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Want to Identify Crop Specific Costs of Production for Your Farm? Join the 2016 Cost Study Project and Make It Happen!
Publish Date:Winter 2016
VolNo:Vol. XI No. 1
Want to have a better sense of what it really costs to grow your crops? Join the 2016 Cost Study Project, which begins its second season this March (see below for more info).
Crop enterprise budgets are widely recognized as a useful tool for determining breakeven prices, identifying crops that are making money (and crops that aren’t), and identifying changes that can be made to operations or crop mix to improve profitability. Labor costs can make up as much as 65-70% of production costs for small acreage vegetable producers. This makes tracking the time it takes to perform the various activities that go into growing each crop crucial for developing farm specific enterprise budgets.
Many farmers recognize the value of developing farm specific enterprise budgets, but tracking labor can be onerous, especially for highly diversified operations. This work often takes a backseat to the day-to-day work of running the farm, yet it’s essential for making informed business decisions.
In 2015 the OSU Small Farms Program launched the Cost Study Cohort Pilot Project to test an approach for capturing the information needed to determine farm specific costs of production. We designed this approach with the primary objective to make the process achievable. Farmers in the North Willamette Valley, Southern Oregon, and on the North Coast participated in this project. This project is part of our larger efforts to develop tools and trainings focused on farm viability. Our long-term goal is to develop an online learning module that supports farmers with determining production costs and can be facilitated by agriculture professionals across the country.
The approach we tested focused on conducting time studies on the various activities that go into producing crops. We tried to identify the fewest number of time studies needed to develop useful estimates for production costs. Instead of setting out to do all the necessary time studies at once, we encouraged farmers to limit their focus to one “activity area” on the farm at a time. For example, we started out with time studies in the greenhouse, and then moved to looking at the time it takes to prepare beds for planting, followed by time studies on seeding and planting. Time studies for each “activity area” were communicated via a monthly webinar that we envisioned would double as a forum for farmer members to give input and troubleshoot any challenges they anticipated. Farmers were also provided with worksheets that mapped out the time studies and could be adapted to fit individual operations.
In December, farmers got back together to use the time studies they had collected (along with some educated estimates) and determine the costs of production for one crop. Break-even prices needed to cover costs of production were identified. Farmers were also able to see what activities contribute most to costs and to compare their costs with other farms and different production systems.
For one group of farmers, this exercise highlighted how investing time to weed an onion crop can really pay off in higher yields and labor cost savings during post-harvest handling.
We received great input from the participating farmers on what worked and what didn’t about the approach we piloted. One farmer found that ultimately the time it takes to do the time studies is minimal and can be easily incorporated into the workday. Other farmers pointed out that after they worked through the exercise of calculating their costs for one crop, they had a far better understanding of what they will track next season.
We are also changing things that didn’t work. For example, the webinars had low participation, so we will now identify and provide instructions for all the time studies at the beginning, before the season is underway. We’ll also be working to identify more ways to support farmers with getting their time studies done, e.g., strategies for incorporating the time studies into the workday, creating more accountability, and more regular check-ins.
The 2016 Cost Study Project will kick off with a full day orientation in early March. We’ll use the orientation session to map out all the time studies for the season and identify ways to insure they get done. We plan to offer orientations in a few different geographic locations that will be determined by farmer interest. There is no cost for participating in this project.
If you are interested in learning more and/or being part of the 2016 Cost Study Cohort Project, please contact Tanya Murray.