Live below your means, avoid debt and manage growth to help ensure your market garden or farm business’s long-term success.
In light of our modern love affair with fast growth and fast money, I’d like to propose embracing the opposite: As you grow your market garden or farm business, slow down. A debt-free farm is a thing of beauty — but you can’t build it overnight.
A common business axiom is that financial collapse usually doesn’t result from a poor product, poor marketing or poor service. Instead, collapse is frequently a consequence of a cash-flow crunch: A growing business is strapped for cash because accelerated sales require increased infrastructure and labor, which often must be paid for faster than the business’s growth can afford. Before you know it, the business is mired in debt. With proper planning, however, you can avoid yoking your farm business or market garden to paralyzing debt.
My own trajectory as a farmer followed a path of slow growth and low debt. I’m nearly 60 years old; I started my first chicken enterprise when I was 10. When my wife, Teresa, and I review our current farm financials — our staff, infrastructure and expenses — we sometimes shake our heads and ask each other, “How did we get here?” We never planned or even expected to be at our current scale. The growth happened largely without farm debt, and the business developed so gradually, for the most part, that we didn’t even realize where the trajectory was headed.
You could say it snuck up on us — over the course of 50 years.
Nothing stimulates creativity and motivation like being poor and hungry do. Teresa and I had limited financial resources — and I’m grateful for that. We both came from frugal families who always lived a little below their means. If every generation spends a little less than it makes and saves that surplus, wealth will accumulate. My dad and mom worked jobs away from the farm in order to pay for the land, but never made a living from the farm. At the time, the farm’s gross annual income was just a couple thousand dollars.
Because their off-farm jobs paid for the land, Teresa and I were able to launch without a mortgage when we decided to farm. That was a huge blessing and leg up, but before anyone thinks this deal put us on farming’s Easy Street, realize that every day, farmers who own their land or have inherited it still go out of business. Owning land does not necessarily lead to profitable farming.
We each brought some savings into the marriage and held off-farm jobs for a couple of years, until we had some money in reserve. In September 1982, I resigned from my position at the newspaper office, where I had been working as a reporter, to begin farming full time.
I was 25 years old, and nobody thought we’d succeed. But we knew that, as cheaply as we were living, we could survive for at least a year, even if the farm business didn’t work out. How did we accumulate those savings on modest salaries? We drove a $50 car. We remodeled the attic of the farmhouse into an apartment we rented out for extra income (we called it the “penthouse”).
We never went hungry because we raised our own food. Teresa canned and froze our garden bounty, and our meals were simple, seasonal and substantial. We cut our own firewood. We never went out to eat, to movies or on vacations, and we didn’t even have a television. (A cookout at the farm pond is still as relaxing and recreational as anything money can buy, and it’s a lot cheaper.)
For a little extra money here and there, I helped neighbors build fence, plant trees, make hay. When you’re living on $300 a month, $600 goes a long way. I guarantee you that we are making the most of those frugal years today because we didn’t let our spending get ahead of us early on. By cutting back on living expenses, we didn’t have to earn much from the farm. Eventually, all the belt-tightening added up.
Since then, we’ve been able to create a successful business, purchase an adjoining farm, and lease 10 pieces of land that are owned by people who inherited or purchased property but couldn’t figure out how to make it profitable.
Through direct marketing, we developed a customer base of families in the community who wanted pastured meat and poultry. We wore the hats of producer, processor and marketer so we could set our own prices rather than cast our wares on the commodity table.
We realized that advertising is often expensive, with undependable results, so we opted to rely on relationships to sell our products. I put together a slide program about ecological, pastured livestock production and presented it to civic clubs in the area. We gave samples to prospective buyers, and we rewarded word-of-mouth evangelists with free products.
These strategies kept our growth gradual, but also helped us develop good spending habits. If we had accumulated farm debt to grow quickly, we wouldn’t have developed the experience necessary for maintaining the integrity of our production. I’ve known numerous farmers who grew their farm businesses faster than their expertise, only to have their businesses collapse when disease or sickness hit, or they failed to keep up with orders. If you can’t market and deliver one pig, you sure can’t market and deliver a dozen. Going from 50 to 3,000 laying hens entails exponentially more skill and management.
