2 weeks ago
Thursday, October 28, 2010
Another farm bites the dust: postmortem
The blog honestmeat.com has announced that after 6 years of operation they're closing their farm operation, named TLC Ranch . A postmortem is an examination of a situation to see what you can learn from it. I was introduced to this sort of examination while I was working at a big company; failed projects, and successful ones too, got postmortems. Personally I found the discussions around failed projects to be the most interesting.
First, to be clear, Rebecca, one of the farmers at honestmeat, and I have not had the best of relations; but this is not personal in any way. I hate to see someone who clearly wants to farm and has spent 6 years doing it close the doors. Rebecca and I most recently 'conversed' in the comments section of this blog post in the end of May of this year.
Here's my (no so hidden) agenda:
The audience that I write for is mostly other producers, particularly those folks who are producing animals. Anyone is welcome to read it, but what I'm writing is mostly aimed at other farmers or people who are thinking about farming. I write about the nitty-gritty stuff that is farming, and I do so with the following goals in mind:
1) Save farmers time and effort by talking about stuff I do, including stuff that doesn't work well.
2) Emphasize practices that are in my belief the most likely to work for people, and;
3) Be skeptical about things that I see as not workable or not likely to succeed.
4) Encouraging farmers to make a profit*
Lets talk about TLC ranch, the business name of the honestmeat.com blog.
Principle farmers:
Jim and Rebecca appear to have a long-term interest in farming; Jim did a stint in the Marine Corps and started a delivery service for vegetables, and Rebecca spent some time earning a degree and then apprenticed on several farms. I'm pretty clear that both of these folks know about hard work and dedication, and they started this venture with their eyes open. They have a little girl, born 4 years ago.
Products:
their website lists several products that they sold at the end of their farming life: pork, eggs, lamb and beef. It appears that they would buy the hens, pigs and lambs from other farmers and raise them to laying age or market weight. They would also resell beef from a neighboring farmer. they apparently did not sell any sort of vegetables or fruit (see land and facilities)
Land and facilities:
They rent a house and 48 acres, and state that "For all 48 acres we rent, we pay about 10 times the going rate for pasture".
Pricing:
TLC sold products into the San Francisco bay area, which is one of the highest priced markets in the country. Their prices are high by most standards. Representative pork prices: Tenderloin $17/lb. Bacon: $15/lb, fresh sausage links: $9/lb. Beef prices: Filet Mignon $19/lb, flat iron steak, $15/lb, etc. Eggs are $8-9/dozen.
Feed & Husbandry:
Quite a bit of discussion on their site about organic feed, how the animals are slaughtered, and how they're handled; taken at face value, these folks spent a lot of time managing their animals. This is reflected in the comment that Rebecca made in her announcement of closing their farm that they were working 80 hours a week.
Overview:
This venture was difficult to begin with, but complicated by several factors. The price of the land that they were renting was one; difficulties with labor was another, and finally the lack of sales. I'll add to that list insufficient capital. Their pricing was sufficiently rich that they had sufficient margins, but in pricing at that level I'm guessing they also significantly limited their market. There is very little discussion of traditional business planning; revenue projections, milestones, critical path items... that may have been done, but it's not obvious from the blog or website.
Stated reasons for closing:
"1. LAND ACCESS: We rent land in North Monterey County, California. Half the land we rent is in an active floodplain and is under water for half the year. The other half of land we rent is a steep, overgrazed, parched hillside with no water to help bring it back to life. For all 48 acres we rent, we pay about 10 times the going rate for pasture. The best grazing lands in this region are locked up by a handful of long-time cattle ranchers, the fertile bottomland locked up by capital-intensive berry farming, so we are left with the dregs. To top off the over-priced land, our leases are too short to build a long-term business, the landlords too inflexible, and ultimately, we are building no equity for all the effort we put into the land. What can you do to help solve the land problem for farmers? Make sure your city and county planners don't pave over any more good farmland in your county and don't let them rezone farmland for things like rural "ranchettes" and other developments that carve up viable farmland. If you or your family own farmland, consider offering a low-priced, long-term lease to a good farmer to help them build their business. "
The best farm land in all parts of the USA are always occupied by farms that can turn a profit and are sufficiently capitalized. As a new farm, you will always find the marginal land anywhere you go to be the most available. My farm is located on the flood plain. Welcome to the new farmer club, chums!
The discussion of equity is interesting. The equity that I would expect them to be building is in the TLC ranch brand name. With a strong brand you can move your location around and still be in business. Land ownership and building a farm are not connected. Many successful farmers are using leased land. If you are in that sort of situation, develop a farm plan that allows you to move when you need to; either for natural reasons (floods) or for business reasons (loss of lease). None of this should have been a surprise to these folks.
"...offer a low-priced long-term lease to a good farmer..." A good farmer is one who manages their farm business in a sustainable way, and I'd like to promote and support people who don't need a subsidy to farm. I'd disagree with this.
"2. MEAT PROCESSING: This topic warrants a much longer post, but basically California has only a handful of USDA-inspected slaughter and butcher facilities. Because there are only a few, it is hard to even get an appointment to bring your animals in (one place we called had a 7 month waiting list!). Also, because these abattoirs don't have much competition, they don't have to provide high-quality customer service to ranchers. They can charge what they want, they can choose not to follow your detailed butchering instructions (for example, put nitrates in the hams that you asked for "nitrate-free", cut all the fat off your pork chops when you asked for 2 inches of fat on them, etc.). These abattoirs charge you by the carcass weight of your animal and then sometime they won't even give you the whole animal back that you paid for, such as taking the head, the organ meats, the feet, etc. So we work our butt off to raise this amazing animal and then the butchers devalue your hard work. Having zero control over our processing is extremely frustrating and costly. To top it off, the rules for ranchers processing their own meat are different than those for small custom butcher shops. They can take their meat products to farmers markets without a USDA-inspection but we cannot (Corralitos Meat Market is an example of this). This is a double standard that most customers are oblivious too."
