To many people today, using the words “factory” and “farm” in the same sentence is nothing short of sacrilege. In many cases, though, the same sound business practices apply whether you are producing cars or carrots. In The Lean Farm (Chelsea Green Publishing, 2015), author Ben Hartman relates how he and other young farmers are increasingly finding that incorporating the best new ideas from business into their farming can drastically cut their wastes and increase their profits, making their farms more environmentally and economically sustainable. The following excerpt is from Chapter 6, “Flow II: Tools to Root Out Farm Management Waste.”
You can purchase this book from the GRIT store: The Lean Farm.
In our culture of accumulation, business owners are prone to be addicted to constant expansion: bigger every year, more sales, more goods, more employees. With a farm, that philosophy can be destructive: farmers strip and overuse land, stuff animals into tighter and tighter quarters, and work unsustainable hours. Food quality suffers, the environment suffers, and people suffer.
On the other hand, a farm that is the right size and well kept is a beautiful sight: animals have room to roam on fresh grass and in open air; crops are healthy and well tended; a farmer’s schedule is balanced and sane. Food quality is high because quality and value matter as much as quantity.
At the time we started applying lean, we did not want to add hours to our workload. We didn’t have a vision to expand. We were happy with the size of our farm. But we wanted to make our work easier. We wanted to travel more and have more time to spend with family and friends. Too often we felt trapped by the farm. After we organized with 5S and leaned up our production using the tools from Chapter 5, we saw an incredible difference. We were working less, and our food quality was increasing. Our farm was indeed a more pleasant place to work.
But as we planned for the long term, we wondered if lean had management tools to offer as well. Were there ways to grow even more profitable in the next five or ten years without getting bigger? Brenneman told us about three such tools: produce only what you know will sell, cut costs to grow profit margins, and replace low-dollar-value items with high-dollar-value items. These strategies maximize fixed costs, allowing us to get the most out of our small farm and the money we’ve invested in it.
The target of all these tools is waste. Long-term farm management wastes are less tangible than day-to-day production wastes. Production wastes, the subject of Chapter 5, concern everyday operations. They often linger close to the surface: drain holes that are too small, crops that don’t grow well, lanes that are too long. We can see them with our eyes and touch them with our hands. Long-term management wastes are a bit more elusive. These wastes occur during planning stages, when you plot out your farm’s future or plan what to grow in the next year. Examples of management waste include choosing the wrong crops, producing too much or little of a product for sale, or bogging down your farm with experiments. These originate in the management office, behind the scenes, not in the field. But they are just as pernicious. They create friction, block flow, and slow down your farm. Seven tools help root them out:
- Practice production control (stop hoarding).
- Cut costs to grow profit margins.
- Replace low-profit items with high-profit items.
- Maximize fixed costs.
- Level the load (heijunka).
- Use metrics to measure your work.
- Balance creativity and discipline: the 15 percent rule.
Tool 1: Practice Production Control (Stop Hoarding)
There will always be some guesswork involved with farming, since farmers can’ t perfectly predict markets or yields. There are too many variables, such as the weather, that are out of the farmer’s control. But the more accurate you are, that is, the less you overproduce and the more you supply just what the market wants, the better. In the first few years of a farm, you need to try out new crops or animal products to test your markets. But after that, profitable farming requires discipline to produce the right amount. This is surprisingly hard to do.
Taiichi Ohno suspects that the reason we are addicted to such habits as overproducing is that humans are, after all, an agricultural people: we have strong instincts telling us to hoard.
Long ago, your life depended on the amount of grain you put up during harvest for leaner times. Scarcity was often the rule. It made sense to produce as much as possible and to harvest every last kernel of corn or grain of rice. For this reason, explains Ohno, “In our gut, we must enjoy inventory management more than production control.” We feel more secure with plenty of food around us.
Rachel and I still preserve a lot for ourselves. We put up extras for winter, freezing strawberries or canning dilly beans. We keep a stash of potatoes, squash, onions, and sweet potatoes in our home storage room. We’ve started growing our own corn for cornmeal. But business economics are different from home economics. The role of a business is to produce for others in exchange for cash. Business people are not rewarded for producing an overabundance and holding onto extras. They are punished. Their net profits suffer. Reining in means fighting our instincts. As Ohno writes:
Rather than doing proper production control upfront, we prefer to stay busy making things and then later spend effort managing inventory when “the parts were made.” Books titled “Production Control” do not sell very well, but when you write books on “Inventory Management” they sell very well.
Every spring, when the seeder is in my hands, I have a hard time stopping. Even though I know better, I always feel an urge to keep pushing the seeder an extra 5 feet. The problem, if I give in to instinct, is that I am wasting 5 feet of prepped ground. At weeding time there will be 5 feet more to weed. If nights are cold, there will be 5 feet more to cover. I am only adding waste.
When harvesting, I feel the same urge to hoard. I want to harvest it all, even if I know I don’t have a market. I remember more than once over harvesting tubs of vegetables too nice to let go to waste. After rounds of phone calls, the food more often than not didn’t sell. It turned into compost. While the food was not technically wasted (it turned into compost that fed the farm), a lot of effort was.
Opportunity Losses and the Historical Context of Lean
To understand production control ideas better, it helps to understand the context in which they originated in Japan.
Ohno explains that after World War II, in the 1950s and the 1960s, Japan suffered enormous opportunity losses because it did not have the infrastructure capacity to produce items fast enough for a rapidly growing economy. Later this led many factories to overcorrect and start using more machines and bigger equipment–to overproduce out of fear of more lost opportunities. As Ohno writes:
The word “loss” can be an actual loss or an opportunity loss, and are [sic] very different things, but in either case people tend to feel they have suffered a great loss. I think this is another example of a misconception because the lost opportunity to make a profit causes no actual harm, while an actual loss causes financial harm. People confuse these things.
