usa production market

8/6/2019 USA Production Market

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COST OF PRODUCTION AND MARKETOPPORTUNITY FOR VETIVER GRASS

Prepared forOahu Resource Conservation & Development

99-193 Aiea Heights DriveAiea, HI 96701

by theAgribusiness Incubator Program

University of Hawaii

June 26, 2009


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COST OF PRODUCTION AND MARKET OPPORTUNITY FOR VETIVER GRASS

ii

o Thisequatesto$5.52perlinearfoot.

Areductionintheperdayequipmentchargesignificantlyreducedtheperlinearfootcostwhen

comparinga200footinstallationanda1,000footinstallation.

MarketOpportunities

TodeterminethedemandofvetiveronOahuoverthenext5years,3marketswereanalyzed:

Government,LargePrivateLandowners,andFarms. Theaggregatedemandandfinancial

estimatesfromthethreemarketsisestimatedasfollows:

Year Slips

Revenue

(at$1perslip) Profit

1 442,110 $ 442,110 $ 207,792

2 1,198,932 $ 1,198,932 $ 563,498

3 1,961,111 $ 1,961,111 $ 921,722

4 2,567,178 $ 2,567,178 $ 1,206,574

5 2,717,624 $ 2,717,624 $ 1,277,284

Total 8,886,955 $ 8,886,955 $ 4,176,869

Thedemandandrevenue/profitpotentialforinstallationservicesvariesamongthe3analyzed

marketsandthetotalisestimatedasfollows:

Year Feet Revenue Profit

1 49,616 591,268 295,634

2 203,927 2,314,415 1,157,208

3 360,248 4,061,415 2,030,707

4 477,954 5,371,766 2,685,883

5 498,841 5,613,234 2,806,617

Total 1,590,587 $ 17,952,098 $8,976,049

Conclusion

Asvetiverincreasesitsreputationasan

effectivemethodtoreducesoilerosionand

stabilizesteepslopes,thedemandforthe

plantandinstallationserviceswillcontinue

toincrease. Basedontheanalysisofthe

costandmarketopportunity,vetivercanbe

aprofitablecropforgrowers.


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iv

DefinitionofMarkets .................................................................................................................25

MarketResearch ........................................................................................................................25

MarketSizeandDemand ...........................................................................................................25

Government .......................................................................................................................... 26

LargePrivateLandowners ..................................................................................................... 27

Farms ..................................................................................................................................... 28

TotalMarketPotential ...............................................................................................................29

Competition................................................................................................................................30

PricingAnalysisSaleofVetiverPlants .........................................................................................31

PricingAnalysisInstallationofVetiverPlants..............................................................................32

Appendix.........................................................................................................................................33

CostofProductionEstimateAnalysisforGrowingVetiver .....................................................33

DirectCostsFirstYearofOperation ................................................................................... 33

DirectCostsFullProduction ............................................................................................... 35

IndirectCosts......................................................................................................................... 36

UnitSalesAnalysis ................................................................................................................. 37

CostVolumeProfitAnalysis.................................................................................................. 37

CostofServiceAnalysisforInstallingVetiver..........................................................................38

Installing200LinearFeetofVetiver...................................................................................... 38

Installing1,000LinearFeetofVetiver................................................................................... 39



SolicitationLetter .......................................................................................................................42

SolicitationLetter .......................................................................................................................42

RevisedUniversalSoilLossEquation(RUSLE)KFactor ..............................................................43

MarketCalculations....................................................................................................................44

GovernmentDemand............................................................................................................ 44

LargePrivateLandownerDemand ........................................................................................ 45

FarmsDemand ...................................................................................................................... 46

InstallationDemandAllMarkets ........................................................................................ 47

ResearchSources............................................................................................................................48

Publications ........................................................................................................................... 48


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v

SubjectMatterExperts.......................................................................................................... 48

SubjectMatterExperts Unresponsive................................................................................. 50


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1

Introduction

Background and Objective

Sunshinevetiverisanonfertile,noninvasiveperennial

grasswithadensewebofrootsthatbindssoilandpenetrates

verticallyto15feet. Itthrivesinthetropics,growinginavariety

ofinhospitablesoilswithlowregardforfertility,salinity,pH,and

drought. Whenplantedinstrips,vetiverformsavegetative

barrierthatslowsthevelocityofwaterandtrapssedimentand

debris. Decadesofuseinthetropicsconfirmthatvetiver,when

usedasavegetativebarrier,isaverycosteffectivemethod

toreducesoilerosionandstabilizesteepslopes.

ItsprovensuccesshasledtheUSDANaturalResources

ConservationService(NRCS)toincludetheplantingofvetiveras

abestmanagementpractice(BMP)forHawaiifarms.

SmallamountsofSunshinevetiverhavebeenavailablefromtheUSDAHoolehuaPlant

MaterialsCenter(PMC)onMolokai,fortestingandgrowerincrease,andtheHawaiiAgriculture

ResearchCenter(HARC)KuniaSubstation. ThePMC,however,hascompleteditstaskoftesting

thisspeciesandhasplanstoreduceitsproductionofvetiver. Limitedsuppliesavailablefrom

thePMCandHARCcannolongermeetthegrowingdemandandthereiscurrentlyonlyone

knownestablishedcommercialvetiversupplier.

PreliminaryestimatesfromtheKuniaandWaialuaareas,gatheredbytheNRCS,indicateaneed

forover100,000linealfeetonjustafewofthefarms. Inaddition,theNRCSbelievesthatother

farms,theHawaiiDepartmentofTransportationandDepartmentofLandandNatural

Resources,andtheUSDepartmentofDefenseagencieswouldlikelybeendusersofvetiver

grassifitwereavailableatareasonablecost.

Inlate2008,theOahuResourceConservation&DevelopmentCouncil(ORC&D)wasawardeda

granttoevaluate,promoteandadvancetheadoptionofvetivergrassasaconservation

resource,andencourageitsproductiononacommercialscale. Theprojectseeksto

establish/conductthefollowing:

Agronomicfieldguidesforpropagation.

Economicsofpropagationinformationforpotentialcommercialscaleorcontract

production.

Atleasttwofielddaysforpotentialproducerstosharepropagationguidance.

Marketopportunitiesthatprovidelinksandcontactlistsforthoseneedingplant

materialsandthoseinterestedinprovidingplantmaterials.


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2

Thegoaloftheprojectisto:

Evaluate,promoteandadvancetheadoptionofvetivergrassasaconservationresource

toreducesedimenttransportinareasneedingcriticalareatreatment. Byestablishinga

fieldsite(orsites)thatdemonstratesprofitablepropagationtechniques,information

canbesharedwithnurseriesandgrassfarmsintheformoffieldguidesfor

establishment,propagationandreplantingasaconservationpractice,and

publications/literatureforfarmers,NRCS,andotheragencies/organizations.

Inventorycurrentandprojected15yeardemandonOahuforvetiverplantmaterial.

Thisinformationwillbesharedwithnurseriesandgrassfarmerssotheycanbetter

evaluatemarketopportunities.

Compilepropagationcostsandmarketpricesforvetiver.

o Measuregrowthperformanceofvetiver.

o Increaseadoption/transferenceofthistechnologytofarmers/publicthrough

appropriateliteratureand/orpublications.

o Identifyanddocumenteffectiveestablishmenttechniquesforthepropagation

ofvetivergrassforresale.

Thisreportfulfillsthegoalsrelatingtovetivercostofproductionandmarketopportunitiesfor

theislandofOahu.

Vetiver Grass

Vetiver(Chrysopogonzizanioides)hasbeenutilizedformedicinalpurposes,energyproduction,

bioremediation,matandbasketproduction,landscaping,hedgerows,firebreaks,insect

repellent,scentedoils,perfumes,andsoaps. ItsprimaryuseinHawaii,however,hasbeenfor

soilandwaterconservation.

Use as a Vegeta t i ve Bar r ie r f o r Eros ion Cont ro l

Vetiverisaquickgrowinggrass,suitableformostsoilconditions,andhasadeeprootsystem

thatprovidesstructuralstrengthinashortperiodoftime. Whenplantedinarow,vetivercan

beaneffective,inexpensive,lowmaintenance

methodtominimizesoilerosion. Afterinitial

planting,asinglevetiverslipquicklymultipliesand

whenproperlyplanted,connectstoadjoiningplants

tocreateathick,sturdygrasshedge. Thedeepand

widehedgeslowsandspreadswaterrunoff,forming

terracelikebenchesatthefaceofthehedges. In

addition,thethickanddeeprootsystemkeepsthe

plantrelativelyfixedduringhighvelocitywater

flows.


