[Market-farming] Economies of scale

Rick Williams mrfarm at frontiernet.net
Thu Jan 30 18:31:15 EST 2003


Adriana wrote:
> 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.

I agree that it goes in steps and some other commenters pointed out that
sometimes you get at the top of a curve point and you are better off to stay
there instead of expanding. We would never hire people to work here at Misty
Ridge Farm, but then we are not planning on making the farm income our total
family income either. If we did that, we would either have to switch to
dairying or get pretty large for produce. Ranching is, of course, out of the
question in terms of making a living.

One of the books that I used as a resource for running the "enterprise
project" that I had for 25 years at my employers cooperative, was a book on
running a photographic repair business. This was the closest thing I could
get for Audiovisual/Computer/Network repair at the time. And the writer
correctly pointed out that having just one employee was about the worst case
situation because there were economies of scale in going toward the second,
third, employee as you expand the operation. (If you can). At one time I had
five employees and did not enjoy supervision at all since I am both a
planner type and also a hands on type and prefer to be responsible for my
own quality of work which was a huge issue with a shop of that sort. But it
was possible to receive a much larger income being in that sort of position.
Eventually, most of our skills became obsolete and we had to keep downsizing
like other similar shops until we closed the operation a couple of years
ago.

Sincerely,

Rick Williams
Misty Ridge Farm
Direct marketed dairy beef and produce
(also dairy heifers and beef stockers)
Viroqua, WI





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