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  • From: John Ferree <john AT seldomseenfarm.com>
  • To: Market Farming <market-farming AT lists.ibiblio.org>
  • Subject: Re: [Market-farming] Why do It II
  • Date: Thu, 01 May 2008 07:31:34 -0400

Sorry for jumping into this thread late. The ground dried out and I got
busy. . .

I've seen an increasing net to gross for the past few years (5 yr old
operation) as need equipment has been sourced, going from 60%
non-payroll cost in 06 to 40% last year. The budget for this was an
optimistic 24%, but I would be happy with 30%. But regardless, there
are two ways I see you can do it. No paid labor, low cost, maintain
existing equipment instead of buying new, and severely curtail capital
improvements. Aka the stable farm. . . not trying to take over the
world. If you hire there's no choice but to get bigger and bigger. But
until you get big enough you won't be making any money because of
capital improvements and equipment, or labor because you lack equipment
ot accomplish various tasks efficiently. You won't be making a living
until the system stabilizes above 250k gross. So basically. . . You can
Net the same money doing 80k gross that you would at the 200k
level--with a lot less labor headaches.

But the system has to match the grower and the ground. The new well can
only do 20gpm. . . so without a pond overhead and large scale irrigation
is impractical. As to the spreadsheet, 40% labor is a low estimate. I
think between 40-50% is stable and wouldn't be too suprised to see it
spike around 60% in some years.

An earlier email suggested paying close attention to where you grow. . .
and I totally agree. We're outside a metro area of ~1M, but local is
just catching on. Fortunately there are upscale markets. But ground
water is non-existant and corn/bean ground tends to be well worn from
heavy nitrogen applications and erosion. So I would rather focus on a
small acerage and do heavy soil improvements than get big and go crazy.
Likely I'd be better off moving into one of the river valleys down south
where the soil actually drains in spring and cultivators don't get hung
up on rocks. But you live and learn, hopefully every year works out a
little better than the last. But every spring we all create these
utopian visions in our crop plans and we don't have until the next year
to work out existing kinks in the system.

For the small grower though, you have to spread your season and income
sources. Find something to sell in April and May before the field crops
come in, and get a handle on cash flow (i have NOT). It can be done.
If you are hopeful in a very deterministic kind of way (i think).

John
Danville,IN

Gross materials cost materials % payroll cost payroll % Net












$80,000 $20,000 25% $0
$60,000
$80,000 $24,000 30% $32,000 40% $24,000
$90,000 $27,000 30% $36,000 40% $27,000
$100,000 $30,000 30% $40,000 40% $30,000
$150,000 $45,000 30% $60,000 40% $45,000
$200,000 $60,000 30% $80,000 40% $60,000
$250,000 $75,000 30% $100,000 40% $75,000
$300,000 $90,000 30% $120,000 40% $90,000




Krystle wrote:
> If your farm business is meeting your goals, then that's all that
> matters, in the end.
>
> The main reason I see for seeking enough profitability to earn an
> hourly rate as an owner, as well as to hire employees, is that it adds
> long-term stability to the operation. If the owner is doing all the
> work for a low hourly rate, what happens if the owner has an injury,
> or must leave town for a family emergency? Or just to visit
> grandchildren, even? Can the owner find someone else to step in? If
> not, this presents a big quality of life issue for some folks,
> especially as people get older and face more health issues, want
> health insurance, and want to be able to hand someone else the reins
> once in a while. That only becomes possible, I think, on a larger
> scale (from what I've seen and researched so far).
>
> Krystle
> Salem, OR
> http://www.selfmadefarmer.wordpress.com





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