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3

Al te rn a t i v es to Ve t i ve r Grass fo r So i l Eros ion

Soilerosioncanalsobemitigatedusingthefollowingtechniques:

Diversionbermsaremoundsofearthusedtodeflectwater. Theycanbeusedtomove

watertoalesserodiblearea. Soillosscanoccurfromthebermsthemselves,andberm

creationtypicallyrequiresheavymachinery.

Constructionmethodsincludeusingreinforcedconcretestructuresorditches. Fixed

structurescanbeexpensivetoinstall,brittle,costlytorepairandmaintain,andare

usuallyunsustainable.

OtherVegetativeMaterialssuchasbanagrass,wildcane,piligrass,andlemongrass

canalsobeusedforvegetativebarriers. However,Sunshinevetiveristheonlyplantto

receiveavariancefromthestandardminimumwidthof36inchesto12inches.Thus,a

singleroworacloselyplanteddoublerowofvetiverwillsufficewheremultiplerowsof

otherspeciesareneeded. Aminimumamountofcroplandisdevotedtothesesingle

rowvegetativebarriers.

Advan tages o f Using Ve t i ve r f o r Eros i on Con t r o l

Themajorbenefitofvetiveroverconventionalengineeringisitslowcostandlongevity. Itis

estimatedthatthecostofinstallationis30%ofthecostoftraditionalconstructionmethods

(Troung,Van,andPinners,2008:30). Inaddition,vetiverhasthefollowingadvantages(Troung,

Van,andPinners,2008:30):

Vetiverprovidesanatural,environmentallyfriendlywaytocontrolerosionandstabilize

landandsoftenstheharshlookofconventionalrigidengineeringmeasuressuchas

concreteandrockstructures. Thisisparticularlyimportantinurbanandsemirural

areaswherelocalcommunitiesmaycriticizetheunattractiveappearanceof

infrastructuredevelopment.

Longtermmaintenancecostsarelow. Incontrasttoconventionalengineering

structures,greentechnologyimprovesasthevegetativecovermatures. Therefore,the

useofvetiverisparticularlywellsuitedtoremoteareaswheremaintenanceiscostly

anddifficult.

Vetiverisveryeffectiveinpoorandhighlyerodibleanddispersiblesoils.

Disadvan t ages o f Us ing Ve t i ve r fo r Eros ion Cont ro l Themaindisadvantageofvetiverisitsintolerancetoshading,particularlywithinthe36month

establishmentphase. However,duetosunavailabilityinHawaiiduringmostoftheyear,

appropriateplanningcanreducethisrisk. Inaddition,vetiverhasthefollowingdisadvantages

(Troung,etal,2008:31):

Vetiveriseffectiveonlywhentheplantsarewellestablished. Effectiveplanning

requiresaninitialestablishmentperiodofabout23months.


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Vetiverhedgesarefullyeffectiveasavegetativebarrieronlywhenplantsformclosed

hedgerows. Afterestablishment,gapsbetweenclumpsmustbeminimizedor

eliminated.

Itisdifficulttoplantandirrigatevegetationonverysteepslopes,althoughthiswould

alsoapplytoalternatives.

Vetiverrequiresprotectionfromlivestockduringitsestablishmentphase.

Project Research Approach

Todeterminethecostofproductionassociatedwithgrowingandinstallingvetiverandthe

marketdemand,thefollowingresearchwasconducted:

1. Interviewedkeycontacts(seeAppendix,ResearchSources,SubjectMatterExperts).2. Reviewedexistingdocumentation(seeAppendix,ResearchSources,Publications).

Detailsontheresearchactivitiesundertakenareincludedintherelevantsectionsofthis

document.

Approach to Findings

Informationoutlinedinthisreportisbasedonacombinationofresearchandexperiencefrom

theaforementionedsourcesandtheauthors. Marketdemandestimatesarelimitedtothe

Oahumarketonly. Obtainingmarketdemandwascomplicatedbythefactthatmanysources

werenotabletoprovidespecificinformationforuse. Inlieu,estimateddemandnumbersbased

onstatedacreagewereutilized.

Thecostandmarketdemandofmaintainingvetiverasaservicewasalsoconsidered. Becausevetiverrequiresminimalmaintenance,therewasalowinterestlevelinthisserviceandfurther

analysiswasnotconducted.


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5

Cost of P roduction Estimate for Growing Vetiver

Grow ing Vetiver for Commercial Production

ThegrowingmethodcurrentlyusedattheUSDANRCSHoolehuaPlantMaterialsCenter(PMC)

wasusedtodetermineappropriateproductionrequirementsandcostsassociatedwithgrowing

vetiverforcommercialproduction. Notethatadditionalexperiencewithvetivermayleadto

newinformationandimprovedproductiontechniques.

Althoughthisplanting/growingmethodwasusedforconsiderationincommercialproduction,it

shouldnotbeusedforadvicewithplacementofvetiverforsoilmitigationpurposes. Foradvice

inplantingvetiverforsoilerosionmitigation,contactthelocalNRCSoffice.

Usingcurrentgrowingmethods,theHoolehuaPMCstaffprovidedrecommendationsfor

commercialvetiverproductionandtheCostofProductionfiguresassumeadherencetothese

recommendations.

General

o Plantinthreephaseswithnewvetiverplantedevery6months. Harvestat12

monthstoallowthelandtoremainfallowforaperiodof6monthsandbe

adequatelyrotated. Retilllandpriortoreplanting.

o Basicfarmmachinery(seebelow)isneededtoprepareland,controlweeds,and

cutandharvestvetiver.

o Growersshouldplanfora10%mortalityrate. Theplantoutputnumbersnoted

intheanalysishavetakenthisintoaccount.

InitialStartup/Planting

o Useaclear,relativelylevelareawithopensunforplanting.

o Useatractorforlandpreparationandplantremoval. Itisthepreferredmethod

andisthemethodusedintheaccompanyingCostofProductionEstimate.

Manualmethodscanbeused;however,thiswillincreasethelaborhours.

o Groundpreparationincludesplowing,amendmentaddition,andtilling.

o Aspecificsoiltypeisnotessential. Soiltesting,however,shouldbeconducted

todetermineeffectiveamendments.

o Aspecificfertilizerformulaisnotconsistentlyrecommended. Atarecent

planting,thePMCusedTriple16fertilizerwheninitiallyplantedandisusedin

theCostofProductionEstimate.


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o Installadripirrigationsystemforsupplementalwatering.

o Priortoplanting,soaksoilovernight.

o Plantbyhandandplaceeachslip1footapartwithintherow.

o Placerows68feetapart(dependingonthetypeofequipmentthatisneeded

toremoveandmaintainplants).

PostPlanting

o Afterinitialplanting,soakvetiverdailyforthreeweekstoestablishtheroot

system.

o Afterestablishment,irrigateonceperweekforonehourwithdriptape.

o Handweedoncepermonth.

PlantRemoval

o Useatractortocutoutarootballabout1footdeep.

o Plantscanbeharvestedasearlyas6months. Theidealharvestingperiodis

between12and18months. Theplantsshouldnotremainintheground

beyond24monthsasslipsbecometightandrootsbecomedeeplyrooted,

makingtheremovalandhandsplittingdifficulttomanage.

o Manuallysplitandcleanplantsandremovemostoftheroot.

o Plantoutput:

6months:20slipsproducedperinitialplant

12months:50slipsproducedperinitialplant

OtherNotableInformation

o CurrentlyvetivercannotbeimportedintoHawaiiwithoutfulfillinga1year

quarantineperiod.

o

Vetiver

can

be

exported

to

other

states

if

the

grower

has

a

Hawaii

Department

ofAgriculturecertification.

o Growerscanconsiderplacingvetiverinpotsinsteadoftheground. Although

thismayallowforeasierplantremoval,thePMChasnottestedthisgrowing

methodanditseffectsonplantvolume.


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o Growerscanconsidergrowingvetiverhydroponically. Althoughthismayallow

foreasierplantremoval,thePMChasnottestedthisgrowingmethodandits

effectsonplantvolume.


