Unfair fare: Why prices for meat from small local farms are too high

Editor's note: New York part-time farmer Bob Comis sent us a link to a post on his Stonybrook Farm blog for consideration in the Digest, but we liked it so much we asked him if we could publish an edited version in its entirety. His opinions are going to raise some hackles, not to mention hocks, but we think Bob's assertions are worth discussing, especially given the knee-jerk critique of SOLE food as an affectation and status symbol only the wealthy can afford.

Pig from Stonybrook Farm

By Bob Comis

It is becoming something of a cliche that industrial food prices “don’t reflect the true cost of raising food,” for a number of reasons: because a lot of those costs are shunted onto the public in the form of externalities like pollution, and because of low wages paid to farm workers and low prices paid to farmers, and subsidies, to name a few.

There's a common misperception that local vegetables (and fruit) are more expensive than industrial, but on average that is actually not the case. In August, for example, you can usually get a cucumber at my friends’ — who are full time farmers — farm stand for less than you can at Wal-Mart. When local vegetables (and fruit) are more expensive, it is usually by less than 50%, and very often by less than 25%. Part of the problem is that many supermarkets charge by the pound for things like lettuce whereas farm stands generally charge by the piece. A big head of supermarket romaine at $0.69/lb will cost you more at the checkout than a big head of local romaine for $1.50.

Local meat, poultry, and eggs, however, are dramatically more expensive than industrial, often two, three, or even more times so. Are these dramatically higher prices legitimate, in the sense that they reflect the true cost of raising that food?

I don't think so. I believe very strongly that these prices are as artificially high as industrial food is low.

Here's why. Local farmers are unwilling or unable to scale up to reasonable production levels, so they compensate for low volume by charging exorbitantly high prices to get their cash flow up. They rely on extortionate profit margins — but remember, their volume is low, so they are still barely making it.

This is not to say that raising meat, poultry, and eggs on a small local scale is not more expensive than on an industrial scale. It is, and no matter how streamlined, no matter how efficient, it always will be. Livestock farming is one area where economies of scale and industrial efficiencies are incredible.

Profit margins of error

The next time you talk to your livestock farmer, ask him or her what their production volume is. You might be surprised to find out just how many local farmers are finishing just a dozen pigs (or even a few dozen), a few hundred chickens (or even a thousand), and/or just a handful of cows per year. Based on reasonable prices, cash flow on that volume is extremely low, and the cash flow requirements of fixed costs such as land, buildings, and equipment is very high, so those low-volume local farmers have to charge outrageous prices to bump up their cash flow.

Also, for the low-volume local farmer to stay economically viable, he also has to demand what amounts to an extortionate profit margin. (From dictionary.com: Extortion — noun. 3. “An excessive or exorbitant charge.”) The going rate for a whole or half pasture-raised pig in my area is about $3.50/lb hanging weight, and you can find even higher prices. At my current cost of production, $1.50/lb hanging weight, at that price I would make $300 per pig, or a 130% profit margin. That per-pig profit makes it worth it for a part time farmer to finish only two dozen pigs a year for a net of $7,200.

A 130% profit margin, however, is a totally unreasonable expectation for a market to bear. It is, as I said, extortionate.

Consumers of local food have been so swept up in the rhetoric of the “true cost of raising food” that they are willing, and some even happy, to pay exorbitantly higher prices for local meat, poultry, and eggs. Mainly they do so because they believe these are fair prices. Wake up, consumers! The model you have bought into, based as it is on extremely low-volume farms, is not priced honestly. Nor is it fair, especially to people with limited means, who would very much like to purchase local meat, poultry, and eggs, but cannot afford to do so.

Let’s use my current cost as the “true cost” to raise a pig — $225. If the “true cost” to raise a pig is $225, and the price charged to customers is supposed to reflect that true cost, how can those farmers ask customers to pay $525? I don’t know how long it takes other people to raise their pigs, but last year, when I only raised a dozen pigs, on average there were nine hours of my labor in each finished pig. And last year I was hand-feeding the pigs three times per day, a very labor-intensive way to raise them. At a net $300 per pig, therefore, I would have made $30 per hour. If I had raised two dozen pigs, like the hypothetical farmer hanging around this post, it would have required very little additional labor, so I would have made $60 per hour!

Turn up the volume

I believe very strongly that farmers should make a good living. I think they should be comfortable. I don’t think they should struggle financially at all, although that does not mean they shouldn’t have a budget they need to stick to. Farming takes skill, lots of hard work, and involves substantial risks, both financial and physical, and farmers should be amply rewarded for those things.

I think it is not unreasonable to ask that a full-time farmer make at least $40,000 per year for her efforts. Contrary to the popular impression, this salary is actually quite good in our economy. In 2004, 35% of all New Yorkers in a two-adult, two-child family could not meet their basic family budget — about $43,000 per year in my area — according to the Economic Policy Institute. Most of those families comprise two working adults, so what that statistic means is that a substantial percentage of people living in New York earn half, or less than half, of what I think farmers should make. I believe a couple farming together should make at least $60,000.

What I do not believe is that farmers should get to this income level by charging extortionate prices. The small-scale local farming model should be based on a maximum average profit margin of 30%, not 130%!. Which, as far as businesses go, is a very good profit margin. I know a lot of businesses that would love to have such a margin. A 30% profit margin would mean we should be charging closer to $2/lb hanging weight for a whole pig, a far cry from $3.50/lb.

However, what this 30% profit-margin-based pricing model means is that small-scale local farmers are going to have to scale up. Instead of two dozen pigs, they’ll have to finish 300 or more, which on a pasture-based farm would take at least 20 to 30 acres. Given the above cost of production, six hundred pigs at a 30% profit margin would result in a net income of $45,000 on 40 acres in use. Three hundred pigs plus a nice-sized flock of sheep, a good-sized beef herd, and/or a few thousand meat chickens will get the farmer to $40,000 in net income.

Note, however, that at these numbers, a substantial percentage of the distribution on farms of this type will have to be wholesale — “non-commodity” wholesale, that is. It is unlikely that in the wholesale market a 30% profit margin will be possible. Therefore, to maintain a 30% profit margin on average, a premium for direct sales will need to be added back in.

Personally, I am attempting to put this theory into practice. I am pasture-raising 300 pigs this year, and I am in the process of increasing my sheep flock to 100 to 150 ewes. Most of those pigs will be sold non-commodity wholesale.

For the time being, I have settled on $2.40/lb hanging weight for my direct sales: a 20% premium over the 30% profit margin. I estimate that is about equivalent to where prices for meat coming out of the non-commodity wholesale market would end up, after taking into consideration profit for the wholesaler and the retailer.

Even once the model matures, meat, poultry, and eggs will certainly still be more expensive than our current industrial prices. But I hope the extortionate prices of the early 21st century “Buy Local” movement, based as they were on extremely low-production-volume farms, will be a distant memory. Meat, poultry, and eggs in this mature model will be broadly affordable, not an exclusive niche for the well-heeled.

When things shake out, and the paradigm shift from our industrial import-export model to a local-regional model is complete, I think the small farm will look a lot like it used to — and on Amish farms, it still does: 80 to 100 acres, tended by one full-time and one part-time adult, with additional labor provided by family (children) and/or part-time (or full-time if it can be afforded) hired help. The production volume will be in the hundreds and/or thousands per species depending on the species and the mix of animals on the farm. A substantial percentage of the farm marketing will be wholesale, but there will be a significant amount of direct sales via farmers markets, on-farm, and CSAs.

Local meat is more expensive than industrial and always will be, there is no doubt about that. But it's time for a little honesty about just how much more expensive it really needs to be.

Bob Comis grew up playing video games and eating fast food in a shopping mall in a suburb of Syracuse, New York. In his late twenties, he woke up to the unfortunate reality of the industrial food system, especially factory farms. After losing 15 pounds in his short three-month stint as a very unsuccessful vegan, Bob realized that he could move from Center City Philadelphia to the country with his horse-loving wife and start raising his own animals for slaughter. After five years of pasture farming a windy hillside farm in Schoharie, New York, Bob is so taken with it that he hopes someday to be able to do it full-time. Currently he works as a cyber-commuting PowerPoint specialist and communications project manager for a Philadelphia-based not-for-profit that promotes cancer research.) He has been blogging his adventures and ideas about farming here in an effort to share the farming life and generate discussion about what a local-regional farming and food system might look like.

A version of this post first appeared here. All photos were taken by Bob's cousin Zach Phillips, a filmmaker and photographer.

