The business of small-scale farming

I pirated this from another thread - hope tamatik doesn't mind, but I thought it was appropriate here, also. I may have a friggin gold mine in my barn!!

I am interested in replacing my flock of older comets with younger birds. I have heard that you can't mix birds or they will fight. I really don't feel like building a second coop, so I may give away the old birds first and then buy new birds and maybe have to buy eggs while I wait for the new birds to lay.

I was wondering how you handle flock replacement. Do you mix the birds or separate them?

Welcome Sam!


I separate them. I basically maintain two flocks for about 6-8 weeks - if I time it right.. longer if I don't time it right - learned that lesson...

ETA: Let me expound on that a bit. If you mix them, there will be a bit of bloodshed - the new flock will be the victims in this conflict as they haven't established themselves in the pecking order. The stress will probably cause them to delay their egg laying by a couple of weeks until things get sorted out. That's the good news. Now you have a flock of birds (the old flock) that need to be culled (since they're not laying as much) from the new flock which is your new production flock. In order to accomplish this you will have to trap nest and band the birds or spend 10-12 hours a day for 4-6 weeks observing first hand and banding the birds that are laying frequently to identify the two groups - not fun...and not very accurate. Buying eggs for resale is not an option for me - for some it would be, but probably an expensive one. My advice is that if you intend to maintain an ongoing operation, bite the bullet and set up to be able to maintain two flocks. This gives you the added advantage of being able to routinely rotate your production flock between the two areas until you are in a 'replacement mode'. Much cleaner, easier and efficient...

Thanks for the advice, Bill. I'm making some labels for the produce emphasising 'fresh' and 'natural' and this weekend we're going to sit down and sort out what we're going to concentrate on instead of rushing about all over the place. Sometimes you can be so busy you lose track!
I've got a market tomorrow so will be aiming for feedback on what people really want...and if it weren't raining I would be out in the MARKETgarden!

We sell whole lambs off our farm. (Lambs that are grass fed) But Bill, if you're looking for places to insert the words "value added" items from the farm,.... My wife has said more than once, that I am a value added commodity on our farm.

Seeing as how we make about $8,000 each year(on the weekends) off the same 4 head of sheep, I guess you'd call them [value added] as well. Plus the exposure has added to our from the farm sales.

When my wife attends the local Farmers Market Saturdays, her sales range from $150-$350 in sales, from her [value added] soap and wool items and rugs.

All in all I think we are doing pretty well off our 7.5 acres. I can't wait until we can get to a bigger farm.

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A good dog may be hard to find, ...but a hard dog usually means it's been dead for a while

I wouldn't waste any time making a ton of mistakes transitioning from home garden to market garden on your own. Find a BIG CSA or similar and see how they do things (you may need to volunteer). They have made all the mistakes already and you can learn so much in a very short period of time. Starting a market garden is much more than expanding the home veggie plot.

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I cried because I had no shoes, until I saw a man who had no feet.

We mix ours in with the older layers. We use leg bands to differentiate who came in when and we eat the older ones, usually at about 3YO. We haven't had any trouble with fighting when we introduce the younger birds. But our birds free range all over, so maybe that's why.

In the past, we have kept the younger birds in a movable pen in the midst of the older flock's area, for a few weeks before letting them run together.

Thanks for posting this. I used to use leg bands to differentiate between flocks also and should have mentioned that option to Sam. I started separating them because it was easier to catch them when I sold the retiring birds. And yes, if you can free range your chickens it will virtually eliminate any bloodletting. LOL

I too am finding this thread very interesting. And I'd also like to hear more specifics on the financial end. Anytime I run the numbers on my 25 acres through the calulator, accounting for land costs, feed, overhead and labor, it turns out a loss.

Now, were my land all paid off (we bought an adjoining 10 acres 2 years ago because it wouldn't be available again, and have about 21 monthly payments left on it), then I could "fudge" things so the land cost would not be included, and maybe break even. But that's not a real accounting, then.