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Crop Plot P lan

IndeterminingtheCostofProductionEstimate,commercialproductiononacreoflandwas

used. Thefollowingisgeneralinformationabouttheland,numberofplants,andslip

productionfortheacre:

SquareFeetPerAcre 43,560squarefeet

SquareFeetperAcre(rounded)20,000squarefeet

Assumeareausedis100feetx200feet

PlantsperRow 100

NumberofRows(planted6feetapart) 33

NumberofPlots 3

NumberofPlantsPerPlot 1,100

SlipsProducedFromEachPlantin12Months 50(includesa10%mortality)

Thefollowingplotplanwasusedinthecalculation:

Plot#

Number

ofPlants Rows Harvest Yield

NextPlanting

Schedule

January-2010 Plot1 100 1 Jan-11 4,000 Jan-2012

July-20101

Plot1 1,000 10 Jul-11 50,000 Jan-2012

2011HarvestTotal 1,100 11 54,000

January-2011 Plot2 1,100 11 Jan-12 55,000 Jul-2012

July-2011 Plot3 1,100 11 Jun-12 55,000 Jan-2013

2012HarvestTotal 2,200 22 110,000


July-2012 Plot2 1,100 11 Jul-13 55,000 Jan-2014

2013HarvestTotal 2,200 22 110,000


July-2013 Plot1 1,100 11 Jul-14 55,000 Jan-2015

2014HarvestTotal 2,200 22 110,000

1Theinitialplantingincludes100freeplantsfromtheHoolehuaPMC. Sixmonthsafterthe

planting,1,000slipsareremovedfromthesidesofthestarterplantsandreplanted.


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Financial Analysis

TheCostofProductionEstimaterevealedthefollowing(seeAppendixforthedetailedCostof

ProductionEstimate):

Duringthefirstyearofoperation:

o Totaldirectcostincurredduringthefirstyearofoperationis$16,985.

o Totallaborhoursincurredduringthefirstyearis1,184($15,948,or94%ofthe

totaldirectcost).

Atfullproduction:

o 2,200plantswillbeplantedannually.

o 110,000slipswillbeharvestedannually.

o Annualdirectcostswilltotal$36,214.

o Laborrepresents93%ofdirectcosts.

o Directcostperslipwilltotal$0.33.

o Totalcost(withestimatedindirectcostsadded)perslipwillequateto$0.53.

o Ifcharging$1.00perslip,expectedprofitperslipis$0.47. Annualoperating

profitwilltotal$51,426.

Assumptions

Thefollowingassumptions,basedonplantingmethodsattheHoolehuaPMC,wereusedwhen

developingtheCostofProductionEstimateforgrowingvetiver:

Initialareaisclearedforplanting.

Plantingareaisacre(100ft.x200ft.area). Thereare100plantsineachof33rows.

Plantsareplaced1footapartwithineachrow. Rowsareplaced6feetapart(centerto

center).

Groundpreparationisonlydoneintheareatargetedforplanting(exceptfortheinitial

plantingwherethe1/6acreisprepared).

TheHoolehuaPMCprovides100startedplantsfreeofcharge. NotethatHoolehuaPMC

hascompleteditstaskoftestingthisspeciesandhasplanstoreduceproductionof

vetiverinthenearfuture.


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Theinitialplantingincludesthe100freeplantsfromtheHoolehuaPMC. Sixmonths

aftertheplanting,1,000slipsisremovedfromthesidesofthestarterplantsand

replanted.

Elevenrowsareplantedevery6monthsforadequaterotation. Landlaysfallowfor6

monthsaftereachharvest.

ThePacificBusinessNews(dated:2/23/09),notedaveragewageforfieldworkersin

smallfarmsas$10.36. Thisdollaramountisusedforlaborcosts.

Thirtypercentisaddedtolaborcostsforemployeebenefitsandinsurancecosts.

Soiltestisestimatedat$21forthereportplus$10forshippingordelivertoCTAHR.

Informationonsoiltestingcanbefoundatwww2.ctahr.hawaii.edu/adsc/

Groundpreparationassumesuseof2bladeplowandincludesthefollowingperacre

timeestimates:

o Plow(16hours)

o Breakingclodsofdirtwithdisk(3hours)

o Addingamendments(lime/phosphorous/nitrogen)(3hours)

o Rototill(8hours)

Dripirrigationsetupincludespullinglines,stretching,hookingfittings,andpegginglines.

Watercostisestimatedat$2.66/1000gallons(.00266pergallon).

Atractorisusedforplantremoval. (Note:handremovalisanoptionbutitwillincrease

laborhours.)

Costperslipisbasedonfullproduction.

Thenurseryhada5acreproductionandvetiveraccountedfor10%ofoverallfarm

production. IndirectCostsareallocatedatthislevel.

Disposalcostsarenotfactoredintotheestimate.

Allplantsaresoldatoneyearofage. However,costsformaintainingplantsforan

additional6monthsarefactoredintotheestimate.


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Cost of Production for Installation

Installing Vetiver for Soil Erosion Mitigation

Inadditiontodeterminingthecostofproductionforgrowingvetiver,thecostandmarket

opportunityofinstallingvetiverasaservicewasexplored.

Financial Analysis

TheCostofServiceEstimaterevealedthefollowing(seeAppendixforthedetailedCostof

ServiceEstimate):

Thecosttoinstall200linearfeetofvetiveris$1,840.


o Laborcoststotal$577(31%oftotaldirectcosts).

Thecosttoinstall1,000linearfeetofvetiveris$6,432.


o Laborcoststotal$2,560(40%oftotaldirectcosts).

o Areductionintheperdayequipmentchargesignificantlyreducedtheperlinear

footcostwhencomparinga200footinstallationanda1,000footinstallation.







Assumptions

ThefollowingassumptionswereusedwhendevelopingtheCostofServiceEstimate:

Threeemployeesareavailabletoworkontheproject.

Initialareaisclearedforplanting.

Landgradeisnotprohibitivelysloped.


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Purchaserprovidesatleast3weeksbetweenorderandinstallation. Thisallowsthe

nurserytoroottheplantspriortoinstallation.

Atroughisdugwithaplowattachedtoasmalltractor.

Equipmentisrented(vs.purchased). Deliverychargesarequotedforalocationin

Kunia.

Estimatedrentalcostis$400perdayor$1,150perweekwitha$250deliverycharge.

Plantingisdonebyhand.

Fourvetiverslipsareplantedineach6x12area(forpurposesofthisreport,thisarea

willbereferredtoasalinearfootsincetheplantswillconnecttoformonerow).

Vetiverisplantedin2rows(6"apart)withvetiver6"apartoffsetineachrow(see

followingdiagram,wherexindicatesvetiverslipplanting).

12 12

x x x x x x

6

x x x x x

Toensureestablishment,sitevisitsareconducted3timesperweekforthefirst3

weeks.

Landownerisresponsibleforirrigationinstallationandplantwatering.

Indirectcostsarenotincludedintheperlinearfootestimate.


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Market Analysis Sale of Vetiver P lants

Definition of Markets

TodeterminethedemandofvetiveronOahuoverthenext5years,thefollowingmarketswere

definedforthepurposeofmarketsegmentation. Eachofthesemarketswereassumedtohave

asignificantaggregateneedtomitigatesoilerosioncausedbysurfacewaterflow,andthusbe

candidatesforvetiverpurchase/implementation.

Government:includingfederal,state,andcitygovernmentlandsthatmayusevetiver

forsoilerosioncontrolalongroads,parks,watershedreserves,andotherpublic

propertiesontheislandofOahu.

LargePrivateLandowners:suchasKamehamehaSchools,CampbellEstate,andCastle

andCookewhohavelandholdingsover10,000acresonOahu.

Farms:privatelyoperatedfarmsonOahu(doesnotincludelandintheLargePrivate

Landownermarket).

Market Research

Significanteffortwasmadeingatheringmarketdemandinformationfromawide

representation(seeAppendix,ResearchSources,SubjectMatterExperts)ineachofthedefinedMarkets. EachofthecontactedSubjectMatterExpertswasaskedtoprovideinformationona

numberofquestions(seebelowandAppendix,SolicitationLetter).Duetothelowgeneralfamiliaritywithvetiver,thequestionsweredesignedtoprovide

quantitative

information

on

the

scope

of

need

that

vetiver

might

address,

in

addition

to

other

informationusefulforsellingvetiver. Datawassolicitedfrom31organizations/individualswith

16providingfeedback. Respondents,however,wereoftennotableorwillingtoprovide

answerstosomeofthequantitativevolumequestions,inpartduetothelackofsummary/total

informationfortheirrespectiveorganizations.


