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Understanding Small Farm Economics

Why are farm fresh food prices so high?

Most NH farms are small, family owned businesses. As often as not, farming couples will have one or both adults working off-farm to earn a non-agricultural income to support their farm & household. A legacy farm might be making good profits, but most NH farm families struggle to make the extraordinary long hours worthwhile.

In simple terms farmers have 3 categories of expense:

Household: Food, cars, gasoline, insurance, taxes, clothing, savings, retirement, mortgage, education, recreation, eye wear, medications, utilities, etc.

Property: Mortgage, taxes, maintenance, improvements, insurance, utilities, etc.

Operations Overhead: Depending on the crop, livestock or service mix, farm machinery, seeds, feed, incubators, saddles, livestock, harnesses, sheds, barns, trucks, fuel, crop insurance, veterinarians, labor, fertilizers, packaging, advertising, accounting, licenses, registrations, business taxes, etc.

Those costs have to be paid regardless of how many turnips are harvested or sleigh rides sold. And realistically, most farms have just a 3-4 month income 'window' when they can make the majority of their sales.

Most farmers that I have met can harvest or provide much more than they can sell. So it's always a fine balance between demand/production/margin/profit. And throw in a season of poor weather (too wet/too dry), a weather event (early or late frost, hail, hurricane or tornado), or precipitous drop in demand (Covid-19) and you can see the dilemma.

For the most part farmers have limited control over their household and property costs and zero control over the weather. The best they can do is control operations overhead, provide wanted quality products and consistently expand their market.

Nationally farmers get between 11-15% of food revenue. Farm direct sales are the bread and butter of NH farmers. That same peck of apples you buy farm direct for $14-$16 would net the farmer $1.20 to $2.40 on the wholesale market.

You can help your local farmer by buying direct, particularly off-season. Like a ski area, most farmers make the majority of their sales in a 3-4 month period. Any off-season sales are a big help. And that's one of the several reasons I am designing the farm to offer year 'round sales. To spread the 12 months of household and property overhead costs over 12 months of sales, instead of 3-4 months. That will enable smaller margins, i.e. less cost per item. I doubt fresh food from my farm will ever cost the same as big-box grocery stores, but with a consistent 2,000 weekly customers, it won't be nearly the customary expense of 'farmers' market' prices either.