“Don’t fear opportunity losses,” became one of Ohno’s mandates at Toyota. Fear should never be an excuse to overproduce. The occasional unexpected sale rarely makes up for overproduction waste.
Start Controlling (Forecasting)
Lean encourages production control to produce the exact right amount instead of as much as you can. A primary tool used to get volume right is forecasting–tracking sales from year to year and adjusting the amount you produce accordingly. In lean factories, cycle times are often so short, and workflow so efficient that forecasting becomes unnecessary: units are simply built to order. On farms at least some forecasting is unavoidable because most plants and animal have long cycle times (several months or even several years) determined by nature, not human engineering.
After a few years of composting too many unsold crops, we asked ourselves what would happen if every seed germinated, grew well, and sold for a fair price? In other words, what if every seed turned into cash? Not half, not 80 percent, but 100 percent. That goal keeps us motivated to search for reasons seeds don’t germinate or grow well (asking why five times). And it motivates us to forecast well.
Forecasting is hard work but absolutely worth the effort. The best way to forecast is to presell, as in the CSA model, which was a Japanese invention. CSA, which involves customers paying at the beginning of a growing season, eliminates almost all overproduction waste because the farmer knows exactly how much to produce. Any time you make a sale before you spend money on production, you create ideal conditions for controlling production.
Our market base includes more than the CSA, however. So we developed systems to track and predict sales. In the beginning I remember trying to keep track in my head how many pounds of each crop we sold from week to week and adjusting the next week’s harvest accordingly. At seed-ordering time we mostly purchased random amounts, based on our gut feeling of how much we might need. Our forecasting was crude. Now, using the three forecasting practices below, I know with precision how many pounds of tomatoes we will sell on the Fourth of July and exactly how many tomatoes to plant, as well as when to plant them, in order to achieve the right-size harvest for that market. Ways to forecast on the farm:
1. Precisely track week-to-week sales. The best predictor of future behavior is past behavior. There is no substitute for tracking sales as they happen as the best indicator of how the same crop will fare in next week’s or next year’s marketplace. We keep track of our farmers’ market sales using a Google Drive spreadsheet that a market worker fills in at the end of each market. We rely on it from week to week. We refer to the trajectory of sales over the past several weeks to project the coming week’s harvest.
2. Track production inputs needed to produce the volume sold. Once we project how much we need, we need to know what it will take to produce that amount. In the case of carrots, for example, I need to know how many seeds, how much fertilizer, and how much land will be required to yield enough carrots to supply our markets during all four seasons. Charts and graphs in seed catalogues and books aid in this, but the best data is our own. We keep a spreadsheet that tells us yield per bed for our crops and how many transplants fill a bed. For example, I know that a 60-foot-long bed of hybrid tomatoes in the greenhouse will produce approximately 900 pounds of tomatoes and require forty transplants. In addition, the bed will consume a half a square yard of compost. Year-to-year field maps help us adjust plantings as needed. For densely seeded crops, we often refer to seed purchases from previous years to help us get quantities right.
3. Track seeding and harvest dates to time output with projected sales. For a vegetable farm, projecting time to harvest for summer crops isn’t hard, since seed companies often write the days until harvest right on the seed packet. But for winter sales we needed more information. Winter days are shorter, so crop cycles are much longer than in the summer, and they vary widely. We spent two seasons keeping tabs on a calendar when our winter crops went in versus when we harvested them. We put the information into a spreadsheet that we use to guide our planting to this day. We found that some crops can take four weeks from seed to harvest during late fall but require more than four months in midwinter. Understanding precise seeding times has cut our overproduction way back, and we are able to target crops to reach peak harvest when prices are highest.
Forecasting helps produce the right amount. It’s never possible to get it just right–markets always change and weather alters yields–but it is possible to come closer and closer every year.
Harvest Precisely What You Plan to Sell
Just as important as careful forecasting is precise harvesting. With vegetables, it’s best to put together an accurate list of items you need to fill orders, then harvest precisely to the list. This is more efficient than harvesting first and scrounging for markets second.
We accomplish this by calling or texting all of our wholesale accounts a day or two ahead of harvest to get their precise orders. We add to those figures our projection of farmers’ market sales and what we plan to put in the CSA boxes. We tally the numbers and write them on a whiteboard in the middle of our processing area for everyone to see. On harvest day we pick exactly to the list.
Ewert at Bair Lane Farm told me he also takes the principle seriously. He said it can be difficult to harvest bulk items, like greens, in precise amounts because it’s hard to judge in the field exactly how many pounds he is picking into a tote. A tote of baby romaine might weigh twice as much as a tote of curly baby lettuce. To solve the problem, he harvests greens at the same time that his crew is washing them. As he harvests, he takes greens up to the processing room to be washed. He tries to match his pace to his washers so he never overpicks: “If we need 100 bags, I’ll wait until they wash 99 bags, then run out and pick one more.” For many farmers, more precise harvesting like this could reduce an enormous amount of waste.
If You Do Have Extras…
Not selling a crop you’ve produced is like a marathon runner quitting after mile 25. Production control, using tools like forecasting and precise harvesting, prevents this from happening. But if you do have extras, there are options besides tilling in, composting, or disposal. Fruit orchards perhaps have the biggest challenge with production control. Yields can be nonexistent one year and a bumper crop the next. For overproducers, the following techniques are a must.