The USDA slaughter situation has been this way for at least a decade. None of this should have been a surprise to these folks. Many farmers have trouble finding people who can correctly cut and wrap their meat (myself included). If another farm has a competitive advantage in getting to market, consider seriously doing what they do. You've had 6 years, folks. that's longer than most. If it is a crucial aspect of your business, maybe you should have looked at carralitos meat market carefully and done that yourself. I can't speak specifically to the laws of the State of California, but this is a common, reoccurring problem when raising animals for food.
"3. THE ECONOMY & CONSUMERS: We certainly have some amazing customers, some who have been with us since the beginning, others who have loaned us money, and many who put faith in us when purchasing an egg share. We get the occasional compliment like "your eggs changed my life" or "I feel comfortable eating meat again when it is from you". Yet we have other customers who want our products to be cheaper, for us to stop using organic feed, or for us to lower our standards in other ways. There are people who want us to use a soy-free feed, but yet are not willing to pay the added price that a non soy feed will cost (it takes longer to grow out an animal without soy and laying hens produce fewer eggs when not on soy). Many customers, in fact, will choose to get eggs from several states away from a farm they have never seen in order to get a soy-free egg or they will buy bacon or sausage that is sugar-free but happens to come from some nameless farmer in Iowa. Many people prioritize their personal dietary preferences du jour (I say "du jour" because these preferences change often over time) over supporting an actual local farmer or perhaps over humane animal care, environmental sustainability, etc. I encourage you all to look at the bigger picture and think about what values you want to support. Added to this, the bleak economy is encouraging many of our former customers to pinch pennies and discard their values for food that are organic, local, environmentally sustainable, etc. While I understand the need to be budget-minded (we haven't seen a movie in over a year), I don't think people should skimp on the food they put into their bodies and the kind of planet they want to see. If we want local farmers to stay on the landscape, we must support them over the long term. When we shop around, try to save a few pennies, or preference our dietary fads over the realities of local livestock production, we are taking away that vital support that keeps local farmers around. "
Customers ask for things you don't produce. Check. Customers complain about prices. Check. Customers like your product: Check. Customers make choices on who they buy from based on factors other than you being more righteous than other farmers. Check. Customer preferences change. Yep.
You should buy from me because I am entitled to your business. Um. Nope. Sorry.
This is a pretty classic marketing problem. If customers aren't buying your story (and your product) change it. I'm sure that there are lots of dollars flowing to local farmers from the bay area. Its your job to figure out how to get more of them; and that's the bottom line: Starting a business is all about customers, and nothing else. If you don't have enough customers to support your operation, right-size your operation.
"4. QUALITY OF LIFE: We both used to be avid mountain bikers, backpackers, rock climbers, all around adventure-lovers. Since starting a farm, we have had almost no time to do anything fun. Our daughter's only 'fun' time is when all three of us are washing and packing eggs to music at night. We live next to a highway because that was the only land we could find to rent that also had a house for us to live in. We farm in an area rife with criminal activity and had 300 of our laying hens stolen in the spring, but it is the only place we could find that would rent us land. To top that off, we can't find any good employees that would enable us to work less than 80 hours a week and have some semblance of a life. So unlike the beautiful, joyous life that many romanticize for farmers, we don't have that. We need a better life. "
A small farm IS your life. A small business IS your life. If you are not able to do the things that you wanted to do, maybe it's not the business for you. I think it's unreasonable to think that your lifestyle will not make a drastic change if you go from being an academic to a full-time farmer -- you are making a drastic change. Since you are self-employed, design a job you like, not one that oppresses you. In fact, that's my version of hell: Self employed at a job I hate. I have no one to blame but myself since I created the position.
Summary and conclusion:
A house and 48 acres is something that looks good on paper, but isn't really necessary for the operation that they described. They could have produced much the same product on a 2 to 3 acre parcel. It wouldn't have been as pretty, but sometimes you start small. Feed the same organic feed to your chickens and pigs, rotate the chickens over an acre of grass, accept a dry lot as your pigpen. Instead of living in the trailer now, you should have been doing that 5 years ago, on the 2 acre plot. Once you've got a good system in place, and are selling product, expand. Lease another 2 acres and double your operation. I'm sure that they could have found a 2 or 3 acre parcel to lease, maybe even closer to their markets. And being that close to the animals solves the theft problem, and the commute problem.
They also seemed to have missed a revenue opportunity: they had 100 people attend an event where they slaughtered a small pig. Classes on the basics of farming are a great source of funds and are interesting and useful to the participants, too. If each of those 100 people had paid $100 for the class, the resulting $10,000 would have probably been pretty darned welcome revenue. Do one of those per quarter and you've got a new tractor. three years of that and you can put $100,000 down on that land you had your eye on.
Spend less time worrying about certification and organic, and more time worrying about customers and markets. Ask for help before you fail. Accept help. Learn how to hire and retain good employees.
Trailbreaking sucks. Study and emulate farms that are succeeding unless you have a lot of money for the inevitable mistakes you'll make trailblazing.
