- Author: Dan Macon
Both of my daughters are involved in production agriculture. My oldest, Lara, who is 16, will be showing a lamb at our county fair in two weeks - something she's done every year since she was 9. She also has a small flock of commercial sheep that are part of our larger flock. A junior in high school, she's an officer in her Future Farmers of America chapter. She's also trained Mo, the best border collie we have! Emma, an eleven-year-old sixth grader, will be showing her second lamb at the fair, along with a breeding ewe. Like her sister, Emma has her own small commercial flock, and she sells eggs from her own flock of chickens. In short, we're raising both our girls to have an appreciation for farming - and, perhaps, to become commercial farmers or ranchers themselves.
But given my own struggles to make a living from ranching (which I've documented in this blog), can I really recommend that my girls pursue a career trying to produce food for a local food system? Is there a future for farming and ranching - as a commercial endeavor - in our part of the Sierra Foothills? I think there is (all farmers are optimists - as Will Rogers said, "The farmer has to be an optimist or he wouldn't still be a farmer"), but I think we need to make some important decisions about farming as a business.
And fundamentally, farming must be a business. Sustainable farming rests on three pillars - ecological sustainability, social sustainability and economic sustainability! In my mind, if a farm can't stay in business (economic sustainability), it can't provide ecological or social benefits - in other words, economic sustainability is the foundation of sustainable farming. This brings us to the evil "P" word - profit. Without profit, I can't do simple things - like pay my mortgage, pay for health insurance - or buy the food I don't grow myself. Profit isn't the reason that I farm, but it allows my farm to exist.
One of the best responses I've seen to "Don't Let Your Children Grow Up to Be Farmers" was written by Cody Reed, a beginning farmer from Plumas County (click here to read Cody's response). He correctly raises a number of points that all of us - farmers and eaters - need to discuss regarding locally produced food. Another sheep rancher, Rex Williams, responded to my Facebook link to Cody's blog with the following:
"I have always beat myself up for not being able to make my entire living off of our agricultural endeavors but after doing a little research into some local history a lot of farms of years past have had to have off farm support I have read of plenty of outfits who are successful in the second or third generation, that the patriarch had to work in the woods or milk or something for someone else to get his own farm off the ground.
"This news alone should give all of us hope that maybe, someday we can own a little of the dirt we take care of!"
Rex raises a valid point here - the history of small-scale farming in the United States is full of examples of families who work off-farm or in other trades so that they can continue farming. In most of the commercial ranching families I know today, at least one family member works off-farm - mostly for the benefits. While off-farm work can make life busy and stressful at times, I've found that I enjoy the combination - and the economic stability it provides!
Scale, as I've written many times before, enters the equation, too - if I can make a profit on each lamb I raise, I need to raise enough lambs to generate enough total profit to make a living. The same goes for any other crop. While I can adjust my standard of living to some extent (living frugally and working off-farm are the strategies I've employed), I think the fundamental issue is one of scale. How can I grow my farm or ranch to the size necessary to make a living from it? Conversely, are there some things I can do on the expense side of the equation that will allow me to achieve greater profitability at a smaller scale?
Over the 12 years in which we've tried to farm commercially, one of the most significant barriers to expansion has been affordable access and long-term tenure to agricultural land - especially irrigated pasture, in my case. Farmland in most of California is valued far beyond it's productive capacity - in other words, we've found that we can't purchase farmland based on the agricultural revenue it will produce. Consequently, banks won't make loans for real estate purchased based on agricultural income. As a result, we've always leased land (sometimes for cash payment, other times for an exchange of services - like fire protection). While I think a written lease is important, not every landowner wants to put terms in writing. Most of our landlords have preferred a year-to-year arrangement - which makes it difficult for us to justify making improvements to the land. In several cases, we've been outbid by other producers for leases - in most instances, these other producers have given up the lease once they realized they paid too much.
Another barrier to scale is access to affordable capital - not just for land purchases. As a sheep producer, most of my capital is tied up in breeding animals - currently, a commercial yearling ewe costs roughly $150. To purchase a flock of 600 ewes (which I think is the minimum flock size needed to provide one person with a full-time wage), I'd need $90,000. Other capital expenses include fencing, equipment (truck and trailer), livestock guardian dogs and border collies, and handling systems. Being financially conservative by nature, most small-scale farmers (myself included) balk at taking on this much debt.
