Tuesday, November 29, 2011

How do you make a small fortune in Farming?

Well, Clearly by starting with a large one!

Or so the old joke goes.
But if you start out middle class, doesn't farming make you poor?
Isn't farming just a transfer of wealth from you to the bank?

Let's examine this idea for just a second...
I found a guy online bragging that he had made $550/acre in this (2009) his best year ever, but that some guys down the road were barely breaking even. I have heard that many industrial corn farmers will average about $100 per acre after subsidy and all expenses in a good year.  Afterall, the expenses for a corn farmer can be very high.
They need to buy fertilizer by the truckload. The big tractors cost $300 a day in diesel. The equipment costs can run into the hundreds of thousands of dollars. The herbicides, fungicides, the pesticides, and of course, the 1000 acres aren't cheap either if there is a mortgage on it at 5%? Add to that the frankenseeds that Monsanto makes you buy (seriously, they will sue you if you save your own seeds) which costs about $100 per acre.

Then if they irrigate there is a whole new expense or pipes, pumps, water, infrastructure and more...

"So", you ask, "what makes you think you can make any money at it when even the big guys can't live without taking a second job in town?"

I'm glad you asked that. Really I am. Sharon asks it all the time, wondering if I've lost my ever loving mind... I wonder too, if there is something to that... After all, of all the things I've lost, I miss my mind the most.

There are a few differences that need to be considered.
1. With permaculture, the long term goal is to have as few external inputs as possible, other than water (as rain), energy (as Sunlight) and human input.
2. The outputs of the permaculture farm are not commodity priced. They obtain a much higher price in the market place.
3. The small farm does not sell a commodity, it is a business, in business to make money, or at least a living.

So first off, do small farmers have the ability to sell food that can make them money?

I think you will find that they most certainly can.

For example, a typical CSA (Community Supported Agriculture) farm will charge $30 - $35 per half bushel of food, each week. Compare that to $7/bushel for Corn.  Big difference eh? In that half bushel will be about 12 - 16 lbs of food, mostly greens, cukes, tomatoes, squash and the like... So the CSA is getting about $2 per lb for their produce.
Many CSA farms around here have as many as 500 customers generating $15,000 per week during the growing season. I could live on that, if I had to, but putting 500 boxes together would be quite a chore I think.
Some Farms only have 100 customers generating $3000 a week.Certainly some have fewer supporters, but I don't want to be one of the really small farms... Too hard to pay the bills.

My Second Example is that free range organic beef  and pork tends to go for around $6-$8 per pound in the farmers markets around here. If you sell a smaller lowline angus beef per month, dressed out to 350 lbs each, you can clear about $2100 a head. Lowline need about 1/2 acre each and since you need enough room to maintain mom and calf for 18 months, you need just over one acre per head sold per year. So sixty acres can produce as much as 50 head of cattle worth $2100 each at market (butcher costs about $1/lb plus feed, gas, and other costs)
Add to this  that you can free range hogs at a much higher density and that they are much more prolific. You should be able to keep about 1 sow per acre, and they throw off a dozen piglets each year.
Pigs are quite efficient at converting food to protein. They will need about 4-6 lbs of feed to make about one pound of pork.
It takes about 6-9 months for a pig to be finished, If there are a dozen piglets per sow per year, you can sell 12 piglets per year from each acre at 250 lbs each. We should be able to sell each hog for about $700. Subtract a couple hundred for feed (if we aren't in full pig food production yet) $4800 per acre. Not a bad living at all. if you are running them on thirty acres. Of course you will need as many as a thousand customers, so I won't be able to get to this point quickly. It might take many years to get to this level of production.
Here is a nice reference article on raising piggies: how-much-land-per-pig.

And, since pigs and cows eat different "stuff" they don't compete all that much for food.

And then there are Chickens! http://www.free-rangepoultry.com/

Here are some other ways a farm might make some money:
herbs and herbals
bed and breakfast
farmers market
fruit stand
equipment rental
farm tours
Pick Your Own
Backyard Bar-B-Ques
fish (aquaponics)
salad greens (aquaponics)
Out of season hot house vegetables
vanilla beans
various crafts

Some ideas are better than others, but a diversity of income streams is always a good thing.

So, let's just start with the assumption that IF we can grow food, we can sell it for a decent amount of money if we cut out the middleman. The question is what are the costs of the inputs, what labor is needed, how much can we grow and how much can we sell?
We will discuss those issues in the next post.

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