Small Farm Economics: Production possibilities frontier

by Jeremey Weeks

It starts out with a few chicks.  You fork out some money for a heat lamp, some shavings and a bag of crumbles.

A few weeks later, you buy some poultry wire and you scrounge some pallets to make your first coop.

Or maybe it’s plants for you.

Either way, you are buying garden hose.

The costs add up.  It’s okay while it’s just a hobby.  But you have dreams and you want to scale up.  There’s that whole thing about having money to make money.  You know that you’ll eventually make enough to cover costs once you get big enough.  How do you get from here to there though?

There’s equipment that will allow you to get more things done faster or cheaper.  A feed silo?  A tractor?  Also, there are eighteen different things you could do better yourself rather than pay someone else.  Grind your own feed, breed your own animals rather than buy.  The list goes on.

You have to make some guesses.  You only have so much time in the day.  You only have so much money.

So, make a list.  It should have everything that you want to do.  Let’s say that you want to raise pigs and chickens and you want to grind your own feed.  Do you you plan to breed and have litters?  Are you going to grind your own feed?  Do you plan on butchering those pigs yourself?

Break everything down.  What are the costs for everything?  Also break down your workflow.  What would your morning routine be?  How long would it take?  How about evening?  Where’s the point where you are out of time?

Take your work routine and examine how you can give yourself more time.  More time means more production unless you use up another resource, like money, or land, or…

You have your routines planned and they are based on a certain amount of result.  It takes more time to feed 20 pigs by hand than it does 5 pigs.  How many pigs can you raise using 70% of your time?  50%?

How much grain can you grind with 10% of your time?

Factor in fence mending, building farrowing areas, winter shelters and anything else you can think of.

You might want to graph each activity.  How many lbs of feed can you grind in 4 hours?  Does that include getting the ingredients?  How many lbs in 8 hours?

Let’s say you have 8 hours a day during the week and 12 hours a weekend day available.  Take the tasks that have to be done every day and subtract the time.  40 minutes to feed/water the pigs and check fencing, 10 minutes to feed and water the chickens, etc.  Then, calculate how much time you’ll need on the weekend to grind that feed or install more fencing or…

Take all your tasks and graph them.  Maybe if you did nothing else, you could raise 200 chickens or 10 pigs, but not 200 chickens and 10 pigs.  You’re starting to figure out your production possibilities frontier.  You can add your feed grinding as well.

Eventually, you’re going to find that you don’t have enough time in your week to do everything you want.  At least, not without more equipment or more hands.

Time to reduce your plan to the essence of what you want to do.  If you lower the number of chickens you raise, you can grind more feed and raise more pigs.  Or maybe, you reduce your pigs.  You’ll have plenty of time to grind feed and raise a lot of chickens.

Maybe you pay that feed guy.  It will give you back 12 hours a month and only cost you $50 in savings.  Plus, you won’t have to buy the silos, the grinder and the tractor to run it.  That $50 savings goes away, but you are paying the feed guy $4.17 an hour for his labor.  He’s not exactly ripping you off.

Here’s a link to an economics video about Production Possibilities Frontier.

More to come on farm economics.

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