Value-adding crops, such as turning leftover strawberries into jam, can be a great way to both sell everything that you grow and increase your price point per pound. But beware. Value-added crops take time and an additional investment in equipment that might be better used elsewhere on your farm. On the other hand, sometimes farms will discover a value-added niche that shifts the entire focus of the farm.
Steve Lecklider at Lehman’s Orchard explained that he does everything he can to add value to his leftovers. He turns apples and pears into ciders and wines. He dries leftover cherries, apricots, blueberries, and apples. He has started making pure vinegars, including apple cider vinegar and red and white wine vinegars. His foray into value-added products has changed the direction of his farm. Instead of just selling fresh fruits at Chicago farmers’ markets, he now sells wines through a distributor and is expanding sales through his new retail shop in town.
Another way to value-add is to host meals. Farm meals can be a good way to turn extra produce into profit. Many farms plan for meals around peak harvest season, when there are likely to be extras, as a way to add value for customers. We partner with a chef to host occasional farm-to-table meals in our barn. We start each meal with a tour of the farm, so we can show guests where ingredients for their meal were grown and tell them about growing the food. Food tastes better when customers know the story behind it. The meals can use up food in times of abundance and give customers a closer connection to a local farm.
Develop Markets for Leftovers
Some costs of overproduction can be recouped by selling in bulk. This does not mean price-slashing an hour before the market closes in order to clear your table. That practice merely diminishes the value of your booth, undercuts other farmers, and accustoms customers to wait around for cheap food rather than paying a fair price.
Rather, it means creatively finding new customers outside of your retail outlets. For example, sometimes we advertise bulk quantities on Facebook for same-day farm pickup. Or we sell tomatoes in 5-gallon buckets to Amish neighbors to preserve. It might mean preserving the crop on your own to resell. A fruit farmer at our market freezes extra strawberries and raspberries to sell in bulk throughout the winter. Whatever markets you develop, the goal is to turn everything you grow into cash, as long as the costs to value-add return a sufficient margin.
Tool 2: Cut Costs to Grow Profit Margins
Business success is often measured by sales volume. To be sure, without paying customers there is no cash with which to keep the doors open. Almost by instinct, many farmers assume that the only way to grow their businesses (and profits) is to sell more. But cutting costs is an equally legitimate way to grow and comes with several benefits.
Let’s look at an example. Say your goal is to increase net profit by 50 percent over ten years. What farm wouldn’t love to do that! You could decide to increase sales volume. That would require more staff, more land under cultivation, more greenhouses, bigger processing areas, more delivery vehicles–an infusion of investment and effort.
Another way would be to cut costs. If you manage to trim your expense ledger by just 5 percent a year over ten years while keeping revenues exactly the same year to year, that would also grow your business by 50 percent, without extra effort or investment. The result would be a much leaner farm that is probably more pleasant for you and your staff to work on.
The above example is simplistic. In all likelihood your business will grow in a variety of ways, including through revenue increases and cost-cutting. Lean thinking simply encourages a focus on cost-cutting growth.
Value: More Important than Cost
Cutting costs is an important lean practice, but cost-cutting is not an end in itself. Lean production is not about racing to the bottom to create cheaper and cheaper goods using the fastest method possible. It’s about recognizing what matters to customers and then refocusing efforts by eliminating projects, tasks, tools, and whatever else doesn’t add value to your product.
On our farm we take waste elimination seriously, but in strategic ways we sometimes forgo less costly options in favor of higher value for our customers.
For example, we package our microgreens in more expensive plastic clamshell containers rather than cheaper plastic bags because clamshells are easier for chefs and market customers to handle without damaging the greens. Cut costs, but not to the point of decreasing value.
In fact, lean says that cost-cutting growth is the most efficient way to grow. Let me explain by looking at a simple equation:
sales – costs = profit
Let’s say sales equals 10 units and costs equals 5 units. Profit would be 5:
10 (sales) – 5 (costs) = 5 (profit)
You can expand profits by adjusting either sales or costs. Lean focuses on eliminating costs:
10 (sales) – 3 (costs) = 7 (profit)
Decreasing costs by two digits increases net profit by two digits. It’s that simple. Lean argues that for the effort involved, decreasing costs is a more efficient way to grow than focusing on increasing sales because increasing your supply is not cost-free. There is no way to increase sales without having costs go up as well. Not only will you have the costs of doing business (called variable costs), but you will also have all the wastes that scaling up is bound to produce, such as construction messes and interruptions in production. Hour by hour, your efforts will yield less total profit than simply cutting costs.
Let’s look at some examples. In 2015, the fictional Happy Meadows Pineapple Farm is ten years old and generating annual sales of $100,000 per year operating at full capacity. Their expenses are $50,000 per year, leaving a net of $50,000 (a gross-to-net ratio of 2:1). Sally and Harry, the owners, would like to grow their profits in the next five years by 50 percent, so that their net by 2020 will be $75,000. They have two options:
- Grow by getting bigger: add on to the processing room, plant more pineapples, find more customers, hire more staff.
- Grow by getting leaner: root out wastes and cut costs by $5,000 per year, adding $25,000 in net profits over five years.
They decide that they are doing everything possible to grow pineapples as efficiently as they can, so they choose the growth-through-sales model (the first option above). After five years of pushing production and sales, they reach their goal and are grossing $150,000 per year and netting $75,000. Because their process did not change, they have the same 2:1 gross-to-net ratio. But to get there they had to wade through a pile of waste. They had to spend time training new workers, cleaning up a big construction mess, haggling with contractors, and on and on. They put in lots of overtime and experienced plenty of stress caused by the expansion.
