How to start a commercially viable produce growing operation. Session looks at the equipment, skills, finances and also explores year one of Edible Earth Farm
So You Want to be a Farmer: an in-depth look at starting a commercially viable produce farm.
1. SO YOU WANT TO BE A FARMER:
an in-depth look at starting a
commercially viable produce farm
John (Johnny) Parker
Follow Us on Twitter:
@backtothefarm
@edibleearthfarm
A look back at year one of Edible Earth Farm
2. BEFORE WE BEGIN
• Please place mobile devices on vibrate or mute.
• Feel free to Tweet or blog this session. Twitter
hashtag: #pasa20.
• Please hold your questions till the end of the
presentation. I have a lot to cover. I allotted time for
a Q&A discussion.
• Session website:
http://edibleearthfarm.com/starting-a-farm.html
A look back at year one of Edible Earth Farm
3. Session Overview
This session attempts to look at starting a produce farm from a
business perspective
The first half of the session is a pictorial journey of year on at
Edible Earth Farm
The second half we’ll talk about the specifics
Beware: Lots of eye candy
This session will not broach issues like plant varieties, soil fertility
or plant health. That’s not to say these items are not important.
Horticulture and farming experience is an important component in
starting a farm. Note the discrepancy in session description: we
will not be talking about crop selection.
Admittedly, this presentation takes advantage of the promotional
opportunity I have here today, speaking to you. I’ll indicate where
it is not obvious.
Important skill as an aspiring farmer: never miss an opportunity
to promote your farm, your product or yourself.
Not a SPIN farming session
4. Session Details
Who am I
What is Edible Earth Farm
Year One
How we started
What we did
Our lessons
So You Wanna Farm?
Scale
Skills
Infrastructure & Equipment
Revenue Streams
Pricing
CSA Resources
Marketing your Farm
Financing a Farm
Diversification
Farming Resources
5. Who Am I
What qualifies me to speak here today? Very little!
I hold an off-farm job at Carnegie Mellon University and I work
as a sales rep for Woodward Crossings
Worked on an organic farm and at a French restaurant as a
teenager
Moved to Pittsburgh to go to culinary school
Dropped out of culinary school to open a vintage clothing
boutique in Pittsburgh’s Southside
Eventually, I returned to school and studied computer science
and software engineering
I’m determined to build a financially viable produce farm
Started Edible Earth Farm with my wife
I try to apply software engineering principles to farming (e.g.
risk management, systems optimization, formal processes)
6. Edible Earth Farm
A produce growing business started by John and
April Parker
Established initially as a micro-farm to:
Limit risk
Minimize initial investment
Jumpstart a larger, commercially viable operation
Use the opportunity to gather and analyze data
Begin to build efficiencies
Understand the market
Do we still enjoy it after the first year?
In 2010 it was managed full-time by April. I
worked on weekends and during paid time off
from my day job. We had lots of help from friends
and family.
10. Year One Objectives
Grow on 1+ acre using intensive cropping
techniques
Build important infrastructure
Start an 18 week CSA w/ ~20 members
Participate in weekly farmers’ market
Develop processes
Provide a high quality product
Market the farm
Learn
Start small. Don’t fail!
11. The Immediate Tasks
Drill water well and run irrigation lines
Build produce cooler
Build mobile hoophouse
Purchase a delivery truck
Purchase supplies
Find someone to start seeds
Build sorting/washing/packing station
Find a market to sell at
Cultivate
The list goes on ……………..
