||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.
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
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.
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?
|| 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.
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?
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
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.