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Marke t i ng Su rvey Ques t i ons

Howisyourorganizationcurrentlymanagingsoilerosionandstabilizingsteepslopes

(structural:berm/concreteorvegetativemethod)?

HowmanyTotallinearfeetaremanagedbyyourorganization(orboundaryfeetortotal

sqftofproperties/numberofproperties)onOahu?

WhatpercentageofTotalareslopedlands?

WhatpercentageofTotalmayneedsoilerosioncontrolorslopestabilization?

ArethereOahuprojectsplannedinthenext5yearstomanagesoilerosionand

stabilizeslopes(obtaindetailsonsizeofprojectandmethod,ifpossible,aswellas

approximatetiming)?

ArethereanycurrentOahuinitiativestomanagesoilerosionandstabilizeslopes?

Aresoilerosion/slopestabilizationresponsibilitiesmanagedbyyourorganizationor

lessee?

Wouldyourorganizationconsiderevaluatingvetivertomanagesoilerosion/stabilizing

slopesandwhatwouldbetheprimarydecisionpoints?

Wouldyourorganizationmakevetiverpurchasedecisiondirectlyoristhisdetermined

byathirdparty(contractor)?

WouldyourorganizationinstallorcontractoutinstallationforOahuimplementations?

Whataretherequirementstoawardproject(license/insurance/etc)?

Whatisthecontactinformationforindividual/departmentthatwouldmakepurchasing

decisionsforOahuprojects?

Market Size and Demand

Vetiverhasnotyetgainedstatuswithmostmarketsasadefactooptionforwaterdiversionor

soilerosionmitigation. Assuch,directdemandestimatesarenotavailable. Inordertoprovide

aproxyfordirectdemand,thefollowingapproachwasdeveloped:

Formarketswhereonlyacreagedataisavailable:

Squarerootof43,560(oneacreinsquarefeet)=209(horizontallengthinfeetof

acreageintheshapeofasquare)

Numberofacresundermanagementx209=A(linearfeetofacreageassumingonerow

peracre).


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AxB(modifierpermarketsubsegmenttoreflectrelativevetiverapplicabilitydetailed

persubsegment)=C(estimatedcandidateforvetiverinlinearfeet). Notethatdefault

valueofBhasbeenvaluedat25%basedonKFactorfindingsbelow.

Cx4(prescribednumberofvetiverplantsperlinealfoot)=Numberofvetiverplantsfor

thatmarketsubsegment.

Theauthorsattempttobeconservativeinthisapproachinthatitassumesonlyasinglelineof

vetiverplantedhorizontallyacrossanacreofsquareland(avarietyofparcelsizewouldtendto

havegreaterhorizontallengthonaveragethanthesquarerootofanacre). Also,just25%of

theacreageisdeemedthebasemodifierforvetivercandidacyasdeterminedbytheKFactor

analysis. Furthermore,marketunfamiliarity,resistancetochange,nonopenareas,andother

factorsaretakenintoaccountandthemodifieristhustypicallyreducedfromthebase. Finally,

thetotalacreageusedfortheestimatesisunderstatedduetolimitationsoftheresearch

(incompleteaccountingoftotalacreageforanygivenmarket).

Inordertoserveasaformofvalidation,theauthorsusedtheHawaiiNaturalResources

InformationSystem(HNRIS)softwarefromtheCollegeofTropicalAgricultureandHuman

Resources,UniversityofHawaii,toanalyzethenumberofacresonOahuwithsoilwith

ModerateorgreaterKfactor(seeAppendix,KFactor)asagrossindicatorofcandidacyforvetiver.

Bytheaboveanalysis,99,328acresonOahuhaveaKFactorof0.25orgreater(thethreshold

forModerateerodibility)asshownintheshadedareasofthemapbelow. Thisrepresents

roughly25%ofthetotalOahuacreageof384,043acres.


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16

Effortwasmadetoidentifyacreageexceedingcertaingrades/slopesasthiswouldbeanother

formofgrossvalidation(NRCSestimates3%12%asaworkingfigure),buttheHNRISandNRCS

GISsystemscouldnotprovidethisinformation. Asapointofreference,astudybyKinoshita

andTurnfortheDepartmentofBusiness,EconomicDevelopmentandTourism,providesavisual

representationofcertaingrades/slopesforagriculturallandonOahu(below).

Thefollowingtablecontainsacreagepersloperangeinformationbutappliesonlytoacreage

withsoilsdeemedsuitabletosugarcanegrowth.


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Gove rnmen t

Thismarket,consistingofFederal/military,State,andCityandCountyofHonoluluagenciesand

organizations,representsthelargestopportunityforvetiverplantsales. Somereasonsstated

bymarketintervieweesthatsubstantiatethestrengthofthismarketinclude:

Customersinthismarketmanagerelativelylargelandareas.

Customersinthismarketareespeciallysensitivetoenvironmentalconcernsbypolicy

and/orpublicinterestandarethusmorelikelytoaddresserosionissues.

Theuseofnaturalmethodsforsurfacewaterdiversionanderosioncontrolispreferable

forpublicperceptionconsiderations.

Currentlytherearetwoidentifiedvetiverusingprojectsintheplanningstages. TheState

DepartmentofTransportationServiceshasaplanforusingvetiveronaroadsideslopeon

KahekiliHighwayandisestimatingtheuseof13,000vetiverslips(ChrisDacus). TheCity

DepartmentofParksandRecreation(JamesWoll)hasrecentlyapprovedavetiverpilotproject

onunspecifiedparkland. Inaddition,interestinvetiverwasexpressedbytheUSArmyCorpof

Engineers(RussellLeong).

Themarketpotentialforvetiverslipsinthegovernmentmarketisestimatedtobe(see

Appendix,MarketCalculations,GovernmentDemand):

Year Slips

Revenue


1 205,672 $ 205,672 $ 96,666

2 720,623 $ 720,623 $ 338,693

3

1,206,056

$

1,206,056

$

566,846

4 1,753,013 $ 1,753,013 $ 823,916

5 1,844,351 $ 1,844,351 $ 866,845

Total 5,729,715 $ 5,729,715 $ 2,692,966


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18

0

500000

1000000

1500000

2000000

Year1 Year2 Year3 Year4 Year5

Vetiverslips


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19

Large P r i va te Landow ne rs

ThelargeprivatelandownersonOahuareidentifiedasCampbellEstate,KamehamehaSchools,

Castle&CookeHawaii,andJamesCampbellCompanyHawaii. Thesehavelandholdingson

Oahuofover10,000acres. Althoughthesefourlandownersaccountforover131,000acreson

Oahuathirdofthetotalacreagethedemandforvetiverisestimatedtobesignificantly

lowerthanthegovernmentmarketduetoarelativelylowermotivationtoutilizevetiver:

Emphasisoncomplianceversusproactiveerosioncontrol.

Lesssensitive/subjecttoenvironmentalconcernsbypolicyand/orpublicinterestthan

governmentmarket.

Highrateoftenantresponsibilityforerosioncontrol.

Themarketpotentialforvetiverslipsinthelargeprivatelandownermarketisestimatedtobe

(seeAppendix,MarketCalculations,LargePrivateLandownerDemand):

Year Slips

Revenue

(at1$perslip) Profit

1 0 $ $

2 182,762 $ 182,762 $ 85,898

3 400,399 $ 400,399 $ 188,187

4 400,399 $ 400,399 $ 188,187

5 400,399 $ 400,399 $ 188,187

Total 1,383,959 $ 1,383,959 $ 650,459

0

50000

100000

150000

200000

250000

300000

350000

400000

450000


Vetiverslips


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20

F arms

TheFarmsmarketincludesprivatelyoperatedfarmsonOahu(doesnotincludethatwhichfall

undertheLargePrivateLandownermarket). Forthismarket,pastdatafromNRCSonvetiver

recommendationsandimplementationsprovidedastrongbasisforestimatingthemodifierC

usedinthedemandcalculations.

