From the editor: The road to profitability

Hat-tip to Indoor Ag-Con, where I borrowed the headline above. In March, I attended the Vegas-based conference and moderated a panel of the same title.

I had the opportunity to discuss profitability with Tisha Livingston, CEO of Infinite Acres; Marc Oshima, CEO of Babylon Micro-Farms; and Chris Higgins, general manager of Hort Americas.

During a pre-conference discussion, Higgins said, “Profitability is a relative term. You can run a small, family-owned farm and generate the type of income you want and everybody’s happy. But that’s not the same for somebody who raised $100 million-plus dollars and needs a certain annual return for the investors.”

Where is your profitability sweet spot? Is it with a partnership of neighborhood markets, a collection of chefs in a large city or a major retailer in several states?

BrightFarms, the subject of our cover story, originally concentrated on profits from a hyper-local model. Now, they’re focused on a regional model with three new greenhouse hubs in full operation, which can serve two-thirds of Americans with its fresh greens.

Product selection is paramount to profitability. Culinary herbs present an opportunity for growers, and researchers with the Controlled Environment Agriculture Herb Extension and Research Base (CEA HERB) are learning the best methods for growing this crop. Read the second article in our eight-part series from this group here.

There’s currently a hazard on the road to profitability: tariffs. At press time, the proposed 25% tariff on Canadian and Mexican goods was paused, but not taken off the table. Council of Supply Chain Management Professionals President and CEO Mark Baxa talks about the potential challenges the horticulture industry faces from these tariffs.

“It’s going to erode your margins, and you’re going to have to strongly consider price increases or absorbing those costs in some way ... because tariffs are going to become a major impact to supply chain cost, not just in the U.S., but around the world,” Baxa said.

Those tariffs will no doubt affect peat, unless the industry is successful in excluding sphagnum peat moss from those Canadian tariffs.

Speaking of peat, James Altland, research leader at USDA’s Agricultural Research Service’s Application Technology Research Unit, wants the industry to make decisions about the use of peat based on scientific research. He presents a ton of research in his story here. Those input decisions certainly affect profitability.

I’d like to hear about your journey to profitability. I’m eager to hear how you overcame the hazards.

Kelli Rodda, Editorial Director | krodda@gie.net