Capsicums

Commercial covered capsicum needs at least 4,000sqm of flat land that can support greenhouses or tunnel houses, plus space for infrastructure like driveways and other buildings.

Design and build

The cost of building mid-range infrastructure for a covered capsicum crop sits around $1.7M. This can seem daunting, but you can also reach commercial scale and achieve excellent returns with a fairly small land area.

Greenhouse cropping is very technical and it is important to get advice from a qualified, experienced consultant when you are planning and building your system. Get advice about details like:

• row width
• plant spacing
• substrate
• irrigation
• heating systems
• computer controls systems
• hygiene.

A common layout for standard capsicum has 4 or 5 plants per square metre, with each plant pruned to two stems. The greenhouse should be high enough to support a 4m tall plant, and will need pipe rails and other infrastructure to guide picking trolleys and high crop work trolleys.

Other decisions to make before planting include:

• which variety to grow
• how to balance the nutrient levels and temperatures throughout the life of the plants, to encourage the right type of growth during root system establishment, vegetation growth, flowering and fruiting.

Learning how to grow different varieties of capsicum takes time and experience.

Pruning and light levels

All parts of New Zealand have enough natural light to support capsicums. It is important to manage pruning so that each plant can make use of the available light, or they will drop their fruit.

The approach to pruning also needs to be balanced against the planting density and internal greenhouse layout.

Selling your crop

Most small growers sell direct to a wholesaler, who will then on sell to retailers. Growers can choose to pack their own product or use the wholesaler's packing facilities. Larger companies deal direct to supermarkets and export markets.

In general, you're likely to need around 4 to 6 permanent staff per hectare of capsicum plantation, but this varies depending on the cultivar (type) of capsicum you're growing and your processes or automation levels.

Greenhouse cropping provides a steady amount of work year-round, which reduces the need for seasonal labour and makes it easier to secure and keep workers. Seasonal staff are still needed for  picking in summer, which is the peak season for capsicum production.

Consultants

Greenhouse growing is highly skilled and technical. It is difficult to find all of the required knowledge and expertise in one person, so it is important to choose consultants with specific skills and experience to help you.  Ensure that your consultants have either relevant experience as head growers or operation owners, or specialist qualifications and knowledge, such as plant nutritionists.

Manager

Operating a greenhouse requires a manager with an understanding of plant physiology, a high level of technical ability, horticultural experience and people management skills, including the ability to manage changing seasonal labour demands.

Understanding whenua management

Team leader

Depending on the size of the operation you may need one or more team leaders to direct and instruct the crop workers. Team leaders spend more time on inspection and monitoring tasks including detection of diseases and pests, which are more likely to be detected later if there is no monitoring programme in place. 

Crop workers

Many of the tasks performed by crop workers are repetitive but crucial for high production outcomes. Crop workers usually start on minimum wage, moving up to around $25 per hour including incentives as proficiency and experience increases.

Typical day-to-day tasks when working in a covered crop include:

• planting
• plant work such as clipping and twisting, to train plants to grow up a string
• pruning, de-lateralising and de-leafing
• mixing fertiliser
• pest and disease monitoring, identification and management
• spray handling and application
• harvesting.

Depending on your operation, you may also need forklift and truck drivers or maintenance workers.

As with any business, there are compliance regulations like health, safety and wellbeing, employment law and tax obligations. Some of the key industry-specific compliance obligations are listed below.

Levies

Growers are supported by Horticulture New Zealand as well as industry body Vegetables New Zealand.

• Horticulture New Zealand collects a compulsory levy of $0.14 per $100 of sales.
• Vegetables New Zealand collects a compulsory levy of $0.30 per $100 of sales for capsicums sold in New Zealand, or $0.20 per $100 of the export price received by the grower after deduction of all offshore costs (including international freight).

These levies can change, so check their websites to make sure you have the latest information.