19. Lesson: Weeds
Employ a strategy that’s proven
Stay on top of them
Be able to identify weeds
Understand how to manage them
Diamond Scuffle Hoe
S-tine Sweep
Backpack Flamer
Wheel Hoe
by
Valley Oak Tool Company
Composting Mulch Cultivation
Buckwheat Crop Rotation
Hay and Straw Hand Weeding
Stale Seedbed Technique
20. Lesson: CSA the First Year?
CSA in first year is not recommended
Time consuming to organize and market
Cost prohibitive at less than 40 shares
For us, we were selling at prices less than we could
command at a market
Constant product supply including variety is required
Worked for us because we may have quit had we not
cashed their checks
We received lots of encouragement from our CSA
customers
A CSA is certainly something that should be
considered for subsequent years
In the initial year, use farmers’ markets to build
interest in a CSA
21. Lesson: Pests and Disease
Seek knowledge from experienced farmers
Learn to identify early signs
Scout often
Employ a proven crop rotation strategy
Understand the lifecycle of the pest or
disease
22. Lesson: Farm Finances
Don’t overspend
Prepare for a substantial initial investment
Purchase equipment only when necessary or when you
can determine that it would greatly reduce costs or
resources
Prepare to operate at a loss for at least two years
Know your input costs
Be frugal but not cheap
Weigh the cost of a product or service with the potential
value of a long-term relationship with a vendor
Borrowing money is an unfortunate reality
Constantly evaluate financial risks
Learn to manage financial stress in a healthy and
constructive way
23. So You Wanna Farm?
How big?
Start small but not too small
Don’t under commit
Initial capital and risk comfort will most often dictate initial
size
Be sure you have the necessary startup capital. It’s very easy to
underestimate.
Don’t start without necessary equipment and infrastructure
Let your budget drive your size and don’t overspend
There are economies of scale. However, they require
experience to harness.
Be sure to develop a 5 year plan for growth that takes data
from revenue projections. Revise yearly.
Don’t jump in too early
Prepare to operate for several years with minimal or no
profit
24. Important Skills
Time management
Including the ability to quickly reschedule around changing
weather conditions
Knowing when good enough is better than perfect
Developing efficiencies through process optimization
Learn to leverage economies of scale but also beware of
the point where there are diminishing returns
Mechanical knowhow
People management
Risk management
Stress management
Computer and web skills
Industry knowledge
Customer relations
25. Large Equipment Needs
Tractor
If farming more than 3 acres, a tractor is a must
Buy large, buy newer. 40HP-50HP w/front end loader and pallet forks.
A skid loader and a tractor are an ideal setup. Tractors are not designed
to do a lot of FEL activities. Hard on tractor transmission and clutch.
Tiller
Can often buy two used for less than the price of one new. While
BCS tillers are nice, Troy-Bilt Horse tillers will do the job.
Shop for good used equipment. If you can’t tell the difference, buy
new instead. Consider the cost of a new piece of equipment and
average its cost over the life of the product. Oftentimes, new
equipment wins out when you factor in repair costs and downtime.
Mist Blower/Sprayer
Use to spray crops. Mix spraying agent with a sticker.
Delivery truck, Pickup truck, Trailer
Shop for fuel efficiency
26. Large Equipment Needs Contd..
PTO Driven Tiller
If farming more than 3 acres, a PTO driven tiller is
advised
Can find many on the used market but you don’t know
how they were cared for
Mulch Layer
Worth its weight in gold!
Purchase one that will produce raised beds
Heat up the roots of the plant better and helps keep roots dry
Buy a good quality layer
Propane Flamer
Used in controlling weeds
Pre-emergence flaming helps give plants a head start.
Heat will burst the cells in the small weeds killing them.
27. Large Equipment Needs Contd..
Jang Seeders
Jang JP series
Seed singulation
Reduces seed cost
Reduces need to thin
Dense planting
Great for intensive cropping operations
Does very well with small seed
Can singulate lettuce and carrot seed
Combine with pre-emergence flaming for great
results. Particularly with slow to germinate seed.
NOTE: Does not seed large non-spherical shaped
seed
Specs:
JP-3 12” outside row 3 seed heads
JP-6 22” outside row 3,4,5,6 seed heads
JP-6W 36” outside row 3,4,5,6 seed heads
Not cheap. Very well engineered.
WoodwardCrossings.com
Or contact me: johnny@woodwardcrossings.com
29. Revenue Sources
CSA
Farmers’ Markets
Local Farm Alliance
On-site Market
Wholesale
Restaurants
The more sources you choose, the less risk exposure you
have to significant loss. However, taking on additional
revenue sources comes at a price in time and resources and
can oftentimes impact the quality of the product. Start
small and try to limit risk. Expand as you become
comfortable.