44 Responsesto “Unfair fare: Why prices for meat from small local farms are too high”

  1. FoodRenegade says:

    What an insightful article. THANK YOU so much for sharing. I am an avid supporter of my local markets, and I'm willing to pay a higher price for sustainably grown, nutrient-dense foods.  That said, this "insiders look" at meat pricing has me wondering just how much I should demand of my producers. How do we as consumers vote with our forks? It's not like we have anywhere else to go! If we want to avoid Big Ag and industrialized meats, these local small-scale producers are our only choice.

  2. Ed Bruske says:

    Exactly. This is why I complained about a pork shoulder purchased at the Dupont Circle farmers market here in the nation's capitol which, after removing the bone and extraneous fat, cost me $25 per pound.

  3. Aimee says:

    How did you raise a pig for $225? I've raised one pig for each of the last 3 years, and I can't get my per pound price below $3.00. The piglet costs me $75, the kill/process fee is about $150, and the feed is about $100, only because we feed him all our scraps and leftovers. Otherwise it would be more expensive. If we butchered our own pigs it would be only about $1.75 a pound, but then I wouldn't have any bacon or ham. Plus I'd have to invest in a lot more equipment. I'm willing to raise a semi-expensive pig because the flavor is so good and it's handy having a living composter/rototiller around the farm. The truth is, I could buy someone else's local, pastured pork as cheaply as I can produce my own. 

  4. Red Icculus says:

    It just goes to prove that small farms aren't as efficient as mega-farms.  If you want to eat organic or local, expect to pay more for their inability to compete in the market.

  5. Red- actually, reams of scientific data show that small farms are more efficient because they produce more per unit of land.  What you are talking about is economies of scale, not efficiency. Bob- interesting article, but I take issue with your premise that small-scale animal producers charge according to the overall income they would like to receive for their efforts.  I don't know any producers who do that.  The ones I know (myself included), determine our pricing based on costs of production with a profit margin added, just as you described.  Our costs are higher than the mega producers because we don't own the input streams, such as the grain elevators or feed mills.  Should we have to compete on price with companies that have bent or gone around anti-trust legislation to command the entire food chain, from seed to plate (or in the case of animals, from semen to barbecue)?  I would say that is a pretty poor argument....

  6. Joe A says:

    The reason that local, pasture raised meat is more expensive has nothing to do with the cost of raising the meat. Pasture raised meat is expensive because (1) demand is high, and (2) supply is low.

    Example from another context: 2 ct D color flawless perfect cut diamonds. They are expensive because (1) demand for them is high, and (2) supply is low. The costs of producing them are irrelevant.

    This is not a bad thing if you believe that pastured meat is better for everyone concerned (the animals, the consumers, the planet). A rational farmer will keep raising her prices until she can't sell all her meat. High prices will give more farmers the incentive to enter the market, lowering the cost of locally raised, pastured meat. Supply will increase. Prices will go down.

  7. Steve says:

    I am often times rather shocked at the price asked by local, small-scale farms for certain products (I live in central NC, where at the farmers' market eggs tend to go for $5 a dozen and chicken is $5 a pound from the larger local/organic farms); I raise my own chickens and eggs, and when I do sell them (when demand for a quality product is so high that I can't tell people no as they wo't take no for an answer), I tend to charge $3.00 for a dozen eggs, and $4.00 a pound for my chickens. Both are [actual] free-range, humanely-treated chicken products. I don't make any money on the chicken meat, but just chalk it up to being  a hobby and any money made is gravy. I tend to only raise about 50 birds at a time (two or three times a year), so I'd likely have to charge about $10+ a pound to break even! (As feed isn't too much, but my time is worth a lot to me.)

    I have paid about $25 for a four-pound chicken locally, and while the bird was truly amazing and I'd hate to see the farmer go out of business (and pay that kind of money so he/she hopefully won't), it's tough to pay that much for a bird. And, there's no way someone who pays $1.99 a pound at the local supermarket will pay that kind of cash no matter how tasty or healthy the bird.

    But, the competitor for a local organic or organic-esque farmer is Whole Foods, not Food Lion or a similar large-scale supermarket.

  8. Chris says:

    Here in Oregon, I paid $2.50/pound hanging weight, $5.50/pound cut and wrap for a whole steer (which my family split with three families) and $3.80/pound for cut and wrap pork (I don't recall the price for hanging weight). Either way, $5.50/pound is CHEAP in my book for the best beef I've ever had. I know I can't buy conventional meat from the local butcher for that, except ground. Same with the pork. Whole chickens range from $2.90-$5/pound. Now, if I was going to buy that meat by the individual cut, I'd pay far more, but then, I also understand that what's convenient for me as a consumer brings additional costs and risks to the farmer--storage costs, marketing costs, losses when the ice thaws before they can get the any unsold meat back into the freezer, etc. In my experience as a consumer of small-scale family-farm raised meat, I have saved money.

  9. a really interesting debate. on one hand, Bob's argument seems fair; but then I put that up against the backdrop of what Rebecca and other farmers I admire, like the Zaerpoors at Kookoolan Farms here in Oregon, say; essentially, it's not so much the financial ratios as the desire to maintain sustainability. for the Zaerpoors, that means doing the butchering themselves (they raise chickens, turkeys and geese for meat), and looking for more trustworthy and authentic sources of food (they're working with other farmers to start a grain co-op), as well as considering heritage breeds, which often take far longer to raise. I have no idea what their profit margins are, but Chrissie mentioned not being able to sell her meat when she factored in the cost of fully organic feed -- she'd reached the top of the curve.

    there are additional factors that aren't accounted for in the pure microeconomic calculation; like the emotional exhaustion of slaughtering 1,000 birds, for instance. the difficulty in finding feed (to supplement kitchen scraps and grass and worms and such) that doesn't challenge the ethics and passions of the sustainable farmer. the ability to utilize the waste appropriately; at some scale, doesn't it become difficult to recycle the waste into compost?

    perhaps we require too much of our modern free-range meat farmers; perhaps we're spending for public relations and web site design and a cinematographer (I know, that's your cousin ;) and, surely, wifi, for which the Amish don't have to pay. the Amish model works for them because (a) they don't have to pay labor, as their family members work for them and (b) they don't need to make as much income because their culture demands they avoid cell phones and Jimmy Choos and occasional dinners at Applebee's other uses for that $40,000 annual income.

  10. Bob Comis says:

    Aimee,
    I am sorry, I did not make it exactly clear what that $225 (or $1.50/lb hanging weight) accounted for. That is just to raise the animal, not also have it slaughtered. One reason I chose not to include the slaughter fees is that they are highly variable, so it is difficult to include those fees in cost comparisons. For example, I just had most of a pig made into sausage (except the loin and the belly), and since many slaughterhouses around here charge $1.00 additional per pound to make link sausage, the fee on that pig was $300. Another reason I left out the slaughter costs is that I have non-commodity wholesale on the brain, and that sale is generally delivered to the slaughterhouse and is priced per pound hanging weight (some do it by live weight, but since a reasonably good quality hog scale is about $2,000, I am going to resist live weight sales for as long as I can. Unless that scale actually makes sales, a lot of them, that $2,000 is simply thrown out the window). Processing fees are paid by the buyer.

    Rebecca,
    I am definitely not saying that we should compete on price with factory farming. What I am saying is that since one of our rhetorical slogans is "the true cost of raising food," then we should be honest about why our meat is wildly more expensive than industrial meat -- much of our price has little to nothing to do with the actual cost to raise the food, it has to do with making up for low-volume.

    If I gave the impression that I think farmers start the pricing process by saying to themselves, "okay, as a part-time farmer I need to make $10,000, so based on my costs and sales volumes I need to charge X per pound," I apologize. That was not my intention. I was trying to point out that there is an income level below which it is not worth it for most farmers to do the work. I don't know what your profit margin or profit per pig is, and I am not asking you to reveal it, but would you still do it if you were only making $75 per pig? Would you spend that considerable time and labor to raise 24 pigs for $1800 total, which would amount to just a bit more than $8.25 per hour (assuming a labor-intensive nine hours per pig)? My point is that while you might actually be willing to do so, most low-volume farmers say no, they wouldn't do it, it isn't worth it. Based on the prices that are out there (and assuming it costs other people about what it costs me to raise a pig to slaughter weight), it seems that most don't consider it worth it for less than four to five times that. My argument is that we should not increase our profit per pig to make it worth it, we should raise more pigs, especially considering that it takes hardly any more time to raise two batches of fifty pigs than it does to raise two batches of twelve (even with this slight increase, your time per pig will be substantially lower, and your return to labor per hour substantially higher). There are two areas where there is an increase in time, moving shelters (one single portable shelter big enough for fifty pigs would be enormous) and sorting, loading, and trucking to slaughter (I doubt most farmers would be sending all fifty pigs at once).

