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Greenhouse Farming in Russia

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Greenhouse Farming In Russia: A Business With High Profitability

Among the most promising areas of agriculture in Russia is the so-called greenhouse business, which is most relevant for the Central and Eastern part of Russia, where there is a shortage of fresh vegetables in the winter and spring months. So let’s look at the prospects of greenhouse farming in Russia as a business with high profitability.

Greenhouse farming in Russia as business with high profitability

The profitability of The Greenhouse Business

Competition in this area of business is estimated as relatively low. But it is a little difficult to accurately assess the profitability of such a business project. This indicator depends on many variables and, first of all, on the geographical location of the greenhouse farm. On the one hand, as mentioned above, growing fresh vegetables in a greenhouse are more in demand for the middle zone, Eastern and Northern regions of Russia. In the South, the competition is much higher, and the cold season is much shorter.
On the other hand, the Northern part of Russia is characterized by sharp temperature changes and even frosts. In addition, there is a lack of sunlight. Therefore, additional expenses will be required for lighting and heating greenhouses, which, in turn, will lead to an increase in the cost of production. Thus, growing greenhouse vegetables, for example, in Moscow and the Moscow region may be unprofitable due to the high cost of local greenhouse products and given the fact that large quantities of fruits and vegetables are imported to this region from the South at lower prices.

Of course, profitability directly depends on what is grown in greenhouses. Most often it is greens, flowers, and vegetables. In addition, experienced agronomists undertake to grow various exotic agricultural crops for Russia in greenhouses. The last option is not suitable for a novice entrepreneur for two reasons: its implementation requires considerable investment, and the business itself is characterized by high risks, which are associated, first, with the whimsicality of such crops, and secondly, with the inability to accurately predict the demand for such products on the Russian market. Greenhouse farming in Russia as a business with high profitability.
In the first place in terms of profitability in the greenhouse business are flowers, but also investments in the flower business will be the most impressive since you will need extensive areas for the construction of greenhouses. But if you do not yet have large start-up capital or special experience in growing greenhouse plants, experts advise you to start with greens (onions, parsley, dill, lettuce, etc.), which is much less whimsical to weather conditions, has a good yield and is always in high demand.

Basic Requirements For Growing Vegetables

If you still intend to grow vegetables, it is recommended to pay attention to the eco-direction. Recently, the world’s population has become more concerned about their health and prefer environmentally friendly products. However, in order for your product to be called “eco-friendly”, you will need to issue an environmental certificate for it. An environmental certificate of conformity is a document that confirms the environmental safety of products, including their operation, storage, and transportation.
It is issued only after the manufacturers pass the environmental certification procedure, during which the compliance of the entire production process and the product itself with the accepted environmental standards are established. Environmental certification is a voluntary procedure, but passing it significantly increases the competitiveness of your products.

Environmental Certificate Required for Greenhouse Farming
Example of environmental certificate in Russia

To obtain an environmental certificate, you will need to submit the following documents: a free-form application, a technical description of the product, a certificate of compliance with GOST of Russia, if any, and a certificate of state registration of the applicant company. This list may change depending on the type of certified product. Greenhouse farming in Russia as a business with high profitability.
The procedure for passing environmental certification consists of several stages. First, the applicant company provides the certification center with all the necessary documents, as well as an application for a certificate of compliance with environmental safety. Then the certification center analyzes the provided product documentation, gets acquainted with the production process, makes a decision on the submitted application, signs a contract for the implementation of the application, analyzes test reports, audits the production or technical process, selects samples for testing, conducts product testing, and finally decides whether to issue or refuse to issue an environmental safety certificate.

If a positive decision is made, a certificate of conformity is issued and then passed to the applicant. The cost of passing the environmental certification procedure is 55 thousand rubles.
So, let’s sum up. Investments in the flower business are 2-3 times higher than investments in growing vegetables. And growing greens is 2 times more profitable than growing vegetables. However, the final decision about what you will grow on your site should be made only after a thorough marketing study of the region where you live and the local market. OK, let’s continue to consider greenhouse farming in Russia as a business with high profitability.