Their neighbors, Judy and Bill at the similarly fictional Happy Hill Pineapple Farm, reached a similar crossroads in 2015. They wanted to grow 50 percent more profitable by 2020. Their sales in 2015 were also $100,000, with expenses of $50,000. Instead of getting bigger, they wondered what would happen if they kept sales the same but trimmed costs every year by 5 percent, or $5,000 per year. Every year for the next five years, they print out an expense ledger and scour their operation for waste.
After five years they attain their goal as well. Their sales stayed the same ($100,000 per year), but their expenses were only $25,000, producing the same $75,000 in net profit as their neighbors but without the hassle. The key difference is that through leaning they enjoy working on their farm more–it’s cleaner and work is more pleasant–and their business is able to withstand more ups and downs. In addition, they have freed up additional capacity (time and money) to add another crop (banana trees?) to their operation in the next five years if they so choose–or take more vacations. Eliminated waste leaves a vacuum of time and resources to fill any way you please.
Here, then, are reasons I like lean (cost-cutting) growth:
- The savings (and higher profits) are perennial with no more work. They add up. Imagine that you develop a way to wash vegetables that shaves twenty minutes a day off your workload. Over ten years (assuming a five-day workweek) you will have freed up 52,000 minutes–or thirty-six days–to grow more food or take a vacation. Or say you find a cheaper source of bedding for your animals, saving you $1,000 per year. Over ten years the savings multiplies to $10,000 in additional profit with no additional effort. The eliminated waste turns into capacity. It frees up time and money.
- Getting rid of waste requires less overall effort than keeping your current process and increasing sales. More sales means more staff, more buildings, more supplies, more stress, more work.
- Eliminating waste makes your business more flexible, resilient, and pleasant for workers (including yourselves).
On our own (very real) farm, we have focused on waste reduction for four years, while our revenues have stayed about the same. We’ve managed to cut our costs from between 60 and 70 percent of gross to around 40 percent, thus increasing profits without ballooning production. We look for waste in the value stream as we work, and we print out an expense ledger every so often and ask, “Where’s the 5 percent waste?” There was plenty of waste when we started, so trimming was easier then than it is now. But there is still plenty to identify. We’ve learned to enjoy the challenge almost as much as we enjoy growing food. Cutting costs is easier than expanding. And our farm is more pleasant to work on.
When asked about the need to calculate costs, Ohno famously replied, “Costs do not exist to be calculated. Costs exist to be eliminated.” Ohno was so passionate in his distaste for costs that he wanted to spend as little time pondering them as possible: “I say you don’t need cost knowledge. I’m not even interested in learning the terminology.” This is not to say Ohno was not conscious of costs. In fact, he made a career of finding costs and rooting them out. But once you identify a cost as waste, why bother to think about it? Just get rid of it!
Cutting Costs by Cutting Ice
My favorite illustration of cost-cutting is from an Amish farmer friend of mine, David Bontrager, who grows produce for Whole Foods. A few winters ago I visited David on a bitter-cold day in February. I walked up to the house, but no one came to the door. I looked around and didn’t see anyone around the barns. Then I heard a small gas engine in the distance. I walked down a lane and saw a team of horses and a parked wooden hay wagon.
The wagon was perched on the edge of Bontrager’s pond. The engine I had heard was an ice saw, a giant circular saw with a three- or four-foot blade. Bontrager was out cutting massive blocks of ice from his pond. As each block was cut, one of Bontrager’s helpers would tie a thick braided rope around the ice chunk and guide it as the team of horses pulled it up a ramp and onto the wagon.
Ice for refrigeration was commonplace not long ago. Railroads hauled blocks of ice for people to use in iceboxes and coolers. But I had never seen ice extraction in action. Bontrager later told me his system is rustic compared to other Amish produce growers, such as those in Canada, who use ice refrigeration on a larger scale. According to Bontrager, those growers–with sheet metal chutes, elevators, and conveyers–can pull off two tons of ice in three minutes.
After the ice was loaded and stacked up like bales of hay onto the wagon, the horses pulled the wagon up to Bontrager’s walk-in cooler, the box of a used delivery truck that he has insulated with foam. Bontrager and his help unloaded the ice, packing sawdust between each layer of blocks. Bontrager’s cooler is a hybrid system, cooled both by a generator-powered compressor and his ice. His day on the ice shaves hundreds of dollars off his refrigeration costs. His ice should last at least until next winter. He explained that in coolers where floors have plenty of insulation ice could last for up to two years.
Besides saving him money, harvesting ice gets Bontrager out of the house and builds community during a time when he has a smaller physical workload and there is less happening on his farm.
Every dollar that Bontrager saves by cutting ice translates directly into a higher profit margin at the end of the year. With every block of ice that comes off his pond, he is growing his business without having to plow up more land and grow more food.
Tool 3: Replace Low-Profit Items with High-Profit Items
One of the best ways to lean your farm is to spend time deciding what not to do. Many crops or animals are fun to care for but yield low returns. Take the energy you were spending on low-return projects and put it into producing more of your best-selling items. It might sound obvious, but it is surprisingly hard to do. “We have to produce X!” you might say. You can produce X, but realize it might be bogging down your farm.
Don’t take the principle to an extreme, though. You can become a mono-crop farm in a hurry by determining your top moneymaker and stopping production on everything else. Like all lean tools, this one should be used in context–to support your farm and your family, not replace values like diversity.
