Any Profit in What You're Doin'?

digit(ID/WA)April 25, 2006

The folks over in the Vegetable Forum are asking if growing produce actually generates any profit. Or, is it just a net loss like that guy with the $64 tomato.

Whaddya think?

Steve

Here is a link that might be useful: Anyone done the math?

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robin_maine

Yes, it can be profitable. It's what I do for a living.

    Bookmark   April 26, 2006 at 3:04PM
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heidi41(z5 Mass)

I, too, think it CAN be profitable. I've been selling from my roadside farm stand for years, Bedding plants, cut flowers and fresh veggies. This year I cut way back on the bedding plants as I don't feel there is much profit in it after paying the fuel expense for the green houses. However, depending on what your growing, it certainly is profitable. Last year I also started selling at afarmers market. I do keep records and I did make a profit. I certainly don't think I can get rich this way but the extra income helps out. And besides I love the farming so I see it as a WIN WIN situation. HEIDI

    Bookmark   April 26, 2006 at 4:24PM
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ohiorganic(5/6 SW Ohio)

I do it for a living and do indeed make a profit, though not everyone who tries will. You have to be a good marketer and be able to build a loyal customer base to succeed

    Bookmark   April 27, 2006 at 9:33AM
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digit(ID/WA)

The thinking amongst a few in the "has anyone done the math" thread was that it was nearly impossible to grow vegetables more cheaply than they could be purchased at the supermarket.

If that was so, all market gardeners would be out of business. In my comments, likely to have been too "materialistic" for some, I reported on a study by the University of Wisconsin that showed that market gardens were the most productive per acre of all farm operations studied - above $25,000 in gross sales/acre. Of course, the gardener is working his or her fingers to the bone. The study is linked below (couldn't link the pdf file but here's the webpage, scroll down and click the "New Resources: grower to grower" link).

Anyway, for the market gardener to have any income, their vegetables MUST be competitively priced. If the produce is consumed at home, a GOOD gardener is able to save money in the family food budget. And no doubt, you ARE saving money by consuming some of your own garden produce as well as gaining an income from sales.

It is a very good study; I hope you have time to take a look at it.

Steve

Here is a link that might be useful: New Resources

    Bookmark   April 27, 2006 at 6:29PM
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loodean

"...it was nearly impossible to grow vegetables more cheaply than they could be purchased at the supermarket". This statement is absolutely correct, if your goal is to sell cheap vegetables.

I do not doubt that some shoppers at Farmer's Market go with the idea that they will find good buys, however, that is not the culture that now surrounds many of todayÂs trendy markets. A perception has been created that products offered at FMs are better than regular supermarket fair (maybe organic, fresher, better for the local economy, etc.). Michael SilversteinÂs "Trading Up" did an admirable job of detailing how numerous consumer items have been up-scaled so that people are willing to pay more for items that they perceive as being "better". And Samuel FromartzÂs just published "Organic, Inc." contains a lengthy description of how FMs evolved to be THE place for the beautiful to shop. In addition, he details exactly how much profit market gardeners actually make  it was not pretty. $25,000 gross per acre was darn accurate, however, the net frequently ran into the negative.

Do I make a profit selling at a FM? Some, but not much, but then it is a very small rural market. Most shoppers are over 60, looking for a deal, and are unfamiliar with many vegetables. Even if I provide recipes and a good sales pitch, most shoppers are unwilling to buy something they view too unusual. I am always surprised by people who donÂt know what Brussels Sprouts, eggplant, leaf lettuce, or Kale are. Moreover, the people who want their tomatoes to match the supermarket varieties floors me. Last year I couldnÂt even get many shoppers to try free samples of the dark heirloom tomatoes  they insisted they were rotten and no amount of telling them otherwise would change their minds. Still I sell at the FM because it is fun and offered good exposure, but I make my profit on my CSA, not the FM.

    Bookmark   April 28, 2006 at 8:30AM
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digit(ID/WA)

Well, Loodean, the market garden given as an example in the study also operates as a CSA. In fact, the authors suggest that this is a more profitable component. That business did wholesale, as well.

At the market, I shy away from really unusual varieties. I do, however, insist that folks know that our tomatoes won't "bounce" if you drop them, unlike their choices at the supermarket. We also like to bring a few different choices but mostly just for fun.

