MARKET ANALYSIS
Governments in the past few years have subsided greenhouse farming. A country who has particularly invested in research and technology for greenhouse development is the Netherlands, it launched a green label subsidy that provides energy tax deduction or a discount in the energy bill when power is used for greenhouse horticulture. Also, Netherlands has the Wageningen UR which its greenhouse horticulture department works on innovation on behalf of and in partnership with the industry improving and innovation greenhouses aspects like: climate and energy, sustainable crop production, water and emissions, advance breeding and production systems, quality of plant and product. Moreover, similar to the Netherlands, Gujarat in India has a goal to increase 1,000 greenhouses by 2018 from its current 150. These targets will be resilient enough to provide an increase to the greenhouse horticulture market during the 2017-2021 (Wageningen University & Research. (2017)).
The world population will increase during the next 5 years from more than 7 billion in 2016 to almost 10 billion by 2050. By 2050, more than 66% of the total world’s population will reside in urban areas (UN). It is clear that with growth of population comes demands for food, specially in developing countries. It has been an ultimate concern that the way of meeting these demands usually is by unsustainable farming techniques by overworking the soil causing the eutrophication of it, erosion and unhealthy and nutrient less crops using wrongful and excessive use of synthetic fertilizer, pesticides and unequal distribution of food around the world. To meet the future demand, the efficiency of the food production and delivery system must be increased. So, the development of greenhouses horticulture, the use of better infrastructure and automatization of them are useful ways of improving efficiency.
Gradual introduction of innovation in the farming methods such as smart greenhouses, such like the proposal of Garden Industries: a portable greenhouse machine that is fully automated. So that theses smart greenhouses can promote growth of the global greenhouse horticulture market. More importantly, these smart greenhouse farming will improve the production process and reduce the production losses.
MARKET DEFINITION
Greenhouse horticulture is the production of horticulture crops within a planned shelter to provide customized growing conditions for crops. The majority of these greenhouses structures are made from plastic, glass, and other materials such as plastic acrylic, polycarbonate and polyvinyl chloride materials. Inside the structure, crops are grown under a controlled environment using manual, semi-automatic. Or full automatic systems. Greenhouses protect crops from plagues and unwanted weather conditions and the productions of its crops have many benefits over conventional crop production techniques ensuring customized growth conditions, therefore providing safer and healthier food.
CAGR (Compound Annual Growth Rate) helps identify the steady rate of return of an investment over a certain period of time. It assumes the investment compounds over the period of time specified and it is useful for comparing investments with similar volatility characteristics. It is forecasted that the global greenhouse market grow at a CAGR of 10.79% during the period 2017-2021.
KEY MARKET HIGHLIGHTS
Key customer segments
• Retail customers
• Wholesale customers
Key market drivers
• Growing demand for food
• Growing demand for plastic greenhouse covers
Key market challenges
• High soluble salts in agricultural water
• No enough cold storage facilities
Key market trends
• Increase in Research and Development (R&D) investment and activities
o Sustainable and competitive greenhouses
MARKET SEGMENTATION
Types of materials
The green house market is primarily split into:
• Glass greenhouse
• Plastic greenhouse
• Polycarbonate films.
Geography
The greenhouse market is manly split into these key regional markets:
• Americas (Argentina, Brazil, Canada, Chile, Colombia, Mexico, Peru. Puerto Rico, US, Venezuela)
• APAC (European counties, Russia, Africa, Iceland, some Middle East countries)
• EMEA (Australia, China, Hong Kong, India, Japan, Malaysia, NZ, South Korea, Taiwan, Thailand, Indonesia, Pakistan, Vietnam)
Usually, the market size is calculated based on the revenue generated from greenhouse horticulture products for its application by end-users in each region and their corresponding countries.
Key vendors
Company
Greenhouse product advantage
Dalsem
– Greenhouse horticulture for pot plants, vegetables and flowers.
– Venlo greenhouse (most popular greenhouse structure)
Harnois Greenhouses
– Greenhouse structures
Netafim
– Greenhouse structures
– Greenhouse technology
Richel
– Greenhouse structures
Van de Hoeven
– Greenhouse structures
– Project: ModulAIR
Other major players in global Greenhouse Horticulture market include:
• Hoogendoorn
• HortiMaX
• Priva
• Ceres greenhouse
• Certhon
• Oritech
• Rough Brothers
• Trinog-xs (Xiamen) Greenhouse Tech
• Top Greenhouses
Market size and forecast
According to the Global Greenhouse Horticulture Market Analysis, in 2016 the global greenhouse horticulture market was valued at $19,639.71million USD and it is expected that the market will reach $32,931.09 million USD by 2023, growing a CAGR of 7.66% between 2016 and 2023. According to (Hadley, D. (2017)), the total estimated world greenhouse production area is 473,466 hectares, as shown in the figure below.
Figure 1. Taken from Hadley D. (2017).
