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Greenhouse Sweet Potato Slip Production Budget for Mississippi

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Publication Number: P3359
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Greenhouse Sweet Potato Slip Production Budget for Mississippi

Producing sweet potato slips in greenhouses has the potential to provide growers with a secure supply of slips as well as additional revenue from selling the slips to other sweet potato farmers. Slips can be labeled as certified virus-free with yearly inspection to ensure that the greenhouse is sanitary and proper growing conditions are maintained. Certified virus-free slips assure growers and others that the product is safe.

However, producing sweet potato slips in greenhouses can be very labor-intensive and costly, so it is important to conduct an economic analysis before jumping into this venture. The demand for slips depends on the number of acres dedicated to sweet potato production in the region. Growers should consider local demand before making a major investment to supply slips.

The next step is to estimate the costs associated with producing sweet potato slips in a greenhouse. This publication estimates these costs, assuming the producer satisfies a demand of 60,000 to 100,000 slips. The figures in the budget reflect average capital and operating expenses. You may experience different production costs and demands from those assumed in the budget; therefore, customize the budget to reflect your particular situation.

Capital Investment

The greenhouse costs are based on a 30-by-96-foot “hoop house” greenhouse structure that includes a galvanized steel frame, end wall, ground stakes, and double cover of 6 mil clear UV film. Hoop houses are relatively easy and inexpensive to set up compared to glass greenhouses. The greenhouse uses a propane heating system and interior fans to help circulate air throughout the greenhouse. The electrical system consists of waterproof electrical outlets spaced 15 feet apart for each row of aluminum benches, along with a 200-amp breaker box.

Table 1 lists estimated greenhouse and associated capital costs. Estimated assembly costs are included in the budget, but these will change depending on whether you hire someone to do the work or do it yourself. A smaller greenhouse would incur less initial investment cost as well as lower overall production costs.

Table 1. Estimated capital requirements for greenhouse sweet potato slip production in Mississippi, 2019.*

Item

Description

Number

Units

Cost/unit ($)

Total initial cost ($)

Estimated life (yr)

Greenhouse structure**

30 by 96 feet

2,880

sq ft

2.19

6,307

20

Electrical system

200-amp breaker box, wire, conduit, and waterproof outlets

1

ea

646

646

20

Ventilation fans

48-inch, 1 HP

2

ea

1,130

2,260

5

Thermostat

120V, digital

1

ea

143

143

3

Heaters

Propane, 150,000 BTU

2

ea

1,095

2,190

10

Benches

Aluminum

47

ea

553

25,991

20

LED lights

Vegetative growth lights

90

ea

230

20,700

10

2-gallon sprayer

 

1

ea

41

41

3

Pots

7 by 7 inches

200

ea

1

200

3

Pots

13 by 9 inches

12

ea

2

24

3

Cutting supplies

 

1

ea

 

60

5

Irrigation system

Sprinkler system with polyethylene pipe, solenoid valves, and 2 GPH sprinkler drops

1

ea

1,510

1510

5

Ground cover

Woven polypropylene

2,880

sq ft

0.10

288

5

Personnel door

Aluminum, 42-inch

1

ea

382

382

20

Insect screen

 

1,600

sq ft

0.30

480

5

Assembly cost***

 

95

hr

15

1,425

20

Utility hookup****

Electric, gas, water

1

ea

529

529

20

Total

       

63,176

 

*Land and site preparation are not included in this budget.

**Structure includes frame, end walls, stakes, and 6 mil plastic double layer.

***Assembly costs may vary depending on location and how involved the owners are in the assembly process.

****Costs may increase if a water well or propane storage tanks are needed.*Land and site preparation are not included in this budget.

Production Budgets

The production budgets are based on information gathered from MSU’s Northeast Mississippi Branch Experiment Station in Verona and from researchers familiar with greenhouse sweet potato slip production. The production system is based on producing sweet potato slips for sale or transplanting during the sweet potato planting season, and maintaining the plants throughout the rest of the year.

Production Costs

Table 2 summarizes the yearly costs associated with slip production. Several steps must be completed for a grower to begin and maintain slip production:

  1. mother plants to pots
  2. slips to benches
  3. field or sold

The Northeast Mississippi Branch Experiment Station has “mother plants” from which sweet potato growers can initially cut slips. Growers must provide their own labor to cut slips from the mother plants. Place slips into plastic pots, two slips per pot, where they will grow until slips can be harvested from them. Next, place the slips into aluminum growing benches lined with landscape fabric and filled with potting soil. Once the benches are filled, let the plants grow until slips can be harvested and sold or transplanted into a field.

Irrigate the plants through a sprinkler system with 150 sprinklers throughout the greenhouse. Water plants approximately three times per week for 1½ hour each time. Spray insecticides on a regular basis to control insect populations within the greenhouse. Fertilize plants as needed. Although slips can be harvested throughout the year in a greenhouse environment, slip production should coincide with the planting season in the region.

 

Table 2. Estimated yearly production costs for greenhouse sweet potato slip production in Mississippi, 2019.

