This spring we attended the 2013 Family Economics Conference. We feel this was a good use of a few hundred dollars and a couple of days off. We bought, and recommend, the DVDs of the presentations. Among other speakers, we saw Joel Salatin speak 5 times. We limited ourselves to bothering him just 3 times after he spoke including a small gift of some essential oils. One of Joel’s topics was titled, “Going Full Time with Your Part-Time Farm”.
Again, I think the DVD or the MP3 are worth your time. Rather than go point by point in detail I would like to focus on one point of his talk: becoming a low cost producer. He also discusses value adding but I’ll leave it to the reader to obtain a copy of the speech for yourself. I think the whole conference is worth buying and I might prefer the MP3 over the DVD as you get more for less money. Also, one of the speakers tends to flap his arms quite a bit and that’s distracting. You don’t notice that in the MP3.
Chism Heritage Farm sells premium products. We sell things you can’t buy elsewhere and are in demand but our supply is limited because we are small. Our marketing ability is also limited. These ideas come together when we realize we can only ask so much for our eggs before we begin driving customers away. The best way for us to widen our profit margins is not to raise prices. The best way is to lower our production costs (which will enable us to lower our prices).
Utilization and Ownership
There are several things we can do to help keep costs low. The first is to make sure that everything we buy is fully-utilized. The most utilized equipment on our farm is a 5-gallon bucket. We use them for everything. We haul water and feed (rabbit feed, chicken feed, pig feed, cow minerals). We have used them to carry 5 or 6 chicks at a time when moving from brooders to pasture. We use them to hold chicken offal when butchering. Apple drops, peach pits and skins and kitchen scraps for the pigs. They make handy containers for moving gravel, for protecting wheat for long-term mouse-proof storage. I use a bucket to carry matches, paper and tools when I trim brush and cut wood in the winter. If all else fails, we can use a bucket to catch water that drips in the leaky roof. Not every bucket is full every minute of the day but we spread the cost of the bucket across each additional function. Now, apply that thinking to a lawn mower. How many different operations can you spread your lawn mower across? The utility of the good has nothing to do with the initial price. Tractors are very useful and can power any number of implements…but those implements, like lawn mowers, tend to only perform one function. Our wagons can be useful but this year the baler put up less than 500 bales. Now it will sit for another year. And we have a spare. And a shed to keep it in. Not to mention the mower/conditioner and the rake that were barely used this year.
So to keep costs low, we have very few farm implements and barter/borrow the use of the rest from my dad. That’s the closest I’ve come to asking my parents for help since I got married. Salatin says, “A profitable farm looks pretty threadbare.” Our feed grinder was purchased for scrap price and we have kept it together for four years so far. We initially bought it to grind chicken feed but we also use it to grind hog feed. The initial cost was low and we spread that costs out between two operations. Now, truth be told, we really shouldn’t grind feed at all. We should have it delivered and allow another operation to spread that machinery cost across a wider number of customers while also saving ourselves time and labor. As we grow, this situation will be changed. Along with this thinking, we should not own hay equipment. We should allow someone else to have the joy of ownership and maintenance of that equipment.
As a final note on this thinking, remember Gordon Hazard? The following quote is from this article. As you read this, remember that Hazard raises 1,800 steers on 3,000 acres.
Hazard operates with a 1996 Dodge Dakota truck, a Polaris Ranger, a 14-foot stock trailer, one horse and saddle, a portable loading chute and $100 of fencing tools.
“I can get everything else I need done from custom workers or my neighbour. Why are you going to bother your neighbour? Cuz he’s got payments to make on that trailer.”
Just like spreading equipment costs across multiple functions can lower the production costs associated with that equipment, spreading land use across multiple enterprises lowers the impact the cost of land use has on each enterprise. Salatin gives the example of his hoop houses holding rabbits, pigs and chickens in the winter then vegetables in the summer. What does that greenhouse cost? What does the square footage within that greenhouse cost? It’s nice to run cattle around your farm but cattle tend to be low-margin, even if low cost. But if each acre covered by cows is also covered by sheep, pigs and chickens we’ll see higher resource utilization, higher nutrient cycling and lower land costs per enterprise as now we’re spreading the land cost over 4 businesses instead of just one. Can this go further? Sure. We could add fruit and nut trees and shrubs. We could harvest timber and firewood. We could build bird nesting boxes and invite birdwatchers to our farm. The possibilities are endless…the more we keep stacking enterprises per resource, the more the cost per unit of production continues to fall. It’s this kind of thinking that allows McDonald’s to lose money on a hamburger and make it up on sales of soda. Eggs may be a loss leader for us until you factor in the value of the manure and pest control.
Use Your Time Efficiently
Labor is expensive. Everything you do takes time but the time spent with the cows is mostly accounted for in the travel to and from, not in moving the cows between pastures. It does not take significantly more time to move 500 cows than it takes to move 50 cows but the travel time is split between more animals. Salatin connects two eggmobiles so the resources used moving one chicken house moves two houses instead. Beyond simply economies of scale, Salatin delivers hog feed once per hog pasture. He delivers just enough for the entire time the hogs will be in that location. No return trips with more feed, just move the pigs to the next prepared space. Every feed delivery comes at a cost. Minimize those expenses.
Rent or Lease Before Buying
Salatin points out how many acres have been abandoned…land that was in use for agriculture 15 years ago and is now entirely unused (reverting to forest). He sites a Cornell study that identified 3.1 million acres that have been abandoned in New York. There is more productive land out there than people to farm it. Often that land can be rented or used for much less than the cost of ownership. With your high-use, portable infrastructure it’s no big deal to just pack up and move to the next land lease. Salatin says “You don’t have to own any land to farm” and later, “Because the price of land no longer bears any resemblance to its productive capacity, we very well may be entering a time where people buy land for economic defense […] and people that don’t have money are going to become the farm managers.” In his book You Can Farm he suggests that renting is the way to build wealth in agriculture, land ownership preserves that wealth.
Practice Function over Form
Pretty does not equal profitable. The pretty white-picket fence, well-manicured lawn and a new home tie up capital that could otherwise be employed toward productive endeavors.
“A profitable farm looks pretty threadbare.” Borrow a tractor. You don’t need much equipment. In his video Pigs ‘n Glens (which I highly recommend) he says everything you need to fence in x pigs can fit in a 5-gallon bucket. Sure, you need some way to deliver feed but you don’t need to handle the pigs. He WALKS them to and from pasture. That’s what we do too.
Use your infrastructure. Just like the 5-gallon bucket example, if you have a tractor, use it as much as you can. If the equipment is single-use (like our chick brooders) build them as cheaply as possible and make them last. Our farm does not look like one you would see on a magazine cover but I’m not paid to produce magazine covers. I am paid to produce chicken, pork and beef for your table. Pretty, painted fences won’t make the steak taste better, just more expensive. A new machine shed would be nice but how will I pay for it?
We are working to provide you the most nutrient-dense, safe and flavorful products you can buy at the best price possible. To accomplish this we don’t drive new cars. We rarely buy clothes. Everything on the farm could use a coat of paint. We use it up, wear it out, make it work or do without. It is even painful to us when we have to retire a 5-gallon bucket.
It is these thoughts I keep in mind as we continue to farm part-time. There are a number of reasons why I have to keep my town job, not the least of which is I still have so much to learn. Over time, application of ideas like those presented by Salatin above will enable us to make the switch. Let me know if you have any other ideas to give us a boost.