    I believe that as a matter of fairness to people with limited means who want out of the factory farm system, increasing the number of pigs we raise instead of our profit per pig is an ethical imperative. The true cost of local meat is well below what we are currently charging.

  11. Bob Comis says:

    While I am at commenting, let me point out that I am trying to think about this at the macro level. I am trying to think about how best to create a local-regional farm and food systems *model.* A local-regional farm and food system worth having needs to be able to get food affordably into the hands of all people living within that system, and it needs to do so in a way that is profitable (worth it) for farmers, distributors, purveyors, processors, retailers, and all of the other people involved in the production, processing, and distribution of food, and finally it needs to do so in a way that is sustainable.

    The argument I am making here is that if you take these three requirements together, the foundation stone of this local-regional farm and food systems model, at least in terms of meat, will be farms of 80-100 (or 120) acres, that will consist of a diversity of species and be pasture-based, and the number of animals raised and marketed on those farms will be in the scores (beef) to hundreds (beef, pigs, sheep, goats) to thousands (chicken and other poultry), and finally that the marketing of those animals will be primarily non-commodity wholesale with a good bit of direct marketing (farmers markets, on-farm, CSAs) to round it out.

    One thing I think that I failed to make clear in my post is that I do not think that there is no place for very low-volume farms in this model. My argument about low-volume farms is that the model should not be *based* on them, as it currently is. Furthermore, within the local-regional farm and food systems model that I am attempting to imagine, very low-volume farms will not set the prices, as they currently do; they will act as a niche within the broader model. The average price of food in this system will be set by the higher volume farms (that are still tiny by industrial standards) that are selling into a mostly non-direct local-regional (small scale) processing and distribution chain that makes local-regional food broadly available at much more affordable prices. And all of this will be, I hope, accomplished without sacrificing environmental, social, cultural, and/or community sustainability.

  12. Bob- why do you think most of these farms only raise a small number of animals?  Could it be that they don't have any infrastructure, or they have to slaughter on-farm (such as with poultry) because there are no independent slaughterhouses left?  How about that they already both work off-farm, such as yourself, and don't have time to move 10 chicken tractors or 16 mobile egg coops when they get home exhausted in the evening?  You mentioned yourself that leaving the day job is a hard thing to muster.  Indeed, many have to keep that day job for health insurance and other benefits that they will never receive as a farmer.  Scaling up is not just a matter of will, it is a matter of available inputs, infrastructure, and marketing mechanisms.  For example, when you go from 300 dozen eggs a week to 3,000 dozen, you then have to start wholesaling.  Is there a distributor in your area?  If not, you have to buy a refrigerated vehicle, you have to get cartons printed and approved by the federal government, you have to buy a walk-in cooler or build a cold room to store the eggs, you have to buy a large egg washer, you have to hire people, etc., etc.  I think you get my drift.  There are so many barriers, many of them regulatory, that keep farmers from scaling up.  To not mention them and make it sound like it is merely the farmer's will is disingenuous. 
    Additionally, it is not the public's role to dictate how much a farmer should earn.  If that is the case, next time somebody asks me why our meat and eggs are expensive, I am going to ask them what their salary is and if that is fair.  Why should farmers be subjected to a different standard, especially when you know they are working their butts off to nourish others?
    Also, it is not always the case that scaling up lowers your costs, such that you can lower the price of your products.  For us, only labor costs are reduced per unit, but only marginally so.  This translates into about a .13/unit difference, which consumers will hardly notice.  Just because we are bigger, our land is not cheaper, our feed is not cheaper, our gas is not cheaper, our egg cartons are not cheaper, etc...

  13. sara says:

    How about we let the perceived expense of meat remind us that it is perfectly possible to eat substantially less of it?  No, I'm not a vegetarian.

    I started buying grass-fed beef, which means I buy beef less often, which is actually the healthier way.   

    That being said...

    I am really glad to see comments from Rebecca T. 

    It is one thing to have an opinion and to extrapolate on what it costs someone to do business, based on what one feels is a fair way to do business, but it is another animal to actually be in business and be in it with the goal of remaining in business for years to come. 

    I have a small crafting business when I'm not working full time, so this is something that tends to get my hackles up.  It's not just about charging what the market will bear.  Nor is it extortion.

    One of my friends raises chickens and sells eggs when she has extras, and she's still not made a profit.  I think she might be breaking even at $4/dozen, about 5 yrs into this.  She underpriced herself for the first several years of selling the extras, see.

  14. Michael K. says:

    Maybe part of it is that this is still a nascent movement, and people have to start small because of start-up costs. Land, especially, and equipment, all these things... as people continue some of them may be able to scale up, depending on how the infrastructure they need (independent slaughterhouses, etc.) evolves.

  15. Bob Comis says:

    Rebecca,

    Your point about infrastructure, especially slaughter capacity, is definitely on the mark, so too are your points about the other barriers (health insurance, time, etc.), and all of them need badly to be addressed.  However, even those issues are not cut and dry.

    While heavily regulated industries do not respond to market signals all that well, they do respond. In response to increased demand in eastern New York state for slaughter and processing, there are two new USDA plants opening and one more is expanding. Within my sphere of USDA slaughterhouses, that represents an increase of 30%-40%, not including the expansion. That is a substantial, and of course much needed, increase. If we show consistent, steady demand -- and that means year round (seasonality and slaughter capacity are diametrically opposed, unless you want to pay more than double our current rates to make up for a lack of demand in winter) -- we will see more USDA slaughterhouses open. While USDA does not provide advisory services and is notoriously difficult to deal with for small facilities, the reality is that if you build an approved plant, they will staff it with an inspector. The question as a slaughterhouse owner is, are the farmers in your area going to bring you enough business -- in enough months of the year -- to meet your payables and with a bit of profit to boot? The answer to that question is not at all a given.

    Regarding time constraints, especially the specific point about the chicken tractors and layer coops, my point is exactly that from the perspective of working out a local-regional farm and food systmes model, perhaps 75-bird tractors and 300-hen mobile coops are not the designs we should be using. Perhaps those designs, no matter how many farmers we have using them can never give us anything more than expensive niche chicken and eggs. Maybe we should be designing and/or using equipment that permits us to raise more broilers and to care for more layers in less time.

    Regarding distributors. They might not have been there two years ago, but they are there now, and increasingly so. I got a call out of the blue from one last season looking for a couple hundred dozen eggs per week to start with the possibilit of going up to 500 per week. I have recently been in discussions with three or four large buyers that all together would like to ramp up to purchasing a total of 10,000 pigs per year within three years (one of those buyers accounts for the bulk of those pigs -- 150 pigs per week). I am trying to convince farmers in my area to form a pig marketing cooperative and to scale up to meet that demand, but so far, few have been willing to do so. (To provide some perspective, just those four buyers represent 10% of the total number of pigs reported in New York State in 2007 (96,000). Currently, New Yorkers consume nearly one billion pounds of pork per year (based on national per capita consumption), about 9,000,000 pigs worth. New York farmers currently produce 1% of that amount, and the vast majority of those NY pigs come from factory farms in the western part of the state.)

    Regarding health insurance, you are absolutely right. This is a grave cultural, political, and socio-economic issue that needs to be addressed. The fact that my wife will continue to work full time is what makes it possible for me to have health insurance.

    From my perspective, therefore, scaling up is primarily (though not completely -- I do admit the reality of constraint) a matter of will.

    I must confess that I do not understand your cost accounting.  Any increase in the number of animals up to maximum production decreases fixed costs per unit of production. If you have a ten acre pasture and are only raising twenty-four pigs (2 acres), then any increase up to the use of all ten of those acres (240 pigs) will decrease your land costs per pig, substantially (unless you are "cheating" and only charging the land in use and not the whole pasture against the farm). The same is true for gas if you go from trucking 100 to 300 dozen eggs per trip (limited by the storage capacity of the truck). The same is true for egg cartons based on sales volume -- purchasing 20,000 cartons at a time is substantially cheaper per carton than 500 at a time. If you are already buying 20,000 at a time, then you are right, you won't see a reduction. If you are already buying bulk feed, then feed will not be cheaper, but if you aren't, then feed becomes substantially cheaper ($50-$100 per ton cheaper than bags) when purchased in bulk, even taking into account the cost of a (new) 3- or 4-ton grain bin. At a $50-$100 per ton savings, that $3,000 bin will be paid for in thirty to sixty tons, although with a 300 dozen per week flock (4000 birds), you might do better getting a bigger bin and going for the additional discount at the ten or twelve ton per delivery level. (NOTE: I am not advocating that we farm at the maximum production of our farms [or our animals]. I am dead set against such a thing. I am just making a point about fixed and other costs per animal or per unit.)