The greenhouse horticulture sector could be a sustainable and safe, adequate, good quality food contribution to the demands of the growing population for sufficient food and sustainable food production. The global greenhouse horticulture market is responding to the developments and the growers are demanding wider structures, fewer gutters and shades, larger roofs to allow different conditions of growth. The demand for vegetable, fruits, flowers plays an important role in the uprising market growth. It is expected that the market will grow significantly in demand to the anterior products and advances in technology due the huge amount of research being done. Lastly, increase in investments by regional and international vendors is also expected to drive the market growth.
Australia
The industry is a capital-intensive market and capital costs are between $100 and $300 plus per square meter, it depends on the level of sophistication and equipment of the green house. Besides, the viable production units are a minimum of $1500 m2 .
Horticulture in Australia is the third largest agricultural sector with an estimated gross value of production of $8.9 billion in 2013/14.
According to the Protected Cropping Australia (PCA) association, the case for national centre for controlled environment horticulture study realized in 2016, states that:
• Greenhouse horticulture is the fastest growing food producing sector in Australia
• It is valued a $1.3 billion farm-gate value per year.
• It is equivalent to 20% of total value of vegetable and flower production.
• It contributes around $1.8 billion to the national economy.
• Employs over 10,000 people throughout Australia.
• The industry has an expansion of 4-6% per year.
INVESTMENT
• Current investment in greenhouse horticulture infrastructure is valued at $975 millions being approximately 1,300 hectares of land at $75/m2
• The annual investment in new infrastructure is valued at $50 million over the next 12 months being approximately 25 hectares at $200/ m2
• Major domestic retailers eager to increase consumption to 50% in the next 5-8 years.
• The average return investment is between 5% and 10%.
• Potential return investment on investment high technology for greenhouse horticulture enterprises is around 20-25% per year.
• Woolworths has doubles its consumption of greenhouse capsicums every year since 2005.
Greenhouse horticulture sector production statistics
Table 1.Taken from Hadley D. (2017).
State
Greenhouse Area (ha)
No of growers
QLD
30
80
NSW
500
680
VIC
200
200
SA
580
650
WA
21
30
TAS
10
25
Totals
1341
1665
Government subsidies for greenhouse farming
One of the key factors for developing our business plan into the global greenhouse horticulture market, is the fact of the increased collaboration between the local governments and international organizations, which will thrive to continue market grow. The progressive governments of Asia and Europe have introduced various schemes to encourage greenhouse horticulture market. The government expects this type of sustainable farming to improve the lives of their countries.
Government
Initiatives
Government of Netherlands
– The farmers can access to the incentive of the energy tax (ER) deduction or energy investment. Also, to the reduction of the energy price consumption for glasshouse horticulture.
– Various policies to support greenhouse horticulture.
Government of India
– Training to investors in the greenhouse horticulture
– Free or subsidized to farmers.
Australia
NSW department of Primary Industries
– Conducts research, advisory and education programs
– New South Wales 2017-18 Budget includes:
o Approximately $2 billion to the State´s primary industries and natural resources
o Over $6 million to Young Farmers Business program a 2016-17 pilot project which lasts 4 years.
– Offers mentoring, business advice & networking, employment experience
– Rural Resilience Program
o Development of farmer focused initiatives
o 150 workshops events
o $300,000 funding secured
MARKET CHALLLENGES
Global and Australia
Australia
The biggest three challenges for young farmers are:
o Access to finance
o Access to land
o Succession planning
o Insufficient cold storage facilities
The insufficient quantity of cold storage facilities for greenhouse horticulture products is negatively impacting farmers as well as consumers. This is one of the major challenges confronting the global greenhouse horticulture market. The effects include crop wastage and low-profit margins because of the low prices offered by distributors and for consumers they include price inflation of products because of scarcity of crops.
o Reliable energy sources
Greenhouses need a source of fuel to provide heating and carbon dioxide, they usually have petroleum gas or diesel (LPG) for heating but the modern facilities use liquefied natural gas (LNG). The accessibility of fuel supply is not a problem in Australia but when the greenhouses are stablished in a remote place, the fuel price can have a significant impact on the business´s profit. Moreover, due to the high average temperatures of some areas of Australia the cost associated for cooling might affect the water and energy requirements. The annual heating energy (LNG) cost per hectare at different location in Australia is shown below.
Figure 2. Taken from Hadley D. (2017).
MARKET TRENDS
• Increase in Research and Development (R&D) investment and activities
A large number of governments and organization are investing in research and development activities to the agriculture sector. The different areas of research include energy and climate, sustainable greenhouse horticulture crop protection, an increase in crop quality, reduction in water use, emission suction, advanced breeding, plant quality and advanced production systems for greenhouse horticulture.
• In Australia at the University of Western Sydney a supported by the Netherlands University Wangeningen UR Greenhouse horticulture high-tech research facility was constructed in 2014. They are a cooperation partner in the Australian project, it will help to design the new greenhouse facility by using their Dutch design models and experience. The special designs of the new greenhouse facility will have:
o High level of environmental control (temperature, humidity, CO2 and light) and in separate plant growth chambers.
o Different greenhouse covering materials that will affect light.
o Different options of operating conditions.
o High level of water and nutrient control
o Monitoring crop production and find food growing conditions under Australian climate
o Monitoring of overall energy and water use.
