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Successful market farmers have a comprehensive
approach to record keeping. These farmers—the ones
who were able to see the relationship between those detailed
records and their total operation—were more profitable. |
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August 10, 2006: Experience is a good teacher
only if you are willing to learn from it.
During the past few years I have seen a number of market
farmers go out of business. When I asked them what happened,
a common answer is “I just can’t make enough money.”
Because we need each other to succeed to keep farming alive
in this part of the country, I care about these people who
now believe they can’t have a future in farming.
I suggest that how we go about farming in this intensive
marketing environment makes a big difference as to whether
we have a future here in agriculture that fits in a metro-farming
situation. There are hundreds of thousands of people within
an hour’s drive and they all eat. Some of them want
to eat fresh food grown locally and have the income to pay
for it.
So what has been one of the most common differences between
successful market farmers and those who were failing?
When I look around, I see that successful market farmers
have a comprehensive approach to record keeping. They have
records on harvest, markets, prices received, seed/transplants,
fertilizer/soil amendments, crop rotation, sales, expenses,
equipment and labor. These farmers—the ones who were
able to see the relationship between those detailed records
and their total operation—were more profitable.
Your harvest records will help you predict when an item will
be available in the crop year and how much you will have for
market, based on when you plant and other insights you can
glean from your records: the variety planted, when you planted
it, as well as rainfall, temperature and other growing conditions
early in the season.
Your weekly yields of any crop will change during the season.
Good records—kept faithfully over a period of years
on your farm—help you plan which early, midseason and
late season crops to plant. If you use your harvest records
in this way, you should be able to have an adequate quantity
and variety of items at your stand each week.
Prices you can thrive with
How can you set your prices at a profitable level when you
do not know what your products cost? Keeping a record of everything
you paid for is just not good enough.
Since your cost is based on the
number of units you sell—not the number of units
you grow—you will not know your actual cost until
the end of the season. Don’t let your biggest
seller be your biggest loser. |
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To estimate a product’s cost, assign a percent of all
appropriate expenses to that product then divide by the number
of units you sold last year. Since your cost is based on the
number of units you sell—not the number of units you
grow—you will not know your actual cost until the end
of the season.
Don’t let your biggest seller be your biggest loser.
What is the number of markets you need to maximize your profits?
Market records help you determine which ones to drop and which
ones to keep. Weekly sales records should tell you how much
of any given product you sold throughout the season. Comparing
harvest amounts with the total sales in all venues, you can
test your predictions and determine how much of the harvest
actually makes it through grading and packing to market.
The real value isn’t just in having numbers on a page.
It’s taking time to learn what they are telling you
by looking at several streams of figures at the points where
they intersect. For example, it’s the combination of
seasonal harvest data and weekly sales records that tell you
the number of markets you can handle.
Avoiding hard choices brings hard times
To stay in business you must grow the right products in
the right quantities. If you can’t sell a product for
a profit, don’t grow it! Growing too much or too little
of any crop has an effect on its profitability. So how do
you know which crops are the most profitable and how much
of each crop to grow?
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If you can’t sell a product
for a profit, don’t grow it! Growing too much or
too little of any crop has an effect on its profitability. |
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Good sales records tell how much you sold and how often you
sold out of an item. Your receipts minus expenses tell you
just how profitable a product is. A product’s harvest
record, minus its sales records, tells if that product has
been over-produced. Your pricing records for that over-produced
crop will let you examine if there’s profit in a lower
level of production, or if the profit just isn’t there
given production costs balanced with market demand.
It takes time, but if you use your expense, sales and harvest
records in this way, you will know which items to drop and
have a good idea of how much of each of the other crops you
should grow.
Once you decide which crops and how much of each to grow
for the year, other records help you to decide where to grow
them. Your crop rotation records tell you which fields are
best to use for each crop. The harvest records tell you the
yield you can expect for a crop at a particular location,
given the same conditions as the records report.
Good transplant records tell you seed sources, germination
rates, the best dates to plant, and the percent of transplants
that will survive for each crop. This critical information
allows you to grow the right number of plants and to have
them ready for transplanting at the best possible time. Backing
up from the planting date you can make sure you have seeds,
planting media and planting supplies in hand on time.
Harvest data shows what works
Your harvest records will tell you the season’s yields
for each crop. To develop a fuller picture of your season’s
crop management success, however, you need to consult your
planting and field records to know what fertilizers/soil amendments
you used.
Each year you should have one or more soil tests done for
each field. This will allow you to track trends in soil health
and soil nutrients, both influenced by cover crops and cash
crops. When you get the results of your soil test, you can
add manure or compost plus the appropriate soil amendments
or chemicals to maximize its yield for the current season.
Record the rates, materials, times and method of application.
For careful assessment, after adding the soil materials you
should have the field retested after the amendments have had
sufficient time to become biologically active. If a field
is not in line with where you wanted it to be, you will know
which amendments to add. It is important to know if your crop
yield increased based on the soil amendments that were added.
After reviewing your harvest records, if the crop yield is
as good as or better than in the past, you’re on the
right track. If the yield of a crop has fallen from what it
should be given the year’s conditions, you need to rethink
both the amendments (the choice of material, the quantity
used and its interaction with other management steps) and
your cropping system for the field.
Tracking the tractor, your time
Imagine it’s next spring and your fields are perfect
to turn over. You go to fire up your tractor (or tiller) and
it just won’t start. An early winter maintenance check
lets you make sure to tend to each maintenance and repair
task when it’s completed, then write it down.
| If your plans are not based on facts,
what chance do they have to really succeed? |
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Even better, doing a Thanksgiving check will let you verify
that you’ve finished the steps to winterize your equipment
that’s in working order. Having a maintenance schedule
that tracks both calendar days and hours-logged tells you
when to have to take a little time for upkeep (with the parts
and supplies you need) to reduce emergency down time that
is almost always more painful and costly.
The prices you charge—based on the markets that are
best and the field experience of record—are also dependent
on you doing your job in the course of the season. If the
yield of a profitable crop decreased because you did not have
time to weed, how will you find the time next year? To manage
your time properly you need to be able to analyze how your
time has been spent. Use whatever system you want, but you
have to be honest with yourself about your time.
Even if you are the only person working your farm, you must
assign a percent of the time spent on every job to the appropriate
product. If a product is profitable enough, you may bring
on additional labor. When a low-profit item sucks up a disproportionate
amount of your time, you may have to drop it. Just as your
expenses and sales records show if a product is profitable,
your sales, expense and labor records will show if you are
using your time in the most profitable way.
To make the difficult decision of when to hire more labor,
your records give you the foundation for the needed estimates
of costing out greater production for greater sales to see
if—even on paper—you will have greater profit.
You’ll need to be looking beyond your own experience
to estimate if the markets you are attending have the potential
to absorb a higher volume of goods from your farm at the same
profit level. Perhaps the market’s overall records or
some general volume history from other farmers at the market
can help you out.
Here’s my basic message, as a longtime businessman
who has graduated to market farming: If your plans are not
based on facts, what chance do they have to really succeed?
I hope that seeing how you can use farm business records to
increase your profits will encourage you to create these accounts
and find new ways to farm well at a profit.
And the old saying is true: Those who fail to plan, plan
to fail. 
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