Friday, December 16, 2011

Economics of a small farm

Are nerdy accountant type folk allowed to be farmers? I hate to admit it but I’m not a very good farmer nor am I educated or experienced in such realms. One of the most looked at posts on The Simple farm is when I discuss whether land can pay for itself. So I assume some of you must be of the nerdy influence as well.

My day job includes mostly financial skills and with that background I always find myself crunching numbers on the feasibility of various profit centered activities.

For instance, does the time and effort it takes to keep a flock of chickens have the potential to make it rich if we just stick with it?

Or how much garden area would we need to plant to have a viable long term chance at quitting my day job and doing it full time?

Or maybe, just maybe, if the stars align we can earn a living raising super duper grass fed and finished beef? I mean, some people are making money doing this right?

Well over the past year we’ve had quite an eye opener on how much money, effort, and luck it takes in various farming activities. Let me list all the things we were tangled up in:

  1. Planted a fairly decent beginning size garden
  2. Bought a Jersey milk cow which also came with a steer. We milked the cow morning and night for several months until we dried her up as she calves in early January
  3. Acquired a flock of 30 chickens (give or as a few died and we just picked up a few point of lay hens). About 19 of them are laying hens
  4. We (Milly) butchered 15 roosters. (Remind me to post on that. I wasn’t there as I was away on business (which is a rather sore topic) but she took pictures and gave me vivid details of the process while I ate pizza and watched TV in my hotel room. (Opps, did I just confess to that out loud))
  5. Harvested and stacked around 25 acres of hay
  6. Started building a farm house
  7. Picked berries in the river bottom
  8. Blogged about the experience
  9. Picked herbs and plants for medicinal purposes around the area
  10. Moved several…well used (I didn’t want to use the word decrepit) buildings for farm animals to our place
  11. Built fence to keep in farm animals and another fence to keep out wild ones

Well, I’m not sure if you’re impressed with the list above but I’m pretty dang tired and I’ve worked my wife and kids to the bone so I assume the above is a pretty good list for one spring/summer/fall seeing that I still held down a full-time day job as well.

So where do the numbers come into play? If you are starting to shake and sweat with me even mentioning the phrase expense and revenue I’d suggest skipping to the end of this set of posts to read my summary.

This is your last chance to bail to the end. I mean it. I’m going to get really boring. The following is the stuff Milly asks me to talk about at night when she can’t sleep.

Yuck, Numbers Type Stuff

OK, if you are reading this you are either:

  1. An accounting nerd
  2. Glutton for punishment
  3. Deciding if any of the above activities are worth it
  4. Have done any of the above activities and are wanting to compare my experience with yours
  5. An accounting nerd

So, for those brave enough to still be reading this I will make an attempt at determining a profit and loss number for each activity.

Assumptions: To be fair I’ve included as revenue the amount of money we would have spent if we wouldn’t have done each activity. We didn’t really sell anything as I’d rather keep anything we produce than give away our best source of fine quality delectable's.

Please don’t question my numbers too closely. I’ll admit we are hippy, granola type folks that like good local food and we’ve gone to great length and expense in the past to acquire such wares. Why don’t you plug your own numbers in as a comparison to see if I’m off my rocker.

Garden

We tilled and planted a garden 30 feet by 30 feet. We knew we wouldn’t have that much time this summer so we started small. Next year we will probably double the area at least. We probably have enough seeds left over to do a good portion of our planting next year. We’ll have to take out the fence and put in a new one but I seem to find posts and wire all over the country side.

Revenue    
Potatoes $150 50 lbs @$3/lbs
Carrots $75 25 lbs @$3/lbs
Onions $25 25 lbs @ $1/lbs
Squash $2 2 lbs @ $1/lbs
Parsnips $20 20 lbs @ $1/lbs
Peas $4 4 lbs @$1/lbs
Tomatoes $40 10 lbs @ $4/lbs
Watermelon $0 Cold summer
Summer Squash $40 20 lbs @ $2/lbs
Beans $10 5lbs @$2/lbs
Beats $20 10lbs @$2/lbs
Radishes $6 3 lbs @ $2/lbs
     
Total Revenue $392  
     
Expenses    
Seed $150 (didn’t use it all)
Tilling $40  
Fencing $50  
Gas $100 Probably low est.
Labor $1500 – (That’s just ridiculous. I’m going to keep out labor but you get the point) (2 adults, 50 hours a piece in total @$15 per hour. No child labor included)
     
Total Expenses $340  
     
Net Profit $52 Yippee

 

So was planting a garden worth it? Financially speaking, probably not. We didn’t have to go to the grocery store at all for about 5 months. I like that a lot. I hope to grow enough in the future to last me the whole year. We will continue to do this. We like growing things and find great self fulfillment working with our kids in the garden.

How big would you have to be to make money at this? I’ve been to small farms that are at full capacity for one to two people that plant 2 acres worth of garden. But that takes all efforts in managing such an area for the one to two people.

I’ve estimated that such a farmer, one who sells their wares at a farmers market, would roughly bring in around $4000 worth of revenue per month during the growing season (that has a lot of assumptions along with it as well). I’d guess expenses would be around $1000 per month. So not too bad of an income I suppose as long as you don’t include labor numbers. And that is probably only for about 5 months worth of time.