    Finally, and perhaps I should have left out all of the above and only commented on this, food is not an IPod. Good food, real food, honest food, to borrow your own term, is a political, a social, a cultural, and a community concern. How it is raised, how much it costs, who has access to what food, who profits from it and how much, are all deeply important public concerns. Farmers should be subjected to a different standard because food is different. Food falls within an ethico-moral purview in a way that widgets do not. Do I think that there should be government regulation of farmer profit margins? No. Do I think that we should have a frank public discussion about it? Yes, very much.

  16. Jay Porter says:

    This is not cool. 

    This essay calls smaller-scale farmers "extortionist" while also acknowledging they are only charging what it takes to barely scrape by.  In other words, it is saying it is extortionist for a person to farm at a small scale, if that might require a 100% markup in order to break even.

    It's so wrong on so many level I don't know where to begin.

    I live in a area where small farming has been decimated by real estate values, suburbanization, and industrial agriculture.  Those of us who want to eat real and local food need *more* people to take on the task of small farming.  We certainly don't need to drive out people who are doing it by calling them extortionist.

    It would be great if there were more fully-functional 20-30 acre farms in our area that were farming totally pastured livestock.  But given the realities of real estate, financing and infrastructure, I'm supportive as hell of 5 acre farms, 1 acre farms, whatever.

    "Get Big or Get Out" thinking is what got us in all this trouble in the first place.

  17. Bob- We are at the carrying capacity of our land, therefore in order to scale up we have to rent more land, thus more costs.  We can't add anymore animals.  We already buy feed in bulk, so we can't save there.  Our egg carton price does not go down the more we buy, in fact it gets more expensive because when we buy in larger quantities we have to pay a trucking firm to bring them out to us and then we don't have anywhere clean and dry to store them, so we will have to pay for their storage.  Our egg washing is being done by an antique, scrappy little egg washer that we refurbished.  If we scale up, we have to buy a ridiculously expensive one that can handle more eggs, plus ship it from far away since there are none in California...
    As for USDA inspectors, we have a legal mobile slaughter trailer here in our county and the USDA refuses to staff it, saying that it is too small for them to deal with (even though they paid for and licenses the original trailer!).  There is one new USDA slaughterhouse that has been built in the state in the last two years, while at least three others have gone out of business.  There is huge demand for a poultry slaughter facility but nobody is building one, due to high costs of land, regulatory hurdles, etc...
    As for designing infrastructure that works for raising large numbers of animals that is not a CAFO, that is not a manure and ammonia toxic nightmare- have you come up with a design?  Our mobile chicken coops are as big as they could possibly be, housing 500 birds per unit.  Any bigger and it would have to be stationary, which kills the whole sustainability thing and pasture-raised thing.  The crux of the arguement you are making is what are the production models that allow for increased production without sacrificing quality, humane animal treatment, stewardship of the land, conservation of biodiversity, prevention of pollution, safe for workers, and bring fair returns to the farmer.
    If agriculture is to be a public concern than the public should pay for that.  Whether that comes through the consumer pocketbook or government subsidies is up for debate, but it has to be paid for somewhere, and it can't come from the farmers limited income.
    All this said, I do think this discussion is worthwile.  I am just afraid that consumers have so little understanding and background that they will read what you wrote and start demanding their little local farmers to lower their prices.  Instead, I would like to see them approach their local farmers and say these exact words, "What can I do to assist the growth of your business so that your amazing food can be more accesible to more people."

  18. Jane A says:

    What an unfortunate and grossly miss informed article. This is rubbish. The author is failing to take into account what it truely takes to raise a pig. He is also failing to account for the horrific costs of industrialized food production.

    WITH-OUT SUBSIDIES:
    The cost of the piglet is $75 to $150.
    Feed is $150 to even $300 if you go with quality feed organic and such.
    Housing Fencing InfraStructure add to that.
    The farmers time adds about 10 hours (a large number of pigs) to 30 hours (a few dozen pigs) over six months so at a living wage of $20/hour which is so often quoted in the newspaper that is $200 to $600 for labor.
    The farmer also has to pay taxes and a mortgage so add something to that.
    Add to that health insurance, farm insurance, liability insurance, licenses and fees.
    There are losses and risks to be accounted for as well or do you really think every pig will make it to market?

    All told the REAL cost of raising a pig is at least $550. With high volume production you can push it down a little bit below that but not by much without getting to unsustainable production levels that destroy the land and ruin the quality of the pork. The authors $225 figure is simply false.

    So if consumers pay $3.50 on a hanging weight of 180 that is $630 and the farmer has only made a profit of $80 or 12% which is needed for reinvesting in the farm.

    Now lets look at the rest of the story as Paul Harvey liked to say...... The slaughter-house and butcher-shop charges $150 to $250 to process that pig. The smoke-house charges $50 to $75 to smoke the bacon and hams. Thats $200 to $325 that is being made by other people after the farmer has spent six months and taken all the risks. If anything goes wrong it is the farmer who takes the blame and gets soaked with the costs. The farmers price must be high enough to absorb the errors and mistakes made by the butcher and the smoker so add 10% for that.

    Lets not spread lies like this article. If the author wants to buy cheap meat let him get the expired onsale meat at the super market from the factory farms that have been fed antibiotics pesticides herbicides and all that toxic sludge.

    Other people will gladly pay for the previlage to support local agriculture and get the good stuff. The demand for quality is high.

    I went and looked at the authors blog. He has the double income from his wife to finance his farm so he can do it for under cost if he wants. In other-words he is subsidized and not seeing the real costs of farming. In factory production what he is looking at is called a per unit cost which fails to account for all the over-head, research and development, infra-structure and such. This is a false economization that fools you into thinking the price of something is lower than it really is.

    I have a very strong suspicion that the author has never written a business plan for his farm and doesn't know what the real costs of doing business are. If he has then I dare him, no I double dare him to full disclosure, to publish the data and business plan on the web so that he can prove his rediculous claims.

    In this one article he has done more to hurt the small farmer than Monsanto.

  19. Nat West says:

    Bob, you're certainly getting a lot of flak from this article, but I for one, am encouraged by what you have to say. I am a very-small veggie producer in Portland, Oregon so while things are different for you and me, I agree with you on all points. Possibly you should work on the delivery a bit, to better get your message across to the nay-sayers.

  20. Bob Comis says:

    Rebecca,

    Over dinner I was expressing to my wife my frustration at the fact that so often how I interpret what I write is dramatically different from how other people interpret what I write. It doesn't surprise me, and I have at least a passable understanding of why it is the case, but it is frustrating nevertheless. In the course of our discussion, I boiled my point down based on your most recent comment, and I think I would like to express that point here as clearly as possible in an effort to get us to stop going around and around arguing the particulars of the small-farm economy.

    So, here it is: if your farm is at maximum production and you have pretty much squeezed out all of the efficiency cost savings that you can, and you still find yourself in a position of needing to (or just wanting to) charge $5.00 per dozen eggs, or something like it, then my point, at least in terms of the discussion we are having in the comments section, is exactly that your farm and farms like it are not the type of farms on which a local-regional farm and food system should be or can be based.

    As I said in my second comment above, this is not to say that there is no place in this system for farms like yours. It is only to say that farms like yours should not be the model for that system. The model needs to be based on farms that are able to provide food that is much more broadly affordable because their costs are lower and/or because their volume is high enough to sustain lower profit margins.

  21. Unfortunately this article is deceptive because Bob is not accounting for all the costs of raising that pig. His farm is paid for and subsidized by his wife with her job and benefits plus possibly money from before he began farming. $225 is _not_ the true cost of raising a pig.

    If you add the costs of buying the farm, real estate taxes, health care, labor at a livable wage (or even half that which is what I live on) then the cost per pig is about twice what Bob quotes. Working for free and ignoring paying for the farm is not sustainable. That's hobby farming.

    I know because I do farm. Our family raises pastured pigs full-time in the kind of quantity that Bob is discussing which is more than an order of magnitude greater than what he does. I just redid our farm's business plan including reviewing our last several years' data so I'm very familiar with the numbers. It costs much more than $225 to produce a pig.

    There is no extortion involved in the price of pastured locally produced meat because it is a free market. Willing buyers and willing sellers, both of whom can walk away from the deal. If Bob doesn't want quality there are plenty of people who do and are more than willing to pay for it, even on modest incomes like many of our customers who buy whole pigs at $3.50/lb hanging.