You'll find the final post on honestmeat.com here.
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49 comments:
Interesting and valuable perspective. It's a tough business where it appears there's not a lot of room for mistakes - and very expensive mistakes abound.
What's the solution here? Is it feasible to think that some business consulting prior to startup would help the plight of farmers - helping avoid this type of situation from happening in the first place? How would you get to them prior to making the mistakes? Could you get paid doing this type of consulting?
To write a "postmortem", as you call it, you may want to actually talk to or interview the farmers instead of making a bunch of assumptions based on scanning their website. I could do the same thing- looks like you are raising animals in a sensitive wetland habitat, causing serious water quality issues while providing less than humane conditions for your animals. Looks like you are using your own personal money to float your farm until you start making a profit. Wonder how long you can pull that off before you are broke. But wait, I won't do that because I don't waste my time giving superficial analysis & criticism of how other farmers run their business. That is what little 12 year old boys do when they are jealous of things they don't have and have to much time on their hands while they ignore their animals rotting in the mud....Now go find some other farmers to pick on to make yourself feel superior.
I'm still pretty young also. 23, army wife, one year old, but you're absolutely right and I'm glad "figured out" what I want and need.
1. You have to figure out the market, and introduce "new products" in a limited way. Like I'm glad I bought only 2 mini dairy goats for myself. I can sell them elsewhere, but it's meat and standard goats that sell, as well as pigs, chickens, quail.
2. I already know that farming is a way of life.
3. I want to be self sustaining, either start from young stock, breeding stock, and reproduce. Breed the best, eat the rest haha
4. Also, we're renting 4 acres right by a highway, I successfully talked my husband OUT of wanting to buy it. One acre(?) that has to be mowed, on a hill, the land is not suitable for growing, the rest almost impenetrable woods, unfenced, one very small barn.. We found a place $350 cheaper than what we're renting a month, loamy soil, flat, barns that would need to be fixed up, basically a place better suited for my needs. The only thing is that there is a big black walnut tree there, the goats and donkeys that live there seem to be alright with it there..
Excellent analysis. Yep, it's a business and it's a lifestyle and it's a choice. Take it at any less than any of those, and it will fail.
Bruce,
Not often that I read your blog anymore, even less so that I bother posting.
Whether your farming practices/decisions make sense to me or not, you have my respect as a businessman.
Excellent analysis!
Cheers,
Friend
Rebecca, if there's something you'd like to say I'll publish it. Feel free to comment on any part of what I wrote.
As far as my own operation goes, sure, I've got off-farm income and resources as most farmers do. I'm sufficiently capitalized to take the various slings and arrows of outrageous fortune or regulatory excess. I've said as much in several posts on this blog.
Closing a business is always an emotional time. Hope that you're happier soon.
I agree with your analysis as well.
Going into business is a major work load, and farming is a major work load. All of that combined pretty much means that your life is your farm and business. Which is why most people don't go into business for themselves, especially not in farming.
It just goes with the territory.
I was subscribed to the Honest Meat blog and was sad to hear that they were closing up shop, but it happens. I think most startup businesses go belly up within 5 years of startup. They lasted longer than most.
Bebop: haivng a farm near a highway is great for advertising purposes. Most of the animals I sell are to people who see them from the highway and stop by the farm to inquire. In fact, so many sales that I don't advertise much at all. It's been a real blessing.
Best of luck with your farm.
Lisa Rae: I agree with you.
Friend: Appreciate your comment.
Kevin: the business aspect is the hardest part to convey to anyone. It's unfortunate, but most folks aren't open to advice on the business front until they're done. That's one reason that having a board of directors or a mentor is good; a little perspective and distance from the scrum gives them the ability to see a little more clearly and objectively.
As far as making money by consulting farms; that's a thought. I could probably be a "farming the wetland" consultant now, and offer pretty good value!
BTW: I've really appreciated your blog and the videos of farm operations. I watch them very carefully and I find them really useful.
Regardless of whether this is an accurate postmortem or not (whether Rebecca agrees or not), your (Bruce) points are very, very valid. I'd even simplify things down to just one sentence:
Farmers are in business to feed people.
The aim is to feed as many people as you possibly can, in a sustainable way.
Yes, it IS a business, and the business person HAS to use business measures to ensure sustainability (for him/herself as well as for the farm). But again, we should place feeding people as THE reason why we farm: farming IS your life. Everything that one does should revolve around this. Are we feeding enough people? How can we feed more? This mindset should help establish what people want/need, it should help drive marketing. Based on the snippets from TLC Ranch's demise it would appear that they weren't maximizing food production, they weren't looking to feed the most numbers of people possible; they seemed to be too selective, looking to transform potential customers rather than transform themselves. Yes, in the end it's about being able to deliver what the customers want/need.
All that stated, non-traditional (read "non-corporate") farmers are caught between the current and the future. The aim is the future, but the current (mostly driven by the commodities market) makes it extremely difficult to get there. The best strategy that local farmers can take on is to prepare for the transition to when the current has long been laid to rest (failed highly intensive petro-farming). It's the long-haul. Customers WILL change, but that change will only come in time; for now local farmers should stay alive, and they cannot if the priority isn't that of looking to sustainably feed the most people possible.
