Can Urban Rooftop Microfarms be profitable?
Geoff Wilson
Urban Agriculture Network-Western Pacific
E-mail: fawmpl@powerup.com.au
Geoff Wilson is also Editor and Publisher of "Urban Agriculture Online"
magazine (Website: www.urbanag.info)
Introduction
This question has been answered (on paper) by the Southside
Chamber of Commerce in the city of Brisbane, in sub-tropical Australia.
The chamber calculated that with a little more than A$200,000 (approx.111.450
USD), a "rooftop microfarm" based on waste management could yield around
20% return on invested capital, and employ three to four people. The Southside
Chamber of Commerce Urban Agriculture Group is now considering how to fund
a pilot project in Mt Gravatt Central in Brisbane, in the state of Queensland
to prove the feasibility study findings.
Urban Microfarm Project
The urban rooftop microfarm project proposed at Mt Gravatt is best described
as a nutrient capture system that offers organic waste recycling as one
important community benefit, and reduction of the greenhouse gas, methane,
as another. It also provides income and employment
The project in suburban Brisbane's Mt Gravatt Central will further
develop and test organic hydroponics and integrate aquaculture with hydroponics
("aquaponics") to offer local restaurants a range of "organic" produce. It
will entail the following recycling activities (see Figure 1):
* collecting of food wastes from restaurants within half a kilometre
radius of Mt Gravatt Central;
* pulverising and heat-sterilising of these wastes, and perhaps
adding supplementary organic material or minerals for nutrient balance;
* feeding of the pulverised food wastes to an innovative worm
farm that provides a continuous flow of output rather than a batch process,
including:
(a) liquid nutrient for organic hydroponics;
(b) worm castings for containerised growing
of fruits; and
(c) surplus worms to be frozen and subsequently
fed to fish or crustaceans (crab, lobster);
* production of salad vegetables and herbs from organic hydroponics,
fruits in containers; and aquaculture; and
* selling of the produce to the same restaurants.
Food wastes that normally go to landfill and then cause methane
emissions can be reduced by earthworms to their soluble nutrient form for
recycling via horticulture. Methane is some 21 times worse for the environment
than carbon dioxide.
The Southside Chamber, of which the author is currently President,
sought and obtained a A$20,000 grant from the Australian Federal Government
of Employment Workplace Relations and Small Business in 1998 for its Urban
Microfarm Feasibility Study in Mt Gravatt Central. The commercial microfarm
concept was tested in 1999 by Integrated Skills Consulting Pty Ltd, of Brisbane.
The Feasibility Study
The Urban Rooftop Microfarm concept of the Southside Chamber differs from
many previous studies in that it involved an urban microfarm with three objectives:
* Production of food in a way that contributes actively to a better
environment using minimal space
* Provision of employment opportunities for people disadvantaged
in the labour market
* Achievement of sustainability through the profitable sale of
produce.
The project studied how a microfarm could be a business serving
a market within a small radius of a shopping centre - perhaps only half a
kilometre from the microfarm site. This included:
* the collection of waste food from nearby restaurants, hospitals
and clubs;
* the use of this waste in the worm farm.
* the microfarm concept situated on rooftops of commercial buildings
or at ground level in Mt Gravatt Central, growing salad vegetables and herbs;
and
* the selling of salad vegetables, herbs and fish back to the same
restaurants, hospitals and clubs.
Integrated Skills Consulting concluded that with a total funding
of A$212,000, a microfarm on a Mt Gravatt commercial rooftop (or equivalent
urban space) could be profitable after 17 months of operation. It could
then provide a return of around 20% a year on invested capital. It could
provide three to four new jobs for each microfarm, possibly jobs suited
to people with a disability.
The consultants said that a capital investment of A $212,455 would
ensure that the project would not run short of funds at any stage, but the
figure did not give a margin for error.
Cashflow projections were indicative only, because total annual
costing was applied evenly on a monthly basis. Nevertheless, the consultants
reported that the cash flow showed the expected generation of revenue and
expenditure under the economic conditions in Brisbane, Australia in 1999,
over the first 30 months, and with progressive repayment of A $32,000 in working
capital required to tide the enterprise during the start-up period (see Table
2).
The consultants emphasised that the resultant achievement of 19.4%
return on capital invested was conditional on relatively conservative production
targets being achieved, and on the following of a recommended marketing plan.
Key factors were proximity to markets, consistent supply of high quality fresh
produce and stable pricing.
The study set out specifically to:
* Identify the project's technical platform components, cost and
availability. The three were (a) horticulture which cost about A $50,000
to set up, (b) aquaculture which cost about A $14,000 to set up, and (c)
vermiculture which would cost about A $5,000 to set up - the total being
around A $70,000 for equipment specific to these enterprises, but not including
shared equipment such as a motor vehicle.
* Identify job and business opportunities and local target groups
for those opportunities. It was estimated that three to four jobs would
be created.
* Assess any support/concerns from the general and business community.
Noise and smell were found to be concerns, but support potential was excellent.
* Identify markets, supply sources, product acceptability. Indicated
markets within a kilometre were generally most enthusiastic because of the
waste management advantage.
* Determine commercial viability via a business plan outline. This
was proved - at least on paper.
* Examine benefits for the built and natural environments and identify
issues of concern to authorities.
* Provide a skills audit.