Pay attention to what products are most in-demand, what your competitors offer and at what prices, how they sell their products. Also, take into account the climatic features of the region and your opportunities to start a business. For example, if you plan to work at first only with retail, you should give preference to greens (dill, lettuce, parsley, onions), radishes, strawberries. In addition, you can increase your profit by growing and selling seedlings of various garden and garden crops in early spring.
If you expect large revenues and fast payback, then you need to bet on wholesale sales. In this case, experts recommend paying attention to tomatoes and cucumbers. Finally, if you already have access to the owners of restaurants and cafes and an agreement with them on direct deliveries, you can take the risk and start growing more whimsical plants, the cost of which, accordingly, will be higher than the cost of common crops.

Also, consider the distance between your farm and potential customers. The further away from the city your greenhouses are located, the more profitable it will be to grow “light” products (that is, those that will weigh less and will not be too demanding for storage and transportation conditions). Greenhouse farming in Russia as a business with high profitability.
Finally, profitability depends on the selected process. But it is not so simple. For example, the method of hydroponics provides the maximum yield at the lowest cost when growing vegetables good direction for greenhouse farming in Russia as a business with high profitability. This technology can be used with equal success by both small greenhouses and large agricultural enterprises. However, its main drawback is the low taste of the finished product.
Often vegetables grown in this way, although cheap, have almost no taste. Accordingly, they will not be in high demand either. For this reason, it is recommended to use a traditional system with the use of fertilizers, even if it is more expensive, but in this case, it is quite justified.

How To Issue Documents For Growing Vegetables In a Greenhouse In Russia

If the land plot for the construction of greenhouses is your property and you do not plan to work on a large scale, hire additional workers and sell finished products to large companies, then no special documents are required for the organization of such a subsidiary farm. To implement the harvest, it will be enough to take a certificate that the land on which the greenhouses are located belongs to you.
If you are going to attract additional labor, organize a larger production and sell your products through stores, retail chains, as well as supply it to public catering establishments, you will have to register as an individual entrepreneur or organize a private agricultural enterprise. In the latter case, you will be entitled to certain tax benefits for greenhouse farming in Russia as a business with high profitability.

State registration of a farm company is carried out in the same manner as was established for the state registration of individuals as individual entrepreneurs. Only the head of the farm is registered. To do this, they must submit the following documents to the registration authority:

  • application for registration (form established by law);
  • agreement on the establishment of a peasant (farm) economy (if necessary);
  • a copy of the main identity document of the head of the farm (passport);
  • a document confirming payment of the state fee (the original);
  • copies of documents confirming the relationship/partnership of members of the farm.

What Equipment Are Needed For Greenhouse Farming In Russia As a Business With High Profitability?

Regardless of which crops to grow in greenhouses, you have chosen, whether the land for their construction is owned or leased, whether you are going to make do with your savings or plan to take out loans, you need to start organizing this type of business by drawing up a detailed business plan.
In it, you will be able to assess the situation on the regional market, determine the format of your future business (it can be either seasonal with the use of cheaper and simpler farm greenhouses, or permanent with the construction of industrial greenhouses with constant heating and lighting), evaluate sales opportunities and search for buyers, calculate costs and profits, sources of project financing, etc. the Cost of organizing such a business directly depends on the type of greenhouses that you will use. The most common in Russia are greenhouses of two types – film and glass. Film or polyethylene greenhouses have a lower cost.

Greenhouse farming in Russia

The disadvantages include low light transmission capacity of the film and its insufficient strength, as well as increased humidity inside the greenhouse. On average, once a season, these greenhouses are subject to replacement. “Productivity” with the use of film greenhouses will also be lower, because plants will have to be planted in them later, which, accordingly, increases the time of ripening of the crop. Glass or winter greenhouses have a more complex design and are more expensive than film ones.
The advantages include their durability, relative strength, and good light transmission capacity. Under certain conditions, they can grow vegetables even in the winter season. But still, glass is a fairly fragile material, and the cost of replacing the broken glass will be higher than the cost of replacing torn polyethylene, which should also be taken into account when making estimates for greenhouse farming in Russia as a business with high profitability.
Recently, greenhouses of the third type, made of polycarbonate or acrylic, which is more durable than glass and film, has good transparency and light scattering, are becoming more common. The light level in a polycarbonate greenhouse is twice as high as in a polyethylene greenhouse.

