What Is Your Most Profitable Crop?

When I posed this question to a producer a few years ago, he reasoned that since he had the most acreage planted to tomatoes that tomatoes were his most profitable crop. When we sat down to look at his numbers, he discovered that his input and labor costs were considerably higher on tomatoes and that he was losing money every time he sold a box of tomatoes at the produce auction in August. As we delved deeper into his farm finances, he found that his most profitable crop in terms of profit per square foot was his day-neutral strawberries. After this brief meeting discussing profitability and farm finances, I asked the grower if he was going to do anything different, and he told me that he was going to spend more time looking over his sales receipts and that he was going to plant more strawberries. In this case, planting more strawberries may not be the best solution for this producer, but a regular review of his farm finances and sales receipts was a good first step.

Years ago, I was asked to cover farm financial management in addition to my horticultural duties. Farmers would flock to every talk that I gave if my presentation was on the latest and greatest bug or the newest herbicide. Unfortunately, when I talked about farm financial management issues, the meeting room was usually empty except for the lone person looking for a quiet place to drink their coffee or eat a doughnut. Farm financial analysis is not fun and spending time reviewing financial records in the winter is not on the "to-do list" of most farmers.

Supply chain issues and inflation have created great uncertainty on many farms. When greenhouse growers were asked last spring if they were going to raise prices, many responded that they were not because they were afraid of losing customers. In some cases, greenhouse input costs increased by 30% or more, yet many growers were going to freeze their retail prices at 2021 levels. While this may be a noble act, it is a disastrous business strategy that may lead to insolvency over time.

Vegetable growers rarely have the luxury of increasing prices to cover increases in input costs and are often at the mercy of the market per se. While prices are often set by the market, growers can look for market windows where pricing for specific crops is at a higher level. Growers with computer access can go online to the USDA Market News to pull down weekly data for the current year and even past years to track supply and price data for almost every vegetable or small fruit crop. If you take a commodity like vine-ripe tomatoes and review the 2022 terminal market data, you will find that vine-ripe tomatoes fetched a higher price for a 25-pound loose carton in Baltimore, MD, on October 7, 2022 ($25.00) than the same tomatoes sold through the same terminal market on August 9, 2022 ($18.00). If a grower can take advantage of season extension by using a high tunnel, a grower can generate a higher return per square foot for their tomato crop if they target the early October market.

Even with a vegetable like kale, data can be gleaned from these market reports that can be quite illuminating to the grower. Kale pricing remains steady throughout most of the growing season, but there are market windows where kale fetches $2.00 to $3.00 more per carton than at other times of the year, and growers could utilize row covers and/or high tunnels to extend the growing season to get the higher return per carton. In looking at the USDA Market Reports it was also interesting to note that the Lacinato or Tuscan-type kale consistently sold at a higher price than "regular" kale at the Baltimore terminal market for a similarly sized carton. The price for organic kale at the Baltimore terminal market tended to be 2X the price of non-organic or conventionally produced kale. Using the data from the Baltimore terminal market, a kale grower could increase their profitability by first growing for market windows where the price for non-organic kale is higher, second by growing the Lacinato or Tuscan kale instead of the traditional kale greens, or third by growing kale organically in the field or high tunnel to increase their potential return.

Farming any crop in a vacuum can yield disastrous results, and copying what your neighbor does on his or her farm may be as equally disastrous. Farmers should review their cropping plan each winter and develop an enterprise budget for each crop grown. Determine your breakeven price for each commodity and compare it to the price you were paid for that commodity last year. If you made a profit every time you sold that commodity in the past year, you should keep that vegetable in your crop mix. Crops that lost money consistently throughout the past growing season should be removed from the cropping plan for the next year and replaced by other crops that appear to be more profitable.

Sometimes, a crop can be profitable if you change where you market the product. One grower I worked with several years ago opted out of selling his tomatoes through a co-op and decided to use a broker for marketing them in a more urban area. This slight change in his approach to sales and marketing made a significant difference in his bottom line. So, in some cases, your profitability hinges on where you market/sell the product and not squarely on the commodity itself.