — I look at these problems from an economic standpoint," says Harsh. "Does it pay for these guys to do these things?"
To remain profitable tomorrow, the industry needs to act today. Only by embracing innovative strategies and working together to curb rising costs and combat declining profits, will the industry weather the challenging financial times ahead. This might require us to operate differently, think differently and act strategically.
People are worried and sectors of the greenhouse industry are currently going through a "shakeout" process, says Harsh.
"Whether it's the greenhouse industry, farms or mainstream America, everyone has to become smarter about these things," he adds. "Some smaller, less-efficient operations are saying it's time to retire or quit. The guys that are left are being much more innovative; they're exploringÉrunning operations much more efficiently, much more financially soundly. Those will be the survivors."
Obstacles to Progress
With all this promising research and ideas floating around, what's holding the industry back from really moving forward? Why the hesitancy? For Harsh, it's a combination of factors: the "first mover problem," in which no one wants to be the first to test a new idea and possibly fail. Another inhibitor is finances; struggling greenhouses are unable or unwilling to make the economic investments these types of innovative strategies require. Lack of knowledge and a "if it's not broken, don't fix it" mentality also play roles in holding back the industry from taking a leap of faith into a new way of operating.
Growers need to be proactive and act now, rather than struggle to catch up later, Harsh says: "When you're playing catch-up, you don't stay in business for long."