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Can Hydroponic Farming of Leafy-Vegetables be Profitable?

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Can Hydroponic Farming of Leafy-vegetables
be Profitable?
and
Can Qatar, Bahrain, Kuwait and Iceland reach
their self-sufficiency of Leafy-Vegetables with
Hydroponic Farming?



A magic to turn seeds into gold


2014-08-20
Author: Dr. Allen Lang & Peter Teng
SpeedyGreen, Inc, China
Peter Teng: email: pteng88@gmail.com
Tel: +86-186-5526-9911
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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Summary
Various types of hydroponic farming factories of vegetables seem
picking up its momentum in recent years. However, most of these
hydroponic farming factories still either remain at the stage of
experimentation or lack mass-production capability, or lack profitability
in its operation. Commercial level hydroponic farming in large scale
production has not been adopted to replace traditional soil-grown
farming.

So, in the year of 2014, is or is not possible to make an investment on
building and operating a hydroponic farming factory of leafy-vegetables
and achieve a high annual ROI? Or is there or isnt there a commercial
hydroponic farming factory that has the Magic to turn Seeds into Gold?

Author believes the answer comes from answering following two
questions:

How to design the most-efficient and practically-operable hydroponic
vertical farming factory to make its production cost-effective? A
wrongfully-designed hydroponic farming factory of leafy-vegetables is
doomed for its failure. Under-design it without must-have features, or
over-designs it with costly features results in low efficiency in production
quantity and over-all cost. Both end up without obtaining profitability in its
operation. And reaching high efficiency and mass-production capability
is the key point of the design. Without them, the factory has no chance to
make profitability. And without making profitability, there is no chance
that Hydroponic Farming can reach to its commercial stage.

Where is the location on the globe to build and operate such factory to
achieve profitability? Even a well-designed, highly-efficient Hydroponic
Farming factory today, due to its consumption of large amount of
electricity, still requires more conditions to be met to be profitable. In
order to obtain high ROI on its operation, two major factors need to be
considered: the cost of its operation has to be low and the income of it
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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has to be high. Authors analysis results in the conclusion that both of
these two factors are location-dependent. Building and operating such
factories only on locations that these two factors are met, the high
annual ROI can be obtained. So, searching the locations on the globe to
find out where to build and operate such factories is the key point of
obtaining the high ROI.

To answer question A of the above, author offers detailed analysis in this
article on what is the design principles of achieving a highly-efficient and
mass-production-type hydroponic vertical farming factory of
leafy-vegetables. Author-designed factory is used to demonstrate the
efficiency and mass-production capability.

To answer question B of the above, author offers detailed analysis and
concluded that in order to obtain profitability, the location to build and
operate an already well-designed factories must have following
characteristics:

1. The location has to provide stable and low-cost electricity.
2. The market selling price of vegetables has to be stably-high.

And 4 locations meeting these requirements that author found are:

1. The State of Qatar in Persian Gulf
2. The State of Bahrain in Persian Gulf
3. The state of Kuwait in Persian Gulf
4. The Republic of Iceland of Nordic Europe

So, author concludes that we can make high profitability by building and
operating efficiently-designed hydroponic vertical farming factories of
leafy-vegetables in Qatar, Bahrain, Kuwait and Iceland. Also, by
building and operating large numbers of efficiently-designed hydroponic
vertical farming factories, Qatar, Bahrain, Kuwait and Iceland can reach
their self-sufficiency of leafy-vegetables production.
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The design principles of an efficiently-designed
hydroponic vertical farming factory of leafy-vegetables