Thismarketrepresentsanactivemarketforvetiversalesdueforthefollowingreasons:

Farmershaveincentivetominimizesoillossduetotheiroperationalrelianceonsoil.

FarmershaveincentivestoobtainandimplementconservationplansfromNRCS,

includingpermitobviationandcostshareprograms.

TheNRCSConservationReserveProgram(CRP)andtheEnvironmentalQuality

IncentivesProgram(EQIP)providetechnicalandfinancialassistancetoeligiblefarmers

andrancherstoaddresssoil,water,andrelatednaturalresourceconcernsontheir

landsinanenvironmentallybeneficialandcosteffectivemanner.ThePrograms

encouragesfarmerstoconverthighlyerodiblecroplandorotherenvironmentally

sensitiveacreagetovegetativecover,suchastameornativegrasses,wildlifeplantings,

trees,filterstrips,orriparianbuffers.VetiverasavegetativebarrierisaNRCS

recommendedbestmanagementpracticethataddressessomeoftheprogram

objectives. Farmersreceiveanannualrentalpaymentforthetermofthemultiyear

contract.Costsharingisprovidedtoestablishthepractices.

VetiveruseisarecommendedBestManagementPracticebyNRCS,whoprovide

conservationplanningservicestofarmers.

ThismarketincludessomelargefarmerssuchasDelMonteandhybridseedcompanies,someof

whicharealreadyimplementingvetiverforerosioncontrol.

Themarketpotentialforvetiverslipsinthefarmsmarketisestimatedtobe(seeAppendix,MarketCalculations,FarmsDemand):

Year Slips

Revenue


1 236,438 $ 236,438 $ 111,126

2 295,547 $ 295,547 $ 138,907

3 354,656 $ 354,656 $ 166,688

4 413,766

$

413,766

$

194,470

5 472,875 $ 472,875 $ 222,251

Total 1,773,282 $ 1,773,282 $ 833,442


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21

0

100000

200000

300000

400000

500000


Vetiverslips


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22

Total Market Potential

Theaggregatedemandfromthethreemarketsisshownbelow. Thegeneralyearoveryear

increasesandsharpriseintheestimatebetweenyearsoneandtworeflectassumptionsthat:

ThroughthedisseminationofinformationandfielddemonstrationsbyORC&Dand

NRCSaspartofthisproject,anincreasedawarenessonthepartofpotentialvetiver

suppliersandcustomerswilloccur. Theresultingincreaseinsupplyavailabilitywill

enableanaccelerationofvetiverimplementation/purchases.

Aspilotprojectsandearlyimplementationsdemonstratesuccess,confidenceinvetiver

andthusadoptionwillsteadilyincrease.

Year Slips

Revenue

(at$1perslip) Profit AcresofVetiver

1 442,110 $ 442,110 $ 207,792 2.01

2 1,198,932 $ 1,198,932 $ 563,498 5.45

3 1,961,111 $ 1,961,111 $ 921,722 8.91

4 2,567,178 $ 2,567,178 $ 1,206,574 11.67

5 2,717,624 $ 2,717,624 $ 1,277,284 12.35

Total 8,886,955 $ 8,886,955 $ 4,176,869

Asapointofreference,notethataKfactorof0.25+yields83,038,208vetiverplantsusingthe

basedemandformula. Thefiveyearaggregateislessthan10%ofthatnumber.

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000


Revenue

TheupwardtrendmaybefurthersupportedbyaSenateConcurrentResolution(SCR No.176)

beingreviewedbyvariousSenatecommittees(asof4/16/09)requestingthattheDepartment

ofLandandNaturalResourcesandtheDepartmentofTransportationresearchtheuseof

vegetativeerosionbarriers,particularlyvetivergrass,tominimizesoilerosionandpreventthe

resultingrunofffromdamagingroads,streams,coastalwaters,andreefsandtostabilizestream


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23

banks,hillsides,andotherthreatenedsites. TheSCRrequeststhattheDepartmentofLandand

NaturalResourcessubmitafinalreporttotheLegislaturepriortothe2010RegularSession.


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24

Competition

Currentlythereisoneknownlargecommercialgrowerandtwoadditionalsourcesofvetiver

plantsinHawaiiaslistedinthetablebelow. Thegeneralassessmentofthesupply/demand

balanceisthatthereisinsufficientsupplyofvetivertomeettheneedsofprojected

conservationplanrecommendations.

Potentialcompetitionforsupplyingvetiverwouldcomemostnaturallyfromexistingnurseries

withingroundgrowingmethods.

Source Location VetiverPricing Capacity Notes

VetiverSystemsof

Hawaii Oahu

Proprietary Proprietary Onlyknowncommercialgrowerin

Hawaii.

HoolehuaPlant

MaterialCenter

Molokai

None Limited Distributionquantitylimitedto

100slipspergrower.

HawaiiAgriculture

ResearchCenter

Oahu

.40.65/slip Limited Researchcenterwithlimited

supply. Notestablishedfor

commercialdistributionbut

currentlysharinginconsideration

ofthelownumberofalternate

sources.

Plantremovalisnotincludedin

thecost. Purchasermustremove

plants

on

their

own.


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25

Market Analysis Installation of Vetiver Plants

Definition of Markets

SeeMarketAnalysisSaleofVetiverPlants,DefinitionofMarketsabove.Market Research

InadditiontofeedbackfromtheresearchdescribedinMarketAnalysisSaleofVetiverPlants,MarketResearchabove,thefollowingactivitiesprovidedusefulinformationfortheanalysisofthevetiverinstallationmarket:

Publiclyavailablerequestsforproposalsandbidsonsoilerosionmitigationprojects

demonstratedthatthegovernmentmarketgenerallyseekstohire

construction/implementationservices,whichisanalogoustoinstallation. This

informationalsoservedasacomparisonforpricinganalysis.

AnalysisofaStateDepartmentofTransportation,HighwaysDivisionplanforroadside

erosionmitigationinvolvingvetiversupportedtheabovefinding,specificallyforvetiver

installation. Inaddition,thescopeofspecifiedvetiverinstallationinformeddemand

estimates.

InterviewswithSubjectMatterExpertswithknowledgeofvetiverinstallationsprovided

insightofdemandestimatesfortheLargePrivateLandownerandFarmsmarkets.

Market Size and Demand

Thelinearfeetdemandestimatesforthedefinedmarkets(seeAppendix,MarketCalculations)formedthebasisforestimatedvetiverinstallationdemand. Appliedtothisfigureisaper

marketmodifiertoadjustforvariabilityamongstmarketsfordemandofcontractedinstallation

servicesversuscustomerinstallation(seeAppendix,MarketCalculations,InstallationDemand).Formarketpotentialcalculations,thevariousmarketsarecharacterizedbydifferent

assumptionsofaveragevetiverinstallationprojectsizeandthusdifferingcostofservicefigures

areutilized(seeAppendix,MarketCalculations,InstallationDemand). Notealsothatthesecostsassumepurchasingvetiveratthecosttoproduce,i.e.,growingtheplantmaterial.

Thepricingoftheserviceforallmarkets,however,issetatthemediananalyzedmarkupof

100%duetotherelativecostsavingsofvetiverversustraditionalmethodsoferosionmitigation,

andincludesthevetiverplantmaterialitself.


