CSA or Food Hub: Allocating 2,600 Hours on a 14-Acre Vegetable Farm
Two full-time farmers work 14 acres of certified organic vegetables with one seasonal crew, giving them 2,600 total labor hours across owners and crew. For next season they are weighing two channels. Channel A is a 150-share CSA at $610 per share, with variable costs of $185 per share and an estimated 2,100 labor hours. Channel B is wholesale to a regional food hub: 28,000 lb of mixed vegetables at $1.05 per lb, variable costs of $0.32 per lb, and 900 labor hours. Fixed costs (land, equipment, insurance, certification) are $28,000 regardless of channel. The food hub wants a signed contract by February 1 and pays 30 days after delivery; CSA members pay in full by March 1. Last season a tomato planting was lost to late blight and two CSA pickup weeks were thin.
1. Calculate contribution margin and contribution per labor hour for each channel, then recommend a plan that fits within 2,600 hours.
Read the worked answer
Channel A (CSA): revenue 150 x $610 = $91,500. Variable costs 150 x $185 = $27,750. Contribution = $63,750, or $63,750 / 2,100 hr = $30.36 per labor hour.
Channel B (food hub): revenue 28,000 x $1.05 = $29,400. Variable costs 28,000 x $0.32 = $8,960. Contribution = $20,440, or $20,440 / 900 hr = $22.71 per labor hour.
CSA wins on both total contribution and per-hour return, and it also covers fixed costs more decisively: $63,750 - $28,000 = $35,750 before owner draw, versus $20,440 - $28,000 = a loss if wholesale is the only channel. The obvious recommendation is CSA as the core channel.
But CSA uses 2,100 of 2,600 hours, leaving only 500. At the wholesale rate of about 31 lb per labor hour, 500 hours could produce roughly 15,000 lb, or about $11,300 of contribution. That is too aggressive: those 500 hours are also the slack that absorbs weeding surges, harvest peaks, and a rainy week. A safer plan is CSA plus a limited wholesale commitment of about 8,000-10,000 lb (roughly 260-320 hours), leaving 180-240 hours of buffer.
2. Given last season's blight loss and the two payment schedules, which channel carries more financial risk, and what protections would you write into the plan?
Read the worked answer
The CSA carries more delivery risk but better cash risk; wholesale carries less delivery risk and worse cash risk.
CSA exposure: a signed share is an obligation to deliver a box for 20-plus weeks regardless of what the weather does. A blight year means either buying in product at retail prices or delivering thin boxes, and thin boxes cost members. Offsetting that, all the cash arrives by March 1, before the season's spending peaks, which is a real financing advantage.
Protections for the CSA:
- A written member agreement with explicit substitution language and a crop-failure clause.
- A crop plan built around diversity and succession planting so no single crop can hollow out the box, plus the resistant tomato varieties and a copper-based program where blight pressure is forecast.
- A modest reserve (5-8% of share revenue) held against a shortfall year, and clear early communication when a crop fails.
Wholesale exposure: the food hub pays 30 days after delivery, so the farm finances seed, labor, and packing before any cash returns; a single buyer also concentrates risk. If any wholesale volume is taken, negotiate a minimum volume with a price floor, keep the direct channel dominant, and arrange a line of credit sized to one month of operating costs.
3. Suppose only 110 CSA shares sell by March 1. Work through the consequence and the options available.
Read the worked answer
Revenue at 110 shares is 110 x $610 = $67,100. Variable costs fall proportionally to 110 x $185 = $20,350, so contribution is $46,750 over 110/150 of the labor, about 1,540 hours. Fixed costs of $28,000 still apply, leaving $18,750 before owner draw, versus $35,750 at full enrollment. That is a serious shortfall, not a rounding issue.
Options, in order of speed:
- The February 1 food hub deadline has passed, but hubs sometimes have late openings; ask, because the ground is already planned.
- Convert the unsubscribed production into farmers market or restaurant sales, which capture retail-level prices but consume weekend labor the crew may not have.
- Offer late-season or half shares, payment plans, or a friend-referral credit to close the gap before planting, since planting decisions lock in the cost structure.
- Scale back planted acreage now rather than harvesting a surplus that no channel will absorb; a crop that is grown and not sold is the most expensive outcome.
Set a decision date in early March. After that, the plantings are in the ground and the only remaining variable is where the produce goes.