Final report for FW22-395
Project Information
The domestic cut flower industry is growing, yet we lack key financial and profitability metrics. With no references of profitability to aspire to, new flower farmers have no sense of potential yield for individual crops, or sales and net margin goals. Without this information, flower farmers are making business decisions based on trends and market pull, rather than knowledge of the profitability of their production and marketing systems.
This project worked with a cohort of 5 successful, established flower farms over one year to track cost of production, variable profit per crop, and key financial metrics, analyzing the profitability of their businesses, and developing benchmarks. These farmers were able to assess how to make smart decisions for their businesses by identifying their profit centers, crops and processes where they are losing money, and specific parts of production that need improvement.
By starting to build a larger data set of these metrics, flower farmers will better be able to undertake sound production and financial planning, building businesses to be sustainable not only financially, but for the farmers' quality of life.. We encouraged cost of production studies on more farms by publishing our results widely. Flower farmers armed with the information of what crops have the potential to be profitable under what circumstances will be able to grow more quickly and sustainably, and to stay in business longer. This will allow the sustainable cut flower industry to grow, create more jobs, and take back market share from imported flowers.
- Establish both the cost of production on 3 crops as well as key financial metrics for 5 flower farmers over the course of one year, using the Know Your Cost To Grow program (developed by Oregon State University’s Center for Small Farms and Community Food Systems in partnership with Oregon Tilth) with Lennie Larkin as a hands-on facilitator.
- Trained the farms to analyze their data and chart pathways to financial sustainability based on refinement of studied production processes and crop choices. This helps farms to prioritize the goals of sound ecological stewardship, quality of life for both the farm owners and their employees, and positive contributions to their local agricultural communities.
- Began the establishment of a larger benchmark database for cut flower farmers by publishing our findings, associated case studies, and fact sheets for each crop.
- Upon completion of the program, established best practices for tracking cost of production for flower farmers, to be shared through our educational component.
Cooperators
- - Producer
- - Producer
- - Technical Advisor
- - Producer
- - Producer
Research
Objectives:
- Four Farms tracked the cost of production on 3 crops from April 2022 - December 2022. The project began with five farms, but two dropped out partway through and we were only able to add in one replacement (Gina Strathman, Longer Table Farm), so we have data from four farms. Additionally, the PI was planning to take data from her farm as a 5th farm (not included in the budget, just a goal), but her season was cut short by a dry well and she subsequently moved the farm from California to Oregon in the height of the season and ceased production.
Methods:
- We did this by working together as a cohort, facilitated by Lennie Larkin as the PI, using the Know Your Cost To Grow program developed by Oregon State University’s Center for Small Farms and Community Food Systems in partnership with Oregon Tilth.
- This was the process for each farm:
- First, they signed up for accounts and familiarized themselves with the KYCTG program.
- They then had one group zoom with Lennie Larkin and the agricultural professional, to go through the program step by stem.
- They then followed up with one zoom meeting with Lennie Larkin to address individual concerns and questions, and to make individual plans for data tracking. Each farm worked with Lennie to determine the most practical means of tracking data over the year, whether on paper and clipboards placed in strategic locations on the farm, or on smartphone-based spreadsheets that are easily accessible.
- They then conducted ‘time studies’ on the different tasks associated with production of the crops in question (guided by the KYCTG program). These covered each aspect of pre-harvest, harvest, and post-harvest labor and inputs for the two crops they chose out of a list of five potential crops
- The farms entered this information into the Know Your Cost To Grow software as it was gathered, or at a minimum at the end of every month.
- They checked in with Lennie by text once a week to troubleshoot any problems, and shared collected data with Lennie on a monthly basis.
- Lennie conducted one site visit to three out of four farms in the 2022 growing season to troubleshoot problems in person, and to document specific growing techniques and machinery. The fourth farm tour was conducted via Zoom due to health considerations on the part of the farmer.
- In December of 2022, the farms met via zoom as a group and individually with Lennie and the Agricultural Professional, to calculate their end-of-year data.
2) By February of 2023, the PI compiled and analyzed the cost of production for 2 annual flower crops, collected on four farms between April 15th of 2022 and December 31st 2022. Two of the farms were able to study more than two crops, one studied two exactly, and one was only about to complete analysis on one crop.