1) It has to perform mass-production of leafy-vegetables:
author-designed 1530 factory, can produce at least 1 million
heads of lettuce a year. Without this kind of mass-production
capability, reaching Qatars self-sufficiency seems impossible. A
same-size factory that can produce less than 10% of this quantity of
vegetables will not be cost-effective to generate profitability as well
as meeting the markets demand on vegetables quantity.
2) Its source of energy required has to be what locality can offer: the
factory should be designed to only draw on electricity, not on other
resources which the locality cannot provide. A factory that demands
large amount of fresh water, land and high-skilled labor which the
locality cannot offer is not qualified. Author-designed factory relies
heavily on the drawing of large amount of electricity but demands
very little on other sources.
3) It should utilize Hydroponic Vertical Farming: Vertical Farming
saves land-usage and makes control of the environment easier and
more cost-effective. Profitability of the factorys operation relies on
these savings. Author-designed 1530 factory provides
3-layer-structure on its working space, forming the storage of total of
273 seedbeds (4.3M X 1.72M) with accumulated growing space area
over 2100 . And hydroponic NFT method is used.
4) It should be designed with Automated-Moving-Seedbeds-System:
once we go with Vertical Farming, the multi-layer vegetables growing
space structure prohibited human-handling of any production
processes. We need an automated system to transfer the growing
units (seedbeds) to a working space area for handling and
processing. Author-designed factory is designed with such an
automated system with streamline-style production line operation.
5) It should utilize Multi-Stage-Transplanting-Method: traditional
land-growing-method designates a fixed fully-grown-vegetable-size
area for growing vegetable from seed to harvestable-stage. While
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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Multi-Stage-Transplanting-Method designates different areas to
grow sprouts arranged in different density to optimize the usage of
growing area. And transplanting of sprouts from high density area to
lower density area is performed at end of each growing stage cycle.
Mathematic calculation proves that this method can grow 2.5 times
more vegetables than the traditional method. However, due to the
large of transplanting action of sprouts from stage to stage is needed,
this method can only be easily implemented on Vertical Farming
Factory with Automated-Moving-Seedbeds-System. Instead of
performing transplanting during each end of stage time, Vertical
Farming Factory with automated moving seedbed system averages
out all the transplanting work on a daily processing basis. With
Vertical Farmings increasing production quantity efficiency by the
number of layers in the vertical structure, and the
Multi-Stage-Transplanting-Method increasing production quantity
efficiency by 250%, the total combined production quantity efficiency
can reach 6-10 times verses the traditional growing method on a
non-vertical farming way. That is why author-designed 1530
factory can produce more than 1 million heads of lettuces a year.
6) It should utilize industrial streamline-style production: The traditional
agriculture-style production is a style that farm workers roaming
around the whole growing space area performing production-related
work. This is wasteful as well as non-effective. The industrial
streamline-style utilizes production line setup for workers to stay at
the side of it and perform the necessary handling and processing.
Therefore, author-designed hydroponic vertical farming factory of
leafy-vegetables is designed with separated growing space and
working space. Plus the Automated-Moving-Seedbeds- System is
designed to allow farm works to stay on the side of the production line
in the working space and the robotic vehicles are used to transfer the
need-to-be-processed seedbeds to the production line. This set-up
increases the production efficiency and cuts down the wastes in labor
and cost as well.
7) It should be installed inside a sealed industrial workshop building:
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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glass greenhouse is not well-insulated which increases the
heating/cooling cost in the places with hot summer temperature or
cold winter temperature. Also, glass greenhouse costs more to build
than the simple industrial workshop building. All of these contribute to
saving of costs, therefore, increasing of profitability. Author-designed
factory utilizes industrial workshop building, not glass greenhouses
for saving costs as well as the total controllability of vegetables
growing environment.
8) It should utilize automated recycling-irrigation system: water-saving
is important in place like Qatar. Author-designed factory is installed
with such a computer-controlled recycling irrigation system.
9) It should utilize automated LED illumination system: Qatar can
provide low-cost electricity and this will not be a major expense for
our factorys operation. Author-designed factory is installed with such
a computer-controlled LED illumination system.
10) It has to generate profitability on its operation in the locality: For any
hydroponic factory that requires governmental subsides to operate is
not qualified to help that locality reaching its self-sufficiency of
leafy-vegetables production. Author-designed factory built and
operated in properly-selected places can produce high annual ROI if
the locality can offer low-cost electricity and high market price of
leafy-vegetables.

