Northeast Organic Farming Association (NOFA) Cost of Production Project:
CARROTS
Over the course of the 2016 season, 30 organic farms in Vermont, New Hampshire, and Massachusetts tracked and analyzed their crop-specific costs of production. This is one of five crop factsheets that aggregates and presents the results of their work.
Carrot Production: Average Hours/Task
This data is aggregated from 7 farms, which grew .1 to 1.4 acres of carrots in 2016. 1
Gross Sales/Acre
Yield and sales price are two of the biggest factors impacting crop profitablility. Farms with highest gross sales had good yields as well as good sales prices.
Gross Profit/Acre
Gross profit is defined as total sales minus production expenses, not including overhead and marketing expenses.
Net Profit/Acre
Net profit is defined as total sales minus all expenses, including overhead and marketing expenses.
Cases/Acre cases
Farms with a low number of cases per acre were affected by drought. Case size is 25 lbs.
Average Price/Case
Prices are an average of wholesale and retail prices, weighted according to each farms’ market channel mix. The farm with the highest price per case did not have high gross and net profits, while the farm with the lowest case price had the highest gross and net profit. Case size is 25 lbs.
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Hand Weeding Hours/Acre hours
Three farms had significantly fewer than average hand weeding hours per acre due to lower weed pressure and use of a flame weeder.
All Cultivation Costs/Acre
Cultivation costs include hand weeding hours. Farms that used preventative weed control showed significantly reduced hand weeding hours.
Cases Harvested/Hour cases
The farm with a carrot harvester picked more cases per hour than all other farms which picked by hand. Case size is 25 lb.
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Total Harvest Hours/Acre hours
Cases Washed & Packed/Hour cases
Rates were faster from farms using barrel washers. The fastest wash and pack rate was from the farm selling ungraded bulk bags.
Total Wash & Pack Hours/Acre hours
This Cost of Production project is a collaboration of:
This project was designed to help farmers strategically increase the profitability of their farm businesses. To learn more, download our cost of production workbook, or request technical assistance in calculating your own crop-specific cost of production, visit www.nofavt.org or contact Jen Miller, (802) 434-4122, jen@nofavt.org. Supported by the Specialty Crop Block Grant Program of the U.S. Department of Agriculture (USDA) through state of Vermont grant 14-SCBGP-VT-0051. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the USDA.
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Northeast Organic Farming Association (NOFA) Cost of Production Project:
LETTUCE Over the course of the 2016 season, 30 organic farms in Vermont, New Hampshire, and Massachusetts tracked and analyzed their crop-specific costs of production. This is one of five crop factsheets that aggregates and presents the results of their work.
Lettuce Production: Average Hours/Task
This data is aggregated from 4 farms, which grew .02 to .24 acres of lettuce in 2016. 1
Gross Sales/Acre
Yield and sales price are two of the biggest factors impacting crop profitablility.
Gross Profit/Acre
Gross profit is defined as total sales minus production expenses, not including overhead and marketing expenses.
Net Profit/Acre
Net profit is defined as total sales minus all expenses, including overhead and marketing expenses.
Cases/Acre
Case size is 24 heads.
Average Price/Case
Prices are an average of wholesale and retail prices, weighted according to each farms’ market channel mix. Case size is 24 heads. 2
Hand Weeding Hours/Acre
The fastest harvest rate was on the farm with the largest area planted to head lettuce.
All Cultivation Costs/Acre
The farm with no cultivation costs used straw mulch. The farm with the highest cultivation costs spent the most time handweeding.
Cases Harvested/Hour
Case size is 24 heads.
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Total Harvest Hours/Acre
Cases Washed & Packed/Hour
Case size is 24 heads.
Total Wash & Pack Hours/Acre
This project is a collaboration of:
This project was designed to help farmers strategically increase the profitability of their farm businesses. To learn more, download our cost of production workbook, or request technical assistance in calculating your own crop-specific cost of production, visit www.nofavt.org or contact Jen Miller, (802) 434-4122, jen@nofavt.org. This project was supported by the Specialty Crop Block Grant Program of the U.S. Department of Agriculture (USDA) through state of Vermont grant 14-SCBGP-VT-0051. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the USDA.
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Northeast Organic Farming Association (NOFA) Cost of Production Project:
ONIONS
Over the course of the 2016 season, 30 organic farms in Vermont, New Hampshire, and Massachusetts tracked and analyzed their crop-specific costs of production. This is one of five crop factsheets that aggregates and presents the results of their work.
Onion Production: Average Hours/Task
This data is aggregated from 4 farms, which grew .15 to .5 acres of onions in 2016. 1
Gross Sales/Acre
Gross Profit/Acre
Gross profit is defined as total sales minus production expenses, not including overhead and marketing expenses.
