[Market-farming] Econ. of scale

Rick Hopkins rdhopkins at americanpasturage.com
Thu Jan 30 12:47:37 EST 2003


Beth,

Your perception is correct.  An expansion that requires off farm labor
usually does not increase the net and can often decrease the net percentage.

If you look at large operations such as Wal-Mart, their profit margin
decreases with each expansion.  That is why Fortune magazine targeted them
to fail in an article last year just before the Enron collapse.  Wal-Mart
and other transnational currently maintain a cash flow due to their
predatory buying policies.  When these resources are exhausted, a supply
side failure will cause a collapse in the company.

This same analysis applies to industrial agriculture that depends
exclusively on outside inputs to maintain cash flow.  A disruption in
energy, chemicals, or seed will have a devastating effect on the industry.

Rick H.

-----Original Message-----
From: market-farming-admin at lists.ibiblio.org
[mailto:market-farming-admin at lists.ibiblio.org]On Behalf Of Hook Family
Sent: Thursday, January 30, 2003 11:29 AM
To: market-farming at lists.ibiblio.org
Subject: [Market-farming] Econ. of scale


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?

This is Hubby's and my philosophy exactly.  We had a partner our first two
years of CSA who keep thinking hire hire get bigger bigger.  I kept saying
we'd make the same amount (net).  Gross would be more but not net.  He
really couldn't get over size as an award or trophy but was unwilling to
listen to sense.

That said I don't think we've quite expanded into our upper limit.  I think
we could expand a bit with just the two of us working.  Thats the other
problem if we get so big that the two of us really could not do the job if
all the help quit we decided that is too big.  We farm in basically suburbia
farm help isn't easy to find.  Had a good one last year, but unfortunately
he may be able to find a real job this year (done with college I think).

I know that we could add a few of this plant or that plant without really
increasing work thus resulting in surplus beyond what any CSA member could
eat.  I then need to market said surplus in my "free" hours :).  Dabbled a
bit last year with food coop worked well.  Increase this year.

I really want to expand flowers, sell by side of road?  Would people stop
for flowers over veggies?  Gut tells me yes, pay more for them than veggies
that init seems is unfortunately/fortunately true:).  But hay if thats what
they want :).

Beth

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