Forrest has been thinking about this for a long time. We first published this in October of 2014. Read on for how he’s gone deeper with a new book on the topic.
As Bren Smith recently explained in his heartfelt editorial for the New York Times (Mamas, Don’t Let Your Babies Grow Up To Be Farmers), making a living at farming is hard. No, scratch that. Farming for profit is more than just difficult; statistically, it’s almost impossible. The reason so many small farms fail, Bren explains, isn’t due to a lack of enthusiasm by the farmer, or support from the customers. Rather, it’s an economic witches’ brew of under-capitalization, barriers to entry, and a paucity of organized representation. For small farmers wanting to make a living growing wholesome, authentic food, the challenges can almost seem insurmountable.
My own farm teetered on this precipice for decades. From the late 70s to the mid 90s, our family farm treaded water through off-farm salaries. My parents worked city jobs to cover farming debts accrued each passing day. When I returned from college in 1996—determined to single-handedly rescue our failing farm—an entire year of work yielded me a paycheck of $18. Eighteen dollars of profit, from five tractor trailer loads of corn. I was humiliated and ashamed, and doubted whether I could ever make a living from farming.
Twenty years later, and a thousand farmers’ markets under my belt, our farm now makes enough profit to pay ten full-time salaries. But I’m fully aware that our story is more the exception than the norm. In his NY Times article, Bren wisely makes a call to action, encouraging farmers to organize themselves—just like any other business would.
And that’s when it hit me: Family farms are the perfect microcosm for small businesses everywhere. In fact, having spent a little time in graduate school, I’d wager that one year of managing a farm might be worth an entire course load of MBA classes. (I’m not a betting man, so I’d only wager a cookie, certainly not the farm.)
The truth is, farming is a business just like anything else. And for anyone starting out like I did—convinced that if I simply grew great food, the rest would take care of itself—then this fact must not be ignored. So here are five tips for farming success that have little to do with tractors or tillage, tomatoes or turkeys or turnips.
1) Understand The Odds.
Much has been written about how 50% of all businesses fail within the first 5 years, and I would hazard that farming is no exception. Beyond these cold statistics, however, how often do we study the reason why a business failed, or even if it truly ‘failed’ at all? At its core, agriculture is a glorious mixture of skill, temerity and raw good luck, with a thousand creative ways to succeed, and a thousand—often unfair—reasons to fail. Before starting a farm, ask yourself these questions: What are my goals? What will be my measure of success? How do I envision my farm in five years? Introspection helps us face the odds with confidence, making us realize that honest, meaningful work is about more than just the pursuit of the almighty dollar.
2) Think About Money… A Lot.
Wait, didn’t I just say that farming is about more than just money? Yes, and that’s why this comes in second. Make no mistake, the importance of positive cash flow can’t be overstated on a farm. While I don’t know a single farmer for who ranks money above family, faith and healthy living, I can honestly tell you this: Money ranks a close second.
So, here’s an important secret: There’s never an end to money you can justifiably spend on a farm. Read that line until it becomes rote. A fortune can be spent each day, justifiably, on improving a farm. From fence posts to barn roofs, tools to truck tires, it’s staggeringly easy to blow a thousand dollars a day just keeping things fixed-up and tidy. There’s an old joke in agriculture: How do you get a million dollars from farming? Start with two million.That’s why a legion of equipment, fertilizer, seed and chemical salesmen make their living selling products to farmers. Look up “Money Pit” in the dictionary, and you might see a photograph of your grandparents farm.
Now that you know the secret, take the ‘Smart Farmer Pledge’: ‘Each day, I will consider new ways to generate income—even if it’s a dime, or a dollar—without spending a cent.’ Warren Buffet famously said, “The way to wealth is to buy a dollar’s worth of assets for fifty cents.” The path to wealth in farming is to take what’s free—for example, sunshine—and turn it into cash.
I’m not claiming it’s easy. But it’s fundamentally important for farming success. Can you do it? Challenge yourself.
3) Stop Worrying About Money.
What?! Didn’t I just tell you to think about money all the time? Correct, and that’s why this checks in at #3. Stop for a moment, and reflect back on your answers at the end of ‘Understand The Odds.’ What motivates you to farm in the first place? Is it the freedom to be your own boss, the beauty of working outdoors, the connection to the soil, the abundance of sunlight and fresh air? Some of each, perhaps?