Horticulture New Zealand membership levy

Vegetables New Zealand commodity levy

Food Safety

All growers must meet the requirements of National Programme 1 under the Food Act 2014 to ensure the produce you’re supplying to the market is safe to eat. The requirements include rules about how the crop is handled, managing spray residue, and withholding periods.

National Programme 1

Food Act 2014

New Zealand Good Agricultural Practice (NZGAP)

NZGAP is a system that helps growers to keep up with compliance requirements. Becoming NZGAP certified:

• gives you confidence that you're meeting compliance requirements
• makes it easier to find out when regulations have changed, and
• makes your product more attractive to buyers.

NZGAP

Emissions

The Ministry for Business, Innovation and Employment (MBIE) estimates that the covered cropping industry in New Zealand created about 221 thousand tonnes of carbon dioxide emissions from heating in 2018. MBIE defines this type of heating as 'process heat' and provides more information about process heat in covered cropping and other New Zealand industries on their website.

Process heat in New Zealand

Process heat is usually generated by burning fuel. The fuel provider needs to purchase carbon credits to cover the emissions from the fuel they are selling. The cost of these carbon credits is passed onto the grower in the price of the fuel, so the growers pay for their emissions when they purchase the fuel for their heating system.

Fuels with higher emissions include higher costs because the fuel provider needs to buy more carbon credits. This means that growers will pay more in carbon costs for using coal than for gas. There are no carbon costs if you are using geothermal energy or burning recycled oil.

Capsicum growers can claim free carbon credits every year. This is called an industrial allocation. Growers who submit an annual return to claim these credits will get back, on average, around 60% of the carbon costs from process heating. If your allocation is higher than the amount of credits used, you can sell the extras. More information about claiming your industrial allocation credits can be found on the Environmental Protection Agency (EPA) website.

EPA industrial allocations

Council regulations

You may need permits for your tunnel house or greenhouse structure.

You may need a water consent. Getting access to irrigation water can be hard in some areas and you may need to get help from a hydrologist to put your application together. Make sure you can get a water consent before you commit to developing your whenua.

Talk to your local council about the environmental obligations for your area or catchment. Each council has their own rules.

Meeting council compliance obligations

Local council contact details

National policy statement for freshwater management (NPSFM)

The National Policy Statement for Freshwater 2020 gives local authorities direction on how they should manage freshwater under the Resource Management Act 1991. As such, some local authorities require growers and farmers to create a Farm Environment Plan (FEP). Make sure you're familiar with the FEP expectations in your region. Check with your local council about the requirements for your whenua or planned development.

Even if your region doesn't yet require an FEP, it's good practice to put one in place for your whenua as part of your business plan. The Foundation for Arable Research (FAR) provides templates you can use to create an FEP.

Developing a business plan

Farm Environment Plan templates

Capsicums require an environment where the temperature can be kept steady at 20°C during the day and no lower than 17°C overnight. Most commercial capsicum greenhouses are heated, which adds fuel costs to the operational overheads.

They are very sensitive to both low light levels and overly intense light. All parts of New Zealand have enough light for growing capsicum, but it is important to prune the plants properly so that they can use the available light, or they will drop their fruit.  

Capsicums like the sunshine but it is advised to grow with internal shade or diffused screens if growing in glasshouses. Plastic greenhouses provide natural diffusion so don't always need extra shade.

Capsicums are generally bought as seedlings to be planted in March through to July. Capsicum crops planted in March will  pick in 7-8 weeks, or as long as 8-10 weeks if planted in winter.  Picking will continue through the summer months before the crop comes to an end. Then plants are removed and the greenhouse prepared to receive the next year's plants.

The nursery grows the seedlings in small propagation blocks to keep leafy growth under control. The greenhouse transplants these into bigger substrate bags and will manage the rest of the plant's growth through pruning and nutrient balance.