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26

Gove rnmen t

Forthismarket,projectswilltendtobelargeandthereforecostsfromthe4,000linearfoot

analysis(seeAppendix,CostofService)wereused.EstimatedMarketPotential,Government

Year Feet

Revenue

(at100%markup) Profit

1 43,705 $ 482,507 $ 241,254

2 153,132 $ 1,690,580 $ 845,290

3 256,287 $ 2,829,408 $1,414,704

4 372,515 $ 4,112,569 $2,056,285

5 391,924 $ 4,326,846 $2,163,423

Total 1,217,564 $ 13,441,911 $6,720,956

Costperlinearfoot(4,000ftCoSanalysis) $ 5.52

Sellingpriceperlinearfoot(100%markup) $ 11.04

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000


Revenue


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27

Large P r i va te Landow ne rs

Forthismarket,projectswilltendtobelargebutmoreconservativeandthereforecostsfrom

the2,000linearfootanalysis(seeAppendix,CostofService)wereused.EstimatedMarketPotential,PrivateLargeLandowner

Year Feet

Revenue


1 $ $

2 43,406 $ 487,884 $ 243,942

3 95,095 $ 1,068,865 $ 534,432

4 95,095 $ 1,068,865 $ 534,432

5 95,095 $ 1,068,865 $ 534,432

Total 328,691 $ 3,694,479 $1,847,238

Costperlinearfoot(2,000ftCoSanalysis) $ 5.62


0

200000

400000

600000

800000

1000000

1200000


Revenue


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28

F arms

Forthismarket,projectswilltendtobesmallerandthereforecostsfromthe200linearfoot

analysis(seeAppendix,CostofService)wereused.EstimatedMarketPotential,Farms

Year Feet

Revenue


1 5,911 $ 108,761 $ 54,381

2 7,389 $ 135,952 $ 67,976

3 8,866 $ 163,142 $ 81,571

4 10,344 $ 190,332 $ 95,166

5 11,822 $ 217,523 $ 108,761

Total 44,332 $ 815,710 $ 407,855

Costperlinearfoot(200ftCoSanalysis) $ 9.20


0

50000

100000

150000

200000

250000


Revenue


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29

Total Market Potential

Theaggregatemarketpotentialfromthethreemarketsisshownbelow. SeealsoMarketAnalysisSaleofVetiverPlants,TotalMarketPotential).

TotalEstimatedMarketPotential

Year

Feet

Revenue

Profit

1 49,616 591,268 295,634

2 203,927 2,314,415 1,157,208

3 360,248 4,061,415 2,030,707

4 477,954 5,371,766 2,685,883

5 498,841 5,613,234 2,806,617

Total 1,590,587 $ 17,952,098 $8,976,049

0

1000000

2000000

3000000

4000000

5000000

6000000


Revenue


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30

Competition

CurrentlythereisoneknowncommercialinstallerofvetiverinHawaii,locatedonOahu.

PotentialcompetitionforinstallingvetiverwouldincludelandscapersonOahu,particularly

thosewiththeabilitytogrowtheplantmaterial. Otherrequirementsofaninstallerwould

include:

Needforexpertiseontheimplementationofvetivertobeeffectivefortheintended

purpose(erosionmitigation,surfacewaterdiversion,soilstabilization,etc.)

Potentiallyalandscapecontractororotherlicense,bonding,and/orparticipationonthe

GSAscheduletobidongovernmentjobs.

Otherskillsrelatedtoinstallation,includingirrigationinstallation.

Asourceforvetiverplantmaterial.

Giventhatconventional(nonvetiver)alternativesareashighas$91persquarefoot,competitionwithinstallersofthesealternativesisnotexpectedtocomefrompricecompetition

butrathercustomeracceptanceofvetiverasasolution.

Source Location Installation

Pricing

Capacity Notes

VetiverSystemsof

Hawaii Oahu

Proprietary Proprietary Onlyknowncommercialinstallerin

Hawaii.

InterviewswithSubjectMatterExpertsindicatedlowinterestinpostestablishmentplant

maintenanceservices(e.g.,mowing/hedgingvetiver). Therefore,themarketwasnotanalyzed.


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31

Pricing Analysis Sale of Vetiver P lantsAbusinessshouldconsideritscompetitors,suppliers,theavailabilityofsubstituteproducts,and

theircustomerswhendevelopingapricingstrategy. Inthecaseofsellingvetiverslips:

Competitors: asindicatedintheCompetitionsectionabove,thereisonlyone

knowncommercialgrowerinHawaii. Therefore,thecurrentlevelofcompetitionis

low.

Suppliers:thevastmajorityofdirectcostsassociatedwiththesaleofvetiverplants

relatetolabor. Therelianceonsuppliershasrelativelynoeffectonthegrowingof

theplant.

AvailabilityofSubstituteProducts:asindicatedintheAlternativestoVetiverGrass

forSoilErosionsectionabove,alternativesincludediversionberms,construction

methods,andothervegetativemethods. Bermandconstructionmethodsare

readilyavailableatahighercost. Thefollowingexamplesprovideinformationon

recentHawaiiprojects:

In2004,theStatereducedthedegreeofslopeonamountainatCastleJunction

onKalanianaoleHighwayfrom70degreesto30degrees. Theprojectcostthe

state$7.8million. Thisprojectincludedroadmodifications.

In2008,theStateDepartmentofTransportationpublishedanoticetobidders

forslopestabilizationnearthePaliHighway. Theprojectincludedproviding

slopestabilizationusingAnchorMatSystemorequivalent,andproviding

erosioncontrolmatandgroundcover. Theareaisestimatedatapproximately

150feetby50feet. Theestimatedconstructioncostwasbetween$500,000

and$1,000,000. Bidsamountsubmittedrangedbetween$622,000and

$745,000. Thisrepresentsanaverageof$91persquarefoot.

SinceothervegetativemethodsarenotcurrentlyrecommendedbytheNRCSinthe

VegetativeBarrierConservationPractice,acompetitivepriceanalysisforvegetative

alternativeswasnotconducted.

Customers:theclientbaserangesfromsmallfarmerstogovernmentagencies. In

thecurrenteconomy,allclientsareconcernedwithcost. Governmentclients,

especiallyFederal,showparticularinterestinusingavegetativebarrierinsteadof

traditionalconstructionmaterials.

Consideringthatthereisminimalcompetitionandlimitedinformationregardingcompetitor

pricing,abusinessmightconsiderusingacostplusmarkupstrategyfordeterminingpricing. The

businesscandeterminethedesiredprofitlevelandaddittototalcoststodetermineselling

price.


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32

Pricing Analysis Installation of Vetiver PlantsSimilartothepricinganalysisforsellingvetiver,abusinessshouldconsiderthefollowingfactors

whendetermininginstallationprices,whichincludethevetiverplantmaterialitself. Inthecase

ofinstallingvetiverslips:

Competitors: therearemanyexperienced,licensedcontractlandscaperswhocould

installvetiver. Asof4/1/09,therewere70licensedlandscapearchitectsonOahu.

ThemostrecentLandscapeIndustryCouncilofHawaiimembershiplistreflects105

membersonOahu. Superpages.comlists127landscapecontractorsonOahu.

Suppliers: otherthanlabor,thecostofthevetiverslipsaccountformostofthecost

associatedwithinstallation. Iftheinstallerisalsoagrower(supplier)ofvetiver,it

willhaveanadvantageovernongrower/installerssincetheycanfactorinaprofit

fromtheplantsaleinadditiontoaprofitfromtheinstallationservice.

Availability

of

Substitute

Products:

Farmers

and

landowners/government

departmentswithadequateexpertiseandlabormayopttoselfinstallthevetiver.

Inaddition,otherlandscapersmayhaveanautomatedmethodwhichcouldreduce

thelaborcostsassociatedwiththeinstallation.

Customers:theclientbaserangesfromsmallfarmerstogovernmentagencies. In

thecurrenteconomy,allclientsareconcernedwithcost.

Consideringthatthereisafairamountofcompetitioninadditiontotheopportunityforthe

customertoinstallthevetiverontheirown,abusinessmightconsiderusingcompetitor

pricingasabenchmarkfortheirownprices. Theymayconsiderpricingslightlybelow,above

orthesameastheircompetitors. AqueryoflandscapersonOahuconcludedthatjobsare

pricedbasedonacostplusstrategy,rangingbetween50and100%. Consideringthatthere

isnomarkupreflectedforthecostoftheplantsintheCostofServiceestimates,itis

recommendedthatthebusinessconsidermarkupsonhigherendoftherange.

Toensurethatpricesremaincompetitive,thebusinessshouldcontinuallyobserve

competitorpricingandstrategyandadjustpricesasnecessary.


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33

Appendix

Cost of Production Estimate Analysis for Growing Vetiver

Di rec t Costs Fi rs t Year o f Opera t ion

Notes:1,100slipsareplantedduringtheyear,yielding54,000atharvest.

(1) Only1/6ofanacreispreppedateachcycle. Soilsamplewillbecompletedforeach1/6

acrepriortoplanting.CostofsoiltestfromCTAHRis$21withanadditional$10for

shipping/deliverofsoil.

(2) BasedonHARCestimate:161616fertilizer:$168/acre;lime:$60/acre;gypsum:

$90/acre.

(3) HoolehuaPMCestimated2hourstoplant100slipsbyhand.

