Newark Hydroponic Greenhouse Project

1. Newark Hydroponic Greenhouse Project SIPA Newark Capstone Team: Ryan Chan Christopher Santulli Kesha Thomas McBeth Mark Viehman Advisor: Ivan Gonzalez May 4, 2011

2. Project Description • Operations: The Newark Conservancy will operate the greenhouse with subject matter expertise from a consultant for the first year • Greenhouse Goals: • Create a self-sustainable business that can support the greenhouse’s social missions • Enhance the job skills of the City's ex-offender population • Produce and distribute food in a manner that is environmentally sound • Support the city’s mission of creating economic opportunity for its residents and enhancing the vibrancy of Newark • Proposed strategy for self-sustainability: • Sell to institutional clients

3. Central Questions • What are the best practices for the successful operation of a hydroponic greenhouse? • Does demand for its produce exist in Newark? • How can it maintain its social missions and be financially self-sustaining?

4. Scope of Work • Conduct a demand study by researching the market and identifying and surveying anchor institutions in the Newark area • Research similar greenhouse operations to identify successful business practices • Produce a report detailing our findings, our methodology and the research conducted • Develop a production forecasting tool to help the Newark greenhouse operators project revenue and expenses

5. Agenda • High-Level Findings • Demand Study • Best Practices • Production Model • Future Considerations • Q & A

6. High-Level Findings • It is difficult for hydroponic greenhouses to be profitable • Experienced personnel are critical • The produce market is extremely competitive • The location and size of the greenhouse is critical to its financial success • Supplying institutional clients poses unique challenges

7. Demand Study - Goals • Research produce demand among Newark-area anchor institutions • Examine product lines needed to satisfy the demand of anchor institutions • Assess opportunities to market and sell local produce and promote the Newark greenhouse’s social mission • Identify operational challenges and other barriers to entry into the institutional market

8. Demand Study - Methodology • Potential clients • “Eds and Meds” • Methodology • Interviews, surveys and research • Anchor profiles • Overview of operations • Assessment of the extent to which each anchor institution values the multiple missions of the greenhouse • Description of current produce suppliers

9. Demand Study - Recommendations • Potential institutional clients: • Gourmet Dining, LLC • New Jersey Institute of Technology • Kean University • Seton Hall University • Product lines and volumes: • Remain flexible in production to cater to institutional and customer demands • Sell high-margin produce to subsidize primary operations • Pricing: • Enter into contract agreements with institutions wherever possible • Managers should stay aware of pricing trends in the market to exploit profitable opportunities

10. Best Practices - Goals • Identify best practices and lessons learned as they apply to the Newark greenhouse’s implementation and operation • Analyze production and distribution processes • Learn Client Relationship Management and Marketing strategies • Identify strategies to overcome operational challenges to entering the institutional market • Consider possible paths to expansion

11. Best Practices – Methodology • Operational best practices • Implementation lessons learned • Client relationship management • Production management and forecasting • Transportation and distribution • Overcoming barriers to entry into the institutional market

12. Best Practices - Recommendations • Operational best practices • Hire an expert grower for ongoing operations • Consult a third-party expert on appropriate greenhouse technology • Understand packaging requirements for different types of clients • Implementation lessons learned • Give special attention and priority to the greenhouse site location • Test water quality • Ensure reliable access to water and bathrooms • Adjust expectations for first-year cost overruns • Find a niche within the market

13. Best Practices - Recommendations • Client relationship management • Meet with institutional clients at regular intervals • Highlight comparatively smooth production and pricing • Leverage the social and environmental missions • Consider hiring a full-time Business Manager • Transportation and distribution • Utilize the service of a values-based food distributor

14. Best Practices - Recommendations • Addressing barriers to entry into the institutional market • Food safety practices certification • Insurance • Production management and forecasting • Forecasting will require preparation and flexibility • Monitor price and produce trends • Plan for demand changes based on institutional seasonality • Variety is important to customers • Keep in mind what types of produce are more cost efficient

15. Production Model • Description of the Production Model • Revenue • Expenses • Assumptions • Production is highest in June • Temperature is kept constant throughout the year • Nutrients do not vary throughout the year • Annual output is based on output in March • Usage of lights • Demonstration

16. Considerations for the Future • Expansion • Build a larger greenhouse • Expand at a later date on the same site • Developing a local food network • Economies of scale in the Newark greenhouses • Reclamation of brownfields or vacant lots • Increase in city employment • Branding opportunity

17. Newark Grown

18. Thank You! Questions?