Wednesday, January 23, 2013

2012 Financials

No photo today, just a few cold hard numbers. Every year I try to do a little analysis of how the farm did the previous year. This year the numbers are a little warped due to the extra work of starting the farm move, but they're in the ball park I think. As an average of all hours worked on the farm, including field work, harvest, deliveries, and office time in 2012 I made about $7.50 and hour - definitely not hitting my goal of $11/hr.

It is somewhat unusual, in my experience, for new farm owner/operators to keep track of their hours and I talk to a lot of young farmers who have no idea how much they're making per hour. I also meet with too many farmers who don't pay themselves at all, and all they have to show for their significant labors each year is whatever value their is in the business and the assets that the farm owns. I can understand if folks aren't making money in the first few years as they invest in the long term success of the business, my understanding is that this is common in many business start ups. Regardless, it's been important for me to track my numbers so I can understand how I'm doing with some level of detail, and what it is that I need to do better.

This years number of $7.50/hr was definitely impacted by extra work developing new beds in town for the winter harvest and having to rework the plan mid season to accommodate the move. Adding bicycle delivery to the mix was probably the biggest single piece of downward pressure on the dollars per hour numbers. It's interesting to note that if I took out just the extra time spent on the bike and instead considered them recreation (isn't that what going on a bike ride is?) my hourly income for 2012 would be closer to $8.50 per hour. Even knowing that, I'm much happier taking the pay cut and riding the bike, which goes to show you can't just look at the numbers.

2012 was also my heaviest administrative cost year. I scaled back the farm this year, which didn't significantly change the planning work required, but did reduce the number of shares paying for that planning. Next year, 2013, that trend will reverse as we quadruple in size, and it will be interesting to see how much it saves the farm.

For comparison, in 2011we had a good year and made about $9.50 /hr, which is talked about in this post. In 2010 we doubled the farm size from the previous year, but didn't do a good job of selling the extra shares, and in fact we reduced our delivery range which also made it harder to sell more shares. That year we only made about $6.50 per hour. On paper 2009 was our best year with an income of $9.80/hr.   I think one of the major contributing factors there was that we did a good job of selling all of our shares and not having extras. We also really scrimped on tools and supplies that year and so while we made a little extra money because of it, we suffered a bit physically as a result. To put it mildly our set up was not very ergonomic in many cases that year. We paid for that a bit in 2010 as we upgraded systems.

A couple of other interesting numbers, at least to me. The farm grossed about $60,000 per acre in 2012, and expenses were about 25% of the gross. With a little work I think we can actually drive that gross per acre up a bit, although in 2013 I think it will go down, as the new site encourages us to spread out a little more than we would have in the past. I'm also guessing that our expense as a percent of gross will continue to grow, as it's quite low right now, and has gone up slightly every season.

Looking ahead to the 2013 season, we're being very optimistic with our projections. By taking advantage of some of the equipment available to us on the new property and by increasing our labor to management ratio I'm hoping we'll be able to come close the $11/hr average that has been my goal since starting the farm. I'll let you know how it goes next January.

1 comment:

  1. Nice post, Josh. Not too many farmers out there that can break the numbers down so well.

    My view is that the bike deliveries should be taken out of the $$$/hour and somehow factored into savings for your healthcare premium ;)