The problem with debt isn’t that it’s inherently bad, but that it can quickly spin out of control — and it can enable a business to outgrow the owner’s knowledge, skill level and ability to produce. Suddenly, the operator is confronted with infrastructure limitations and challenges that go beyond his or her limited experience. At the same time, the cash overhead (debt payments, for example) rapidly escalates, and this squeeze can create a death spiral.
I encourage aspiring farmers to live in a tipi if they have to in order to stay out of debt, and to put every spare penny into their farms. Build a profitable farm business first. Do it on rented land. Do it on a small scale. If you only have 2 acres, make the most of those before thinking about upgrading to a bigger acreage. Under intensive rotational grazing practices, 2 acres is enough for 500 laying hens, a milk cow or two, 30 honeybee hives, 500 broilers, 50 turkeys, $20,000 worth of vegetables, and specialty fruits, such as blackberries, raspberries and strawberries. In Quebec, Jean-Martin Fortier, author of The Market Gardener, provides an inspiring modern example of how you can gross $120,000 on only about 2 acres of land.
In my experience, size is almost never the weak link keeping a small farming enterprise from being successful. The problem is constipation of the imagination — a lack of creativity, efficiency and business acumen. Fast growth won’t fix any of these problems; it will only compound them. If you aren’t successful managing a small number of acres or animals, why would increasing those numbers improve your situation?
If you’re struggling to keep ahead of the chores on a small place, the problems will only multiply if you expand. If you can’t successfully shepherd the birth of five calves, having a hundred births to manage will not suddenly make you a better farmer. If you can’t manage your own time effectively, having more people to manage won’t help.
Mastering any skill involves a learning curve. According to business guru Peter Drucker, the bottom part of that curve gets deepest in the fifth year or so of a new enterprise before the rise to success begins. In that valley, too many people either seek fast money or simply quit. The more practical and doable option is to persevere another year — learn from your mistakes, leverage your experience, and climb out the other side of the curve without being enslaved to big farm debt payments.
Impatience is not only costly; it’s often deadly for small businesses. Enjoy the time it takes to develop skills and relationship intelligence, and realize that sometimes a successful farm business is a multigenerational endeavor. You might not be able to accomplish all of your goals in your lifetime. That’s OK. Mentor someone who will take the vision and proceed, methodically and systematically.
Debt isn’t evil, but it should be sought out judiciously, turned to as a last resort and used strategically. Through the years, we’ve received a few gifts and loans. We’ve borrowed, but only when we knew the payback would be quick and assured. Debt is a hard taskmaster. Deferred growth is sweeter than endless loan payments.
You never have to repay a loan you don’t accept. If you want to expand, then be creative enough to figure out how to make it happen without saddling yourself with burdensome debt. As my dad used to say, “We make haste slowly.”
Seldom does a signed, sealed and delivered farming opportunity fall in anyone’s lap. Even if you’re starting with no money and no family resources, opportunities can open up for you, depending on the skills and confidence you’ve developed, and the track record you’ve created one manageable step at a time.
Ask yourself what you can do right now, right where you are, that will develop your knowledge base, build skills and help you determine the type of production you’d like to undertake. Then look for opportunity and be prepared to take the next step when you can do so in a sensible way. Everyone has a starting point; everyone has weaknesses and strengths. Is it more valuable to start with owned land, or with mechanical ability or marketing smarts? A more apt question might be, how do you leverage what you have within your own context?
“Profitable farms always have a threadbare look,” says Allan Nation, editor of Stockman Grass Farmer magazine. When you visit our farm, you won’t see fancy fences, spiffy buildings or expensive landscaping. We use what we have, for as long as we can, as frugally as possible. It’ll never get us respect on Wall Street or Madison Avenue, but it lets us sleep soundly at night. And that makes us wealthy in the true sense of the word.
Joel Salatin slowly shepherds his farm business with his extended family in Swoope, Va. He is the author of Fields of Farmers: Interning, Mentoring, Partnering, Germinating and numerous other books about sustainable farming.
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