Regional Extension agent Kevin Athearn conducts research on the economics of alternative crops at the North Florida Research and Education Center in Live Oak, Florida.
The question Athearn gets asked the most is: What is the most profitable alternative crop? “That’s a difficult question to answer,” he says. “For every crop, you’ll find some people that have figured out how to make money on their crops, and some people who are losing money on their crops. Every grower has different costs, and every year it’s a little different. It really depends on their skills as a grower as well as their financial management skills, marketing ability and marketing efficiency.”
To operate most efficiently, growers should decide which crop is the best fit for their current operation. Ahearn is dedicated to helping growers think through the best possible crops suitable for their situation and their operation. Start-up investments, labor requirements, labor availability and marketing are all important aspects to consider.
Agriculture, like most industries, is a global market these days. To compete in such a market you have to consider where the low barriers to entry are. This means crop supply can increase quickly even if the price fluctuates.
Athearn advises growers to look at what their potential competitive advantage in a particular crop is. It’s important to identify efficiencies that allow production at a lower cost, a higher quality product, or product differentiation that can garner higher returns.
In Florida there are competitive advantages based on the season. So if growers can reach the market window, they can get a higher price.
Some people underestimate their cost and overestimate their marketing ability, says Athearn. If a grower goes forward with a particular expectation and that expectation is not met, yield could be lower or higher than expected.
According to Athearn, in most situations where growers are unprofitable, it is because they left out a significant amount from their budget or they are underestimating their costs. Other times, the market doesn’t pan out as expected. It is hard to get a guarantee that somebody is going to buy something from you in the specialty crop business.
It comes down to the grower’s situation, skills and market, which can vary. “There is a lot of uncertainty in agriculture no matter how skilled you are, but it does boil down to doing a lot of things well and having some luck to go along with it,” Athearn says. “It’s always good to do research and find out as much as you can from researchers or Extension agents or market research reports, put together a good business plan, include enterprise budget projections by crop and make the best decisions you can with the information you have.”
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