When we started growing ten years ago, we planted and sold more than eighty different varieties of vegetables. By now we have cut that number in half. Each year we ask, “What were our top crops?” And then, “What would happen if we stopped growing the poorest-performing three or four crops?” I think of this as placing focus on winners–high-margin crops with strong local demand whose performance is consistently successful using organic techniques. We still need diversity, for the health of our land and to fill our customers’ orders. But setting profit goals for each crop helps us focus.
A few crops that we stopped growing were ones that our customers valued. For example, we stopped growing winter squash and watermelons because they took up too much room (field management costs were too high with our setup) and because we couldn’t move them efficiently. We were wearing ourselves out lifting them by hand, and we didn’t want to remodel the barn to accommodate a pallet-moving system.
Just because we can’t grow these crops profitably doesn’t mean others can’t. Other farms are set up to grow many crops more efficiently than we can. We partnered with a nearby Amish farm to provide those items in our boxes. We are up-front with our customers, who have told us they don’t mind. Farm-to-farm partnerships often add value for customers.
Almost invariably, successful long-term farms stake out a niche–tomatoes, potatoes, garlic, greens; rabbits, sheep, hogs, heifers; apples, grapes, peaches–and develop special expertise over many years on their niche crop. In the beginning it might be appropriate to try to produce a little bit of everything, but as time goes on a farmer is wise to make careful decisions about where to focus a farm’s energy.
Tool 4: Maximize Fixed Costs
Fixed costs are costs to your farm no matter what your level of production may be. They include payments for long-term investments like land, fences, tractors, greenhouses, and buildings. Variable costs are costs that rise and fall as production increases or declines. Think seeds, electricity bills, and gas. Lean production encourages a focus on maximizing production while keeping fixed costs the same. In other words, before buying new equipment or adding infrastructure, first use what you have to its fullest capacity.
From an accounting standpoint, lean practices like cutting costs, producing only what sells, and replacing low-profit crops with high-profit crops are management decisions that maximize fixed costs. They make the most of your farm.
Toyota was famous for its tight use of space for a firm of its size. When times are good, it is tempting to spread out, buy big equipment or build bigger buildings, and make life easier. Instead, Toyota kept economizing, choosing to maximize fixed costs rather than sprawl out. Womack and Jones write about touring Toyota’s Takaoka plant in Toyota City, where they were astonished at the plant’s narrow aisles:
Toyota believes in having as little space as possible so that face-to-face communication among workers is easier, and there is no room to store inventories. GM, by contrast, has believed that extra space is necessary to work on vehicles needing repairs and to store the large inventories needed to ensure smooth production.
The authors noted that because workflow was smooth, worker tasks were balanced, “so that every worker worked at about the same pace.” Spaces that are used to their fullest capacity are also efficient workspaces, reducing motion waste.
We used the “maximized fixed cost” principle when building our four greenhouses. We didn’t build them all at once. We built one greenhouse and told ourselves we couldn’t build another until we were selling every single item out of the first one. By the end of our first season, we were ready for a second greenhouse. We then applied the same rule: no third greenhouse until we were selling everything out of the first two. As of this writing, we have four greenhouses covering 9,000 square feet.
We also treat cultivated land as a fixed cost. This means growing as much value as possible on what we have tilled up before expanding to new ground. Often a new crop will go in within hours of the old crop’s coming out. And we have spent years discovering ways to grow food in our farm’s hidden spaces. Between our rows of young greenhouse tomato plants, for instance, we use aisle space to grow a quick crop of radishes or green onions or microgreens that will be harvested before the tomatoes are large enough to shade out the small crops.
Many farmers I’ve met have come up with other smart solutions to maximize their fixed costs. At his fruit orchard Steve Lecklider grows strawberries, tomatoes, and other spring and summer crops between rows of fruit trees. This is an unusual practice in orchards, where trees are often spread out and aisle spaces are wide and usually seeded in grass. Lecklider sees large aisles to mow as a form of waste: “If I can grow something there, then why not?” He told me he uses the understory crops as a way to pay for the costs of growing the fruit crops. In 2014 he sold $30,000 worth of strawberries grown in the unused aisle space between trees. Whereas most orchardists must wait until midsummer or fall to collect a paycheck, Lecklider did not: “It’s great to start the year off with an infusion of capital.”
Christa Alexander at Jericho Settlers Farm in Jericho Center, Vermont, showed me a new vertical garlic-drying rack she uses. After garlic is harvested, it needs plenty of air moving around it for several weeks so it can dry and cure. Many farmers hang it in bunches on rafters or spread it out on a barn floor, which can gobble up a lot of room. The rack Jericho Settlers uses consists of several 4′ × 4′ stackable racks, saving space in their processing area.
Pete Johnson at Pete’s Greens in Craftsbury, Vermont, told me the heated concrete slab in his greenhouse is his best example of maximizing a fixed cost. The slab provides bottom heat to vegetable starts and much more. “The slab grows veggie starts, cures squash, dries onions, stores equipment, and grows winter shoots,” Pete explained. “There are few weeks in the year that it is not full and fully utilized.” The heated slab greatly increases the utility of his greenhouse, a fixed cost.
At Blue Heron Farm, Adam Derstine takes pride in minimizing the fencing–a fixed cost–that keeps his hogs in their pasture. He told me, “I use deep-cycle batteries, single-strand fence, and $100 fence chargers, and the pigs stay in. Other people use $600 fence chargers, three to five strands of wire, and an obscene number of fence posts. Their pigs also stay in.”
Sandy and Paul Arnold at Pleasant Valley Organic Farm in Argyle, New York, have carefully chosen their equipment and greenhouse capacity to match their market demands and their labor capacity. They want to maximize their fixed costs. “If I have more greenhouse space or more cultivated land than I know what to do with, then I am working for my farm rather than letting it work for me,” Paul explained to me. In recent years the Arnolds have scaled back from 7 acres to fewer than 5 in cultivated production, “and we’ve seen our sales go up, not down.”
