Thursday, June 19, 2008

A Treatise on Pricing & Costs

Why the winter scene ? We're in the thick of readying ourselves for the inevitable onslaught of cold, snow and NO GRASS. During these busy times of haying and putting up grass silage, we're getting hammered by high costs and we've been fielding quite a few questions on how we are managing our costs with the recent spike in prices throughout the economy. For those who are repeat and loyal customers, you noticed our latest price increase, and many thankfully nodded that it was necessary in today's business climate. Others have asked "Aren't pasture based farms supposed to be more efficient, less energy consuming, cheaper ?" The answer is a double edged sword. First, energy is in everything we do. From the fuel to transport our animals and to moving our products as well as day to day operations on the farm, this all takes energy. We can ply some draft horse power to help in some areas, but in others, we're at the mercy of the energy markets. Diesel fuel, a keystone energy source, is now $5/gallon. Electricity to power freezers and water pumps is now $0.15/KwH. Secondly, add to the mix that we are still investing very heavily in the farm's infrastucture of fencing and equipment updates. Many of these investments are quite sizable, and almost economically ruinous if we do too much to embark on because of the shear magnitude of the outlay in money. We harvest surplus grass as baled grass silage and hay to then use in winter or during summer slumps in pasture quality. This takes about $100K worth of machinery. Fencing ? The material is steel....which has doubled in price. Land ? We need 5 acres per mouth to produce beef, about 3 acres to produce your chicken. We are still competing with development. If we are to continue and be able to offer abundant, healthy and clean food, our prices will reflect this reality and the need to stay economically sound. The financial strain is also great since we don't qualify for ANY subsidies. Agricultural infrastructure in New England took a battering in the last half century. Decayed farms, disintegrated fencing, tired and overgrown fields, if you can find them. Now more than ever, we need the continued support of our customers and supporters ! Thank you !