2005 Annual Report for LNC01-194
Profit by Planning: Helping Fresh Market Vegetable Growers Meet Financial Goals and Improve their Quality of Life
Summary
Economic and labor data was gathered for a third and final year from 19 fresh market produce farms. These farms ranged in scale from less than an acre to over 80. An end-of-project survey was also administered to evaluate the project and ascertain impacts and outcomes. The final year of data confirms various patterns and trends including significant variability in income on individual farms from year to year as well as across farm to farm. Most farms are able to achieve a gross income per acre between $8,000 and $15,000. Net cash income is most often between 30% and 50% of gross income although some farms achieved higher net cash to gross ratios. Per hour earnings are generally rather low given the labor intensive nature of diversified, organic vegetable production and direct marketing. Higher returns were observed on farms with more experience and farms with a focus on CSA.
Objectives/Performance Targets
1. Growers and farm support personnel will increase their knowledge and understanding of the economics of fresh produce farming and direct marketing.
2. Growers will adopt and maintain successful record-keeping systems.
3. Growers will adopt new decision-making methods, management approaches, cropping and harvesting systems, technologies, or marketing strategies to make their farms more profitable and improve their quality of life.
Accomplishments/Milestones
1. Growers and farm support personnel will increase their knowledge and understanding of the economic and quality of life dimensions of fresh produce farming and direct marketing.
The original project was intended to span two growing seasons. Farmer participants were anxious to extend the project (even though they would not receive a full stipend or have project related expenses reimbursed) due to the value of the data being collected and the invaluable dialogue and interaction that took place at annual project meetings.
The growers have been unanimous in there sentiment that the project has been invaluable in terms of expanding there knowledge and perspective on the economics of fresh market vegetable farming especially as it relates to scale.
Growers outside the project are beginning to contact the project PI and are anxious to see the results and compare their farm numbers with those in the project. This demonstrates the considerable demand for this type of information and that value of what has been collected. Two new farms supplied numbers to the PI and these were compared and contrasted with the project database. While these numbers will not be a part of the final project report, they confirmed the validity and usefulness of the ratios. This exercise was also a great test for the PI to experiment with using the database to evaluate other farms and provide feedback on specific issues such as the impact and requirements of farm scale expansion.
The bulk of the work in the past year has been combing the data for patterns and trends and conducting an analysis that will form the foundation for the projects final report. These results will be featured in a publication published in early 2006 as well as presented at various workshops and conferences.
2. Growers will adopt and maintain successful record-keeping systems.
The third year of data collection was the easiest to date. The growers were in tune with what needed to be collected and provided their numbers promptly to the PI. Many growers have expressed their gratitude for the record-keeping aspect of the project because it is helping them to better track information, especially labor inputs. This allows them to pinpoint where improvements and changes could be made and it also helps them set prices based on a more accurate knowledge of labor costs.
3. Growers will adopt new decision-making methods, management approaches, cropping and harvesting systems, technologies, or marketing strategies to make their farms more profitable and improve their quality of life.
Some participating growers have already used the information from the project (and interactions with other growers) to implement changes on their farm. Others indicate they plan to use the data to set goals and make changes on their farm in the near future. It will take more time than originally conceived for some farms to identify what the numbers say about their farm and for them to figure out how to address a “short-coming” and implement changes. This is in part due to the variability in the data from year to year. It will take time for some growers to distinguish patterns in the financial performance of their farm businesses. However, as stated before, growers continue to report that they have indeed utilized the ratios and implemented successful changes. One farm has recently used the data to set more realistic (data-driven) income goals on a per acre basis and also uses project data to help set harvest goals for employees and motivate them to work more efficiently and effectively. Other farms are using the data to make investment decisions (greenhouse seeding technology, cultivating equipment) based on where they stand to reduce or replace hired labor costs.
Impacts and Contributions/Outcomes
The growers have all been successfully engaged in the project from start to finish. They exhibit great interest in the ratios and have expressed sincere appreciation for the opportunities and benefits this project afforded them…especially the chance to come together as a group to discuss the issues of profitability and quality of life. Thus, a unique and rewarding impact of this project has been the development of a community of growers who feel comfortable sharing information about income and quality of life values. The growers in the project have developed a strong sense of trust and speak very openly and frankly about both financial and personal (quality of life) issues. This is one of the strongest values of the ratio tool and the model of collecting and discussing the ratio data as a group. Hopefully, this project can serve as an inspiration and model for others to replicate.
The specific impacts and outcomes of this project will become clearer in the future as participating growers have time to glean lessons from the data and implement changes and witness improvements in quality of life and financial performance. As stated above, participating growers have been extremely thankful for the project and its goals. In addition, there appears to be strong and growing interest from both other growers and farm support personnel in this project and many are eagerly awaiting the final report, workshops, and other outreach activities.
Finally, the growers in the project have expressed their gratitude for a project that specifically addresses smaller-scale, fresh-produce farms—a somewhat neglected group of agricultural producers in terms of Land Grant University research and outreach. Thus, this project is serving as a relationship-building and capacity-building effort. It is helping develop stronger connections between growers and the University of Wisconsin.