Farm Dream, Chapter 2

Happy New year! So… here’s the next installment in my “Farm Dream” book. Remember, it is NOT perfect, but I hope there will be some good nuggets for you to think about as you begin, or continue on with, your very own Farm Dream!

 

Chapter 2

Homestead vs. Farm, Scale & Specializing

 

Homesteading versus Farming


Homesteading – a lifestyle pursuing self sufficiency by growing your own food and living off the land, possibly supplementing your income by selling any surpluses.

Farming – producing food or other farm products at a scale so as to make a living for yourself.

Homesteading is where many of us Farm Dreamers start. After tasting a bit of the good life and the reward and satisfaction that comes from growing good food, this quite easily leads to the desire and the “call” to become a farmer. Many people already want to quit their desk jobs, but just homesteading won’t allow for that. It can be hard to understand why, when you are an aspiring new farmer. HOMEsteading is focused on providing for the HOME, not customers. There’s an enormous difference between a farmer making a living entirely from their farm and a homesteader growing their own food, who sells a bit of product here and there, but doesn’t need to sell as specific quantity, because they are not making a living from it. A farmer has to build up a business to provide for their financial needs, a job of growing food for others. Homesteaders only have to take care of themselves, and usually they have day jobs, are supported financially by someone else’s day job, or are retired.

Both homesteaders and farmers are noble and good. However farming is an occupation and a trade, and homesteading is a productive hobby to various degrees. If you are filled with an entrepreneurial spirit, I would encourage you to strive towards becoming a farmer. In order to make the transition to full time farming though, you first need to be honest about what your financial and life goals are, and then be proactive in how you will achieve them.

Homesteading can be the first step towards following your passion, while you learn about farming. I homesteaded for 7 years for fun and as farming “home school.” I started a farm business while homesteading, but I kept my day job. If you are teaching yourself the agricultural arts by homesteading, starting with the simple goal of your beginning farm endeavor paying it’s own bills is essential. For instance, if you keep even a small flock of sheep right now, this year see if they can completely pay their way by you selling yarn and lamb from the flock. Covering your “practice farm” expenses by selling small amounts of products will allow you to practice your skills and grow your business smartly. Being savvy at selling enough products to completely cover your farm’s expenses is a skill in and of itself. This is one way to start farming and learning about making it into a profit-earning business that employs you full time. You learn slowly, but you learn hands on by making mistakes, adjusting, observing and growing from there.

There is what I call a “Small Scale Myth” out there, that you can have a picturesque, diverse and very small farm and make a living from it. You simply can’t, unless you are growing something extraordinarily profitable. Many aspiring and even beginning farmers don’t know how to absorb the fact of this “Small Scale Myth.” When you have a day job to pay your main expenses of living (rent, utilites, insurance, etc.), any extra money you make is lovely extra padding, but this is not equivalent to a living wage. If you raise a small batch of broilers and get excited when you’ve brought in $400, while it is a place to start, how many birds do you need to raise to entirely make your living from this activity? How profitable are they at the end of the project? Making enough profit from your farm is the only way to quit your day job, your farm’s profit is will pay for all the things your day job check currently pays for. If you want to quit your day job and go full time on your farm, you need to get yourself out of the headspace of the “Small Scale Myth.”


Another thing I need to communicate to you, the aspiring full time farmer, especially if you are currently homesteading, is that there is nothing wrong with wanting to make a living from your farm. The thing is- to be a farmer, you have to make sure anything you do as a business on your farm is worth your time, even if you enjoy it. It’s just not sustainable for you as a farmer to do things and not have your needs met. This can be hard for friends and family to understand and transition to as you evolve into a business. You need to understand and learn from the “Small Scale Myth.” Scale your farm business to meet your financial needs. There is nothing wrong with assigning a value to the time and effort and work you put into making a product to sell, but in the in-between stages of starting a farm, you may not feel confident in asking for the proper price. Don’t hesitate to do so. Don’t undersell yourself. Producing top quality products from your farm is not a charitable act. If you are uncomfortable asking for the proper amount, or even just taking money for your products, you may want to stick to homesteading and keep your day job. Running a business is not for everyone, farming or otherwise, and that is OK. Homesteading is a wonderful and fulfilling lifestyle!