(4) HoolehuaPMCestimated810hours/1100plantspermonth. Frequency:weeding1x

permonthpercrop. Additionalcyclesincludedincasenurseryneedstomaintain3rd

plotfor6months.

(5) HoolehuaPMCestimated4gallons/plant/watering. Costestimate:$2.66/1000gallons

(BOWSpublishedrate). Frequency:2timesperweekforthe1stmonththenweekly.

Additionalcyclesincludedincasenurseryneedstomaintain3rdplotfor6months.

(6) HoolehuaPMCestimated5mintoremoveeachball;1100balls=92hours.


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34

(7) HoolehuaPMCestimated75/hour;54,000slips=720hours.

(8) Estimated1hourper500slips.


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35

Di rec t Costs Fu l l P rodu ct ion

Notes:2,200slipsareplantedduringtheyear,yielding110,000atharvest.

(1) Only1/6ofanacreispreppedateachcycle. Soilsamplewillbecompletedforeach1/6

acrepriortoplanting. CostofsoiltestfromCTAHRis$21withanadditional$10for

shipping/deliverofsoil.

(2) BasedonHARCestimate:161616fertilizer:$168/acre;lime:$60/acre;gypsum:

$90/acre.

(3) HoolehuaPMCestimated2hourstoplant100slipsbyhand.

(4) HoolehuaPMCestimated810hours/1100plantspermonth.

Frequency:weeding1xpermonthpercrop. Additionalcyclesincludedincasenursery

needstomaintain3rdplotfor6months.

(5) HoolehuaPMCestimated4gallons/plant/watering.

Costestimate:$2.66/1000gallons(BOWSpublishedrate).

Frequency:2timesperweekforthe1stmonththenweekly. Additionalcyclesincluded

incasenurseryneedstomaintain3rdplotfor6months.

(6) HoolehuaPMCestimated5mintoremoveeachball;1100balls=92hours.

(7) HoolehuaPMCestimated75/hour;54,000slips=720hours.

(8) Estimated1hourper500slips.


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36

I nd i r ec t Cos ts

Notes:(1) Estimatedat$750permonth.

(2) Employeeinsurancesareincludedinlaborcosts.

(3) Estimated$75,000+30%employeerelatedcosts.

Laborwagesareincludedindirectcosts.

(4) Estimated$3,600peracre/peryear. (CostofMililaniAgParkis$200$400peracre/per

monthfor5acresorless).

(5) Estimated4%GETand5%state/fedtaxfor$500,000inrevenues.

(6) Estimatedat$2,000permonth.


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37

Uni t Sa les Ana lys is

Notes:Unitcontributionmarginreflectstheamountavailabletopayforindirectcosts.

Cos t -Vo lum e-Pro f i t Ana l ys is


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38

Cost of Service Analysis for Installing Vetiver

I ns ta l l i ng 200 L inea r Fee t o f Ve t i ve r

Plants Per Linear Foot 4

Total Linear Feet for Estimate 200

Total Number of Plants Needed 800

Estimated Days to Install 1

Notes:(1) Costtoremoveplantfromnurseryisbuiltintogrowingcost.

(2) Labortochangebucketsdaily(200slipsperbucket). Fiveminutesperbucketfor21

days.

(3) Driveandunloadtimeestimatedat30minutesineachdirection/perperson. Location

estimated15milesaway. Estimatedpermilerateat55cents.

(4) Timeestimatedat50linearfeetperhour;equipmentcostis$400perday;$250delivery

chargetoKunia.

(5) Timeestimatedat50slipsperhour/perperson. Materialcostreflectstotalgrowing

costofeachvetiverslip.

(6) Timeestimatedat20minutesper100feet. Visitingsite3timesperweekfor3weeks.

(7) Estimated5%plantreplacementrate.


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39

I ns ta l l i ng 1 ,000 L i nea r Fee t o f Ve t i ve r


Total Linear Feet for Estimate 1,000

Total Number of Plants Needed 4,000




days.



(4) Timeestimatedat50linearfeetperhour;equipmentcostis$1150perweek;$250

deliverychargetoKunia.






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40








days.










47/56


41








days.










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42

Solicitation Letter


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43

Revised Universal Soil Loss Equation (RUSLE) K Factor

RUSLEisatooltomeasurerillandinterrill(sometimescalledsheetandrill)erosiononthe

landscape.ItisamultiplicativeformulaofRxKxLSxCxPinwhichRisaRainfallfactor,Kisa

soilfactor,LSisaslopelengthandgradientfactor,Cisamanagementfactor,andPisapractice

factor.

TheKfactorisasoilerodibilityissoilerodibilityfactorwhichrepresentsbothsusceptibilityof

soiltoerosionandtherateofrunoff,asmeasuredunderthestandardunitplotcondition. Soils

highinclayhavelowKvalues,about0.05to0.15,becausetheyareresistanttodetachment.

Coarsetexturedsoils,suchassandysoils,havelowKvalues,about0.05to0.2,becauseoflow

runoffeventhoughthesesoilsareeasilydetached. Mediumtexturedsoils,suchasthesiltloam

soils,havemoderateKvalues,about0.25to0.4,becausetheyaremoderatelysusceptibleto

detachmentandtheyproducemoderaterunoff. Soilshavinghighsiltcontentaremosterodible

ofallsoils.Theyareeasilydetached;tendtocrustandproducehighratesofrunoff. ValuesofK

forthesesoilstendtobegreaterthan0.4.

Organicmatterreduceserodibilitybecauseitreducesthesusceptibilityofthesoilto

detachment,anditincreasesinfiltration,whichreducesrunoffandthuserosion. Additionor

accumulationofincreasedorganicmatterthroughmanagementsuchasincorporationof

manureoradditionsofmulchisrepresentedintheCfactorratherthantheKFactor.

ExtrapolationoftheKfactornomographbeyondanorganicmatterof4%isnotrecommended

orallowedinRUSLE. InRUSLE,factorKconsidersthewholesoilandfactorKfconsidersonlythe

fineearthfraction,thematerialof


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44

Market Calculations

Go v e r n m e n t D em a n d

VetiverDemandonOahu,Government A B C B C B C

Key Customerswithidentifiedacreage AcresFormula

LinearfeetYr1

Mod

Yr1

candidate

plantsYr2

Mod

Yr2

candidate

plantsYr3

Mod

Yr3

candidate

plants

1 StateDepartmentofHealth 85.71 17913 2% 1433 4.0% 2866 5.0% 3583

2 USArmyITAM 53000 11077000 0% 0 0.5% 221540 1.0% 443080

3 USAirForce 28000 5852000 0% 0 0.5% 117040 1.0% 234080

4 USNavy 15000 3135000 0% 0 0.5% 62700 0.5% 62700

5 USMarineCorp 2951 616759 0.5% 12335 1.0% 24670 1.5% 37006

6 HawaiiDepartmentofAgriculture 9450 1975050 2.0% 158004 3.0% 237006 4.0% 316008

7 CityParksandRecreation 5000 1045000 0.5% 20900 1.0% 41800 2.0% 83600

8 StateDepartmentofTransportationServices 13000 100.0% 13000 200.0% 26000

205,672 720,623 1,206,056

Key Notes

1 PubliclandsinthewindwardOahuwatershedareasalreadyidentifiedascandidateforrestoration. Modincreasesreflectincreasingacceptanceofve2 75%>5%grade,Rehab5000acres/yr,vetiveroflimiteduseforrangeastootallandseedingmethodnotideal. Modreflectslowbutincreasingaccep

3 NotcurrentlymanaginglandslikeITAM,butinterested.Modreflectsslowstart,increasingacceptance.

4 Mostlyshipyardthuslowlikelihood.Modreflectslowandslowacceptance.

5 ManagedlikeITAMbutrelativelysmallacreage. Wetterandmoresloped.

6 2700acresnow,butexpect34xthattwoyearssoused3.5xcurrent.Tenantsarerequiredtoimplementconservationplanin1year.Modreflectsgro

