S4 ● E125 The Farmers Progress is a numbers game...

So in today's video, I just want to give a quick update with where we're at with planning. It's a big old numbers game and we're in some ways no further forward than we have been for the last week. We're playing with a lot of ideas, but I'd like to get into that with you. If you've been following us since last summer, you'll know that we were originally thinking about inviting three people into the business and really scaling up enterprises to see how far we could push ecosystem processes here. Growing business in terms of scaling, it just requires more labor, so it requires more employees. So obviously living in a country like this, with taxes as high as they are, that's quite intense. To pay someone out €20,000 just to pull a number out the hat that they actually get in their bank account will cost the company about €35,000. So the more people we have on payroll, obviously the more we have to produce. But with Matt deciding he's going off to do his own thing and only Nicholas, you know, staying on as the one long term person that's always consistently returned and shown up here, we've been evaluating whether it's worth the risk to grow things beyond our means right now. And it feels like a nice stepping stone to play with. How small tweaks with the systems can increase revenues without really intensifying the enterprises too much at this point. Obviously this is all totally, you know, we're just playing a numbers game. I want to just show you some of the thinking processes and the sheets that we're working on to develop this process. So something we've been working on is putting the farm down in terms of working hours, what it takes to run this place. And it's quite an interesting process. We have a very intense growing season for six months and then quite a low amount of labour needed in the winter. Although we do continue sales all through the winter. We have eggs obviously and a lot of meat products that we sell throughout the winter. So we've divided up into farm work, accounting, delivery, the sales back ends, cooking for people. And we've been playing with this idea of a multi year training program that I've discussed in other videos. This idea has really come about because we've been really evaluating what it's been costing to have people here and what those people bring for us. We've had amazing people here over the years and we've had some people that haven't been great for us and people that haven't had a great time themselves. You Know, it's a whole mixed bag working with different people. But what we see as we scale down to like just more what's actually needed on the farm and, and close down some of those learning opportunities. These first few years, for context, have been about setting up systems from scratch. And so I've always felt like this is a really important learning opportunity for people because there's very few places doing all this kind of stuff in Europe. And seeing established places doesn't really allow you to see how do I start from this empty field and turn it into this productive agro ecology system. So I wanted to really leverage that from the beginning. And now the systems are about perfecting, tweaking, managing systems, not putting new things in. We've done all of our major investments now and so we've decided like we really. I personally, my learning objective is to support people that want to go into farming. So for people coming in, apprenticing here in the future, it's like, hey, are you going off to seriously start your farm in the next couple of years? Then this could be a place for you. If you just want to dabble your toes in the water, there's many other places you can go. But this is not a place for it. This is a serious working farm. And you know, we work hard like farmers. And so we've been thinking about how to be more selective in who comes here. And one of them will be around climate zoning. So there's been many people coming here in the past that aren't from relatable climate zones. And it's. I just don't think it's as potent as it could be for someone about to go into farming full time in a similar climate zone in a, you know, similar economy. It's important learnings that can happen here that they won't find in ag school, they won't find in many other places. So based on that, we're thinking of having four people on a payroll. And I think that we'll probably have three interns on the farm just to open up the chance for like wider learning and time off and you know, like really high, having a fun time, which is an important element for us too. We like having people here and we just want to limit the amount of people here to reduce their costs and the energy involved in managing those people. So putting all this down, we've been working around an interesting idea of a work unit. So one unit of work is a normal farmers work week, which we're saying is 54 hours a week. Now we have livestock all year round. So it's seven days a week to work here. And it's interesting to think about those numbers because a normal Swedish worker would perhaps work for about 1600 hours a year. That's quite low. And that wouldn't be a typical farm job, perhaps other than a farm hand. In Europe that might be about 1800 hours and in other European countries, you know, up to 2,000. But we're saying a farmer's work 2,700 hours and that's quite modest. You know, in the summer months these last four years, I've been putting in 80 to 110 hour work weeks consistently. And I think when you're starting up a business from scratch, certainly a complex business like this, you have to put that time in, you know, it can't survive without that. And so it's a lot of hours. But I think it's quite modest for farming actually. I think many farmers out there are putting in that work most of the year round. But that obviously affects the way we calculate things. And based on the way we set the farm up, we calculate that it's about 120 units to run the farm. That equates to 6,500 hours. So two and a half people working at what we call a farmer's week could run the farm in its entirety. Now obviously we have the summer and winter differences, so we need more people here in the summer and we don't need anyone here in the winter. It's less than one person's work in the winter