    Realistically, meat should cost more than vegetables. Meat has a lot more nutritional value and it takes longer to produce. It takes ten months to produce a market sized pig including gestation which is necessary if you want a piglet. Cattle take even longer at about two to three years. Fortunately we can raise these animals on pastures that are too steep for raising crops so they coexist well in land use.

    If you remove the subsidies, like Bob's wife and government subsidy payments to Big Ag, then the cost of industrial scale meat would be far higher than it is now. If it were required to be sustainable, to not pollute our air and water, then supermarket, mass-produce meat would cost even more.

    Lastly, realize that the processing (slaughter, butcher, smoke) costs about 30% to 50% of  the final price. Small processing plants do a better job and yes they do cost more. Don't blame the farmer for that. The farmers have no control and limited options since there are so few processors.

    Of course, if you prefer then go ahead and gamble with your life eating CAFO sourced, in-humanely raised, antibiotic laced, pesticide filled, GMO traced factory farmed meat processed by the Big Ag, Mega-producers where virtually _all_ food born illness originates. I want you to ask yourself, are you feeling lucky, punk?!?

    Cheers,

    Walter Jeffries
    Sugar Mountain Farm LLC
    Pastured Pigs in Vermont
    ---
    http://SugarMtnFarm.com
    http://hollygraphicart.com
    http://NoNAIS.org

  22. Jenna says:

    Ha ha!!!!!! I get it. This is an April Fools Joke. I should have looked at the date!!!!! I was taken in at first. I googled and factory farmed pigs cost more than that to produce and they get subsidizes. Good joke!!!!!

  23. Bob Comis says:

    So, the focus of the comments is now on my cost accounting, so I obviously need to address it.

    I will start with a pet peeve of mine, labor. I have no idea how it got started in the small-farm community, but in no other area of business that I am aware of is the labor of the owner considered a cost charged to the business. The labor of the owner is paid to the owner out of profits, and so therefore has no place in a general discussion of costs.  Hired labor is a cost charged to the business and would be included in a cost accounting. Again, my labor is paid for out of profits. My labor is not included in the cost to raise a pig (or any other animal for that matter).

    Second, another pet peeve of mine, land/mortgage/buildings/taxes. The small farm community has a completely whacked view of how such things are accounted for. The mortgage on the farmhouse is not included as a cost. Like the labor of the owner, the mortgage on the farm house is paid for out of profits. A substantial percentage of the mortgage on a farm is in the farm house. The mortgage charged to the farm should be discounted appropriately. Similarly, taxes on the farm house are not included as a cost to raise a pig. Taxes on the land are. If you look at your tax bill, the assessed value by which the taxes are charged should be broken down. Only that part of the tax bill that taxes the land should be included in your cost to raise a pig. Farm buildings and the taxes paid on them are also included.

    Third, insurance. Again, liability insurance related to the farm operation and all insurance of farm equipment, buildings, etc. are included as a cost. The whole insurance bill, however, is not. Insurance on the farmhouse building and its contents and liability insurance covering it and insurance on the non-farm vehicles are not included as a cost to raise a pig, they are paid for out of profits. My total farm insurance bill for this year is $2000. Therefore, if all that I raised were 300 pigs, my total farm insurance bill would amount to $6.66 per pig. Since I also raise a few meat chickens (500 this year) and sheep (23 ewes this year), my total farm insurance amounts to $2.43 per "unit." Since my costs and revenue are so heavily weighted toward the pigs, however, I am charging the pigs 70% of the insurance bill, or $5.00 per pig. If I were a low-volume farmer only raising two dozen pigs, that bill would be $58.33 per pig, which I think makes my point rather nicely. Although, why a low-volume farmer would have a farm policy is beyond me. When I was a "gentleman farmer" (insurance company language), the cost to add product liability insurance was $14. I can't remember how much it was to add the tractor under that same policy, but it wasn't much. The cost of insurance went up substantially when I got a proper farm policy, but it also covers me more thoroughly. For example, I didn't realize that under the gentleman farmer extension, I was not covered when operating my tractor on the leased land, only my own.

    Fourth, health insurance. My health insurance is indeed paid for by my wife's full-time job, and without that job  health insurance would be a challenge. Regardless, a low-volume farmer cannot have health insurance, non-subsidized health insurance, either. Non-subsidized health insurance for my wife and me would be about $1000/mo, or $12,000 per year, or $500 per pig on a low-volume twenty-four pig farm. There is no market that will pay a farmer $500 additional per pig for health insurance, so the health insurance point as it relates to this discussion is moot. On a 300-pig farm covering that health insurance is doable, although at a substantial increase in costs of $40 per pig, which bumps the cost from $225 per pig to $265 per pig, still a far far cry from the numbers that people have been throwing around.

    Fifth, my wife's job, other than health insurance, does not subsidize the farm. All farm-related costs are charged to the farm and are paid for by the farm (at least in theory). To date, my volume as the farm gets off the ground has been too low to cover some of the fixed and capitalization costs, so my own off-farm job has been subsidizing the farm as I scale up (of course, this actually means that my wife's job has been subsidizing the farm because without her salary I would not have the money available from my own salary to give to the farm). I think it is likely that in our economy all new farmers will have to subsidize their farm start-up with off-farm jobs.

    I appreciate that people want to find fault with my cost accounting rather than accept that a pig can be raised to slaughter weight for $225 on a pasture based farm. I believe the numbers are accurate, especially because their accounting has been substantially guided (though not performed) by my wife, who is a CPA and works as a CFO, but even if I grant that I am off by 30% (and that is an awful lot to be off by), $300 per pig still means that at $3.50 per pound hanging weight, I would be making $225 per pig in profit. A number I still find unconscionable.

    It is of course important because of the argument I am making that my accounting of the cost to raise a pig be accurate. However, going around and around constantly about it keeps us from discussing the real issue at hand, which is that we are almost certainly on the leading edge of what could be a paradigm shift in our farming and food system. Currently the face of that leading edge is a low-volume farmer that charges extremely high prices for her meat. I believe that those prices are so high and so widely inaccessible that what could have been a paradigm shift will stall and come crashing down around us leaving us with a niche market of healthy, ethical, and ecological food for the well-heeled, while the rest of the community remains stuck with the unhealthy, unethical, non-ecological "food" (scare quotes refer to Michael Pollan's argument) of the industrial farm and "food" system. We need to find a way to make local-regional food more broadly accessible. I believe the way (one way) to do that is to base the local-regional farm and food systems model on higher volume farms that still easily maintain those standards of health, ethics, and ecology. I believe both that costs on these farms are lower and that the higher volume enables those farmers to have lower profit margins, which together can substantially reduce the final price charged to consumers while not compromising the viability of those farms. Low-volume farms should be a niche within this system, not the model the system is based on.

    OK. I think at this point I have said everything I can on the subject as far as the discussion goes. I will continue to read the comments, but unless some point comes up that I have not already addressed (multiple times at this point) in the main article or in the comments, I will likely not add anything further -- although as a compulsive communicator restraining myself is never easy.

    I believe very strongly that this is the most important issue we face, so I implore people to not focus on whether my accounting is accurate, but instead to make the Pascalian wager and act as if my accounting is accurate. Even if it is just an exercise, what then? How do we deal with it? What do we do about the fact that a substantial percentage of the final price charged to consumers in the local food economy -- a price that makes local food widely inaccessible -- is based not on cost ("the true cost of raising food"), but on low sales volume?

  24. Big question here---What do Bob make per hour in his day job? Asking that farmers not respond to the market where in many situations supply and demand drive prices up, while his job is supported by most likely govenrment and foundation grant money and other people's largess seems a bit disengenuous. I too have a concern about good food being what only the elite can afford. However, when farmers who have often not had to purchase their land (Amish and Salatin, for example) therefore having no mortgage payments, and do have children and family that offer labor underprice more local, struggling farmers there are options. Economies of scale is why we are where we are with factory farming. The tipping point has to be carefully watched to make sure you are not getting too big for the kind of sustainability that most of us seek.  I feel that when society assumes that it is OK and right that farmers must subsidize their operations with outside jobs to provide enough dollars to get the basic necessities of life there is something off-kilter.  People who gripe about paying for food, yet shell out the money for cableTV,  i-pods and related $ spent filling them up, new fashions, bottled water,etc. have a skewed basic of that which is valuable.  Those vegies that are cheap in summer are cheap due to supply and demand. Vegies and fruit of the same caliber are not so cheap or available in off months.  My profit margin is nil at this point because I still am working on capital improvements on the farm, and at the tax rates--even at land use reduction--it takes a bite.  I happen to believe that when a society makes the choices to pay sports and film entertainers, politicans,  et al at extremely high rates, and complains about good food costing money and being unwilling to allow farmers who produce it to have a somewhat comfortable life is bound to sink into a quagmire of confusion over what is important in this life.

