Are you interested in starting a tomato farming business? If YES, here is a complete guide to starting a tomato farming business with little money and no experience.
Okay, so we have provided you an in-depth sample tomato farming business plan template. We also took it further by analyzing and drafting a sample tomato farming marketing plan backed up by actionable guerrilla marketing ideas for tomato farming businesses. In this article, we will be considering all the requirements for starting a tomato farming business. So put on your entrepreneurial hat and let’s proceed.
Tomatoes originated in Southern America and only came to the United States in the 1400s. They were always considered an ornamental fruit till the 1800s. Commercial tomato production began in 1860s. Tomatoes come in different types such as grape, cherry, plum or paste, fresh or beefsteak, and others. If you produce a variety, you are likely to make more money and have more customers than if you stick to one variety.
Why Start a Tomato Farming Business?
Starting a tomato farming business is a rewarding business that is not too expensive to start up. However, before you start your tomatoes business, find out what kind of tomatoes people usually want. This information can be gotten from those who supply seeds, as they will be able to tell you what is popular and what isn’t. Also, they will let you know the varieties that sell well; however, you will also need to ensure that the seeds you finally pick will grow well in your climate.
This means you would need to check your soil, and make sure it is very healthy. For instance, if you intend to plant heirloom tomatoes, your soil will need to have lots of organic matter and humus, and also have a neutral Ph that is under 7.
This will ensure that pests and disease problems for the tomatoes are reduced to the barest minimum. It is advisable you test your soil before planting; you can do this yourself or ensure that you take it to a soil laboratory to determine its health.
Once your tomatoes are fully developed and ready for harvest, they will turn into their natural colors – red, yellow, purple, or pink. Once you have harvested them you can start selling them. However, you would need to have carried out due diligence and search for your customers so that you don’t just have your produce with no one willing to buy.
Starting a Tomato Farming Business – A Complete Guide
- Tomato Farming Industry Overview
There are two ways a tomato plant can grow, determinate and indeterminate. A determinate tomato will not only grow to a specified height that has been genetically determined, but it will produce all of the fruiting flowers at the same time; while an indeterminate will continue to grow and produce throughout the whole season.
Tomatoes in the United States are harvested for two basic purposes such as:
- Fresh produce for direct consumption
- Marketing and processing
The United States in recent years have produced 300,000 acres of tomatoes that have been valued at $700 million and 130,000 acres of fresh produce tomatoes that is valued at $1.6 billion.
Pennsylvania fresh produce market has an annual worth of between $15 to $25 million for a 4,000 acreage. In 2014, in Florida alone fresh tomato export sales were at about $70 million, down $1 million from 2013, this data is according to the United States Census Bureau data.
The export sales come from mainly farms that are large scale in nature, whose focus is on growing round green tomatoes, which are harvested green but gassed with ethylene to turn red before being sent to stores. This helps in extending shelf life for the tomatoes, and helps stores sell longer recouping their money.
According to USDA 2012 Census of Agriculture, since 2007, tomato production has dropped 10% per acreage, while farmers producing tomatoes had their percentage rise by 20%. As at 2014, 27.3 million fresh market tomatoes were harvested from 97,600 acres, which brought the value to $1.14 billion. Also as at 2014, 14.6 million tons of processed tomatoes were grown on 277,000 acres with an estimated value of $1.325 billion.
The tomato farming business is set on a slight decline as smaller farms are filling in the niche markets. Also, consumer demand is shifting to organics produce. This has led to farms trying to adjust so as to meet up with the demands of the customer.
Starting a Tomato Farming Business – Market Feasibility and Research
- Demographics and Psychographics
The psychographic and demographic composition of those that take tomatoes is very large. Tomatoes can be taken raw, cooked, processed as puree, or dried for tomato powder, or used as a beauty product. This means that almost everyone takes tomatoes. Those that use tomatoes include homes, restaurants, grocery stores, fast food outlets, spas, beauty salons, gyms, and so on.
