A frequent and legit question to ask from all parts of the world; how do I start a hydroponic farm or business. Deep down in me I don’t understand why people ask me this other than that they should not be in the farming business. Starting a hydroponic farm or business is the same as starting any other business for that matter. If you don’t know how to start a business don’t be in business. I may sound very negative, but farming, be it conventional or high tech has high risks, as high as playing around in Forex (and by the way I have traded Forex so I know).
In normal business, 80% of entrepreneurs succeed in the first two years (see the graph below). That is for normal business. Vegetable farming and that includes hydroponics is slightly different. There is a good chance that you will succeed in the first two years, just like any other business, but in the third and subsequent years diseases become a major factor. They have the potential to shutdown farms. I might be wrong, but no other type of venture has the same insidious problem. I have seen it so many times, everything is hunky-dory and then suddenly heart-breaking death throughout the system. If you can survive for more than 6 years, you have a very good chance of success.
I wrote this article with a critical mindset and if I offend someone, sorry. But, if by being critical and prevent anyone from losing their pension in the process I will be very happy. I am not being polite nor politically correct. If sarcasm scares you stop reading. Quite often it is the only way of hammering in the truth.
I need to clarify one thing for potential new growers. Hydroponics is not greenhouses and greenhouses is not hydroponics. Do not get the two mixed up. You don’t need a greenhouse to grow crops hydroponically. You can use shade cloth just as effectively. It just depends on your climate and the crops you grow.
For those that really want to know, I will try and answer the question as broadly as possible.
The first thing you must answers is; why the heck are you asking this in the first place. Seriously, what is it that lures you to this type of business or farming. What do you want to get out of it? I can confidently say that very few people are successful starting off from scratch compared to farmers that evolve their farms into higher-tech such as hydroponics.
What do you need to do first?
A lot of the things I mention in this article must be done in close succession. You need to locate land first, off course. Then you must make sure the water quality is good enough for hydroponics. Then you need to create a marketing strategy with crops, structure and system design in mind. The point is you cannot consider each component alone, each one depends on the other.
Although I discuss each component alone, you must combine the decision-making process. If one aspect does not work or is not suitable, you must start the circle all over again.
Build-up a good knowledge base about hydroponics
First, you need knowledge. You might have the opinion that this site has provided you with enough info, but you will be wrong. You need much more than this site and you will find that you have never enough information. So what information do you require:
- Scientifically based agronomic or horticultural knowledge.
- Basic chemistry to know what is NaCl and NaOH stuff. It gets more complicated when Ca(NO3)2.4H2O is involved.
- Basic marketing principles (you will be surprised how broad and deep ‘basic’ becomes later)
- Some engineering and practical knowledge. You don’t have to be an engineer, but you must be able to fix stuff (stuff is lots of things. Anything that decides to break and prevent you from making money is stuff).
- Personnel management (good luck with that).
- Networking: no successful business has ever run without it.
- Accounting basics: cashflow is king, always remember it. But know how to implement it in such a way to minimize your risk.
Sources of information
There are two basic sources of hydroponic knowledge; people and books. Be careful with the knowledge you stuff your brain with. Getting all your knowledge and knowhow from one person is just ridiculous. Are you on a pure diet of just beans? No, you will blow up in the first week.
Believing any sales person is just nuts. They don’t care what happens to you as they won’t be there in five years’ time. Ok that is a bit negative, but be warned. Sales people sell products, they have targets to make, kids to feed and bank managers to keep happy. Obviously, their product is the best, you cannot expect them to say anything else. Shop around and pick their brains. Sales reps like to chat, they are an enormous nest of bits and pieces of knowledge of other growers. That is what you need to fish out of them. They love talking about their customers, about gossip etc. Often that is the only way of getting ‘classified’ or insider information legally. I used to see reps (company representatives) about every day and was flabbergasted at how much sensitive information was spilt out on all aspects of our business sector. Some kept to themselves, but there were reps that could not hold it in. As soon as you are successful you keep those reps at bay, never revealing anything of importance to them. It’s a funny game and it plays out not just in hydroponics or farming, but every other sector in business.
If you get into contact with a sales rep, a lot of them will be very happy to drive you around to all the growers and show their products in situ. An ideal opportunity to view successful and failing farms. A lot of reps also have huge amounts of images of installations or setups. Go and see them, have a look at how it is done and gain experience.
Universities and other research institutions are a minefield of good information. Remember, its good information, it might not be a long term economically viable technology. Research institutions do research, they don’t run successful business farms. Know the difference when you are there. Don’t expect a plant physiology professor to help you with the economic viability of hydroponic systems, ask the right questions at the right place to the right people.