Now we introduce author-designed commercial level hydroponic vertical
farming factory of leafy-vegetables. Following is a diagram illustrates the
over-all design concepts:
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An actual implementation picture is shown here:

Whole system is built inside a seal industrial building. There are two
separated spaces inside: a large-sized growing space and a smaller
working space (HeadHouse).

The growing space installs with vertical structure for storage of a large
number of growing units equipped with automated irrigation (NFT
method) and LED illumination system. Author-designed standard 1530
factory can store 273 seedbeds in a 3-layer structure. Each seedbed
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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is 4.3M X 1.73M offering a growing unit area of 7.5 each and total
combined vegetable-planting area over 2100 .

The HeadHouse space installs with workbench-production-line, storage
shelves and other production-process-r, packaging and shipping-related
equipments.

Automated moving seedbeds system is designed to transport
growing-unit-seedbeds between HeadHouse and Vertical-Farming
Growing Space, allowing workers only to work inside the HeadHouse.
Two robotic vehicles are used for transporting all growing units between
the growing space and HeadHouse:
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Workers are only staying inside the HeadHouse, not requiring traveling into
the growing space at all. These two robotic vehicles will transfer all
need-to-be-processed seedbeds from the working space to the production
line in the working space. Seedbeds are transferred back to the growing
space after production processed is performed by the workers.

Author-designed growing unit (Movable Seedbed) is shown here:
Intelligent Robots that shuttle Seedbeds
between the Growing Space and Headhouse
A Robot Retrieves Seedbed
from Growing Area to
Headhouse
A Robot Delivers Seedbed
from Headhouse to Growing
Area
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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A germination room is built to produce initial sprouts from vegetable
seeds. The germination process will be easier to handle and produce
higher success rate in a germination room than on the seedbeds.

We utilize all of our growing space with
Multi-Stage-Transplanting-Method. Three specially designed inlays are
designed for 3 different stages each with matched density so that the
production quantity can be maximized. This method can generate 2.5
times of production quantity than the one-fixed-area-one-vegetable
method.

Automated hydroponic NFT with closed-circled liquid-fertilizing system is
installed. A closed-circulating irrigation system is installed with a nutrient
tanks providing all the nutrient flowing from the tank to every single
Growing Unit placed on the vertical shelves.

A computer-control LED illumination system shall be used to deliver
Growing Unit: Movable Seedbed
Seedbeds Frame
Hydroponic or Tidal Irrigation
Being performed on each seedbed
Seedbed + Inlay
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artificial sun-lighting to every single Growing Unit on the vertical shelve.

Automated CO2 generators are installed supplying enough CO2 for the
vegetables growing needs. The normal PPM value of the air is 300. But
we need to increase to 1000-1500 so that it fits best for vegetable
growing. Also due to that our grown space is sealed, the CO2 inside
shall be consumed and re-supplied through a CO2 generating system.

A fully-functional HeadHouse with proper workbenches, shelves,
automatic seeding machines is installed so that all
handling/transplanting of sprouts, sprouts, and harvesting of vegetables
can be operated inside. HeadHouse should be equipped with proper
benches and storage shelves for sprouts-tranplanting as well as
harvesting/packaging/shipping process inside.

All technologies and practical know-hows on growing all types of
leafy-vegetables are provided (including recipes of fertilizer and
acidity ,SOPs on sprouting, transplanting, and harvesting, SOPs on
growing cycle control, irrigation control, illumination control, CO2 control,
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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and pest or disease control for all types of leafy-vegetables

Also provided are the hardware and software know-how on the
technology of vegetable growth. We can tailor our system to any kind of
leafy-vegetable for our customers.