to run the whole farm. So it's been an interesting process just to play around with that because we're looking at this multi tier system. The multi tier system has come about from like wanting to reward people that take on their own learning experience for themselves, but also like seeing the bigger picture and wanting to really step up and contribute to this place. This place really thrives when everyone here is just focused on how to be a benefit to the whole. One of the big sticking problems here is that we are very remote in Sweden. So attracting people here long term who really have the skills to make this sort of thing work, that want to live here in the middle of Vanland is challenging. So rather than have people, and it's not something we would want to force, if those people show up, that's great, but it's not something I would push for. I think it has to happen organically. And so what will probably suffice for us is to have people here slightly longer term than just assuming season, who know the Way around the farm already. And so we want to like, be able to compensate people accordingly. What we've been considering is what it looks like to run a profit share. And that's why we put all of the farm work into categories. So we can pay proportional wages due to what people are doing. But it would look like taking on apprentices for the first season. And they're basically paid in beyond organic food that's cooked from them three times a day. And they're getting accommodation and the sauna every day and, you know, perks like washing machines and things like this, that and, you know, very high strength WI fi. And these are simple things, but they're expensive. You know, I'll talk about our costs this next year and what we've been able to reduce them from this year. So those things add up and they're often not taken as like a kind of payment, but it's an exchange service. Like if someone comes here for a full season and completes a full season, they're often very useful in their contribution to the farm. Sometimes, you know, it's costing us more in time and effort and fixing and repairing things than some people are worth, unfortunately. Certainly wear and tear goes up dramatically and it's, you know, disproportionate to the amount of people, like repairing our atv. This year I've been letting just anyone use it and the repair costs have totaled now a third of the cost of the machine. So we're going back to the old rules of not letting anyone use that machine, basically. And things like electric fences, you know, we have very simple ground rules that you never walk over an electric fence because it really puts pressure on the strings at the top of the posts. And things that would last you, maybe things five, eight years if you were using them yourself, looking after that typically last a year, maybe two here, where there's been so many people using them. And you might remember a video back in the summer of the tragic accident with the hens that cost us thousands of euros. And those little things really add up. And it's not something you get your head around until you've hosted people for long periods of time, multiple years, that you can really sort of see the pattern language in that. But it's expensive. And I've addressed this in other videos looking at things. Free labor, there is no such thing. It's often expensive to have people who aren't trained. So we want to move towards a model where we're training people and hopefully having them stick around for multiple years. It's based On I've started reading George Henderson's other work, the Farmer's Progress, and he talks about the same issues I'm talking about 70 years ago, about how to secure your learning on a farm, what you could expect to be paid. I can just read a passage here. I'm often asked, is it necessary to pay to learn to farm, or should the services of the student recompense the farmer for the training he is given? It depends entirely on the farmer and the student. There are some farms on which you would only learn to be an indifferent farm labourer, and others where the knowledge gained would make it possible to earn 1,000 pounds a year when you start farming. Hi, Ragnar. That's in 1940s money. And interestingly, a thousand pounds back then would be about £20,000 now. And so people learning these systems, you know, are being exposed to things that can create that kind of revenue in their first year. So that's kind of interesting. He goes through a lot of thoughts about how to go through mentoring programs, how he learned his own process of farming. And I've taken a lot of inspiration from that. I feel like doing like a book corner and just like reading through this book as some of my video series, because I think everyone should read this. Really fascinating to see that such a pioneering figure, you know, so long ago, but everything in it still rings true today. You know, there are very few places to go in Europe, particularly to learn the stuff that we teach people here. And so we're really looking at what sort of model we could create to take that further. So we're thinking of running interns that are on. You know, they're getting compensated for all their costs, basically, and they will pay a tool deposit that will be returned if they complete the season and if they don't damage tools, someone coming back for their second year who already knows their way around the farm would perhaps receive the basic agricultural wage for this area. And they're coming for seven months. The apprentices would come for five months, and someone coming for their second year would come for seven months. And then someone like Nicholas, who would be in the next tier, who's been here, this will be the fourth time he comes back. He would be in the higher tier of the profit share, where he's taking on more responsibilities with accounting and managing sales and things like this, and would take a month on farm sitting in the winter to give us time time off, so he would be on a higher percentage. And it's interesting, they've been looking at adapting these units and spreading it throughout the whole year to see what percentage of a full time wage at 54 hour work weeks we all have. Which makes it interesting. Nicholas, you've changed. You've changed the units. Can you explain that?

