The Ultimate Guide to Starting a CSA with a Container Farm
At the peak of the Covid-19 pandemic, Community Supported Agriculture (CSA) shares saw a surge of interest because people wanted to support local growers.
Plus, 52% of Canadians said they would pay a premium for locally grown indoor produce.
But how do you take advantage of this market?
Growcer has you covered! This guide will break down what Community Supported Agriculture is, how the model works with a container farm, and what it looks like to start and market your CSA food box.
Chapters
What is CSA (Community Supported Agriculture)?
Advantages of CSA with a Container FarmWho Can Start a CSA with a Container Farm?
How to Price your Container Farm’s CSA Box
How to Plant in your Container Farm for a CSA
Best Practices for Produce Packaging
How to and Tips for Member Recruitment
What is CSA (Community Supported Agriculture)?
Before stands of shiny exotic produce could be found in supermarkets year-round, our food system was much different. People were more aware of where their food came from (local farmers), and the availability of food changed with the seasons. And while local farmers, produce markets, and specialty shops are still commonly found in our communities, the majority of consumers shop in grocery stores. In fact, Canadians spend around $100 billion annually at our roughly 3,000 grocery stores.
With this drastic change in our food system also came a grassroots movement that saw people wanting to get back in touch with the way their food is grown. In addition, the shift was motivated by concerns about the industrialization of the food system, reliance on imported food, the loss of local farmers and use of pesticides. Such concerns prompted the start of Community Supported Agriculture (CSA).
The CSA concept is thought to have originated in Japan in the 1960s, and is known as teikei in Japanese. By the 1970’s, farmers and consumers in Europe with a similar outlook and concerns created the community supported agriculture model we are familiar with today.
Let’s dive into exactly what community supported agriculture means and what it looks like in today’s world.
What Is Community Supported Agriculture?
Community supported agriculture is an alternative food movement that involves a direct farmer to consumer partnership. Consumers purchase produce (and other goods) directly from the people who grow it. In business terms, a CSA can also be thought of as a production and marketing model whereby consumers buy shares of a farm’s harvest in advance. Farmers benefit from the financial support and predictability, and consumer benefit by having access to fresh, local food.
Different Types of Community Supported Agriculture
There are many different ways to structure a community supported agriculture initiative. Typically, consumers become CSA members by paying an agreed amount at the beginning of the growing season, either in one lump sum, or instalment payments. In return for this investment or “membership fee,” consumers receive a variety of fresh vegetables weekly (or on another agreed upon interval). Depending on the growing season, the specifics of this arrangement can change. Some CSA-inspired structures involve the ‘adoption‘ of a tree, whereby the farmer will send some of the harvest from that tree directly to the consumer every year.
With container farming, which refers to vertical hydroponic farming systems inside a container, farmers have the notable benefit of a year-round growing season. Most CSA initiatives from container farms take the form of a weekly or biweekly food subscription box plan. This type of food box subscription is different from a typical community supported agriculture structure since the consumer doesn’t have to commit for the full season and the year-round subscription can be stopped or started at any time.
Food box subscriptions have increased in popularity in recent years, and these types of subscriptions can be found for products such as fresh flowers, fruit, herbs, and eggs. These however, should not be confused with meal-kits, which are pre-packaged boxes that include a recipe and all elements of a meal inside (including pantry products, proteins, and vegetables).
Advantages of Food Box Subscription Box Model
CSA’s and food box subscriptions have several advantages for both farmers and consumers. Farmers are better able to plan their production for the season with a guaranteed market for their produce. Without worrying where the next customer might come from, farmers can spend more time growing high quality food for the community. Consumers benefit as they get local, fresh produce on a regular basis while supporting local farmers.
Community supported agriculture and subscription food boxes are a relatively new food model, but have seen a surge in popularity over the pandemic. Since this model benefits both growers and consumers, it’s safe to say that they aren’t going anywhere.