So that's why I still work my off-farm job. It's paying for the land and utilities and etc. The farm produces some added cashflow, as well as housing a used riding mower parts biz I run off and on when I have time. But if the job were to evaporate, I don't think the farm at present could carry the expenses it generates, let alone provide profit. And I am TIGHT...er, I mean frugal. Old tractor, old trucks, old everything. I told DW we should have named the place the Fix-It Farm.

So please, keep going. I'll check back. But I personally have been at it for 17 years and haven't found a true, profitable, model that will generate sustainable profits when it is subjected to standard accounting. If I could find that, I'd put in my two-week notice tomorrow.

Well, let me return to that, cuz I do know one profitable way to go. The 10 acres in back we bought, were I to put a cul-de-sac into it, run utilities and "farm" it out as lots, would provide handsomely for us. It is very near an existing subdivision, and we very likely could do that for retirement. It would make about 16 very private lots, at $30,000 per lot; land cost and improvements would run me at present $129,000, and the electric service installation costs are rebated back to me as each lot sells by our utility. So $480,000 in lots subtract 129,000 = $351,000. Then $16,000 is added back to that over time, $1,000 each time a lot is sold, from the utility for the electric service. Total profit = $367,000. Now that one, I can figure out.

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Jim Steele
Sweetpea Farms
"To avoid criticism, say nothing, do nothing, be nothing." -- Robert Gates

For me at least I don't have to factor the land costs in as the land is my home and we'd have bought it regardless of whether we ever intended to make a dime off of it.

But the rest of the costs do count so I'm finding this thread to be of interest as well.

I am trying to get my very small-scale egg operation to at least pay for itself. Eventually it will, but at the moment I'm still in the building the infrastructure stage.

The eggs are not the only item of value being produced though. The manure that is being slowly spread over the property has value as well and is one of the reasons I chose poultry to start with. As the fertility of my land increases so does the possible uses I can put it to.

This has really been an interesting thread.

.....Alan.

Yes, Alan, that is what I'd really like to get into, is an egg operation with a moveable eggmobile contraption like Joel Salatin uses, both to sell the eggs and get the fertilizer.

For me, the farm would have to make its land costs and pay the overhead for us to live on-farm to free me from corporate America. I would guess that is why even guys with 1,000 acre farms in the Midwest must still work off-farm. It is hard to pencil it out and have money for living expenses when a true accounting is made like with any other business. Farming is a low return on investment deal. I have read that the very BEST farms nationwide have an ROI of 3%. And most farms lose money by true accounting methods.

For example, the latest article I have seen shows that in a cow-calf operation, it would take 300 cows at 90% weaning rate to generate $25,000 in net income for the farmhouse.

I read Salatin's stuff, but then I remember that he inherited his land, and he gets a bunch of his gross income from books and appearances, plus he has "intern" labor for free to help out.

I think this lack of ROI is why the average age of a farmer in the U.S. is now 55, and the population of farmers is dwindling. It' also why midsize places of 300 acres are going away, and all the growth is in small (25 acres or less) hobby places that are disconnected from the economics, or at the other end, in 3,000 acre and up places where volume makes up some for the low ROI. Young folks don't farm because it won't pay like other professions.

I'm not trying to be a fly in the ointment. Like I say, for 17 years I have tried to put something together that would be more than a stipend. Even if I could see my way to working part-time and getting the rest from the farm, I know my lifestyle would be much better and more whole. I just haven't found it yet, and not for lack of trying.

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Jim Steele
Sweetpea Farms
"To avoid criticism, say nothing, do nothing, be nothing." -- Robert Gates

Don't forget the Tax advantage of farming. Itemize and write off everything (Legally). there are many things that can be written off that people are unaware of. The tax breaks are there for a reason... take them. Ag economics is very different from regular business. Being in the red black in Ag is not the same as in regular business.

Know your tax rights. Use them. Your Farm/ small business tax guy can make you some serious dollars. Just keep all papperwork and treat it like a respectable business and the Gov't wont say a word. VERY few in ag make the profit that the Gov't say you shouel have. If you live anywhere near a big city where land prices are so high one could never make a profit w/ land costs. Make sure you are selling something, not just buying. But buy a Hummer and call it a farm turck and they will slap you upside the head.