Other people that require the use of tomatoes include wholesale markets, cooperatives, roadside stands, processing firms, pick-your-own-operations.
List of Niche Ideas within the Tomato Farming Industry
As regards the niches in this sector, there aren’t a large number of niches in the tomato farming business, as there are no real clear differences between one tomato farm and another.
However, some of the areas of specialization in the tomato farming business sector include; tomato processing for juice, sauce, paste and salsa, tomato sales, tomato dehydration for long storage purposes, ornamental tomatoes, exportation of tomatoes.
The thing about all these areas of specialization is, while a small scale farm might likely focus on one or two areas, a medium or large scale farm due to economies of scale might be able to specialize in most or all of the areas.
The Level of Competition in the Tomato Farming Industry
Starting a tomato farming business is not considered as an expensive business, especially if you are starting out on a small scale. However, you would still be required to purchase the necessary equipment that will allow your farm efficiently regardless of the scale, the only difference being that larger scales will need to procure more equipment than smaller scales.
If you intend to start on a small scale, you can compete favorably against your competitors regardless of the scale if you choose your customers wisely. For instance, if you produce on a small scale, you might not need to target processing companies as your customers, as they will prefer farmers who operate on a large scale, but you could target restaurants, and fast food, and local stands.
List Of Well – Known Brands in the Tomato Farming Industry
Well known brands are those that have performed better than their counterparts in the same market or industry. This might be made possible due to the fact that these well known brands stood out probably due to their well laid out strategies and consistencies over the years at what they do, and also overcoming challenges that might have been thrown their way.
Listed below are some of the well known brands in the tomato farming business industry in the United States of America;
- Weis-Buy Farms
- Lipman Produce
- Oakes farm
- West Coast Tomatoes
- Hanshaw Farm
- Everglades Farm
- Village Farms
- Farm Flavor
Before starting a tomato farming business, you would need to ensure that you carry out a thorough investigation by visiting other tomato farms in your area as well as produce stands in the farmers market. Visiting the farm will provide you with the information needed to be able to plant your own tomatoes, while visiting the produce stands will help you see customer buying trends so as to have first-hand information of what customers would want.
However, if you intend to include grocery stores, and restaurants amongst your customers, you could decide to produce a variety of different types so that your customers could have their different preferences. Apart from knowing what tomatoes would move in the market, you have to be prepared for pests and diseases that could destroy your yield and also investment.
Another thing you would need to know before planting your tomatoes is the viability of your soil, this means that not all tomato variety might work with your soil composition, and so it would be necessary for you to carry out a test on your soil by sending samples to a soil laboratory for analysis.
Depending on the circumstances in the state you intend to produce your tomatoes you could decide to sell your tomatoes to tomatoes processing factories. Another thing to consider for your tomato farming business is the storage facilities available to store your tomatoes, since the tomatoes have to be in a good condition before they reach the customers.
Is a Tomato Farming Business Worth Starting from Scratch or is Buying a Franchise Better?
Starting your tomato farm business from the scratch might be challenging but will offer you a rewarding experience that cannot be gotten via any other means. When starting from the scratch, you get to devise strategies that would work for you, as well as means in attracting and retaining your customers. You can also start on any scale you want – advisably small scale – and progress from there.
The drawback in starting from the scratch is the cost of equipments, infrastructure and running operations that you might encounter; however, if you are serious with your tomato farm business, you can make it a success regardless of the challenges.
Buying a franchise is different from starting from the scratch, as the company would all equipment and infrastructure used. However, for now, the farming industry does not operate on franchises. Most large scale stores or tomato processing plants own farms in the countryside or partner with tomato farmers. This means as there is no franchise option, you will need to start from the scratch.
Possible Threats and Challenges You Will Face When Starting a Tomato Farming Business
The farming business though a lucrative business is one that has a lot of challenges and threats. A single challenge is sufficient enough to wipe away all your crops leaving you with a loss in investment. Some of the challenges you might face include diseases and pests, bad weather or natural disasters, lack of a good storage capacity, and stiff competition from your competitors.