30. Revenue Source — CSA
Potential: Not uncommon for 1000+ CSA member operations on 30
acres
Cost prohibitive at < 40 members
Pros:
Potential revenue stream early in the year. Although, increasingly,
members expect payment plans which increases the costs to
manage and diminishes an early revenue stream.
Predictability. Unlike growing for market, it’s much easier to plan
how much to grow.
Flexibility with product and varieties
Cons:
Extensive amount of effort to plan, organize and manage
(especially if it’s your first year)
Marketing costs
Less of a connection to customers compared to other direct-to-
consumer sources
Increasingly competitive due to its popularity among produce
farmers
31. Revenue Sources – Farmers’ Markets
Potential: $5000-$10,000 max first season. Varies by market.
Being certified organic often will open doors to markets that
would otherwise not accept additional produce farmers. Harder to
find good markets because of the increasing number of smaller
local markets.
Pros:
A great way to move product that hasn’t been used in CSAs,
sold to restaurants or wholesaled
Great way to meet and interact face to face with your
customers
Immediate and honest feedback
Cons:
Good markets are often difficult to get into
Revenue variability -- You’ll have bad weeks
Can be very political
Location at the market matters
Tenured vendors almost always have better spots at market
32. Revenue Sources – Local Farm Alliance
Potential: Varies depending on your status in the alliance
Structure of co-ops/alliances vary greatly. Oftentimes, there will be buy-
in fees and yearly dues.
Pros:
Allows growers to focus on growing
Harness the experience of alliance employees to pack and
distribute CSA shares, recruit new members and market the
service
Price is better than wholesale
Less emphasis on product uniformity compared to wholesaling
Cons:
Impacts a farms ability to build a brand insofar as the marketing
is done under the name of the alliance
Selling for less than you could command in other retail channels
With a large alliance, demand for product from any given grower is
reduced. It becomes imperative for a grower to partner with an
alliance that has few growers and a commitment to growth
33. Revenue Sources – On-site Market
Potential: Very difficult to project
Revenue is largely dependent on location, local demographics, nearby
competition, having quality traffic, complementary products, product
availability and product selection
Pros:
Minimal start-up costs
Minimal risk
Little or no transportation costs
Minimal labor costs to staff, if you can limit the time the market is
open to a day or two
Cons:
If the farm is located in a low-traffic area, getting customers can be
difficult and will require advertising costs
Margins may be slim in areas where people expect better priced
products
Much like a farmers’ market, you will likely experience revenue
variability
Takes away from farming time – be sure to limit hours
34. Revenue Sources – Wholesale
Potential: Difficult to project
Being successful at wholesale requires vast amounts of experience and
resources
Pros:
Relatively dependable source of revenue
Minimal marketing costs
Can focus on specializing in products that do well in your area and
soil
Cons:
Lots of waste. Distributors demand product uniformity.
Packaging costs.
Distributors demand product packed to specifications.
Margins are slim. Difficult to compete with large California farms that
can harness years of experience and economies of scale.
Inability to get feedback from customers
At the mercy of the distributor
35. Revenue Sources – Restaurant
Potential: Difficult to predict first year revenue. Can reliably use first
year as baseline for subsequent years.
Be realistic about pricing. Distributors add about 20% to the
wholesale purchase price. Monitor commodity prices and adjust
pricing accordingly.
Pros:
Can often command prices close to retail for high quality items
Outlet for large quantities of product
Learn about hot varieties that may also sell well at market
Chefs love local products
Immediate and honest feedback
Cons:
Requires significant marketing effort
Difficult to predict demand
Requires significant time to engage chefs, accept orders and
deliver product
Some chefs want multiple deliveries per week
36. Pricing
Develop pricing strategies for each revenue
source
Know your cost to produce a product
Know the competition
Don’t underprice your product. Yet, know the
price customers are willing to pay and use it to
your advantage.