I could go on but you are probably already tired of this post.

Milk Cow

We bought a 6 or so year old Jersey cow in June.

Selling raw milk is illegal in almost any state or province in North America. There are also quota’s sold to dairy farmers so to get into this business is rather difficult. I’ve confessed some nefarious activities we’ve been apart of in the past regarding raw milk.

I don’t want to sell milk to anyone. I love our milk and I’m itching for the day I can start milking again when Rosebud calves in January. However for this exercise I’m going to include how much money we have saved as revenue.

Revenue    
Milk, Cheese, Butter, Kefir, Yogurt, Chicken feed, Calf feed, $10,800 Average of 3 gallons/day @$12/gallon for 9 months
     
Expenses    
Feed – Hay $750 $5/bale. 1 bale a day for 5 months
Feed – Treats $150 Alfalfa pellets, ets.
Fencing $100  
Purchase price Dep $360 $1800/5 years
Labor $8100 1 hour/day for 9 months, $15/milking
Equipment- Ropes, halter, buckets, sheds $300 Generously on the low side
     
Total Expenses $9760  
     
Net Profit $1040  

 

I fluctuate between really liking having a milk cow and wishing I cold just buy the stupid stuff. Having a milk cow has made it so we don’t have to go to the store. Veggies are important but if we didn’t have such an over abundant source of milk we’d still have to frequent the grocery store with out question.

We also wouldn’t use milk in nearly the quantities we do if we had to buy it by the gallon. We were paying $12 per gallon to buy pasteurized  whole milk so only bought about 3 or 4 gallons a week. Having a cow we use about 2 gallons a day on just drinking. ha. Not including butter, yogurt, cheese, etc. We also feed the chickens with the skimmed milk or butter milk. It’s hard to drink that stuff after having full cream Jersey goodness.

The negative part is the time commitment. Rain or shine or cold the cow needs to be milked morning and night. It’s also very hard to go away at all when the thought of Rosebud engorging by the minute is in the back of our minds.

We also have a ready source of hay as we harvested bales from our land this year. It would be way stressful if I had to pay $5 every time I throw a bale into the cow. I guess the hay really is costing me that much as I could sell it for $5/bale if I didn’t need it myself but it seems differently for some reason.

Everyone says a cow only needs like 18 lbs a day for feed but our Jersey is way more than that. All the old time farmer are saying we are wasting hay as the cow just poops it out but none the less we still feed her about 50 to 65 lbs a day.

In weighing negatives and positives I’d do the cow again.

To Be Continued

I’m going to need to break this post up. I doubt this post will fit on the blog it’s getting so long and I need to go feed the cow and chickens.

To Be Continued…

4 comments:

  1. Wow! Thanks for the post. We're so right there with you. We'd probably have a dairy cow for ourselves also if I didn't already work on a dairy... At least you get a few months off!

    I can't believe how expensive milk is in Canada! Holy cow! Was it from a grassfed organic dairy?!

    When it comes to including or excluding labor costs/depreciation, I tend to just forget it. Yes I could make (x) by working elsewhere or make (x) by selling stuff instead of using it, but sometimes I believe there's an unsaid gain from doing things ourselves (health benefits, enjoyment, time with family working...) Does that make sense?

    In other words, if in the future, Laura and I have a small(er) farm where we can produce most of our own food and make enough money for a decent living on top of that, I'd be very content with just forgetting all the (lost) profit.

    well, maybe that makes sense...

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  2. Oh! And by the way, have you ever read any books by Wendell Berry? You would love his essay 'The Economies of Subsistence' from his book The Gift of Good Land. And really, any other book by him.

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  3. This is an ongoing topic at my blog, so I know exactly what's going through your mind. I think the biggest obstacle we modern day folk have is a mortgage, and let's face it, land and homes and especially farms are not cheap. Back in the day, folks inherited the family farm and everything that went with it, including the knowledge and skills. On the other hand they had less stuff and less complicated lives. And, I suspect they didn't think of things in terms of a monetary value, but how well it met their needs. Still, I can't imagine myself doing anything else.

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  4. Neal and Laura, The milk we buy when our cow is dried up is simply pasturized whole milk. It's still nothing compared to the stuff we get from our Rosebud. Milk in general is expensive in Canada due to the milk regulations here. Costco milk runs around $5 to $6 a gallon so the non Costco stuff is about double.

    I agree with the DIY attitude. I find a lot of fulfillment in doing things for myself including food production etc. I'll look up the book you mentioned.

    Leigh, Thanks for the comment. I've read some of your posts and agree with you. We are trying desperately to stay out of debt as a mortgage is dreadfully opressing. We've saved up an worked for about 14 years to be in a position to get on this farm. I suspect that's not that long compared to some. We are lucky I can work my day job while living on the farm.

    We are kind of lucky to be living in the Canadian tundra. Land isn't that expensive yet although there is probably good reason for that as the growing season is a whopping 4 months out of the year.

    I'm convinced living on less and cutting costs are a major factor on being able to work and thrive on a farm.

    Good discussion. Thanks again.

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