Every business faces challenges ad threats every now and then, how you handle yours, will make the difference between your success and failure as an entrepreneur.
Starting a Tomato Farming Business – Legal Matter
- Best legal entity to use for a Tomato Farming business
A legal entity is important because it is used to identify your tomato farming as a trading business. Before you choose a legal entity you should understand the difference each structure is, and so would choose the one that is best suited to meet the needs of your tomato farm. Some of the things you would need to consider when choosing a business structure is the power the legal entity would give you as the owner of the tomato business, the tax advantages the structure would offer you, how expensive a set-up it is, and the legal obligations required.
Asides the rules and regulations that would be required from each legal entity, it has to be one that does not work in contrast to the food industry regulations, and state and local laws. While some farmers go for the sole proprietorship especially as it would be easy to run and also gives the farmer control of his or her tomato farm, others go for Cooperatives collaborating with other farmers which might or might not be for same crop, or the Limited Liability Company (LLCs) offers liability protection to you as an entrepreneur and offers you great tax options as well.
If you feel confused about what legal entity might be best for your business, you should met with an attorney in your area, who is proficient in agricultural matters, and who would give you professional advice on what would be best for you.
Catchy Business Name ideas Suitable for a Tomato Farming Business
- Plum Farms
- Fresh Farms
- Cherry Farms
- Big Joe Farms
- Evergreen Farms
The Best Insurance Needed for a Tomato Farming Business
Insurance is highly necessary especially for this kind of business, where diseases might destroy your crops, requiring you to start all over again. Once this happens, if you are insured, you would be able to rise above the challenges, but if you aren’t, you might end up paying out of your own pocket, which might mar the progress of your business.
However, to get the best insurance policies that suit you and your tomato farming business, you would need to approach a professional insurance broker or agent, who would guide you on the best policies to choose. Some of basic insurance policies that you would need to consider when starting your tomato farming business in the United States of America include;
- General Liability
- Equipment Breakdown Coverage
- Workers’ Compensation
- Liability Insurance
- Produce Protection Coverage
- Hazard Insurance
Intellectual Property Protection and Trademark?
Ordinarily, you would not require an intellectual property protection for running your tomato farming business. However, you might decide to apply for n intellectual property protection over your business name and logo. But most tomato farmers do not bother with intellectual property protection as it is not considered an utmost priority.
Is Professional Certification Needed to Start a Tomato Farm?
No, this business does not require any form of certification except experience, as most tomato farmers; either became one by trial and error or learnt under other experience farmers by working for them. While many usually acquire certifications, it is usually not deemed necessary.
However, this does not mean that you would not attend seminars and courses that would help your tomato farming business. These courses, seminars and associations you would belong to will help ensure that you run your tomato farm business according to standard practices especially when using fertilizers, pesticides, as well as during harvesting.
List of Legal Documents You Need to Run a Tomato Farming Business
If you intend to start your own tomato farming business in the United States of America, you would need some legal documents and they include;
- Certificate of Incorporation
- Business Plan
- Insurance Policy
- Business License
- Business Permit
- Contract Documents
Writing a Business Plan for Your Tomato Farming Business
The best decision you would ever make before starting a business that you are serious about, and that you intend to make profit from, is having a business plan. A farm business is not something you just decide to start off without carrying out the necessary investigations that would ensure that you have knowledge of what you are going into. The findings from your investigation has to be written down somewhere, as well as what your thoughts are and how you intend to achieve them in your business.
This therefore means that a business plan is regarded as a guide that ensures you run your business successfully. It is a document which you will refer to from time to time, and which will influence your actions and decisions.
Your business plan if followed religiously can save your business from crumbling. It should however be noted that the strategies in your business plan are not cast in stone and can be changed depending on changes in the internal and external business environment. Your business plan should contain components such as how you intend to generate capital for your tomato farm business, who your target market is, and what future plans you intend for your business.
