Seed Economics: Target Profit in Space

I should start off by clarifying that this is ‘space’ as in garden growing area, not as in the final frontier. I will also mention, that this is one post in a series on seed economics that begins here.

Space is limited on most farms. This can simply be because you only own or have access to so much land. But even if have you huge tracts of land, space is often limited since there is only so much area you can manage well . The exact amount of land each farmer can handle depends on their tools, labour, and especially their experience; but the more area you grow, the less tender loving care you can give it.

Since space is limited, you need to choose your seed crops well. To evaluate whether a crop makes financial sense, you first need to know what profitability in space you need to make.

To establish your target profit in space:

How much do you want to make and how much space do you have to make it in?

Gross sales ($) ÷ growing area (acres) = target $/acre

If your business needs to gross $70,000 and you grow on 2.5 acres, you need to make an average of $28,000/acre on your crops.

Since many of us small scale farmers don’t grow full acres of a crop, it is often easier to think in terms of smaller area.

Convert $/acre to $/bedft.

I prefer to think in terms of bed feet (bedft) rather than square feet. One bedft is a one-foot long slice of a growing bed.

Lettuce planted 3 rows/bed with each row on 1ft spacing. There are 3 lettuces per bedft, though they aren't worth much in this state.

We have 28 beds/ acre and each bed is 300 bedft long (each bed is also 5 foot wide – from tractor wheel center to center).

$/acre ÷ 28 beds/acre ÷ 300 bedft/bed = target $/bedft

Using the numbers from the example above:

$28,000/acre ÷ 28 beds/acre ÷ 300 bedft/bed = $3.33/bedft

So, every bedft of growing space, you need to sell $3.33 of crop in order to gross $70,000 on 2.5 acres.

Different $/acre and $/bedft benchmarks

$/acre $/bedft
60,000 7.14
40,000 4.76
20,000

2.38

Do note that $/acres and $/bedft are ratios. Your gross sales ultimately depend on how much space you have in production.  The more acres, the lower target $/bedft you need to meet. On very large acreages, $1/bedft might make sense; but most small scale farmers should aim to average $2.50/bedft to $5.00/bedft to meet their financial needs.

Next, we will look at how to calculate the actual profitability in space for a crop.

Advertisements

2 responses to “Seed Economics: Target Profit in Space

  1. Pingback: Seed Economics and Marketing « Going to Seed

  2. Pingback: Seed Profitability in Time « Going to Seed

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s