Consider value-added items to justify higher
prices (e.g. certified organic, online ordering,
cleaner product)
Revisit pricing strategy several times a season
Resist the urge to have loss leaders
37. CSA Numbers
CSA shares per acre
1acre – 20-30 shares
4 acre – 100-125 shares
CSA pricing: $15-$30 per week/share with
the average price being $25
Expect $3000-$5000 net return per acre
Expect 20% yearly member attrition
2009 average price and length $540 for 20
weeks
38. All files included in
CSA Resources
download with
permission from the
author
http://www.roxburyfarm.com http://www.roxburyfarm.com/content/7211
Greenhouse Schedule Zone 5A
39. Marketing Your Farm
Create markets! They won’t come to you.
Farm website
Social media
Local print and local CSA directories
Online communities (e.g. LocalHarvest)
If selling at a farmers’ market, use the
opportunity to promote other products or
locations
Use friends and family to spread the word
Signage
Newsletters
Blog
40. Social Media
It’s a slippery slope! Once you start and to be
effective, you should be committed to building it.
Takes vast amounts of time to manage
Exposure to customer feedback that may be difficult to
manage given other farm responsibilities
Return on time investment is difficult to quantify.
Building the network is slow and has minimal benefit
early in the process.
The power it affords a business should not be
discounted
Young customers want that level of interaction
If you have a good product and service, customers will
spread the word
Spread the word about specials and new products
Gather feedback on what people want
41. Financing a Farm
Debt is an unfortunate reality
Build strong relationships with local lenders
Manage debt responsibly
Save now!
Be conscious of opportunities to shift debt to
an institution with better terms. This has the
potential to save substantial amounts of
money over the life of your debt.
Do the math. Only borrow when you can show
that the positively impact the bottom line.
Set aggressive repayment goals
42. Diversification
Farming is a high risk and low profit
business
Find areas to expand where you can
leverage existing skills or equipment
Quickly cull operations or efforts that are
unprofitable
Diversify: flowers, prepared food, fruits,
meats, bees, the possibilities are
endless……………
44. Farming Resources – Books
Market Farming Success – Lynn Byczynski
- Complete overview of a market farm operation
including:
- A look at market potential – $25,000 gross per acre
- Identifying ideal farm characteristics
- What to grow
- Production lifecycle
- Planting
- Recordkeeping
- Flower ISBN: 9780930031756
The New Organic Grower – Elliot Coleman
- Very detailed look at the full lifecycle of a market farm
including:
- Land characteristics
- Soil Fertility
- Deep-organic production methods
- Farm labor
- Green manures
- Pest management
ISBN: 093003175X
45. Farming Resources – Books contd.
The Winter Harvest Handbook – Elliot Coleman
- One of my favorite books. Explores:
- Winter production in unheated greenhouses
- Crop rotation
- Vertical growing
- Overwintering
- Soil fertility
- Movable greenhouses
- Intensive crop production
- Hardy plant varieties ISBN: 1603580816
The Organic Gardener's Handbook of Natural Pest and
Disease Control – Rodale Press
- A resource for pest and disease identification. Explores:
- Details preventative measures and organic controls
- Describes ideal growing environment for 200+
vegetables, fruits, herbs and flowers
ISBN: 1605296775
46. Farming Resources – Books
contd.
Sustainable Vegetable Production From Start-Up to Market
- Highly recommended book for aspiring farmers.
Required reading in several Masters of Sustainability
programs
- Describes recordkeeping strategies, budgets, marketing
and equipment to name only a few.
- A must for any aspiring farmer
Web Resources ISBN: 093581745X
• New England Small Farm Institute
• Roxbury Farm – Detailed production information available for
download
• Penn State Cooperative Extension
• Northwest Beginning Farmers Project
Publications
• Growing for Market
• Small Farm Journal
• Vegetable Grower – Warning!
47. Contact Info & Services
John (Johnny) Parker
814/303-9663
johnny@edibleearthfarm.com
website:
EdibleEarthFarm.com
blog: BackToTheFarm.net
twitter: @backtothefarm
My Services:
Farm Equipment Sales
Speaking Engagements
Technical Consulting
Business Software Evaluation
Project Management