I get it. It’s why I farm, as well. Come to think of it, a sense of community, steady exercise and daily peacefulness would also rank high on my chart. Consider, for a moment. Where, amongst all the attributes listed above, is something that a corporation can package, trademark and sell to you? Can a company sell you good health and peace of mind, like they do steel belted radials and soda pop? Can a company sell you fresh air and beautiful views, or the satisfaction of growing your own food and sharing it with neighbors?
Sigh. Okay, let’s do this thing:
My second secret is this: In farming, there’s something called a ‘lifestyle paycheck’, and it can only be cashed by you. Being a farmer comes with proprietary perquisites, impossible to quantify with dollars. This summer, I had a mockingbird sit on the edge of my roof for weeks—weeks—singing his heart out. I had the most delicious watermelons volunteer in my garden, and I’ll never know what variety they were. My gym membership this year was zero dollars, because I didn’t need one. And I’ve got enough Vitamin D soaked up to make a dermatologist chase me around with SPF 40. What are these things worth?
The bottom line is this: Go ahead and put a price tag on happiness and satisfaction if you think you can. I hear Coke is hiring.
4) Save One Dollar Each Day, And Invest It.
Now wait just a minute here… I keep telling you not to worry about money! But in order to not worry about money, first we have to save for a rainy day. (Of course, rainy days are usually a positive thing on a farm, but you get my point).
Have you heard of the Rule of 72? It’s a simple equation that allows you to predict a doubling of your money, based on a fixed interest rate. Need to turn a dollar into two dollars? At ten percent interest—compounding—divide 72 by 10 for your answer: 7.2 years. How about turning $1,000 into $2,000? At 5% interest, we divide 72 by 5 to get… 14.4 years. Make sense? The takeaway is this. Saving money is a lot like having a baby: There’s never a perfect time to do it. But when it comes to farming, being financially proactive is key. Learn simple tricks such as how compounding interest works, what a reasonable annual return in the stock market is (roughly 8%, btw), and where NOT to put our money (savings accounts at banks are typically bad voodoo; stay away!). Then, you can better understand how to accomplish your farming goals (recall: ‘Goals’, paragraph #1).
One dollar a day. A hundred pennies, scrounged by rooting through your seat cushions. And after that? Root through your friends’ cushions. They won’t mind, they’re your friends. Can you scratch up one dollar each day, save it, and invest it? When it comes to farming—where economic uncertainty is the norm—your resourcefulness might mean ultimate success or failure.
Let’s quickly model a financial scenario. At age 25, invested in a generic mutual fund, after 40 years you’d have $116,000, all for an investment of $14,000 (that’s $1 a day over 40 years). What if you could save $2 each day? A free online calculator projects $245k. Compounding interest, amigos, is your farming friend.
So do yourself a colossal favor, and save a dollar or two each day. And if you can’t (be honest with yourself), then please consider a different career. Finances will crush you in farming, and there’s no sugar-coating this reality.
5) Take Pains To Take Care.
Feel like an emotional yo-yo yet? Sorry to jerk you around, but that’s farming in a nutshell. You just signed up for one of the most difficult jobs on the planet, fraught with risk, uncertainty, and daily challenges. You’ve studied all the pitfalls, had (many, many) honest conversations with yourself and your loved ones. Now, at long last, you’re ready to get started.
From the bottom of my heart, Thank You. We love you for it, and want you on our team. God speed. May you live to be one hundred and seventeen, and still have all your teeth.
But, please, do take care of yourself. When it comes to farming, no one can care about you more than YOU. Seriously. I’ve learned this lesson the hard way, on my own. For nearly twenty years, I’ve surrendered weekends (and sleep) to farmers’ markets and livestock schedules, waking before dawn and going to bed late. I’ve worked through natural disasters, predator catastrophes, equipment calamities and family upheavals. In other words, I’ve managed a small business, just like a million other small businessmen and women. And at the end of the day, I wouldn’t trade it for anything.
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So there it is, a generic road map to successful farming. Did you notice I didn’t mention corn, cantaloupes or cucumbers? That’s no accident. A farm is the ultimate small business, irrespective of production. And like any small business, hard work, common sense and a little dumb luck usually carry the day. Ready to get started? The rewards will last for a lifetime.
Forrest covers this in more depth in his lastest book with Ellen Polishuk, “Start Your Farm: The Authoritative Guide to Becoming a Sustainable 21st Century Farmer”
It’s Kathy’s favorite new book on farming – read about that here.
And stay tuned because On Pasture is going to be printing an excerpt soon!
You’re seeing The Best of OP because On Pasture is on break this week. In addition to “The Best of OP” articles we also left you these hints for searching our 2,800 article archive to find just what you need.
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