Jim - here's the rough numbers from my 3 most profitable operations. I didn't include produce since it varies so much from year to year, nor did I include firewood as I have very little actual out of pocket expense - it's almost all labor. These numbers are reduced down from my actual numbers to an individual animal - you can multiply them by however many head of livestock you want to see how many you would need to make what you would need. You can gain some economies of scale for some items (500 chickens will be substantially less per chicken than 50), but for our purposes here I think they'll present a usable scenario. These do not account for any infrastructure (buildings, fencing, etc) or supplies (feeders, waterers, etc) or utility costs (electric, water) as these items will vary with production models, location and natural resources.

Also, you need to understand that most of the models that you see are based on traditional modern (is that an oxymoron? LOL) farming models where grain crops are sold to commodity brokers or co-ops, and livestock is sold at auction or to processing plants. My numbers, however reflect selling a value added product directly to the end consumer at premium prices that are higher than the 'same' item would be at a grocer. That's the difference in the P&L for the gross numbers. And okiemom is spot on about the accounting and tax advantage of operating a farm. We had an operating profit last year so I bought a log splitter and some supplies in Nov/Dec to get rid of most of it.

Omega 3 Enhanced Eggs
A 17 week old chicken costs me just under $4. She'll be productive for 2 years - $2@ year
She will eat just under 50# of feed in a year $8
I also feed my birds flax which is about $40@CWT - she'll eat about $5 worth
She'll provide me with 17 - 25 dozen eggs let's use 17
17 egg cartons $.20 each including the label I print myself $3.40
So I'm about $18.40 into 17 dozen eggs.
If you sell those eggs for $3 / dozen you're revenue is $51 making your gross profit $32.60 or about $1.90 / doz Which I can live with (for now)
This is where a lot of folks don't get it.
Selling those same eggs for $1.50 / doz my profit is $8.10 or about $.47 / doz. BECAUSE MY EXPENSE DOESN'T DROP JUST BECAUSE MY REVENUE DID. I couldn't live with that - I work too hard and have too much invested.
I think you'd be hard pressed to get much more than 1.50 selling at auctions or to any wholesale entity (restaurants, grocers) if that - I'm not sure because i've never had a desire to be in the wholesale egg business. Another consideration of selling to establishments is that in most, if not all states you get into a whole different situation regarding regulation and licensing - not that that can't be dealt with, but you have some additional expenses not involved in my operation.

Pasture Raised Pigs
Feeder Pigs cost me $40 usually (varies slightly year to year) for a 40# piglet
They will gain over their short 5-6 months stay about 210 - 250 lb. Average feed consumption is about 3# for each 1# of weight gain, so about 600# per pig for which I pay about $90. I usually worm them twice which is another $10. That's it - $140 Don't even think about taking this hog to the auction - bankrupt city. You might get 50 - 60 cents per lb selling it to a processor, I'm not sure. If so - 250 # * .6 = $150 -$140 = $10. Are ya starting to see why the traditional farming numbers look so bad? I sell my pigs by the half or whole for $3 / lb based on hanging weight (about 150# for a 240# hog. the customer pays for the slaughter and processing. $450 - $140 =$310.

Meat Chickens
Chicks (Freedom Rangers) cost me just under a dollar each if I buy 100-500 (I think that's the range) I let them free range and limit feed them about 2 lbs of feed per week or about 25 lbs while they are my guests. I pay (last year) about $18/cwt for broiler feed (I add soy meal to bump the calories up) so they eat about $4.50 worth of feed. Slaughter is about $1.80/bird and I calculate mileage at 40 cents per mile as I have to drive about 200 miles RT to the licensed processing plant. If I take 100 birds that works out to $.80 / bird. So now I'm $8.10 into the chickens in my freezer. They average slightly over 5# each and I sell them for 2.50 / lb ($12.50 / bird). $4.40 profit. This number can easily be improved (to $7), of course by slaughtering them yourself, I just don't do it.

Add to these some firewood sales (I sell campfire bundles in the summer), a good market garden year, a few head of sheep, a couple dozen bee hives and you're outta that 8-5!! LOL

Ya gotta sell value added, though, at a premium price direct to the end consumer or you'll be drivin' to work until you're 65. How you get to your market and develop your customers depends on ......... location, location, location Oh, did I mention that my farm (which is in an excellent location) is for sale? (shameless plug!!)