Some of the other components that must appear in your business plan to make it comprehensive enough are;
Your business plan should contain key components such as an executive summary, where your tomato farm is described holistically for investors to understand. Also, you would need to include components like your history, structure, vision, objectives and mission statements, products and services your farm intends to offer, location, as well as your overall strategy as a new entrant into the sector or industry you intend going into.
Your plan also needs to include your intended target market – who and where your customers are, how you intend to address the market segments, the infrastructure you would require to meet the start-up requirements for your business, SWOT analysis, and who your major competitors are in the industry you intend going into, and how your strategies are better than theirs, and how you intend to become one of the industry’s leaders.
You would also need to input your financial analysis – cash flow, projected income and expenditure, balance sheet for at least five years.
Writing a business plan can be quite cumbersome especially when it gets to the financials. However, there are loads of business plan writers that you can approach for help in getting your business plan written; or you could decide to go online and download guiding templates that would help you put down a comprehensive business plan for your tomato farm.
A Detailed Cost Analysis for Starting a Tomato Farming Business
The cost involved in starting a tomato farming business according to research in the United States is capital and labour intensive. However as regards the equipment, they are mostly a one-time purchase, but labour and other operating expenses are usually recurring, however, you would learn how to juggle your expenses so as to keep your overhead low.
A tomato farming business is one where certain costs during start-up cannot be avoided. This is because the certain equipment you would use would be needed regardless of the scale of farm business you are running. Some of the items that you would need to ensure are in place if you intend to launch your tomato farming business in the United States of America are as follows;
- Total Incorporation fees $1,000
- Liability insurance, business license and permits $500
- Amount needed to buy or lease an acre of land depending on the size $30,000
- Cost of facility construction on land $15,000
- Cost of equipping the facilities $5,000
- Cost of acquiring tools and equipments $50,000
- Cost of launching an official website $200
- Miscellaneous expenses (business cards, fliers and handbills, signage) $1,000
Going by the above detailed research, you will need an average of $130,000 to start a small scale tomato farming business in the United States of America.
If you are intending to start a medium scale tomato farming business in the United States, you would need nothing less than $260,000. And if you intend to start a large scale tomato farming business in the United States of America, then you should think towards raising close to $500,000 or more for your start – up capital.
- Financing Your Tomato Farming Business
The tomato farming business might be something different from what you are used to, especially if you have never done farming before. Most people have the idea of starting a tomato farm but never do, which might be due to a lot of things which always includes finance. However, before you can get financing for your tomato farming business, you would need to have carried out your research, and ensure that you would put in the necessary hard work that is required.
Most horticultural crops – tomatoes being inclusive – are usually capital intensive. Apart from money, it also requires a significant amount of time and energy. So if your intention is to make money immediately, this is not the business for you or anyone you approach for investment as you would need to let your investors know that it may take several years before the investment can yield any profit.
However, any investor you approach would already see this in your business plan, and would decide if they would want to invest in your tomato farming business or not. This is why it is important that as a business person, you have your business plan written out before approaching anyone.
There are various options that are available when it comes to raising money to finance your tomato farming business, and they include;
- Approaching the bank for a loan for your farming business
- Raising money from personal savings and sale of personal stocks
- Applying for grants from relevant agriculturally inclined organizations
- Raising money from business partners
- Approaching investors for money
- Pitching your business idea to venture capitalists
Choosing a Suitable Location for a Tomato Farming Business
The location you intend to use for your business is very important, especially if you intend on taking the business seriously and view it as a successful venture. To get a farm for your tomato business, you probably would need to buy acres of land on the outskirts of town if you live in a busy one.
However, if you live in the countryside and have a whole land just sitting vacant doing nothing, you might after analyzing the soil and determining it healthy for planting start your tomato farming business.
Another thing you would need to consider while searching for a location is how much budget you have got. If you do not have the necessary budget to purchase a suitable land, then you might consider leasing the land till you raise the money town the land, or look for a fellow tomato farmer who would not mind sharing some acres with you, pool your resources together to get the land. However, if you prefer to operate on you farmland alone, you might need to source for finance from your investors.
