Tracking Labor for Time and Enterprise Budgeting

Project Overview

ONE09-110
Project Type: Partnership
Funds awarded in 2009: $5,828.00
Projected End Date: 12/31/2009
Region: Northeast
State: New Hampshire
Project Leader:
Seth Wilner
Email
UNH Cooperative Extension

Annual Reports

Commodities

  • Agronomic: potatoes
  • Fruits: berries (blueberries), berries (brambles), berries (strawberries)
  • Vegetables: broccoli, sweet corn, tomatoes

Practices

  • Farm Business Management: budgets/cost and returns, agricultural finance
  • Sustainable Communities: infrastructure analysis

    Proposal abstract:

    The literature on small business management cites that one of the top three reasons for failure is unawareness of costs. Farm labor is often one of the highest and most difficult costs to track, yet it is critically important when analyzing enterprises, developing time budgets, or tracking employee productivity. Tracking labor is especially difficult on diversified fruit and vegetable operations that are common in the Northeast. The same is true with tracking equipment use. As profit margins shrink due to higher input costs, farmers find themselves needing this data to make sound management decisions such as which enterprise to keep, whether or not to purchase or sell a piece of equipment, or how much overall labor is needed. I have worked with the three farms participating in this project to develop whole farm plans. We have tried to track labor using notebooks and forms, yet none of these methods have proven effective. Likewise, published enterprise budgets are too general, as each farm is different in terms of their equipment, layout, and crop production methods. Our project will evaluate the feasibility of using an electronic hand-held tool to track labor and equipment on three diversified vegetable farms. The devices track the time and location of the tasks being performed, the employees performing the tasks, any equipment used, and a host of other related data that is categorized by crop enterprise. This data is then uploaded to the farm’s computer where it can be sorted to provide data for enterprise and time budgets. Our project will assess whether using such a tool in the field is practical and how much it can increase the efficiency of a farm’s management system. We will disseminate both the enterprise budgets, as well as the feasibility study to regional farmers through newsletters, web sites, conferences, field days and one-on-one meetings with growers. I have worked with numerous farms over the past three years doing whole farm planning and enterprise analysis. Without exception, when we went to assess the true costs of producing a crop, we lacked data on the costs of the labor involved. In many cases we also lacked data on how much equipment time was needed to produce the crop and its associated costs. Critical decisions often are based on educated guesses because data is missing. For example: Drop an enterprise? Expand it? Buy a piece of equipment to save on labor? How does a farmer predict total labor needs as crop enterprise mixes change? These decisions require hard data about labor and equipment. Tracking labor and equipment is especially difficult on the diversified fruit and vegetable operations that are common in the Northeast, as farmers spend small amounts of time on one task and then go onto another. For example, a crew may spend twenty to thirty minutes weeding carrots, move on to harvest broccoli for forty minutes and then mulch strawberries in a different field for two hours. As profit margins shrink due to higher input costs, farmers find themselves needing this data to make sound management decisions such as which enterprise to keep, whether or not to purchase or sell a piece of equipment, or how much overall labor is needed. In an effort to solve this problem we tried to use published enterprise budgets, yet these were too general and we felt even inappropriate, as each farm is different in terms of their equipment, production methods, and the efficiency of their labor force. Farm management specialists I have checked with have said that this is a ubiquitous problem and knew of no practical remedies. We have tried to collect such data by keeping field notebooks, but these got wet, were not always used, and had the greatest drawback of needing to have the data from the notebooks entered into a computer by hand. The data entry became yet another task that farmers did not have the time to complete. Keeping track of the copious amounts of data with a notebook is not feasible for diversified farms. Yet, in order to maintain or increase farm profitability, it is important for farms to be able to develop an effective system to track these critical costs and collate them by enterprise, employee, field, and time of year. A search of the national SARE database found no projects that covered this subject area. Our literature search on the subject found no practical systems that have been identified for farms so that they can collect this data for their own operation and use it in their management and decision making. Given that 85% of small businesses fail in their first five years, and that lack of knowledge about true costs is one of the top three reasons identified for failure, knowing the actual labor and equipment use associated with the different crop enterprises is directly linked to sustaining farms, especially in this difficult economic environment.

    Project objectives from proposal:

    One of the collaborating farmers previously ran large construction crews and knew of handheld electronic devices to track workforce productivity and clock crews at different worksites. He researched whether any such application was available for agriculture. He found a company that had modified such a handheld device for use on large farms in California. The company is called Exaktime and their device is called the PocketClock.

    The company has designed this device so that each farm can program in the activities and enterprises they want to track. Once programmed, simple touches of the hand held kiosk enables the users to track activities and equipment associated with the enterprises, the employees who performed the work, and how long it took them to complete the tasks. The information logged in the devices is then uploaded to a PC by simply placing the PocketClock in a cradle connected to the computer. The software that comes with the device allows the farmer to perform a variety of analysis. Another piece of software transfers information to QuickBooks, reducing payroll time.

    These devices appear very promising and easy to use, yet no one in our region has employed these on their farms. Are they as good as promised? Will they successfully be able to track such diversified data as farmers perform twenty to forty minute tasks and then move onto others?

    Three diversified farms are willing to take the time and put in the effort to test these devices. Two of the farms will attempt to track all of the equipment and labor associated with each crop enterprise, while the third is too large and will seek to track their major enterprises that include: strawberries, blueberries, raspberries, sweet corn, potatoes, scallions, field tomatoes and greenhouse tomatoes.

    The three participating farms are representative of many farms in our region. One farm has the enviable dilemma of trying to support two adult offspring who wish to come back and work on the farm full time. A second farm is questioning whether to buy a cultivating tractor to save money on labor and is also questioning dropping or expanding crops. This same farm also desires information on how much labor is truly needed and when. The third farm needs information to make crop mix decisions and also to increase their labor efficiency to ratchet up farm profits.

    We feel that by testing these devices on three different, diversified farms that are representative of many regional farms, we can truly provide valuable data. If the devices work, farmers can learn from our successes and set backs and create a system for their own farms. If the devices are not practical to use, then farmers will be able to learn from our efforts and avoid the monetary and time expenditures of attempting to track labor and equipment costs in this manner.

    No doubt each farm will have unique experiences trying to develop a system, implement it, and manipulate the data. I will work with the company and the farmers to learn how to use the devices, collect the data, and manipulate it so that crop enterprise budgets and farm labor budgets can be developed. We will share this information with growers through the outreach plan described below. It is important to note that the farmers are only asking for the costs of the equipment and software and are willing to provide all the labor and effort in kind.
    3. What are your project methods?

    We will purchase the PocketClocks upon notice that our proposal has been funded and each of the three participating farms will receive a PocketClock. (Edgewater Farm will receive two as they run multiple crews due to their size). I will work with Doug Grant from Exaktime to learn how to program and manipulate the PocketClocks and then teach this to the farmers. The farms will program both the activities and crop enterprises they want to track into the devices so we can simply use a touch screen to record all of our information during the growing season.

    Both Blue Ox and Gypsy Meadows Farm will record all crop enterprises and production activities; whereas Edgewater Farm has too many crops so they will target some of their major crop enterprises to track, including: strawberries, blueberries, raspberries, sweet corn, potatoes, scallions, field tomatoes and greenhouse tomatoes.

    Once the devices are programmed and the farmers trained, we will hold a joint training session to train all the field crew managers on how to use these devices and discuss our expectations about the information we desire to be measured.

    Since many of the crop enterprises we will be tracking begin with seeding and transplanting in greenhouses, the growers will record all labor and equipment data on paper and my secretaries will enter this on a computer so that we will have a complete labor history for each crop.

    During the growing season, the crew managers and/or farmers will use the PocketClocks daily to track all labor and equipment for each enterprise. The specific data to be tracked will include: crew members involved, fields where the work was performed, equipment that was used, length of time for equipment use, activities conducted each day, and length of each activity. The PocketClocks will be uploaded at least weekly to a PC and checked to make sure that the data transfer was successful.

    I will check in with each farm on a weekly basis to make sure that things are progressing smoothly. If problems arise, I will resolve these issues with Exaktime.

    At season’s end, all data will be collated by enterprise, identifying total labor and equipment time devoted to each crop enterprise. The times will be converted to dollar figures by multiplying hourly labor by the rate for each of the employees. Likewise, hours of equipment use will be translated into financial figures by averaging fuel consumption, maintenance, replacement cost, and other costs for the season and dividing it by the hours each enterprise required.

    Finally, the total costs will be added to the enterprise budgets and the enterprises will be assessed for profitability and appropriate price levels. Other management decisions will be made using this data. These may include purchasing or selling equipment, raising prices, and expanding or dropping enterprises.


    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.