I recently stumbled across this video. I highly recommend it. In the end it acknowledges two points: 1) Keep the game (farm) going; 2) Adaptation is the name of the game, the future is going to present the need for big time change.
http://www.thetinylife.com/farms-of-the-future/
Bruce, having considered starting my own farming operation your blog has been extremely helpful (along with multiple educational websites, magazines, trade publications and other local farmers). The vitriol from the 'failed farmer' is unfortunate. How often do I see young people (and others) in my area of the country go into a 'farming business' only to see it fail within a few years. Your analysis, regardless of what anyone else may say, hits many marks spot on.
[Due to limitations on message size rebecca couldn't post this reply, so I'm posting it for her. Bruce]
OK Bruce- if your point of this blog is to 'teach other farmers' as you explain up top, then you may want to do a proper
analysis based on facts, otherwise your words of wisdom will be misleading and full of conjecture. So here are the facts:
Farmers: Together, Jim and myself have 25 years of farming experience and degrees in biology, natural resources management,
and agroecology. We have a deep understanding of biological systems. We are not experts in business, but have taken numerous
courses in economics, accounting, and marketing as well.
Feed & Husbandry: We go into detail on our website how we manage the animals so that consumers understand how we do it.
We use the best organic feed in California because it works- other, cheaper organic feeds that we have tried cause a
reduction in egg production and diarrhea in our pigs. In order to reduce our feed costs, we work hard to make sure there
is sufficient pasture vegetation for the animals through rotational grazing and we have a waste feed route that we do
twice a week, picking up the best waste feeds such as organic brewers grains, organic produce from natural foods stores,
and organic cull veggies from local farms. This has dramatically reduced our feed bill, turns a local waste problem into
good food for people, and increased our profitability. Jim works 80 hours a week because we had some challenges this year
finding a reliable workforce even though we pay a living wage and the work is actually enjoyable & diverse.
Land Access: If you really think that the division of land resources in this country has been simply a result of the free
market, then you are deluding yourself. In California, much of the farmland was taken from Indians, given away as vast
Spanish land grants, and more recently much of it has been purchased by land trusts with tax payer dollars and then rented
back to big ag companies at a reduced rate. Big Ag has been able to take control of all the land around where we live
because water prices are subsidized, allowing them to continue their farce of producing monocultures of the most water-hungry
crops on the planet. These crops have pushed land values up and destroyed the viability of livestock production in this area
and it is all because the government keeps water prices artificially low or even free in some areas (even though it costs the
water agency up $1,000 an acre foot to provide the water to them). I would love there to be a free market for farmland, but
that is simply not the case. To top that off, we rent land from a non-profit that purchased their farm with government money
in order to help beginning farmers. So yes, we expect a reasonable rental price and lease. That is what the public expected
for that money- why should we expect any different? We did try to move the farm to the North Sacramento Valley while maintaining
our markets. There was no land for lease up there, as it turns out. You have to be part of the good ol boy network to get
into anything. Yes our brand was strong enough to move locations, problem was there were not other locations that we could
find in six years of searching (& searching HARD).
[Rebecca couldn't post this due to a limitation on the part of blogspot, so I'm posting it for her. Bruce]
Slaughter & Butcher: I am not sure how we would have known that all the USDA-inspected cut & wrap facilities SUCK, that they
can't follow directions, but that is what we found out after trying nearly all of them. We actually finally found an excellent
USDA butcher, but then the giant Hearst Ranch Corporation bought out the facility and made it their private butcher shop.
Building our own butcher shop, obviously, was not an option. Therefore we could not mimic what Corralitos Meat Market has done,
plus their facility is grandfathered in, built over 60 years ago. As you are probably well aware, building a butcher shop
costs around a million dollars. So even recommending that we look into that is just plain stupid.
The Economy & Consumers: We scaled up our production to meet demand, actually, based on our sales last year. 2009 was our best
year ever- profitable in fact, so we thought that our customer base was surviving the economic downturn ok. This year has been
a different story and sales have been down. As you might know, when raising livestock you plan your volume usually one or two
years in advance so you begin breeding or growing out the proper number of animals. That is what we did, but our demand
dropped this year. Does that make us bad farmers or business people? No, that is pretty normal for most businesses out there.
We were also trying to get to the proper scale so that we could realize some better economies of scale on our equipment,
feeding practices, and our land base. This would allow us to lower our unit costs of production and realize better margins.
Also, because customers are now pinching pennies and asking for us to lower our standards does not mean we should chuck our
values to chase those dollars. If I can't raise the highest-quality, nutrient-dense, organically fed and treated, pasture-raised
animal under humane conditions, than I am not going to continue raising animals, simple as that. There is plenty of crap
food out there from animals treated like shit. If that is what consumers want, they can go get it at any store. We have a
mission and values to what we do. If consumers would rather have us feed GMOs, antibiotics, and raise animals under stressful,
CAFO-like conditions, then we will simply opt out of producing food for those people.
[Rebecca couldn't post this due to a limitation on the part of blogspot, so I'm posting it for her. Bruce]
Quality of Life: We love farming and living on a farm- that's why we have been doing it for a combined total of 25 years.
However, the complexity and level of stress that we faced due to all the challenges I explained had sapped all the enjoyment
out of it. No, I don't think the farmers & ranchers who feed and nourish our society should suffer miserable lives, working
themselves into physical and mental ruin. A hard-working, older veggie farmer I know has had two strokes. Many farmers I know
are obese and unhealthy because they don't have any time to cook for themselves, instead they are working themselves to the
bone. I don't think it is unrealistic that our family have one day off each week or have time to spend with our daughter and
extended family. I haven't seen my mom in a year and a half, because we couldn't take the time off the farm, nor did we have
the extra cash to pay for the visit. That is a sad state of affairs in my opinion, and all my farming friends in this region
share the same sentiment and predicament. Our farmers should be fairly remunerated for what they do and they should have
physical, mental, and spiritual health. But apparently, we are just not HARD enough for you and should just suck it up. I
look forward to seeing if you last 25 years in agriculture, as we have together.
