By Nicolas Lindholm
Supported primarily through a grant from the Maine Dept. of Agriculture, this article is the first of five covering some of the most commonly produced and potentially most profitable seed crops being grown by small-scale organic and biodynamic farmers in the Northeast. The information comes from almost 30 farms in New England and New York, including large retail and small farm-based seed companies, market gardeners and family farms, CSAs, nonprofit groups, and a USDA farm that is part of our National Plant Germplasm System. Future articles will cover lettuce, cucurbits, beans/peas, and brassicas.
Introduction and Overview
The Northeastern United States has a challenging climate in which to grow many of today’s popular and significant agricultural crops profitably. Only some of our most common berries – including blueberries and cranberries – are actually native to our temperate bioregion, with its typically cold, snow-covered winters and warm, moist, 90- to 120-day frost-free growing seasons. Our soils are generally quite stony, sloping and variable from field to field, and they tend toward the acidic.
Indeed, the economic viability of vegetable crop growing itself is an on-going challenge, with farms and farmers coming up with their individual successes and failures each year. Some years the tomatoes do well while the lettuce is lousy; other years the peas do well while the peppers and eggplant do nothing. Given these natural local parameters, producing quality, marketable and profitable vegetables, herbs and flowers here is neither easy nor ideal. Other climates can produce our agricultural crops better.
Yet we persist and even thrive in the Northeast, with a vibrant, ever-changing and dynamic agricultural industry. From large-scale commodity crops to small-scale market gardens, the farms in the Northeast – most of which are still classified as family owned and operated—produce a breathtaking array and quantity of crops and products.
One of the key elements to success in our current agricultural market is diversification. A farm that can show positive economic analyses for a number of crops or a range of products has a greater opportunity for success from year to year than a farm that relies on a single product, crop or commodity, because nature and the market are so unpredictable in their effects on the quality, quantity, demand and supply of each crop. To “weather” these “storms,” the typical family farm needs to diversify.
Northeastern farmers also need to respond and adapt quickly, like entrepreneurs in other industries. To be able to seize an opportunity, foresee a trend, take advantage of a general, cultural pattern, or plow new ground with a new vision are all admirable farming skills with the greatest potential for success.
Seed production offers one such opportunity. A growing group of Northeastern farmers and industry supporters have been quietly developing a seed production industry over the past 10 to 20 years. They are growing and marketing seeds of vegetable, herb and flower varieties for other farmers and gardeners to purchase, plant and grow. Current popular interests and trends, including preserving genetic diversity, growing and saving heirloom varieties, organic gardening, and even anti-GMO concerns have all contributed to the recent rise of this largely untapped, potentially profitable niche market for small-scale, diversified organic farmers in the Northeast.
Most of the research and development efforts in organic seed crop growing and marketing to date have been done by the seed companies in the Northeast and by a few farmers, mostly in isolation from one another, each independently testing production and marketing techniques and overcoming challenges. I believe that my work is the first economic viability study of seed growing for small farmers in the Northeast, and the first attempt to consolidate the findings of all these independent, experienced growers. The results are encouraging, at least for entrepreneurial farmers who are quick on their feet, are able to remain diversified, and make sound marketing decisions based on economic analyses.
A New Take on Tomatoes
Many Northeastern organic seed producers agree that tomato seeds seem to be one of the most profitable of the seed crops. They say “seem to be” because most growers rely on subjective opinions and personal experience while being interviewed, and do not have such objective data as costs per square foot or average yield per plant, particularly in the height of the season when crops are still on the vine. (I visited most in August and September.) However, my own analysis, (Tables A, B and C), backs up the growers’ opinions and indicates that a wide range of successful (i.e., profitable) economic models are possible with organic tomato seed production.
Some of the key elements that favor tomato seed growing are botanical. First and foremost, tomatoes have perfect flowers, are self-pollinating and are self-compatible. This means that each flower has both male and female parts, so it can and does pollinate itself. Minimal cross-pollinization occurs from other tomato plants, and inbreeding depression (genetic degradation from one generation to the next) is not experienced.
For the farmer, this means the seed crop plants can readily be integrated into vegetable row-crop fields without isolation or other special needs. Indeed, the tomato seed crop growers interviewed for this study all grow their crops (sometimes upwards of 70 varieties) side by side in the field, for minimal crossing occurs between varieties.
Because tomatoes are self-compatible, each plant and even each seed carries enough depth and breadth of the genetic material, the gene pool, that defines that given variety, so very few plants are required to maintain the population (in a healthy genetic sense). Typically, growers try to have at least six to eight plants of each tomato variety, while 12 is a more common goal, and upwards of 25 is best.
