Tuesday, December 11, 2007

Selling at The Market

Last week I wrote about how the economics of conventional agricultural industrial production impact the bottom line of a small farm. This week I am going to discuss how the traditional methods fare when selling direct to retail, i.e. the local farmer's market. Actual cost data for seed, fertilizer and pre-emergent pesticide usage are from the local Co-op price list. Pesticide licensing is done by the local Extension office.

Let's assume equipment costs are the same as in last week's example: $735 per month for the equipment loan.

You need between 6 and 8 lbs of seed per acre at $8 per pound for sweet corn. Let's say you buy 18 lbs of seed for $144. All you plant is corn to sell at the local farmer's market directly to the person who eats it.

You follow the recommended conventional spraying schedules for pre-emergent and fertilizer. Atrazine is a pre-emergent, sprayed after planting costing about $25 but you also have to get licensed to use it. The license cost $20 and is available to you from the local Extension office. To obtain the license, you are required to screen a four hour video and take a short test. The fertilizer will be formulated especially for the corn, having twice the nitrogen as a balanced 15-15-15 fertilizer. The local Co-op salesman told me that it didn't matter if you were planting corn for the first year in a new field or the third year in the same field, you would still need the same amount of fertilizer. You pay $290.87 for the special formula. You will find out that 15-15-15- fertilizer would have cost you $390. So you save about $100 there. The co-op recommendation is to get the corn in as early as possible to avoid having to spray pesticide. So you plant right after tax day for an early July harvest of bicolored sweet corn. You'll still have to watch for bugs and worms towards harvest time. Customers tend to not buy wormy corn.

Now you will need to pay attention to water requirements. 1-1.5 inches per week is needed to produce high quality sweet corn. Using Tennessee average rainfall data, you should only need 355,582 gallons of water for irrigation from April through the end of June. On average the cost per gallon of water is $.013, so you can expect to pay $4622.56 for irrigation.

You start harvesting the corn in July and continue to sell it at the market for about four weeks. Using this year's local prices, you should be able to average $2.50 per dozen ears. Your land yielded 12,500 ears/acre or 37,500 total ears. The total gross amount you receive from selling your corn is about $7812.50.

Your expense for the year include equipment payments: $8820; seed: $144; atrizine plus license: $45; fertilizer: $270.87; and water: $4622.56. Total expense is $13902.43

Subtract your expenses from your costs and you net nothing and still owe $6089.93

Is it worth it? Do you feel supported in the market place? Do you have a job to support your expensive hobby?

No, no & I'll have to get one.

Let's say you manage to wheel and deal your way through the equipment and you bought no equipment with a loan. So you have no monthly equipment payment to make. Your total expense would then come to $5082.43. You would net $2730.07.

Here is a key concept for sustainability. Do not take out loans for new and expensive equipment. Buy only what you can pay for immediately. For a small farmer this means making deals with neighbors to borrow attachments and buying a much older tractor. That $2730 could get you an older tractor with attachments and you would break even, the first year.

Next week I'll discuss in detail how a sustainable organic scenario might play out.

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