7 Plannedvetiverpilotproject. Modreflectsincreasingacceptance.

8 Nofeedbackonacrevolumesbuthavedatafromplannedvetiverproject.Modreflectssuccessfulvetiverpilot.


51/56


52/56


46

Farm s Dem and

VetiverDemandonOahu,Farms

Key Customerswithidentifiedacreage Acres

Formula

Linearfeet

Yr1

Mod

Yr1

candidate

plants

Yr2

Mod

Yr2candidate

plants

Yr3

Mod

Yr3candidate

plants

1 AllOahuFarms,USDA2002Census 70,705 14,777,345 0.4% 236,438 0.5% 295,547 0.6% 354,656

236,438 295,547 354,656

Key Notes

1 Modbasedonhistoricalrecommendedlinearfeet,expectedtogrowwithincreasedawarenessandconservationplannercapacity.

Notethattheacreageusedinthedemandcalculationonlyincludesthatwhichwasdeterminedtobefarmland,asopposedtosimplyagricultural

agriculturalzonedacreagewould,ineffect,doublecountasignificantnumberofacresalreadyconsideredfortheLargePrivateLandownermarke

Itisgenerallyassumedthatthismarketwillutilizevetiverbasedonconservationplanfulfillmentandincludethoseplansgenerallyeligibleforcost

vetiverneed:

o SmallCooperator:200400feet

o LargeCooperator:2,000feet

HistoricalvetiverrecommendationsandimplementationfromNRCSOahu

Notethatimplementationtypicallylagsrecommendationandthustheratioofimplementationtorecommendat

calculated. Notealsothelimitednumberofyearsthatvetiverhasbeenrecommendedandthehighrateofgrow

ConservationPlanProjectYear

Linearfeetrecommendedby

conservationplans(Oahu)

ConservationplanLinea

implemented(Oah

2007 1,500 500

2008 5,150 1,150

2009 22,000 TBD

Total 28,650 1,650


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I n s t a l la t i o n D em a n d A l l M ar k e t s

OahuInstallationDemandEstimates

Key Market Mod Year1feet Year2feet Year3feet Year4feet Year

1 Government 85% 43,705 153,132 256,287 372,515 391,

2 LargePrivateLandowner 95% 43,406 95,095 95,095 95,

3 Farms 10% 5,911 7,389 8,866 10,344 11,

Totals 49,616 203,927 360,248 477,954 498,8

Key Notes

1 Modimpactedbyproclivitytocontractservicesbutslightlyamelioratedbyexistenceofsomecapacitytodothisthemselves.

2 Modimpactedbyproclivitytocontractservicesandlowcapacitytodothisthemselves.

3 Modimpactedbycapacityforimplementingvegetativematerialandgenerallylowfinancialresources.


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Research Sources

Pub l i ca t ions

AllphotoimagesobtainedwithpermissionfromtheVetiverNetworkInternational

(www.vetiver.org).

HawaiiBusinessMagazine,November2007. Top20WealthiestLandowners.HawaiiNaturalResourceInformationSystemv2.0,CollegeofTropicalAgricultureandHuman

Resources,UniversityofHawaii.

Joy,RobertJ. 2009. PlantGuide:SunshineVetiverGrass. UnitedStatesDepartmentofAgriculture,NaturalResourcesConservationService(http://plants.usda.gov/).

Kinoshita,Charles,etal.2006. PotentialforEthanolProductioninHawaii. DepartmentofBusiness,EconomicDevelopmentandTourism,StateofHawaii.

Lavelle,Neoma.2007. ImprovingHawaiisWaterQuality: SelectingSitesforRiparianRestorationinaGIS. NicholasSchooloftheEnvironmentandEarthSciences,DukeUniversity.

OahuSoilandWaterConservationDistricts.June2007.TheOahuOutlookTheVetiverNetworkInternationalwebsite. Articlesandotherreferencematerialsfoundat

www.vetiver.com

TheVetiverSystem:Aprovensolution. BrochurewrittenandpublishedbyTheVetiverNetwork

International.

Truong,Paul,TranTanVan,and,ElisePinners.2008.VetiverSystemApplicationsTechnicalReferenceManual.TheVetiverNetworkInternational.

UrbanGroundwaterDatabase,1999

UnitedStatesDepartmentofAgriculture2007CensusofAgriculture

VetiverGrass: Athingreenlineagainsterosion. WrittenbytheNationalResearchCouncil.

Publishedin1993bytheNationalAcademyPress,Washington,D.C.

Sub jec t Ma t t e r Expe r t s

Brokish,Jean,ProjectManager,OahuResourceConservationandDevelopment

Char,Marvin,CivilEngineeringBranch,SiteDevelopmentDivision,DepartmentofPlanningand

Permitting,CityandCountyofHonolulu


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49

Dacus,Chris,LandscapeArchitect,DepartmentofTransportationServices,CityandCountyof

Honolulu

Howland,Mark,IntegratedTrainingAreasManagement(ITAM)/ImprovedRepairableAsset

Management(IRAM),GeneralDynamicsforUnitedStatesArmy

Inouye,Wayne,PermitIssuanceBranch,DepartmentofPlanningandPermitting,Cityand

CountyofHonolulu

Joy,Robert,PlantMaterialsSpecialist,NaturalResourcesConservationService,UnitedStates

DepartmentofAgriculture

Kacir,Richard,DistrictConservationist,NaturalResourcesConservationService,UnitedStates

DepartmentofAgriculture

Leong,Russell,ArmyCorpofEngineers,UnitedStatesArmy

Matsunami,Garret,EngineeringandSiteConstruction,Castle&Cooke

Miller,Kim,LandOwnershipSpecialist,HawaiiHousingFinanceandDevelopmentCorporation,

StateofHawaii

Morton,Mawae,StrategicResourcesManager,LandAssetsDivision,EndowmentGroup,

KamehamehaSchools

Nakata,Ryan,DepartmentofTransportationServices,CityandCountyofHonolulu

Rice,James,WastewaterProgramManager,UnitedStatesArmyGarrisonHawaii

Sakamoto,Glenn(andstaffDavidDuvauchelle,KeniReyes,AndresJuario),Manager,Hoolehua

PlantMaterialsCenter,NaturalResourcesConservationService,UnitedStatesDepartmentof

Agriculture

Santo,Lance,Agronomist/FieldCoordinator,HawaiiAgriculturalResearchCenter

Slay,Hudson,CleanWaterBranch,DepartmentofHealth,StateofHawaii

Smith,Craig,Agronomist,USDANRCSPacificIslandsWest.

Takayesu,Gerald,DepartmentofEnvironmentalServices,CityandCountyofHonolulu

Teruya,Randall,AgriculturalAssetManager,AgriculturalResourceManagementDivision,

HawaiiDepartmentofAgriculture,StateofHawaii

Turnbull,Steve,EnvironmentalBranch,ArmyCorpofEngineers,UnitedStatesArmy

Woll,Jason,DepartmentofParksandRecreation,CityandCountyofHonolulu


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Sub j ec t Ma t te r Expe r t s - Un respons ive

Thefollowingwerecontactedforinformationbutdidnotprovidefeedbackintimeforthe

publicationofthisreport. Thesecontactsarelistedforthepurposeoffurtherilluminatingthe

scopeoftheresearchaswellasprovidingpotentialsourcesoffurtherresearch.

ArmyFamilyHousing,UnitedStatesArmy

BureauofLandManagement,UnitedStatesDepartmentoftheInterior

Constantinides,Michael,ForestryandWildlifeDivision,DepartmentofLandandNatural

Resources,StateofHawaii

FishandWildlifeService,UnitedStatesDepartmentoftheInterior

ForestService,UnitedStatesDepartmentofAgriculture

Hirano,Eric,ChiefEngineer,EngineeringDivision,DepartmentofLandandNaturalResources,

StateofHawaii

JamesCampbellCompany,Hawaii

LandDivision,DepartmentofPlanningandPermitting,CityandCountyofHonolulu

LandManagementDivision,LandManagementBranch,DepartmentofHawaiianHomelands,

StateofHawaii

Mansker,Michelle,DepartmentofPublicWorks,UnitedStatesArmy

NationalParkService,UnitedStatesDepartmentoftheInterior

Penn,David,TotalMaximumDailyLoad(TMDL)Coordinator,EnvironmentalPlanningOffice,

StateofHawaii

RoadMaintenanceDivision,DepartmentofTransportationServices,CityandCountyof

Honolulu(indicatednotapplicable)

UrbanForestry,DepartmentofParksandRecreation,CityandCountyofHonolulu

Watts,Kimberly,Director,SustainableRangesProgram,UnitedStatesArmyEnvironmental

Command

usa production market

Documents