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Contributor

Buisness

Im currently a student and I aspire to own a roadside farm stand selling fresh produce and possibly find contracts with grocery stores, gas stations etc..

I think that 40 acres is a good size farm to start with and it would take about $70k in decent used/new equipment tostart. $150k in land (40 ac to to build a home etc). And with leased land (20 ac) the lease could be about $5k a year.

Over all on loans (Including a home) on 2 large payments I estimate $33k per payment with lots of extra added in.

What i really need help figuring is the overall sales I would have. I used USDA spread sheet prices from 2008 and Tonnage per acre found on the internet (i.e. corn might be 4-6 ton/ac; I figured for 3 tons to be conservative) planting 3-5 acres of various crops I got to over 3 million in net sales which I do not see even remotely possible on 40 acres of land unless im planting gold.
Can someone help me out and give me a rough estimate of net sales.

I would plan on plating almost anything you could thing of;

Corn

Okra

Peas

Beans

Turnips

Strawberries

Potatos

Cantleope

Watermelon

Tomatoes

Cumcumber

Zuchinni

Carrots

etc.

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8 Replies
Veteran Advisor

Re: Buisness

My advice, is to start out small, and use the vegetables to supplement your other income.

I hate to sound pessimistic, but if you are starting from nothing, you will have great difficulty getting ahead in the farming game. 

Maybe a couple acres to start with, that could be handled with a large tiller, just to see how it can work out?

Besides all the start up costs, you also will have to establish a market for what you grow, and seasonal vegetables are hard for locals to get into grocery stores, they want a steady supply year-round, not an abundance of just what is in season. 
Farmers markets are good places to visit.  See how much an ear of sweet corn, or a pound of tomatoes sells for, write it down, and do some figuring.  That is about the only way to know what you can sell for locally.  The grocery store is a start, but usually fresh farm grown gets a better price.

Lastly, did you consider chickens?  The hot thing around here, are all-natural eggs, and all-natural chickens.  I know a few guys that do that, and make a bit over $1 a bird profit on the broilers (the birds you eat), not sure on the eggs.

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Senior Advisor

Small acreage

Check out the local land grant university extension service to see what they say about small operations.  Often they'll have good info local to your area.  There are also online publications that cater to the smaller farmer.

Above all, you have to have a market.  You grow what you can sell for a profit, not what you like to grow. 

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Senior Contributor

Re: Small acreage

My advice is also to start small and have a job. Work to build a business at your local farmers market and do this in addition to a job. The profit will vary according to what produce is selling for in your market.There will plenty of room to grow your business if you decide to continue. This is hard work with many long hours in hot weather. It can certainly be done but please start small. There is lots of demand for local produce in some areas but there is also a threat of over doing the farmers markets.  Keep your expenses low and try to sell for the most your market will support. Then of course there is the factor of weather and water etc.  Maybe you can build a market for the produce at a high end restaurant too.

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Honored Advisor

Re: Buisness

I honestly think you have a grossly oversimplified set of figures on your mind.  You have accounted for one operating expense, in the form of a lease...what about seed, fertilizers and chemicals (many of the crops you have listed are very susceptible ot diseases and pests), and most of all LABOR??? Planting, weeding, and harvesting. 

 

I don't know what production figures you are accessing, but it seems likely that you have used commodity corn, rather than sweet corn, for example.  Not the same thing at all. 

 

Most fresh crops for sales require chilling, perhaps icing.  Lots of energy costs, plus facilites and more LABOR. 

 

Transportation?  Refrigerated truck or trailer factored in? LABOR to drive routes, load and unload, inventory, bill and collect payments, etc.  Do you have this expertise?  If not, more pricey professional LABOR, not to mention insurance, licenses, and product liability insurance. 

 

Most farmers' markets of any consequence require at least a million, some two million in such coverage, naming the market as an additional insured.  Fuel operating expense?  Workers' comp insurance, housing and other costs related to maintaining a labor force?

 

What water source and irrigation costs? Equipment accounted for in your $70 K? Wells sufficient to supply, or will you have to buy water?  

 

Established truck farms are struggling to find workers, under new immigration realities.  I've seen stories of whole crops laid out to waste, with no one to pick them.  WHO are you going to hire?

 

I can go on, but maybe you get the picture.  I think that even if your gross annual income figure is on target, you will find a narrow margin when you account for all the rest of the expenses such a farm entails. 

 

You are asking about "net sales"...don't you mean "gross sales" and net profit? 

 

You need to do a full fledged business plan.  What you have in print now is a very narrow slice of a very big pie. 

 

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Veteran Advisor

Re: Buisness

I hadn't really considered all that, but my biggest fear would be finding a market for large amounts of veggies.  When you take your tomatoes to the farmer's market, keep in mind, yours will probably be ripe, the same time everyone else's are, and many of those things do not keep well.  Grocery stores may be reluctant to buy from someone who can only give them tomatoes to sell for 2 months out of the year.  They may not wish to risk upsetting the supplier that delivers them the other 10 months.

This may be out of left field, but maybe think about going small scale, but high-value niche markets.  I know of one family not too far from here, that makes home-made preserves, canned fruits & frozen fresh veggies.  They work very hard during canning time, but the added value gives them something like triple the value per acre or plant, than they would get, just selling the produce fresh.

Of course, it takes a lot of planning, not just in what to make, but what to plant, so that things don't ripen all at the same time, to give you time to spread out the harvest and processing. 

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Honored Advisor

Re: Buisness

I didn't even touch production out of season, which makes for added value, or added-value products, like the processed foods you describe.  For every step in those direstions, add more energy costs ( for greenhouses, for example) and more LABOR for the processing.marketing, etc. .  Add expenses for containers, labels, added ingredients, different delivery vehicles, etc. 

 

Canning requires inspected facilities, and that almost always means additional costs for contruction and operation.  I have a friend who does a fantastic job of marketin her family's value-added peanut products.  Developing customer accounts is basically a fulltime job for her. 

 

I would challenge the original poster to raise a one-acre garden all season long, by himself, and save and sell it all, plus keeping up succession plantings, and then see how far he thinks he can take forty times that much.  If it was an easy way to get rich, everyone would be doing it.  

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Senior Contributor

Re: Business

You mentioned a full list of produce you want to grow. Many of these crops require intensive labor such as strawberries and melons on the scale you are considering. One person cannot do all of that. Granted you need produce coming ready for market though out the growing season but succession planting can help with that such as planting sweet corn every two weeks.  I think it is better to specialize in a few crops. I know one farmer who sells only sweet corn and sweet potatoes which gives him a crop to sell though out the season.

Visit a farmers market and ask questions.

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Honored Advisor

Re: Business

Unless this poster is near a big, wealthy urban center, I think it will become rapidly apparent that the majority of people selling at farmer's markets are not dealing with multi-muillion dollar crops every year.  Asking questions may or may not really help, if you are asking your potential competition. 

 

There is a famous example of competitioon in a specialty crop, called the Great Zucchini War.  Essentially, thje first guy raising this crop in the area was successful, until the second guy planted his crop the next year.  The ensuing situation caused them both to go bust. 

 

Unless you are very early with a popular crop, or have a very long season, or find a niche that no one else wants to touch, farmers' markets are some of the most cutthroat places to sell that I have ever seen.  I sat in on a meeting of one locally, and the fighting over location within the sales space was brutal.  I wanted no part of it. 

 

I didn't mention the problem our local strawberry growers ahev had this year:Eatly season, with late frosts and freezes.  Having deep enough pockets to survive a partial or even total loss is crucial. 

 

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