How large is the mass-production capacity of our factory? Using
lettuce production as an example, this factory can produce more than 1
million heads of lettuce (200g each). The annual production reaches 200
tons on a total investment of 1.55 million USD. For comparison, an
optimized and well-managed conventional greenhouse of the same size
operating in a year, produces 20-25 tons of lettuce a year. So, our
factory can be 8-10 times more efficient in production quantity with a
total investment of 0.3-0.4 million USD. Another way to measure our
factory is that it can produce about 1200-1400 MTs (tons) of lettuces per
hectare with total investment of $10.3 million USD.
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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How to achieve high ROI by selecting the right location
to build and operate our factories?

The advantages of our hydroponic vertical farming factory of vegetables
are as follows:
Minimum usage of land
Minimum usage of water resource
Minimum usage of liquid fertilizer and acid
Minimum usage of chemicals of producing CO2
Minimum usage of consumable materials
Daily production procedure is simple and SOPed
Minimum usage of labors and low demands on labor quality:
Only vegetable seeds required
Production operated year-round , no impacts from weather, climate
or nature disasters
Production Quantity and Quality is consistent everywhere on the
globe, operation repeatable everywhere on the globe

Now we look at the disadvantage of it. The major disadvantage is that
our factory requires the consumption of a large amount of electricity on
LED-illumination and buildings cooling/heating. A large number of LED
light tubes are installed in the system and they are operated 16 hours a
day and 365 days a year. This consumed lots of electrical power. And to
maintain best vegetables growing temperature inside the sealed growing
space with consistent 25-30 C year-round, also consumes lots of
electrical power.

To find out how much electricity is required, we focus two major parts of
the electricity usage: The LED illumination, and build temperature
cooling/heating.

LED illumination required for vegetables growing are provided through
the LED light tubes installed on top of every growing units in the growing
space. Following are actual data calculations:
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LED light bulbs are 1.2 meter T8, 18W LED light tubes
For author-designed 1500 sq meters factory, there are 11781 LED light
tubes used forming 10000 LUX of illumination for vegetables growing
For maximum operation, we may provide 16 hours per day of illumination
every day in the year
Electricity is calculated with following formula:
18W x 11781 x 16 x 365 / 1000 = 1,238,418 KW-H

Estimate building cooling/heating requires 750,000 KW-H from following
calculation:
200W per sq. meter cooling system for 1500 sq. meter space,
200Wx1500 x 12 Hr. per day x 180 days per year /1000 = 864,000 KW-H

Total Electricity consumption annually is about 2 million KW-H.

For the same factory, to build and operate in different location, the annual
total cost on electricity consumptions

Electricity (per
KW-Hr)
Total Cost of
Electricity Used
China $0.100 $200,000
Qatar $0.014 $28,000
Bahrain $0.040 $80,000
Kuwait $0.010 $20,000
USA $0.075 $150,000
Nordic Europe continent
Countries
$0.400

$500,000
Iceland $0.080 $100,000
[Note: for Nordic Europe locations, no building heating/cooling is
needed]

Some experts suggest the solar power should be utilized to generate the
electricity required. Author believes this solution is non-practice at the
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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current time. A solar system to generate 2 million KW-H of consistent
electricity requires: a) An unbelievably high cost, b) A very large space is
needed for the installation of solar panels, c) Solar power requires
steady sun lighting year-round and when such condition is not met, the
electricity generated becomes inconsistent. To solve this problem with
Solar Energy solution cannot resolve the issue and even adds more
issues.

We can see that it makes huge difference on the total cost of operation if
our factory is operated on different location. From the above chart, if we
choose to operate our factory in Norway, Denmark, Finland or Sweden,
the cost of electricity a year by itself will be 0.8 million USD, which
requires us to sell wholesale price with $0.8 more a head of our lettuce to
just balance out the electricity cost. This is not possible at all.

Authors conclusion, is that in the year of 2014, picking the right location
where low-cost electricity is provided, is the only practical solution to cut
the total cost of operation down so profit can be made.

So, we conclude:

Rule to cut cost of electricity of our factory is
location-dependent.