[Rebecca couldn't post this due to a limitation on the part of blogspot, so I'm posting it for her. Bruce]
Summary: We did start much smaller, with just 7 acres, then 13, then 20, then 48, each year adding more. We set out to do a
pasture-based livestock and poultry farm, not a CAFO. So 2 or 3 acres would not be sufficient, unless you think we should
have a muddy poop yard to raise our animals? Additionally, as I explained, much of our acreage floods and the other part
is non-irrigable, therefore we need to rent dry ground to escape the winter flooding and have the irrigable ground for
when the non-irrigated pasture is bone dry in summer. It is a very strategic, planned rotation around our fields, making
due with the marginal land that is available to livestock producers in this area.
You are also incorrect about our pig slaughter classes, again pointing out your lack of research skills. We did 6 pig
slaughter classes that were each capped at 10 people per class due to limited parking and wanting each person to get a
hands-on experience. We charged $200 per person, so that was $2,000 per class and $12,000 overall. In addition, we had 5
chicken slaughter classes with 20 people each class, each paying $65 to take the class and help us get rid of our old
laying hens. That earned us $6,500 and paid us to cull 300 of our crappy old hens- sounds like a pretty good revenue
decision on our part.
[Rebecca couldn't post this due to a limitation on the part of blogspot, so I'm posting it for her. Bruce]
As for your ending comments, we got our eggs certified organic because 1) our customers were asking for it non-stop; and 2)
our county ag inspectors told us that we could not tell people we used all organic feed & practices with our hens unless
we got certified. So we did it, and it was painless because we were already using all organic practices. That is the only
certification we got. Yes, we are committed to organic feed (do you know what it is like to be committed to a value?)
because we don't believe in using GMOs, pesticides, herbicides, & chemical fertilizers in grain production just so we
can have cheaper feed. I don't think the people who live in the Midwest, nor the people who live near the Gulf of Mexico
should have to suffer the consequences just so I can have cheaper feed. But instead of just suffering from expensive feed
bills, we did research and experimented with different practices and high-quality waste feeds, improving our profitability
while maintaining an excellent quality product. Of course, we did seek out advice from others, read a ton of books and
blogs, and had 25 years of cumulative farming experience to draw from. However, as you may have found, there are still
not a lot of other livestock farming models to learn from (at least for pigs & chickens) and we had to trailblaze alone
to a large extent and learn from our mistakes. We actually spent a considerable amount of time listening to and
communicating with our customers, checking out how other meat producers market their products, and reading and
researching all the time. And guess what, instead of eeking out a meager living and continuing to move forward
like hamsters in a wheel, we are stepping off the wheel for a while to go learn from others. Isn't that exactly what
you would want us to do? Why criticize that decision?
So on an aside, I wrote business case studies as a researcher in the Center for Agroecology & Sustainable Food Systems.
To write a proper case study, I would spend about 5 hours doing interviews, collect a mountain of background info.,
thoroughly read the companies business plans, and only then could I give a proper analysis of the strengths and weaknesses
of the company. You would do well to do the same when you analyze the business merits of another farm.
-Rebecca T.
Ruth: I'm glad that the blog has been useful for you. I like to hear that. Thank you.
Rebecca, I'll respond to your posts in the order presented.
Your educational background or experience don't really matter. A chicken raised by someone with a degree in natural resources management doesn't taste any different from one raised by a high-school dropout by virtue of the degree. So I'm going to say that your background is immaterial to what I wrote. this is a pretty common mistake made by people who have some expertise in one area; they believe that it magically translates to expertise in another.
Regarding employees: If you cannot find someone good in the worst recession since the great depression of the 30s, I'm wondering why. Now is a GREAT time to hire folks. I put an ad out for someone to shovel manure -- literally -- and got over 200 applicants.
I'm unclear about your land access comment. To paraphrase, you seem to think that you're entitled to the best farmland by virtue of...what? I'm not sure. your sense of entitlement? in your writings you repeatedly ask for subsidies but then you complain about the subsidized water that big ag gets, or subsidized leases they get. You are on a subsidized lease yourself. How can you criticize anyone when you're doing the same thing?
Personally I'd prefer to have someone model a farming system that is not based on subsidies, that was based on making a profit. You rented land from a non-profit that bought the land with government money and you were still paying 10x the going rate of pasture? Really? How much did you pay per month for the land?
Regarding finding a place to relocate to: A simple search of of the sf bay area craigslist with the term "pasture" turned up 7 rentals offered, varying in size from 2 to 9 acres, for $200 to $750 a month. I don't accept that you could not find acreage that is workable within driving distance from your markets.
Slaughter and butcher: "I am not sure how we would have known that all...[the butcher shops suck]" That's part of business. Working with vendors and suppliers, and having some not work out is a normal part of everyday life for a business and is not limited to farmers. That's also an opportunity for you -- having the background knowledge on who does and does not work means that you're 3 years ahead of a potential competitor. "...butcher shops cost a million dollars...". No -- current solution is to apply for grants and build a mobile USDA slaughter trailer. In King County washington, from formation of the group to first animals processed on the trailer was 2 years.
I have gone through some of the points that rebeccas raised to illustrate that there are alternate views and tactics that could have solved this or that problem, and in fact, the difference between a successful business and one that fails is just that sort of flexibility.