Change the units?

No. You've compensated for a year round salary.

Yeah. So we just, we were looking at the total amount of work it needs to run the farm. Yeah. And divided that by the 12 months.

Because it's like our farm runs very intensive in the summer, very low hours in the winter comparatively. So you're trying to even out throughout the year.

Yeah. So then we come up with an average of this is like the units. Units or like you could also say we need this amount of people on a full time wage to run the farm in average. So if we take that, if I.

If I work my 54 hour work week in the summer and my lower hours in the winter.

Yeah.

I work at what percentage of a full time.

You would work on 79% of a full time wage, which would be defined as working 54 hours each week throughout the whole year. Which is like not what realistically has been done because you have also holidays. But it's interesting for us to see this is a full wage. Then have it for the second year person who comes here for seven months.

So what would they be on?

They would be on a 48% of a full wage.

Okay.

According to the hours we put down.

And how. What percentage you going to be on?

67%.

What do you think about that?

It sounds like I got some time off in winter.

Well, you get some months off in winter.

Yeah. So that's, that's where it becomes interesting again because you're working intensively for some part of the year, but then you're having time off. So just relating it back to a full year's work is interesting to see.

The numbers coming up that would allow us to put someone like Nicholas who's, you know, coming back consistently and also taking on holidays when we want to go away and coming up from Germany to put him on two to three times the local agricultural wage. And that would be eight months a year. But it takes a lot of enterprise profit to be able to start paying out wages like this because the taxes here are so high. So something we've been doing is starting to compile the season cash flow. And so we're starting to build Ragnar's here. So we're starting to build all of the costs that are outside of the enterprises. So overheads for running the farm. It's about €30,000, that's less than half that it's been last year. Now that's largely due to some investment costs we put in. We've now completed all of our major investment. We're now at the point of optimizing systems and tweaking them. But our costs are also going down massively by having less people coming through. And all of those costs are clearly exposed when we, you know, get it down in sheets very clearly like this. Obviously those costs are different wherever you are in the world and Sweden's a particularly expensive place to be. You know, spending a couple of thousand euros on butter in six months is, you know, a bit of a shock to the system. We've also been looking at our investment costs, haven't we, for what we want to do next season? And they're things that are quite small compared to previous years because it's basically a bunch of tools and things we considered mostly to invest in some tools for harvesting and making processes in the market garden efficient because ultimately that takes the most time and needs the most time shaving off market gardens, as I've talked about in other videos, super intensive and high yielding per square meter, but they also take a massive amount of time compared to pastured boilers or layers etc. We're going to invest possibly into a refrigerator trailer to enable us to do extended reach deliveries and some little simple costs, but basically about €10,000 of investments, which is stuff that's all medium term investments, things that should last certainly longer than they do proportionally because there'll be less people using everything. Something we're doing is talking about what level to scale the enterprise is. And it's not just a case of like increase in revenue is not just about scaling it up. We've talked a bit in the recent webinar about intensifying the farm rather than growing it. It's very tempting. I've seen people in the past who like, oh, we need more revenue, so let's just make more vegetable beds or do more of this. But little tweaks to like the price of an egg can make a huge difference to the revenue without changing anything necessarily. But then eggs are very, you know, price sensitive in the marketplace. So it's a lot of considerations and we're going round and round with things, just playing, playing with ideas to see how we can fit all of our needs for time, for incomes, etc. So right now we're thinking to up the hens. We're not totally sure. We keep going back between adding another eggmobile, adding Two more eggmobiles and that's something that's not totally clear yet. And we might even cut down on the broilers and sell all, all of them to private sales. We've been selling a high percentage to wholesale and that makes such a significant difference to just reduce numbers but only sell private to the time and workflow balance that. That's a big consideration for us and it's the easiest one you'll remember from other videos to scale in season should we need to and then boost the pig. Enterprise is good. One enterprise we'd like to build up is a meat processing facility. But it feels like we'd like to see if we can make