Advantages of Running a CSA with a Container Farm
Growing food in container farms comes with some distinct advantages if you’re looking into community supported agriculture or creating a food subscription box. Community supported farming (CSA) refers to a food production model whereby consumers purchase food from growers in advance. Let’s look at the advantages and disadvantages of a CSA growing model for container farms.
1. The ‘Shared-Risk’ Of Container Farming is Lower
Working with living plants means the risks of farming are never completely zero, but with container farming some key risk factors for crop yields - including pests and adverse weather conditions - are no longer affecting a crop’s success.
Think about a scenario where an outdoor farmer loses a harvest to a hail storm or summer storm and has to come up with what to include in their CSA box that week. It is one of the challenges that comes with outdoor farming. With controlled environment agriculture, you are able to ensure a reliable amount of produce to include in your CSA regardless of the weather.
The risk farmers and consumers share in the CSA model is minimized and the probability for a successful crop is high every single year. You know all of your produce is already sold before any seeds even start to germinate!
2. Container Farming Provides A Consistent, Year-Long Harvest
A CSA or subscription box model can also be sold year-round because container farming is year-round.
Farming year-round in containers means that your season length isn’t limited to the summer. You can use this to your advantage, strategically filling a need in the market when fresh produce is less widely available or partnering with other year-round markets (like a CSA for meat).
With the immediate income from CSA, growers can purchase the inputs needed for their farm upfront and have continued, guaranteed inputs throughout the year. Upfront costs are therefore mitigated and early revenue helps cover labour and other production costs. Less time and energy are wasted because you’re able to sell directly from the farm, which simplifies the harvest and distribution process. Growers also benefit by focusing their energy on growing crops versus marketing or business development during a growing season.
Using a hydroponic container farm allows you to harvest fresh greens 365 days a year and give customers the opportunity for a year-round subscription.
3. Gain A Competitive Edge From Additional Crop Options
One key advantage of starting a CSA with a container farm is that you can determine what to grow and when to grow it. With proper planning, you can grow crops that aren’t available in your area at a certain time of the year to avoid competing with local farmers. Having several crops, as well as leafy green vegetables (which are excellent for filling in a subscription box (in addition to being highly nutritious and delicious when freshly harvested), will add more value to your subscription box offering. Adding variety helps you keep things fresh for customers!
4. Financial Viability
When you grow food in a container farm, it falls under the hyper-local, value-added produce category. This means that comparable products are those with higher price tickets, such as living lettuce, hydroponic greens and organic foods.
Furthermore, with a CSA you’re selling directly to the consumer, so instead of selling to supermarkets at wholesale cost, you can sell it for retail prices. Another advantage of selling directly to your customer is your ability to build a relationship with that customer and open up a direct channel to learn how to improve your product instead of having a more transactional relationship.
What Challenges Are There To Starting A CSA With A Container Farm?
Of course we can’t discuss the advantages without also noting the challenges of starting a CSA with a container farm. While the CSA and subscription food box models work well with container farming, there are still a few challenges out there.
Firstly, selling directly to consumers means better margins, but it also means that you need to manage the logistics of delivery and pick-up. However, managing these logistics is also something you would need to do with wholesale customers too but on a different scale. Farmers with CSAs often set aside a day for delivery and pick-up to simplify the process.
A second challenge that can arise is unreliable subscribers. In an ideal world, subscribers will maintain their subscription for years, but it is of course possible to see subscriber attrition. In order to counteract this attrition, consider value-adds, such as sharing recipe ideas, focusing on member retention strategies, and additional education about produce varieties. and consistent marketing activities.
A final challenge that you may face with a CSA container farm is being limited in what you can grow. While you can grow a large variety of produce, such as lettuce, leafy greens, herbs, brassicas, and some cultural crops, hydroponics are not the most efficient way to grow every crop. This means that your food subscription box can only have produce that is growable in a container farm. However there are ways around this, like partnering up with other CSAs growing other crops or other goods like honey or meat.