Another thing you would need to consider when seeking for a suitable location is if where you have eventually chosen has got healthy soil that will ensure that you grow healthy tomatoes for sale. If you eventually get a location, and the soil isn’t healthy for your tomatoes, you would have wasted money on a venture, except you sell off the land to someone else, while you seek another location.
Finally, your location must be large enough to accommodate a storage facility for your harvested tomatoes, and also a space for office facilities so that you would be able to carry out the necessary paperwork.
Starting a Tomato Farming Business – Technical & Manpower Details
Farming of any kind is always a capital and intensive labour project, even if it is on a small scale. You would need tools to plough, plant, weed, keep the plants growing, and eventually harvesting your tomatoes. If you are lucky enough, you might be able to get these equipment for fairly use from farmers either offline or online that are looking to upgrade on the tools they have.
You could also try your local hardware store for some of the tools and equipment that you might need. It is economical for you if you decide to purchase some of your equipment for fairly used, as this would help keep overhead cost down.
Some of the equipment that you would need to fully launch your own tomato farming business includes;
- Tillage Equipment
- Wheel barrows
- Sprayer (Boom Type)
- Wagon or Trailer
The nature of this business is such that you cannot run all the process alone. Even if you are running a small scale tomato farming business, as long as it not a small garden, then you would need the help of others in helping your business become a success. It makes economic sense for you to have your facility on your land of you are just starting out, so you would not need to worry about paying rent for an office facility. However, medium or large scale farmers might own two offices, one on their lands and another in the city.
Regarding the number of employees you would need to run your tomato farming business, it would vary depending on the size of your farm. One person cannot run the business from planting to harvesting. If you run a small scale tomato farming business, you would need at least a Farm Manager, Driver, Sales Persons, and Farm Hands. This is about 6 to 8 people.
The Production Process in Tomato Farming Business
The production process involved in a tomato farming business is basically the same from the point of planting to the point of harvesting.
The process include, getting tomato seeds, determining their viability, ensuring that your soil is of the required state to grow your tomatoes. Weeding and watering are also processes that are involved in producing your tomatoes, and finally harvesting when they are about to ripen.
Other processes include packaging the tomatoes for either end customers, processing factories, for overseas customers, and so on.
Starting a Tomato Farming Business – The Marketing Plan
- Marketing ideas and Strategies for a Tomato Farming Business
Before marketing strategies can be carried out, you would need to conduct a market research that will determine the best ways you could use to generate money for your tomato farming business. You would need to ensure that there is a demand for the types of tomatoes that you intend to plant, know when the demand occurs more, as well as carry out other marketing analysis that will make your tomato farming business boom.
Generally, while it might be more profitable if you stick to a particular variety or even few varieties; so that you can comfortably offer you’re your tomatoes at a price that would not get stiff competition from other areas that might already be filled with competitors. This is why it is helpful to understand market trends before you venture into your tomato farming business.
If you are going to be running a small scale tomato farming business, you might not find it easy getting large customers since these kinds of customers would prefer tomatoes in large quantities that you might not be able to handle seeing that yours is a small scale, however, if you are running a medium or large scale tomato farming business, then you would strategies to draw in the big clients.
Some if the marketing ideas and strategies that you can use for your tomato farming business include;
- Develop a point of sale material that will enlighten customers on the uses of your tomato business
- Ensure that your distributors and suppliers make use of the referral method to help promote your business
- Pass out your business cards in stores, restaurants and other target areas
- Design a website that will be used to promote your tomatoes
- Send a press release to your local newspaper as regards tomatoes, thereby getting free publicity
- Advertising your tomato farm business in local newspapers, and in food and lifestyle magazines
- List your business in yellow pages
- Attend fairs and seminars, as well as food fairs and use in marketing your services
- Pass out fliers and handbills in target areas,
Factors That Will Help You Get the Right Product Pricing for your Tomato Farming Business
The factors that will help you get the right pricing for your tomato farming business is those that would ensure that you have your overhead and operating expenses covered so that it would make your rates fair and affordable and within market regulated prices. This is a regulated price market and so you should ensure that you do not plant at a higher cost than your counterparts.