What’s the true motivation behind your Farm Dream? Raising your own food for sustenance? Or being your own boss, making a living from the land? It’s simple math- if you are farming for a living, the bottom line is this: your profits have to be higher than ALL of your expenses. This won’t happen overnight. In the first years as you set everything up on your farm you’ll be lucky to have anything profit-wise to show at tax time. You will need to keep your day job on the side at first. Keep saving up as much money as you possibly can and re-­invest any bit of money you do manage to bring in from the farm right back into the farm. Expenses in any start-up business are usually higher than expected, and learning also means making mistakes which will set you back financially.

I want to clarify that there is space on a working farm for homesteading activities. As a farmer, I need to emphasize to you that if you want to be a full-time farmer, you must focus yourself on your business first just as you would go to a job, and don’t mix the two. My ex and I were very confused on this topic in our beginning years, for instance I was spending hours during the day making cheese which we couldn’t sell because we were not a licensed cheese facility or dairy. I was spending what should have been working hours on something that wasn’t a legitimate business. Now I have a rather strict schedule to ensure I am devoting the appropriate effort and time on the business. Homesteading comes second. The garden is not part of the business anymore, so gardening is done at the end of the work day. I hope you can see the differentiation there. By getting into this mental space of your farm business as your REAL job, you will prepare yourself for success more quickly.

 

Online Distraction

There are many online forums for homesteaders, but I want to caution you, and say loud and clear, as much as possible, get off the internet and get together with other people who also want to FARM for a living. Homesteaders are not reaching for the same stars as you. They want to provide their own food, maybe a bit of a surplus to share and it’s a glorious thing ­ but their scale will never be trying to achieve what you are aspiring to. I find it’s easy and pretty fun to get caught up in the online homesteader world, because they are a lively, opinionated group full of creative and inventive ideas. But when we’re talking about any kind of online forum, some of these people are sitting at a computer all day waiting to post something clever, but they are not doing actually doing any THING but typing out theoretical solutions or techniques. There is nothing worse than a self proclaimed “expert” who’s actually done nothing, and when this community is online, there is no way to know whether their ideas have actually ever been implemented.

You don’t have time to hang out in that world, and sitting online all day is not good for being proactive; it can be a vacuum that prevents you from getting things accomplished. Instead of getting sucked into the internet, get out there and go in person to visit other Farm Dreamers in person. Go visit their open houses, volunteer or work for your farmer heroes and see in person what they are doing, what is working well, what isn’t. Take a look at their scale, and see if they are willing to share some of what it takes to make a living as a farmer. Don’t impose on them though, they are busy working and this is their livelihood.


Doing what it takes
Embrace frugality as a tool to reach your goals. How much are you willing to sacrifice to succeed as a farmer? Examining your current financial and personal habits and patterns, striving to better them is a method towards farming success that is often not addressed. A farmer friend of mine told me as that the best way to approach becoming a full time farmer is to figure out first how much money I needed to survive. Then to figure out if I can trim anything back or completely off and, then, make a farm plan to make that amount of profit. Then I’d be full time farming. It sounded so refreshingly simple!

However, I’d never been honest with myself about my personal “budget” or lack thereof. I considered myself rather frugal by nature, but when I got a paycheck and after I paid my bills, I spent the rest on whatever I thought I “needed.” My farmer friend’s advice helped me to take a closer look at my personal expenses and begin practicing the all-important part of running a business and record keeping by starting on myself. Whether you are on land currently, or thinking about leasing, renting or buying soon, taking a hard look at how you are currently living and spending money is a major step towards becoming a successful farmer. The more cheaply you can train yourself to live now, the more likely you’ll be able to make it through the financially lean years of start up farming. I like to think of frugality as a challenge, and it is very satisfying to see how very little cash you can survive on. We can learn a lot about living cheaply from those who survived the Great Depression. Make do, or do without!

