First of all, it’s not your typical farm tool. It isn’t a hoe, or a shovel, or even a tractor implement. But, it may help you harvest faster, increase your production, and lead to greater profits. By now, with the dawn of agriculture some 12,000 years or so behind us, it is reasonable to believe that every tool we really need has already been invented. Of course, there can never be enough variations of the hoe in the minds of the tool manufacturers. However, during the past several months, I have noticed a gap in the pantheon of farm tools.
The type of tool I’m talking about is a financial tool. Try though I may, I just cannot find a tool for small-scale farmers that help them address costs of production, profit margins, gross margin ratios, and other metrics in an accessible, comprehensive, and (this last part is very important) farmer-friendly manner. If I am remiss in my search, please let me know ASAP. However, I suspect that I am not. I have come across many books that either over-simplify this process, or address important accounting/book-keeping concepts while leaving out a comprehensive analysis of the operation in a (again, very important) farmer-friendly format.
In plain terms, here’s what I find lacking. Every small-scale farming operation here in Placer and Nevada Counties produces more than one crop. For an operation that produces one crop, it is very easy to get at the costs of production, profit margin, gross margin ratio, etc for that particular crop. However, when the farm starts to add crops to that list, the challenge of isolating these metrics becomes increasingly complicated. Any literature about this tries to address the problem by presuming that these crops exist by themselves, as if they were a one-crop operation. They do not.
In short, I seek to create a tool that can generate various metrics for a given crop, in the broader context of the operation as a whole. Translation: I am building a tool that will allow a farmer to know metrics for their carrots, beets, lettuce, broccoli, and whatever else they grow. I feel it’s a necessary step for farmers to be able to run a profitable business, and thus continue to farm.
Why is this important? Well, farmers may be selling their crop under their costs of production. For instance, through this process, I learned that for several years I was wholesaling bunched carrots for less than it took me to get them to market. Ouch. Maybe that’s why I was not hitting my salary goals! How many farmers are like me? Perhaps none. Perhaps several. Yet, I would guess the answer is that most farmers have this issue.
If you are a farmer, I recommend that you not be afraid of your numbers. Every little bit will help you and your business to succeed, and knowing your numbers may give you a measure of control in an otherwise unpredictable industry.