Possible Competitive Strategies for Winning Your Competitors in Tomato Farming Industry
Even though there are certain states in the United States where tomatoes are produced more than others, this does not mean that if your state isn’t among, you will find it easy competition wise. If you intend to start your tomato farm business, you must be aware of the other competitors you would face, and so must package your business in such a way that you have leverage over your competitors.
Customers may not want to know about how you plant your tomatoes, but they’d be interested in knowing about the benefits of tomatoes and the advantage each variety has over the other. This can be part of your competitive strategy. Enlighten your customers on tomatoes and its uses, and watch them flock to buy your tomatoes.
Another competitive strategy is ensuring that you concentrate and specialize on a particular niche, therefore becoming an expert in your niche.
Possible Ways to Increase Customer Retention for your Tomato Farming Business
In order to grow your business, you would need to retain more than half of your customers. You can increase customer retention by staying in touch with your customers regularly through communication. This can be to inform them about the availability of your tomatoes, educating them on the uses of tomatoes and the different varieties available. Ensure that you tell them why your tomato is the best one for them.
Another way at increasing customer retention is to ensure that you give them excellent services, as well as incentives for referrals. You could offer extra tomatoes for coming to purchase your tomatoes with a friend, or give them a discount for the future ones they will purchase from you.
Strategies to Boost your Brand Awareness and Create a Corporate identity for your Tomato Farming Business
Creating strategies that will boost your brand as well as create a corporate identity for your tomato farming business is so that customers quickly recognize your product as well as identify with it. If your tomato farm is going to be a medium or large one, then you would need these strategies more than a small scale tomato farmer.
Some of the strategies that you can use to boost the brand of your business, as well as promote and advertise it are;
- Identify and join networks in the industry that will help in raising your tomato farm business profile
- Attend farmers’ association meetings
- Ensure you give quality customer service, and are known for it
- Use social media platforms Facebook, Twitter, LinkedIn to create awareness for your tomato farming business
- Use forums and blogs to enlighten users and even potential farmers on your tomato farming business
- Create a unique signage for your booth or stand in the farmer’s market
- Promote your tomato farming business in offline directories like yellow pages
- Distribute your handbills, business cards, and fliers in target areas
- Advertise your tomato farming business in local newspapers as well as radio stations
- Use your official website to promote your tomato farming business
Creating a Suppliers/Distribution Network for your Tomato Farm
If you plan on running a tomato farming business, then you would need to source for those that can that can supply you with tomato seeds, pesticides, as well as fertilizers.
Being in a good business relationship with your suppliers is highly beneficial to your business. Your seed supplier for instance, can tell which variety would give you a better yield, and which tomato seed type will be beneficial to your climate. They would also give you tips that would help you whilst planting your tomato to a very healthy standard. This will inadvertently lead to your tomatoes being sold quickly; bring about good revenue for you.
Tips for Running a Tomato Farming Business Successfully
To be successful at your tomato farming business, you would need to have a vision of what you intend to achieve with your business. Any successful entrepreneur starts by envisioning success before they can make their business become a success.
However, for your tomato farming business to grow, you would need to provide room for the business to grow especially as regarding the infrastructure you would need for your farm. Your tomato farming business would need to have sufficient land to expand, as well as resources to harvest and process your tomatoes.
Also, having additional storage requirements will be very important for your tomato farming business. If you did not envision the potential for your tomato farming business to expand, and it does, you might fail because your business plan did not account for it.
Another successful factor is in networking. As a tomato farmer, you would need to meet with as much farmers as possible. You could also attend seminars, workshops, as well as other training events that will be beneficial for your tomato farming business. You might have to go to other tomato farms to see how other tomato farmers are handling their tomatoes, and get them to share tidbits with you on how your tomatoes can grow to yield mush profit for your business.