June 24, 2016

What is the Return on Investment of a FarmBot?

Many people think that having an expensive piece of farming equipment like FarmBot at your home will never pay for itself - that we would all be better off financially by simply buying fresh veggies at the grocery store. In this post we'll look at the financial costs associated with purchasing veggies at the grocery store vs owning and operating a FarmBot at your home. There are many assumptions we'll be making in this analysis. Most assumptions are linked to a source for where we found the information while others are just realistic guesses. Guesses are marked with an asterisk. For your specific use case, you may want to adjust some of these assumptions and run the numbers yourself to gain a more accurate understanding of the economics of FarmBot and you.

Direct Costs Only

From our analysis of how much food FarmBot can grow, we're going to work with a quantity of 4.5 cups of veggies per day, or 135 cups/month [1]. The table below shows the monthly direct costs of producing this much food with FarmBot vs buying it at the grocery store.

		FarmBot Grown Veggies		Store Bought Veggies
Factor	Cost	Frequency/Month	Subtotal	Frequency/Month	Subtotal
Vegetables	$0.50/cup [2]	135 [1]	$0.00	135	$67.50
Seeds	$2.00/package*	3*	$6.00	-	$0.00
Water	$0.015/gallon [3]	150*	$2.25	-	$0.00
Electricity	$0.12/kWh [4]	8.6 [5]	$1.03	-	$0.00
		TOTAL cost/month	$9.28	TOTAL cost/month	$67.50
		TOTAL cost/year	$111.36	TOTAL cost/year	$810.00

Using the data above, one would save approximately $60/month, or $700/year in direct costs by growing their own veggies with FarmBot vs buying them at the store. If a FarmBot costs approximately $3,500 (kit, shipping, taxes, supporting infrastructure, soil, etc) then this would indicate a return on investment of five years. However, this is not a complete picture because it does not take into account indirect costs such as fuel consumption when traveling to the store, the time required to shop for veggies vs harvest them from FarmBot, or the social cost of CO2 emissions. So let's look at what the cost savings and ROI of FarmBot is when taking into account indirect costs as well.

Direct + Indirect Costs

Many of the indirect costs in this calculation are based on valuing a person's time. We're going to use an hourly rate from an average middle class person making $50,000/year, or $25/hour. We're also going to go out on a limb and suggest (based on conversations with prospective FarmBot customers) that most people will be using FarmBot to grow vegetables with organic practices. Thus, the $0.50/cup cost of veggies we used in the table above needs to be adjusted to level the playing field. Because organic food sales account for less than 5% of all food sales in the US [6], we can assume that the $0.50/cup price is largely reflective of conventionally grown produce. So let's tack on a reasonable premium of 30%, or $0.15/cup to account for growing organically. A few other notable assumptions include using a 25 MPG vehicle for travelling to and from the store, and using a social cost of CO2 emissions of $220 per metric ton [9].

		FarmBot Grown Veggies		Store Bought Veggies
Factor	Cost	Frequency/Month	Subtotal	Frequency/Month	Subtotal
Vegetables	$0.50/cup	135	$0.00	135	$67.50
Organic markup (30%)	$0.15/cup	135	$0.00	135	$20.25
Seeds	$2.00/package	3	$6.00	-	$0.00
Water	$0.015/gallon	150	$2.25	-	$0.00
Electricity	$0.12/kWh	8.6	$1.03	-	$0.00
Transportation to and from store in vehicle - 6.8 miles [7] at $0.59/mile [8]	$4.01/trip	-	$0.00	4	$16.04
CO2 emitted by vehicle transport to store - Using a 25* MPG vehicle	$0.22/kg [9]	-	$0.00	9.7	$2.13
CO2 emitted in production of veggies	$0.22/kg [9]	5 [5]	$1.10	6.8 [5]	$1.50
Time to purchase veggies (transport and in-store) - 1 hour* at $25.00/hr*	$25.00/trip	-	$0.00	4	$100.00
Time to harvest veggies each day - 5* minutes at $25.00/hr*	$2.08/harvest	30	$62.40	-	$0.00
Time to maintenance FarmBot - 30* minutes at $25.00/hr*	$12.50/session	1	$12.50	-	$0.00
		TOTAL cost/month	$85.28	TOTAL cost/month	$207.42
		TOTAL cost/year	$1,023.38	TOTAL cost/year	$2,489.04

With these numbers, one would save approximately $120/month, or over $1,400/year by growing their own veggies with FarmBot vs buying them at the store. If a FarmBot costs approximately $3,500 (kit, shipping, taxes, supporting infrastructure, soil, etc) + another $500 for installation time (20 hours at $25/hour) then we're looking at a total investment of $4,000. Thus, FarmBot will have a return on investment period of less than three years. Now some might be saying that they are not responsible for their CO2 emissions, or that they don't buy organic, or that they would go to the grocery store even if they did have a FarmBot so they could buy other goods. If any of these cases are true, then your ROI period would fall somewhere in between the three and five years we've suggested. If you value your time differently, normally ride a bike to the store, or power FarmBot with solar, then these numbers will be different for you too. Another big factor is whether you buy a kit or build a FarmBot yourself. We're estimating that building one yourself (and 3D printing all of the plastic parts yourself) can save you upwards of $1,000. This means that the ROI period could dip below two years! To best understand the economics of owning a FarmBot, we suggest looking at these example calculations and plugging in numbers that more accurately reflect you and your lifestyle. Something else to note is that these calculations do not account for things that have no clear dollar value. For example, what is the value you place on self reliance and owning the food production process that sustains you? What is the value of eating fresh, local vegetables grown right in your backyard? What is the value of being more connected with your food? What is the value of having a really cool farming robot in your front yard that impresses your friends and family every time they come over? We'll let you decide!

Sources

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