Finally, as I've written on numerous occasions, direct marketing in a community the size of Auburn may be inherently inefficient. To sell enough lambs (700-800) each year to make my living from sheep production, I'd need to attend 4-5 markets each week the size of the Saturday Auburn farmers' market on a year-round basis. This means hiring someone to attend the market (since I have always sold more than my employees and interns at markets, this would likely drop my sales volume) or hiring someone to do my farm chores on market days. And I've decided that it's more important to me to go to my kids' soccer games and horseshows on Saturdays! Scale, in other words, is as important in marketing as it is in production.
And so I continue to search for answers (as most of us do). For Bren Smith, the answers include transitioning USDA programs away from commodity crop supports and towards supports and grants for small-scale farmers. Personally, I don't think this addresses the underlying issues I've outlined above. Here are the ideas I'd like to see our community discuss:
- Access to Land: local government and non-governmental organizations in Placer County are focused on land conservation, including farm- and ranchland conservation. In some cases, these entities have purchased or accepted conservation easements on agricultural land, which at least ensures these lands won't be subdivided. In other cases, lands have been purchased outright. I think we need to go a step further - we need a program through which the community purchases large-scale farms and ranches from willing sellers. These lands could be made available to commercial farmers at an affordable lease rate. We could even create a local, modern version of the Homestead Act - a long term (20+ year) lease or life estate on the farm- and ranchlands owned by agencies or NGOs could be provided to families who agree to make agricultural improvements on these lands. In any case, we need to end the fallacy that splitting a working farm or ranch into 5 acre ranchettes keeps the land in agriculture!
- Access to Capital: commercial lending institutions (and to a large extent, USDA credit programs) are geared towards large-scale loans rather than towards meeting the needs of small-scale farming. For example, I talked to an agricultural loan officer in my bank who told me they didn't generally make agricultural loans of less than $250,000. The business lending officer wasn't comfortable with the risks inherent in farming - so a smaller loan would have cost me substantially more in interest. I think crowd-funding and community lending pools might be the answer. Finding a way to make capital affordable - and a way to give the community some direct financial involvement in its own food system, might help small growers invest in their businesses.
- Collaborative Marketing: personally, I like the term "cooperative," but the failure of several California marketing cooperatives (Tri-Valley Growers, for example) in the last 20 years makes it a dirty word in some farming circles. That said, I think we need more collaboration. Consumers consistently tell us that convenience is a real barrier to eating locally grown food - some folks simply can't get to the farmers' market. On the flip side, I don't know of any small-scale farmer who wants to go to more farmers' markets each week - especially without some guarantee of sufficient sales volume. Perhaps we need to look at other collaborative marketing models - art galleries or antique malls come to mind.
- Author: Dan Macon
Local food and small-scale farming seem to fit hand-in-glove - folks interested in locally grown food want to buy from small, family-owned farms that are part of the community. Small-scale farmers want (and need) to sell directly to consumers - selling to the end user eliminates the need for a "middleman" who takes a cut of the value of a farm product. While I've considered these issues in this space previously, I'm increasingly convinced that the middle - that space between micro-scale and large-scale farming - is a difficult place to be.
A vibrant local food system, then, requires a diverse community of medium-sized farms - enterprises that produce on a big enough scale to make food affordable but on a small enough scale to be personal. In his book Eaarth, author Bill McKibbon puts it this way, "what [a local food system] really requires is not huge commodity producers or small, incredibly wonderful gourmet farms. What [we] need are 1950s-size farms." If this scale is so desirable from the standpoint of quality and community economics, why are mid-sized farms increasingly rare?
As a struggling mid-sized farmer, I think there are several reasons. Some small-scale farmers start small with the specific intent of growing their operation. Others start small but treat their farms as true businesses. Many, however, are hobby farms that do not truly account for the cost of doing business. I've had several micro-scale farmers tell me, "I don't really care if I make any money - it's something for my kids [or grand kids] to do." While I don't discount the value of teaching a new generation about the skills involved in producing food, I do think that this approach to agriculture devalues the act of farming. When these micro-scale farms sell their products for less than it costs to produce them, it puts downward pressure on everyone else who's operating in a local marketplace.
