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Pasa fff-conference-presentation-new2

  1. 1. SO YOU WANT TO BE A FARMER: an in-depth look at starting a commercially viable produce farm John (Johnny) ParkerFollow Us on Twitter:@backtothefarm@edibleearthfarm A look back at year one of Edible Earth Farm
  2. 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: A look back at year one of Edible Earth Farm
  3. 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. 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. 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. 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.
  7. 7. Distance Makes the Heart Grow Fonder 2.25 hours 110 miles
  8. 8. StartingEquipment
  9. 9. 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!
  10. 10. 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 ……………..
  11. 11. H2O Well Never Leave A Ditch Open!
  12. 12. Produce Cooler Stats: 12’x12’ Low ceiling 20K BTU A/C R-20+
  13. 13. Sorting/Cleaning/Packing Station
  14. 14. Early-Season
  15. 15. Mid-Season
  16. 16. Oakland Farmers’ Market Click to Play Video
  17. 17. 2010 CSA Click to Play Video
  18. 18. 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 FlamerWheel HoebyValley Oak Tool Company Composting Mulch Cultivation Buckwheat Crop Rotation Hay and Straw Hand Weeding Stale Seedbed Technique
  19. 19. 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
  20. 20. 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
  21. 21. 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
  22. 22. 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
  23. 23. 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
  24. 24. 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
  25. 25. 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.
  26. 26. 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 seedSpecs:  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. Or contact me:
  27. 27. Infrastructure andEquipment
  28. 28. Revenue Sources  CSA  Farmers’ Markets  Local Farm Alliance  On-site Market  Wholesale  RestaurantsThe more sources you choose, the less risk exposure youhave to significant loss. However, taking on additionalrevenue sources comes at a price in time and resources andcan oftentimes impact the quality of the product. Startsmall and try to limit risk. Expand as you becomecomfortable.
  29. 29. Revenue Source — CSAPotential: Not uncommon for 1000+ CSA member operations on 30acresCost prohibitive at < 40 membersPros:  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 varietiesCons:  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
  30. 30. Revenue Sources – Farmers’ MarketsPotential: $5000-$10,000 max first season. Varies by market.Being certified organic often will open doors to markets thatwould otherwise not accept additional produce farmers. Harder tofind good markets because of the increasing number of smallerlocal 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 feedbackCons:  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
  31. 31. Revenue Sources – Local Farm AlliancePotential: Varies depending on your status in the allianceStructure 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 wholesalingCons:  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
  32. 32. Revenue Sources – On-site MarketPotential: Very difficult to projectRevenue is largely dependent on location, local demographics, nearbycompetition, having quality traffic, complementary products, productavailability and product selectionPros:  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 twoCons:  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
  33. 33. Revenue Sources – WholesalePotential: Difficult to projectBeing successful at wholesale requires vast amounts of experience andresourcesPros:  Relatively dependable source of revenue  Minimal marketing costs  Can focus on specializing in products that do well in your area and soilCons:  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
  34. 34. Revenue Sources – RestaurantPotential: Difficult to predict first year revenue. Can reliably use firstyear as baseline for subsequent years.Be realistic about pricing. Distributors add about 20% to thewholesale purchase price. Monitor commodity prices and adjustpricing 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 feedbackCons:  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
  35. 35. 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
  36. 36. 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
  37. 37. All files included inCSA Resources download with permission from the author Greenhouse Schedule Zone 5A
  38. 38. 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
  39. 39. 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
  40. 40. 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
  41. 41. 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……………
  42. 42. Edible Earth Farm & Eatery
  43. 43. Farming Resources – BooksMarket 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: 9780930031756The 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
  44. 44. 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: 1603580816The Organic Gardeners Handbook of Natural Pest andDisease 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
  45. 45. 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 farmerWeb Resources ISBN: 093581745X•  New England Small Farm Institute•  Roxbury Farm – Detailed production information available for download•  Penn State Cooperative Extension•  Northwest Beginning Farmers ProjectPublications•  Growing for Market•  Small Farm Journal•  Vegetable Grower – Warning!
  46. 46. Contact Info & ServicesJohn (Johnny) Parker814/303-9663johnny@edibleearthfarm.comwebsite:EdibleEarthFarm.comblog: BackToTheFarm.nettwitter: @backtothefarmMy Services:Farm Equipment SalesSpeaking EngagementsTechnical ConsultingBusiness Software EvaluationProject Management