Plus, our research team is constantly looking into additional crops to see if they can be grown reliably and in quantities that make sense. Check out the Growcer Guide for more details about what crops you can grow in a vertical container farm.
Who Can Start a CSA with a Container Farm?
Are you thinking about launching your very own community supported agriculture initiative with a container farm? Wondering if it’s for people like you? There are many different types of CSAs and using a container farm gives you the opportunity to start a farm without needing to invest in farmland. Going with a system like Growcer’s also means that you are supported at every step on the way with a proven growing system and education.
Growcer makes plug-and-play container farms that allow anyone to take advantage of hydroponic growing technology to grow year-round.
What Type of CSA is Right For You?
As a quick refresher, community supported agriculture is an alternative food movement involving a direct farmer to consumer partnership. Consumers purchase produce (and sometimes other goods) directly from the people who grow it. There are several forms of CSAs that may work better for you than others.
Producer-Initiated CSA - Are you already a farmer that’s looking to expand revenues and look for other avenues to distribute produce? In addition to increasing sales, a CSA also strengthens the connection with local consumers. Starting a CSA can be a great way to forge strong bonds with the local community and get high quality local food on their tables.
If you’re not yet farming (but thinking of getting started), or aren’t quite ready to start your own CSA, you can also look at partnerships with existing CSAs in your area. For example, you could provide leafy greens to a subscription box of local meats for a more rounded local food package.
Retailer-Initiated CSA - Retailers can also be the ones to initiate a CSA for their communities. If you aren’t ready to start your own CSA and don’t live in a rural area where there may be other farmers you could partner with, it’s worth checking in with your local grocery store to see if there’s an opportunity present. Retailers will often create CSAs to help with customer retention and support local.
Organization-Initiated CSA - Organizations, such as businesses, non-profits and schools can also decide to offer a CSA model to their communities. Since CSA’s help to get fresh, local food to a community, they are attractive projects for certain organizations to get involved with. Look for partnership opportunities with organizations in your community that could be interested in supporting your CSA!
What Other Skills Do You Bring To Table?
Running a successful CSA involves more than growing delicious food. In addition to managing food production, here are a few other skills that indicate you may be a successful candidate for a CSA:
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You enjoy engaging with others. A community supported agriculture project involves interacting with the community on a regular basis.
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You thrive in a team. It’s likely that your food subscription box won’t be a one-person operation. Whether you’re working with partners, volunteers or employees, teamwork is a crucial skill for your success.
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Entrepreneurial spirit. Starting a CSA is an entrepreneurial venture. That doesn’t mean you need to be crunching numbers on a spreadsheet all day, but it does mean that you must be willing to work autonomously, make decisions, and respond to change.
So, Who Can Start A CSA?
You! If you’re interested in bringing healthy local food to your community, a community supported agriculture project could be for you.
How to price your container farm’s CSA box
Community Supported Agriculture is where customers are able to directly support farmers. Typically, for a seasonal farm, customers purchase “CSA shares” in spring and receive a weekly supply of produce over the growing season. With a container farm, you’re no longer restricted by the growing season and can grow produce year-round.
With a container farm, a CSA takes on the model of a weekly subscription box where your customers have the flexibility to opt in for produce year-round, or on a less frequent basis like bi-weekly.
But what do the numbers look like for this direct-to-consumer model?
Costs to Consider
To keep it simple, we will use Growcer farms as an example and take you step-by-step what it would be like to start a weekly subscription box with a Growcer farm.
Start Up Costs
One Growcer container farm can grow 504 heads of fresh produce weekly.
Farming has high barriers to entry, whether you’re buying land or specialized equipment. Container farms, for some, are also quite the investment. However, in comparison, container farms may not be as much as buying the farm down the road.
On average, you can invest approximately ~$270,000 (CAD) to start container farming with Growcer. This number includes the Growcer farm which is only $209,720 CAD (or $164,892 USD) and other start-up activities like site preparation, installation, onboarding, training, supplies, and ongoing support.