I just don't see the sort of attitude in Rebeccas response that would lead me to believe that she's open to doing whatever it takes to make the farm work and that really is the second key element after customers
I don't think that a few more years of study is the path I would have taken given the same situation. Downsizing maybe -- getting an off-farm job for someone to help during the down sales period; maybe for both people. Or how about a few more classes for $2,000 a day. Teach 4 classes a month and that $96,000 a year goes a long way towards the bills. So maybe you hit three farmers markets instead of 8; ask some other farmer to stock your eggs in their booth, for instance. Heck, if it was that bad and I had too many animals, take the loss and take the excess to the auction. Rebecca, as much as you'd like to think that your product is special, it's still a commodity, and commodity prices fluctuate. I've had more price resistance this year than last, too. Welcome to farming.
And if you want to quit, just quit. Slavery ended in 1865.
With regard to the "slaughter and butcher" issue I read nothing about partnering with others to come up with a solution. I'm not sure, but I think that the mobile solution up here (King County) was a joint effort (if not that one, then another one).
We're not going to beat the big corporations (who are highly subsidized) easily. But, beat them we must. With enough local cooperation it WILL happen.
I applaud all the hard work that local farmers do. We must, however, keep in mind that what will get us there in the end is Smart Work.
Thanks for posting a postmortem, Bruce. I feel terrible for Rebecca T, it sounds like she's put in a lot of effort. Rebecca, best of luck in your next ventures, and hopefully you'll bring all that experience and learning back to a farm somewhere.
Bruce, reading through this the two questions I have are:
1) Why are they paying 10x market rate? It sounds like that's sinking the business more than anything else.
2) How come they have 48 acres? Are their sales so high that they need that land? IIRC they aren't running a cow herd. To rephrase a little more clearly, what are the big elements of their business and how much land do those elements need?
You combine the two and you get a situation where they're renting too much land at 10x price. You'd need some amazing ability or luck to survive that.
[I still can't get over the 10x number. 10x! The moment you figured out it was 10x it was time to renegoiate. Or blow up the business and start again.]
You can not do everything correctly, work 80 hours a week, and still fail, unless the goals or standards you set are unrealistic. Check your ego, and review your lofty standards. Better to meet 70% of your goals and profit than to meet 100% and fail. I have failed in business for these same reasons. Now I have to work for someone else so that I can save money to try again. Try to learn from your experience instead of making excuses for your failure, and you will likely succeed in your next venture.
Also, get in touch with Mr. Jefferies. I'm pretty sure he hasn't spent a million dollars on his slaughter house.
Bruce- FYI- slaughter and butcher are two different things. We don't have a problem finding a USDA slaughterhouse, we have a hard time finding a USDA butcher. The mobile slaughter trailers don't do cut & wrap, so that would not solve our problem. Your ignorance on the subject is really beginning to show.
Also, as I mentioned above, small acreages under 10 would not work for the rotational grazing model we are doing, trying to keep our animals free of parasites and not rotting away in mud & manure. So if you can find me a 50-100 acre parcel within 2 hours of SF Bay Area for normal pasture prices ($10-100/acre/year), please pass them onto me. We are not just raising pigs & chickens but also lamb and steers, which require more acreage to be grassfed.
Again, I am not asking for subsidized land prices, just normal market prices.
To build a butcher shop, one need to first purchase the land, then build the building. So yes, here on the Central Coast of California it costs one million dollars, that is why nobody is attempting to do it.
Personally I think if you had some burning desire to prove your worth you should have just written a stand alone article about the challenges of small farming or thoughts to consider towards extended success to make your points and kept the other people anonymous rather than pick a fight and make it personal with these people, you come across very arrogant, sorry to say. Not that you didn't make a few good points, you did, but still I'm asking myself what were your intentions? And maybe you need to ask yourself that question. The bottom line though is they should not have been put in a position to have to defend their decision to you, especially on a public blog, that was just mean, shame on you for that.
shawnee
Here's an interview with TLC farm. It's definitely worth a listen. http://www.naturesharmonyfarm.com/natures-harmony-farm-podcast/2010/10/11/farmcast-20-death-of-a-farm.html
When I was a soldier, it always amazed me the amount of armchair generals I had tell me how they would do things. Oh, I'd go over there and blah, blah, blah. No, you'd curl up in a ball the first IED that went off. It always ticked me off.
I'm seeing the same's true with farming. Personally, until you've tried making a profit raising livestock like Rebecca or Bruce, you really don't have a leg to stand on. If it's all so obvious, then why aren't you doing it? Not planning to do it...do it.
Rebecca, my hat's off to you for doing all you did while carrying, having and raising a baby while on the farm. We're in that balancing act as well. It's a special type of tough.
Bruce, I dig your blog, keep it up.
Brentcu; I can't figure out why they needed 48 acres, either. Maybe Rebecca can fill us in on how the land was used or divided. I'm figuring 2 acres for the 300 laying hens and maybe 5 acres for the pigs. If you can't afford the grazing land for the cows and sheep, drop 'em as a product, or resell someone elses, as they were doing with beef.
As far as rates go, $100/acre/year is not the market rate in western washington; it's more like $100/MONTH/acre. Cropland is selling for $10,000 an acre in most of washington state, particularly those parcels with water rights. Assuming that you'll be able to use $500,000 worth of land for $500 a year seems... optimistic. Huge subsidy assumption there.
