If you’d really like to get my dander up, just refer to our farm as a “hobby farm”. Nothing gets my blood boiling faster than that term. We may be a small farm to a lot of other farmers, but it is most certainly not a hobby. A hobby is something that does not make money, something done simply for enjoyment. And although we enjoy what we do, we make money. It is a business. If you’re farming and you’re NOT making money…you must have a hobby farm.
This summer all of our animals had to graze within the 19 acres of our yard because the surrounding area was still enrolled in the CRP program (with the exception of some pasture on a hill where we grazed broilers). It was a chess game moving everyone around and in and through the yard. For a while, all the livestock was visible from the road. One of the stories going around town was that we had a petting zoo. Apparently, having more than one species of livestock on your farm makes you a petting zoo!
We are not a petting zoo. We are not a hobby farm. Well, what are we?
We are a professional graziers who utilize animals to harvest solar energy in the form of forage and turn it into meat, eggs and milk.
Our farm utilizes different species of livestock, not only to diversify our sales portfolio, but to create symbiotic relationships between species and with the land.
What makes our farm different as a business?
1. We pay ourselves. Labor is calculated into every enterprise and those costs are accounted for when calculating price points.
2. We are price makers, not price takers. We know where are price points are on every enterprise and can explain the price of any product to our customers, fellow farmers, and “experts”.
3. We track expenses and income for every enterprise. Each one has to be profitable. Value-added enterprises such as our Meat CSA and fiber business must pay the farm for their inputs, account for labor, storage, etc. and then a price point is determined.
4. We do not set our prices by seeing what the market will bear. For example, we do not put a premium on our products because they are local, grass-fed, pastured, natural or whatever. The price for our products is not determined by the grocery store price, plus premiums. It is our fair and true cost. Why is this important? When we analyze our business and production models, we have to be able to differentiate expenses to see a true picture of production. Where are we spending the most money? Can that be adjusted or modified? If you are pricing products based on commodity and grocery store prices, you will never know if you are truly profitable and if your product can compete in the marketplace on its own merit.
Day 24 Homework: How is your farm running as a business? Do you know if you are profitable? What can you change to begin to get an accurate picture of your business?