How choosing the right planting format can lower your operating costs
Growers are faced with many different sizes of flats, packs and trays to choose from. Sizes range from a “slim” size with flats configured at a 7.25” by 20” size, to square sizes, such as the 17x17” size, with many, many sizes in between. It doesn’t help that the stated size of a configuration isn’t always the actual size. Although it’s easy just to choose a format and forget about it, different formats can have a considerable impact on the growing cost per plant produced, so it pays to get it right from the start. Read on to see how you may be able to reduce your growing costs.
The first, and perhaps most challenging, task is to understand what’s in the market. There are many different sizes available. The most popular across the US is referred to as the “1020” format, which means the flats and inserts are 10” by 20”. But in our industry, nothing is that simple. The “1020” format actually refers to a number of different formats, only one of which is actually 10” by 20”.
||10.75" x 21”||Also referred to as a “traditional” size.
||View all Standard 1020 packs & flats|
||7.25-8.5" x 20"||Slim 1020 means the width of the flat is less than 10”, and there are many different formats with widths less than 10”. Slim 1020 flats can be as narrow as 7.25”, but are also available with widths of 7.5”, 8”, or 8.5”. All are still 20” long.
||View all Slim 1020 packs & Flats|
||10” x 20”||Tip: be suspicious of any number in the industry that isn’t preceded by the word “True”. If it’s not labeled as true, there’s a good chance the actual number is different, usually less. See, for example, the “trade gallon” sizes of nursery cans.
||View all True 1020 packs & Flats|
||17” x 17” square||This is primarily used in some parts of the West Coast, especially California.||View all 17" packs & flats|
||14" x 18"||Used in some parts of Texas, this format is typically 14” by 18”. However, in an effort to reduce cost, you’ll also find it as a 13” by 17”.|
So there’s a lot of formats available. Why should you care? Because when you really think about it, the economics of growing can be similar to the economics of real estate. And the size of your format has everything to do with real estate.
But I’m growing plants, not flipping houses.
By “real estate”, we don’t mean actually buying or selling property. It’s that a lot of your costs are related to the square footage that your plants take up. Heating costs, cooling costs, watering, maintenance, fuel, trucks, some labor cost -- all of these are related in some way to how much square footage your plants take up. Is each pot or pack bigger? You’ll need more greenhouse space to grow it, and more truck runs to deliver it. More greenhouses? More heating, more maintenance, more labor.
In fact, many growers use a cost accounting system to truly understand the cost of growing their product by calculating a weekly “rent rate” per square foot of growing space. The plants have to pay you rent to be worth production. If they can’t pay you rent, evict them. Even if their flowers are pretty.
This a subject for another article, but the gist of how it works is this: take all of your production overhead -- your employees, the rent you pay for your land (or pay yourself if you own it), your maintenance, your depreciation, everything that isn’t material cost directly assigned to that plant (costs such as seeds or soil shouldn’t be included), and divide that total by the average amount of square footage your plants actually use in a year. Note that it’s not the amount you have, but the amount you use. You’ll have empty space during certain times of year, and if there’s no plants, you aren’t getting rent from those vacant spots.
So at the end of all the accounting calculations, you’ll have a rent rate per square foot per week. What do you do to reduce the rent cost of each plant? A real estate developer would tell you to build a plant skyscraper. That’s usually not practical advice in a greenhouse, but you can reduce the square footage each plant takes up. Then you can fit more plants in the same greenhouse, which means less rent per plant, which -- if you keep your sell price per plant the same -- means more profit for the grower.
Rent for a Six Pack
That’s how the format you pick for a six pack (or any other pack) can have a big impact on your costs. In a given square footage, do you want more plants paying you rent, or fewer? Unless you are able to get premium prices, often more plants per square foot is better. Example:
A traditional sized six pack (606) occupies about 38 square inches per pack. Meanwhile, a slim 7.25x20 six pack occupies 24 square inches. Doesn’t seem like much, but depending on your greenhouse layout, you could get up to 58% more plants in the same house. That’s a lot of extra rent-paying plant tenants, even though your heating costs, maintenance costs, etc are not also going to increase by 58%.
That’s before getting to delivery. What if you could deliver 58% more plants in the same truck space? If your trucks are maxed out on certain routes, and so you’d benefit by putting more plants on the truck, it could be big savings.
Some retailers actually prefer narrower formats. Why? They get extra facings on every bench. That often translates to better inventory and better sales. There’s no music a retailer loves to hear more than an increase in sales per square foot.
So is switching to slimmer packs a slam-dunk? Not exactly. There are downsides to the approach as well.
Smaller soil volume. Although a slimmer pack doesn’t necessarily have to have smaller volume (it could be taller as well, to achieve the same soil volume), they often are lower soil volume. Will your customer accept this? It could mean higher failure rates for the retail consumer, or a diminished perception of value. If your customers are primarily high end shoppers who aren’t purchasing on price, the impact of a smaller cell size may not be worth it.
Expensive to change. Making a change to your format could have major implications for your existing assets, such as your nursery transport carts or greenhouse benching. Some growers who have made the switch had to buy all new racks to benefit from it. Check your current racks to see if there’s a lot of empty space on the shelf with the flat you’re considering. There’s no point in switching if you find you can’t actually fit more flats anywhere because of the size of your carts or benches.
Price point. Sure, you’re reducing your costs, but will you be able to keep the same price point? If your customer demands a lower price point for a narrower pack, you may be giving back much of your savings. On the other hand, it protects you from a competitor switching to a slim format and trying to underbid you.
Choosing a Format
Choosing the best pack format for your greenhouse can be difficult. If you have any questions, contact us and we'd be happy to help you make the right decision for your unique growing conditions.