Small farming for profit

how to price farm productsDiversifying your product offering is one key to small farming for profit

If you have a small farm, or are contemplating small farming for profit, you probably want to know how much profit is possible. In a recent article I wrote about the High Income Market Garden Here's some data from my experience to give you an idea if a small farm is the business for you.

Our first year operating a Community Supported Agriculture (CSA) market garden, we sold the equivalent of 10 full shares.

While researching for for this launch, I discovered that CSA market gardens tended to have the highest net incomes of all marketing models, so that became our centrepiece operation.

We also wanted to integrate small livestock into our production model. When properly managed, livestock can contribute to soil fertility through their manure, which is rich in nitrogen, phosphorus, and other nutrients essential for plant growth.  Joel Salatin at Polyface Farms is a great example of this (on  a larger scale)

Integrating livestock into a farm can also help to diversify the farm's income streams. Naturally raised pork, chicken and eggs proved to be popular with our customers.

So, the gross income from our first year was $8,900. We also sold about $4,500 of meats and eggs to our CSA customers, for a total gross income of $13,400. After paying for a small greenhouse and a plant-starting room and some other stuff, we netted about $1,000.

That might not sound like a lot, but remember this was literally a bootstrap operation; income from sales paid for all our equipment and supplies and our part-time farm help. It was also our learning year.

lean-to greenhouseYear 1 farm income paid for our lean-to greenhouse

Note that we could easily have done this whole garden ourselves and saved the cost of the part-time helper, but I was working off-farm quite a lot and we wanted to be sure we could harvest and deliver on schedule.

The other thing to note is, if we amortized the cost of the greenhouse and plant starting room over 5 years (a reasonable life expectancy), then our actual profit would have been about $4,000.

This is an important distinction when small farming for profit by the way, the difference between cash flow and profit. As I wrote in Farm Risk Management financial risks result from inadequate cash flow to meet obligations. Small farming for profit means keeping a close eye on the spending.

Now let's have a look at the year we operated a larger garden, Gross sales of CSA shares came to about $49,000 (93 families). We sold another $6,000 worth of meats and eggs, for a total of $55,000 gross sales.

rototiller in the gadenMe and a helper in the BIG garden

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Equipment and supplies cost us about $7,000; we also had about $14,000 in salary costs for 3 part-time farm helpers and delivery drivers. So total costs came to about $21,000; gross profit therefore was about $34,000.

And of course, we got just about all our own food, too. This was on a market garden of about 1 acre, plus another half-acre or so to raise pigs and meat chickens.

Again, we could have worked longer hours in the garden ourselves and reduced the money we paid out in salaries. Suzie and I each put in about a 30-40 work week in the garden, However, we were both pushing 50, and having more help seemed the prudent course.

And, knowing what I know now about small farming for profit, I could probably cut the salary cost in half, and use more efficient methods.

Small farming for profit for the young farming couple

I think a farm couple with proper equipment and approach could look after a one-acre market garden by themselves. This is a trade-off, of course, since this would require more of an investment in equipment. See my 5 Acre Farm Plan for an idea of the equipment I consider necessary.

So, what conclusions can we draw from this? First, a full-time income from a CSA market garden becomes possible around 100 customers. With sales of other farm products (see How to Raise Meat Chickens and Pigs on Pasture ) you can probably net $40K-$50K or even more from your small farm.

piggies clean up the gadenOur piggies help clean up the garden in the fall

Second, this is probably also the minimum size to justify an investment in equipment to mechanize your operation. Tractors and other 'heavy metal' are expensive to own; you need to use them a lot to justify the expense.

Third, if you are small farming for profit on a full-time basis, it would be possible to 'layer on' even more businesses to make additional income.

You could add everything from bedding plants to bees, limited only by your ability to manage. These additional sources of income make it feasible for a couple to live and work solely on their small farm, and make a right living.

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