Market Gardening Business 101
So, we are hearing the catch cry from many groups and the media that we need to encourage new blood to come into farming, as the majority of farmers are in their late 60s, and about to retire, which is true….What we are not hearing about is that there isn’t much support for new farmers (or existing farmers), pathways, access to affordable available growing land etc. to break into markets, or much understanding of the investment required to successfully start up a market garden and run a small business. We are seeing an increase in landlords ‘offering’ to host agricultural enterprise on their land for up to 30% of gross profit, you do not need to be a business expert to understand that by entering into these type of unrealistic contracts and expectations , it is setting up many keen young gardening enthusiasts for failure 🙁
I believe we need to raise the status of organic farmers to that of a skilled profession. Nearly every month, we are approached by someone who wants to start a Market Garden in Byron Shire. Market Gardening is exactly like any other business and requires the same amount of critique of population, services available and demand. Being able to produce food is 50% of the work of a small organic farm, running the business is the other 50%…..My first question is ALWAYS ‘where do you intend to sell your produce?’ I ask this because if you do not have a specific customer(s), then you will not be able to sell enough of your produce locally to have a viable and financially sustainable market garden for the following reasons:
1. The market for spray free, organically grown produce is saturated here
2. The ‘Farmers’ Markets in Byron Shire are all full
3. You will be unable to sell to the local wholesalers, shops or supermarkets if you cannot deliver volume and ensure 12 month, consistent, high quality production (which new farmers cannot, due to lack of experience, it also takes time to grow growers too : )
4. The majority of the restaurants / cafes in the region order most of their fresh produce from the local wholesalers (mainly for convenience, daily delivery and price)
Home gardening and commercial growing are vastly different ball games, and we have made many mistakes…..we learned that just because you grow great vegetables in your garden, does not mean that you will be able to deliver the same, at scale, and volume consistently, which is what is required to be paid. To be able to achieve this takes time..and the development of production systems.
In order to make an income off a small organic farm, you will need to be highly selective about the products you grow….eg. how long do they take to grow, how popular are they, research the current market for that product regionally, $ for you to produce, $ you will receive, and a whole host of other factors. eg. We get many people asking why we do not grow ginger, turmeric, or garlic, quite simply it is just not profitable unless done in scale as they take so long to grow, and these crops also require post harvest processing….but what about the price they ask?…whilst you do see high price per kg tags on retail garlic, turmeric and ginger, it is common for the farmer to be receiving 25-50% of the retail price. Market fads are also something to be aware of eg. turmeric was selling for a great price a few years back, so many other farmers started growing it, now we observe that due to an increase in supply, and certified organic turmeric now being imported ,we are beginning to see the price decline. The prices set for these products are controlled nationally by seasonal supply and demand.
Unlike many other businesses, agriculture works at the pace that nature works…so agricultural projects take time to develop, and unfortunately in the modern day time is money, so it doesn’t work to compare a farm to other different types of business’, and this is also why the return on investment for agricultural enterprises is significantly lower, and does not have infinite growth potential as they are based on finite living systems – not man made ones.
Tips for Starting a Market Garden
1. Make sure you are farming within delivery distance to a large population
2. Research your location thoroughly, find out who is farming what in your local area BEFORE you start, if you intend to sell locally
3. Find and establish customer relationships BEFORE planting your crops.
4. Know how you are going to finance it…do your figures on a spreadsheet…have a plan
5. Understand that farming is a lifestyle…life depends on you, you are a care-giver / steward to many
6. Make sure that you set up a fair and reasonable exchange if you are share farming, or entering into leasing exchanges on land …25-30% of gross profit is not reasonable. To make a financially sustainable business it would be closer to 5-10% net profit, remember both parties will lose out if you are not successful in the long term. Try to lease land from experienced growers so they have realistic expectations of what can be achieved in a time frame.
This week we would also like to thank Eden’s Landing for their support, they are now stocking our Mullum grown produce 🙂