If there is one area I encourage you to be a bit generous on in your budget it is buying good local food from good farmers. Perhaps the types of farmers you want to emulate. This is not only better and healthier for you, but it is an act of good farmer karma. And you will make friends with a farmer, who may lead you down your farming path somehow sooner than you expected. Cooking your own food from scratch is A#1. The average person eating out just one $20 meal per week spends over $1000 a year. And many people spend FAR more than this, or go out much more often. Going out should be more of a treat, a special occasion. You can buy a lot of ingredients for $20, certainly more than one meals’ worth. You cannot afford to eat out instead of cooking your own. If you don’t feel comfortable cooking, ask a friend, or take out beginner cooking books at the library. Start simple to build your confidence, using inexpensive ingredients and small batches to teach your self and minimize financial frustrations. If you mess up a pot of split pea soup, it’s not as financially painful as ruining an expensive piece of fish. Invite friends over for “soup night”, host and attend potlucks for the social aspects of dining out. Learn to cook from the cheaper pieces of meat, or cut out meat entirely. Shop the bulk departments and compare prices between stores. Start preserving your own food even if you aren’t growing it yet- buy up the seasonal bounty at the farmer’s market and can and freeze. Organic tomatoes in a can at the store cost WAY more than a box of canning tomatoes at the market. Cook up staples in large batches and freeze in recipe sized portions. When you make a meal, freeze leftover meals to take to work as your lunch. Plan out your weeks meals, and work with a basic arsenal of whole food ingredients and whatever is fresh, local and abundant (cheaper) at the farmers market. There are many resources for eating better on a budget but it all begins with removing the attitude that cooking is a chore. It isn’t- cooking is a tool for success and health!

Junk food snacks also need to be cut out. Do you know how much per pound potato chips cost?! Eating better and healthier is also going to be very important for your physical and mental stamina as a farmer. The thing with eating healthy, whole foods is that you can actually eat less, since they fill you up and actually nourish you more. At first, you may not notice difference, as your body will want to eat the same quantity, but you’ll notice a change. Same goes for cutting out all the processed and sugary foods. At first you’ll crave what you were used to, but soon, with some serious determination, you’ll break through to the other side. Personally I noticed I could reduce my late night snack cravings by eating dinner later in the night. If you do want snacks, opt for cheap things like popcorn made on the stove top (not microwave- the packaging makes it 10 times as expensive and much worse carbon footprint wise,) or carrots you’ve cut into sticks with a healthy dip like homemade hummus. Try making your own crackers instead of buying the boxed ones, again the price per pound on these packaged pre-made products is very expensive.

On my old budget, I had $25/month for clothes shopping. For some people, this is a tiny budget. But the truth was, I enjoyed shopping in thrift shops. I didn’t need really to, but I wanted to have it in my budget. I stuck below my budget and found other creative ways to get “new” clothes by hosting clothes swaps with friends. The truth is, we don’t need new clothes that often. As farmers we need utilitarian pieces that span the various seasons we will be working in. Many of your friends may have closets full that they’d be happy to unload on you, or trade for some of yours. Garage sales can often be much cheaper than thrift shops and many people will bargain since they truly want their stuff gone. Try to work with what you have first, and then add articles of clothing you really NEED, not what you want. You WANT to be a farmer, not another person with the newest style or most modern, expensive gear.

If you are sitting with debt right now, whether consumer credit card debt or student loan, consider your new frugal ways as the method for paying those debts off. I hate to say cut up your credit card, as it can be a good tool, but at the very least stop using it. Learning to work with your budget means having the cash you’ve allotted yourself in your pocket, not the plastic magic card. What other ways are those dollar bills leaving your pocket or bank account? If you are prone to impulse buys, just stay out of shops. When you need to get supplies, make a list and stick with it. Learning how to control yourself financially is not a skill encouraged in the American culture. We are taught to indulge, give in, treat ourselves, we deserve it….this is what consumerism is and it’s driven by people who want your money. They prey on your human nature and if you look at it this way it may help you resist and retrain yourself away from impulsive shopping. It’s all in your best interest of becoming a successful farmer.


SCALE.