You are quite right about NET income. The researchers found that we are working for just above or below federal minimum wage. A couple things to point out: State minimum wage for farm work is considerably lower than federal (oh, the joy of being an undocumented alien or competing with one!) Secondly, our enterprise feeds us at a very low cost. Therefore, food budget saving could be figured in.

The market where we sell has only about 10% higher than supermarket costs for some (but not all) products. We DO NOT get better than supermarket costs for our green beans, for example. Yet, we grow quite a few beans because they do well on our ground.

Gardeners can take the route of going exotic or even just dabbling but having a healthful diet can be an inexpensive benefit to a pleasant activity. Kind of a quality of life plus good health choices plus practicality argument.

Steve

    Bookmark   April 28, 2006 at 10:20AM
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ohiorganic(5/6 SW Ohio)

I make far more at farmers' markets than via my CSA (which in 10 years has never turned a profit). perhaps because I go to FM's in a College town where I also happened to grow up so I know a klot of people plus we get a highly educated crowd (P.hD's are litterally a dime a dozen around here). So we can and do gropw a lot of specialty veggies like baby squash, aragula, spring mix, heirloom tomatoes, beets, cucumbers, winter squash, tomatoes, onions, garlic. Heck I believe that we do at least one heirloom type of every variety we grow and they are popular.

that said i am opening up a farm stand in about a week in an area that is not so highly educated about 30 minutes north of the college town which celebrates strange food. and for that i am going to have more regular things.

Another thing I am getting into is brokering food-I invite people to either consign or set up at our farm to sell. for consignments I mark up 25%. for farmers to sell on our farm I charge between $10 and $20 a day depending on if they get a shelter or not. So far I have no takers on the farmers market but than I have not advertised this much either. I have gotten a couple of growers interested in consigning sweet corn and a few other items. I am hoping the farm store will make far more than either the CSA or farmers' markets ever have (and I will be doing both FM's and CSA this season as well) and hopefully by the end of this year we will no longer have to drive to a FM, drag a lot of heavy produce to our spot and set up and tear down twice weekly in all weather in order to make money.

One thing about veggies being cheaper to buy than grow. remeber that most big time operators are in deep debt to keep their operations running. I don't think this is the case nearly as mucyh with the small scale grower so the small farmer gets to keep more of the net. At least that is the case with me. I have never been one to over spend on gadgets. my husband and I tend to go towards under capitalization which can also get you in trouble. but we must be doing something right as we do grow each year and expecty quite a bit of growth now that we have bought our own farm on a very busy highway.

    Bookmark   May 3, 2006 at 9:15AM
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digit(ID/WA)

A farmer in overalls entered a bank and inquired about taking out a loan for 20 dollars.

"What security can you offer?" the banker asked.

"My New Holland TJ500 tractor is parked out front," he said. "I will be away for 3 months. Here are the keys."

Three months later, the farmer returned to the bank and paid off the loan, 20 dollars with interest.

"Pardon me for asking," the banker said, "but why a 20 dollar loan for a man of your obvious means?"

"Very simple," he replied. "Where else can you store a $250,000, 500 horse power New Holland with a heavy duty axle, radar, stereo, TV, and electric mirrors for 3 months for $20?

Both the banker and farmer are now out of business.

    Bookmark   May 3, 2006 at 12:24PM
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hmeadq

A home garden is just not the same as a market garden.

For a home garden, I need hand tools, a straw hat, nice clogs, Martha Stewart gloves, a cypurus potting bench. Then I go to the garden center and pay $2.50 each for my plants, which I plant in compost I've bought in 20 pound bags. I feed it with Mircle grow or Garden Alive items all the time. I water with city water, and water wether they need it or not. By the time my few tomatoes in the raised beds mature, then the time I have spent probably I can buy them cheaper true.

But market gardening is not the same. The cost of everything is spread over a lot of items. We start our own seeds, in soil blocks we make, then plant them under plastic with irrigation, fertilize with compost we make, and water from our well. Including plastic, seed, and everything we figure about $0.50 a plant. If it produces one tomatoe we broke even. Now, that obviously does not include tractor, time, land, cover crop cost, ect but we still do make money through our market and our CSA.

It is an economy of scale and an economy of time. When we planted 100 feet of radishes the first year one seed at a time it took forever, using a simple earthway we can do it as fast as we walk. Which also means we are likely to plant more and more often which means more money. A couple years ago we were getting $2 for bunch of 8-10 radishes. When picking them I was counting them by the quarter outloud. But that is diffrent from being on your hands and knees and planting each seed one at a time and with (I've seen it) a ruler!