On the other end of the scale, industrial farms can out compete mid-sized farms. The factory model of purchasing inputs, converting them to a marketable form, and selling them at a profit, allows industrial-scale farms to enjoy significant economic advantages. Farming at this scale pays the farmer, in most years, a living wage.
Farming at my scale - right in the middle of these two extremes - involves full-time (and then some) work on the part of the farmer. At least for me, our farm has not yet provided a full-time wage, let alone retirement, paid vacations or health benefits. In other words, our farm is too big to require part-time work and too small to provide full-time pay.
The answers to this problem are elusive and challenging. Local food security is dependent upon mid-sized farms being profitable. Perhaps increasing processing and shipping costs will reverse the economic advantage currently enjoyed by industrial-scale farms. Perhaps we need to recognize that in demanding cheap food, we get what we're willing to pay for. As a mid-sized farmer who is taking a part-time off-farm job so that I can continue to farm, I hope our community continues to seek these answers.
- Posted By: Foothill Farming
- Written by: Dan Macon
Small is beautiful, E.F. Schuacher tells us, and Schumacher’s vision of economics at a more human scale certainly resonates with me as a small-scale farmer. From a local food perspective, small farms are held up as a more compassionate, sustainable and responsible alternative to corporate-managed industrialized agriculture. Small, family-owned farms, the theory goes, are more ecologically sensitive than their “industrial” counterparts. As a practitioner of “small” farming, I am philosophically and economically inclined towards this perspective. As someone striving to make my living from small farming, however, I often struggle with the question of scale. Balancing the idealistic goal of staying small with the realistic need to be big enough to earn a living wage is, I think, one of the most critical questions for small farmers.
From a practical standpoint, there are advantages to staying small. On a small farm, the farmer can pay close attention to details that might be lost on a larger operation – details like soil protection and pest detection. Wendell Berry writes that a farm is sized correctly if it can be cared for by the farm family and perhaps by a few seasonal employees. Obviously, this definition means that a right-sized farm will vary depending on the crops produced. For example, our family can properly care for 400 ewes with a minimum of outside help. On the other hand, five or ten acres of vegetables might be the correct size for another operation.
Perhaps by necessity, smaller-scaled farms also have more direct contact with their customers. With fewer units to sell, small farms are driven to maximize their profits per unit, which often means direct marketing. This direct connection means less time between harvest and consumption, which allows small farms to market fresher, better tasting, and more nutritious fruits and vegetables. As a small farmer, I focus more on feeding my neighbors and my community than on the oft-repeated focus on “feeding the world” espoused by the proponents of industrial-scale agriculture.
The romantic notion of making a living from 100 ewes or an acre of mixed vegetables, however, quickly runs up against the realities of scale. Small producers typically have higher unit costs for purchasing supplies, obtaining processing services, transporting products, and other inputs. In some cases, these higher unit costs on the expense side of the ledger partially or totally offset the higher per unit revenues that result from direct marketing. In other words, I receive more per lamb marketed than my large-scale counter parts, but my expenses per lamb are greater as well. Size is related directly to costs. For example, the harvest cost for a lot of 19 lambs is $25 per animal. For 20 lambs, I only pay $20 per animal. A semi load of lambs (400 or so), would cost even less to process. Similarly, a bale of alfalfa costs $14 at our local feed store. If I buy a ton of alfalfa, I save 10 percent. If I purchase a truck and trailer load, the hay costs just $8.50 per bale, and it’s delivered to our place.
Finally, scale matters to customers, too. Buyers like restaurants and retail grocers would generally rather purchase food from a handful of sources rather than from a greater number of small farms. The Farmers Diner, a small New England chain of restaurants committed to buying from local, small-scale producers, can’t afford to pay $7.50 per pound for bacon from a farmer just down the road (the price the farm received for bacon at the farmers’ market). Says Bill McKibben in Eaarth, what Farmers Diner owner Tod Murphy “really requires is not huge commodity producers or small, incredibly wonderful gourmet farms.” Murphy tells McKibben, “What I need are 1950s-size farms” – the mid-sized farms that have disappeared in the last 30 years.