Rebecca: I deal with the USDA slaughter situation each month as part of my business. I'm aware of the current system and limitations. The difference is that I'm not citing or blaming the current situation for the demise of my farm. I'm working with the hand I'm dealt.
Inspected meat can be sold to resturaunts or across state lines, and you're correct, USDA slaughtered needs to be cut and wrapped in a USDA meat shop, and that is one way to do it. Another is to rent a commercial, inspected kitchen, license yourself as a food handler and sell the products you produce in the same was a resturant does. it's a heck of a lot cheaper, allows you to sell value-added products (ready-made meals, fresh sausage, ready-to-cook roasts, etc) and allows you to capture even more of your customers dollars.
And there are other options, too.
If you're serious about continuing, sure, I'll work with you on the business organization and I'm pretty sure we can reduce your need for acres (drop the beef and lamb, concentrate on pork, chicken, eggs and classes, etc) and I'm pretty sure with your customer base and general location you'll do fine.
But I get that you're tired of it, and want to quit, and that's fine, too.
Across: I didn't see that natures harmony thing; thanks for the pointer.
And I'm glad you like the blog. I do my best to keep it entertaining.
Rebecca states in her interview that she had 2,000 laying hens at the end.
Giving each hen a 1/2 square foot of grass per day that's 1,000 square feet a day. An acre is 43600 square feet, which means that each acre gives you 43 days of rotation for all 2,000 hens. So I'll revise my estimate of land needs for the hens to 3 acres giving a 4 month rest after grazing.
One thing to note about NaturesHarmony is at minute 22 in that interview, paraphrased:
"if you have a formula to be a successful farmer, they had it, well educated, experience on farms, anything i would say to start a farm they had it and couldn't make it work"... They didn't have a wheelbarrow of money.
Tim made quite a bit of money and has a substantial off-farm income. His recipe for farming is a pretty common story: Make a lot of money somewhere else, and then start a farm.
I'll be honest. sometimes it takes a wheelbarrow of money to make things work. You have to have enough money to be able to survive the lumps.
I just stumbled across this and know nothing about business, but I still know that 1/2 square foot per chicken is unacceptable. For comparison - taking into account a healthy adult male's height and weight - imagine living your entire life in a 25 square foot room with 10 or 15 other people. Imagine eating, sleeping, breathing, defecating, establishing social orders and relationships (yes, chickens do that), with less than 3 square feet of space in which to position yourself. Imagine the toll it would take on your mental and physical health.
When humans have been placed under similar conditions, we have decried it as inhumane, cruel, torturous, and barbaric. Why is it acceptable to treat animals in such a fashion and justify it as fiscally necessary?
I respect Rebecca's consistent efforts to maintain the good treatment of animals. No, it is not good or easy business. But she has been making an effort to overcome something that valuing (above all else) financial gain has resulted in - the abuse and torture of animals.
Please don't view this comment as an uneducated blurb - one does not need to have operated a farm to understand that living creatures cannot be happy or healthy when they live in overcrowded conditions (and as for chickens specifically, yes - I have owned and raised chickens, though not for profit, and having observed their behavior, it is clear that chickens do need personal space, just as humans and many other animals do).
Please also do not view this as an attack on your personal character. My invitation to imagine your life in similar conditions is meant to educate, not to passive-aggressively condemn. Just because Rebecca chose the ethical treatment of the animals we owe our dinners to over a sustainable business model does not make her stupid or shortsighted. I highly suggest (especially before making such personal comments on her intelligence in a public medium) that you take a closer look at her values and goals as a farmer and accept that they are indeed valid, although they may not be similar to yours. Can't we all just get along - or at least agree to disagree without using personal attacks, as more than half of the commenters seem to have done?
Having said all of that, I am happy to have found this blog as a source of locally grown meat in Washington state. Please keep it going, and I will be continuing to read new and archived posts to learn more about the world of farming and business.
Bottom line is that it is hard to have success on rented land: your investments in the land are not yours. Their use of the land was beyond sustainability. To sustain farm land, you can put no more animals per acre than 1 cow, or 4 hogs, or 40-50 chickens. For maximum use, pigs can follow steer, and chickens can follow pigs. This is NOT to say that that 1 acre can sustain 1 cow, 4 pigs, and 40 chickens...you need 3 acres to do that!
I agree, the business model they had or thought they had was severely flawed. The prices were inflated, the land extortionately high, (but they KNEW the rent cost when going into the lease or should have). When the current model of what you're doing in business ISN'T working- then you have to take a long hard look and make the necessary changes. Prices are generally number one if you have the quality, then your expenses have to be examined. It's actually very simple when boiled down to the basics. Before a new or home business is proven to be able to provide the full incomes (including insurances and benefits that would normally be obtained "off-farm") one or both partners MUST NOT quit their day job! VERY idealistic and flawed logic to think that you will just grow a bunch of animals, process and sell them without having first done your "due diligence".
They may have had all the apprenticeships in the world working on a farm- NOW they need the same time in forming and running a PROFITABLE BUSINESS- period. Good Review, Bruce
I am amazed you guys make a profit at those western washington rents and prices. You need to inherit or make money elsewhere in order to afford to buy something in the first place. Out here (SW France) things are, surprisingly, much cheaper.
brentcu.
Hi Bruce,
I have about twenty chickens on about a quarter of an acre, and it's not enough.
Those that can fly over the fence to scrounge outside do, which is fine. Some of them have taken up permanent residence with the pig, which is fine.
