Selling Barley Fodder for Profit October 07 2016, 3 Comments
For the past 5 years we have been actively promoting and selling fodder systems. During that time we've done our best to get the word out to the farmers and ranchers who could most benefit from using fodder as a feed source.
To date, more than 99% of our customers are using fodder on the farm for their own animals. They have been featured on TV news stations, newspaper publications large and small and NPR Radio. Those looking for an affordable and high quality feed have implemented fodder with great results.
Over the years however there has been another group of people who have called to ask about fodder. They typically have no animals, little to no land and occasionally don't even have any agricultural experience! So why would they need hundreds if not thousands of lbs of fodder each day? They want to produce fodder and sell it in their local area. There are all types of motivation for wanting to sell fodder. Although some might be tempted with lofty financial rewards, I believe margins on livestock feed quickly weed them out. That's not to say it can't be done, but I'll share some realistic numbers below.
What good would this blog post be without some experience actually selling fodder?! Interestingly enough, the local feed store has been in the Chittock family for over 50 years. Fodder was introduced over 7 years ago on a small scale. We've actually been selling fodder longer than we've been building fodder machines. (It's the experience using fodder that has helped us perfect our systems.) Production scaled up as customer interest grew from 110lbs per day, to a larger machine, up to 2 large machines. Eventually some of the larger customers purchased their own fodder equipment and we settled on a single F1100 unit. Keep in mind that if you're going to sell fodder, there's always a chance that one of your bigger customers will just buy their own machine. The majority of people purchasing however have small backyard farms or "pets" they want to feed. There are some exceptions of course, including people who don't have time to operate the machine or those running off grid without sufficient power. Nevada County Free Range Beef is one such company that has been purchasing for several years on a consistent basis. Owner Jim Gates swings by on a regular schedule to pick up his fresh fodder. He knows how well his cows do on the feed and his customers are very happy with the quality of beef produced. For the irregular customers, fodder is kept on an open rack in front of the store.
At the Simply Country feed store (located in Penn Valley and Grass Valley, California) fodder is sold by the "biscuit". A single 18lb chunk of sprouts sells for $3.25 if conventional barley or $3.75 for organic. Both are Non-GMO. Customers like Jim Gates have a monthly agreement and get a discounted price. Since fodder is best fed fresh, anyone you can commit on a regular basis is a good thing! You can be sure that with the animals around the Simply Country feed store nothing goes to waste at the end of the day.
Karin Perkins of Rainman Fodder in Kingman, Arizona also sells fodder. You can see details on their Facebook page. As of October 6th, 2016 their price is $70/month per fodder biscuit - including local delivery! There's really nothing that can compare to freshly sprouted feed delivered right to your door. The closest customers receive fodder daily. Those further out get deliveries on Monday, Wednesday, and Friday. Enough fodder is delivered to hold them over on the off days. Kept in the proper conditions fodder can last a couple of days. We recommend keeping it cool, in the open air, and avoid stacking for prolonged periods. Remember that the sprouts are still growing and generating heat. They must be cared for properly before feeding.
What are the numbers?
So how does selling fodder pencil out as a business opportunity? Let's share some numbers from the Simply Country feed store:
- F1100: Seed use is 174lbs per day
- Seed cost is 28 cents per lb, for a total of $48.72
- Average power usage is .75KWH per fodder biscuit
- Electricity usage is .16 per KWH. (We'll use this for a fair comparison, but the feed store has recently implemented a solar system, drastically cutting down the power costs for the store, and in turn the fodder machine.)
- A well is used, so water costs not included in power are negligible.
- The store has an employee (usually the most recent hire - it's easy to do!) run the machine and allows a generous 2 hour window each day. Labor cost is .35 per fodder biscuit.
- 12 cents per biscuit in power
- 77 cents per biscuit in seed
- Total biscuit cost (excluding fodder equipment purchase) is $1.24.
- Total fodder biscuits produced per month is 1,890.
As the numbers will vary, let's make an assumption on our average customer for a day. We have 63 fodder biscuits per day. We'll assume 20 are on a contract basis at $2.33 per fodder biscuit. 40 biscuits are sold per day at $3.25. (To simplify, we'll leave out organic fodder for now.) The last 3 biscuits weren't sold.
- 63 fodder biscuits cost us $78.12 to produce, regardless of what sells.
- The initial 20 bring in $46.60
- The last 40 bring in $130
Total Income: $176.60
Net Profit after expenses: $98.48 daily, or $2,954.40 per month. This would easily cover a monthly payment on the machine. ROI on the equipment would be approximately 18 months.
Obviously you will spend some time developing your clientele and determining how to arrange either pick up or delivery with your customers. With a feed store this makes things easier. It took 3-4 months to reach capacity with the F1100 machine. If you don't have a location such as this it will clearly require more legwork to find your buyers.
Can this work for anyone?
Unfortunately we can't guarantee that. We would love to say YES but it depends on your area, feed prices, demand for fresh livestock feed and a host of other factors. Our own experience has done quite well but each area of the country has different needs and wants for the animals. Many customers buying a machine for their own animals have been successful selling excess to their neighbors.
Does it scale?
Fodder Production does get cheaper as the systems get larger. The seed costs come down, electricity usage per lb comes down, and up front investment per lb of production is lowered. On the flip side, the price for large volumes of feed are also going to be lower. Large volume customers will want a better price - or you risk the chance that they buy their own system. To date, the largest system used to sell fodder is the F1100 machine. With the right customer base it can work but we're not aware of anyone that has taken the plunge (yet).
If you're in a situation or area where you think selling fodder can work, give us a call! We'd be happy to discuss the details and share our experience. We know there is great potential, but it's uncharted territory. We thought it was time to share our results and let others run with the numbers. In the meantime, if you'd like to buy some fodder come on over to the Simply Country feed stores in California or contact Rainman Fodder in Kingman, Arizona.