Our normal financial reporting schedule was interrupted by the fire and the subsequent scrambling, but I want to get back into it. This post has been sitting as a draft for over three months. I'll touch on our financial summary for 2014, give you and update on some good news and our current finances, and talk about where we see the farm in 2016 and beyond.
In summary, we ended last year $2,915 in the red, but that doesn't tell the whole story. We made several investments last year that would/will have paid off in 2015. For instance, we spent $900 on two steers which we should turn a profit on in 2015, and we made close to a $1000 investment in garlic seed. We also made over $1000 of investments in rabbits and rabbit infrastructure, which were all unfortunately lost in the fire. So, we were pretty close to breaking even save those investments. What hurt us the most were small pig litters, which kept us under the magic number of an average of 6 weaned piglets per sow. Some of that was due to less than optimal facilities, which we had updated for 2015 before the fire, and for which we will update again when the new barn is built. With dedicated farrowing pens, a vaccination program, and continued selection for good mothers, we think we are going to be able to achieve our litter size goals in the future.
Our largest expense continues to be feed, of which we spent nearly $6000 on last year. We purchased a grain bin last year that allows us to get pig feed delivered and gives us the cheapest and most efficient way of bringing feed onto the farm. A big feed expense is a necessary part of raising pigs at scale for us, since there is no chance that we will be growing our own feed anytime soon. Some other expenses that we want to try to keep a handle on include interest from our credit card and transaction fees from customer credit cards. The interest is a necessary evil in order to maintain adequate cash flow, but we want to be able to rely on credit less going into the future. Transaction fees are extremely annoying, as they eat up 2.9% of all our revenue when customers don't pay by check or cash. With our profit margins at 10% of costs, 2.9% is a huge amount. We were especially negatively effected when we did pork deliveries last year and paid for all the butcher fees up front, adding the butcher fees onto the final invoice (you well see that as "temporary butcher charge" and "reimbursements." This meant that we were getting 2.9% taken out of the relatively sizable charge. We are going to try to find a way that customers can pay the butchers directly this year (it's not a problem when customers pick up meat at the butcher, but when we deliver, they never physically go into the butcher shop to pay.)
Our largest expense continues to be feed, of which we spent nearly $6000 on last year. We purchased a grain bin last year that allows us to get pig feed delivered and gives us the cheapest and most efficient way of bringing feed onto the farm. A big feed expense is a necessary part of raising pigs at scale for us, since there is no chance that we will be growing our own feed anytime soon. Some other expenses that we want to try to keep a handle on include interest from our credit card and transaction fees from customer credit cards. The interest is a necessary evil in order to maintain adequate cash flow, but we want to be able to rely on credit less going into the future. Transaction fees are extremely annoying, as they eat up 2.9% of all our revenue when customers don't pay by check or cash. With our profit margins at 10% of costs, 2.9% is a huge amount. We were especially negatively effected when we did pork deliveries last year and paid for all the butcher fees up front, adding the butcher fees onto the final invoice (you well see that as "temporary butcher charge" and "reimbursements." This meant that we were getting 2.9% taken out of the relatively sizable charge. We are going to try to find a way that customers can pay the butchers directly this year (it's not a problem when customers pick up meat at the butcher, but when we deliver, they never physically go into the butcher shop to pay.)
Our finances have been thrown akimbo by the fire, but the current state of our accounts is above. We have been depositing offline donation checks specifically made out to "Thoughtful Food" into the farm account, which has allowed us to pay off the debt related to the rabbit investments and gotten us to a point of relative equilibrium. We are still waiting on $750 in deposits for pork and beef which will get us back in the black. We will also put some of the insurance contents money into the farm account as we've been buying replacement equipment specific to the farm. While we still have a 1/2 beef share to sell, we won't have any direct farm revenue coming in until we sell summer/fall weaners and/or until the pig slaughter in September. Unfortunately, this means that we will officially lose money again this year, but because of the donations and money we can put in from our personal accounts, we'll be able to keep the farm afloat this year.
The majority of the donations will go directly to the approximately $65,000-70,000 (cost includes demolition, site prep, permitting, and sales tax) cost of the new barn. In extremely good news, we received a $25,000 grant from the Humanlinks Foundation. The grant allocates $22,400 of the moneys toward the barn structure, and $2,600 toward building a new, improved composting area and for water quality tests to evaluate the runnoff from the barn, field, and composting area in the winter. This means that our total fundraising total is now more than $65,000 and we will not need to borrow any money to complete the new barn. In essence, it's like we have a big "do-over" button that we get to press and start from scratch. The upside is that the new barn will be designed to the exact needs of the business and should allow us to grow to a 10-20 sow operation over the next few years.
