artwork Is hoping to start a small hot pepper farm " The Food Business"?

J

Jabski

I would love to grow 1 to 5 acres of hot peppers. Is this the right place to post this question? A farm is about food and is a business. First outdoor growing then greenhouses. I can retire at age 55 in 2017 or I will loose my mind. I want to be growing these with basically only me and a women in Kentucky and earn enough to live relatively nicely. If it turned into a dynasty or empire I wouldn't be sad. I do know I would have to grow tons and tons and tons to be really really comfortable. I'll shoot for the stars but would be happy getting to the far away planets.

If any of you farmers want to clue me in on anything and everything you could THANK YOU!!!

Thanks for any info.
 
Sort by date Sort by votes
Cost of Goods Sold

Every gallon of gas, every tool, every hour of labor paid & every drop of fertilizer goes into the cost of goods sold.

Basically the cost of producing the peppers - everything that goes into it.

You can't know your profits until you know your costs. You need to project your costs to formulate a business plan.
(You'll also need to project and account for operating costs, like market stall fees, crating & transporting peppers, cold storage, etc)
 
Upvote 0 Downvote
Lucky Dog Hot Sauce said:
Cost of Goods Sold
Every gallon of gas, every tool, every hour of labor paid & every drop of fertilizer goes into the cost of goods sold.
Basically the cost of producing the peppers - everything that goes into it.
You can't know your profits until you know your costs. You need to project your costs to formulate a business plan. (You'll also need to project and account for operating costs, like market stall fees, crating & transporting peppers, cold storage, etc)
Click to expand...
Lucky Dog Hot Sauce thanks!

My pepper partner is having me do this because she had started an electronics business in the past and has given my the task of doing what you just wrote. She is making me do all the research so that I do this like a real business instead of just letting me say "I can grow peppers so let's go into business". I now know of some more items I need to account for from your above list.

How do I account for items that last for years? For example lights, bulbs, shelves, crates? I figured these items can last 5 to 10 years so do I get the cost and then divide into how long I think it will last and then add that to the cost per plant? I quite don't get depreciation yet. That is what I think I'll need to learn about real soon.

Thanks Again!
 
Upvote 0 Downvote
for those type items, it depreciated over 5 years or something.  That's more for a tax expert to say but basically...
If you spend $1000 on a rototiller and it's depreciated over 5 years, each year you would deduct $200 from your income. 
 
So if you made $2000 in sales the first year, without deductions you would have to pay taxes on $2000.  But if you spent $500 on seed and fertilzer and another $200 depreciation on the rototiller, that comes off your income so you would only pay taxes on $1300.
 
You still have to front the money all in the first year, but then can deduct the cost over time.  Some things can be deducted the whole amount in the year it was purchased. I dunno all the ins-and-outs of all that.  I just TurboTax. 
 
Upvote 0 Downvote
salsalady said:
for those type items, it depreciated over 5 years or something.  That's more for a tax expert to say but basically...
If you spend $1000 on a rototiller and it's depreciated over 5 years, each year you would deduct $200 from your income.
Click to expand...
Spot on .

That's standard depreciation. When I purchased manufacturing equipment for my old job i would also have to do ROI. Had to prove that by making this purchase for $100k, $200k, etc, that within 5 years the equipment (less depreciation) would pay for itself - otherwise you can't justify the upgrade.

Which brings up another subject: what equipment will you buy? To maximize on your investment you're going to want to buy more than you need to account for growth and scalability. But how much is too much? You'll want to be able to determine whether it makes sense to buy tractor A vs tractor B vs tractor C. How much crop do you plan to to grow next year over how much you grew this year? If your aim is to grow your business 5% a year for the 1st 5 years, you'd be wise to purchase the tractor that will still be sufficient to manage your workload when you've increase your output by 25%. And by then you'll have depreciated your tractor & you'll be ready to buy the equipment that'll get you through the next 5 years. If tractor A is only good for what you need this year, it's probably the wrong tractor. If your goal is 10% a year, tractor B might not be sufficient either. But tractor C costs a heck of a lot more than A or B.