Tool 5: Level the Load (Heijunka)
I can remember picking tomatoes one summer night by headlamp until after midnight–not by choice, but because we were so overwhelmed with work that our workday had turned into a work night. We were often overburdened in summer. By contrast, we spent winters waiting for spring rather than producing.
Through load leveling (heijunka)–the practice of spreading work and sales out as evenly as possible throughout the course of a day, week, or even a year–we now consider ourselves a four-season farm. Our area of biggest growth is in the winter. Our load isn’t perfectly level, but it’s much more even than it used to be, resulting in a more even pace and more predictable work.
An uneven load is full of waste. We can chart the two different ways to increase sales by 5 percent over a period of ten years.
In the first line, sales are uneven, causing a company to quickly scale up to increase capacity, then downsize, then scale up, then downsize, and so on. While total sales do increase, erratic production means enormous wastes:
- Staffing wastes because of the extra time it takes to constantly hire, lay off, and rehire workers
- Waiting wastes because of construction lag times
- Equipment burden from overuse during rapid increase
- Wasted moves and overburden of workers because of a chaotic work environment
In the second line, sales increase steadily; production is even. The load is close to level. This has several benefits:
- Workers are not asked to rapidly scale up beyond capacity in boom-and-bust fashion, minimizing overburden on people and equipment.
- Work is more efficient. Process waste is easier to see because the work environment is predictable and smooth. As a result, defect rates are lower.
- The work environment is more pleasant for workers because work is more consistent and controlled.
Farm work is by definition seasonal, not steady. At harvest time many farmers simply need a lot of hands to perform a lot of work. Still, farmers are wise to do what they can to keep work predictable and farm growth steady, not erratic. Any farm can find ways to spread out work by stretching production seasons and sales and by performing as many tasks as possible during slower seasons.
Pete Johnson at Pete’s Greens in northern Vermont has forged new winter markets for his greens and other vegetables. He told me that through storage and winter production, “our smallest week of sales in the winter is now two-thirds of our biggest summer week of sales.” This is an incredible feat in a climate that often provides just two months of frost-free weather. In similar fashion, Steve Lecklider at Lehman’s Orchard saves the winter months for value-adding his leftover fruit and selling value-added products. His winter sales are a significant part of his bottom line.
We appreciate the slower pace of winter–there is something to be said for time off and seasonal rest–but because we also realize the benefits of a more level work pace, we keep the farm going all year, though not in full gear during midwinter. We end our CSA in December but continue delivering to a farmers’ market all winter. In addition, we create a winter projects list. We want to do as much as possible in the winter to prepare for the busier summer. Our list includes tasks like oiling tool handles, sharpening blades, decluttering, and fixing tools. Bed preparation is also on the list. In early winter, when the ground is still dry enough to work, we prep our beds–chisel plow, till, shape, or add compost–in order to jump-start our spring planting.
Load leveling requires both raising low points as well as bringing down high points. For us, this means finding ways to temper our summer pace to reduce overburden. We’ve found that filling time in winter is easy compared to slowing down in summer. With time, we are getting better at scheduling in summer breaks, such as by taking off a few weeks in the middle of the CSA season and keeping summer production in check. The goal is to keep our energy reserves stocked so that our work flows predictably and smoothly any time of year.
A Trip to Level the Load
When farms in northern places level their workloads, customers around them benefit: they can eat local all year. But replacing apples from Chile and carrots from California is no small task, especially in the winter. According to author and food journalist Michael Pollan, how to produce enough food to feed our communities in the winter months is “the big question facing the local food movement.”
On our farm over the course of seven years, we’ve developed techniques for keeping alive spinach, lettuces, kale, carrots, and more through the coldest, darkest parts of the year. Still, we’re at the tip of an iceberg. There are hundreds of other varieties from all over the world that we’ve never tried and many growing techniques we’ve never explored.
Fortunately, other growers love the winter challenge, too. One day last August, I joined around twenty of them to compare field notes on what has worked and what hasn’t to keep things growing in the winter. I saw the conference as a way to learn how to level out our farm’s load.
I was picked up at the Burlington, Vermont, airport by Christa Alexander, one of the owners of Jericho Settlers Farm. After helping her team unpack from a day of selling at the farmers’ market, I spent the next two days in a room with other growers as well as representatives from the University of Vermont and Cornell University plus a few seed companies.
Fifteen years ago, commercially grown greens and vegetables in winter months in the north were virtually unheard of. Now there is a body of experience to learn from. Growers shared their experiences with a promising range of alternative and conventional heat sources (in-ground heat through buried water tubes, air heat from gas, convection heat using biomass boilers), new agricultural fabrics and plastics (greenhouses within a greenhouse), and countless new seed varieties–spinach, lettuce, Chinese cabbage, winter-hardy kale, komatsuna, and more–developed for winter production. Growers also discussed tips for improving storage practices in order to keep fall crops like carrots, sweet potatoes, leeks, and butternut squash around until spring.
Load leveling requires more than meeting production challenges, however; it also requires new market development. It’s possible–even fun–to find winter customers. We started offering a winter greens share to our CSA customers in November and December. It’s a box of salad mix, spinach, and many kinds of Asian greens that we package as a stir-fry mix. We also include carrots, salad turnips, and other items customers can add to their fresh salads. At our farmers’ market we’ve expanded our range of storage crops like leeks, sweet potatoes, and winter squash, and we’ve found ways to stretch the growing season on fresh crops like ginger, microgreens, and head lettuce so that our booth stays full year-round. In his essay “The Pleasures of Eating,” Wendell Berry says “eating is an agricultural act”–what we eat determines to a large extent how land is used. The more customers put winter greens in their mouths in January and February, the more motivated we are to make our land productive at that time of year.
