Why Small Farms Fail

hi I'm Pete and welcome to just a few Acres Farm we do a lot of yakin today about small farms and small farmer burnout but before I do that I want to update you on Miss brownie our very pregnant Pig hi brownie how are you the old wisdom for Sal pregnancies was you know pregnancy takes three months three weeks three days and piglets come at three a.m in the morning Hillary went out last night after it was dark out and brownie looked Restless the mom will look Restless before she has her pigs where normally she'd just be snoozing Hillary said I don't know I think they might come tonight jeez they're weak early but they could she went out later and brownie was sleeping so false alarm she is due now in uh Seven Days Seven Days on the small farmer burnout which I think is an incredibly important topic I want more small farms to exist not fewer and every time one leaves I'm a little bit sad about that and I have some personal experiences to share this is nothing new you know it's been in the news for a long time farmer burnout small farm burn out it's a hard living to make and every year a lot of folks start small farms and a lot of folks fail at small farms and I would like to provide some advice to keep that from happening maybe quite as much I actually prepared for this video and I have an outline with lots of facts and figures I have to talk about small farm churn turnover burnout via Earth our Farmers Market because that's where I see Farms come and go it's really good representation of what's happening in our area we live in a very vibrant local food economy composed of lots of farms like ours that are built to sell direct to Consumer and aren't really involved too much in the commodity business that you might see in your area it's it's it's an interesting and diverse mix anyway our Pavilion downtown holds about 90 vendors and of those vendors 60 about 60 of them are farms they have fixed percentages for the different categories because we have three there's Agriculture and prepared food and Artisan vendors who make things but there's about 60 occupied by farms and every year three of them four of them turn over they're the the person who has the broke the booth reserved for them leaves and another Farm comes in so if you do the math you know four or five out of 60 that's five percent leaving every year and what happens is there's kind of this core of of vendors who have booths reserved for them in the Pavilion those 90 booths that they've got in the Pavilion and then there's a big periphery of other vendors that are approved to sell at the market and there's probably 250 total of them composed of all three of those categories that move in and take over those booths so you've got people leaving and you've got people coming that's a heck of a lot of turnover five percent every year just in small farms I don't keep strict track of everybody that comes and goes at the farmer's market but two notable Farms left this year and one was simply retirement they'd done it for decades sold at the market were successful and the other one decided to get out of farming and go into something else which happens a lot and when I look around the market I see quite a few folks that have been there for decades and it's obvious to me they've got the game figured out and they they know how to make a living doing what they're doing and then I see a lot of farms come and go very quickly where they get in quite often they're young folks and they'll last sometimes less than five years around five years and then they're gone why is that look at these Gales all in a row looking at me accepting that farm that left because they're retiring you have to assume something went wrong with the other ones that leave right well a bunch of things go wrong and something going wrong is based on not fulfilling some expectation the person had for the lifestyle in the business so let's look at the expectations that people have when they get into small farming often it's an altruistic thing nobody gets into small farming because they're going to make a fortune that's for sure you expect a lot of hard work but a lot of people get into small farming saying I'm going to change the world or I'm going to help change the world I want to see the world be different from what it is now I want to decentralized food supply because that's more resilient in times of uncertainty absolutely true they believe that locally grown in Heritage breed foods be it vegetables meat whatever it is are healthier for you than some of the highly processed foods that are coming out of our centralized system small farms create thriving communities you know they keep people working within the community or local to the community these are all altruistic things they're all really good things about making the world a better place they connect people directly to their food source so people I sell to you say yep I grew that and this is how it was raised and these are the details of it and they get to know what agriculture is and the work involved and how their food is raised and they feel good about that there's a connection there can be nothing wrong with all those things it brings meaning back to the food that we eat and there's a few other reasons that people get into it they love farming or at least they love the Romanticism and the idea of farming they may know how much work it is maybe not you don't know but it definitely does have a sort of Lifestyle Romanticism about it and they love being Their Own Boss they love being independent I sure do love that and not having anybody tell them what to do with Noble and idealistic goals these Farms enter the marketplace and a significant percentage of them fail within the first five years why is that well I've been around long enough to see enough come and go that I have a good idea of the reasons and the first and foremost is money it takes a lot of capital to start a farm and to expand a farm and keep that farm running you got to have a lot of work in capital and people just run out of gas in the capital Department it goes like the old story of the farmer that won the lottery won a million dollars people asked him what are you gonna do with the million dollars you won the farmer set I'm going to keep farming until the money's gone other reasons first one related to that that money thing is the pay stinks you work long hours for little pay and you're lucky if you make ends meet not to mention stashing away money for a rainy day or your retirement the work is hard small farms fail because the work is hard shoveling raking mocking scooping weeding lifting up heavy things walking a lot and working out in all kinds of inclement weather it gets to people after a while and they figure out well that's really not my cup of tea so they leave they're psychological reasons that Farms fail I think you're swimming against the stream you're fighting against the rising tide when you have a small farm in a world that demands bigger faster and cheaper and it gets to you sometimes you think everybody's going this way and I'm going that way is there something wrong with me the other psychological thing that happens is small farms often feel isolated because mainstream