It’s scaling up your passion and skills, with a solid plan that you follow through on, that will give you the opportunity to achieve your Farm Dream and make a living as a farmer. You need to produce a lot of product to make a living as a farmer. Scale is the biggest place of mental adjustment for an aspiring full time farmer, especially if you’ve been practicing farming by homesteading. It’s a funny place the homesteading brain corners itself, where you celebrate getting handed a $20 bill for 5 dozen of your glorious chicken eggs, when seriously, you need to be bringing in much more than that each day. If you truly want to be totally self employed as a farmer, you are going to need to be realistic about what kind of quantities of product you need to produce and sell.

Right sizing your business, in this book, doesn’t mean aiming to be a huge company or becoming a multimillionaire. I believe there is such a thing as too big, when you aren’t even doing the actual farming anymore, but managing employees to do the work for you. You must examine if your call is to be a farmer in the soil with your hands, or supervising from a desk.

 

Efficiency and Scale

When you spend time doing nearly anything, it is usually not much more work to scale up because you are already expending x amount of time and effort to just go there and come back. Scale equates to more efficiency, which means more bang for your buck, or buck for your bang. Here’s an example: You have a chicken flock of 200 laying hens and successfully sell all their eggs, but after paying for feed, do you have enough profit to pay yourself for all the time you put in? Did you figure in the other expenses like their housing, the egg cartons, the fencing, the egg license, the cost of the birds themselves and raising them until laying age, etc?

If you had 1,000 hens, the investment and time wouldn’t change too much, and while it would require more of your time to clean eggs and tend hens, how much more than with just 200? The idea of talking about efficiency in this example is that you will spend X amount of time tending to the flock of chickens, collecting eggs, moving fencing, cleaning and packaging eggs up. Add a bit more feed hauling and egg time, but nearly everything else will be the same as far as your workload, you’ll just bring in more net profit. Scale of farming equaling more efficiency in your actions and thus more profit, aka your paycheck, is really important to understand in this regard. Your friends and family may ooh and ahh over you having 200 chickens compared to a couple of backyard hens, but that’s just not enough birds to make a living as a fulltime farmer. Consider that the successful Organic Valley Farmer’s Cooperative requires any new chicken egg farmers joining their co-op to have a MINIMUM of 3,000 hens. They understand scale, otherwise this farmers’ co­-op wouldn’t exist.

One question to ask your self when it comes to thinking about scaling up your passion and making a product that stems from it, when you do the numbers on your scale and your potential product- do you WANT to do/raise/make that much of that? Do you want to process literally tons of apples and can thousands of jars of applesauce? Do you want to transplant that many pepper plants, make that much sausage, wash that many eggs, shear that many sheep, bundle that many bouquets, etc? Trying to figure out scale in my humble beginnings, I used to do “farm math” on scratch paper taped to my steering wheel as I drove to my day job. How many bars of goatmilk soap did I need to make so I could quit that job? The better way to look at this is would have been how much was I making in profit per bar, and then how many bars did I need to make and sell in order to be able to afford to quit my day job? It came out to around 8,000 bars of soap per year. That is a lot of soap. I had perfected the efficient and scaled-up process for my soap making so that I COULD make about 300 bars a day. The final questions when I arrived at the reality of needing to make and sell 8,000 bars a year to quit my job were: did I really want to make and sell that much soap? Could I? Was it my true passion?

Net and Gross

Let’s talk about “net” and “gross” numbers. I think many new to farming or those doing it on a practice/small scale may need to understand pricing a product a bit better. If you spend $5/day on chicken feed for your flock and they lay 5 dozen eggs a day, and if you sell all those eggs at $1/dozen, you are losing money. Why? Because you have many more expenses than just the feed to consider; the chicks, the cartons, the coop, the fencing, the waterers, the electricity… and your time.

Gross” is how much money you bring in when you make a sale. So if you sell your eggs at $1 dozen, 5 dozen a day, you “grossed” $5. After expenses, your “net” was less than $0.

Gross profit (total sales amount) minus all related expenses = net profit.

Your Net profit # is what you will live on, it’s your salary as a farmer. But it can be surprising hard to make barely ANY net profit in farming, and especially so as a new farmer.

I’ll use my pastured veal calf experiment as an example of net and gross. I was following my passion of raising animals ethically, and dairy industry bull calves are often treated horribly as an unwanted by-product. If I liked raising them and they were delicious and my customers were interested, I’d scale it up big time. So here are the numbers. I brought in $1760 in gross profit from the sale of 2 calves as veal. WOW, right? But what were the expenses, and what was the “net” profit from that impressive number?

