Market Farming Success (Chelsea Green Publishing, 2013) is the go-to guide to market gardening for those in the business of growing and selling food, flowers, herbs or plants. In this new and expanded edition, learn how to find land, which crops to grow, how to market your produce and more. Author and editor/publisher of Growing for Market, Lynn Bycynski’s expert advice will help beginning farmers advance confidently through the learning curve of starting a farming business. In this excerpt from chapter one, “Getting Started in Market Farming,” find out the earning potential of market gardening, whether you garden full time or part time.
You can purchase this book from the MOTHER EARTH NEWS store: Market Farming Success.
How Much Money Can You Make?
Even if you accept the fact that farming is not a high-paying occupation, even if money is not highly important to you, you still have to think about it when you’re starting out. You need to know how much it’s going to cost to get started. You need to know how much you can potentially earn once your farm is established. You especially need to know whether to hang on to another job in the meantime. As you develop your new farming business, you should make financial viability one of the tenets of your planning. A business can be sustainable only if it makes enough money to meet your financial needs.
Financial needs differ from one farmer to the next. A family of five has different financial needs than those of a couple without children. Someone who wants to make his or her entire livelihood on the farm will have a different perspective on profits than someone who views farming as a sideline. I’m not going to tell you how much you need to make to be considered a success. That’s entirely up to you. Over the years, my definition of a “sustainable farm” has broadened, and I now think that the person who keeps farming obviously has achieved a satisfactory measure of financial sustainability.
In my role as editor and publisher of Growing for Market (GFM) magazine, I have discussed finances with a large number of market gardeners. Some have been willing to share financial statements with GFM readers, and others have told me their income but didn’t want it published. As a result of these discussions, I have developed a clear picture of the earning potential of market farms.
Farmers who are successful — that is, making enough money to keep farming — can have an operation of any size, from a tiny, part-time start-up to a large, established business. They are growers who have achieved a balance between income and expenses, carving out enough to pay themselves fairly while building equity in land, buildings, and equipment.
At one end of the scale are growers who pay themselves the same wages as their employees, sometimes as little as minimum wage. At the other end of the scale are people who net $100,000 or more per year — but often that represents the work of both spouses, so the per-person income in even the high-end situations is modest, though certainly adequate.
However, market gardening clearly offers something that money can’t buy, because none of the veteran market gardeners I have interviewed expressed any interest in quitting to take a more lucrative job. For most farmers, the financial goal is to make enough money to live on and put a little away for retirement, while doing work they love, spending time with family, and making a contribution to the community.
In the sections below, you will read more details about finances on several different types of farms. The variables from one farm to another are numerous, so it’s not possible to state unequivocally that if you follow one model you will make a certain amount of money. Length of growing season, proximity to markets, growing expertise, marketing skill, weather disasters, and many other factors influence revenue on individual farms. The dollar amounts in the examples listed below represent what is possible on farms that are well managed by experienced growers, in hospitable growing conditions. I will group them by the previously mentioned categories — fewer than 3 acres, 3 to 12 acres, and more than 12 acres. These are just approximate sizes for purposes of discussion; there are always going to be exceptions to every category.
For the purpose of applying other farmers’ numbers to your own farm, the two most important figures are the gross revenue per acre and the margin, which is the percentage of revenue that is left after expenses. The gross per acre multiplied by the number of acres farmed provides gross revenue; that, multiplied by the margin, provides the net income. On a family-owned farm, net income is the same thing as the farmer’s pre-tax salary.
If you want farming to be a full-time livelihood, you need to have realistic expectations about your earning potential. Start by calculating how much you need to make to provide for yourself and your family. The descriptions below will help you determine what scale your farm should be to meet your income goals.
Fewer than 3 acres
A rule of thumb in market gardening is that one person working full-time can handle about 1 acre of intensive production. In this model, at least one person, and often two, work full-time on the farm with little or no hired help. They grow a wide array of crops, but with a particular focus on high-dollar crops, such as salad mix, heirloom tomatoes, and cut flowers; and they sell in diverse markets, including farmers markets, to restaurants, and through a community-supported agriculture (CSA) component.
The amount of money that can be earned per acre on this type of farm varies considerably, based on the length of the growing season and differences in management practices. It could be $20,000 per acre for mixed vegetables to $35,000 an acre or more for high-dollar salad mix, herbs, or cut flowers. Whatever the per-acre revenue, the margin on this type of farm consistently runs at about 50 to 60 percent, which is considered a very good margin. At this scale, farmers rarely hire labor, preferring to do the work themselves rather than managing other people. They purchase only basic tools and equipment. The bulk of expenses on this type of farm are for seeds, plants, and supplies.
3 to 12 acres
Many growers who started with just a few acres soon find that they need to grow more to earn enough for a full-time livelihood. It’s impractical to grow more than 3 acres of produce using just hand labor, so farmers invest in labor-saving equipment, which means higher capital costs, depreciation, maintenance, and repairs. Hired help will also be necessary.
The amount of revenue generated by this size farm depends tremendously on the grower’s energy and marketing abilities. To sell more than 5 or 6 acres of vegetables at retail prices is a feat requiring attendance at numerous farmers markets each week, or an on-farm market. For most growers at this scale, wholesaling to grocery stores, restaurants, and institutions is part of the marketing mix.
More than 12 acres
At this scale, mechanization is essential, and the gross per acre is much lower than on small farms, simply because production isn’t as intensive. Plants need more space to allow tractors, transplanters, cultivators, and harvesters to get through, so the number of plants per acre is smaller than on a hand-tended vegetable field. In addition, the greater the production on large acreage, the less likelihood the farmer can sell it all direct to the consumer at retail prices. Revenue per acre may be as low as $10,000, but with 12 or more acres in production, the gross revenue is high.
But is the net revenue any higher on these farms than on the small, intensive farms? Often, it is. On most of the larger farms I have visited, profit margins range from 10 percent to nearly 50 percent. In addition, most of these larger farms are more meticulous in their record-keeping than smaller farmers and have already deducted depreciation and taxes as an expense before they cite their net income, so they have a more accurate figure for their personal earnings. More on those considerations later.
The Sideline Farm
Many market gardens are operated as part-time enterprises, with the farmers holding other jobs either on or off the farm. Because growing produce and flowers requires a high level of attention, it’s difficult for the part-time farmer to be as efficient and productive as the farmer who is always present on the farm. As a result, gross revenue per acre will be somewhat less than that earned by the full-time farmer. And expenses will probably be higher, because the part-time farmer will have to hire help to get the work done.
Despite those constraints, it is not unusual for a part-time farmer to gross $10,000 to $15,000 an acre on produce and flowers and to net about half that amount. Net revenue on the start-up farm is a nebulous figure, however, because many growers just plow their profits right back into the farm. For the first few years, and maybe for much longer, the part-time grower realizes that he or she isn’t big enough, and so reinvests the farm income in greenhouses, tractors, tools, land, marketing aids, and experimental crops.
And that’s as it should be. Debt can sink a fledgling farmer who has a bad year, so it’s advisable to grow the business slowly until all the pieces are in place. Once a grower has experience and skills, it may be time to take the leap into borrowing money to scale up the business.
Read more: For more tips from Market Farming Success read Pricing Strategies for Selling Your Produce.
Reprinted with permission from Market Farming Success: The Business of Growing and Selling Local Food by Lynn Byczynski and published by Chelsea Green Publishing, 2013. Buy this book from our store: Market Farming Success.