In terms of the near future, we have a general plan for 2016 in place now. We will bring 4 sows and 1 gilt to 2016 (and 2 boars) and hope to achieve a minimum of 30 piglets born in the late winter and 30 more piglets born in the early summer of 2016. This will be a big jump for us, but we think we are ready. We will likely sell about half the winter piglets as weaners and the rest as butcher pigs depending on demand (we sold out of 10 pigs in 10 days this year). All the summer pigs will be sold as weaners. In addition, we want to buy 4 bull calves in the late summer or early fall of this year once the barn is finished. We'll bottle feed those calves to begin and keep them until slaughter in the fall of 2016. Lastly, the big wildcard is the seed garlic. It looks absolutely terrific right now and we are hopeful that we will turn our 40-45 lbs of planted garlic into approximately 200 lbs at harvest. We will plant the best 3/4 of that harvest and hopefully get about 600 lbs in 2016. We can begin to start garlic seed sales in 2016. It's really difficult for us to evaluate all the true costs of garlic production at this point, and we don't know exactly what to charge. We'll probably just match our prices to other local producers to begin. The garlic has the potential to be a significant source of our revenue, and my initial projection for 2016 is to make a profit of $13,000 (note that most/all of this profit is actually just the cost of my labor). 2016 will be our fifth year in business. Profitable farming is hard.
If 2016 is successful, 2017 may be the year I finally decide to go all-in on farming full-time. I don't want to jinx that fantasy, but it is a nice thought.
One last thing: we are not going to rush back into raising rabbits again. We couldn't feasibly have rabbits ready until 2016, and I am beginning to think that three main enterprises (pork, beef, and garlic) is enough to keep me more than busy. The future looks bright!
The majority of the donations will go directly to the approximately $65,000-70,000 (cost includes demolition, site prep, permitting, and sales tax) cost of the new barn. In extremely good news, we received a $25,000 grant from the Humanlinks Foundation. The grant allocates $22,400 of the moneys toward the barn structure, and $2,600 toward building a new, improved composting area and for water quality tests to evaluate the runnoff from the barn, field, and composting area in the winter. This means that our total fundraising total is now more than $65,000 and we will not need to borrow any money to complete the new barn. In essence, it's like we have a big "do-over" button that we get to press and start from scratch. The upside is that the new barn will be designed to the exact needs of the business and should allow us to grow to a 10-20 sow operation over the next few years.
In terms of the near future, we have a general plan for 2016 in place now. We will bring 4 sows and 1 gilt to 2016 (and 2 boars) and hope to achieve a minimum of 30 piglets born in the late winter and 30 more piglets born in the early summer of 2016. This will be a big jump for us, but we think we are ready. We will likely sell about half the winter piglets as weaners and the rest as butcher pigs depending on demand (we sold out of 10 pigs in 10 days this year). All the summer pigs will be sold as weaners. In addition, we want to buy 4 bull calves in the late summer or early fall of this year once the barn is finished. We'll bottle feed those calves to begin and keep them until slaughter in the fall of 2016. Lastly, the big wildcard is the seed garlic. It looks absolutely terrific right now and we are hopeful that we will turn our 40-45 lbs of planted garlic into approximately 200 lbs at harvest. We will plant the best 3/4 of that harvest and hopefully get about 600 lbs in 2016. We can begin to start garlic seed sales in 2016. It's really difficult for us to evaluate all the true costs of garlic production at this point, and we don't know exactly what to charge. We'll probably just match our prices to other local producers to begin. The garlic has the potential to be a significant source of our revenue, and my initial projection for 2016 is to make a profit of $13,000 (note that most/all of this profit is actually just the cost of my labor). 2016 will be our fifth year in business. Profitable farming is hard.
If 2016 is successful, 2017 may be the year I finally decide to go all-in on farming full-time. I don't want to jinx that fantasy, but it is a nice thought.
One last thing: we are not going to rush back into raising rabbits again. We couldn't feasibly have rabbits ready until 2016, and I am beginning to think that three main enterprises (pork, beef, and garlic) is enough to keep me more than busy. The future looks bright!
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