I bought three calves in May for $170 total (later that summer calf prices skyrocketed nearly 10 times that amount), two bags of milk replacer for $180, and $12 was spent on new bottles, and $60 worth of sweet feed = $422. The shelter and fencing materials were already here for them, so that didn’t add to the cost.

As far as labor, each day the calves were bottle fed twice, which took about an hour of time per day total for mixing the formula, bottling the calves and then cleaning the bottles. I didn’t count the time when I was just enjoying them, or taking them on walks down the road. I had them for 12 weeks x 7 days = 84 days= 84 hours. If I want to make $10/hour for my work, that adds $840 to the cost of production. My expenses before I figured my labor were $422 + $840= $1262, and there’s another expense to come- the professional, licensed butchery.

When harvest day came, I loved the calves and knew I would miss them immensely, but I was also very excited to see actual hanging weights, finally be able try pastured veal as well selling this ethically raised pastured veal to a few of my customers. I had the butcher come and harvest 2 of the calves for sale, and kept one to harvest for myself. The 2 calves were pre-sold as halves @$8/lb, and they had hanging weights of 110 lbs each (220 lbs total x $8= $1760). Each one was killed on-farm, skinned, gutted, transported to the locker, where they were cut and packaged into halves, this cost me $400 total. Here’s where we were at financially:

$422+840+400=$1662 in expenses

$1760 in gross sales.

That includes me being “paid” $840 for raising the calves plus a whole veal for my own use, and a profit for the farm of $98, which is good news! I say “paid” because I didn’t get a paycheck from this endeavor, any and all money goes to and from the farm business account. The point is, if I had priced the veal without considering my time and labor, I would have completely made a loss.

There are few variables in this example- if I had sold all three calves and had 330 lbs of veal to sell at $8/lb, that would have been $2640 in gross, not $1760. This would have increased the net profit for this project substantially. As this was an experiment, though, I really needed to keep some meat for myself and to give out as samples before deciding if it was something I wanted to scale up on in the future. A major lesson I learned during this project was that the labor hours I budgeted to raise the three calves (an hour a day) could easily raise 6 or 10 calves at once, which would lead to the time being spent even more “net” profitably. Only because of the inflated cattle prices as of 2015, have I chosen to not raise pastured veal for now.

If you sell vegetables at a farmer’s market and sell $300 worth of vegetables in a day, that’s $300 in “gross” sales. “Net” profit is what is left after you pay the expenses related to that sale. What did you spend to make that $300? The land for growing the produce, the Market Booth fee, the seeds, the compost, the equipment, the time spent on planning, seeding, transplanting, harvesting, cleaning, packing and displaying for sale, the time spent driving to and from the market. Many of the equipment dollars and labor hours spent will benefit the entire season’s worth of production, so you need to accumulate all of the sales over the whole season to figure out the over-all net profit for market vegetable growing.

Because I strongly believe that most newbies have absolutely no idea how much actual product they’ll need to sell to make a living as a farmer (hey, it took me a long time to figure this out too!), I want to give you a couple of examples as a visual for the scale we’re talking about to make a very, very modest living. If one were to aim to bring in $40,000 from the gross sales of a farm product in a year, you will be lucky to actually earn/”net” half that amount (can you live on $20,000 a year?) amount as profit, depending on your product of course. Many products will incur much higher production costs, and thereby reducing your net profit. And when you are starting up, your expenses of setting up your business and the learning curve itself will be very costly. So the reality is, you need to be aiming to produce much more than these numbers. Let’s use this $40,000 in gross sales as an example of a production goal to take an eye-opening and honest look at scale.

If I was producing skeins of yarn, selling them at $15 apiece, I’d need to produce and sell over 2600 skeins of yarn a year. If each fiber animal provides 10 skeins of yarn per shearing (I have no idea if it is more or less), I’d need the fleece or fiber from around 260 animals to be making a super modest living. However if I also sold the lambs from those 260 ewes each year as part of the business, then the numbers would be looking even better.

