Scenario-based Cost Analysis for Vegetable Grafting Nurseries of Different Technologies and Sizes

Abstract

Grafting of fruiting vegetables is a relatively new advent in the United States with promise as a technology to improve both yields and the environment. However, investing in a commercial-sized grafting enterprise requires substantial capital investment and is a risky endeavor. A tool to help evaluate grafting costs for different production technologies and sizes of operation is a useful decision aid for individuals investing in new or modifying existing operations to produce grafted plants. Using a combination of engineering and financial equations, a scenario-based analysis was completed to obtain approximate capital and variable costs per plant for both new and existing production facilities. For exemplary purposes, four scenarios consisting of two different crops (tomato and watermelon) at two production sizes with different technology levels [low-volume manual grafting (one million plants per year) and high-volume fully automated grafting (100 million plants per year)] are presented to compare costs. For simplification purpose, consistent weekly production was assumed in the cost simulation. Total capital costs were $115,127 and $118,974 for low-volume production for grafted tomato and watermelon plants, respectively. They were $21.6 million and $16.7 million under high-volume production for tomato and watermelon, respectively. Among the four scenarios evaluated, variable costs per plant (costs of plants produced) were lowest for watermelons with high-volume production ($0.089 per plant), suggesting that production costs of grafted plants could decrease by scaling up production and introducing automation. Sensitivity analyses for high-volume production of tomato showed that the electricity rate, grafting clip price, and grafting robot speed were factors with the greatest influence on costs of plants. Scenario-based cost analysis was shown to be an effective tool for developing strategies to reduce the price of grafted plants.