Or something like that.

Now figure that out for every piece of equipment you need. :)
 
Upvote 0 Downvote
salsalady said:
for those type items, it depreciated over 5 years or something.  That's more for a tax expert to say but basically...
If you spend $1000 on a rototiller and it's depreciated over 5 years, each year you would deduct $200 from your income. 
 
So if you made $2000 in sales the first year, without deductions you would have to pay taxes on $2000.  But if you spent $500 on seed and fertilzer and another $200 depreciation on the rototiller, that comes off your income so you would only pay taxes on $1300.
 
You still have to front the money all in the first year, but then can deduct the cost over time.  Some things can be deducted the whole amount in the year it was purchased. I dunno all the ins-and-outs of all that.  I just TurboTax.
Click to expand...
Thank you salsalady, I'm learning from you pros.
Lucky Dog Hot Sauce said:
Spot on .
That's standard depreciation. When I purchased manufacturing equipment for my old job i would also have to do ROI. Had to prove that by making this purchase for $100k, $200k, etc, that within 5 years the equipment (less depreciation) would pay for itself - otherwise you can't justify the upgrade.
Which brings up another subject: what equipment will you buy? To maximize on your investment you're going to want to buy more than you need to account for growth and scalability. But how much is too much? You'll want to be able to determine whether it makes sense to buy tractor A vs tractor B vs tractor C. How much crop do you plan to to grow next year over how much you grew this year? If your aim is to grow your business 5% a year for the 1st 5 years, you'd be wise to purchase the tractor that will still be sufficient to manage your workload when you've increase your output by 25%. And by then you'll have depreciated your tractor & you'll be ready to buy the equipment that'll get you through the next 5 years. If tractor A is only good for what you need this year, it's probably the wrong tractor. If your goal is 10% a year, tractor B might not be sufficient either. But tractor C costs a heck of a lot more than A or B.
Or something like that.
Now figure that out for every piece of equipment you need. :)
Click to expand...
Well I'm learning so much over and over. Thank you! I have such good teachers on here.

I haven't posted anything because I have been using all this knowledge to fine tune my calculations & plans. And wow I am racking my brain to get just about everything that I need to account for.

Off to more planning.
 
Upvote 0 Downvote
Jabski said:
Off to more planning.
Click to expand...
 
Better you than me. :rofl: 
 
I studied applied sciences for the better part of 3 years and worked in Horticulture (greenhouse management) for several after that - it's a hard gig, and profits are slim. Owning land really, really helps. 
 
I would suggest getting a few more resources in addition to wracking your brain. Not saying your noodle isn't sufficient, but there's an awful lot of stuff available to help you from people who've already done the brainstorming on the subject. 
 
Suggestions: 
http://www.walmart.com/ip/5980874?wmlspartner=wlpa&adid=22222222227001179375&wl0=&wl1=g&wl2=c&wl3=53112659328&wl4=&wl5=pla&wl6=75198346368&veh=sem
 
http://www.frys.com/product/6322151?source=google&gclid=CJ60sea_xMMCFQaLaQodoKUAaQ
 
http://smallfarm.about.com/od/otherresources/tp/top10smallfarmbooks.htm
 
I've not read any of these but I did a quick search & these were the top recommended, along with that Top 10 list in the last link. Hope this helps. :cheers: 
 
Upvote 0 Downvote
Knowing your costs is the first step in eventually coming to know what you need to charge for things so you a) can pay for everything along with next year's seed stock and b) make a living at the same time.  
 
It's a real pita to get everything all worked into the spread sheet, and by the time you've done that odds are good that something has gone up in price.  BUT it's so important to have the information.  Without this info you'll have no idea what to charge for any of your produce.
 