Methods:
- Farms met with Lennie and the Agricultural Professional individually in the beginning of 2023 to analyze and interpret data.
- By February of 2023, Lennie Larkin documented the process of tracking cost of production and identified areas of hardship, tips and tricks to make this process easy to replicate. This information was be collected by Lennie each week, who noted where the challenges lie.
- By March of 2023, we analyzed and compared the cost of production of at least 2 crops between 4 farms.. This was done by Lennie Larkin and with assistance from the agricultural professional. We noted not only the numbers and data, but descriptions of production practices that could lead to differences in data.
- By March of 2023, we compiled key financial metric benchmarks between the four farms, including net income to gross sales ratio, and labor hours to gross sales ratio. However, this part of the research needs significantly more attention in order to be interpreted and published. For further research, the PI is bringing on a technical advisor well versed in financial benchmark studies to spend more time with each farm's financial data.
We have learned from previous studies that farms require more hand-holding than they had anticipated. We therefore built a lot of PI hours into the grant to be quite hands-on with the farmers. But most farms had difficulty tracking or analyzing their data, and were only able to manage the tracking of 2 crops rather than 3, so we analyzed the data they did manage to collect, and explained where and how the tracking failed.
Objective 1: Four Farms completed cost of production analyses on 2 crops each from April 2022 - December 2022.
Results and Findings:
Each of the four farms that remained in the study succeeded in tracking and analyzing their costs and contribution margins on 2 crops (one farm only finished the study on one of two crops). Through this process, the PI and Technical Advisor learned a great deal about how to fine-tune the pace, pedagogy, support structure, and accountability piece for the Know Your Cost To Grow program. This information was invaluable in setting the PI up for a phase 2 of the grant with twelve farms over the course of the next two seasons, and we came to see this year as a training ground upon which we can build better, more accurate, and expanded data. We learned broad lessons, such as the need to more heavily front-load the educational component of the program before the season begins, the need to thoroughly work through each component of each farm's production system for each crop so that we could answer questions as they arose, and the need to set up a weekly accountability structure to keep farms on track. We also learned specific lessons as related to cut flowers in particular, such as specific issues that arise when dealing with specific crops.
With frequent meetings and support from the PI and technical advisor, the farmers involved in the study also learned a great deal. In a broad sense, they gained confidence in analyzing their crops, not shying away from looking at their numbers, and were able to either validate or disprove hunches they had as related to a crop's relative success on their farm. They also learned how to strategically analyze and then alter their crop list to improve the financial outcomes for their farms.
Objective 2: By February of 2023, the PI compiled and analyzed the cost of production for 2 annual flower crops, collected on four farms between April 15th of 2022 and December 31st 2022. Two of the farms were able to study more than two crops, one studied two exactly, and one was only about to complete analysis on one crop.
Results and Findings:
The PI, with substantial support from the technical advisor, were able to successfully compile and analyze the results from each farm. This allowed us to compare crops across 2 or more farms in some cases, and in most cases, to compare two crops on each farm, in order to provide the farmer with information necessary rank the two crops in terms of their contribution margin (relative to both bed space and labor). The farms chose their crops off a short approved list, and while in an ideal world all farms would have studied the same crops, we also wanted the farms to choose crops that were relevant and meaningful for their production. In the end, this meant that there were a few crops that we could compare across two farms, and only one crop that we could compare across three farms. This has been adjusted for phase 2 of the grant so that more farms have more crops in common.
The below tables shows the results at a glance for each farm.
|
Table 1.1: |
Raindrop Farm | |||||
|
Crop |
Crop Unit |
Price |
Variable Cost Per Marketable Unit |
Contribution Margin Per Marketable Unit |
Contribution Margin Per Direct Labor Hour |
Contribution Margin Per Standard Unit of Space |
|
Ranunculus |
Stem |
$1.60 |
$0.59 |
$1.01 |
$94.59 |
$1040.58 |
Raindrop Farms completed the analysis for their ranunculus crop, which showed a positive contribution margin.
