Hoophouses, high tunnels, or unheated greenhouses have been demonstrated to be effective tools for season extension in colder climates such as in Michigan. Hoophouses allow farmers to produce crops at both ends of the regular growing season [e.g., April/May and September/October (hereafter called shoulder months)] and cold-tolerant crops in winter months, potentially leading to year-round profits. Previous economic studies on hoophouses have typically focused on single crop profitability (Cheng and Uva, 2008; Heindenreich et al., 2009) or on-farm enterprise budgets (Blomgren and Frisch, 2007), but few, if any, have examined the profitability of hoophouses used by small farmers who adopted the tool at similar times and used it to grow and sell produce through direct markets such as farmer's markets, CSA arrangements, and on-farm markets.
In this article, we look at the management and economic outcomes of primarily hoophouse vegetable production from the perspective of novice hoophouse growers. There are various reasons why more traditional budgeting methods may fall short in guiding profitable hoophouse use. Modeling diversified crop hoophouse production is similar to modeling an intensively managed diversified whole farm: it is challenging to model profitability on a revenue per-square foot basis (as is more common in floriculture/greenhouses) or to make comparisons with crop rotations on a per-acre basis over the course of 1 year (such as a linear programming approach as is more common in agriculture economics). Additionally, the hoophouses allow farmers to cultivate year-round, and so it is also difficult to define the beginning and end of a season. Further complications include labor costs, which occur in very small and difficult to measure time increments. Also, many crops (as many as five) are often cultivated in succession in a single location over the course of 1 year.
The traditional outdoor growing season in Michigan is April through September, so the extended season can be conceptualized as running from October to March. A hoophouse theoretically allows a farmer to grow or harvest the year-round, making economic profits in extended season months, which a farmer without a hoophouse is unable to produce. Because of a higher volume of local produce on the market in summer months, and thus greater competition during the traditional growing season, we would expect hoophouse farmers to maximize the potential of the hoophouse by allocating labor to produce extended season crops and even winter crops. Therefore, we would expect the marginal value product of the labor to be higher in the shoulder months. However, because most of the hoophouse growers are selling directly to consumers, there is still the incentive to supply local produce in summer months in areas where sufficient demand exists. Finally, in these traditional growing months, hoophouse growers are likely tending outdoor crops so we would expect an increased opportunity cost of working in the hoophouse.
Microeconomic theory predicts that profit-maximizing farmers will allocate their labor, so the marginal profit of 1 h spent is equated across different activities: activities will vary according to their contribution to productivity in any given time period. In other words, one would expect the marginal profit of 1 h spent in the hoophouse to be equal to the marginal profit of other activities of the hoophouse grower, thus shifting and rotating labor allocation during the year. Each farmer would theoretically choose to allocate their time to maximize their profit given the relevant inputs and outputs and the opportunity costs of labor from other activities. Furthermore, one would expect the grower to allocate time differently from one season to the next as they learn how to use this tool more efficiently. Eventually, the marginal product of labor in the hoophouse will equal or exceed the marginal product of labor from other activities. Farmers who are unable to make this happen, we would expect, would discontinue the technology.
The focus of this article is to explore the determinants of profitability of the hoophouse use on 12 Michigan farms and to understand how these novice hoophouse farmers made management decisions. It builds on a previous study (Conner et al., 2010) by using regression analysis and interviews to better understand how management decisions impact profitability. This study differs from the previous study in several key ways. First, this article includes data from three additional farmers who joined the study 1 year later than the original nine farmers. Second, the earlier article focused largely on descriptive statistics (e.g., frequencies and means) of several measures, including revenues, inputs costs, and labor devoted to construction and operation, with little discussion on how these measures interact. This study goes into greater depth on farm management, particularly how market and labor allocation decisions influence profitability. This study contributes to the literature by using mixed (quantitative and qualitative) methods and statistical analysis to provide an in-depth picture of how 12 novice farmers use a potentially valuable tool to increase farm profitability.
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