Planning for Profit. Cultivating an Economically Sustainable Hightunnel. Scott Thellman

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1 Planning for Profit Cultivating an Economically Sustainable Hightunnel Scott Thellman

2 About Me Owner of Juniper Hill Farms, LLC Senior at Iowa State University Agricultural Business Agronomy Agricultural Entrepreneurship Agricultural Entrepreneur Interests in post harvest handling, marketing, storage, and distribution of local and regional foods.

3 Background Raised in Lawrence, Kansas. Moved with family to rural Douglas County, Kansas in Became interested in agriculture. Began working at different agricultural operations in the area as a teenager. Sweet corn, vegetables, cattle, row crops

4 Background Became interested in starting my own farm. Purchased some old hay equipment with savings from summer jobs. Baled 20 acres of hay in 2006, and sold it quickly. Saw my opportunity to enter into farming!

5 Background Expanded hay operations throughout high school. Graduated high school in 2009, and produced 10,000 small square bales that summer. Entered into vegetable operations in 2010 with the construction of our first high tunnel. Started schooling at Iowa State in the fall of 2010.

6 Background Constructed second high tunnel in 2011, and grew on one acre. Primarily marketed crops at farmers market s. Expanded to two acres of vegetables in 2012, and focused on direct sale to grocers and restaurants. Partial USDA Organic Certification of farm in Increased hay production to 500 acres.

7 Today we Produce 900 acres hay and alfalfa. 1,300 round bales and 5,000 square bales in Grow four acres of USDA Certified Organic vegetables. Serving one wholesale customer, five grocery stores, five restaurants, and one food bank. Harvested over 20,000 lbs of produce for fresh market distribution in Provide agricultural consulting services, hay and vegetable brokering services, and custom hire services to over 100 customers around the region.

8 Crops We Grow Hay and alfalfa Small grains and soybeans Hops Vegetables Tomatoes, potatoes, onions, bell peppers, beets, head lettuce, leaf lettuce and greens, cilantro, kale, beets, radishes, zucchini, squash, and more!

9 High Tunnels!

10 High tunnel production is not as easy, profitable, or beneficial as you might think. You really need to crunch your financial figures to ensure success. Without the proper preparations, you will more than likely not meet your annual projections or make a meaningful return off of your investment.

11 Construction of Our High Tunnel First step was site selection. Limited to commodity crop production area. Selected level area in creek bottom with high quality soil. Wabash silty clay loam soils with good drainage and high organic matter.

12 Planning for Your High Tunnel

13 June 14 th, 2011

14 Planning For Your Tunnel Determine what grows well, what sells well, what is most profitable, and what you like to grow! Plan to have a quick turn around from crop to crop. Growing fewer unique items helps increase your consistency, makes crop and nutrient planning easier, and provides your with more product to sell!

15 Planning For Your Tunnel Goal: Consistently supply our customers with in season produce. Meet with suppliers early to determine their demand. Use historical yield and sales data from farm records. Remember to account for seasonality, day length changes. Crop Encore Lettuce Ovation Greens Cherry Tomatoes Radishes Ask yourself Avg Yield/sqft lb/sqft 0.52 lb/sqft 13.2 lbs/plant 0.85 lbs/sq ft How much do I need to grow to meet my current demand? THEN ADD 30%

16 Planning for Your Tunnel Form a 12 month plan Down to the week! Things to consider Crop rotations Fertility needs of crop Seasonal weather Market demand Sequential planting requirements Opportunity costs of space Labor involved High tunnels need high value crops, and quick turn around to be economically feasible!

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18 Crop Rotations Use common agronomic sense. Overplanting/doublecropping can increase pest and disease presence, and can decrease quality and yields of crops. Spring, Summer Fall rotations with uses of cover crops if not overwintering crops.

19 Fertility Needs Take annual soil samples. Apply compost or manure during off season. Be aware of food safety regulations. Regular application of fertilizers at proper times in growth cycle. Fertigation or foliar application methods. Plant beneficial cover crops when possible.

20 Seasonal Demand High tunnels give you an advantage to season extend. But, be ready take price breaks to move your inventory. Know your markets, and what they desire. Market yourself well, and form long-lasting relationships with your customers. Keep up on consumer trends and industry changes.

21 Sequential Plantings Key to keeping your customers supplied and satisfied. Requires detailed planning in high tunnels. Remember to account for day length changes.

22 Weather Seasons change! Be ready for whatever could come your way. Row Covers Ventilation Opening/closing sides It IS possible to grow year round without heat if you have the right cropping system and the right tools.

23 December 20 th, 2012

24 January 6 th, 2013

25 January 6 th, 2013

26 February 28 th, 2013

27 Budgeting

28 Budget for Success! Many types of budgets Enterprise Budget for a single crop or enterprise Multi-Crop for an area or specific area of the farm Capital for long-term feasibility and planning Whole Farm Budget for entire farming operation The most useful budgets for High Tunnels Enterprise Budgets Multi-Crop Budgets Keep in mind that high tunnel crops will have

29 High Tunnel Construction Costs Item Cost Hummert Intl. High Tunnel $5,200 End Walls $650 Baseboards $260 Plastic $300 Total $6,410 Do not forget the labor costs!! 80+ hours of labor Not included in costs as much of it was considered sweat equity for the farm.

30 Depreciation of Your Tunnel Strait line depreciation Average ownership costs over entire ownership period. Included as ownership cost in enterprise budget. Strait Line Depreciation = Purchase Cost Salvage Value Years Owned Depreciate structure and plastic separate. Assume 15 year useful life of High Tunnel, and 4 year useful life of plastic. High Tunnel Example (20 x96, 1920sqft): $6,110 - $500 = $ dep/yr 15 Years $374 dep/yr = $0.23/sqft 1613 sqft (84% utilization) Poly Plastic Example (32 x100 ): $300 - $0 = $75.00/yr 4 Years $75.00 dep/yr = $0.046/sqft 1613 sqft (84% utilization) Total Annual Depreciation Expense = $ ($0.276/sqft)

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32 Budgeting Resources Iowa State University Ag Decision Maker (AGDM) Templates for all types of crops, including vegetables and hightunnel templates. Kansas State University Enterprise Budgets Excel (easy to make) The Organic Farmer s Business Handbook Richard Wiswall Wholesale Success (4 th edition) Jim Slama & Atina Diffley

33 Record Keeping

34 Keep Good Records Record keeping in the field, and in the office is key to your success! Without history, you cannot see the future. Yields of crops, sales, quantities available, peak harvests all are key items to track.

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38 Record Keeping Resources AgSquared Crop Planning COG PRO Organic Record Keeping Quickbooks - Accounting, sales, expenses Excel Employee journals Additional Record Template examples available (ask me)

39 Pros and Cons of High Tunnel Production Season extension. Consistent availability for longer duration. Upfront cost of infrastructure. Long-term site planning. Opportunity costs associated with your time. Feasibility of larger scale offseason production.

40 You Will Make Mistakes! Do not assume that you will profit in your first year. It takes many years of experience growing, marketing, and distribution experience to build a sustainable business model that will benefit your farm, your community, your soils, and you.

41 Thank you! Questions?