Item

Description

Number

Units

Cost/unit ($)

Total cost ($)

Fertilizer

25-lb bags

10

ea

25

250

Potting soil

3-cf bags

203

ea

12

2,436

Irrigation

Gallons

70,200

gal

0.02

1,404

Insecticides

 

1

 

360

360

Green shield

Sanitizer

91

oz

0.43

39

Landscape fabric

 

1

ea

100

100

Total hired labor

 

132

hr

11

1,452

Total owner hours

 

66

hr

22

1,452

Inspection fee

 

1

ea

500

500

Total production costs ($)

       

7,993

 

Labor Costs

Table 3 shows the labor cost breakdown associated with slip production. Labor costs are estimated at a wage rate of $22 per hour for the greenhouse owner and $11 per hour for all hired labor. Wage rates are estimated from average labor rate reports from the United States Department of Agriculture for 2018. Labor requirements are estimated based on the average time needed for cutting slips from the mother plants and transferring them to growing benches.

It is assumed that the owner will not be physically involved in the process; if they are involved, labor costs will need to be adjusted accordingly. Also, growers most likely will not have to replace the sweet potato plants in their greenhouses every year; estimated labor costs are for the initial startup only.

 

Table 3. Estimated labor cost breakdown for greenhouse sweet potato slip production in Mississippi, 2019.

Activity

Total hired labor hours

Hired labor wage ($)

Owner hours*

Owner wage ($)

Total cost ($)

Mother plants to pots

12

11

6

22

264

Pots to trays

120

11

60

22

2,640

Total labor costs ($)

       

2,904

*It is assumed that the owner will spend half the time required for the transfer process supervising hired labor.

 

Annual Ownership Costs

Annual ownership costs are presented in Table 4. Costs include depreciation, interest on investment, insurance, taxes, and overhead costs. Depreciation was estimated using the straight-line depreciation method, with assets being divided by their life expectancies to calculate the annual cost for depreciation. Interest on investment was calculated by using a rate of 5.25 percent charged on one-half of the initial cost of assets (it is assumed that one-half of the initial capital investment was financed with debt). Insurance and taxes are estimated at 2 percent of the initial cost of the assets. Overhead costs include heating, water, and electricity expenses.

 

Table 4. Estimated annual ownership costs for greenhouse sweet potato slip production in Mississippi, 2019.

Item structure

Depreciation ($)

Interest ($)

Insurance and taxes ($)

Total ($)

Greenhouse structure w/double covering

315

165

126

606

Electrical system

32

17

13

62

Ventilation fans

452

59

45

556

Heaters

219

57

44

320

Benches

1300

682

520

2,502

LED lights

2070

543

414

3,027

Irrigation system

302

40

30

372

Ground cover

59

8

6

73

Personnel door

19

10

8

37

Insect screen

96

13

10

119

Assembly cost

71

37

29

137

Utility hookup

26

14

11

51

Auxiliary equipment

       

Pots

50

4

3

57

Pots

8

1

1

10

Cutting supplies

12

2

1

15

2-gallon sprayer

14

1

1

16

Total greenhouse and equipment costs ($)

5,045

1,653

1,262

7,960

Overhead

       

Heating

     

9,075

Electricity

     

778

Total overhead costs ($)

     

9,853

Total annual ownership costs ($)

     

17,813

 

Total Annual Costs and Breakeven Points

Table 5 presents the estimated total annual costs and breakeven points for different levels of slip production. The total annual costs include total yearly production costs from Table 2 and total annual ownership costs from Table 4. The breakeven point reflects the price needed to cover all production costs (including overhead). For instance, if a grower produces 60,000 slips, he/she must receive 43 cents per slip in order to cover yearly costs. Any price below the breakeven point will result in a loss, and any price above this point will result in additional revenue. Estimated breakeven points for producing 60,000, 75,000, and 100,000 slips are included.

 

Table 5. Total estimated yearly costs and breakeven points for greenhouse sweet potato slip production in Mississippi, 2019.

Total annual costs (production and ownership costs including overhead)

$ 25,806

Approximate breakeven point for producing 60,000 slips ($/slip)

0.43

Approximate breakeven point for producing 75,000 slips ($/slip)

0.34

Approximate breakeven point for producing 100,000 slips ($/slip)

0.26

 

Publication 3359 (POD-05-19)

By Evan Gregory, Graduate Research Assistant; Elizabeth Canales, PhD, Assistant Professor; and Alba Collart, PhD, Assistant Extension Professor; Agricultural Economics.

Copyright 2019 by Mississippi State University. All rights reserved. This publication may be copied and distributed without alteration for nonprofit educational purposes provided that credit is given to the Mississippi State University Extension Service.

Produced by Agricultural Communications.

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Extension Service of Mississippi State University, cooperating with U.S. Department of Agriculture. Published in furtherance of Acts of Congress, May 8 and June 30, 1914. GARY B. JACKSON, Director

Department: Agricultural Economics

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Authors

Graduate Research Assist
Assistant Extension Professor
Horticultural Marketing

Your Extension Experts

Regional Ext Specialist I
Agronomic Crops
Asst Extension/Research Prof
Sweetpotato

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