Setting Priorities to Begin Farming on a Small Scale?

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With an increasing societal demand to reduce greenhouse gas emissions, many are seeking ways to capitalize upon local food production. These individuals may often begin by examining production practices as a first priority of evaluation. Most want immediate instruction on how to operate machinery or production guidelines for crops or livestock. This indeed is one of the items that should be considered but this is the wrong project to tackle as a first priority. Much information on these topics abound! Rather, one should examine existing producers, marketing, and development of a financial plan as first priorities.

The following suggested tasks, not necessarily presented in any preferred order, should be performed prior to examining production. The main point is to develop a good business plan. Suggested tasks to examine for a potential venture include:

  1. Examine existing operations similar to what you wish to establish within the area.
  2. Review economic data and population data to determine whether your production idea can be supported by the existing population and buying trends.
  3. Examine how much of your money you are willing to invest? How much are you willing to borrow?
  4. Examine your role and preferences. How much time do you have to spend on this effort? Would you prefer production, sales, general management, accounting, etc.?

Examining Existing Operations
First, examine existing producers of the agricultural venture you wish to pursue. What sort of equipment do they have? What is the typical size of operation? Where are the normal points of sale? What prices are they charging, and what is the quality of goods sold? The answers to these questions will guide you to determine your size of operation and needed equipment. Too, one must realize that these folks are competition. If your customer service and quality is not better than existing operations, then your efforts will likely fail. The hard truth is that without an added quality, service, or value-added product, you will be just another commodity available in the area.

Regrettably, there is no easy way to find these operations because nobody keeps a list of all agricultural business ventures. However, there are several ways to examine data for existing operations. The NC Department of Agriculture and Consumers Services (NCDA & CS) provides marketing tools and website for those that wish to enroll at their sites. NC Farm Fresh lists farm operations and points of sales updated by the NCDA & CS. Additionally, some phone Apps such as Visit NC Farms provide much information about existing operations. Lastly, local NC Extension offices often have information on existing local sales and production.

As one examines existing operations, visit with several to enquire about the amount of time each production operation consumes. One must examine the amount of personal time one intends to provide to the enterprise. Animal ventures may require less concentrated efforts of time yet one must observe and care for animals multiple times a day. In contrast, seasonal vegetables may require 10-14 hour days for a short period of a few weeks. One must evaluate personal preference and be realistic in this evaluation

Should one discover during this examination period that the venture or product chosen to produce does not exist within the area, this is may or may not be a good discovery. It may mean less competition and greater probability of success. However, it may also mean that the venture you have selected is not suited for the area. Consider these two options carefully. If you need assistance, contact your local N.C. Cooperative Extension office to help you make this determination.

Reviewing Economic & Population Data for Sales and Marketing 

As one evaluates a potential agricultural venture, it is critical to ensure that demand exists for the item(s) to be produced. If production exceeds what the current population will purchase, the enterprise will fail unless alternative markets are found. One source for this type of information is the USDA Economic Research Service. Another excellent source is the Ag Decision Maker from Iowa University. Fruit and Vegetable Marketing for Small Scale and Part Time Growers from Penn State University is also a good source. Lastly, the US Census provides excellent information for demographic data.

Once the product or products are chosen, examine realistic production costs to determine a selling price. At this point, examination of essential production practices should be reviewed and production goals established. However, it is critical to realize that these projections should be fluid. Examine optimum as well as adverse circumstance. NC State Extension provides enterprise budgets for many products as well as average pricing data. Examine these budget and input your specific data to determine your actual costs. Once cost is established, then set a realistic goal of production. Simply use your best estimate since one will not know exact production. Following, divide your total production costs by your total production of the product. This provides a break-even price. Add your potential profit margin to establish a price. Make sure to include your time spent recording records, paying bills, general farm maintenance and other efforts into this price. If this price is reasonable for the area, your plans can be examined further. If not, adjust practices, management, or venture expectations to determine whether this should indeed be pursued or not.

Examining Your Specific Role

The next logical step would be to determine personal risks, goals, and financial assessment. Typically, even if land is readily available, the purchase of equipment, storage, fencing, watering capabilities, processing and other equipment can easily fall between $25,000 – $100,000, depending upon the type of venture. Do you have this much capital you are willing to risk? If not, do you have a written financial plan you can offer to a lender to obtain a loan? What are the short and long-term goals of this venture? These are simply a few questions needed prior to seeking further information.

Grants and USDA Beginning Farmers loans are available but require well written plans of work and other requirements. (Read the article, Beginning Farmer Grants for Equipment and Other Resources. Similarly, institutions providing loans will require a well written, reasonable production plan, marketing plan and cash flow statements. Simply take the time to evaluate all of these aspects before trying to understand production. It will save a lot of wasted time and headaches!