You're suggesting 2000 chickens in about a tenth of my chicken pen, and I'd be afraid to walk in there at that rate! There would be no place to put my feet. Half a square foot per hen sounds like what they tell us the CAFOs allow, in those horror movies about how horrible CAFOs are.
As for profitability, at that stocking rate you'd have losses from fighting and cannibalism as the chickens don't have enough room for normal chicken social behavior.
You have also not allowed any space for feeders, waterers, and nest boxes.
Diana, I think that Bruce used the initial 1/2'/bird for simple calculations, then adjusted to triple that (1 1/2' - 3 acres total for the 2,000 birds). I suspect, however, that you'd still view this as being insufficient. I have no direct experience, in which case I'd have to hold a neutral position.
Rebecca stated:
"So if you can find me a 50-100 acre parcel within 2 hours of SF Bay Area for normal pasture prices ($10-100/acre/year), please pass them onto me."
Is this sarcasm? I recently purchased property and am looking to lease back land to my farm operations. My farm will only ask for a couple of acres to start with (I am hoping that I'll end up having about 30 - 35 acres of usable land). It has to prove itself to ME before it attempts to ask for any more land! Stripping away the costs of the residence, I'm figuring that I'd have to charge my farm about $25/acre/mo just to cover the mortgage cost for each acre: the land itself came to just under $4k/acre. $25/acre/mo is pretty darn reasonable. I'm just not seeing that expecting to lease for $0.83/acre/mo to $8.33/acre/mo is realistic: any lessor would at least want to cover costs (property and or mortgage). If this is all one can afford, then clearly somewhere one's expenses are horribly high, or revenues horribly low.
Clearly I will be subsidizing my farming operations, but... I'm not asking anyone else to subsidize them! Yes, I'll have an off-farm income- a "day job," but I think that I've got a shot at eventually dropping it, as my living expenses (mortgage payments) are fairly low (subsidized by years of frugality). I had contemplated going to school to study Ag, but figured that I'd instead use my money to purchase land and, while still having a day job, learn about farming via hands-on and hard-knocks: in essence I'm coming at farming from the opposite direction than TLC (land first, education second, vs. education first, land second).
I'd like to see more qualified figures in all examples (such as Bruce provided). What measures should we be speaking in: density and cycle times, what else?
It's about time that somebody talks about ways to mix realities with idealities. Too many people are looking to be idealistic and not worrying about the realities of life. And this applies to many more situations than just farming. I have been studying and working to start my own farm, and even as a beginner in the pasture based market I am dumbfounded by the amount of complaining by some people who are failiing because of their own idealities.
Are their other industries where people try to point fingers this much when their business fails?
I have a lot of respect for anybody willing to take on the life style of a pasture based farmer. I respect TLC for everything they have done and the success that they did have. But, I can't help but notice their lack of self criticism in why their farm failed.
I have a tiny farm in the Northeast where I produce most of my own meat and eggs and some vegetables; but I certainly don't consider myself a farmer in the true sense, and I know nothing about the business side of farming. I can't disagree with your post mortem, but unless you've lived there you have NO idea what CA is like. From their description I can pinpoint TLC's location within a couple of miles. I used to live there. Because there are lots of farms it seems bucolic, but it is a horrible place. The big farmers, mostly in berries, are one gang. The soil is polluted by all the chemicals they insist on using, and they do NOT have a laissez faire attitude toward small farmers; they run roughshod over them. They also run the local government and school systems. The schools are terrible, and a big part of that is keeping a large pool of poorly educated non-white people for cheap labor.
Oppression breeds frustration and anger, and Chicano gangs run things in another way. It's not safe to walk down the street, you can get killed in a drive-by. Two children were killed this way shortly after I moved there--that was the beginning of my education as to what I'd gotten into! I also had bullets whiz over my head as I drove down the street, caught in the middle of a shootout, and witnessed two shootings. The nice ordinary people are caught in the middle of all this, just trying to get by and raise their children safely.
Despite what you think about what they paid for land, this is the CHEAP part of the CA coast! You cannot imagine the unbelievably high price for land in the nice areas, IF it can be found. It is usually sold for housing or commercial development, a big part of the disappearing farmland problem. I don't see how any start-up small farmer can succeed in coastal CA.
Whatever they do next, I think that before long they will be glad they moved on.
There sure is a lot of drama on this blog. I'm starting to like it! :)
I endeavor to entertain.
Hopefully it won't undermine your farming efforts!
Bruce, if you endeavor to entertain, how about you and me in a fist fight. I'd really enjoy punching your head in and I'm just down the road a bit in Portland. You talk a lot of shit. How about backing it up. -Jim
Thank you for your gracious invitation. I'm up for sparring sometime if you're up for standard rules in a boxing gym, or if you'd prefer more open style, come on out to the dojo I use. Send me a private email and we'll set it up.
Not kidding. Gets tiring to spar with the same folks all the time, and you sound like you're motivated. Come teach me some manners, ok?
So.... did this sparring match ever happen? :)
Nope. Never heard from the guy. Figured he changed his mind when his threat didn't work.
If the best he could come up with in a discussion about farming operations is "I want to punch you" I pretty much figure that I've won the argument.
Motivated sparring is pretty interesting; if you're interested in self defense, it's nice to find someone who really wants to attack you. good practice.
Reality works for me.
Yep ! I love sparring. I used to study and teach American Sombo here in Pennsylvania, also studied Aiki-JuJitsu for a while before I moved due to job stuff. I do miss it, finding a quality dojo is hard now a days... Thanks for the reply Bruce.
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