I said the other source are books, but what I really meant is non-human sources. This includes books, eBooks, the internet, videos etc. All good and bad sources of information. I would start browsing Amazon and find a book that has good reviews. Read the reviews carefully of each book as well. Often one can find a good idea of what is said inside the book and if that information applies to you. Read both the positive and negative comments. A warning on information found on the internet. Do not believe a site selling incredible too-good-to-be-true discounted bullshit systems. Please! They don’t work commercially. It’s ok trying one out as a hobby in the back of your garden. If you are looking for an author try Howard M. Resh. He is extremely knowledgeable and although his books can be a little technical, very well written.
If there is a grower that is willing to share his information with you, you have hit the jackpot. So, it might seem. But be very careful in copying his system, layout, procedures, tools, equipment etc. It might work for him but it can limit your expansion in the future. Understand this; there is always some secret information withheld from you that is crucial to the function of the whole farm in the long term. Unless you are buying an existing farm, no grower will give you all the secrets and it’s the secrets that make him successful.
Getting help from consultants. Be very careful. That is all I can say. If a consultant is so good, why is he not farming himself and I am not referring to a small DIY system in his back yard? Every consultant is good at something, they are never good at everything. For instance, I am useless at CO2 production systems. You will not find any articles with a lot of depth on my site. Yes, I use to be a consultant on hydroponics. Knowledge is one of the most difficult things to sell. But consultants need to provide you with more than just knowledge and expertise. They must challenge you, make you think for yourself, teach you and become your partner (not with the risk though ????). A consultant selling you seed or chemicals is not a consultant, that person is a rep or sales representative. A sales person makes money selling you the most profitable goods, not necessarily the most profitable for your operation. I’m being negative here, but just watch out. Make sure you get what you pay for.
What crops can you grow?
Once you have made a study of hydroponics and you are ready to write your own book it is time to have a look at the market to whom you are going to sell your products.
I assume you have already looked at a location, system structure, water quality and quantity and greenhouse structure type.
First get a good idea of what can be planted commercially in hydroponic systems. I have written an article about it. The link is below:
Is there anything in this list that you can sell, if not, you either have a great sense of adventure or don’t understand hydroponics. If you still have a great market for your product start in the soil first, then move on to a soil-less system. Please do not mail me and claim you are the first to grow potatoes in ebb and flow or some other secret hydroponic system. There is nothing new, there is no magic in hydroponics. The best systems are simple and straight forward and complement the plants growth habits.
Once you have decided on a couple of crops you need to correlate the climatic conditions in your area with the crop and how to optimize the micro-climate with a greenhouse (with or without heating) or shade net structure. The crop goes hand in hand with climate and the structure. The point is, whatever it is, it must create an environment that optimizes growth and yield quality. You need to know the following:
- The crop
- The environment where you are going to grow
- The structure that will provide the micro-climate for optimum growth
What irrigation system should I use
The hydroponic system, or irrigation system, will depend on the type of crop. So, for trellised crops such as tomatoes, peppers, cucumbers, brinjals etc., most growers use bag culture. For low growing crops such as lettuce, spinach, radicchio, herbs etc most growers use some type of gully system. A gully system can be small channels, about 110 mm wide, right up to 1000 mm wide.
Bag culture is also called open systems and gully systems or channels are called closed systems. The irrigation water is not re-circulated in bag culture but it is in gully or channels. That has a big impact on disease management. The higher your day and night temperatures are the higher disease pressure will be and the riskier the farm is. For that reason, I would recommend using bag culture first as it is cheaper and easier to manage than closed gully systems. If your heart is set on growing lettuce and you have limited space then you have no option but to use a closed system. Just remember you should be ok for the first two years (ha-ha).
If the slope of your growing area is higher than 5%, a closed system might be a little difficult. The ideal is 2.5% or lower since you want the nutrient solution to flow very slowly over the roots.
Is there a market that will buy your products?
The most significant barrier in any business is the market. If you don’t have a solid market you cannot sell your products. I should have put this section first. Take time and study the market where you would like to sell and to whom you want to sell. Please do not believe what agents or any other buyer tells you about how much they purchase. Buyers will promise you the world, it’s in their nature because that want a wider selection of suppliers so that they can choose the cream of the crop. It is better for them to select the highest quality produce from 10 farmers than from 2. If they only have 2 growers there might not be enough grade A produce and they are forced to delve into grade B produce and pay grade A for it. They want an oversupply because that is good business, it lowers prices and increases their selection. Don’t be on the back foot. Create a product that is desirable and niche. It’s where the money is.
Do not assume that any fresh produce market will purchase what you have on offer. It does not work like that. I cannot think by just walking in and claiming you have higher quality produce because of hydroponics that buyers will stand in line for you. Hydroponically grown tomatoes for instance have a stigma that they have no taste, are overpriced and have no colour. A new grower will stand in line and current customers that have proved themselves over time will get priority. Buyers will always tell you they are short on produce. What they don’t tell you is that they are short on high quality class A produce at low prices. Once they have enough class A produce they won’t buy anymore. An oversupply means you will get Class B prices for your Class A tomatoes.