At the end of the conference, Christa Alexander dropped me off at the airport about an hour before my flight, enough time to unwind and grab a bite to eat. I stopped at a local favorite, the Skinny Pancake. Actually, it was the only restaurant in the terminal, and it hopes to become “the most local airport eatery in modern history.” On the overhead menu-map, I saw Alexander’s farm listed, as well as Pete’s Greens and other Vermont farms, along with a big sign boasting: “Where good food comes full circle.” I imagined eaters at the bar in mid-January, perhaps unaware that their dining choice was helping these farmers level their loads.
Tool 6: Use Metrics to Measure Your Work
Metrics are goalposts to assess progress on waste reduction in your operation. Lean managers use them to motivate workers and steer their operations. The most useful metrics follow these rules:
- They must be measurable. If you can’t measure a metric, there is no point in having it.
- They must be attainable. Metrics, if used as goals, should be within reach in a reasonable amount of time. In Chapter 1 I discussed the idea that people are happiest when they experience flow, a state of deep concentration. One of the conditions for a flow task is that its level of difficulty should be somewhat challenging. If the task is too challenging, flow is broken and focus is lost due to frustration. If the task is not challenging enough, boredom breaks flow. In the same way, attainable metrics keep staff and farmers motivated (and happier) because they provide an attainable challenge and focus.
- They must be meaningful. Metrics let farmers steer their farms in the direction of their visions. Metrics should be aligned with long-term vision. For staff, metrics should challenge workers to improve work in ways that are meaningful for them. Just because a farmer envisions making more money does not mean the metric will excite workers. Meaningful staff metrics can include goals related to waste reduction and quality work, and they are ideally developed by farmers and workers together.
- They must be simple to track. The best metrics are part of accounting procedures you’re already using or that can be assessed rapidly in just a few minutes per week. I spend very little time tracking what we do–maybe twenty minutes a week. I’ve developed methods to track work in quick spurts on a continuous basis. Sometimes we simply check goals, such as yield per square foot, by calculating in our heads. I will quickly add up the square-foot value of crops as we’re harvesting, then track the number once I get to the processing room. These are simple steps that keep production on track and that steer our farm in the direction of our vision.
Susanne Pejstrup, the Danish lean farm consultant, shared with me an example of metrics in use on a hog farm in Scandinavia. The farmer tracks:
- The number of pigs per sow
- The variation of weight of pigs for sale
- Food consumption per pig
The metrics are measurable, meaningful, and easy to track. Alongside each metric, the farmer sets attainable goals, such as 5 percent less feed consumption per pig. These types of goals keep her entire farm crew focused on cutting waste.
The Arnolds at Pleasant Valley Farm keep tabs on the dollar value per square foot of their crops, but they extrapolate out to dollar value per acre. If a crop makes the cut for them, then it must produce a set amount per acre. The metric helps them steer production in the direction they want to take their farm.
In a similar way, Jack Algiere, farm director at the Stone Barns Center for Food and Agriculture in Pocantico, New York, told me his crops must pay a set amount of rent per plot. One year he projected that a plot of squash could not fully pay the rent for an area, so he planted a few rows of cucumbers next to the squash to bring the value of the area up to his goal.
If a crop cannot pay the rent, that doesn’t necessarily mean you should eliminate the crop. It could mean you shouldn’t grow it at that time in that place. On our farm head lettuces do not pay their way in a January heated greenhouse because they grow too slowly, but they will be worth growing later in the spring, in an outside plot, where costs are lower.
Algiere knows the rent his crops need to pay at different places on the farm in different seasons. He can use this information to charge chefs for experimental crops. He might tell a chef that he’ll agree to grow a cubic yard of snow peas in a heated winter greenhouse, but he will charge a set amount for whatever yield he gets, because that is the rent for the area. “That way the farmer isn’t always the only party taking a risk,” he explained.
Metrics and other tools for long-range farm planning might be important, but keeping track of metrics is still a form of type 1 muda, since the actions add no direct value to your product. Minimum is the goal. I recommend three principles for lean recordkeeping and planning:
Apply 5S to the office. Get rid of items cluttering your desk and delete from your computer files that don’t serve a farm purpose. If you can afford it, dedicate a computer for farm tasks to keep computer time focused. Don’t be a catalog collector. Keep only the ones you need. Remember, everything you keep is a cost.
Keep data-tracking materials close at hand. My favorite example of a simple data-tracking system is from Randy Ewert at Bair Lane Farm. He keeps two calendars next to his seeds, last year’s and this year’s. When he plants, he looks at last year’s calendar for notes he might have written to himself, such as “Plant four beds of broccoli next year” or “Cover salad turnips with row covers right away.” After he plants, he writes in this year’s calendar how many row feet or beds went in. When he harvests, he writes down whether he planted too much or too little and other notes for next year. It is a very simple, quick way to pass data on from one year to the next.
On our farm, we keep data tracking efficient in a couple of ways. We put sticky notes on each tote of market-ready vegetables in our cooler, indicating what the item is, the quantity, the day it was picked, and the destination. We keep markers and pads of sticky notes handy–one set in the processing room, another beside the cooler. I keep track of orders and weekly sales on a scrap of paper in my pocket or my iPhone. I keep track of our metrics on a sheet of paper that I keep in the washing area. When I bring crops in, I walk right by the sheet. We hang our recordkeeping calendars and field maps on our germination chamber in the seedling greenhouse. There is no hunting around for them: they are at eye level, right where we need them.