  25. Standard business planning needs to account for labor no matter who is doing it. Failure to do so is one of the leading causes of business failure. If you're going to compare locally pastured produced meat to CAFO meat then you need to include the labor component. Labor _is_ included in the factory farm cost of meat. Labor is included in the factory model of producing widgets of any type. Labor is included in a business model for a restaurant.

    There are a whole slew of other costs you're failing to include in your little analysis. Then there is the whole issue of producing top quality product.

    Do a business plan that would pass the standards of a bank and investor if you were looking to finance the startup of a business, your farm, and then talk about this. The cost per pig is much higher than you admit.

    Your article is extremely deceptive and shallow. You've done farmers a disservice by calling them extortionists and you've done consumers a disservice by confusing them and making them feel like victims of some scam.

    The reality is food has never been cheaper. It used to be that families spent several times more proportionally of their income. People now spend less than 10% of their income on food. It's a free market. People can choose to buy or not buy. There is no extortion involved in a free market. You're just using that word as market spin to diss your competition so that consumers thing they should buy from you. This is a pretty standard cut throat advertising technique but not cute.

    You are welcome to compete with the industrial CAFO's on price and increase your volume to their scale. It will be interesting to watch how long you last even with the subsidization of your farm by your wife.

  26. Please, just show me a model of medium-scale farms that produce inexpensive but high-quality, nutrient-dense pork, eggs, or other meats using organic, pasture-based, humane methods that also produces fair returns to labor and the farmers themselves.......Still searching?.......Still searching?........Still searching?......Yea, that's what I thought.

  27. Miriam says:

    I have been reading over the responces and replies.  As a certified Organic Pork Producer on a Pasture Based Farm I can see points from both sides.  Both My Husband and I work on a farm that carries 130 sows and progeny.  Our production is totally free range/outdoors and we have only mobile shelters

    I have always been passionate about my product being available to the end consumer at an affordable price. 

    After attending farmers markets  for several years I realised that we were paying everyone else, the abattoir, the processor, the Market organiser, but not ourselves.  I still thinkl that people attending a farmers market feel that they should be getting a better deal than at stores and will try to haggle a farmer down as they think that the costs must be less.  

    Often the opposite is true.  We had to freight our live pigs 3 hours one way to the closest organic abattoir.  We then need to pay the kill fee, and then a shipping fee of at least 22c/kg to get it to the closest processing facility.  We were then charged approx $5 per kilo for a cut and pack for fresh meat and $7.70 for a cured product. I would then have to drive in my refrigerated vehicle to pick up the products and sell them at farmers markets and to specialty stores.

    I know that in my case, it was not the farmer charging exorbidant prices, but the chain of freight, kill, freight, process, freight, sale that pushed the prices up.  We had no other options for the processing at the time.  I was often made to feel guilty by customers saying that the  products were very expensive (compared to the conventional, supermarket style, sick pork that was the only other thing they could compare it to.)

    We have since stepped back from direct marketing and moved more of our business through Distributors.  We found that distributors in capital cities in Aust add 35%.  As they have the product for a week or two and we carry our expenses for at least 9 months I don't see how this is fair.  I understand that they have fixed costs like lease or rental of the building, staffing, freight etc.  With such a large country and populations that centre in the capital cities Distributors are a necessary evill though.

    We have recently made changes on the farm that reduced the cost of feed inputs.  We have decided not to pass these cost cuts onto the end consumer as, keeping our prices low had in fact, made it impossible to carry out the necessary capital improvements for further on farm efficiency. With a hanging carcass price of $7 AUD per kilo,  I still don't feel that I am ripping off the end consumer, although some of our end products have a RRP of over $50 per kilo AUD. 

    With no extra off farm income and the business requiring both of us on farm, making sure we are not pushing ourselves  off the farm, by not having the necessary pricing is our new focus.

  28. Adam says:

    That is an interesting attitude to demand that the farmer not get paid for his labor and not get health care, cover the cost of the mortgage, loans, equipment, infrastructure, etc. You wouldn't demand that the president of IBM get a second job so he could have benefits. To get to the kind of scale you are discussing there is probably hired help. Are you going to refuse to pay them too? This makes you just like the local big farms that hire the illegal aliens from across the border. What other laws do you break?

    If you presented your proposal to a bank or investor based on your assumptions and numbers they would laugh you out the door. What you are discussing is hobby farming. In any real world business there is labor and a host of other things that go into the costs of products which you are ignoring.

    From your blog you seem to whine about the costs of things a lot. Bob, there has been inflation. it is not 1952 anymore. If you do not like the cost of food, stop eating. While you're fussing about costs, you obviously have a computer, an internet connection, a car which is probably a pickup truck, a house, a phone, etc. Ditch all those and you'll save lots of money. Perhaps I can interesting you in a cardboard box.

  29. Another thing that I think is quite interesting is that many times the cost of quality NUTRIENT DENSE food is presumed to be too high, while industrial processed foods are purchased to "stretch the food dollar" at cheap costs. How many nutrients  and how much energy does one recieve from processed, chemicalized carbs, or even an organically raised cucumber? Give me a couple expensive eggs and a chuck roast, with the fat, and I can do a heck of a lot more owrk than with low-fat, vegetarian fare. Americans over eat, often on the wrong foods. There is a superb article out about eating well for not much money that I will re-locate. Drink water or milk. skip the crap, spend the money on a quality food that provides sustinance and be willing to pay the producer.

  30. Paul says:

    Have you forgotten the principles of supply and demand? If a farmer charges too much, he will not sell his products and he will go out of business. If he does not charge enough, he will lose money on every item he sells and he will go out of business. If there is competition, the farmers will have motivation to produce the best possible product at the lowest possible price. If there is no competition, the high price paid for food locally will encourage a competitor to start up. The obvious point here is that if a farmer is staying in business, he is not charging too much. If you do not like the price he is charging, buy your high quality item somewhere else and he will go out of business or lower his price. I know that my dozen pastured pigs in a diversified setting are far superior to your 300, so why shouldn't the market reward me?

  31. Nat West says:

    @Paul - I don't want to speak for Bob, but if our only goal as SOLE-food producers is to maximize profits, then yes you are right. But if we desire to change the way food is produced in our society, then we need to always strive to make food more affordable, to create change, not just continue to serve upper-middle class buyers.

    As a side note, the comment about your dozen pigs being "far superior" to Bob's 300 isn't helpful in this discussion. Have you tried some of Bob's pork? Done a side-by-side blind taste test on various cuts?

  32. Chris says:

    @Nat--While I completely agree that SOLE food should be more than about profit, what small scale farmer do you know who's getting rich? I know lots of farmers in and around Portland and none of them seem to be putting profit above all else or making anything beyond a decent living for themselves--and most still have someone in the family working off-farm.

    What Bob is suggesting would require more middlemen, less direct connection between farmers and consumers, and higher costs to consumers. What we need is not bigger farms, but more farmers and more people working on farms. Thankfully, that's what seems to be happening. The latest Census of Agriculture found 100,000 more farms in 2007 than in 2002, most of them small and diverse (not having more than 50% of sales in one product), with average sales of $71,000.

    Bob notes on his blog that he is has been misunderstood here and that what he is suggesting is that farms scale up "Amish style," without acknowledging the infrastructure inherent to Amish communities not currently available to independent, small-scale farms--infrastructure that farmers themselves cannot create on their own. Amish farmers do not rely on the commodities market, by the way, but directly market their products amongst themselves and to us "English," as they call outsiders.

    I have heard an estimate that in order to get most Americans on a diet of SOLE food, about 20% of us would need to farm or work on farms. That doesn't necessarily mean 20% of us have to become full time farm hands, but perhaps a lot more of us growing food at home or heading out to the country to help out at planting and harvest time. In fact, that's what many urbanites used to do and that relationship with farmers strengthened urban-rural connections--connections that are so strained today. Personally, I'd like to see a return of that rather than a scaling up of insular Amish-style farming.

  33. Bob Comis says:

    Since the Amish scale thing has come up a couple of times, I would like to correct what I think are mistakes in the commenter's descriptions of the Amish farm economy.

    Kathryn -- Amish farmers most certainly buy their land (not all of them, of course). Note also that Amish farm succession is not always (and perhaps never, I would need to check on that) by straight inheritance. Whatever son (or daughter if there are no sons) was going to stay on the farm often buys into the farm (buying the stock, equipment, and/or land from the parents), he (or she) doesn't just get it for nothing. Not only do they buy their farms, they pay them off in many fewer years than we do, and quite often with nothing but a farm-based income.