Land + seed + water + equipment + fertilizer + taxes (if any) + fuel = Cost of Goods Sold.  Once you have that baseline you'll be able to figure what YOU should get paid for all the time spent doing it.  Add your labor costs to the COGs plus a lil 'windage' and then divide total batch size by the ounce or pound and that's what you'll need to charge per lb for your produce.
 
Note - small 'boutique' growers providing niche market items are able to get a premium for them most of the time, especially if said niche market items are organic, etc etc.
 
Jalas/serranos are cheap, very little money in them w/o huge acreage.  Fresnos a bit more rare, but still cheap - like $3-4 a pound.  Habs and more rare still, $5 - 6 a pound here in Chicago.  Heat levels above Habs are very rare, but even then still command $8-10 a pound.   <--- These prices are current as of this summer from Sysco/US Foods.  At a farmer's market with produce like peppers I'd sell em per piece for sure.  
 
Also don't ignore the aftermarket items you'll have - not everything will always sell - and what you don't trade for dinner that week should be dehydrated and sold.    
 
Upvote 0 Downvote
Hey Jabski... you might have a customer here. I live close by and I teach in a rival district. Anyway, I just started a sauce biz and I am sealing the deal with a co-packer in Punxsutawney as we speak. He needs me to supply the fresh Bhuts and any other supers since they traditionally deal with dried. I'd rather deal face to face with someone than contract out of Pittsburgh if I can. I currently have a local farmer growing for me but I'm not sure he'd be open to the volume required. Just a thought. PM me and we can talk some more.

Regards,
Mark
 
Upvote 0 Downvote
ScovilleKid/Mark,
Have a plan in place for processing the fresh chiles when they come on.  Medium size boxes can be shipped with planning (PM me if you want to know how not to ship chiles... :rolleyes:).  Pods can be frozen for processing later, but your co-packer needs to be prepared for dealing with pounds of fresh superhots and be able to store them if they can't be sauced immediately.  They also need to know how to safely deal with superhots to avoid injury/burns to arms and hands, etc.  You don't want your co-packer to fire you because the employee took a pee break and.....well....we've all heard THOSE stories!!! 
 
Also, make sure you are very specific with how you want the pods handled.  They can be washed and de-stemmed and everything thrown in the bowl.  Or, as I used to do with a couple hundred pounds of 7 Pods and Morugas, every pod got cut open, black seeds pulled out, bad spots trimmed, and on a regular basis, the whole pod got pitched because it was black on the inside. 
 
Good Luck with your new business! 
:cheers:
 
Upvote 0 Downvote
Thanks, SL. Good info... as always. They do plan on freezing them. For now, I have them set to produce one of my recipes that only calls for red habs, and they deal with those on a regular basis. The Bhut recipe will be in the near future, but I will work everything out with them ahead of time. I love this type of info. One of the many things a newbie like me could easily screw up.

TSK (Mark)
 
Upvote 0 Downvote
Well it turns out I have 503 plants.  174 are in the ground so far.  My wife had a 6th knee operation yesterday otherwise all of the plants would be in the ground.  It was her 3rd total right knee replacement since 1/9/2012.  Getting everything ready for this operation made the pepper plantings slower than I wanted.  I do have to prioritize so wive is #1 even though she told me don't worry about her, concentrate on the peppers. 
 
Upvote 0 Downvote
Jabski said:
Well it turns out I have 503 plants.  174 are in the ground so far.  My wife had a 6th knee operation yesterday otherwise all of the plants would be in the ground.  It was her 3rd total right knee replacement since 1/9/2012.  Getting everything ready for this operation made the pepper plantings slower than I wanted.  I do have to prioritize so wive is #1 even though she told me don't worry about her, concentrate on the peppers.
Click to expand...
Hope all goes well for her that's a tough one!! Waiting for the same on both knees not looking forward to it.
Good luck on your grow!!!
 