For more information about the botany and techniques of seed production, contact the Maine Seed Saving Network, PO Box 126, Penobscot ME, 04476.
Getting Seeds into the Soil
How can a vegetable grower incorporate tomato seed crops into his or her farm? Table A is neither a composite of all the farms I visited nor a case study of one particular grower, but a generic and readily manipulated model to study and adapt. A reader can look at this “budget” and say, “Well, I can buy soil mix cheaper than that,” or “I think I would need to spend twice that amount of time transplanting,” or whatever variations might be evident.
This hypothetical farm has 2 acres in vegetable production, managed by two full-time employees with some basic equipment, including a rototiller, hand tools, and a greenhouse/ hoophouse for seedling production. For the example, they take 1/16 acre, or about 2,725 ft2, shape it into six 3-1/2’ wide beds (100’ long), and grow 25 plants of 12 varieties of tomatoes (a total of 300 plants, spaced 2’ apart in a single row per bed).
The farmers in our example purchase all of their inputs (e.g., their soil mix for seedlings, their compost, and their trellis posts). Some savings in variable costs may be realized —albeit, more difficult to calculate— by producing some of these inputs on the farm. Many of the growers I visited did make their own compost, or used cut saplings for posts, or used soil blocks instead of seedling trays, indicating a wide range of managerial choices that affect the bottom line and represent efforts at a more wholistic or closed-system approach to managing their farms; however, the example is an effort to accurately reflect up-front costs at each step.
One of the economic benefits of a self-pollinating crop like tomatoes is that the farmer can prepare and manage the planting in large blocks, and not prepare and manage small isolated beds spread throughout the farm, like some cross-pollinating crops would require. Meeting the fertility, tillage, cultivation, pest control, irrigation and other cultural needs is more efficient and economically viable when crops with the same management requirements are grown together. Crop inspection, rogueing (pulling out genetic off-types or overly-stressed and poorly performing plants) and harvest are also more efficient in a block planting.
What’s more, tomatoes allow the farmer to produce many varieties within this block planting – a necessity to meet gardeners’ and farmers’ various needs and interests. Especially now, as heirloom tomato varieties are rising on a crest of public interest and demand, seed growers would do well to supply a number of different tomatoes. Also, the current wholesale market for tomato seed can take quantities of 1/2 to 1 pound of seed of 12 varieties more easily than 6 to 12 pounds of one variety in a given year.
Another economic benefit of the tomato seed crop, at least to an experienced vegetable farmer with the basic equipment and facilities cited in the example, is the lack of any other special equipment or facilities for growing, harvesting or cleaning the crop. A tomato seed crop is started, transplanted and grown in the same way as a tomato crop for fresh fruit marketing.
Finding the Fruit
Harvesting, cleaning and conditioning tomato seeds is relatively simple. Little more than some 5-gallon buckets, a sieve, and some drying screens or plates are required. Whereas many seed crops, both the “wet-seeded” (where the seeds are inside a fleshy fruit, such as melons, squashes and eggplant) and the “dry-seeded” (where the seeds are inside a dry, papery pod, like beans, peas and brassicas), require significant labor and special equipment to thresh, winnow, clean or otherwise process a marketable seed, tomatoes rely on simple bacterial fermentation and a final water rinse that quickly and easily produces quality seed. Our example shows a cleaning and processing labor budget that is only about 25% of the entire crop’s labor budget, a percentage that is remarkably low compared with most other seed crops (Future articles in this series will explore the challenges of threshing and cleaning these other seed crops.)
In general, tomato varieties differ in the amount of seed that is present and harvestable within each fruit, as well as in the amount of harvestable fruit produced on each plant. These differences can be so significant as to make one variety profitable and another not, with all other variables the same. Typically, paste varieties tend to be shy seed producers, while cherry varieties tend to be high-end producers. Growers trial each variety and determine a balance that works between the low-yielding and the high-yielding types and varieties.
Looking at the Numbers
From harvest data gathered in this study, growers can expect their yield from a well-managed tomato crop to range from 1/8 to 1 ounce or more per plant. In looking at the economic returns of tomato seed crops, I used four sets of figures to represent this range (1/8 oz., 1/4 oz., 1/2 oz., and 1 oz. per plant).
In a simple cost/benefit analysis (Table B), fixed and variable costs on our hypothetical farm (Table A) are added to determine the total cost of production, per square foot and per plant. The expected income, calculated using our four yield figures, shows the total gross sales, the gross sales per square foot, and the gross sales per plant for each of the expected yields. These sales are based on a current wholesale price of $300/pound (or $18.75/ounce), a price that is near the premium for organically grown specialty tomato varieties.
