Debunking the Myth that Buying the Cheapest Leads to Cutting Costs for Growers
/In the lush, green world of commercial cultivation, a silent battle rages beneath the surface. It's not against pests or diseases (although that battle certainly exists), but rather, against a more insidious enemy – the allure of cheap inputs.
Like a siren's song, the promise of immediate savings beckons growers, whispering of reduced costs and higher profits. But as many have discovered, this path often leads to treacherous waters, where the true cost of "cheap" becomes painfully apparent.
Imagine a seasoned cannabis grower, his greenhouse a testament to years of hard-won knowledge. He's faced every challenge the industry could throw at him, from regulatory hurdles to market fluctuations. Yet, as he surveys his latest crop, a nagging doubt creeps in.
Despite his expertise, his yields aren't what they should be. The plants, while healthy, lack the vigor and potency he knows they're capable of. As he racks his brain trying to find the problem, the realization dawns - in his quest to cut costs, he may have inadvertently cut corners on the very foundation of his operation by using a cheap input – his growing media – coco coir that he got at a discount because it had been in storage rather than freshly harvested.
This scenario plays out across the cultivation industry, from small-scale microgreen operations to multi-state cannabis enterprises. The pressure to remain competitive in a rapidly evolving market drives many to seek out the lowest-priced inputs, often at the expense of quality and long-term sustainability.
But what if this approach is fundamentally flawed? What if, in our rush to save pennies today, we're sacrificing dollars tomorrow?
It’s time to delve deeper into this topic and challenge the conventional wisdom that equates "cheapest" with "most cost-effective" by exploring why the old adage "cheap is expensive" holds particularly true in the world of cultivation and how a shift in perspective – from short-term savings to long-term value – can revolutionize a grower's approach to inputs like growing media.
Cheap is Expensive
The phrase "cheap is expensive" encapsulates a profound truth that resonates across industries, but perhaps nowhere more acutely than in commercial cultivation. At its core, this axiom warns against the false economy of choosing the lowest-priced option without considering its long-term implications or hidden costs.
In the context of growing operations, this principle manifests in myriad ways. Consider the cannabis cultivator from our earlier example who opted for the cheapest growing medium available. Initially, the decision appeared sound – lower input costs should translate to higher profits, right? However, this simplistic view often crumbles under the weight of reality. Did our grower actually save money? Or did he cut costs from one supplier but then, have to spend a lot more money on labor, other products, and other suppliers later to fix the problems that came from cutting those upfront costs? Did he save money or just move costs (and end up spending more)?
Here’s an example. Buying the cheapest inputs often equates to buying inconsistent inputs, which leads to time lost and money spent to battle problems. If you buy cheap growing media, you’ll likely end up battling variations in EC, pH, and quality. You may not notice the amount of variation, so you’ll use your regular SOPs but lose crop quality or yield. Until you realize you have a problem, you’ll waste time managing it, and when you do notice the problem, you’ll lose time and money identifying it and fixing the ramifications of the low-cost input.
Let's break it down using numbers that are easy to work with. Imagine a high-quality growing medium might cost $2 per plant, while a cheaper alternative is available for $1.50. For an operation growing 10,000 plants per cycle, with five cycles per year, this difference could amount to a $25,000 savings in upfront costs. On paper, it's a significant sum that could be allocated elsewhere in the business.
However, the true cost begins to reveal itself over time.
The inferior medium might not provide optimal nutrient retention, requiring increased fertilizer application. A 20% increase in fertilizer use would add another $0.50 cents per plant, or $25,000 per year, which by itself wipes out the entire “cost savings” supposedly gained by switching to a cheaper medium.
Cheaper media often require the use of additional inoculants or amendments that may not be required with premium growing media. There are a wide-range of products that cultivators might feel compelled to use and many of them, especially inoculants, are expensive. This can add another $0.25 cents per plant, or $12,500 per year.
Additionally, many cheaper substrates come with an increased risk of pests and pathogens. Putting aside the enormous financial cost of total crop loss, these products often require higher IPM costs, both for the IPM products and for the additional labor required to apply them. This typically increases costs by at least $0.30 cents per plant, or $15,000 per year in our example.
But the most significant impact often comes in yield and quality. If the subpar growing medium results in just a 1% decrease in yield, a cannabis operation producing 4 oz. per plant and 200,000 ounces per year, and selling those ounces for $250 each, would generate $50,000,000 in revenue per year. A 1% decline in yield will cost the grower an astounding $500,000!
All told, in this very realistic example, cultivators switching to a cheaper medium, thereby “saving” themselves $12,500 per year, in fact, end up costing themselves an extra $552,500 per year.
Not only is this terrible for the company, it’s likely that, as the negative results of the “cost-cutting” experiment become clear, the person who greenlit it might find themselves unemployed.
The ripple effects extend beyond direct financial impacts. Inferior growing media can lead to inconsistent crop quality, potentially damaging a grower's reputation and relationships with buyers. In an industry where quality and consistency are paramount, this hidden cost can be devastating in the long run.
In essence, the pursuit of savings through cheap inputs often leads to a false economy. The expected cost reductions not only fail to materialize but can transform into significant additional expenses, eroding profitability and potentially threatening the viability of the entire operation.
A more holistic approach to cost management is not just beneficial, it's essential for long-term success in the competitive world of commercial cultivation.
Consider Total System Costs and Think Long-Term
The temptation to focus on immediate cost-cutting can be overwhelming. However, this short-term perspective often obscures the bigger picture – the total system costs over the long term. Successful growers are increasingly recognizing that a myopic focus on reducing individual input costs can lead to suboptimal outcomes for the entire operation.
