Friday, October 8, 2010

Estimating Income to Achieve Farm Goals

Last week in Wisconsin, I had the pleasure of hearing Chris Blanchard of Rock Spring Farm in northeast Iowa. Chris has a very successful vegetable farm that includes a CSA, sales at farmers’ markets and wholesale sales to grocery stores and distributors in the Iowa, Wisconsin, Minnesota tri-state region. His advice to farmers – be “big enough to achieve the income you want.” Starting too small can wear you out as you try to work a full-time job and farm part-time. Too big can bring its own set of headaches.

He advises new farmers to think about what it will take to achieve “your long-term goals.” How much profit will you need? Are you looking to pay your bills only? Or are you also focusing on putting something aside for retirement, paying for college for your kids, having health insurance? Most farmers would say yes, we need all those things. What might not be so important is a new home and a new car – perhaps you just need a car that starts!

Chris Blanchard’s point is that you need to know what kind of income you need to achieve the goals you set. From there you can figure out how much product you need to grow. For instance, if you want an income of $50,000 per year, assuming that you are going to clear about 40% on what your farm produces, you will need to sell $125,000 worth of products. If you want to do any improvements, you’ll need to add $10,000 for capital investments per year. That means that you need about $135,000 in gross income. So if you can gross about $10,000/acre, you’ll need 13.5 acres of crops. Another way to think about it is in the amount of bunches you need to sell each Saturday at the market. If you are making $2/bunch on carrots for instance, you’ll need to sell 1,500 bunches to make a goal of $3,000 at the farmers’ market.

To sum it up -- beginning farmers need to consider what goals they are trying to achieve, and then figure out the income stream needed to achieve those goals.

Chris Blanchard’s presentation will be available at  (by Mary Hendrickson)

No comments:

Post a Comment