May 24, 2012 | Hana Lurie

The following is Part 2 of the interview (Check out Part 1 here) with Cody Hopkins of Falling Sky Farm. This portion of the interview focuses on the farm’s business model, how Cody and Andrea found the funding to start the farm and advice to budding sustainable farmers just starting out.

The Interview – Part 2

Q: How does the farm make money?

Cody Hopkins: About 40 percent of our sales are wholesale to restaurants and retail stores. The other 60 percent is through a mixture of CSAs and, farmers markets, individual sales, and online farmers markets. We found ways to get really creative. We’ve gone from (2007) selling $5,000 worth of product to (last year) selling $189,000 worth of product.

In the beginning I focused so much on sales, you forget to look at the loss statement or the cash flow statements. Farm finance is something that gets overlooked by a lot of farmers. I know that a lot of focus is placed in the beginning on production models and sales and not so much on what is affordable.

We do a pretty cool CSA that we started two years ago – we call it a Meat Share. Basically we’d often encounter people in the more urban areas of Arkansas – like Little Rock – at a farmers market, amd maybe a big family would think that our products were too expensive. We would say that we’ll buy in bulk and [pass on] the discount, so we decided to start providing a freezer for these customers. It’s a year-long program, approximately 240 pounds of meat. It’s supposed to keep a family eating 2-3 meals of meat a week, which we think is about the appropriate amount; it’s certainly less than the average American. It gives them enough meat to make it through the year. We deliver to their house, [and it] gives us a chance to make a connection with the customer. It’s working out really well – we have probably 60 people in that program, and it’s becoming a bigger and bigger part of our business.

Q: How did you find the money to lease or buy the land that you farm?

Cody Hopkins: We started out with 40 acres, about 20 of it was pastures. We approached a neighbor and asked if we could fertilize their pastures – use them for free – and she said sure. In rural Arkansas, there’s a lot of idle land that can be leased very cheaply or for nothing as long as you keep it up. So we had that lease and outgrew it.

We moved to a new 250-acre farm and the landowners actually quoted us because they saw the improvements we’ve made and they really believed in what we were doing. Access to capital is a big issue for a lot of small farmers. Livestock farming in particular is very capital intensive. Right now we’re applying to 4 different USDA loans to try to buy this farm and it’ll be really interesting to see if we get it. We are in year five and we are getting closer to our economic goals, but we’re still not there yet.

Q: On that financial note, would you say the farm is profitable, or self-sustaining?

Cody Hopkins: Well, we’ve had to dump a lot of money into it. It’s really coming back to cash flow, just the basics of small business. As you’re growing, you often end up dumping any profits back into the business to help it grow. If we raise a pig – $400 – we sell it for $600, and we get a $200 profit. That gives us enough profit to raise one extra pig. So it takes a while to get to a certain size where you can afford to make the living wage. What we make is fairly modest. Actually, around here it’s fairly good money – $30,000 a year is our goal, plus the farms expenses. We have had lots of help.

In the beginning we got a grant from an organization out of Idaho called The Wild Gift. It’s a small nonprofit that supports young entrepreneurs, especially ones that are interested in heading business or non-profits that are socially minded. That really helped us, and since then we’ve had a lot of support from different parts of the USDA. We got a USDA Rural Development grant to do a feasibility study on the USDA butchering facility we’re creating. We’ve also got a lot of support from the USDA Conservation Service. They’ve helped pay for some of our fencing and water installations so we could manage our animals in a way that didn’t cause any erosion or over-grazing.

Q: What challenges does the farm face?

Cody Hopkins: I think access to capital and financial management seems to be my focus lately. [Something] we did in 2009 was switch to digital bookkeeping which made a huge difference. It surprised me how much business management it takes to keep a farm of our size from making big mistakes. So that’s a big hurdle. As we expand, we are able to get premium prices. Now we have to grow to get to the appropriate size to buy this farm. So, without having access to loans, it’s very difficult. It’s a risky business and not really seen viable in a lot of circles because it is such a new type of farming. Well, not new, because maybe 100 years ago a lot of farms were like this. But when you exit the commodity market and start direct marketing all of your products, that really changes the way you look to lenders.

Q: What are your future goals for the farm?

Cody Hopkins: We’re still chasing our economic goals, and once we get to those, we really want to start opening the farm up [even] more. We’ve already done this to a degree, but focusing more on the education aspect so that we have a place for young, budding farmers to stay for either a week or a season working with us and get some real hands-on experience – not just how you raise and butcher a chicken, but how you manage the whole enterprise. What goes into the marketing, bookkeeping, the processing and finding supplies? We’ve done internships before and they’ve worked out really well. We just did a two-day course of ATTRA – we had probably 60 farmers that came and stayed on the farm for the weekend. We partnered up with Farmer Vet Coalition and there was a handful of Iraqi vets that are interested in farming. So it’s a great experience. For a lot of potential farmers, it’s good to get out there and see it. We’d like to formalize that experience and put more emphasis on the education aspect.

Q: If you had advice for budding farmers just starting out, what would it be?

Cody Hopkins: There are so many things, but find a good mentor. And don’t forget about your finances, because you won’t make it. That’s where The Wild Gift really helped out. We needed some money to get going and they forced us to do a business plan. That was one of the best things we ever did – laying out our vision of what we want to accomplish. That’s something that we think is important in the beginning – do your very best to visualize what you want it to be. Not just how pretty you want it to be or how many animals you want to raise, but how much money you want to make. If you want to make $200,000 a year, you probably shouldn’t be getting into farming!