Now let us analyze the other side of the balance sheet of a financial
statement: the income side. To bring the income up of our factory, is as
simple as to sell the vegetables produced with higher price. However,
the market price of vegetables are determined by the market, and again,
it is very location-dependent. This is due to that at certainty locations,
due to their deficiency of producing vegetables on local land, drives their
selling price of vegetables stably high. We use the same locations of our
electricity investigation to find out how much the price of a head of
lettuce is sold there:

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For one head of lettuce:

Market Retail Price
China $0.75
Qatar $1.60- $1.80
Bahrain $1.70 - $1.90
Kuwait $1.80 - $2.30
USA $1.00 - $2.00
Nordic Europe Continent Countries $2.10- $2.80
Iceland $2.90 - $3.10

If we consider that our factory is already maximized in its design, then
there is no other method of increasing its income than finding a location
where we can sell higher price of our vegetables produced. Author,
therefore, concludes that:

Rule to increase the income of our factory is
location-dependent

Combine the Cost Cutting Rule and the Income Increasing Rule, author
concludes that to obtain high ROI of an already-well-designed
hydroponic vertical farming factory is to find the most-suitable place to
build and operate.

Comparing Cost of Electricity and local Market Price of Lettuce to
determine whether the location is a good or bad place to build and
operate

Electricity
(per
KW-Hr)
Lettuce Per
Head
Market Retail
Price
Lettuce Per Head
Wholesale Selling
Price
Good
Place
to
Operate
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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China $0.100 $0.75 $0.30
No
Qatar $0.014 $1.60-$1.80 $1.10
Yes
Bahrain $0.40 $1.70-$1.90 $1.10
Yes
Kuwait $0.01 $1.80 - $2.30 $1.20
Yes
USA $0.075 $1.00 - $2.00 $0.600
No
Nordic
Europe
$0.40 $2.10 - $2.80 $1.40 - $1.6
No
Iceland $0.08 $2.90 - $3.10 $1.800
Yes

In China, the cost of electricity is not high comparing worldwide. But its
market price of lettuce is low due to that there are plenty of land-grown
lettuces produced that drives the market price down. We cannot operate
our factory there with profit.

In USA, its cost of electricity is lower than China, but with higher labor
cost and its vast amount of land-grown lettuces available, its market
price is still relatively low. We cannot operate our factory there with high
ROI.

So, author concludes that, luckily still, there are four places found in the
world that we can build and operate our factory with high profitability:

The State of Qatar: with its dessert climate, low rain-falls, high
temperature in the summer, there is only 3 months in the year that
land-grown lettuce can be grown. 97% of its vegetables consumption for
2 million local residents is air-shipped from other countries. This drives
the local market price of vegetables stably high.

Qatar is rich in natural-gas resource and petroleum.
Natural-gas-produced electricity makes its cost stably low. This is a
place with high certainty that we can make high ROI on our factory there.
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The State of Bahrain: Bahrain is similar situation as that in Qatar. The
dessert climate, high temperature, low rain-falls, limits its land-grown
vegetables production in 3 month a year time. Its 93% of the vegetables
consumption for 1 million local residents replies on imported vegetables
from other countries. This drives its local market price of vegetables
stably high, same as that in Qatar.

Bahrain is rich in petroleum resource and its electricity cost still is
relatively low comparing worldwide. We can obtain high ROI by
building and operating our factory in Bahrain.

The State of Kuwait: Kuwait also is in similar situation as that in Qatar.
The dessert climate, high temperature, low rain-falls, limits its
land-grown vegetables production in 3 month a year time. Its 98% of the
vegetables consumption for 4million local residents relies on imported
vegetables from other countries. This drives its local market price of
vegetables stably high, same as that in Qatar.

Kuwait also provides low-cost electricity (currently very low with
governmental subsidy). Even if Kuwait government cancel its subsidy on
electricity and bring the cost to the level of that in Qatar or Bahrain, we
can still operate our factory there with high ROI.

