Status of Processing And Inventory

We've had a lot of questions about the status of our inventory and processing, so here is a short summary before we kick off our 2020 cost review.

Since TC Farm strives to harvest our animals on green pasture, we typically have several months of inventory at a time. This time of year, we are often running tight on certain cuts (last May we totally ran out of chickens for example) After all, the last time the pasture was green was many months back.

Inventory

This year we have an extra month or two of inventory, so we are doing well on that front (no need to stockpile) (in fact, you aren't helping TC Farm or your fellow members if you do).

In the spring and summer, we harvest about twice what the group needs each month, so we have a large buffer to ensure we have enough food for all of our new members as well. My current projections after recent expansions give us about 20% more food than we need over the summer to maintain current record deliveries.

Since our meat is processed at small family run processing facilities, we are not too worried about supply interruptions. They are putting in a lot of extra work for our community and have added-in extra processing slots for TC Farm members.

Any future processing delays should be buffered because TC Farm carries an inventory of products. Our model of having members makes this possible. (Thank you!)

Wait List

Even though we have enough food, we created a wait list for new members. Our primary reason for this was to ensure we can expand our distribution and logistics to accommodate the larger orders. I know distribution and logistics is kind of boring, but it really takes time to get everything ready at the warehouse... and time to drive the trucks... and each truck only has so much room so we have to rearrange once the route gets full... and we only have so many insulated coolers. Stuff like that. Our favorite.

In April, we delivered over twice the normal amount of food and May is set to be larger still.

We asked most of our members if they would be willing to register for an optional home delivery. The response has been amazing. It is super helpful to get those orders off of our regular routes and direct to your homes. (Look in your email if you missed out on registering for that.)

Once we compile all of the requests, we will set up the delivery routes in our system and email each of our members so that you'll know what to expect for timing of your delivery.

If all goes well, we are looking to expand home delivery in the future.

Costs

As a small group of farms who operate like a cooperative with our members, we are always trying to find ways to reduce costs without sacrificing our ideals. We also work pretty darn hard to find new ways to be even more idealistic every year!

We have done a lot to save money, especially in areas like warehouse and other logistical work. As you tell your friends and neighbors about TC Farm, our group grows and all of us benefit from efficiencies, from farming to delivery costs.

Unfortunately, an area where we have little control over costs is processing and packaging. We've been hit with several notable price increases over the last year, but we initially absorbed those costs. As they continued to mount, we did a detailed analysis of our costs and have had to adjust some pricing as a result.

We've been writing for years about how our direct to consumer model has lower overhead costs than a traditional distribution / grocery store setup. That's how we are able to provide much higher quality food at similar (or sometimes lower) prices than a grocery store.

Here are some of the cost increases we tried to absorb over the last 18 months:

• The cost of our packaging has increased considerably
• Processing costs have gone way up
• Recently the huge spike in demand on our processors has required extensive inspector and staff overtime, which increases costs

I always want our farms and processors to earn fair wages, but that is especially on my mind now when the processors are being asked to work double time for our community.

The family that does most of our processing has graciously added in extra work for TC Farm members to help us keep up with the demand. They are working 6-7 days a week, 12 hour days and are keeping themselves isolated so they are able to continue to put food on our tables.

What goes up...

This part of what makes TC Farm so special

One other area related to pricing I want to share is how most farmers and consumers are treated so poorly by the "market place". Right now at the grocery store, the price of food has really jumped. The reason for this is that most markets operate on supply and demand.

The conventional processing plants and distributors are going to charge as much to the grocery stores as they possibly can, so in times like this, they make a killing at our expense. The also pay the farmers as little as they possibly can. So right now when the processing capacity has been limited, the farmers are financially being destroyed.

Or rather most farmers are in trouble. Since TC Farm operates like a cooperative, our farmers enjoy steady prices and predictable living wages. Our members also enjoy fairly steady prices as well.

This commitment between our farmers and members keeps the system stable through the ups and downs of supply and demand.

When a trade war breaks out, our members insulate the farmers.

When prices for livestock jumps up, our farmers stick with our members instead of getting greedy.

The volatility of prices is what puts family farmers out of business. Once a farm fails, a bigger agri-business company buys up that land or takes the market share. By working together we are building a more resilient Minnesota food supply -- it sure is paying off right now!

The Future

We have plans for the future... Right now we are doing everything we can to reduce processing costs. In addition, we will have some big news to share in the future -- there are some great solutions are in the works!