    Chris -- Amish farm marketing is very much commodity driven. Amish dairy farmers (dairy is the centerpiece enterprise of a very high percentage of Amish farmer) sell into the "English" commodity milk market. What makes it work so well for them is that their cost of production is substantially lower than that on English farms, so even with the typically low commodity milk prices, they make a tidy profit. However, based on the fact that an Amish farmer asked me the other day about feeding whole milk to pigs, I think the current milk price is even low enough to be approaching the break even cost of the Amish.

    I have identified the Amish farm scale as my ideal for a model local-regional farm and food system. However, based on the research I have done, I believe the Amish farm economy is actually somewhat precarious, and I would not want to recreate it. It is essentially a premium export economy. As I just mentioned, their "domestic" cost of production is substantially lower than that (English industrial dairy) which sets the export market prices, so their profit margins are very high. Basically, the reality is that if the Amish lost their export market (the "English" milk truck), or if milk prices approached the Amish break even cost, the Amish farm economy would more or less collapse, and because the Amish farm and general economies are so intertwined, a collapse in the farm economy would lead to a collapse in the general economy. There is not enough "domestic" demand within Amish communities to keep their economies going well enough to maintain anything remotely resembling their current standard of living (they produce way too much milk for themselves). The Amish, being very thrifty, however, would, I think, do much better in a collapsed economy than we would. My own vision of local-regionalism is based on "domestic" production for "domestic" consumption.

    I have made an argument that scaling up would substantially decrease the cost of local-regional food, in spite of the addition of non-commodity wholesale middle"men." Therefore, saying something like "What Bob is suggesting would require more middlemen...and higher costs to consumers," with no supporting argument doesn't really get us anywhere. To get us somewhere, you would need to actually argue your point, as my own point, which I have argued, is exactly that without those middle"men" local food will continue to be priced unethically high, that the addition of those middle"men" is actually necessary to get the price down. I do not believe that the "truth" of your statement is at all given. Nor do I believe that the truth of my own is given, which is why I formulated an argument.

    It seems to me that the projected number of farmers needed to get local-regional food onto American plates ignores completely the financial viability of local-regional farms and the possibility of a real income for farm workers. For example, at a per capita pork consumption of 50 lbs, 300M people would eat 15B pounds of pork from 150M pigs (it would be fewer than that, but to keep the numbers simple I am using 100 lbs of pork per pig). If there were 30M farmers and farm workers (20% of our ~150M workforce), on average then each farm would only need to raise five pigs to meet per capita consumption. Even at an astronomical $300 profit per pig, the profit from those five pigs ($1500) only provides 3.75% of a $40,000 income. Because not 100% of the farm workforce would raise pigs, assume that only 25% do. In that case, there would be 20 pigs per member of the pig farming workforce -- and about 20 seems to be very close to the limit allowed by Ethicurean readers, anything above that and you are a "mid-sized" farm or some kind of pasture-based industrial behemoth. Again, even at a $300 profit per pig ($6000), those twenty pigs only provide 15% of a $40,000 salary. Meanwhile, only a tiny percentage of the population can afford pork at prices that provide a $300 profit per pig, and if  the per pig profit is reduced to something that is broadly affordable, the percentage of the necessary salary provided per pig drops to the point where raising twenty pigs per year is nowhere near worth it. Then of course there is the argument that I haven't got a clue what it costs to raise a pig, and that at current prices, farmers aren't making $300 per pig, they are only making $75, the true cost to raise a pig being twice my stated cost (the true cost = $450), so raising twenty pigs provides an even lower percentage of a $40,000 salary than I have stated, and that is without even reducing prices enough to make pork broadly affordable. Oh, I almost forgot to mention that a big part of the SOLE food movement requires eating less meat (I agree) so we'd need to cut the pig numbers even further.

    But, it seems we aren't going to talk about that. Let's just build local-regional farm and food systems on a fantasy instead. That will work out great for everyone.

  34. Eric Reuter says:

    Fascinating discussion. As a full-time vegetable farmer planning to expand into pastured poultry, hogs, goats, and sheep, this has been especially interesting.

    1) Any small business which is expected to be the sole/dominant source of income for the business owner HAS to account for cost of living, health insurance, quality of life, etc. There is a fundamental difference between having a full-time job while selling some food on the side, and attempting to go it alone. Until Bob attemps to actually live in the style he is accustomed to with no income other than his  farm, I question his ability to judge the accounting of farms. If nothing else, just because a farmhouse mortgage, personal health insurance, retirement savings, or the kids' college funds aren't deductable as a business expense doesn't make them a real-world business expense for the person attempting to live on the farm's income. Bob seems to be relying on the government's definition of "business expense"; most of the commenters are relying on the real-world definition.

    2) I think Bob and many commenters are talking past each other, seeing the world in different ways. Bob is seeing the world as it is; assuming that the prices people are used to paying for food are the prices they ought to pay for food; and so on. Many of the commenters are coming from a belief system that says the US pays far less for food than it ought to, and those "premium" prices are actually the real price. In what other industry would we expect businesses to lose money selling products for a price customers insist on, independent of what the product actually costs to produce? So he's right; in the current system, we probably cant' feed the country on small-scale farms.

    But one of the core arguments I, and many other commenters, would make is that this is a result of a fundamentally flawed system. In a world in which we support small farms by reforming health insurance to benefit independant small businesses, reform zoning and land use policies to give agriculture a fair chance in urbanizing areas, end government interference in the food market, and as a culture decide to spend more on food and less on (say) electronics, the business model of the small farm will work just fine (or at least better). The existence of a dam does not mean Salmon spawning methods are inappropriate.

    3) To commenter #7, who charges well below going market rate for his chickens and eggs because he is a hobby farm and not trying to make money, shame on you, sir. I know you mean well, but you are part of the problem. You are not accruing many of the costs that the full-time farmers are, and you are training people that quality products can be had for less than they're really worth. This happens in produce all the time, when hobby gardeners charge half the going rate for tomatoes because they just want to unload their extra and think they're doing poor people a favor. It's maddening to people actually trying to make a living. Please realize that the market rate is there for a reason; farmers markets and local foods are about as Adam-Smith friendly as it gets outside the drug world, and you would do far better for yourself and the real farmers to charge a fitting rate for your product. If you think it's too much because your costs aren't the same, donate the difference (what you aren't spending on liability insurance and so on) to some sustianable farm group; hell, tell your customers that's what you're doing and make it a marketing slogan. Just stop cutting the floor out from under the businesspeople.

    4) Also related to #7, another aspect not fully considered in this discussion is the regional difference in cost of living (for farmer and customer) and the effect on price. I had to laugh at the prices in NC: $5/dozen for eggs and $5/lb for chickens? Here in central MO, selling in a wealthy college town with lots of foodies, $3.50/dozen and $3.50/lb are considered way premium. I suspect your taxes and cost of living are a lot higher out there, so I can't judge which of our products are actually a better value. But I suspect our retirement savings, health & liability insurance costs, college savings needs, and so on aren't too much different. We still live in a national economy, regardless of what the local prices may be.

    5) Finally, Bob seems to be taking a very short-term view, stating that we're building local foods on a fantasy. Well, the way I see it, it took generations to dismantle the small farm network that fed America through WWII. In 1930, few people could have envisioned the processes by which we'd get where we are today. So I don't pretend to have all the answers for how we might get where we want to go, and I don't expect to see it in my lifetime. But I can insist on taking part in a system as I want it to be, and doing my best to nudge things forward just a little so the next generations can build on it. After all, I'm already standing on the shoulders of early folks who rebuilt the local food system to the point that I could consider leaving my former career path to farm. All I want to do is return the favor to those coming next.

  35. 99rb says:

    Interesting thoughts. I like nice stuff altho I am definitely not rich or upper income. So last week I bought some very nice hand crafted pottery from a potter in the next tower over. It cost me $25 per bowl for the big bowls and $10 each for the small ones. Frankly it was a fab deal. It wasn't extortion in the slightest. Of course I could have gone to WallyMart and bought bowls for $1 to $2 each made out of plastic. But it really isn't the same. I want something nice. It is the same way with food. People are free to spend their money on local naturally and organic food -- I do -- or they can buy factory produced meats fed GMed feeds. Its a free market. You can charge what ever you want. If I like the product and price maybe I will buy. Maybe not. But to call your competition extortionists seems unbefitting and ungentlemanly of you.