Our garden pays for itself. We are about to move from 5 to 40 acres. Within 5 years we expect our gardens to pay for us to! ((It helps that we have reasonable salaries to replace, not $100,000 a year each.))

    Bookmark   May 3, 2006 at 3:00PM
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digit(ID/WA)

A home garden need not be different from a market garden. Both sets of grandparents could garden/farm like their lives depended on it and back in the Depression, apparently it did.

They'd never heard of clogs or Martha Stewart. Bought stuff from the "Feed and Seed" but had heirlooms and traded with the neighbors. I bet it never occured to them that people would buy dirt in a bag.

We start plants in our greenhouse. Reuse our inserts, flats, and pots. Save every peeling and frost killed plant for compost. Buy expensive organic fertilizer. I haven't driven a tractor since I started working for myself. We make our gardens pay by selling at the farmer's market and have for over a dozen years now.

And, no I don't spread out the risk or finance putting in crops with CSA's. Debt amounts to paying off the credit card each month.

I know people who measure seed in a row by the inch. But, they aren't interested in saving money on their food.

Our gardens pay altho' we are probably working for just about minimum wage - exactly like those Wisconsin market gardeners.

Steve

    Bookmark   May 5, 2006 at 12:16AM
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ohiorganic(5/6 SW Ohio)

Market gardens are not the same as a home garden no matter how big that home garden is. In a home garden you may be growing as if your life depended on it but this is different than growing for other people and for profit.

The equipment may be similar but the planting techniques will be a bit different. For one in a market garden you will grow far larger quantities of crops. I will grow over this season about 1000 heads of lettuce. if I were doinfg a humongous home garden that would fill my produce needs for the year i woulkd not grow that much lettuce. i might do a succession planting of lettuce to lengthen the harvest but i would probably grow about 1/50th of that amount. same with about everything. I doubt in a home garden I would put out 100+ zucchini plants or 500+ tomato plants because i would not need that many to feed myself or even a large family but i do need that many to feed several hundred customers.

And because I have customers I am committed to growing for them so they do not find another place to buy their food.

    Bookmark   May 5, 2006 at 8:34AM
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digit(ID/WA)

At the risk of making a complete fool of myself (I know, too late) all that I'm really saying is that it is possible for home gardeners to grow vegetables more cheaply than those they can purchase at the supermarket. Of this I'm convinced, not only because of my market gardening experience but because of the way of life I was born into.

If people wish to dabble in gardening as a hobby, that's fine but there are many people today and always who rely on their gardening skills to sustain themselves and their families. They may value the activities for other reasons but they are acting also out of practicality.

Further, I'd like to think that my meager profit and low hourly income as a market gardener is increased by low-cost healthful vegetables as an addition to my family's diet.

Steve

    Bookmark   May 5, 2006 at 7:39PM
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flowermanoat(Z9, Central.CA)

Profit, as I understand it, is what's left over after paying all expenses AND paying oneself a reasonalbe wage. Also, before one starts counting profit she must take out a return to capital, that is a percentage of return to the money that's specifically invested in the market garden business that would compare, perhaps, to the return one would get for it if it was in the bank. By this reckoning, our business makes none.

On the other hand, we have been successful market gardeners since 1996. Our business now completely supports 3 adults, 2 sons and a daughter-in-law. Our net return to labor is probably not much over $2 per hour but we are living the agrarian dream on a 2 acre property and grossing close to $30,000 per year.

This is much more than a business. Like Permaculture it's a lifestyle that makes unsufferably boring city life obsolete. This is our recreation. When one has a productive and absorbing garden there is little need to go to town.

More on our website linked below.

Here is a link that might be useful: http://www.wholesystemsag.org

    Bookmark   May 7, 2006 at 9:45AM
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digit(ID/WA)

Flowermanoat, this is a charming website.

I am not much of an accountant but the example provided in the Wisconsin study was a 1.5 acre market garden with the equipment listed below. I believe that we could consider this as an example of capital investment in the business.

There are other resources which could be counted but, of course, some of them are simply the annual expenses of operating the business. Others are resources necessary for living regardless of the occupation of the owner - a home, vehicle, etc. I suppose that a family might be considered living "beyond their means" on a couple of acres but many do and grow only a lawn. Others in this business rent the ground or arrange for its use in another way.

