Farming For Money

Farmers have long had a fraught relationship with money. Here’s what some small, independent farmers say, as quoted in a 2023 farm viability research conducted by the University of New Hampshire’s Agricultural Experiment Station:

> Just trying to keep my head above water.
> I don’t think anyone should have to work for free. I think you should be able to make a salary and support yourself. So I don’t think it’s a bad thing for farmers to want to make some money doing this.
> We work a hundred hours a week for two years straight and we’re still broke at the end of it.
> We never at least have ever figured out how to make enough money to just like pay for anything outright. Or keep up with the investments that you need to make over time.
> I think there’s gotta be more subsidies or grants or something.

This type of talk is what stigmatizes farming as a money losing business. Academics, economists and researchers also contribute to the profession’s negative image. One well-known statistic is the farmer’s share of US food dollars. Issued by the USDA, it comes from its Food Dollar series which started collecting data in the early 90’s. The series measures how much U.S. consumers spend on domestically produced food.

The series has been expanded over the years, and an explanation of what data is tracked and how it’s interpreted is now 30 pages. Its finding each year has stayed pretty much the same. In 2023 the farmers food share was 15.9 cents. Over the years it goes up or down by a penny or two. Year after year, usually around Thanksgiving, news headlines blare: “Farmers Get Cents on the Dollar.”

What is not well understood about the statistic is that it is based on farm commodity production. How it was derived for 2022 is explained on the USDA website like this:

U.S. farm establishments received 14.9 cents per dollar spent on domestically produced food in 2022 as compensation for farm commodity production. This portion, called the farm share, is a decrease of 0.3 cents from a revised 15.2 cents in 2021. The farm share covers operating expenses as well as input costs from nonfarm establishments. The remaining portion of the food dollar, known as the marketing share, covers the costs of getting domestically produced food from farms to points of purchase, including costs related to transporting, processing, and selling to consumers. One of the factors behind the long-term downward trend in the farm share is an increasing proportion of food-away-from-home spending. Farm establishments receive a lower portion of dollars spent on food away from home because of the added costs of preparing and serving meals. The USDA, Economic Research Service (ERS) uses input-output analysis to calculate the farm and marketing shares of a food dollar, which is an average of all domestic expenditures on U.S. food.

Agriculture is one of the most extensively researched, analyzed and documented industries in the world, but not much of it is of practical use for growers trying to size up how good a business opportunity growing and selling food for local markets is.

So how much money can a farmer really make?

The SPIN-Farming benchmark is $1 – $3 per sq. ft. and $1k – $3k per 1,000 sq. ft. segment.  When we help new farmers scope out a business plan, they pick an operating model and first year gross revenue target, factoring in their other work and family obligations, size of growing space, markets, climate, skills, ambition. Most start by farming less than a half acre (20,000 sq.ft.). Some dramatically less than that. The revenue projections we come up with are either encouraging or a total turn-off, but they give those just starting out a realistic reference point for how much money they can make before making a commitment, rather than when they are in over their heads and their backs are against a wall. The bottom line: with modest investment and a land base that can range from a few thousand square feet to a few acres, farming can be a four, five or six figure business.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEARN HOW TO START A FARM THAT MAKES MONEY HERE.

LEARN HOW TO MAKE MORE MONEY WITH A FARM HERE.