  36. bruce king says:

    I'm a farmer who raises pastured animals (mostly pigs, but chickens, turkeys, goats, sheep and cows as well) and does so with the goal of turning a profit. 

    You've thrown out the $225 number as your cost of production for a market weight hog (which I'll assume to be 280lbs and 1/2" to 3/4" of back fat, the current standard). 

       In my area, western washington, feed costs $330/ton, and I'll need 1,300 lbs of it to bring a 7 week old weaner pig to slaughter weight, provided everything goes right and the pig gains as usual.   Current market price for weaner pigs is $75.    Cost of feed plus cost of piglet = $290.    Here pigs sell for $2.25/lb hanging weight, and I'll get $450 for that pig.  My gross profit will be $160. 

    Out of that $160, i then subtract marketing, labor, insurance, some portion of the mortgage, a percentage of the depreciation on the equipment (it DOES wear out) and so on.  I end up netting about $40 if everything goes well.  But if I lose even a single pig, I make no profit when I sell two other pigs, and we all lose pigs from time to time.    

    I'd like you to break down your $225 figure.  How much are you paying per ton of feed?  What's the market price for piglets in your area?  How much of your land/pasture/equipment do you assign to this pig, and how much do you charge for it?  And labor is an expense.  Profits do go to the owner, but you'd have to pay a reasonable wage to any person who did the work.  I use the minimum wage + 40% in my calculations because I cannot legally pay them any less, and the 40% markup accounts for the various taxes, fees and costs associated with employees. 

    I've spent a lot of time on my blog running down the economics of various animals I produce; chickens, turkeys, cornish cross, and so on.  I've spent a lot of time thinking about this, and I hate that most of my production cannot be afforded by the vast majority of people.  But in order to be here, I've got to charge a price that produces a profit that allows me to make mistakes, to grow, to replace the equipment I  use and so on. 

    I challenge you to go 1 year without a steady stream of income from any source other than your farm.  Capitalize it with some amount at the beginning of the year and really run it as a business.  After that you tell me your cost of producing a pig is $225 and the beer is on me. 

  37. bruce king says:

    You mentioned in your blog that you wanted to buy land to expand your farm, and that the neighbors quote of $4,000 an acre "meant an end to a large-scale stonybrook farm".  

    In my opinion, a reasonable price for your product should allow you to produce enough profit so that you can expand and can afford to pay market prices for land.   If you cannot pay market price, you're being subsidized in some way, and subject to whomever might want to buy the land at market prices in the future.  You even talk about this-even with a 5 year lease you wonder if putting up permanent fencing is worth it because you might lose it.  

       You, and many others, seem to think that "excessive profit" is a terrible sin to be avoided at all costs.  So you sit and look at the land you'd dearly love to farm.  Do you see the dichotomy?   

  38. must have been the roses says:

    This article raises a false question.  The market sets the demand and the prices.  If you don't like the prices, don't buy it.  Many food producers, me included (I own a bakery) have to set higher prices because the demand for my products would be too big if I lowered prices. 

    I choose to maintain a healthy lifestyle;  so I choose to keep my production levels low; quality very high; and maitain meaningful connection and communication with my customers.  To raise the volume level up...yes, it would be more efficient and would allow me to lower my prices and my unit costs, but then I have to manage more employees, manage more machines that can break down and need repairs, more complicated productions schedules, transport, etc. 

    I see no problem with finding a niche market and charging higher prices if the market sustains it.  Some markets won't. 

    So there are moral issues about access to quality food for lower income people.  It's a problem; I started a program where my more affluent customers can donate money which purchases bread which I deliver weekly to a soup kitchen for homeless which is just a few blocks away from my bakery.  It raises sales for me and provides the highest quality fresh breads to the needy. 

    complain about the prices all you want;  but I take issue when you say farmers are doing something wrong by charging too much for their artisinal products.

  39. Scott says:

    Here's a scenario:  A well-loved natural foods co-op in my region is connected to a non-profit organization that preserves land for farming.  This organization is funded in part by the proceeds from the co-op sales and from donations of co-op members.  This organization proudly and appropriately touts the preservation and lease of 100+ acres of land  to a farming family producing pasture-finished product. 

    This story is great for the shoppers in the metropolitan area in which the co-op stores are located.  These shoppers can learn about the organization and the farm as they shop at the co-op.  They can tour the farm, learn about pasture-finished products, and meet the farmers through programs sponsored by the organization and promoted by the co-op.  They cannot, however, purchase any of the farmer's products from the co-op. 

    Isn't this strange?  Customers cannot directly support the farmer by buying the farmer's product in the place where they know to shop for local, sustainable food.  The farmer cannot reach the readily available market of the co-op and its members.  Alternatives are created like a non-profit organization soliciting donations in order to buy the land because the farmer can't and then to ultimately lease it back to the farmer.  Then the farmer has to set up and manage a direct-to-consumer business because the co-op won't buy from the farmer giving him access to the metropolitan area's consumers of his goods.  This strikes me as economically inefficient and contrary to the purported values of the co-op, the shoppers, the community and even somehwhat those of the farmer. 

    Work smarter, not harder is a motto I try to live buy.  I don't think this is very smart.  And everyone has to work a lot harder. But, unfortunately it may be best we can do at this point. And it's certainly better than many alternatives.

    But really, what's the deal?  In my understanding, it comes down to the key issues Bob raised - volume and price.  The family farm produces a lot of meat, but not in enough volume and not cheaply enough for the co-op to purchase it.  A readily available channel is closed and alternatives have to be opened up.  Now there are many more aspects to this situation (as there are to the local food system as a whole) than simply what actions the farmer can take.  The retailer, non-profit organization, wholesalers, distributors and processors, and consumers can take action to build a sustainable system without the weird alternative-market work arounds.

    What would happen if the farmer could scale-up as Bob suggests and sell at a cheaper price so the co-op would buy?  What would happen if the co-op would be willing to pay more for the product so the farmer would sell?  What would happen if the non-profit raised money to purchase the farmer's product and distribute to the poor? What if consumers expected retailers to purchase locally and to connect them to the producers of their food through such things as farm tours?

    A conversation such as this, with perspectives from all sides, is surely necessary to bring about just and sustainable local food systems.  Thanks Bob for asking tough questions.  I hope this conversation continues and that the disagreement and debate produces constructive action, (more light than heat, if you will).

  40. As far as the Amish economy, while there are varied forms that keep Amish on farms, the difference between English and Amish is great in terms of set-up and acquisition costs. You are right in that many Amish operate in the way that Amish farm marketing is very much commodity driven, but not all. And you discount the labor force, which make a considerable difference in being able to produce a product that can be sold for less.

    As far as projecting what the consumption/need would be w/ a locally based economy it is a shot in the dark. The fact is, people eating locally directly from farmers tend to change much of their consuming habits if they continue down that path and are not in it for fad. They start saving money by not purchasing processed packaging and tend to be willing to put that in the food budget for more expensive, nutrient dense food. They begin to look carefully at what they are eating. They make individual family evaluations and changes that cannot be configured off the top.

  41. This is our first year of farming for profit (we hope :)) - and while I was reading this I felt many emotions but the biggest one was the fear of becoming another statistic of farm failure.

    I hope that anyone reading this will take a moment to stop at your local farm stand and support your local farmer.

    We do!!

  42. Ricky Khang says:

    Hi Sir,
    My name is Ricky.  I am planning to raise some chicken this year, but I live in the city with no land.  I am searching for a space to rent.  I am browsing through the web and saw your website.

    I live in Oregon City, Oregon.  If you are close by and have a space for me or know anyone that have a space for rent, please let me know.  I appreciate it.  

    Ricky

  43. Joe Farmer says:

    I believe you, Bob, are a socialist.  I hope you enjoy your marginal profits (if profits at all). I am a farmer and a capitalist. I believe in providing a high quality product for my customers. That cost money, but I wouldn't do it any other way. Yes, the cost of producing high quality meat is in the price, but my customers understand that. We are trasparent in every way. If our cusomers wanted to see our inputs, how much it cost, etc.. they are free to do so.

    You my friend are stirring up stuff for your own socialist agenda. I would have to question how you came up with the cost for raising pigs. You must be cutting corners in order to do that. I kind of feel sorry for you. You seem very articulate, yet you’re putting your energy into giving small farmers a bad name with false statements and falsely accusing small farmers of price gouging.
     
    To me, you are no different than the BIG AG companies that lobby for more laws to tie down small farmers with regulatory crap that stops us from being able to produce without many obstacles in our way. You are just another barrier for small farmers with your irresponsible comments.  Shame on ethicurean for even publishing this article.