The key difference between choosing Growcer and choosing to recreate a hydroponic vertical farm on your own is you benefit from proven technology and reliable yields with Growcer.
Operating Costs
Operating costs will refer to everything you need to keep your container farm running, such as seeds, water, electricity, software, and staff. On average, your weekly operating costs with a Growcer farm are around $900 (CAD).
To calculate this average, we assumed a $20/hour wage and $0.13/kWh power rate. Depending on your specific situation you may also want to account for land rental costs, depreciation costs (if you own your Growcer farm), capital costs (if you are financing your project), insurance, and packaging. Plus, your weekly operating costs may look different depending on your utility rate and wages. Please keep in mind this article presents a simplified example and won’t account for all scenarios. If you would like to discuss financials specific to your situation, reach out to the Growcer team here.
Below is a typical breakdown of weekly operating costs. Your largest expense will be labour, which is why planning how you will package your weekly food pick-ups (or deliveries) will be important so you use your time wisely.
Setting a Price
How do you decide on how much to offer your weekly food box for? Setting a price will depend on a variety of factors, including your location, your costs of production, and its fair market value.
Before deciding on a price, consider what your product will look like:
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Will you offer different tiers of subscriptions? Large and small boxes?
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How frequent will your food box run? Will there be options for weekly, biweekly, or monthly subscriptions?
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Will you offer the choice of paying in instalments? (Consider how it will impact how much bookkeeping you do at the end of the day)
Know your value
The biggest contributing factor to CSA failure is setting the price too low, according to NC State Extension. NC State Extension recommends several methods for finding the right price for your weekly subscription, such as visiting a farmers’ market and seeing what the market price is for the produce you’re growing.
Growcer-grown produce falls in the value-added category because it is hyper-local, stays fresher longer, and grows using less water, land, and no pesticides. Plus, Growcer grown produce tastes delicious!
When you visit a supermarket, your comparable product is living lettuce, other hydroponically grown greens, or local organic produce.
The average sale price in a store is between $3 to $5 for each crop and this range can be used as a benchmark for your prices.
Price based on production
One way to calculate price is to work backwards: calculate how much you can produce, what it costs to grow it, and then divide the cost by the units you can produce. Once you know your costs of production, you’ll be able to know your absolute minimum price to remain sustainable.
With one Growcer farm, you can grow up to 504 mature heads of produce weekly. A mature head of produce is similar to what you would find in a grocery store and refers to a commercially sized crop.
Another consideration is plant loss. Plant loss is inevitable and as a first time grower, it will take some time to get comfortable growing. To keep calculations on the safe side, let’s account for a 10% plant loss factor. Accounting for a 10% plant loss factor brings our weekly harvest to 453 heads of produce.
Now that you know your weekly yields, calculate how many subscribers you can service. For example, if you offer 6 pieces of produce in a weekly subscription then you’re able to produce 75 boxes (453 weekly crops / 6 crops in each box = ~75 boxes).
To cover your operations, your subscription price has to be a minimum of $12. We arrived at this number by dividing your weekly operating costs ($900) by how much you can produce (75 boxes) to arrive at your costs of production at $12 per box.
Now you know your minimum amount to cover your operating expenses, you can factor in that your produce retails between $3-5 at a market. Therefore, to cover your production costs and accurately reflect the market, your share price should be closer to $18-$30 for a weekly subscription that includes 6 different pieces of produce.
To keep it simple, let’s say you operate one farm and you offer a weekly subscription box of 6 types of produce for $20.
If you sell 75 boxes at $20 each, your weekly revenue is $1,500.
To calculate your annual revenue, take your weekly revenue of $1,500 and multiply by 52.14 weeks in a year (you have to be careful with those extra days!) to receive $78,210.
This step-by-step breakdown is a simplified version of how you can calculate your weekly subscription price.