Hope this is what you were looking for...

Bill, I am quite aware of value added, which also means work added. I understand completely the mechanics of value added, and of price vs. value, having run 3 businesses of my own over the years. As a matter of fact, I just spent lunch with another producer who works for Extension talking about value added and marketing.

Thanks for sharing your numbers. On the chickens, to make $10,000 a year at $1.90 would require sales of 5,263 dozen eggs, requiring 309 birds in the flock if all produced 17 dozen eggs a year. I am uncertain about if the figure was annual. If it is 17 dozen for TWO years, you would need 618 in the flock, all producing 8 1/2 dozen a year.

OK, so we have $10,000.

Now, pasture-raised hogs. Taking your $310 profit figure, you'd need to sell about 33 hogs a year to get $10,000.

OK, so we have $20,000.

Now, meat chickens. At $4.10 profit per chicken I'd need to sell 2,273 chickens a year to get $10,000.

Now we are at $30,000, and I am out of my 8 to 5 job and working 5 a.m. to 8 p.m. I also have no benefits, no insurance and no retirement plan, for a lot less than I was making at the cubicle job. But wait! ALL my expenses, like farmland costs and taxes and utilities and anything boughten (beyond the feed costs, the animal costs, and the processing costs that you cited) must must come out of that $30,000 BEFORE I can pay myself any "salary" in cash, for savings or any other use.

To recap: 5,263 dozen eggs, 33 hogs, and 2,273 meat chickens every year would get $30,000 in "profit," from which all building upkeep, equipment, repairs, utilities, fencing, posts, nuts, bolts, food, fuel, etc. would have to come for the year before I got to any "net cash income."

THAT is why young folks are not getting into farming as a primary occupation. That is why the vast majority of cattle farms in the U.S. are 30 head or less. It's a sideline business, because of the extremely low ROI.

There are some people who are successful at it, but I have several friends who lost everything, even their relationship and families, because they did not account for all the costs going into a venture like this. Personally, I completely understand value added for maximizing revenue, and I am in year 2 of a 5-year business plan on my farm moving toward that end, because it makes me more money. But realistically, can it be more than a sideline? The odds are against it, when all the costs are added up. And remember, you are just one big illness or injury (in the most dangerous occupation in America) from being bankrupted. Unless you buy your own health insurance. Whcih would take a big chunk upfront out of that $30,000.

This farming is a very risky thing!

Now, all that said, how can I make it more of a sure thing? Work in the cubicle, save up money by living below my means, pay off my land debt and take on no others, build up a 401(k) and retirement plan, and maybe take an early retirement to the farm with the benefit of supplemental income, and with retiree retained health insurance. That's exactly what I am working toward, myself.

A blend of security from off-farm work and also production from the farm is where I am at now, making what I think is the safer transition. It allows me to live in the country but not be constantly fretting over how to pay the bills out of a small pool of cash I have toiled really hard to get.

If we're discussing a farm couple, having one work off-farm for a wage that will pay the bills for both and ideally provide at least insurance coverage, while the other pursues the farming and its variable income levels could work out well.

I have written this long post because I have seen people lose everything by just accepting the romantacized view and/or the best-case scenarios. I have seen people crushed by not taking the full picture into account financially.

My mother and father in law made their living exclusively from their dairy, and later beef, farms. My FIL was born on the farm and worked it his entire life. He scrimped and saved, and their kids wore a lot of hand-me-down, donated, patched clothing. In lean years, there was no Christmas. Sometimes he would take side backhoe jobs, if times got really bad. When he got prostate cancer and had surgery, he was useless to help at calving, and that was a huge hardship and nearly a train wreck. But he did it.

I believe it's important to go into it with your eyes wide open, though. Be sure to consider the downside in anything, and try to limit it.

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Jim Steele
Sweetpea Farms
"To avoid criticism, say nothing, do nothing, be nothing." -- Robert Gates

kasilofhome gave me permission to cross post this here - good idea
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Here is a tip that really works for us.

Home deliveries.

How it works is I HAVE to take family members to doctors every week (oh joy) Since The gas has to be used I cold called on places on the way (heck - I needed gas to get home) Well, I got customers. I splured ( really marketing and time saver) by buying cheap (less than $3.00 for ----e small styofoam coolers- large enought for a feww dozen and a chicken) Slap a free "Alaskan Grown" lable and printed is bright color "Taylor's Nest Eggs - Home delivery xxx-xxxx) Now how would I know that those cools would become Conversation pieces in the area and for guest and family and even door to door religion sellers)

How it works is they have a standing order. I deliver as I do my run around. The coolers serve a communication tools, carton returning system, and billing system. I can leave notes of specials. They can leave the money and any special add ons for next week. the benfit is NO wasted time. Ringing the door leads to talk, talk is nice but time is money- 10 min is 10 min.

Also I also carry extras when I have them I hit up and cold call the neighbors of people I deliver to leaving a flyer for those not at home my number and the number of the neighbor (with their permission) as a refence.

I couldn't agree more, Jim. And I've read enough of your posts to know that you are aware of the value of value added products. That statement was more for the benefit of anyone else reading the thread than you. After reading it, I did realize that it came across differently than intended...

My purpose in starting this thread was not to provide anyone with a business plan or formula for an operation. Rather to give some ideas and encouragement to some of the folks who have already made that 'leap of faith' into small scale farming. I would certainly hope that anyone entering into any business venture would consider all the possible scenarios and the inherent risks.

If you take only the operations I provided numbers for, it seems very daunting at the least - I've extrapolated those numbers before and realize that alone they do seem pretty much pie in the sky - however the eggs are [only] 14 dozen per day, and the pigs... 33 is certainly attainable in the right market. The meat chickens? I have my doubts, but on the other hand I believe that certain markets would bear a $3.25 / lb price. Add to those a few, more passive, operations such as fruit/nut trees, brambles, grapes, firewood, bees, meat goats, sheep (not that these things don't take time and effort) and one could make a very comfortable living assuming they could connect with markets for them.

As to the time involved in those operations, I spent less than an hour per day last year feeding and watering the two chicken flocks and the herd of pigs plus my DSD's goats quite often. The larger numbers do not equate to a proportionate increase in the time it takes to feed and water them - it just requires different systems. Processing and packaging the eggs would certainly demand more time, but there are mechanical systems to make that much more efficient, also. A half acre market garden would require more time than those operations combined. And yes, there would be some days that 5-8 would seem like a vacation, but those would be few and far between - most of the separate operations would have different times where they demanded more hours than normal. Here, for instance I would have no garden, pigs or meat chickens during lambing/kidding season. My tree harvest for firewood is done during the early winter when very little else is demanding my time and I believe that winter is the appropriate time to prune fruit trees.

There's no doubt that farming has huge inherent risks, but I believe the rewards of a well thought out and well developed operation can be significant.

Wow! Is that just from lamb and wool sales? I was looking into buying a goat/goats for the experience of raising livestock/pets for both myself and my children. I never really considered making a profit from such a venture (although it would be my dream), but I would gladly substitute goat for sheep if I could get a return like that. I do have 4 children that could provide free labour (will work for popsicles, lol)

This is a wonderful, informative thread.

Remember the incidental costs and profits, also.

I heard of a lady who only netted $25 a year off of her 50 laying hens, BUT! She also got 2 dozen eggs a week already paid for, and she ate the 50 spent hens every year. 2 Dozen eggs and a stewing hen every week is a pretty good return, that is perhaps worth $7 a week?

This same lady also sold firewood from her woods, but there was no cost for gas and such because she scheduled deliveries on the days she was going to work. She just dropped off the wood on her way to or from, and she advertized in the areas that was convenient to her.

We explored rabbits, sheep, chickens, ducks and thought about produce. We do all of these for our own needs and wanted to figure out if some might make good cash income. Our land is mountain country and not ideal for growing veggies on a large scale. Chickens are too small a sales unit. Ducks don't have enough demand. Eggs are another thing we tried but we're not on a main road and if we sell them in the stores we make too little to make it worth it. There isn't enough market for sheep and too much competition - besides, sheep are too emotional and fragile.