With such a short time between planting and picking, growers can expect to be getting income from their crop within 3-4 months of planting. Time to achieving a return on investment depends on the sale price of the product, the efficiency of the greenhouse and the skill and knowledge of the grower and advisors. The average Return on Investment for growing capsicum will vary from 5 to 7 years.

New Zealand has enough natural light to support capsicum growing anywhere in the country, as long as the greenhouse is heated to a steady temperature of 20°C during the day and no lower than 17°C overnight.

The planting season generally goes from mid to late March until late July.

Capsicums do not thrive in conditions below 16°C.

Planning for climate change

Water is delivered by drippers directly into the growing substrate for each plant. The type of substrate being used, the planting density and the requirements of your variety will determine how many drippers and how much water you’ll need.

Plants use more water when they are getting more light, so light meters inside the greenhouse are used to measure light levels and to calculate how much water is needed.

Mineral and pH levels in your water source will need to be checked by a qualified fertiliser consultant, to make sure the natural levels will not damage your crop.

The amount and proportion of fertiliser that is added to the plants' water supply will change during the growing cycle based on the different stages of growth and fruiting. Unwanted salts from left over fertiliser also need to be managed. Work with an experienced, qualified consultant to build a regime that suits your operation and maintain a programme of regular testing to make sure everything is staying on track.

The total export value of fresh capsicum has ranged between $20 million and $35 million over the last 5 years. The export market is mainly supplied by two major growers. The largest export markets are Japan, Australia and the Pacific Islands, particularly Fiji and French Polynesia.

The domestic market is stable, with the price to the grower holding steady over the last few years at around $4 per kg for standard coloured capsicum and higher for specialty varieties.

Contact a wholesaler to ensure that you have a buyer for your produce before committing to the crop.

Some growers are looking at the use of supplementary lighting and other techniques to spread the season into winter, when prices are higher due to lack of supply. This would reduce the demand for imported overseas product, which can start to appear in shops around this time. The financial benefits of supplemental lighting in New Zealand have not been proven at this stage.

Operational costs for a covered growing system are higher than for outdoor cultivation. You need to allow for fertigation costs, equipment maintenance and overheads like electricity and fuel as well as annual operational costs.

An operational mid-range plastic greenhouse growing capsicums may have running costs of  around $850,000 to $900,000 per hectare per year, depending on scheduled maintenance and other factors.

It's important to get qualified, experienced advice on the set up and administration of your operation as well as preparation of your annual budget.

Search for funding opportunities

Benchmark farmgate return (to the grower, before any costs are deducted) for a standard block of capsicum are $120 per sqm based on a planting density of 4 plants / 8 stems per square metre. This works out to a gross income, before costs are deducted, of around $1,200,000 per hectare.

Speciality varieties such as sweet points require higher density plantings in order to achieve a similar return, as they have a lower rate of production.

It is important to seek advice from a qualified, experienced advisor when choosing varieties, planning the density of plantings and budgeting.

Seek advice early, before you invest in any design or development.

Talk to your local Te Puni Kōkiri office to see how they can support you through your decision-making process. They will be able to provide advice and find out whether your project qualifies for funding.

Talk to the industry organisation to see what support and resources they can offer to people thinking about growing capsicums under cover.

If possible, seek out advice from people who grow capsicums in your area as well as knowledgeable suppliers.

Talk to qualified consultants who are experienced in capsicum growing and other land developments in your area. They will be able to provide detailed, impartial advice on what will (and won't) work on your whenua.

Find your local Te Puni Kōkiri office

Vegetables New Zealand Covered Crops Advisory Group

This fact sheet provides general information to help start and inform conversations. It is not comprehensive enough to support detailed decision-making.

The information in this fact sheet has been contributed by Grower2Grower and Te Puni Kōkiri kaimahi. Data that has not been credited in the body of the fact sheet has been sourced from StatsNZ or provided by the contributors.

You can provide feedback on the content on this or any fact sheet by emailing us at TPKinfo@tpk.govt.nz