Net Profit/Acre
Net profit is defined as total sales minus all expenses, including overhead and marketing expenses. The farm with the lowest gross sales and net profit had the widest plant spacing and yields affected by drought.
Cases/Acre
This variation in yields is primarily due to differences in each farms’ plant spacing and ability to mitigate the effects of drought. Case size is 50 lbs.
Average Price/Case
Prices are an average of wholesale and retail prices, weighted according to each farms’ market channel mix. Case size is 50 lbs. 2
Hand Weeding Hours/Acre
Farms’ existing weed pressure was a large factor in the amount of hand weeding hours per acre.
All Cultivation Costs/Acre
The farms with the highest cultivation costs had the most amount of hand weeding hours.
Cases Harvested/Hour
The faster harvest rates are due to higher yields and closer plant spacing. Case size is 50 lbs.
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Total Harvest Hours/Acre
The farm with the highest harvest hours per acre also had the highest yields per acre.
Cases Washed & Packed/Hour
Case size is 50 lbs.
Total Wash & Pack Hours/Acre
The total wash and pack hours varies largely according to yield.
This project is a collaboration of:
This project was designed to help farmers strategically increase the profitability of their farm businesses. To learn more, download our cost of production workbook, or request technical assistance in calculating your own crop-specific cost of production, visit www.nofavt.org or contact Jen Miller, (802) 434-4122, jen@nofavt.org. This project was supported by the Specialty Crop Block Grant Program of the U.S. Department of Agriculture (USDA) through state of Vermont grant 14-SCBGP-VT-0051. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the USDA.
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Northeast Organic Farming Association (NOFA) Cost of Production Project:
WINTER SQUASH
Over the course of the 2016 season, 30 organic farms in Vermont, New Hampshire, and Massachusetts tracked and analyzed their crop-specific costs of production. This is one of five crop factsheets that aggregates and presents the results of their work.
Winter Squash Production: Average Hours/Task
This data is aggregated from 5 farms, which grew .1 to .94 acres of winter squash in 2016. 1
Gross Sales/Acre
Gross sales varied with the variety of winter squash grown, plant spacing, yield, quality of that yield, and sales price.
Gross Profit/Acre
Gross profit is defined as total sales minus production expenses, not including overhead and marketing expenses.
Net Profit/Acre
Net profit is defined as total sales minus all expenses, including overhead and marketing expenses. The farm with the highest net profit had the highest yields and the lowest price per case.
Cases/Acre
The farm with the best yield had a bumper crop with very few seconds. Case size is 45 lb (1 & 1/9 box).
Average Price/Case
Prices are an average of wholesale and retail prices, weighted according to each farms’ market channel mix. Case size is 45 lb (1 & 1/9 box). 2
Hand Weeding Hours/Acre
One farm handweeded the edges of their plastic mulch.
All Cultivation Costs/Acre
All farms used plastic mulch.
Cases Harvested/Hour
The farms with the fastest harvest rates picked directly into bulk bins and had good yields. Harvest rate does not include cleaning the squash. Case size is 45 lb (1 & 1/9 box).
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Total Harvest Hours/Acre
Cases Washed & Packed/Hour
Case size is 45 lb (1 & 1/9 box). The farm that did not wash and pack their squash harvested onto a hay wagon.
Total Wash & Pack Hours/Acre
This project is a collaboration of:
This project was designed to help farmers strategically increase the profitability of their farm businesses. To learn more, download our cost of production workbook, or request technical assistance in calculating your own crop-specific cost of production, visit www.nofavt.org or contact Jen Miller, (802) 434-4122, jen@nofavt.org. This project was supported by the Specialty Crop Block Grant Program of the U.S. Department of Agriculture (USDA) through state of Vermont grant 14-SCBGP-VT-0051. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the USDA.
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Northeast Organic Farming Association (NOFA) Cost of Production Project:
POTATOES
Over the course of the 2016 season, 30 organic farms in Vermont, New Hampshire, and Massachusetts tracked and analyzed their crop-specific costs of production. This is one of five crop factsheets that aggregates and presents the results of their work.
Potato Production: Average Hours/Task
This data is aggregated from 8 farms, which grew .25 to 2.6 acres of potatoes in 2016. 1
Gross Sales/Acre
The farm with the lowest gross sales had wide plant spacing and was affected by drought, resulting in low yields.
Gross Profit/Acre
Gross profit is defined as total sales minus production expenses, not including overhead and marketing expenses.
Net Profit/Acre
Net profit is defined as total sales minus all expenses, including overhead and marketing expenses.