Think of it this way. The cost of any one input doesn’t equal your total system cost. People often mistake saving money on one or two inputs as good, but when they step back, their overall costs go up. It may not be obvious. For example, yields might go down a bit – by 1% or 2%, quality might go down a bit, crops might not sell as much, or crops might not sell for the same price as before.
Bottom-line, when you buy cheap inputs, you save pennies up front, but you make less in dollars later. On the other hand, when you buy higher quality inputs that are engineered so you can do more with less, you’ll pay a bit more up front, but you’ll use less, get better results, and make more in dollars later. It’s critical that you understand the ratio of pennies out vs. dollars in!
Therefore, to truly understand the impact of input choices, cultivators must adopt a systems thinking approach. This means considering how each decision ripples through the entire growing process, from seed to sale.
For instance, while a cheaper growing medium might reduce initial expenses, it could necessitate changes in irrigation systems, fertilizer regimens, pest management strategies, and more. Each of these adjustments carries its own costs, both financial and operational.
A study by the Agricultural Economics Department at the University of Nebraska-Lincoln highlighted the importance of understanding the interplay between different operational costs. The researchers found that in corn production, machinery operating costs could range from 20% to 44% of all non-real estate costs, depending on the cultivation method. This underscores how a decision in one area (e.g., choosing a no-till system to save on labor and equipment costs) can significantly impact other aspects of the operation – the ripple effect.
Moreover, the long-term perspective is crucial in an industry where lean operations is not just a buzz phrase but a necessity for survival. A report from Harvard Business Review emphasizes that businesses should reframe how they think of cost-cutting – not as short-term savings but as investments in creating the value that makes a company stronger over time.
Yes, this can mean investing in areas that drive improvements in long-term efficiency, productivity, and quality, even if they require higher upfront costs.
For cultivators, this could mean investing in advanced growing media products that improve plant health, consistency, and crop yields. While the initial outlay might be higher, the cumulative benefits – reduced need for inputs, improved crop quality and yield, reduced labor costs, and potentially higher market prices – can far outweigh the upfront costs.
Ultimately, the most successful cultivators are those who view their operation as an integrated system, where each component contributes to overall efficiency and productivity. By considering total system costs and adopting a long-term perspective, growers can make informed decisions that not only reduce expenses but also drive sustainable growth and profitability.
This approach transforms cost management from a reactive, piecemeal process into a strategic tool for building a resilient and thriving cultivation business.
Switch to bio365 Growing Media
In the quest for optimal cultivation practices, the choice of growing media stands as a pivotal decision point. bio365, a leader in innovative growing solutions, offers a compelling case for why investing in premium growing media is not just an expense, but a strategic move towards enhanced productivity and profitability.
bio365's growing media is engineered to provide a superior environment for plant growth and health, addressing many of the challenges faced by commercial cultivators, particularly for controlled environment agriculture (CEA). While the upfront cost may be higher compared to conventional options, the benefits quickly accumulate, often surpassing the initial investment.
bio365 is the only 100% clean, biologically-active growing media available. As such, it is teeming with millions of beneficial microbes that plants need to thrive without the use of expensive amendments, which provides immediate cost savings to growers.
One of the key advantages of bio365 media is its exceptional water retention and accessibility properties. This leads to more efficient irrigation, reducing water usage by up to 30% compared to standard media. For a large-scale operation, this translates to significant cost savings.
The nutrient retention capabilities of bio365 media are class-leading. Its balanced porosity and cation exchange capacity ensure that nutrients are held in the root zone, readily available for plant uptake. This can lead to a reduction in fertilizer use by up to 20% – another cost savings for growers.
Additionally, many growers are able to use less growing media when they switch to bio365 due to the way the media is engineered, which adds another savings opportunity. For example, many growers who previously grew in 3 gallons of competitor media switched to 2 gallons of bio365 and grew the same yield or more in 33% less soil.
Perhaps most critically, bio365 media consistently delivers superior plant health and vigor. Growers report yield increases of 10%+ when switching to bio365, with some seeing even higher gains in specific crops. For high-value crops like cannabis, where each percentage point in yield can represent substantial revenue, this improvement can be transformative.
Moreover, the consistency of bio365 media leads to more uniform crops that are healthier and higher quality, which are crucial factors in commercial cultivation. This uniformity not only simplifies management practices but can also command premium prices in the market, further enhancing the return on investment.
While the switch to bio365 growing media requires an initial increase in expenditure, the cumulative benefits – reduced input costs, increased yields, and improved crop quality – often result in a positive return on investment (ROI) within the first growing cycle. As these benefits compound over time, the true value of this investment becomes increasingly apparent.
In essence, choosing bio365 growing media exemplifies the principle of strategic cost management. It's not about spending less, but about spending smarter – investing in quality inputs that drive efficiency, productivity, and ultimately, profitability across the entire cultivation system.
Key Takeaways
As we navigate the complex landscape of commercial cultivation, it becomes clear that true cost-effectiveness lies not in chasing the lowest price tag, but in making informed, strategic investments. The journey from viewing inputs as mere expenses to recognizing them as catalysts for growth and efficiency marks the transition from short-term thinking to long-term success.
The cultivation industry stands at a crossroads. On one path lies the familiar territory of immediate cost-cutting, fraught with hidden pitfalls and long-term consequences. The other path, while requiring more initial investment and strategic consideration, leads to sustainable growth, improved quality, and ultimately, greater profitability.
As you reflect on your own cultivation practices, consider this: Are your current choices laying the groundwork for future success, or are they sowing the seeds of future challenges?
In the end, the most successful growers are those who recognize that in cultivation, as in life, you reap what you sow. Choose wisely, invest strategically, and watch your operation not just grow, but thrive.
Contact us to learn more about bio365 growing media and the long-term value it can deliver to your cultivation operation.