What does it cost you to grow – and sell – carrots, lettuce, or strawberries? What can you grow and sell profitably, and what loses you money? Understanding what it costs to grow and market crops is critical to making informed decisions about what to grow, how to grow, how much to grow, what to charge, and where to sell.
Yet tracking cost data – especially for a highly diversified farm – can seem overwhelming and quickly takes a back seat to all the day-to-day work that needs to get done during the farming season.
To solve this problem, OSU Small Farms and Oregon Tilth have designed a Cost Study Pilot Project for the 2015 growing season. From March to October, teams of farmers in different regions of Oregon will collect data in the course of their normal farming activities, which they’ll analyze in November.
Tanya Murray, the Organic Education Specialist with Oregon Tilth, designed and will lead the project. She has worked closely with OSU over the past year to evaluate and craft practical methods of gauging costs and farm profitability. She will provide direct support to farmers as they gather and analyze their data. She will also track how farmers experience the data collection process so she can modify and improve the system.
The time tracking approach Murray and the farmers will test is designed to integrate into normal farming practices and focuses on one on-farm activity area at a time. For example, the first area is the greenhouse: farmers will spend a few weeks tracking the time it takes to do various activities in the greenhouse related to growing transplants.
The activity areas, which will each get about 3 or 4 weeks, follow the typical progression of the growing season. After the greenhouse are: bed preparation, seeding and planting, watering, weeding and trellising, harvesting and post harvest handling, marketing, cover cropping and field clean up. Farmers will primarily track labor – that is, the time it takes to do various activities related to a unit of space or a unit of crop (count or weight). They will keep a few additional records, largely those that most farmers already keep in some form.
The pilot project uses a cohort model – a group of farmers going through it together – so that participating farmers can learn from each other as they go. This is useful both in the data tracking process and in the analysis stage, when the farmers will look for ways to improve profitability. The cohort model also creates a sense of community and the opportunity for peer-to-peer accountability that can help maintain motivation through the duration of the farming season.
In November, Murray and the farmers will use their data to develop per-crop costs and compare them with current prices to evaluate the profitability of different crops. The groups will then brainstorm changes they could make to improve per-crop or overall profitability.
For example, a farmer might discover that her biggest cost to grow and sell carrots is weeding. She could then evaluate whether a backpack flamer would be a worthwhile investment. Another farmers might reconsider the mix of crops included in a CSA share.
Having this kind of information about costs, Murray says, is critical for making informed decisions about your farm business.
In March and April, Murray is visiting all four teams of farmers – in the North Willamette, Central Oregon, Southern Oregon, and the North Coast – to lay the groundwork and get started. After that, she will provide instructions for each activity area through monthly webinars and also ongoing support through a listserv. Because the North Willamette region is her home base, Murray will work one-on-one with that team, and the other three teams will have local coordinators.
The View from Southern Oregon
The Southern Oregon team, facilitated by OSU Small Farms agent Maud Powell and Thrive’s Elise Higley, is highly motivated to be part of the pilot project. Nine farms joined the cohort and attended an initial training on the project in March. Each farm in the cohort will record the production costs of growing onions in order to compare costs across farm operations. They have each chosen an additional two crops to track.
The project dovetails with an organized effort to increase the amount of local foods available in grocery stores in Southern Oregon as we reported in the last issue of OSFN. Thrive has been working closely with wholesale buyers, distributors and farmers to facilitate sales through a Rogue Valley Grown marketing label and an on-line purchasing platform. OSU Small Farms has teamed up with Thrive to offer educational programming for farmers on how to scale up and sell into wholesale markets.
Many of the producers in the cohort are interested in adding wholesale accounts, as direct markets for produce appear to be fairly saturated in Southern Oregon. Data recorded over the season will help determine break-even pricing for specific crops and whether wholesale markets – and wholesale prices – can be profitable. Additionally, tracking costs of production may help growers identify areas where efficiencies can be improved.
We will report on cost study cohort results in future issues of Oregon Small Farms News.