Upvote 0 Downvote
With respect to the folk who have given advice, I say it is simple.  Grow and then offer your produce at a competitive price.  Now on that woman from KY, you know we do not take kindly to you PA folk stealing our women.  You betta have a sister to trade or something.

Seriously, send me a private message.  Want to know your grow list and turn you on to cloning methods that kick ass.  Dont pay for seeds till we talk.

Hey cloning folk, let him now who you are and how do it.  It is October, guy could spend $10.00 on seeds with any of the big time shops and have hundreds of plants.  Lets kick him off good.
 
Upvote 0 Downvote
Jabski said:
I would love to grow 1 to 5 acres of hot peppers. Is this the right place to post this question? A farm is about food and is a business. First outdoor growing then greenhouses. I can retire at age 55 in 2017 or I will loose my mind. I want to be growing these with basically only me and a women in Kentucky and earn enough to live relatively nicely. If it turned into a dynasty or empire I wouldn't be sad. I do know I would have to grow tons and tons and tons to be really really comfortable. I'll shoot for the stars but would be happy getting to the far away planets.

If any of you farmers want to clue me in on anything and everything you could THANK YOU!!!

Thanks for any info.
Click to expand...
 
 
How are things coming along? I really want to get going for myself what you started. Some good points made in this thread. Where I live in eastern KS there is land available for good prices if you just step out from the KC Metro a little bit.  If I had come across a decent amount of money I would purchase the acreage, build a greenhouse, drill a shallow natural gas well to heat the greenhouse for free (after costs of drilling around $25K), and drill a water well to supply the plants if there is no lake or pond on the property. 
 
I know a family farm in the area that grows a variety of flowers, veggies, etc. They have a medium size pond and use that as the water source. The plants reaction to that pond water (filled with bass, channel cats, and crappie) is very noticeable compared to watering with the hose and city or rural water.  They just love that nutrient rich water, and throw in some liquid fertilizer into the line and bam. Being newer to the pepper world I myself would stick first with just mastering growing the variety of peppers then move into other products.  I do not have any degree in these things, but have been messing with growing and gardening since I was 16.  It has to be a passion, it has to excite you...which since you are here that is a given.
 
Would like to add a little mix to my pepper operation and have a fair amount of bee hives for honey.  What I DONT know is would this be a cross pollination problem with outdoor peppers having a local healthy bee population.  Fresh honey from the sunflower state would be nice to sell.  
 
The local hardware store told me they let someone not too far from me who grows habs to sell them out front with their plants in the summer. He said, yeah these habaneros are really hot! I told him I eat Ghost Peppers for breakfast in my eggs, and wouldnt mind bringing in some to see what customer feedback would be like if I get a good batch.  There are abundant farmers markets, and roadside produce stands all over the area. Farmers come to town with what they have grown, but around here I never see any heat. Not even Jalapenos. Its always corn, bell peppers, Okra, tomaters, things like that.  A hot pepper stand would be a first of its kind in this market.  
 
We really got to get more word out about hot peppers, especially the medical benefits. A lot of people I know or run into are often scared of hot peppers. Some balk at the idea of even a jalapeno flavored dish.  You should not fear the heat, you should embrace it. And yes, its all about the flavor too. Every non pepper person never gets that at first.  My motto is "Put some adventure in your diet" when I pitch being a pepperhead.  Years back in my MBA class we had to come up with a hasty business plan out of nowhere and mine was a retail location, the first of its kind in KC. Made a oral presentation with media and all. Got a lot of laughs and smiles. Nobody doubted it though. The money/market is out there, its just figuring out how to most effectively get to the potential buyers.  Its a developing market. Like Disc Golf. Disc Golf is not something I dont often play, but had an old roommate who started his own company in California and its taking off. Learned a lot about it through him. The % growth for that industry is insane. I dont know what the stats are for hot peppers, but my opinion is that its definitely a growing market.  
 
Upvote 0 Downvote
You must log in or register to reply here.
Back
Top