Iowa Growers Spark Profit Conversations by Opening Their Books
DES MOINES, Iowa - A new project is helping some beginning Iowa farmers enter the business with their eyes and accounting books open.
As part of the Whole Farm Financial Project created by the group Practical Farmers of Iowa, about a dozen fruit and vegetable growers shared their financial data so their peers could review and compare to assess their own potential profitability.
Rick Hartmann, co-manager of Small Potatoes Farm in Minburn, contributed to the data, which he says adds some clarity for aspiring growers.
He explains it's never been clear just how well small, direct-market farmers have been doing, given the increased interest in local foods.
"It's one of the few growing areas of farm ownership," says Hartmann. "And there's been a lot of enthusiasm around it and so I think maybe that bucolic picture that was painted went a little far without looking at some of the financial realities."
The project analyzed data from 2013 and is now available for review at practicalfarmers.org.
The project's goal is to have 50 farmers share financial information in some way by 2017.
Hartmann says he's been a cheerleader for the project from the beginning, as he has always wanted to compare data with other operations to assess weaknesses in order to improve business.
"I didn't feel comfortable asking my peers, 'So, what's your return on equity?' But we have a very small farm and to operate efficiently is very important to our success," he says. "I was able to look at things like operating margin, return on assets, net income ratio - compared to other similar farm businesses."
The data is not a blueprint for success, but Hartmann says it does show farmers which ratios to track and what level of revenue might be reasonable to expect.
"It might say to me, as a beginning farmer, there's a wide range of financial success or financial insecurity among the people that participated in this," he says. "It looks like it's not a sure thing perhaps; maybe it's not a financially guaranteed avenue."
Data from 2013 is available in the report. It shows five of 11 farms are hitting their profitability goals, and six that anticipate eventually earning 100 percent of household income from their operation.