Carol Sanders | School of Agriculture, Fisheries and Human Sciences
Many Arkansas small farmers sell their livestock, milk, eggs and products directly to the public from their farms, but all too often they charge much less than grocery store or auction barn prices for similar products, said Dr. David Fernandez, Cooperative Extension Program livestock specialist at the University of Arkansas at Pine Bluff.
This happens for several reasons. Some small farmers may not know their actual production costs. They know what they spend on feed or hay, but rarely do they take into account the cost of fuel for tractors and trucks, their own labor, vaccines and routine medications and death losses. Some fail to consider the fixed costs of running a farm such as farm mortgage, tractor and truck payments and repairs or replacement of old equipment and facilities, said Dr. Fernandez.
Other producers do not know the true value of their products even though the USDA provides weekly market reports for nearly every type of livestock or livestock product. Many new farmers are unfamiliar with abbreviations used. One is cwt, which is the price per 100 pounds. If you have an 80 pound kid and the price per cwt is $150, multiply the weight of the kid by the price, and divide by 100. The 80 pound kid is worth $120 at the market on that day.
Another place to get pricing information is the grocery store. If a dozen eggs is $2.72 and you are charging $2, you are priced below the market and probably not recovering production costs, said Dr. Fernandez.
“By undercutting the market price and not recovering production costs, you are putting yourself out of business,” said Dr. Fernandez. “Not only that, but you are keeping other small farmers from earning a living by preventing them for being able to charge enough to cover their costs and make a profit.”
Some farmers say, “I am not in this to make money” or “I don’t want to seem greedy.” Farming is an excellent hobby, and producers can sell their products for whatever they wish or even give away their products. If you prefer to do this, consider providing for those in need instead of undercutting your neighbor’s market price.
Approximately one-fourth of Arkansas children suffer from hunger, and one out of five households is food insecure. A church or local food bank can help direct your products to those who can use them most, said Dr. Fernandez.
No one wants to appear greedy, but businesses must earn a profit and pay employees or they go out of business. “If you want to earn a living farming and not have to work off the farm, you must charge enough to earn a profit and pay yourself a wage,” said Dr. Fernandez.
Knowing production costs allows you to know the break-even point. No one feels greedy asking for a raise at work, in fact, most employees feel they deserve one because of their hard work.
Producers must make a profit. Profits allow for growth and reinvestments such as better handling facilities for a growing herd, or new processing equipment for a new product line such as cheese or butter. Profits allow for a raise for hard work and management.
For more information on this or other livestock related topics, contact Dr. Fernandez at (870) 575-7214 or email@example.com.
The Arkansas Cooperative Extension Program offers its programs to all eligible persons regardless of race, color, sex, gender identity, sexual orientation, national origin, religion, age, disability, marital or veteran status, genetic information, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer.