“The biggest fallacy in farming is that there is no money in it.” 

One of the most important tools in a farmer’s toolbox is financial planning and record-keeping. I know, not the most exciting subject in the world but oh so important if you want your farm to survive in the long run. 

If you don’t pay attention to the number-crunching side of your market garden, you could be in for some very long days with little to show on your bottom line. 

Most of us who are starting a market garden or already have an established farm strive to work less and make more money. Of course, in the beginning, long hours are going to happen, but the eventual goal is to work less while still making a comfortable income.

Like it or not, farmers are in the business of farming.

Farming is a business.

Business = Farming. 

Any way you slice it, it’s the farmer’s job to make sure the farm business survives

If you want your market garden to survive, it needs to be profitable.

Basic rule of business: Stop doing things that lose money.

Sounds simple enough.

Much of the information provided in the article is from Richard Wiswall’s The Organic Farmer’s Business Handbook, which I highly recommend.

Farm For Profit, Not Production

Profit = Income – Expenses

Often farmers calculate profit just once a year, at tax time. However, the annual calculation of profit is usually an average of all the various activities that make up the farm.

Diversified organic farms may have dozens of parts that make up the whole, such as lettuce, tomatoes, zucchini, microgreens, and seeds.

Each activity has its own unique cost and benefit. 

The odds of having all the farm’s activities equally profitable are very low. 

Each individual crop will have its own profit equation.

For example, you will use the Profit = Income – Expenses for your tomato crop, and again for your lettuce crops, and again for your microgreens, and so on.

This results in an average Profit = Income – Expenses for the whole farm operation.

To become more profitable, the market gardener must break out a freshly sharpened pencil and crunch some numbers to figure out which crops are more profitable and which are less so or just unprofitable.

Once you have that determined, spend more time on the more profitable crops and less on the unprofitable crops (or just drop them altogether).

Evaluate each equation to see if the profitability can be altered by raising the sale price, reducing expenses, or both. 

Focusing your efforts on the most profitable crops and reducing or eliminating unprofitable ones will only increase your market garden’s overall bottom line.

Planning for Profit

The common belief is that farm profit is defined by what is left over (if anything) at the end of the year. This is a passive approach to profit, letting your income and expenses become the determining factors.

Instead, be proactive in your approach to profit. 

How much money do you want to make per year?

Set your financial goals for net return then plan for them. 

The dollar amount you want to make from farming is a personal choice.

Write this number down, and remember it may take more than 12 months to get there.

For example:

Let’s say you want to make $30,000 per year net profit. In order to net $30,000 per year, gross sales have to be at a minimum of $30,000, and with typical farm expenses, gross sales might need to be 2-3X your desired profit amount.

It’s handy if you create a spreadsheet, shown below, to keep track of your goal.

Start by putting $30,000 net profit as a goal for 5 years from now.

Next, what gross sales will you need in order to net that $30,000 in year 5?

For this example, we will use $60,000 in gross sales. 

Continue to fill in years 1-4, with gradual increases that lead up to your final destination of $30,000/year net profit. 

Now you have a rough blueprint of how to achieve your goal of $30,000 net profit.

So, if we assume that a certain volume of gross sales is needed to generate a particular net profit:

• Where will those gross sales come from?
• What do you expect to grow and sell?
  • to whom?
  • how much of each product?
  • at what price?
• How and where will you grow each crop?

These are not very easy questions to answer but can be tackled if broken into smaller chunks.

The planning process is a road map of how you get to where you want to go.

Once you have picked your destination as a certain net profit, break up the journey into smaller segments.

Richard Wiswall of The Organic Farmer’s Business Handbook uses four stops along the way: the Marketing Chart, the Production Plan, the Map, and the Seedling Calendar.

Marketing Chart

Start by breaking down your current or projected sales into a spreadsheet format. I use google sheets for this because it is close enough to Microsoft Excel, but free to use.

Accounts you sell to go across the top.

Products you sell go along the left side.

Dollar and Production amounts (lbs) in each cell.

