Business: Growing Microgreens Commercially

by Jason Lee • 2/5/2019

So you’re already growing microgreens in your own home and are thinking of growing microgreens for others. The good news is that with determination and perseverence, you can definitely grow microgreens as a full time business.

Starting a traditional farm is hard and expensive. A new farmer that has no previous farming equipment or property have to cough up about 1 million dollars to get started. Then, they'll have to survive a few years without making any profit. With thin profit margins, fluctuating prices, farmers rely on government subsidies for income.

The best part about microgreen farming is cost and control. It’s easy to start small and scale production without costing an arm and a leg. And your profit or loss is not at the mercy of bad weather, droughts, or pests. This article will give you an overview of how to think of your farm as a business, particularly calculating costs and profit.

Table of contents:

  • Fixed cost: make your greens pay rent
  • Get materials that lasts
  • Variable cost: calculating yield and profit margins
  • How to package microgreens and keep them fresh
  • Where to find customers
Rack
Microgreens Rack

Fixed costs: make your greens pay rent

When you're transitioning into a business from a homeowner, you never really think that your possessions pay rent because gardening is just your hobby. And if you’re growing for yourself or your family, microgreens takes no more than 8 to 12 square foot of space.

But when you approach growing from a business mindset, that same space can be rented for money. For example, if you devote an entire 100 square foot room in your apartment or house for microgreens, and you can make $500 dollars a month renting the room to a tenant, then it would then costs $500 dollars for you to grow microgreens a month in rent.

You also have to consider that the entire 100 square foot room is not entirely going to be filled with wire shelving. You need to designate space for walkways and storage, both for growing supplies such as growing medium, workspace to plant new containers, as well as a low humidity environment for seed storage.

You have to devote at least 3 feet wide walkways for safety, and secure shelving to the wall or ground. With shelving, they all come in prefabricated sizes, with the most common lengths 3 or 4 feet long. Moreover, the very top shelf on a wire shelving cannot be used for growing microgreens, and is unsafe for heavy storage.

With the floor plan complete, you can calculate the amount of square footage of growing space that you have.

In terms of electricity use, you should be expecting about 20W per square foot of growing space. So if you have 100 square foot of growing space, you should expect 24 kwh of electricity use per day (12 hours light/dark cycle), which would total up to $2 per day assuming 10 cents per kilowatt hour.

Water use is minimal. You would use more water in washing the growing containers than watering the plants. But in general, you should expect about 1 to 2 inches of water per square foot per growth cycle, depending on the species of plant that is grown.

Initial costs: Get materials that lasts

Wire shelving is dangerous. The physics doesn't work in your favor because of its high center of gravity. This means that shelving will easily tip over no matter how sturdy it’s built. You should always secure the shelving to the wall or ground in order to prevent tipping. Putting heavy weights on the bottom will also help to lower the center of gravity. But in general, all wire shelvings are more or less the same quality of built.

The second thing to consider is the growing containers. Do not get containers that break when it drops or cheap plastic black seedling containers that break after two or three uses. Containers should last at least 3-5 years of constant use. Either choose the polystyrene plastic containers or plastic storage containers. They don’t break when dropped, and easy to handle. Moreover, with storage containers, they are cheap and includes a lid.

Get lighting that is at least 2500 lumens per square foot of space. You can achieve this with any T5HO lighting. While LED lighting is more efficient, it also costs more upfront and you can always retrofit fluorescent T5HO ballasts with LED. Do not get lights with a blue color, white always works best.

You can expect fluorescent tubes to have a lifetime of 20,000 hours, whereas LED lighting is rated at 50,000 hours. That’s 4 -5 years or daily use for fluorescent tubes, or 8 to 10 years for LED. Since it's difficult to buy fixtures without the light bulbs, you can't go wrong with either fluorescent or LED lighting.

Variable costs: calculating your yield and profit

The beauty of microgreen farming is that the costs are predictable. First, multiply the seeding rate (seeding weight/ space) by the size growing container (space) and cost of seed ($/ weight). From this calculation, you get the cost of seeds for growing one container full of microgreens. To get the total yeild of the product, multiply the seeding rate (seeding weight/ space) by the size of the growing container (space) and yeild rate (harvest weight/ seeding weight).

Then, add the fixed costs. To get the rent of a single container, divide the cost of rent per year ($) by the total amount of shelving designated for growing (space). Then, multiply the result with the space taken up by the growing container. Then divide the cost by 52 to get the cost of rent per container per week. Multiply the result with the time it takes to grow the crop as well as the electricity costs to grow that same timeframe.

Also remember that you have to pay yourself or an employee for labor. Record how long it takes for you to prepare a container, harvest, and package the microgreens. A good rule of thumb for the rate to pay for the labor is how long it would take to train a person to do the same thing. If it's less than 3 days, then it's minimum wage.

Once you have the cost of growing a container of microgreens, and the total yeild per container, you can divide the cost of growing a container by the yeild per container to get the final cost of growing a mirogreen per unit of weight.

Finally, you will have to add the cost of packaging materials, and storage of the microgreens.

Because you're growing microgreens for business, you will need a profit margin or else it's another job. The profit margin needs to be big enough such that you can scale your business efficiently.

So what is a good profit margin? Wal-Mart has a 5% profit margin. But you’re not Wal-Mart and can’t afford to do high volume sales yet. So you have to stick to a higher profit margin to survive. A good rule of thumb for small businesses is to have a 30% profit margin. Therefore, after adding 30% margin, you get the final selling price of the product.

How to package microgreens and keep them fresh

Microgreens are all about freshness. After microgreens are cut, they can stay fresh for up to a week. However, the best way to keep microgreens fresh is to keep the roots intact.

To harvest the microgreens without cutting them, you have to carefully pull the microgreens from the growing media. Then, wash the microgreens with either chlorinated water or water with dilute ascorbic acid to reduce the microbial amounnt on the product.

Packaging containers need good airflow because plants need air to breathe. At the same time, you will need to have the packaging container sturdy enough such that they will not crush when stacked. The best solution for growers and packaging is to have long term B2C clients instead of customers. This will allow you to do eco-friendly growing container exchanges. Of course, growing containers will have to be sterilized in between exchanges.

On a side note, avoid packaging in styrofoam containers covered with cling film. Packaging has to be appetizing to the eye in order to attract customers.

Where to find customers:

The most important aspect business is sales. A sale is a sale, but the best sales are repeat customers or clients. Repeat customers are better for your business in the long run because the cost of acquiring a customer is amortized.

When you are small, acquiring clients can be as easy as posting ads on classifieds. Learn what it takes to get good at copywriting. Set up your own website and be fully transparent on the materials that you use, whether or not you use organic sources for your seeds and growing materials, and the cleanliness of the whole operation.

Setting up a website is easy, there are multiple platforms that have drag and drop solution for website creation. All you need to do is buy a domain name and follow the instructions. It takes as little as 4-5 dollars a month to host a website.

People will pay for quality products, and quality product basically sells itself. I'm sure that I don't need to convince you that microgreens is the best available vegetable on the market in terms of nutritional quality. But in general, the public are not aware of microgreens or their health benefits.

So when you’re writing copy for your business, make sure to have a goal of selling them a subscription or client, emphasizing the benefits to their health, and the convenience of which they can achieve their health goals.

About the Author

Jason Lee

I am the author of this website and owner of growyourmicrogreens.com. I am an hobbyist gardener and a passionate scientist. I was trained as a scientist in the Molecular Genetics program in University of Toronto, where I received my Masters of Science and published a journal article.

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