Don’t bother tracking everything. We learned early on that farming hours would be limited if we didn’t prioritize the kinds of records we kept. We ask, “Which records help us eliminate waste, and which just give us interesting information?” We stick with the ones that help get rid of waste. These include records of seeding and harvest dates when we are testing new crops, records of amounts harvested on the Google Drive spreadsheet to project sales (Tool 1 above), and very simple plot maps to tell us how many beds of each crop went in each season.
Tool 7: Balance Creativity and Discipline: The 15 Percent Rule
Lean production is like two sides of a coin. On one side is creativity needed to perennially find improvements, to do things differently, and to test hypotheses. On the other side is the discipline of implementation, setting limits, defining the boundaries of your business. There is a yin-yang balance.
In the early years of a farm, experiments and creativity have an important role to play in testing crops and trying out markets to find a profitable fit. Often, though, innovation carries on for too long. Eventually, experiments need to be put in their place: failed systems need to be completely eliminated and the most profitable systems scaled up and further improved. If you’ve decided a crop or animal project is successful, stick with it. A farm that is sustainable for the long haul will need to transition from an innovation center to a production center.
In order not to get bogged down by experiments, I suggest a 15 percent rule after the second or third year of your farm: 15 percent of your time should be reserved for innovating systems to try out new ideas that are exciting to you (creativity), while the rest of your time should be focused on production systems that are known variables (discipline). Anything less than 15 percent and a farmer is prone to boredom or burnout through repetition, and your farm will miss out on new ideas for improvements. Any more than 15 percent and your farm could struggle because your time is gobbled up by your experiments.
We don’t literally track every minute of our time to see how much we spend on experiments versus known variables. But we do try to limit the new items we grow every year to less than 15 percent of our total offering. We try to improve processes incrementally, in two or three new ways every year, while relying mostly on what we know works. For instance, new crops in 2012 and 2013 for us were figs, ginger, and turmeric. In 2014 we added oyster mushrooms and several new winter Asian greens. Process improvements in 2014 included a carrot digger, a second germinating chamber, and a water heater in the processing room. In 2015 we are growing new ginger and turmeric varieties. Our current focuses in process improvement are the portable roots washer and a Japanese paper pot transplanter.
Of course if you want a research farm and can find financing for inventions and innovations, then go for it. From a lean point of view, if your customers, granting institutions, or donors value a constant drumbeat of new ideas, then you can structure your work to give them that value. If your goal, however, is to make a living through the sale of your farm’s products, then don’t get stuck at the wrong end of the creativity-discipline continuum.
There is still a place for quality of life. Hobbies and homestead projects–like experiments–might need to be put in their place, but there is no reason to eliminate them altogether in the name of lean. A farm is a home, not just a business, and quality of life matters. Lean is a tool–it can shore up the business side of your farming, but it doesn’t need to strip what matters from you. Even though we don’t sell animals anymore, we keep them around for our own sake. We love our own fresh pork, and we can’t buy the quality of eggs we want. Likewise, I enjoy making our own pottery dishes out of our clay soil, and Rachel enjoys metalsmithing and jewelry making. These projects aren’t money-driven; they’re not lean in the sense that our time and energy might be more economically spent on other endeavors. But by applying lean in our production space, we have time and energy for these other pursuits.
On the Benefit of Limits
The 15 percent rule might feel stifling, but there is a benefit to setting limits and sticking with them: the practice can unleash creativity.
Ohno tells the story of a government scheme in Japan to reduce rice production. The government mandated that farmers stop using 10 percent of their rice paddy acreage:
The farmers were expected to produce 10 percent less rice, but the productivity of the remaining acreage actually increased by 10 percent and the actual production of rice did not change. [Government officials] said, “We did not reduce enough cultivated acreage,” but they must have used pure mathematical calculations and ignored the idea of productivity. . . .
They should have instructed farms to reduce their output by 10 percent, regardless of what acreage they used to produce it.
The creative farmers found ways to tuck rice plants into unused corners of their properties and increased their productivity by 10 percent, confounding the government regulators. Constraints preceded innovation.
Thoreau plumbed the depths of Walden Pond–and his spiritual life–by staying put in one place, at least for the two years he spent writing Walden. He admonished his readers to limit their affairs to “two or three.” With limits come depth, creativity, innovation, and a tendency to nurture what is within your reach. With unlimited boundaries come shallowness, lack of focus, and poor management.
An important way we’ve cut our costs is to find ways to produce the same amount on a smaller footprint every year. We started on 3 acres, then scaled down to two, and now we are farming less than one. All the while we’ve managed to keep sales steady–in fact, like the Arnolds, sales went up slightly each time we downsized the square footage we farmed, because the smaller footprint received better care and produced more. We save on inputs like composts, and we are walking a lot less, saving moves.
I know we are more creative on 1 acre of land than we ever were on the larger plots we’ve farmed. One year we planted several hundred more tomato plants than we needed and spread them out over ½ acre of land. The yield per plant was low because we couldn’t possibly tend all of the plants well. Now we constrain ourselves. We grow only eight short rows in our greenhouses. Because we are focused on a small number of plants and are innovative with our space, we produce far more than we ever did on ½ acre of land.
Creativity thrives with a bit of discipline.
Reprinted with permission from The Lean Farm by Ben Hartman and published by Chelsea Green Publishing, 2015. Buy this book from our store: The Lean Farm.