The Economics of Food Self-Sufficiency (2004)

Presented at Navigating Our Future: Food Forum (Winter, 2004), WSU Livestock Advisors (Winter, 2004), Snohomish Conservation District Small Farm Expo (Spring and Fall, 2004), King County Small Farm Expo (Spring 2004, 2005), Whidbey Conservation District Small Farm Workshop (Spring 2005), and WSU Snohomish Extension: Self Reliant Homes and Farms (Spring 2005).

By Henning Sehmsdorf

If you are a farmer on Lopez Island (or anywhere in San Juan County) and you produce barley, for instance, you can sell it at the Cargill grain elevator on Highway 20; or if you produce beef or pork you can sell the animals at the Marysville auction or to a number of feedlots further south; or if you produce milk you can make a contract with Dairygold to take it off your hands: these are all examples of producing for commodity markets. For a small producer commodity markets are problematic, however: the producer has little or no control over prices and profit margins are typically very small.

An alternative often recommended to the small producer is local niche markets. For instance, in San Juan County, you can use the USDA-approved mobile slaughter unit (developed by the Lopez Community Land Trust and run by the Island Grown Farmers’ Cooperative) and either butcher on a custom basis or have your animals processed by the butcher and sell your meats and sausage out of your farm freezer or at local food stores.
Or, if you grow vegetables, fruit, flowers, or herbs, you can market these directly through a CSA (an arrangement by which customers pay a lump sum to the farmer at the beginning of the season in exchange for a weekly basket of produce), or you can sell your produce to local restaurants and food stores, or at the Farmers’ Market; or you can process your calendula flowers, for instance, into skin cream and market it through the Internet, or process your berries into jams and sell those through various outlets.

At S&S Homestead Farm, over the years we have tried a number of these approaches, from commodity to niche marketing and have come to the conclusion that what works best for us is not to concentrate on a particular commodity or niche, but to produce a lot of different things to meet our own food needs first, and sell the rest to our immediate community. I want to tell you about the economics of our experience, or about the bottom line of homestead food self-sufficiency.

My wife, Elizabeth, and I farm 50 acres, of which we own 15 and lease the rest from neighbors. We produce beef, pork, lamb, chicken and eggs, milk and other dairy products, vegetables, fruit, as well as the feed for our animals (green forage, hay and grain), and the needed fertilizers in the form of cover crops, composts and compost teas. Everything we produce is grown organically and, in the last two years, biodynamically. What does that have to with economics? Quite a bit, actually, because foodstuffs produced this way are nutritionally whole, which means that we don’t need to buy vitamins or other nutritional supplements (for which Americans spend an average of $5 billion/year). It also means better health for us and for our animals, saving us thousands of dollars every year in medical and veterinary bills. Furthermore, it means that our plants are healthy, and we don’t need to spend money on pesticides.

People often ask us two questions: 1. Can you make a living running a small, highly diversified and self-sufficient farm like yours, and 2.Can your model be replicated by others? The answer to both questions is yes, and I want to show you how.
First a little history: In 1970, I started growing fruit and vegetables, chickens and rabbits on about ¼ acre on the 10-acre piece I bought on Lopez and which cost me 1 year’s salary before taxes (by comparison, today the same piece, if you could find it, would cost Elizabeth about 4-5 years of her teaching salary). Elizabeth and I held full-time jobs at the UW until 1994, but for almost a quarter century our quarter-acre garden provided the family with a bounty of fresh and frozen vegetables, fruit, eggs, chicken and rabbit meat.

I also made a deal (you might call it an associative contract) with my neighbor that I would help him with the haymaking for his cattle in exchange for running a cow of our own with his herd. Whenever he brought in a bull, we would have a calf to slaughter a couple of summers later. All of this part time food production not only provided us with wholesome and flavorful food year round, but it made a huge difference in our household budget. In ’94, after my youngest graduated from high school, I quit the university to become a fulltime farmer and Elizabeth took a position at the school on Lopez. With our savings we purchased an additional five acres, built a barn and other farm buildings, bought our own bull and slowly increased our beef herd, added sheep, pigs, and finally a dairy cow, increased our vegetable production and started to grow enough to sell substantial quantities to our neighbors, and make a profit.

We follow a few simple rules to keep our farm environmentally sound and economically sustainable:

– We follow a fifty-year farm plan that integrates quality-of-life values with economic viability.
– We keep it small. Elizabeth and I manage the animals, vegetables, greenhouse, and orchard by ourselves. Whenever we find we can no longer do that, we cut back the size of our operation.
– We feed ourselves first, and sell the excess to our community. Even our modest production nets a profit of several thousand dollars per year.
– We incur no debt: we save money for water systems and outbuildings before we install or build them.
-We maintain a closed system : The cows, the sheep and chickens are bred and raised here, and gain natural immunities from living in one place. Our piglets come from a neighbor. We do not import replacement animals, feeds, or sources of fertility. The animals fertilize the pastures, and our compost builds rich topsoil in the gardens. Some vegetables we grow all year round; others, like peas and corn, and fruit, we preserve in summer so that we have a generous supply in winter.