Example: 

Totals are then tabulated for each crop and for each account, with a grand total of all sales in the lower right-hand corner. 

This one chart represents everything you sell, or plan to sell, from the farm.

If you are projecting future sales, you can base estimates on past sales or research speculated crops and accounts.

The winter or off-season is a good time to ask produce buyers if they are willing to buy certain crops and if so, for what price and quantity.

This is not a guarantee that they will purchase from you when you have produce for sale, however, it is a start for forming business relationships. 

Farmer’s market and CSA (Community Supported Agriculture) sales depend on numerous factors. Again, some research will be required to get some workable sales figures. 

Crop prices for retail markets are often higher than those for wholesale accounts. 

The list of items you sell may be quite long, but once you have created your first marketing chart, subsequent ones are a breeze.

Production Plan

The totals shown in the right-hand column of the Marketing Chart are used to create the farm’s Production Plan, which is a detailed account of how to produce what you hope to sell.

Example: 

Yields for each crop can be determined from past records, other growers, or a wholesaler grower’s catalog.

Beds may be any size, whatever suits your land. However, if every bed is a standardized size, it will make number-crunching that much easier.

Mapping It Out

Now that you know how many beds or acres you’ll need to grow for your projected gross sales, it’s time to see how this projection works with your available tillable land.

Add up all the beds from the third column of the Production Plan.

• Do you have enough land ready for your projected production?
• Where will each crop go, and when?

Draw an outline of all your fields and make a farm Map.

Example: 

Draw your map on a big piece of paper and fill in as much info as you want.

Hang your map on the wall in a place where it will be seen frequently. Be very specific.

When planning where to put each crop, take into consideration:

• crop family rotation
• access to water
• frost sensitivity
• deer pressure
• early versus late planting and harvests
• what the field will look like when crops are harvested and tilled under
• cover-cropping schemes 

Update your map as the season progresses.

The map is a visual farm plan of everything you grow, a wealth of information.

Once it’s complete, refer to it at least once a week and follow the plan.  

Seedling Calendar

The last piece to carry out your production plan is a Seedling Calendar.

Example: 

On May 1, you need to plant out 750 heads of lettuce. Where will those plants come from?

Transplants have a much shorter time frame in which you can get them in the ground compared to direct-seeded crops.

In order to have 750 lettuce plants ready on May 1, you’ll need to sow lettuce seeds in planting trays 4-5 weeks earlier.

The same goes for all subsequent plantings of lettuce, as well as any crops that are grown from transplants.

Look at your Map and note any crops that are grown from transplants, then figure when you need to start the seeds for them. Place the number of transplants needed on the Seedling Calendar.

In Summary

Here is a bit of a review of the overall planning for profit process.

• Determine what you hope to sell (and to whom) for the upcoming season and create a Marketing Chart.
• Take the total amounts of each crop you will need to produce from the Marketing Chart and set up a Production Plan
  • The Production Plan describes the details of growing the crop and determines the amount of land you’ll need for each crop that you plan to sell.
  • These amounts (in beds or acres) are portrayed on the Map as a visual picture of your fields
• A Seedling Calendar schedules the growing of any crop grown from transplants.

Always start by determining what you think you can sell, then plan on producing that amount.

Farming can be a low-margin business, so efficiency is key.

Thoughtful and systematic planning will result in optimal efficiency and farm profits.

Planning for profit methodically shows the route to obtaining gross sales that will generate your desired net profit.

See, making a profit as a market gardener is easy!

I’m joking, of course!

It requires foresight, planning, sticktoitiveness, and quite frankly the drive and desire to succeed.

There are not a lot of books out there focusing on the business side of market gardening, so I am very grateful for The New Organic Farmer’s Business Handbook by Richard Wiswall for the wealth of information provided from cover to cover.

If you are at all struggling with this part of your farm, you should definitely get this book. It will help you immensely.

Do you know of other resources to help understand the business side of market farming? Please let us know in the comments below.

Stay Local,

Kathy & Jon

your friendly neighbourhood growers