Understand your farm labor costs using labor logs
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EmailKnowing your farm's inputs can help you make decisions about how to sell your product to make the most profit.
When you work for yourself, you may not prioritize documenting your time. There are tasks to be done and you complete them, however, when you are engaged in farming or food production, there are always tasks to be done. When you are looking to assess different options in your business or farm, knowing your labor input is very important – whether it is your labor or someone you are paying to work for you. Knowing all your inputs can help you make decisions about the most profitable ways for you to sell your product. For more information, see this article about choosing marketing channels.
To assess the amount of labor used on your small farm, you should create a labor log of all the tasks you accomplish from harvest to sale for one typical, peak season week. Labor is the largest costs in marketing your product so it is important to know how much time goes into the product so you can make sure you are covering your costs. This will also give you a consistent unit and format. If you have employees, instruct them about how you want the labor log completed and have them each fill out their sheets. This will give you an idea of where the labor costs are concentrated for your farm.
See the accompanying sample labor log example as filled out by you or one of your workers. There is a space for them to write their name at the top and the date. The form will collect information about the time spent in an activity, what product was being impacted, what activity was occurring and what channel this product will serve. Activities are listed with a box next to them for the person filling out the form to check what applies. You can decide how detailed to get in these activity categories. The channels are every location where your product is sold, like CSA, farmers markets, restaurants, etc. For example, if you harvest on Tuesday morning for your CSA to pick up later in the day, you can directly tie that work into the CSA channel.
The tasks are clustered in four general work areas:
1) harvest which includes creating a pick list and harvesting the product
2) processing and packing which includes cull/grade/sort/wash activities as well as bunching and packaging or building boxes for CSA members
3) travel and delivery which would include going to and from the farm
4) sales activities which includes the recording keeping of orders, making sales calls and time spent setting up, selling and taking down your sales location.
You should include time spent doing the paperwork and making calls as well as travel time in this calculation. Encourage care with gathering this information on your farm. The more complete the data, the better picture you will have of what time is invested in tasks and specific products.
Now when you match the labor data for a busy week, you can match the time and labor costs with the money made in gross sales and calculate a profit statement that includes labor as a cost. This will give you an idea of the labor for each marketing channel as well as for each product, if you decide you want to examine the data that closely. The sample labor log shown here was developed by marketing specialist Matt LeRoux of Cornell University Cooperative Extension for their program called Baskets to Pallets.
Michigan State University Extension is committed to helping farmers improve their businesses and improve local food systems. For workshops, webinars, and resources related to farm business management, visit www.msue.anr.msu.edu.