|
Table 1.2: |
Whipstone Farm | |||||
|
Crop |
Crop Unit |
Price |
Variable Cost Per Marketable Unit |
Contribution Margin Per Marketable Unit |
Contribution Margin Per Direct Labor Hour |
Contribution Margin Per Standard Unit of Space |
|
Sunflowers |
Stems |
$1.70 |
$27 |
$1.43 |
$154.91 |
$1,147.75 |
|
Dahlias |
Bunches |
$12 |
$4.02 |
$7.98 |
$121.89 |
$2,394.80 |
Both of Whipstone Farm’s crops studied, sunflowers and dahlias, had positive contribution margins per marketable bunch. The results show that sunflowers outrank dahlias, measured by the space constraint, and dahlias outrank sunflowers, measured by the labor constraint. In essence, this means that if Whipstone was short on labor, they should prioritize sunflowers over dahlias, but if they were short on bed space, they should prioritize dahlias over sunflowers.
|
Table 1.3: |
Longer Table Farm | |||||
|
Crop |
Crop Unit |
Price |
Variable Cost Per Marketable Unit |
Contribution Margin Per Marketable Unit |
Contribution Margin Per Direct Labor Hour |
Contribution Margin Per Standard Unit of Space |
|
Sunflowers |
Bunches |
$6.13 |
$0.99 |
$5.14 |
$132.39 |
$1,746.24 |
|
Dahlias |
Bunches |
$8.94 |
$4.08 |
$4.86 |
$71.93 |
$1,332.99 |
Both of Longer Table Farm’s crops studied, sunflowers and dahlias, had positive contribution margins per marketable bunch. The results show that sunflowers outrank dahlias, measured both by space and labor constraints.
|
Table 1.4: |
Roots Flower Farm | |||||
|
Crop |
Crop Unit |
Price |
Variable Cost Per Marketable Unit |
Contribution Margin Per Marketable Unit |
Contribution Margin Per Direct Labor Hour |
Contribution Margin Per Standard Unit of Space |
|
Sunflowers |
Bucket |
$75 |
$30.31 |
$44.69 |
$61.06 |
$303.93 |
|
Ranunculus |
Stem |
$1.50 |
$0.42 |
$1.08 |
$115.98 |
$14,594.33 |
Both of Roots Cut Flower Farm’s crops studied, sunflowers and ranunculus, had positive contribution margins per marketable bunch. The results show that ranunculus far outrank sunflowers in terms of space (5x), as well as by labor hour (2x).
Objective 3: The PI surveyed and compiled key financial benchmark data from the four farms.
Results and findings:
This objective constituted a much smaller part of the project, and proved to require more professional support in order to gather and analyze the highly specific data points necessary to draw any conclusions on key financial metrics. To that end, phase 2 of the grant will include John Hendrickson, Farm Viability Specialist at the Center For Integrated Agricultural Systems at the University of Wisconson-Madison, to lead the creation of a tailored financial survey, and to interpret the results.
That said, with the caveats that the 4 farms may use different accounting methods and definitions when it comes to expenses such as assets and overhead, we are able to tentatively share the below table.
| Table 1.5 | Financial Benchmarks | ||||
| Metric | Farm A | Farm B | Farm C | Farm D | Average |
| Cut Flower Revenue / Acre | $65,674 | $32,303 | $55,725 | $61,000 | $53,676 |
| Cut Flower Net Margin | 33% | 31% | 32% | 33% | 32% |
| Payrol to Revenue | 30% | 31% | 38% | 31% | 33% |
| Total FTE / Acre | 0.73 | 0.78 | 0.75 | 0.73 | 0.75 |
It proved to be very interesting how close the farms were, across the board. This is data we're excited to dig into deeper and expand upon in the two years to come.
Research Outcomes
Recommendations for Sustainable Agricultural Production:
We recommend encouraging as many growers as possible to partake in Know Your Cost To Grow or other crop costing activities. It provides priceless data that allows each farmer to make better business decisions. Farms can start small on their own or join a cohort, and we would love to see more supported studies in the future, as we've learned that facilitation can be wildly instrumental to a farm's success in getting the analysis done.
We recommend that flower farmers pay close attention to their transplant input costs, as reducing costs in that area can have significant impacts on crops' contribution margins and ultimate farm profitability.
We recommend that flower farmers pay close attention to their harvest process and efficiency, as this is consistently a high-labor activity and room for growth.
We recommend that farms keep better track of their yield.
Recommendations for Future Studies:
We recommend further studies specifically in the Know Your Cost to Grow tool, but also in the crop costing and enterprise budget process in general. More farms need to have this information in order to keep their businesses alive, and to support sustainable agriculture as a whole.
