[Market-farming] Economies of scale

David Inglis mhcsa at bcn.net
Thu Jan 30 10:44:16 EST 2003


Adriana,
A good example of what I was getting at and not atypical. The size of
what you can handle on your own speaks to the high value product you
produce.
Do you anticipate that the percentage of what you get to keep from the
gross will go down even if your total income goes up if you expand?
What you and I have said does not conflict with Ricks take on it in that
he said to operate at the point where the gap between the cost and
income lines are greatest; but it looks to me that that point is at a
smaller scale than most would believe. I have always liked one thing I
heard Eliot Coleman say; 'when you have reached the limits of a
particular scale, do not expand, raise your prices.' [paraphrased ]
In my own field, C.S.A.'s, I have found that the highest costs per share
are at a scale of between 100 and 200 shares; ironically this is the
size of most C.S.A.'s. I agree with my friend Dan Kaplan [Brookfield
Farm ] that at 220 and up the costs / share go down again. However I
operate at 100-120 shares for QoL reasons, but I can only do this
because my equipment has already been fully depreciated. 
David Inglis
Mahaiwe Harvest C.S.A.

> -----Original Message-----
> From: market-farming-admin at lists.ibiblio.org 
> [mailto:market-farming-admin at lists.ibiblio.org] On Behalf Of Adriana
> Sent: Thursday, January 30, 2003 4:45 AM
> To: market-farming at lists.ibiblio.org
> Subject: [Market-farming] Economies of scale
> 
> 
> In greenhouse vegetable growing there is a definited jump in 
> costs as you go up the scale.  The first approximately 
> $40,000 can be handled by a single person working full-time, 
> packing produce on a table in the greenhouse and delivering 
> in the family van, storing produce in small coolers.  The 
> next step up in volume  requires at least a part-time worker, 
> decent packing and processing facilites, a delivery
> vehicle and  a second greenhouse.   It's a step-function, not a curve,
> and that first step is a killer.  I'm standing at the bottom 
> of that step right now- you have to be real comfortable with 
> your ability to increase your market way above and beyond 
> those increased costs for it to be worth the financial risk.  
> And then you have to be prepared to see some decrease in your 
> own produtivity as you have to spend time managing those extra people.
> > This is certainly true here at Misty Ridge Farm. As we increase
> sales, our
> > costs do not necessarily increase at the same rate. And it has been
> very
> > true of the sales and business operations that I have had in the
> past in
> > other fields of endeavor.
> 
> 
> Adriana
> 
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