Balance Sheet

Every so often, I am able to participate in discussions with other growers about things that matter to us.  Recently, in a social media group, someone posted a link to this study presented by Pasa Sustainable Agriculture.  This one looked at direct-market vegetable farmers in Pennsylvania, Maryland, Virginia and West Virginia.  Results were for a variety of farms that ranged in size from less than 15 acres (the size of our farm) to a maximum of 100 acres.  Farm experience ran from beginner to fifty (!) years.

The question being asked by the study - Can direct market vegetable farmers make a middle-class income?

Before I get very far, let me summarize that their conclusion was essentially, "probably not."  The average net income for participants was $18,500.  However, if you look more closely, you find that things like experience, access to larger acreages and a strong market can make a difference.

In the end, the study, like so many of this type, is flawed enough that we need to be careful making strong statements based on the results.  In the first place, there are simply too many variables to make conclusions.  And secondly, the natural selection of farm businesses quitting over time and not being part of the study makes it difficult to say much.  If you look at the data, you will find that most of the farms in the study started after our farm did in 2004 (most starting 2010 to 2017, when the study started).  From what I have seen, new small-scale farm businesses are going to fail in the first five to eight years.  Take from that what you will.

But, I do think one thing is very clear.  Farms that succeed over a long tenure and follow direct-marketing on a smaller scale are uncommon.

Let me be candid with you.  The Genuine Faux Farm landed in the vicinity of the average net income for farms in this study most years.  To be perfectly clear, our income was not salaried with the farm either.  Our income was based entirely off of the net profit our farm could manage from year to year.  So, if you predicate success of our farm solely on whether or not our net income puts us in the "middle income bracket" then we clearly fail.

So, why does the Genuine Faux Farm, established in 2004, still exist?

Farm Life Balance Sheet

The standard net profit model forgets a number of things that are true for a farm like ours.  The farmers are able to benefit in ways that are not necessarily reflected in our net profit.  We have had access to a four-wheel drive pickup that is, essentially, an expense for the farm.  Some of the property improvements are farm improvements.  We have access to some really good food too.

In short, our balance sheet that we might use for our taxes or for our bank does not have a series of columns to measure farm life costs and benefits. 

Our business model early on was to get to "break-even" as soon as we were able - with the knowledge that we were receiving other benefits from the farm that did not show in the numbers as profit. As we progressed, our business model actually moved to more of a "personal well-being" balance sheet. Was the actual net-profit enough to offset any hits we were taking to keep the farm going? For some people, a net of $5K per year may be enough to make it a life's work. For others, a net of $100K won't be nearly enough. 

The question being asked by the study is not adequate to answer this sort of question. But, it still gives a little raw data to work with. It's a decent enough study if it encourages questions - even if it doesn't give answers.

The Hidden Column

There is a hidden column in the balance sheet that is difficult to measure accurately for every small-scale, direct-market farm.  This column takes into account the convenience that comes with living on fifteen acres and having access to a 45 horsepower tractor with a bucket.  It also considers the stress of trying to successfully grow not one, not two, but fifty, or more, different crops successfully in a season. 

The hidden column probably should have its own blog - and maybe I'll give it a run some day.  It would include the benefit I have had where I can be my own "boss."  But, even that has its pros and cons.  And the benefit that someone who farms like we do gets to spend more time closer to nature is balanced by the fact that we are often isolated from other people.  For some individuals, the inability to "get off the farm" is not offset by the $18K net income, and they decide to move in a new direction.

At the Genuine Faux Farm, we have been very aware of the hidden column and we have been working hard to balance it out.  Are we succeeding?  Well, we're still farming, even if we are farming very differently than we once were.  And we ask this question of ourselves every year - because success looks different every year.

Have a great week everyone - and I hope you are able to balance your own hidden column in your personal balance sheet.