Cases/Acre
Case size is 50 lbs.
Average Price/Case
Prices are an average of wholesale and retail prices, weighted according to each farms’ market channel mix. Case size is 50 lbs. 2
Hand Weeding Hours/Acre
One farm did not have to hand weed due to preventative weed control efforts.
All Cultivation Costs/Acre
Hand weeding time is the largest cultivation expense.
Cases Harvested/Hour
The majority of farms used potato diggers. Case size is 50 lbs.
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Total Harvest Hours/Acre
Cases Washed & Packed/Hour
Total Wash & Pack Hours/Acre
The wide variation is partly from big differences in per acre yields and partly from different wash and pack systems.
This project is a collaboration of:
This project was designed to help farmers strategically increase the profitability of their farm businesses. To learn more, download our cost of production workbook, or request technical assistance in calculating your own crop-specific cost of production, visit www.nofavt.org or contact Jen Miller, (802) 434-4122, jen@nofavt.org. This project was supported by the Specialty Crop Block Grant Program of the U.S. Department of Agriculture (USDA) through state of Vermont grant 14-SCBGP-VT-0051. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the USDA.
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Northeast Organic Farming Association (NOFA) Cost of Production Project:
WHOLE FARM FINANCIAL RATIOS Over the course of the 2016 season, 30 organic vegetable farms in Vermont, New Hampshire, and Massachusetts tracked and analyzed their costs of production. This factsheet presents some key financial metrics that were aggregated as a result of their work.
Have you ever looked at your big picture financials and wondered how you compare to other farms with similar gross sales? What is the typical amount spent on labor? Are your overhead costs too high? How much money is reasonable to spend on marketing? This data from the 2016 season is aggregated from 27 farms. Farms’ gross sales are broken into three ranges, with at least 8 farms in each range. Compare your farm to others and then think critically about what that means for your business and what changes could improve your profitability. 1
Overhead Expenses as % of Gross Sales Overhead expenses, also called fixed or operating costs, are defined as expenses a farm incurs without a direct link to level of production. Each crop or enterprise needs to contribute part of their gross profit to pay for overhead expenses.
Overhead Expense/Acre
Farms with the highest gross sales tend to be larger, resulting in their overhead costs spread out over more acres.
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Marketing Expenses as % of Gross Sales Marketing expenses include the full cost of sales by market channel, from the point the crop is harvested and packed until it is sold.
Marketing Costs/Acre Market channel mix, farm size, and stage of business affect farms’ total marketing costs. Farms with higher gross sales tended to spend less on marketing per acre due to having more wholesale accounts, more acreage in production, and an established reputation.
Paid Labor as % of Gross Sales
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Paid labor rates represent the full cost of hired labor including hourly rate, taxes, and workman’s comp. As a general rule, if paid labor as a percent of gross is 40% or greater, labor efficiency is an issue and it is likely profitability could be improved by mechanizing part of the production process.
Net Profit as % of Gross Sales Net profit is defined as total sales minus all expenses, including overhead and marketing expenses. High gross sales with low net profit can still provide sufficient income to the farmer.
This project is a collaboration of:
This project was designed to help farmers strategically increase the profitability of their farm businesses. To learn more, download our cost of production workbook, or request technical assistance in calculating your own crop-specific cost of production, visit www.nofavt.org or contact Jen Miller, (802) 434-4122, jen@nofavt.org. This project was supported by the Specialty Crop Block Grant Program of the U.S. Department of Agriculture (USDA) through state of Vermont grant 14-SCBGP-VT-0051. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the USDA.
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Northeast Organic Farming Association (NOFA) Cost of Production Project:
CROP PROFITABILITY COMPARISONS Over the course of the 2016 season, 30 organic vegetable farms in Vermont, New Hampshire, and Massachusetts tracked and analyzed their costs of production. The data was aggregated and five crops were examined in-depth. This factsheet presents the production and profitability numbers that are most useful to compare across those five crops.
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Cultivation Costs/Acre The profitability of crops requiring significant cultivation will be most affected by a farm’s access to equipment and the acreage of that crop planted.
Harvest Hours/Acre
The profitability of crops requiring significant harvest labor will be most affected by a farm’s access to labor and equipment.
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Wash & Pack Hours/Acre The profitability of crops requiring significant wash and pack labor will be most affected by a farm’s access to labor and equipment.
Gross Profit/Acre Gross profit is defined as total sales minus production expenses, not including overhead and marketing expenses.
Net Profit/Acre
Net profit is defined as total sales minus all expenses, including overhead and marketing expenses.