The Republic of Iceland: Iceland is a unique place that is very interesting
to discuss. It belongs to Nordic Europe but it is an island-country by itself
about 1000 KM west of Nordic Europe Continent. Icelands high latitude
and very low temperature makes the land-grown vegetables impossible
to produce. All of its vegetables consumptions of its 330,000 populations
are imported from other countries. This drives its local market price of
vegetables extremely high. One head of lettuce is sold with retailed price
more than $2.90 - $3.10 USD. Iceland is rich in hydroelectric power and
its cost of electricity is low. Iceland is also rich in geothermal energy that
drives its cost of building heating low.
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But, Icelands population is only 330,000, therefore with limited market
size. Can we build our factories there, and export the vegetables
produced elsewhere with larger market size? The answer is: yes, we can
export vegetables produced to the larger market on the Nordic Europe
Continents: countries of Norway, Denmark, Finland and Sweden. The
total population there is 24.5 million people there and vegetables price
are very high.

If we utilize the low cost electricity in Iceland to operate our factories
there, then ocean-freight shipped vegetables produced to these 4 Nordic
Europe Continent countries, we can obtain more profitability with more
factories to build and operate in Iceland.
A magic to turn Seeds into Gold:
Unique Advantage of Iceland: We can Build and Operate in Iceland
but target the market at all 5 of the Nordic Europe Countries
Here, Market Price
of vegetables is
high
Here, cost of
electricity is low,
also rich in
geothermal
energy
Distance
<1000Km
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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To calculate the Total Number of Lettuces produced
annually in our factory:

With actual data collected in a in the author-designed factory in
2012-2013, we provide heads of lettuces that a 1530 sq. meters factory
that can be produced annually:

System Configurations and production statistics:
Total of Growing Units: 273
Each Growing Units size: 4.3M X 1.73M
Cost of industrial workshop build: $250,000
Cost of Hydroponic Vertical Farming System installed inside: $1.3
Million.
System has a Germination Room to produce initial-sprouts
(2cmX2cm-size) from vegetable-seeds daily with 14 days of growing
cycle. 4950 initial-sprouts (2cmX2cm-size) can be produced daily.
System utilizes 26 growing units to produce stronger-sprouts
(4cmX4cm-size) from initial-sprouts (2cmX2cm-size). 1 growing units
(around 3600 stronger-sprouts) can be produced daily.
System utilizes 52 growing units to product lager-sprouts
(7cmX7cm-size) from stronger-sprouts (4cmX4cm-size) with 20 days of
growing cycle. 2.6 growing units (and 3200 stronger-sprouts) can be
produced daily.
System utilizes 195 growing units to product harvestable lettuces
(14cmX14cm-size) with 20 days of growing cycle. 9.25 growing units
(and 2900 vegetables) can be produced daily.

Total Number of Lettuces can be produced annually:
Annual Production calculations:
With one stage of sprouting in a Sprouting
Room, and 3 stages to grow sprouts to
lettuces, the final daily number of seedbeds
that we can produce harvesting vegetables
9.25 Growing
Units


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are:
Harvestable Lettuces on each Growing Units
are:
348
Head
Annual Production Days are: 365 days
Annual Number of Lettuce that we grow: 1,174,935 Head
Consider survival rate of the lettuce on each
Growing Unit:
90%

Actual Number of Lettuces produced annually 1,057,442 Head

Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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P&L Statements of building and operating our factory:

In State of QatarWholesale Price per head of Lettuce 1.1 USD
Number of Heads of Lettuce produced annually 1,057,442 Head
Wholesale Price per head of Lettuce 1.1 USD
Total Annual Income 1,163,186 USD
Profit & Loss Statement
1530 Sq. M Hydroponic Vertical Farming Factory $1,540,323
USD
Total Annual Income $1,163,186 USD
USD
Total Annual Expenses $530,801 USD
Labor Cost (total of 13 labors working 2 shifts) $179,200 USD
Cost of seeds $44,761 USD
Cost of Sprout Supporters $29,141 USD
Liquid Fertilizer $9,677 USD
Consumable Materials $5,181 USD
Cost of Packaging Materials $68,222 USD
Cost of Cooling or Heating $12,096 USD
Cost of Electricity for LED Illumination $17,338 USD
Land Rental Fee $23,516 USD
Depreciation (95% depreciate in 15 years) $97,043 USD
System Operation and Maintenance $12,903 USD
Administration Fee(3% of Total Income $31,723 USD