this year work without any major investment costs. And we might hire the services of Pam Nielsen, who helped us when we were building this slaughtery to see is there a way to do this? Thinking outside the box, what's the cheapest way you could do this? Because a proper facility, you know, with all steel walls and all this stuff is very expensive. So it's not concrete yet. Don't know what it looks like. I will update when we have a clear picture of how the season is going to go. But quite interesting process. We're going to have to turn about 120 to €140,000 of profit to get the result out we need. And that's quite a lot in a short season. And it's a very interesting process to play with numbers and you know, we're building in margins of error and a decent contingency fund based on previous years experience. It's amazing to cut the cost down so much and it's really cool to like really put down those hours and allow time for, you know, good amount of time for sales and for deliveries that's increasing and we still don't know what it looks like with the Ricoh rings. And we're still building up a customer network, you know, so we're not scaled up. I think we could double all enterprises but we know that we probably don't want to do that next year because there's just not going to be the people, resources available to do that. And so it's numbers around finances and time. Basically that's what we're playing with. And I can't bring anything more concrete than that other than yes, Sweden's a tough place to farm but if we can make it happen here then, you know, it just means that it's a lot easier for people in places with lower tax rates. So I won't be putting anything out online. Till we're totally clear and feel safe. So please don't email us about positions next year. We won't answer those emails. We're gonna probably have, like a fixed month for applications where all applications for next year must come in that month. And we will specifically be looking for people who are going to start their own project in the next couple of seasons and, you know, can tell us about that. Because we need some safeguard that we're getting the right people here, serious people who are, you know, really about to use this springboard, which is what this place has become. It's a springboard for people to go off and do awesome stuff. So that will go up online when we know. And I'll be putting out some more detailed videos before then. I just wanted to take the time to just explain some of the sort of thought process because it's, you know, these simple sheets have a lot of data in them and it's hours and hours of conversation and weeks of mulling these things over. And if you've been following our videos over the summer, it's, you know, it's changing a lot from what I envisaged early in the season. And that's how we roll. You know, we're constantly flexing and constantly adapting and, you know, just trying to integrate all of our needs and all of the different contextual points with the realities of farming here and the economy bit and just taking the business up to a very different level of security and, like, taking it another step along in clarifying systems behind the scenes. And we've always done a really cool job of that, but now we're getting it down. Really cool. I think it's some great work that Nicholas has been putting into some of this, and that feels really beneficial so that he really understands the back end better and just the process of clarifying our context. And, you know, for me, it's so special to just see. I'm going to have so much more time. And thanks for all the comments on the previous video about the Brussels talk. I've been really thinking about that. There's some great points on there and, you know, it's been very interesting to see the sort of big divide there. And I've sought help from mentors and, you know, thinking it over because I know that there's some great intentions there to support good things. And I also feel very, you know, skeptical of other aspects of it. I'm not decided on that matter. I'm not going to decide right now. I feel like there's no rush with that. But thanks for your comments. Really cool. And I'm excited to put out more videos like this over the winter as we get clearer, you know what's going on next season and all the detailed bits of that I can share with you. So thanks for watching as always. That's all I got to share today and you can find out more in the book Making Small Farms Work and you'll find a lot more out in our online training that's coming up. The self led training starts in a week and we're still testing back end and the self led course is pretty much set but we've been testing the webinar function which hasn't been working as it should. But that's for the full course starting mid January. So have a look on our website link below if you're interested in that. If you're going to design your own farm doing diverse mix farming like this and that's what this training is designed for and I'm super stoked for it. It's the best thing we've ever done and I'm pointing all people that write to me for consulting to there too because I think it's just a much better way to do it. So thanks as always for watching the videos and appreciate your comments and time and we'll see you in the next video.