AG is the norm commodity AG farming so especially if you're in a small town like we are when you start a small farm we're surrounded by commodity agriculture Farms Dairy and crop farming and it can be lonely you don't have the support system that a lot of the commodity AG folks do where they call can get together in a room and kind of commiserate over common issues that they all share it's like when you move into a small town and you never really feel like you're part of the inside group at the small town there's people that have moved here that I've talked to have lived here 20 or 30 years and this is a small town they say I I'm still not an Insider in the small town it's the same way in agriculture so those are psychological things that hey we're on you they wear on you when you're a small farmer the last thing really in this basic group is that small farm business startups follow the same demographics as other small business startups a lot of small business startups fail within the first five years ten years think about the restaurant business how many restaurants are still in business 10 years after they make a new start as a business or other small operations it's just the odds are sometimes against you in a world where bigger is better else is a flaw in their business plan something they overlooked if they had a business plan I mean look we're we're in an area where this is like local food Central and five percent of new Farms are going out and why is that well it's because it's a crowded Marketplace so if I show up the market and I'm selling carrots and seven other farmers are selling carrots there why are the customers going to come and buy from me you know it's not only a business plan it's the marketing you do you gotta you gotta think that stuff through so that list that I gave you is kind of a checklist if these are the way small farms fail then these are things you need to think about before you get started I want to spend the rest of this video honing in on something and that's the business plan which I think is what trips up a lot of people and it's amazing when you look around at the folks at the farmers market there's a lot of people like me to which farming is their second career so they've learned the ropes on business and they know how to put a business plan together you know like I did from my old job and I think they have a head start over someone who has never done that sort of thing so the business plan things I see go wrong all the time with business plan folks underestimate the capital required to not only get going with but maintain a farm so you need Capital both to start and you need continuing Capital to expand your farm you're reinvesting money back into your farm as you grow and and you know the third type of capital you need is things that pay your money that pays your living expenses you know it's all coming at you at the same time and that's why a lot of people they either have quite a bit of savings when they start or they start with a low overhead Farm State a lot of young Farmers around here will lease land until they can afford land and they work a fuller part-time job and that's where the capital the fun farms coming in and then once you get going you can start to bootstrap yourself up with earnings from the farm but people always underestimate the amount of capital that's needed there's things that you forget that you're going to need to buy there's efficiencies when you get up to scale things that you didn't realize you're going to need to make your life easier so that money always gets underestimated the second thing that happens is people don't make an accurate market assessment like my example of growing selling carrots you know you got to realize you're coming into a crowded Marketplace and what's your cost for growing those carrots what are you going to sell them for what's the profit you're going to make how many carrots are you going to have to grow to make a living off selling carrots and why are people going to buy your carrots and what's that market like it's not grow it and they will come that's for sure especially in a competitive Marketplace like we exist in people don't realize how slowly uh it takes how slow how slowly it is to scale up a farm when you're working direct consumer you can't just on year One have your customer base in order it takes years and years to attract and keep a customer base took us five years to get to a sustainable customer base there's no magic to gaining that people have to get to know you they have to become comfortable with your product so in that five years you have to have a way to fund your life outside of the farm you know all the expenses you're going to have until you grow to your full size and once you get to that size you have to say is this sustainable can I do this Hillary and I in year five we're growing the maximum amount of livestock we ever had here on the farm and on year five we were saying to ourselves can we continue doing this and what happens is we age and started to think it was a couple years later I went into YouTube because we needed something to bring us into our later years and that brings me to another important part of the business plan which is when you budget for your farm and you say well I'm going to make so much profit per year and that's what I'm going to live off of you got to take at least 10 percent off of that and stash it away just for a rainy day fund for a major breakdown something happens where you can't work for a while that money needs to be going elsewhere you can't be putting everything you make into your mouth so to speak and you've got to save some of that and that's really hard that makes the financial trick even harder to do and you can add to that you know you got 10 percent for your rainy day fund another 15 percent per year if you want to retire off the farm I mean a lot of people don't retire from farming they just gradually slow down but still you've got a shortfall in money so you're talking about not only making your living for today but you're making an extra 25 percent for the rainy days and for the tomorrows so that's it the revolving door in small farms finances marketing and hard work that's really what it boils down to I have no illusions that small farms are the future they are certainly not they're probably more part of our past in the future unfortunately but I think they're part of a mix any anything is healthier the more mixture of components there are in it big farms small farms Commodities Niche markets all these things come together and make for a healthy food system I hope this video was informative I hope it reveals some rocks in the road for anybody that's getting started down this path hope you have a great day and I'll see you next time

Channel: Just a Few Acres Farm

Views: 181,288

Keywords: farm, farming, hobby farm, hobby farm guys, hobby farming for profit, homestead, how farms work, just a few acres farm, life on a farm, day on the farm, slow farming, busy day, farm day, small farm, life on small farm, a few acres farm, few acres farm, just a few acres farm youtube, pigs, dexter cattle, cattle

Id: KLLFieFfL-s

Length: 15min 11sec (911 seconds)

Published: Sun Apr 09 2023