We also recommend further studies on yield data on cut flower farms, so that farmers can properly evaluate a crop's potential before growing it at scale.
Education and Outreach
Participation Summary:
In March and April of 2023, we shared the information we gathered and analyzed, on both the process of gathering data and analyzing it for the purpose of farm business growth, to flower farmers and farm advocates, via print, video, and social media means. To do this we did the following:
-Produced one informational two-page crop fact sheet per farm, including all year-end numbers gathered, showing the calculations and Contribution Margin. These sheets include easy-to-read charts along with explanations of differences outcomes. These are geared towards producers, available online, made known to the almost 3,000 members of the Association of Specialty Cut Flower Growers, and emailed to agricultural professionals across the country who have conducted benchmark studies for vegetables so that they may share them with producers in their areas. Note that the makeup of these fact sheets changed slightly from the project proposal, due to the vast knowledge that the PI has gained of both the Know Your Cost To Grow Program, and crop costing in general. The PI shifted the fact sheets a bit towards the most salient and helpful information to share (and left out certain nonessential items such as photos, production anecdotes, and average numbers rather than individual ones). These sheets were developed and distributed by Lennie Larkin. The main summary sheet only was translated into Spanish by a contracted translator, and was shared with via email to an email list of 1,350 interested growers and farm advocates. These were completed by late April, 2023.
- We have adapted tidbits from the above fact sheets to ingestible social media formats, and have produced a catchy instagram post for each. The first two of these have been shared on Lennie Larkin’s B-Side Farm instagram account and broadcast to her 20,000 followers, and we will encourage interested viewers to share it widely. The first two were shared by April, 2023, and the remaining will be rolled out through May.
-Lennie Larkin conducted year-end surveys with each farm and produced one shared fact sheet compiling the most salient information expanding on data shared in the crop factsheets and containing anecdotes that helped or hindered success in the process. These were be geared towards other farmers and distributed to the same channels as the above fact sheets. These were completed by late April, 2023.
Lennie Larkin led a panel webinar with all four farms and the technical advisor on March 28th 2023, which was be distributed widely to the ASCFG, other farming groups, and shared widely via social media and a mailing list. By recording this and allowing anyone who wants to access it for free, we hope to continue to reach underserved farmers who have no resources or connection to farming business courses. We plan to gain at least 500 views on this webinar, and it is now available on Youtube for viewing into the future. For the live webinar, we had about 40 actively engaged participants, and we used the SARE survey to gauge their interest, responses, and subsequent behavior. See attached summary of survey results. The webinar was considered wildly successful and will remain evergreen. It is available here: https://www.youtube.com/watch?v=qCf-lrzCbDU.
In lieu of pitching an article Growing For Market magazine, Lennie will be presenting salient results at the annual ASCFG national conference in St Louis in November. She would prefer to gather more data in phase 2 of the grant before writing and article with such wide reach.
Results:
Webinar: We received wide interest in the webinar and in addition to the 40+ people in attendance and 90 people who signed up for the mailing list to receive information, we continue to receive emails for further information from growers, farm advisors and educators.
Social Media: It's difficult to quantify the actual reach of certain social media formats, but "impressions" across the board are high compared to B-Side Farm's regular content. We receive hundreds of questions and comments from growers on methods and crop profitability in general.
Fact Sheets: These digestible materials go beyond what's available in a social media format, and are available on B-Side Farm's website to view along with the webinar replay link. We're hopeful that those who view the webinar will read the accompanying sheets and confident that they'll help to make sense of the findings.
Education and Outreach Outcomes
Ways to effectively disseminate agricultural research results:
Social Media:
Because small and first-generation farmers are often active on social media, finding them there is highly effective these days. Engaging with my farming audience on the topics of farm and crop profitability, crop costing, labor requirements, and financial literacy allows me to bring meaningful discussions to a potentially meaningless dialogue.
Webinar:
A free webinar that didn't demand much of the participants was a great way to lure people into learning about this topic. Video is the medium of the day, and many people would rather watch than read.
Fact Sheets:
When people do read, they want it to be accessable and bite-sized. Condensing our findings into short fact sheets has proven to be successful.
Financial acumen
Crop costing
Labor requirements
Production Efficiency
Pricing