When you start growing, you will understand your weekly operating costs are more fluid and change throughout the seasons. The numbers will also change if you are operating the farm yourself (versus hiring staff) or growing herbs which you can plant in greater density. If you want to calculate the figures for your specific situation, feel free to contact the team to get growing.
CSA Numbers at a glance
Here’s a simplified example of what your subscriber count looks like if you sell your subscription at $20 for a large box (6 types of produce) and $10 for a small box (3 types of produce).
This example doesn’t account for the fact that you’re able to plant herbs in double the density (and produce more herbs in less space than you would need for full-sized produce).
When you factor in your unique situation, you can change the unit price, the box size (and therefore your subscriber count), and more accurately reflect your operating expenses. For example, selling a box of 4 products for $15 or a box of 5 for $25.
Start small
In your first year container farming, give yourself time to get comfortable and confident growing hydroponically. A common mistake for beginners is taking on too many members too soon.
Consider starting with a small number of subscribers, like 20, and scaling up your production as your confidence grows.
Advice for beginners
If you are looking for advice, look no further than from farmers who have been there. Corinna Bench from Shared Legacy Farms and Lauren Rudersdorf from Raleigh’s Hillside Farm hosted a webinar talking about the three mistakes rookie CSA farmers make and how to avoid them.
Both of them speak from a place of knowledge, boasting a 95% retention rate for their CSAs and Corinna runs a successful website and podcast to help CSA farmers with their marketing strategies at mydigitalfarmer.com.
Their webinar outlined three common mistakes:
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Starting with too many members
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Not creating an adequate crop plan
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Not spending enough energy supporting customers
To learn more about how to mitigate these mistakes, you can check out the full recording here.
You can also earn how to avoid mistake #2 by understanding how plant schedules work in a container farm and how controlled environment agriculture reduces your risk for severe crop loss.
How to plant in your container farm for a CSA
The logistics behind a CSA food box may seem complicated at first, but they don’t have to be.
Consider what kind of CSA box you want your customer to receive and work backwards.
Working backwards, based on production limits and customer preferences, will also help you price your CSA box accordingly.
Growing in a container farm
Grow a mix of crops - but not too many.
With a Growcer container farm, it’s recommended to grow at least 6 to 8 different items and no more than 14 different varieties assuming you’re rotating the items in the box every week.
Growcer’s customer success team says the sweet spot for the number of varieties is 10, which includes various lettuces, leafy greens, and herbs.
Lettuces are your fastest growing crop, being able to be fully harvested at week 6, whereas leafy greens (kale, spinach, bok choy) take 7 weeks to be fully harvested.
With a proper planting schedule, your Growcer farm will be “full,” but each growing rack holds plants at different stages of their growing cycles.
Herbs take 12 weeks to be fully harvested, but also allow for partial harvests where you trim parts of the plant but do not harvest it completely. For example, you trim basil leaves off your basil plant but you are not harvesting the entire basil plant, but allowing it to keep growing for two more weeks. For most herbs, you are able to trim twice; once at week 8 and a second time at week 10. You also fully harvest the plant at week 12 which provides a third yield.
Spread out your harvest days
The length of the growing cycle matters when planning out your production so you can make sure you are harvesting a crop and transplanting another to take its place. With a proper planting schedule, your Growcer farm will be “full,” but each growing rack holds a plant at a different stage of its life cycle.
For example, you wouldn’t plant an entire container farm of greens because then you are waiting 6 weeks for your entire farm to be ready for harvest. And that harvest day will be a lot of work because you’re harvesting an entire farm! The tiered approach allows you to focus on harvesting one growing rack each week, while knowing you’ll have another rack to harvest next week.
The tiered approach ensures your work is spread out evenly throughout the months and your customers are always getting a weekly supply of various produce.
Watch Customer Success’s Drew Stirling explain how lettuces, leafy greens, and herbs typically grow in a Growcer farm.