Profit or Loss $632,384 USD
Profit Taxes there is no such tax in Qatar 0%

Net Profit or Loss $632,384 USD
Return on Investment 41.1% %
We can see that we can obtain annual ROI of 41% by building and
operating our factory in Qatar.
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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In State of BahrainWholesale Price per head of Lettuce 1.1 USD
Number of Heads of Lettuce produced annually 1,057,442 Head
Wholesale Price per head of Lettuce 1.1 USD
Total Annual Income 1,163,186 USD
Profit & Loss Statement:
1530 Sq. M Hydroponic Vertical Farming Factory $1,540,323
USD
Total Annual Income $1,163,186 USD
USD
Total Annual Expenses $587,051 USD
Labor Cost (total of 13 labors working 2 shifts) $179,200 USD
Cost of seeds $44,761 USD
Cost of Sprout Supporters $29,141 USD
Liquid Fertilizer $9,677 USD
Consumable Materials $5,181 USD
Cost of Packaging Materials $68,222 USD
Cost of Cooling or Heating $34,560 USD
Cost of Electricity for LED Illumination $49,537 USD
Land Rental Fee $23,516 USD
Depreciation (95% depreciate in 15 years) $97,043 USD
System Operation and Maintenance $12,903 USD
Administration Fee(3% of Total Income $33,309 USD

Profit or Loss $576,135 USD
Profit Taxes there is no such tax in Qatar %
Net Profit or Loss $576,135 USD
Return on Investment 37.4%


We can see that we can obtain annual ROI of 37% by building and
operating our factory in Bahrain.

Can Hydroponic Farming of Leafy-Vegetables be Profitable?
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In State of KuwaitWholesale Price per head of Lettuce 1.2 USD
Number of Heads of Lettuce produced annually 1,057,442 Head
Wholesale Price per head of Lettuce 1.2 USD
Total Annual Income 1,268,930 USD
Profit & Loss Statement:
1530 Sq. M Hydroponic Vertical Farming Factory $1,540,323
USD
Total Annual Income $1,268,930 USD
USD
Total Annual Expenses $542,560 USD
Labor Cost (total of 13 labors working 2 shifts) $179,200 USD
Cost of seeds $44,761 USD
Cost of Sprout Supporters $29,141 USD
Liquid Fertilizer $9,677 USD
Consumable Materials $5,181 USD
Cost of Packaging Materials $68,222 USD
Cost of Cooling or Heating $7,431 USD
Cost of Electricity for LED Illumination $12,384 USD
Land Rental Fee $29,032 USD
Depreciation (95% depreciate in 15 years) $97,043 USD
System Operation and Maintenance $12,903 USD
Administration Fee(3% of Total Income $47,585 USD

Profit or Loss $726,370 USD
Profit Taxes there is no such tax in Qatar 0% %
Net Profit or Loss $726,370 USD
Return on Investment 47.2%


We can see that we can obtain annual ROI of 47% by building and
operating our factory in Kuwait.

Can Hydroponic Farming of Leafy-Vegetables be Profitable?
25

In IcelandWholesale Price per head of Lettuce 1.8 USD
Number of Heads of Lettuce produced annually 1,057,442 Head
Wholesale Price per head of Lettuce 1.8 USD
Total Annual Income $1,903,395 USD
Profit & Loss Statement:
1530 Sq. M Hydroponic Vertical Farming Factory $1,540,323
USD
Total Annual Income $1,903,395 USD
USD
Total Annual Expenses $1,162,619 USD
Labor Cost (total of 10 labors working 2 shifts) $720,000 USD
Cost of seeds $44,761 USD
Cost of Sprout Supporters $29,141 USD
Liquid Fertilizer $9,677 USD
Consumable Materials $5,181 USD
Cost of Packaging Materials $68,222 USD
Cost of Cooling or Heating $0 USD
Cost of Electricity for LED Illumination $99,073 USD
Land Rental Fee $29,032 USD
Depreciation (95% depreciate in 15 years) $97,043 USD
System Operation and Maintenance $12,903 USD
Administration Fee(3% of Total Income $47,585 USD