* Specify potential support for funding.
* Review training needs.
* Examine effects on current suppliers (e.g. rural farmers).
While there are conventional farms in the periurban areas of Brisbane,
these remain under threat from urban expansion, which brings up the environmental
concerns about the use of fertiliser and pesticides/fungicides and rising
production costs related to land value. The study took the view that an
Urban Rooftop Microfarm must avoid such problems by adopting a different
approach, using urban spaces not normally considered for farming.
It was clear that the expense of this approach (cost of urban
land) could be offset by greatly reduced costs in transport and energy use
and by providing high quality produce for a premium price, where it is needed.
Many potential customers interviewed said they were prepared to
pay about 10% more for organically grown local produce that was harvested
for same day sale. The 10% was elicited as a fair "premium" to pay, and probably
was a response based on existing premium expectations reported widely in
technical and consumer news media. They were also comfortable with the concept
of organic hydroponics via worm liquor developed from restaurant food wastes.
The study identified by-products of vermiculture as being important
to the final mix of products to be offered back to restaurants. Worm castings
could be used in containerised growing on rooftops, or sold as a valuable
soil additive sought by local home gardeners. Also, surplus worms produced
would be used as a food source in the secondary food production stage involving
holding mature fish or crustaceans in tanks after being bought from rural
aquaculture farms.
BOX
Worm liquor is less capable of precise specification than are
inorganic chemical solutions, because the nutrient content varies according
to the nutrient value derived from different worm food sources - in this
case from Chinese, Italian and Australian styles of cooking. However, the
nutrient balance of worm liquor can be adjusted by adding rock dust, a natural
mineral-rich product, or specific organic materials (such as pineapple tops
for extra magnesium). Some additional, simple heat processing would be required
to ensure pathogen-free and readily digested waste matter for the worms.
END BOX
The proposal required maximum production from a minimal area "footprint".
The site size chosen for the study was 600 square metres because such a
rooftop size in Mt Gravatt was more readily available than sites of 1000
square metres or more.
Of the various hydroponic systems reviewed in the feasibility
study and experience of a number of commercial growers, it was considered
that the locally-developed Boxsell "Ell-Grow" system of oval-channels most
readily met the needs of this project (in a sub-tropical climate).
The proposed layout for the hydroponics occupied 450 of the 600
square metres, with six rows of eight 3 x 2 metre tables, all covered with
hail mesh and insect screening. While the actual growing units formed the
core of the system and represented the largest single cost element, other
components were needed to complete the whole system. Using commercial worm
beds as a basis, a purpose-built system can be configured by stacking a number
of them in a robust pallet frame in such a way that they can be rolled out
and back for access like a series of filing drawers.
The other equipment was a shredding machine to reduce worm bed
material and vegetable matter to a finely ground mulch, a boiler to heat the
mulch to remove pathogens, small pumping systems to re-circulate the liquid
passing through the worm beds, storage for the worm liquor and a worm/castings
separator. An assortment of minor tools and equipment to assist in this process
would also be required.
Aquaculture is an established technology and there are many examples
of successful fish farms operating in Queensland, which could supply mature
fish or crustaceans to be held ready for local restaurants to purchase.
The fish species recommended was "Silver Perch" an Australian native freshwater
fish, which is ideal for the restaurant and retail markets. The use of aquaculture
to grow silver perch thus completes the circle of this proposal. But "Jade
Perch" (previously named "Barcoo Grunter") would be an easier option.
The feasibility study concluded that:
"the above systems combine to present a viable means of growing
a range of hydroponic vegetables, fruit, fish and worms. The system components
are either commercially available, incorporating proven technology, or where
they need to be purpose built, they can use proven elements that offer reliable
results.(...) It must be recognised that in the use of organic nutrient
from vermiculture processes as described, there is a less precise degree
of control of nutrient content than would be the case with inorganic fertilisers.
This is not considered to be a problem as plants naturally take up what
they require for growth from the available medium and the worm liquor analysis
shows that such an organic nutrient is rich in what they require. The main
difference will be that all of the nutrient available may not be taken up
and some will go to waste. (.. ) On balance The Urban Rooftop Microfarm
project appears to positively address all of the issues and should therefore
be accordingly judged as a feasible venture,"
The Southside Chamber's feasibility study also revealed a number
of issues requiring resolution in setting up an Urban Rooftop Microfarm.
They included:
* zoning issues: in Brisbane and other parts of Australia commercial
enterprises are generally banned from residential zones, while in commercial
zones there can be problems with perceived noise and smell issues;
* production facility operation issues such as noise; smell; traffic;
effluent and waste & exhausted nutrient solution disposal; lighting
impact and restrictions; signage and aesthetics;
* space and site management issues;
* health, hygiene and sanitation regulations compliance;
* food waste delivery and storage issues, which focused on the
regulations governing the handling, transport and storage of food waste in
Australia. These concern both human hygiene and animal protection from exotic
diseases, such as Foot and Mouth disease;
* workplace health and safety issues;
* benefits accruing to the built/natural environment; and
* compliance with municipal, state and federal regulations - particularly
in food safety for consumers.
The Southside Chamber of Commerce sells copies of its full report
of 156 pages for A $35 plus A $15 postage and packing - total of A $50. A
25-page summary of the report is available for A $5 per view at www.urbanag.info
or www.L-COCO.info
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