I believe that 5% return on investment would be fairly good for a bank account of $3,850, however, it would amount to only about $200. Flowermanoat, you have expressed some of the returns on the dollar which cannot be quantified. However, your website offers some real practical information on how one might invest their labor.

Below, is just an example used in the study but I think it may be fairly accurate as a reflection of the investment in market gardening for someone who, otherwise, has the land to grow on, pickup, etc.

Steve

Equipment list for a 1.5-acre market garden, current value

Hoophouse $1,000
Used walk-behind tractor w/rotavator $1,600
Used mower $100
Used Walk-in cooler (6x6x4) $700
Garden cart $150
Miscellaneous garden tools, harvest crates, and irrigation lines $300
Total $3,850

    Bookmark   May 7, 2006 at 11:51PM
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sandy0225(z5 Indiana)

I want that $1,000 hoophouse. And the $300 irrigation lines please....

    Bookmark   May 8, 2006 at 6:49AM
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ohiorganic(5/6 SW Ohio)

We use hoophouses that cost about $500 to put up but I do not know where one can find a walk in for $700 these days.I know we got a 3 door reach in fridge from a resturant that was remodleing for $800 5 years ago and that was a steal. The irrigation equip sounds about right. I think we spend about $400 to irrigate 3 acres every other year.

    Bookmark   May 8, 2006 at 9:27AM
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digit(ID/WA)

These items were noted at both current values and purchase price. Obviously, there was depreciation  the hoop house originally cost $1,700. Most of the resources were used when purchased. The entire "package" cost $6,650 but there is no information regarding when each item was purchased.

The research was done between 2002 and 2004 (published last Fall).

Of course, there must be significant regional differences but it is good research and highly appropriate. The link "New Resources" up there on an earlier posting takes you to the university study group website. The publication is a pdf file: http://www.cias.wisc.edu/pdf/grwr2grwr.pdf

Steve

    Bookmark   May 8, 2006 at 11:04AM
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trianglejohn

You can contort the data to swing in either direction. There is "math" out there to sell either side of the situation - is it worth it? does it make money? how do you define hard work?

I built my simple 15' by 17' hoophouse completely from Home Depot products for $325. Not that it compares to the more sturdy, longer lasting models for sale in the greenhouse/farm supply catalogs - but $300 was all I had to spare.

    Bookmark   May 8, 2006 at 1:15PM
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wackybell(z5 WI)

To answer the first question. yes. You just have to stop thinking like a home gardner and think like a FARMER.

What I prove to my customers that they can not get at a supermarket is 1) fresh produce, picked yesterday! 2) since they are buying fresh picked produce, it will last longer in their fridge than a similar item purchased at the store. Why? b/c produce in the store was probly picked out of the field a week or more earlier. 3)a feeling of community. 4)produce in the store used more fossil fuel to get from the field in CA to anywhere USA. 6)etc etc etc.

A home garnder gets the satisfaction of produceing his/her own food. Sharing extra with friends and nieghboors, developing relationships. Also preserving thier food through canning and freezing; thus reducing the winter grocery bill. etc.

This past Jan. I took the U.W. - Madison Beginner farmers market course, that was put on by the center for intigrated ag systems. $250 for 3 very intensive days. Taught by 3 market farmers. It covered crops, IPM, tillage, weed and pest management, tips for working with less strain on your body, CSA, selling to resteraunts, and farmers markets; also, help with taxes, and a discussion on quality of life.
We also looked at several studies. Most were about farmers keeping track of labor hours.

The study that stuck in my head the most was a study on dollers per acre. WHAT I REMEMBER ABOUT THE STUDY WAS THAT A CERTIFIED ORGANIC VEGTABLE FARMER CAN PRODUCE $8,000 - $12,000 PER ACRE.

The CIAS is a very valuable to me as a farmer I would highly recommend that everyone take this course if your are serous about market farming.

I did not bother going to the link at the CIAS web site. I think that it's just an example of what you need to get started market farming. (we had simiar info in our class material at the class)

I have also found that the monthly newsletter "growing for market" very helpful.

thanks for reading

kristi

ps this is my 2nd year as a market producer.

    Bookmark   May 10, 2006 at 10:17AM
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