Profit or Loss $740,776 USD
Profit Taxes(Unknown, assumed no such tax) 20% %
Net Profit or Loss $592,621 USD
Return on Investment 38.5% %

We can see that we can obtain annual ROI of 38% (after tax) by building
and operating our factory in Iceland.
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
26

Conclusions:

With the attractiveness of commercial hydroponic farming, investors are
facing decision to make on business proposals in this field. However,
with lots of confusions on its technologies as well as on its business
operations, many investors are lost in the maze of this gigantic high-tech
puzzle.

Author offers his own practical prior experiences and provides
quantitative decision-making insights for investors to be more intelligent
to make their decisions.

The simple rule of thumbs offered in this article for investors to consider
investment in a Hydroponic Vertical Farming business is: The design of
the Hydroponic Farming Factory has to reach the goal of high-efficiency
and mass-production capability in order to produce vegetables
cost-effectively. Then, the next rule is to make decision to invest only on
business proposal that selects the right location to build and operate
such factories.

By applying the above mentioned rules, we found that we can build and
operate our factories in Qatar, Bahrain, Kuwait and Iceland and can be
very profitable.

Currently, in these 4 locations, their governments are vigorously seeking
solutions of self-reliance and self-sufficiency of their local vegetables
production. To obtain food security is on their high priority list. They are
rich either in petroleum, natural gas, or hydroelectric power and they all
can provide low-cost electricity. And we can offer them a solution for
them to utilize their electricity resource (which they do have) to produce
their leafy-vegetables (which they do not have). And self-sufficiency of
leafy-vegetables production on these 4 locations can be reached by
building and operating large numbers of our efficiently-designed
hydroponic vertical farming factories.
Can Hydroponic Farming of Leafy-Vegetables be Profitable?
27

Final Notes:
NOTE1: Author-designed Hydroponic Vertical Farming Factory of
Leafy-Vegetables is manufactured and semi-assembled in China. The
semi-assembled factory will be shipped container-ocean-freight to final site for final
assembly and testing onsite. Lead-time from the order is given (with 66% down
payment), to the delivery onsite is 3 months, and final assembly and testing time is 2
months. So, total of 5 months of lead-time before the system is functional shall be
expected.
NOTE2: The standard1530 , 273 seedbeds system price is 1.3 USD FOB
Shanghai, China including all turn-key system equipments inside an industrial
workshop building. This price excludes the industrial workshop building itself and the
temperature-controlled system of the building.
NOTE3: Authors company will guarantee our customer of the production of the
mutually-agreed type of leafy-vegetables, and is willing to perform the vegetables
production operation for the customer under mutually-agreed contract (with charge) if
so desired by the customer.
NOTE4: Author-designed factory currently is designed for lettuce growing and
production. Other mutually-agreed type of leafy-vegetable can be chosen and
authors company will make the proper modification to perform the production of
vegetable type chosen. However, we only allow one type of leafy-vegetables to be
grown and produced in one factory. The production of various mixed-types of
leafy-vegetables in the same factory will weaken the utilization of seedbeds and
degrade the efficiency of the production (and may lose the profitability), therefore, not
supported.
NOTE5: Because our factory utilize the Multi-Stage-Transplanting-Growing-Method,
there is a ramp-up time of 74 days (in the case of lettuce production) before daily
production of targeted quantity can be performed from that day and on. The ramp-up
times for different type of leafy-vegetables may vary.
Contact: Peter Teng, Email: pteng88@gmail.com Tel: +86-186-5526-9911