Selling at Farmer’s Markets, Can it Be Profitable?

I’ve always been fascinated by the idea of finding a way to have a side hustle via agriculture, but I’ve always hit the same issues which are viability and profitability.

Now of course, I’m not talking about having 200 acres of corn. I always picture about a quarter acre to an acre of production. There are plenty of books about the subject matter, many of which I’ve read. My favorite book hands down being The Market Gardener by Jean-Martin Fortier. The main reason I admire this book and this author is he appears to think like a smart business man while admiring the beauty that it is to being a farmers market grower. Another good thing to read is Restoration Agriculture by Mark Shepard, especially the last chapter that talks about how profitable agriculture is basically dead.

I’ve also read about  hydroponics and aquaponics.  Both of these techniques usually involve growing medium other than dirt, such as clay balls, coconut fiber, grow cubes, perlite, or another various growing medium. Additionally the nutrients the plants need is added into the water based system. The biggest difference though is that aquaponics also adds fish, which are raised for protein, into the cycle. The end goal in both hydroponics and aquaponics is to lock down nature to produce consistent high value crops such as tomatoes, herbs, or strawberries.

Finally, I’ve read and watched countless youtube videos talking about growing landscaping plants and selling them either retail yourself or wholesale to nurseries. This is a subject that will be in a future post.

Despite all of this, I always find myself at the same conclusion — Profitable small scale agriculture is virtually gone. Let me clarify that there is money to be made, but not enough to sustain an average lifestyle.

Let’s talk about each of the things I’ve explored individually.

Permaculture Style Farming

Pros:

  • Lower Fertilizer Inputs, usually because you are doing nitrogen fixers and trying to focus heavily on design
  • Lower Water Inputs, by using keyline water design you effectively use the land to hold onto the water and distribute it slowly into your land.
  • More environmentally friendly than soil eroding mono-culture farming (in theory)
  • Less money input (in theory) because of Permacultures “set it and forget it” design.

Cons:

  • Very high level of knowledge of plants required.
  • Harder to harvest (often hard to even find the produce created), there is a reason why people do very clean cut rows .
  • Lack of focus which would likely lead to a distribution nightmare.
  • Very little proof that this model is financially viable.

Hydroponics / Aquaponics

Pros:

  • More Control over the results (usually)
  • Often time better quality product.
  • Can potentially be year round.

Cons:

  • More Equipment (including lighting)
  • More Electricity
  • More Expensive Inputs (fertilizer)
  • More upfront costs (growing medium, containers, pipes, tubes, etc.)

SPIN Farming

Pros:

  • Fast turnover, meaning if crops go wrong it’s not as time sensitive
  • High Margins and profitability
  • Able to pivot on market trends easily

Cons:

  • Cannot compete price wise with commercial growers and thereby forced to sell the idea more so than the actual product.
  • Logistics heavy, have to travel to various markets and restaurants
  • Unlikely Permaculture, lot’s of replanting.

Big Picture

Let’s imagine you wanted to provide yourself an income off farming. You also chose high margin products and you have mastered all needed skills.

To make, let’s say, $45,000 pre-tax a year — you would need to sell $75,000 of product assuming 60% margins (extremely high). It should be pointed out that 60% margins factor in items that don’t sell and spoil.

Where I live, there are only about 4 good months to sell at farmers markets, but let’s toss out the number of 6 months, meaning 24 weeks. If you really had it, you could likely do 3-5 markets a week. That puts the number of “selling events” at 72 to 120 a year. Meaning you would need to sell $625 to $1,041 per “selling event. (depending on 72 to 120 events a year)”  That’s a little unrealistic in my eyes, but there is more hope to this situation.

It’s assumed that you will likely build distribution to restaurants and small markets at smaller profit margins. The margins for these sales is likely going to be lower, but let’s run with 50% (because less spoilage but less profit per unit due to bulk sales). If you were establish just five restaurant delivers at $200 per delivery (or two $100 deliveries a week), you would gross $24,000 a season ($200 * 5 *24) — and net $12,000 from the restaurants alone. Suddenly you only need to net $32,000 a year ($53,333 gross) from the farmers markets or $445 to $740 per “selling event.” This number becomes more viable, but maybe we need to step back for a minute.

What you needed to do to make $45,000 a year.

  • Have a mastery of farming
  • Keep net operating margins extremely high
  • Sell roughly $500 to $1,000 (depending on frequency of markets) every single event.
  • Have 6 months of selling (even though most areas have just 4)
  • Establish connects with restaurants
  • Make a few hundred deliveries to restaurants
  • Attend 72 to 120 farmers markets (including setup, harvest, cleaning, etc.)

Let’s imagine you attend 120 farmers markets a year and make 120 deliveries a year. Each farmers market takes 6 hours to attend and setup (720 hours). The deliveries take an hour each including prep (120 hours). Then you have to grow $10,000’s of produce, which alone is probably a solid 40 hours a week for those 6 months (960 hours). Now we’re suddenly at 1,800 hours (at least) to obtain the $45,000 a year. That’s $25/hour, which seems amazing until you factor in that it is an extremely lofty estimate. Not to mention it could years to get established enough to get to that point.

A more realistic estimate is half that amount ($12.50/hr), but only after you get established (several years). Don’t forget that it will likely be the most challenging (and maybe rewarding) $12.50/hr job you will have in your life. I’m going to have a few follow up posts specifically exploring this subject more.

 

 

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