Adding vegetables to farm enterprise mixes may offer producers opportunities to increase revenues significantly. But raising vegetables is kinda like going to Las Vegas.
Don't bet the mortgage on the whims of a roulette table and don't jeopardize the entire farm for a few acres of a crop with no market. If you can't afford to lose it, keep it in your pocket.
Before venturing into vegetable production growers should follow a few basic risk management guidelines long before they lay off the first row, says Jay Yates Texas Extension risk management specialist at Lubbock. Yates says growers who are unprepared for the vagaries of vegetable markets can dig themselves into a huge financial hole.
He says producers should look into marketing, financial, management and production risks before they commit to any new crop and especially one as costly to grow as vegetables.
“The most important thing is to be sure of a sales opportunity,” he says, “whether it's a big market or a niche. Marketing provides a much bigger risk for vegetable farmers than production. They have a lot of resources to learn to grow the crops, but a grower does himself less than no good if he makes a crop he can't sell.”
Yates says buyers offering contracts may not represent a clear picture of market potential.
“Sometimes they come looking for new growers because the old ones have gone broke,” Yates says. “Ask for references, growers who have produced the commodity for these buyers before.”
And Yates suggests doing more than calling references. “Anyone who will invest from $1,000 to $2,000 per acre can afford to spend a day visiting a farmer to see firsthand if the program is working and if the market really is expanding.”
He also suggests potential new-crop producers find out how promptly buyers paid bills and if their claims are reliable.
He also recommends potential growers keep their egos out of the equation. “Don't assume that you can make something work because you'll do a better job than folks who failed,” he says. “Get more information.”
Financial risk for vegetable production can be significant, Yates says. “With any perishable crop, a farmer has to look at all the expense he'll invest and then be prepared to take zero for his efforts. He should plant no more then he can afford to lose all his expenses on.
“Don't risk the rest of the operation, possibly bankruptcy, on a new enterprise.”
Yates says a new crop may add significantly to an operation's overhead. “Determine if you can produce the new crop with equipment already on hand,” he says. “If you have to invest in new, specialized equipment, maybe it's best to look at something else.
“But, if you can grow the crop with equipment on hand, you spread risks and expenses over more crops and improve profit potential.”
He says management limitations may affect a grower's decision to add something new. “If he has 2,000 acres of cotton and is paying his bills but not putting much aside, a grower may consider adding a few acres of vegetables.
“But, if he finds that the management time he spends on vegetables undermines his ability to take care of his base crop, he's jeopardized his financial foundation.”
Yates says a grower must make the financial commitment to his new crop. “Someone once said: ‘Always treat your lettuce like it's worth a million dollars because if you don't it won't be.’
“A grower has to make tonnage and quality, so he can't cut corners on fertility, pest management and irrigation. Make the commitment and stick with it. Be prepared to produce what the market wants.”
Yates says most growers focus on production when they try new crops. And he doesn't deny that learning to make high yields of quality produce is important.
“But production is the lowest priority when a farmer is getting started with vegetables. First, he has to set up marketing and management plans and then he can get his arms around production.”