If I was focusing on growing and selling heirloom seeds in packets and plants for $3 each, I’d need to produce and sell over 13,000 units a year. If the average sale was 5 seed packets and 5 plants, I’d need 1300 customers.

If I canned heirloom tomatoes and sold them at $7/quart, I’d need to be making and selling at least 5600 jars every year, over 460 cases. If each jar needs 5 lbs. of tomatoes, I’d be looking at needing to buy or grow 28,000 pounds of tomatoes.

If I wanted to run a vegetable CSA, I’d need to have 67 members that each pay $600 for a subscription. I’d need well over 67 boxes worth of produce each week from my garden.

Remember these scale examples are to make a modest net profit of $20,000, which is a smaller salary than most people receive at a desk job. Some of these quantities are not too intimidating to imagine producing, some are terrifying. Add to that that scale doesn’t just need to be looked at in terms of quantity and producing that amount of product, but also selling it. While I might be able to grow 2 acres of garlic and make a living on that quantity, can I sell that much garlic? And how? It might not be possible in the first year, as a totally new farmer. This is the other reality with any business, it can take time to build your reputation and grow yearly sales of your product to income to a level where you can be truly self-employed. So, don’t quit your day job until you can reach your proper scale. We’ll talk about sales and marketing in the next chapter.

A food truck, commercial kitchen, restaurant or café, hard cidery taproom, a butcher shop, etc; all of these will all require much more in-depth evaluations on scale, volume of sales and quantity to needed produce, because of the complicated overhead needed to operate these types of establishments.

Specializing

While stacking functions and diversity are extremely important for a small scale farm, I strongly believe that your first focus needs to be on building a successful farm business revolving around one or two Core Products. Joel Salatin calls it a “MotherShip.” Specializing on a product that you are passionate about will allow you to give it your all. Your time, energy, efforts and focus will be better spent in the long run. The reason I say this is that if you have too many irons in the fire, you can’t pay proper attention to all of them simultaneously. Like I said before, in our early years, we were trying to do way too many things on the farm, flailing around trying to scrape together income wherever it seemed promising. Nothing can thrive under this method, other than madness! So focus focus focus. Once you have mastered your initial product (I sometimes say products, as you may have 2 products that come from one passion, like the yarn and lamb example) you can then branch out further as you see fit and desire. Learn to walk first, and then you can think about safely running.

I’ll give you a couple of examples that are based on 2 emails I received. One was from a young lady who really wants to return to dairy farming, after moving away from the farm she worked at for 10 years. She inquired about starting a CSA with fiber she’d spin from sheep and angora goats, as well as the meat from the offspring, and some pigs and ducks, and then also make soap, lotions and other body care items with her cows’ milk. Whoa. That is a LOT to bite off and do all at once, many animals to care for and things to make, let alone have any time to market and sell the products. What do you think she should do? I suggested she focus on the one she is most passionate about, and I suspect it is spinning fiber and/or cows. I encouraged her to not try to do all of the other things as well, not at first, or not as a part of the business (you can always have hobbies.) I told her to succeed with CSA she first needs to work on her branding for her farm by getting a website going, to establish some legitimacy and intention, whether she does the CSA on a very small scale or waits to begin it a year or two from now.

Another was a young man who desperately wants to quit his day-job and feels called to the land, to providing for himself and being as self-sufficient as possible, as well as the craft of beer brewing, including producing the crops to brew. He was thinking of a farm to table beer and wine destination, a little shop on his new farm, where local foods could be sold and served. He wants to take the leap and live this life, but is unsure of where to start. What do think he should do? The young man needed some information about what it is like to start up a business, and a bit of coaching about farming versus self-sufficiency. I suggested he focus on saving up money and learning about the bones of business when it comes to opening a shop and a brewery, he may want to get that running first and buy in the grain for brewing versus trying to also grow the grains and start a homestead on top of everything else.

How do you know what to specialize in? You must follow your passion. I can assure you that this will get you going in the right direction for success, and please, please don’t try to do too many things at once, at least not right away. You product may evolve after you begin, into something totally unexpected, but you still need to focus so that your efforts are directed to success.

 

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