There is no shortage in the market. There is only a shortage of low priced Class A produce.
Niche markets are always better to enter than commodity markets. You can produce a commodity crop in a niche area or location. Do you get the subtle difference? For instance. Growing a crop hydroponically in a rural area where the other production areas are either far away is ideal. Transport makes the import of goods expensive, so producing locally gives you that competitive advantage. This does not just apply to distance, it could also be climate limitations etc. Hauling perishable goods over long distances has three major disadvantages that you don’t have; 1) shipping cost, 2) damage to goods during transport and 3) there is always a disease risk and it increases the longer and more crops you transport. Chilling injury, disease infestations reduces shelf life and reduces trust the buyers or consumers have in a brand or market.
In my experience, from what I have seen, growers that have a stable good local market have their bread and water covered. You might want to focus on tomatoes, lettuce, herbs etc. but a good local market for spinach may exist and it will provide a good stable income. It is not the most important factor but selling directly to your local community is cheap, fast and you can beat many other growers that grow in the soil with quality, earliness and yield.
How many crops can I grow?
I will answer the question, but you answer me first: “How long is a piece of string?”. Once I get that answer I will put it down here. Deal. In the meantime, let’s go on.
You can grow as many crops as your management style and production system permits. But be careful not to be too optimistic and greedy. More crops do not mean more money. More crops do mean more problems. The more crops you have the more complicated your farm will become. Each crop has its own spray program and fertilizer program. Once the crop gets older, and you will always have various crops in various stages of growth, they have different spray programs and fertilizer or nutrient requirements. Five crops do not mean 5 fertilizer programs and 5 spray programs. It can require 7 fertilizer programs and 25 spray programs. Furthermore, the date or day harvesting starts and ends depends also on when and what you sprayed. Some chemicals have a minimum number of days after spraying when fruit or leaves can be harvested.
You can understand now that limiting the number of crops in the beginning is a good idea. Once you have a good understanding of your operations and marketing more crops can be introduced.
So, the number of crops are limited to:
- How much space you have for each crop. You cannot grow 100 crops on 1ha economically. Your market will have a minimum volume that it wants delivered and if you have 1ha available and your market wants 450 tons per year, well then you can only grow tomatoes.
- Sorting and packaging facilities. The more crops and variety of crops the more space and equipment you need for grading and packaging. Not only that your labour will need more training.
- Your ability, knowledge and number of people helping with harvesting, spraying, packing, sorting, delivering etc.
- Available land or growing area for expansion.
- How close you are to your bank manager ????
I have a farm manager with enough knowledge
Ok then, good luck. Forex might be less risky. But it is your choice.
I have the knowledge – with what should I start
So, you have gained enough knowledge to start off, the question with what should you start.
It really depends on capital and who has joined you. If it is not your money then I suggest go for it and use a system that is adapted to the crops you want to grow. If it is your own money calm down. You have at least two long years of profitable vegetable production ahead before you need a hydroponic system. Grow in the soil first, that is if you have good soil. Obviously if you don’t have good soil the next cheapest is grow in bags with soil in them or sawdust. You can literally grow anything on sawdust hydroponically. It will not be at optimum densities, but it will grow and give you experience. The low cost and low risk to soil born disease will provide a good ROI.
Install a shade cloth structure first. Plants use only 5% of the total spectrum of light from the sun for photosynthesis. The rest of the radiation is a waste and just heats up the plant and stresses it out. A 30-40% shade cloth is ideal for most crops (tomatoes and peppers need lower density shade cloth). Start off is all about cashflow and risk management. You will not produce a significantly better tomato, pepper, lettuce, parsley, celery etc. crop under plastic than shade cloth. Shade cloth structures are so much cheaper and in the end a much better ROI than expensive multi-spans. I must back off a little here. You will need plastic tunnels or multi-spans for cucumbers etc., that need the humidity to grow which shade cloth cannot provide. If you have a market for cucumbers you will have to start with plastic covered structures. If you must heat in the winter you need plastic or polycarbonate structures to keep in the heat. It really depends on what, where, when and how you want to grow. If you grow in an area that needs heat during the winter, start in summer and get some cash flow in before the winter starts.
Remember everything is long term and low risk orientated. Start off small and invest in low capital-intensive technology at first. Once you have settled with a good market, good returning customers, expand and improve to keep your customers, create more credibility and dependency on you as a professional grower.
A last point. Click on ‘Article list’ on this site and scroll down to the bottom of the list. Those are the first articles I wrote and they cover the basics of hydroponics. Read them!
I developed a spreadsheet that can assist in calculating the cost of a complete hydroponic system and it generates a cash flow system over 10 years. It is available in Exell. Please note, there are no instructions on how to use it. I developed it for feasilibity studies and since I don’t do that anymore I am making it available for free. With that said, my only ToC is that you use it at your own risk. I take no responisbility if you change a formula and your system is not profitable!