An additional advantage is that there is no need to make a Foundation, as in the case of glass greenhouses. But still, unfortunately, polycarbonate greenhouses are also not perfect and have their drawbacks. First of all, this applies to arched structures, which are the most common. Their popularity is explained only by the fact that it is more profitable for producers of greenhouses to produce such structures since the standard polycarbonate sheet is 2.1 by 6 meters. There are also sheets up to 12 meters long, but they are difficult to transport, and they are inconvenient to work with.
A standard polycarbonate sheet is bent in an arc so that the height of the structure is usually 3.8 meters, and the length is 6 meters, respectively, although these parameters can be increased or reduced if necessary. This greenhouse is considered small in size. With intensive cultivation, the land in it is quickly depleted, so it is necessary to fertilize it regularly. The main drawback of an arched polycarbonate greenhouse is the uneven lighting and high light reflection, which results in only a part of the plants being well lit. To eliminate these disadvantages by increasing the flow of light, you can make the roof of the greenhouse not semicircular, but flat, and the Northern part of the greenhouse – opaque.

Plants in polycarbonate greenhouses can be planted directly in the ground, but in this case, it will be difficult to maintain the recommended temperature regime. Experts still recommend using so-called decking, which is a metal mesh stretched on a wooden frame. Along the perimeter of such a greenhouse, there are several rows of decking, between which a small free space is left to provide access to them.
As in conventional greenhouses, in polycarbonate structures, it is necessary to ensure constant air exchange, for which end-to-end fans are used. You can turn them off in the summer to save money. One mechanical through fan will cost 6.5-7 thousand rubles.
The above-mentioned hydroponics system, with all its disadvantages, allows you to reduce the cycle of growing vegetables to 2-3 weeks (which is 5-10 times faster than with traditional methods of cultivation) with a yield of up to 2-3 tons of products per hectare. To maintain such a greenhouse, 5-7 employees per hectare of the usable area will be required.
When calculating the cost of building one greenhouse, consider the following expenses: obtaining project documentation for the greenhouse itself and all its external networks (electricity, water supply, etc.), which must include a specification for all the equipment used; purchasing planting material plus funds for current expenses until the first profit is received.

If you are only looking for a plot to house your greenhouse, then consider the location of the necessary communications. The further they are located from the site, the higher the costs of summing up. Pay attention to the area around the intended location of the greenhouses. It should be flat and spacious enough to organize access roads. If you rent land, give preference to prefabricated greenhouse structures. It is more expensive than non-selective ones, but these costs are justified because if something happens, you can easily transfer them to a new place.
A lot of disputes among entrepreneurs working in the “greenhouse” field, raises the question of the need to invest additional funds in heating greenhouses. Some believe that you do not need to invest a lot of money on modern expensive equipment. Others believe that higher costs at the first stage will be compensated by higher production efficiency in the future. Whatever your opinion, experts recommend that you start saving money from the profits you receive and gradually upgrade the equipment you use for greenhouse farming in Russia as a business with high profitability. Do not forget that heating and electricity account for up to 90 % of all current expenses for the maintenance and maintenance of greenhouses.

How Much Will We Spend And How Much Will We Earn?

Among the main expenses for organizing a greenhouse economy are the following: rent or purchase of a plot, construction of greenhouses and purchase of necessary equipment, working inventory, purchase of plants, fertilizers, and wages for farmworkers of greenhouse farming in Russia as a business with high profitability. For one greenhouse with an area of one hectare with all the necessary equipment, you will need from 300 thousand rubles (the final amount depends on the type of greenhouse). Another 200 thousand rubles will be spent on inventory, seedlings/seeds, fertilizers.
A minimum of two or three workers will be required to maintain a large greenhouse. The functions of the farm Manager can be performed independently at first. For medium-sized enterprises, about ten workers per hectare of land allocated for greenhouses are taken into account. Using the latest technologies and modern equipment (with automatic irrigation and heating) will significantly reduce the number of staff.
It is very difficult to determine with high accuracy the estimated revenues from greenhouse farming, since, as in the case of profitability, it is directly affected by several significant factors: the region (in some regions it is possible to get up to four crops a year and in others – no more than two), the distance of the farm from the city (which directly affects transport costs), sales channels, and so on. the most realistic is the payback period within two or three years for your greenhouse farming in Russia as a business with high profitability.

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