Collaboration and consolidation will create the scale needed for greenhouse construction

The war in Ukraine, following hot on the heels of the Covid-19 pandemic, has resulted in challenging times for the greenhouse construction industry. Just as many projects were able to get underway again, the sector faced significant increases in the cost of materials.

Dutch builders and technology suppliers are responsible for 80 to 90 per cent of the world’s new greenhouses. Annual construction had been running at around 3,500ha, mostly glass. However, while many constructors think the demand is certainly still there – the disruption to international floriculture and fresh produce supply chains over the last couple of years has led to new opportunities, as ‘local’ production assumes more importance – some say they ‘wouldn’t be surprised’ if less will be built this year and next.

Rising raw material prices

“Greenhouse construction costs have risen 20 to 30 per cent in the past year to 18 months due to the higher cost of energy-intensive raw materials, especially steel and aluminium,” says Pieter van Berchum, recently retired as operational director of Gakon Netafim Greenhouse Projects. He is just coming to the end of his term as a board member for AVAG, the trade body for the Netherlands greenhouse construction industry.

Glass prices have increased, too, he says. More than 50 per cent of greenhouse glass had been sourced from Russia, Belarus, and Ukraine. Now, the market relies on Asia, which affects transport costs and import duties.

Project scheduling has also been challenging because some materials suppliers have reduced capacity to control their costs, leading to uncertain delivery times. Growers and investors are also faced with higher interest rates.

Some constructors say higher costs have led growers to cut back on project specifications elements. Others say project costs have been impacted but not affected customers’ decisions.

Heat pumps are hot

“We explain to customers that this is an investment in a facility with a life of 20 years or more,” says Mike Vermeij, CEO of Bom Group, one of the largest Netherlands-based international constructors. “Over that period, the extra costs per kg or stem of product is less significant.

He adds, “Overall, it’s the higher energy costs growers are facing that is having a greater influence on what they decide.”

He points to the four greenhouse vegetable nurseries Bom has recently built in the UK that use heat pumps for a sustainable heat supply. “This is a major trend globally,” he says. “The technology is proving itself as a way for growers to depend much less on gas.”

Solar panels

Solar panels are also finding a place on the greenhouse roof. “They are particularly relevant to floriculture, where you’re looking for shade for most crops,” says Mr Vermeij.

“Last year, we completed around 15 projects partially re-glazing cultivation or service areas with solar PV. At the same time, we often replace the remaining glazing with diffuse glass to improve light penetration around the crop.”

Semi-closed greenhouse

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The need to reduce energy use has seen a lot of focus on the ‘semi-closed’ greenhouse and its associated technology, with development primarily driven by the edible crops sector.

“Semi-closed is a very broad concept and does not always have to involve a lot of technology to achieve the desired result,” says Mr van Berchum.

“Going forward, the main driver for technological development will be the ability to control micro-climates in fine detail so all plants receive optimum conditions. There will also be a focus on ‘big data’ ¬– using data recorded from climate computers to control your climate computer.”

Bom Group was one of the pioneers of semi-closed greenhouses. “We’re fully committed to it for high-value crops, but for most ornamentals, the investment required isn’t justified – one reason being there is still enough production capacity or potential in regions of the world where the climate is more benign,” says Mr Vermeij. “In most situations, a normal high-tech glasshouse is enough.”

Some elements of the semi-closed concept could apply to floriculture, but the level of investment rules out even a ‘halfway house’ in most cases. It does have a place in areas with more challenging environments or where there is a demand for higher value crops such as Phalaenopsis orchids and cut roses, says Mr Vermeij.

“There is particular interest in new builds where breeding companies are now co-investing with growers to develop new crops and markets, and we expect some will be looking to use semi- or even fully closed technology in the near future,” he says.

Adaptive greenhouse design

Mike Vermeij, CEO of Bom Group.

Here is a sense of adapting greenhouse design and specifications to local conditions and resources, says Jouke Campen, international project manager for greenhouse horticulture at Wageningen University and Research (WUR).

WUR’s adaptive greenhouse design computer model helps those specifying new greenhouses to tailor design and technology to the climate and market demands. Data on climate, available services such as power, water and labour, and crop type is used to generate a design calculated to generate optimum yields and quality for the least inputs.

“There has been a lot of interest worldwide,” says Dr Campen. “That includes investors looking to gain an insight into the feasibility of their projects, growers in places like the Netherlands setting up nurseries in other regions who want to know what level of technology is appropriate, and governments developing food security strategies.”

He says the model can help avoid ‘over-specifying’ a project. “This can be the case where market returns can’t justify the investment, for example, in floriculture, if there is little price premium for quality,” he says.

Most of the interest in the model so far has come from the greenhouse salads sector. Still, Dr Campen says there are benefits for the floriculture industry – to optimise irrigation and fertigation systems, for example, or identify how to control humidity more efficiently.

Climate change

Pieter van Berchum was formerly the operational director of Gakon Netafim Greenhouse Projects.

Undoubtedly, wherever growers are in the world, climate change is becoming a challenge. “That’s especially so for ornamentals,” says Mr Vermeij.

“For example, most production in China is in polytunnels, but temperatures there are becoming more extreme, and drought is more frequent. So, growers are moving to glasshouses with mid-range technology to improve quality and enable year-round production. Bom has recently built several hectares of this type of glasshouse in China for three companies producing solely for the home market.”

Where will future growth come from?

Pieter van Berchum suggests most growth in terms of new projects in the last few years has been in North America, Australia, the Middle East and Central Asia, driven by consumer demand for greater food security and fewer food mile

More recently, growth has slowed in North America, which Mr Vermeij puts down to a combination of interest rates, costs, and market pressures. Local politics also play a part in Canada, where municipalities have turned against large concentrations of high-tech greenhouses, so planning permissions are taking longer.

In contrast, geopolitics has made Russia a no-go area for international constructors, says Mr van Berchum.

No matter where you look, projects are getting bigger, leading to more collaboration and consolidation among greenhouse builders and technology companies.

“For some, that has entailed private equity investment,” says Vermeij. “For Bom and some others, we didn’t want to get involved with private equity, so instead, we scaled up by joining forces, creating Atrium Agri. We can support each other but remain as separate companies.”

He adds: “Being able to address bigger and more complex projects is essential for long-term stability and for growth – for which we are prepared and ready.”

This article was first published in the January 2024 issue of FloraCulture International.