• In Netherlands, the technology they have n greenhouses industry is the perfect research place.
• Horticulture Research International in the UK is the largest horticultural research centre in the world, which maintain an active innovation on greenhouse crops.
• In the Americas, the Greenhouse and Processing Crops research Centre (GPCRC) is the largest research centre focusing on greenhouse vegetables.
• The International Society for Horticultural Science is an international organization of horticultural scientists, which aims at promoting horticulture research in all aspects.
Horticulture Innovation Australia and AUSVEG (2017) have a strategy that will increase the value of Australian vegetable exports by 40% in 2020, because of the next advantages:
• Increasing population of consumers in Asia and the Middle East.
• Increasing demand for packaged, good quality and convenient vegetable products.
• Demand for safe and quality food from dependable and sustainable sources.
• The trend of increasing consumption of western style foods in food service outlets.
Australian horticultural farmers and producers are at a price disadvantage compared to other producers in the world. Despite that, Australian producers have some competitive advantages referring to quality, product and integrity, safety, seasonality and location and the constant need to develop unique, innovative, competitive products in these markets on non-price factors (Hadley, D. (2017)).
COMPETITVE SCENARIO
The global greenhouse horticulture market is very competitive and there is a wide variety of products that made it difficult to provide a detailed description of the key vendors. It is important to highlight that the market is at its initial stages of development and the advances in technology like advanced environmental control are an area of opportunity and will provide the necessary demands to the market in the future.
Company
Services
Dalsem
– Manufactures and supplies greenhouses, climate computer systems, heating and boiler systems, screening, irrigation, electrical installation and energy systems.
– Company is focused on effectively controlling phased project involvement and designing a project that provides quality output and is cost-efficient.
– Has a vision in involving itself in the project from the beginning so it gives better results, saving time and effort.
Harnois Greenhouses
– Develops, manufactures and markets greenhouse structures that contribute to the making of the horticultural, financial and environmental goals of its customers globally.
– The company offers greenhouse equipment like air and water heating systems, climate control, lighting, screen, irrigation systems, coverings, cooling pads and air circulators.
– Offers a range of greenhouse projects including ground-to ground, gutter connected, high tunnels, shade house and accessories for greenhouse.
Netafim
– Develops and manufactures drip and micro-irrigation systems. The company offers a range of greenhouse solutions including projects, structures and technology.
– It has worked on greenhouse projects across the world in areas including Africa, Latin America, Europe, etc.
– The greenhouse structures offered by the company include heating systems, control systems, irrigation and fertilizer dosing systems, project design, integration and installation, drainage and water recycling, and greenhouse accessories.
Richel
– Manufactures and sells agriculture structures. It offers turnkey greenhouse projects, climate control through light, volume, insulation, ventilation, etc.
– The company´s products includes 12.80 m-bay models, 12.80 TR 500 model, etc. T
– The company´s equipment division offers screens, cooling and heating systems, water storage systems, heat diffusers, fertile- irrigation, growth accelerators and insect-proof screens.
Van der Hoeven
– Involved in horticultural projects for modern growers, investors and developers worldwide.
– It offers a big range of greenhouses that are built under different conditions.
– Designs projects for growers across the world helping them get maximum return on investment and comply with regulation related to food safety.
– Specializes in advice and supervision, turnkey projects, project management, solar greenhouse.
– Horticultural project with IQ- Modular.
REGULATIONS
According to the NSW Department Of Primary Industries (2005), the guidelines that must be followed are for the development of Controlled Environment Horticulture to plan, design, construct, operate and manage a greenhouse farm in NSW. They provide a framework for the economically, environmentally and social sustainable development and operation control. The guidelines to follow next:
– Controlled environment horticulture
– Environmental planning and regulation
– Siting and design
– Environmental impacts and hoe to manage them
– Legislation affecting controlled environmental horticulture
References
Wageningen University & Research. (2017). Greenhouse Horticultural market. Obtained from:
http://www.wur.nl/en/Research-Results/Themes/theme-food-production.htm
Smith G. (2016). Overview of the Australian Protected Cropping Industry. Protected Cropping industry. Australia. Obtained from:
https://www.protectedcroppingaustralia.com/wp-content/uploads/2016/06/National-Training-Centre-for-Controlled-Environment-Horticulture-PART-1.pdf
Hemming S. (2014). High-tech research facility greenhouse horticulture in Australia. Wageningen University & Research. Obtained from: https://www.wur.nl/en/newsarticle/Hightech-research-facility-greenhouse-horticulture-in-Australia.htm
Hadley, D. (2017). Controlled Environment Horticulture Industry Potential in NSW. Obtained from: https://www.une.edu.au/__data/assets/pdf_file/0010/174565/controlled-environment-horticulture-industry-potential-hadley.pdf
NSW Department Of Primary Industries (2005). Guidelines for the Development of Controlled Environment Horticulture. Planning Greenhouse and Hydroponic Horticulture in NSW. Taken from: https://www.dpi.nsw.gov.au/__data/assets/pdf_file/0005/119399/planning-and-farm-guidelines-greenhouse-horticulture-1.pdf