Pasa PPT

SO YOU WANT TO BE A FARMER:

A look back at year one of Edible Earth Farm

an in-depth look at starting a

commercially viable produce farm

John (Johnny) Parker

Follow Us on Twitter:

@backtothefarm

@edibleearthfarm

BEFORE WE BEGIN

A look back at year one of Edible Earth Farm

• 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

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

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

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)

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.

Distance Makes the Heart Grow Fonder

2.25 hours 110 miles

Starting

Equipment

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!

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 ……………..

H2O Well

Never Leave A Ditch Open!

Produce Cooler

Stats:

12’x12’

Low ceiling

20K BTU A/C

R-20+

Sorting/Cleaning/Packing Station

Early-Season

Mid-Season

Oakland Farmers’ Market

Click to Play Video

2010 CSA

Click to Play Video

Lesson: Weeds

Employ a strategy that’s proven

Stay on top of them

Be able to identify weeds

Understand how to manage them

Wheel Hoe

by

Valley Oak Tool Company

Diamond Scuffle Hoe

Backpack Flamer

Hay and Straw

Buckwheat

Mulch

Hand Weeding

Crop Rotation

Stale Seedbed Technique

CultivationComposting

S-tine Sweep

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

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

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

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

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

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

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.

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: [email protected]

Infrastructure and Equipment

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.

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

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

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

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

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

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

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

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

CSA ResourcesAll files included in

download with permission

from the author

Zone 5A

http://www.roxburyfarm.com

Greenhouse Schedule

http://www.roxburyfarm.com/content/7211

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

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

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

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……………

Edible Earth Farm & Eatery

Farming Resources – Books

ISBN: 093003175X

ISBN: 9780930031756

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

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

Farming Resources – Books contd.

ISBN: 1605296775

ISBN: 1603580816

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

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

Farming Resources – Books contd.

ISBN: 093581745X

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• 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!

Contact Info & Services

John (Johnny) Parker

814/303-9663

[email protected]

website: EdibleEarthFarm.com

blog: BackToTheFarm.net

twitter: @backtothefarm

My Services:

Farm Equipment Sales

Speaking Engagements

Technical Consulting

Business Software Evaluation

Project Management