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What three main factors affect crop profitability? ¢ Yield ¢ Price of that yield ¢ Production expenses
What else determines if a crop is a good fit for a farm? ¢ Demand/Market opportunities ¢ Labor requirements ¢ Equipment requirements ¢ Cash flow considerations ¢ Land rich or land limited situation ¢ Personal preferences It is important to remember these numbers are guides. NOFA recommends each farm calculate their own cost of production since profitability varies greatly between farms.
This project is a collaboration of:
This project was designed to help farmers strategically increase the profitability of their farm businesses. To learn more, download our cost of production workbook, or request technical assistance in calculating your own crop-specific cost of production, visit www.nofavt.org or contact Jen Miller, (802) 434-4122, jen@nofavt.org. This project was supported by the Specialty Crop Block Grant Program of the U.S. Department of Agriculture (USDA) through state of Vermont grant 14-SCBGP-VT-0051. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the USDA.
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Northeast Organic Farming Association (NOFA)
TIPS FOR TRACKING COSTS OF PRODUCTION
Over the course of the 2016 season, 30 organic farms in Vermont, New Hampshire, and Massachusetts tracked and analyzed their crop-specific costs of production. This factsheet presents lessons learned from their successes (and failures) in tracking the data needed to perform cost of production analysis.
Ever wonder how much it actually costs to produce that case of lettuce, bag of carrots, or flat of tomatoes? Is the price you receive enough to cover all business expenses so you can keep some profit for yourself? By tracking your costs of production, you will discover your farm’s profit centers and can use that information to increase the overall profitability of your farm. You will be able to compare crop profitability side-by-side, determining which enterprises are worth it and which ones are not pulling their own weight.
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HERE ARE A FEW TIPS AND TRICKS TO HELP YOU TRACK DATA AS YOU EMBARK ON COST OF PRODUCTION ANALYSIS:
1. Start Small Keeping track of data in the midst “Some crops that seem intuitively like of peak farming season can be we are making money on are actually challenging. Start with tracking only not that much better and sometimes one or two crops; don’t worry about worse than others that seem more all your other enterprises yet. There is onerous. And some aspects of a no need to account for every hour of crop production that seem onerous every week of every person on your actually don’t cost that much.” farm. Just jot down notes on paper or - 2016 Farmer Participant an electronic device when working on the 1 or 2 selected crops or choose one day a week to track data. Make this tracking time a priority and remember that even just getting a snapshot of the workflow is valuable. Keep your notes until you are ready to build a crop budget after the crop’s harvest.
2. Focus on Rates Rates for picking salad greens, washing, and then bagging are usually constant throughout the season. You don’t have to track all 22 plantings of salad greens; just track the rates 2-3 times to verify the average rate. These rates can be used to build the Crop Budget. Post a list of rates that you need to verify, such as “number of cases harvested per hour” in your pack house to help the process.
“It was surprising to learn how cheap it is to run the tractor and other equipment versus paying an employee.” - 2016 Farmer Participant
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“It was really helpful to do some of the baseline data collection and discover the hidden costs that are involved just to go to the farmers market or do a delivery route.” - 2016 Farmer Participant
3. Involve Your Workers As farm manager, you have enough to keep track of. By explaining how and why to track cost of production data to your employees, you can delegate much of the data tracking to them. Employees usually love being part of working ON the business, not just IN the business.
4. Use Technology Where Appropriate Your phone may be your new best friend as you work towards greater efficiency and profitability. Most phones come equipped with a stopwatch and note taking ability. Even better, use BeetClock, a low priced app that automatically integrates your notes into a Cost of Production workbook. If you do not have a way to digitize your data, be sure to keep several devoted clipboards in the appropriate places (farm truck, greenhouse, wash station, etc.), and a folder to put hand written notes.
5. Don’t Be Intimidated by the Workbook The Cost of Production Workbook available from NOFA provides spreadsheets where you can record all your data and view automatically calculated results. You can do this in the winter when you have more time. While there are lots of tabs along the bottom of the workbook, the info is presented in an easy to follow, step by step format. Start at the Intro and proceed from there. A couple hours of your time will reap long term benefits. 3
“Surprising that in some cases we do spend our time wisely while there are some endeavors we may entirely give up on because they do not make financial sense.� - 2016 Farmer Participant
This project is a collaboration of:
This project was designed to help farmers strategically increase the profitability of their farm businesses. To learn more, download our cost of production workbook, or request technical assistance in calculating your own crop-specific cost of production, visit www.nofavt.org or contact Jen Miller, (802) 434-4122, jen@nofavt.org. This project was supported by the Specialty Crop Block Grant Program of the U.S. Department of Agriculture (USDA) through state of Vermont grant 14-SCBGP-VT-0051. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of the USDA.
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