Now let us look at some numbers. By USDA standards S&S Homestead is not a commercial farm because the total annual economic value of our production is less than $50,000. In a typical year we produce about $15,000 in vegetables and fruit, $12,000 in beef, pork and lamb, and $3,500 in dairy, for a total of a little more than $30,000. As you can see from the pie charts I have prepared, in the year 2002 58% of that total represented cash sales. The remaining 42% was consumed by the farm household and four interns. The charts also show that after deducting fixed production costs (such as depreciation for buildings, machinery, fences and water systems) and variable (or direct) costs for producing beef, pork, lamb, dairy, vegetables, grain and hay, as well as supplies, utilities, taxes, insurance, etc., and after factoring in the cost of our internship program, we are left with about 24% in net profit, or about $7,500.

How do these data throw light on the economics of home-based food self-sufficiency? To answer that question I want to draw your attention to the U.S. Department of Labor Statistics (link to CompareHouseholdSpending.pdf) for an average 2-person household in the U.S., and to the Washington Association of Churches’ minimum standard for a 2-person household in San Juan County.

For comparison with our own household spending, I have selected those categories of major household outlays to which home-based food production can make a significant contribution: food, transportation, housing, health care and entertainment (altogether representing 75% of typical household spending).

The figures speak for themselves: Because S&S Homestead produces its own food and sells more than half of it, the household nets a surplus of more than $15,000 in the food category. But the savings do not end there. Because the members of the household live where they work (and we rarely leave the island), we have minimal transportation costs (about 1/3 of the county minimum standard, and 1/7 of the national average). Similarly, because we live on the farm, and used our own labor to build our house long ago (and have stayed in place), our housing costs are a fraction of the county and national average.

The comparison of health care costs is particularly instructive. Last month the New York Times reported that for the first time in history Americans are spending more on health care than on food, 45% of which is paid by public spending, the rest by personal insurance or out-of-pocket, about $5,984 per household nationally, and minimally $3,156 in San Juan County. By contrast, our household spends an average of $1,200 for medical and dental checkups and minor medical consultations per year, and zero for drugs, supplements or other health aids, largely due (I believe) to the food we eat and the exercise we get in growing it. And, finally: entertainment. I find it interesting that our budget is about 1/10 of the national average (none calculated in the county minimum standard). What is going on here? Does it mean that life and work on a small farm is so interesting that less entertainment is needed?

In sum, what do these statistics tell us? Look again at the bottom line of our comparison. After paying for food, transportation, housing, health care and entertainment (75% of household spending), S&S Homestead shows a surplus that is almost exactly the same as the figure calculated by the U.S. Department of Labor as required to pay for the remaining 25% of household spending, including utilities, household supplies, clothing,
personal care products, education, charity, tobacco, insurance, and pension. In other words, the farmers on S&S Homestead do make a living.

That’s my answer to the first question. I will be briefer in answering the second question: Can our model of home-based food self-sufficiency be replicated? Of course it can, and there are many ways of doing it, not necessarily the way we have done it.
For many years, Elizabeth and I had two professional salaries to help pay for the purchase of the land and development of the farm infrastructure. This is not unusual. I don’t think I know many (if any) farmers on Lopez Island who did not bring outside income, savings or earnings from a previous enterprise, or an inheritance, to establish themselves on the land. And this was true of most agriculture in the U.S. until the growth of large-scale industrial farming after WWII. Except in places where people homesteaded in isolation, traditional family farms relied on outside income to provide cash for shoes, clothing, a kitchen stove, fencing materials, while the land, livestock and buildings were mostly inherited from parents who lived and died on the farm (much as the Amish still do today).

A farmer would sell butter and eggs for ready cash. His daughter would teach school in town, his son would take a winter job in a local sawmill. But the main support of the family came from the farm. In our case, for twenty-five years our outside jobs supported the farm that produced much of our food. For the last ten years the farm has supported itself.

To feed itself, a 2-person family or household on Lopez would not need a complex, integrated farm like ours, nor would it need nearly as much land. For several years now, we have grown more than $10,000 worth of vegetables on less than ¼ acre, consumed half and sold the rest. Jeanna Carter, who works at Lopez Island Schools and is helping us develop a farm-to-school project, has carefully worked out what she calls a replication model. It shows how 1 or 2 persons who own no land at all could enter into an associative (or collaborative) contract with someone who does own land, feed themselves, and at the same time earn (and save) sufficient funds to buy land of their own.