We considered beef, we have lots of pasture, but beef grow slowly and don't reproduce very quickly. I was also a bit intimidated by doing so large an animal - that has changed now that we have 800 lb boars and sows. There is also quite a bit of competition already in the beef market. We may still start doing beef in a few years as well as getting a milk cow but I don't think it will be our 'main stick'. It is good though to have many baskets and cattle are huge baskets. I may change my mind though...

Then we got pigs and discovered we really enjoyed raising pigs. They sell really well, grow great guns on our pastures and rejuvenate the old pastures very nicely. Crimminy! We're pig farmers and didn't know it yet!

The fact that they are so hardy, have big litters twice a year and are ready for market in only six months are all big pluses. They do great in our cold Vermont winters even with simple open sheds for shelter. Most of the time they prefer to be out under the stars rather than in the sheds. We've found that the key to the winter is plenty of hay bedding and blocking the prevailing northwest wind - they do not need barns. We've been farrowing year round now for several years which lets us hit the early spring peak piglet demand.

Pigs are very sellable. There is a market for piglets, roasters, half pig shares, whole pigs and whole hogs - what we call a 300 lb finisher which yields about 200 lbs of pork. We're just starting to sell retail cuts from the farm and in local stores. Over the years we've found customers buying bulk want units of about 50 lbs of cuts or a hundred pounds of cuts so we now finish our pigs out a little bit smaller to better meet that demand. We also do them bigger for people or stores who want to buy a larger animal and thus save on the slaughter cost which is fixed - thus the "whole hog" size.

We have proven that we can raise the pigs solely on pasture in the warm season and hay in the winter, contrary to the myth that only ruminants can eat grass. They do grow about a month faster if we feed them whey, excess milk, cheese trim and the like it is a more balanced protein diet and there are more calories, especially important in the winter. One of the keys to making the pigs work has been finding sources of local food - excellent high quality feed that would otherwise get wasted. Finding these sources is a matter of persistence, patience, keeping ones eyes open and becoming known.

Gradually as the pigs bush hog and improve our old fields I've been over seeding with clover, alfalfa and grains that will provide ongoing additional natural food they can harvest themselves. The goal is to increase the quality and variety of our pasture. I would like to see higher protein levels in the forage. We also grow a lot more sunflowers, pumpkins, beets, turnips and such than we need for our own family use. The extra goes to the herd in the late fall and winter as the pasture wanes and the snows set in.

In the winter we feed hay to replace the pasture. That acts both as bedding and food. We accidentally discovered that the pigs are quite a bit healthier when they eat hay. The hay adds roughage in their diet and I suspect that the carbon helps to bind nitrogen in their wastes so they don't stink. If you can smell it you're losing valuable nutrients to the air - fertilizer that costs money and would be better kept bound in the soil for plants.

During the winter they spend a lot of time in spaces that we're converting in to new gardens so the wasted hay, manure and urine get added to the soil and tilled in in the spring. Then we run chickens in those gardens to eat bugs and weed for a couple of weeks before we plant. This works really well to produce rich weed free gardens on our poor mountain soil in about three years.

A few years ago we got Certified Naturally Grown (CNG) which is similar to the USDA Certified Organic but a better logo. CNG also costs a lot less than the USD Organics program - another consideration. The program described how we already do things. Since we raise food for our own family we don't use chemical fertilizers, herbicides, feed antibiotics, hormones or any of that stuff. For us one of the biggest reasons for raising meat is to have healthy food for our family. Thus getting certified was easy as we already did things the way they described.

We have done sustainable forestry for decades. Some years that is our main income. We also have a mail order business BlackLightning which manufactures and sells iron-on heat Transfer Toner I invented and for about ten years we published the Flash Magazine which was a computer magazine. Now as the pig herd increases that is becoming our dominant cash income. My wife also draws portraits and I tilt at windmills.

Cheers

-Walter
Sugar Mountain Farm
in the mountains of Vermont
http://SugarMtnFarm.com/blog/
http://HollyGraphicArt.com/
http://NoNAIS.org

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SugarMtnFarm.com -- Pastured Pigs, Poultry, Sheep, Dogs and Kids