The cost/benefit analysis does not include calculations for retail prices, because those calculations would require the variable costs for producing and packing retail seed packets, for producing a variety list or catalog, for acquiring the necessary state seed labeling or selling license, and for advertising, promotion and other direct marketing costs. These costs can vary greatly, according to the grower’s goals and abilities. For simplicity and brevity, I have looked exclusively at wholesaling, to show that it is economically viable. I only suggest that retailing can be economically viable as well.
The cost/benefit analysis for wholesaling tomato seeds shows that our best net return for the high-yielding varieties can be $1.59 per square foot (or $14.47 per plant) when 1 ounce seed is harvested and sold per plant. Even getting 1/2 ounce per plant shows profitable net figures of $.56 per square foot (or $5.10 per plant). Remember, these net figures are above the fixed and variable costs, which included labor, materials and other farm expenses. Somewhere just below the yield figure of 1/4 ounce per plant is where the farmer in the example will not cover costs.
Again, it is unrealistic to plan to grow and market one variety or type of tomato at this scale of production in the current wholesale market; even marketing 12 high-yielding varieties (which are primarily the cherry tomatoes) would not be realistic. Premium wholesale prices are typically given to varieties that are either very rare, are not being produced widely in the seed trade, or are otherwise in high demand vs. low supply—or are low-yielding seed varieties or ones that are otherwise more difficult or costly to produce. So, again, growers are advised to seek a mix of varieties and types, with a projected average yield and net margin goal that satisfies the farm’s needs, and a breadth of selection that satisfies the wholesale market’s needs.
A simple break-even analysis (Table C) presents two separate calculations. First, the break-even analysis is used to calculate a selling price (given the projected yields and the fixed and variable costs) at which the grower will “break even” (i.e., cover all those costs, but not make a profit over and above those costs). Then, the formula is used to calculate the amount that needs to be sold at a given selling price. (I have chosen to use our wholesale premium of $18.75/ounce, plus two lower prices.) Again, these calculations are relative to the fixed and variable costs.
The calculated break-even selling prices are well below the current premium prices being paid for organic tomato seed for all but the lowest-yielding figures, indicating the potential for substantial profits for the farmer. For example, seed from the highest yielding varieties, where an ounce of seed is harvested and sold per plant, could be sold at $3.89/ounce to cover all costs (i.e., break even); selling at a premium of $18.75/ounce gives the farmer a $14.86 per ounce profit. Even the varieties yielding 1/4 oz. per plant can provide a $3.18 per oz. profit. Yields below this level, however, become unprofitable within the current wholesale market.
The final calculation is based on current wholesale prices ranging from $300/pound ($18.75/ounce) to $250/pound ($15.63/ounce) to $150/pound ($9.38/ounce). At the premium price, an overall yield of about 68-1/2 ounces (or 4-1/14 pounds) of seed is required from this 1/16-acre plot to break even – a goal that is quite realistic and replicable on most well-managed organic vegetable fields in the Northeast. It requires, as the cost/benefit analysis indicated, a yield of a little under 1/4 ounce of seed per plant from 300 plants. A lower wholesale selling price of $15.63/ounce requires a little over 1/4 ounce of seed per plant, still a realistic and replicable goal. Finally, the lowest price here of $9.38/ounce requires a little under 1/2 ounce per plant from 300 plants to break even, which is still within most growers’ yield potential.
Conclusions and Further Pursuits
With little more than the knowledge of seed saving techniques for tomatoes, a small-scale organic family farm can readily incorporate this crop into its diversified operation and enhance its overall profitability. However, as with any crop, market research is paramount before planning and planting such crops. A farmer must know who is going to buy the seed – and what varieties are wanted – before considering growing a tomato seed crop.
Further study and experimentation is underway on some farms to enhance the profitability of organic tomato seeds through both value-added products from the tomato crop and diversified marketing strategies for the products. Some growers pick and market some fresh fruit from each plant throughout the season, thereby getting returns from both a seed and a fruit crop. Others cut open the fruit at harvest time, scoop out the seeds, then process the flesh into sauce or salsa. A few growers who sell their seed wholesale also are trying to retail simple packets of their seed at their farmstand or at farmers’ market (where they also sell the seedlings and fruit throughout the season), a direct marketing technique that requires little extra in costs to gain the higher retail price.
A crop that’s well-loved and relatively simple to grow, tomatoes offer organic farmers several options for incorporating seed production on their farms.
About the author: Nicolas is cofounder and executive director of the Maine Seed Saving Network.