Economically, a farm is “profitable” if its revenue per unit sold is greater than the direct costs of producing each unit. For me, I earn a profit if I can sell my lamb for more than the cost of feed, veterinary care, shearing and processing. Once a farm can sell each unit at a profit, the farm family must determine its total income needs (for things like living expenses, overhead costs, health care, retirement, etc). Is the farm a part-time occupation? Does the family need to derive one or more full-time salaries from the operation? In other words, the farm must operate at a scale that covers its production expenses and its overhead, and that produces a profit for the farm family. While this scale varies by the type of operation and by the farm family’s needs and expectations, it is a question that must be answered correctly for the farm to stay in business.
Our primary activity is the production of grass-fed lamb. We started our business with 27 ewes in 2005. Today (2011) we have approximately 100 ewes. Experience suggests that I could manage 3-4 times as many sheep without a significant increase in labor or land expenses. Economics analysis suggests that 400 ewes would produce enough lambs to generate both a salary for me and a profit for the business. My conclusion is that we are not yet operating at the proper scale, given our goals and financial needs.
While small farms may represent a way to invest labor (instead of or in addition to capital), capital costs take center stage when considering any expansion. The typical return-on-investment analysis is not a sufficient gauge of success on its own. As a small farmer, I don’t have much capital to invest in my operation. I do have my time, knowledge and skills, however. Consequently, I’m far more concerned with how much a specific enterprise or activity will return per hour of my labor. That being said, once I’ve learned the skills necessary for an enterprise, it may make sense to invest enough money to increase the scale of our operation.
Much of the solution lies in making our national food system more equitable to those who produce our food. “We need to be willing to pay our neighbors enough to grow our food that they can make a decent living,” says Bill McKibben (Eaarth, p 178). To be sustainable, agriculture must address three key elements: resource conservation and enhancement, social equity, and economic viability. To ignore any of these three issues is short sited; to ignore economic viability is lethal. A farm that fails economically will ultimately fail to conserve resources and social equity. Ultimately, economic viability requires farms to operate at a scale that provides for profitability.
Posted by Dan Macon, Flying Mule Farm
- Posted By: Foothill Farming
- Written by: Jim Muck
alone. Because my farm is small, I am the only labor most of the time. For me this is the ideal situation. It is not that I don’t like people. I love people. That is why I go to the farmers market each week. I need the feedback from my consumers to recharge my batteries and keep me focused on what is important: growing good food. That being said, I don’t want to be with people every day.
I love the solitude of farming and I love the luxury of focusing on a task from start to finish. I find that when I have employees, I don’t get to focus on tasks; instead I get to manage. I don’t really like managing and I have not made myself get good at it. The best part is that is okay. I don’t have to manage people if I don’t want to.
What I do have to do is pay close attention to how big my farm is. If I am not careful I could plant more acreage than I can take care of. How do I know this? Done it. There is nothing worse than getting too ambitious and planting so much land that none of the ground gets managed effectively. The result is that all of the crops underperform, and the farm either doesn’t make money or makes a fraction of what it could have made if less were planted and more attention were paid to a smaller space.
Success in farming is in the details, not the big picture. Sure you can plant 10 beds of carrots, but can you weed 10 beds of carrots? I can’t; I can only manage one bed at a time, but one well grown bed of carrots will make you more money than 10 weed infested beds any day. I know this, yet I often have to control my urge to over plant. I usually fail on at least one crop each year, but that is also part of the joy of farming. I never said I was perfect.
Spring is the hardest time for me as a farmer because I have so much pent up farming energy. The quiet of winter lets me recharge my batteries and once the weather warms up I am ready to go. Sometime in March I can feel the call of the land to come and farm (not too much different than the Sirens calling the sailors to the rocks). Like the sailors, I must keep my wits about me. Otherwise, I am headed for a shipwreck: a shipwreck of over ambition.
Jim's Produce, Wheatland