A commercial worm farm – whether for worm castings or the worms themselves – appears to be a profitable venture on the surface.
But when it comes to actually making money, the real story is that it’s much more difficult than it seems.
Since I started this business in 2014, I’ve seen lots of businesses start and fade away with would-be entrepreneurs burning hot for the idea only to run into the brick wall of reality.
Reality, plus the gentle nudges of some wise mentors, helped me see the light; I didn’t have to learn the hard way.
I got lucky.
I see too many people make wrong-headed business decisions, so I wrote this article about good and bad reasons to start a commercial worm farm.
5 Reasons to Start a Commercial Worm Farm
1) The Growing Interest in Organic & Regenerative Agriculture
Soil is sexy now.
Thanks to a decades-long stew of public awareness campaigns, pop culture, and just good sense, there is a tailwind behind anything to do with organic agriculture and its successor offshoot, regenerative agriculture.
Cult heroes like Elaine Ingham and Joel Salatin promote and educate their acolytes on soil health.
Worm farmers everywhere jumped for joy when the Biggest Little Farm was released in 2019.
What was the first thing the Chesters did when moving towards regenerative land management? They installed a continuous flow worm bin.
Joel Salatin’s Polyface Farm grows livestock, not vegetables. But he grows his cows with soil, pumping it full of organic matter and maintaining an optimal turf height to produce thick, fast-growing grass to feed his cows.
The evolution of thinking around soil has made it……just….cool.
Worms are at the heart of this coolness, both as an indicator of good soil and a facilitator of soil improvement. And worm castings are a valuable addition to any most building efforts.
2) The Explosion in Synthetic Fertilizer Prices
Two huge world events rocked the fertilizer world: COVID-19 and Russia’s invasion of Ukraine.
During the COVID lockdowns, global commerce came to a halt, so anything produced overseas got produced and/or transported slowly and expensively.
Russia, the world’s largest exporter of synthetic nitrogen halted nitrogen exports before the invaded Ukraine. But after the invasion, it became clear that Russian urea and the nitrogen exports of its ally Belarus (the world’s #3 exporter) wouldn’t be going anywhere any time soon.
As of this writing in late 2022, nitrogen fertilizer prices remain nearly 400% higher than before the onset of COVID-19.
With razor-thin margins, Western food producers are looking anywhere they can to stem the cost of fertilizer.
Exploiting the nitrogen-cycling microbes in worm castings is now a much more viable alternative than the previously-inexpensive fertilizer.
Wanna Learn More About What We Can Do About Fertilizer Prices?
Learn how organic nitrogen and microbes can start to replace synthetic nitrogen in your soil.
3) Cannabis Legalization
The legalization or decriminalization of cannabis is a huge driver of demand for worm castings. Newly-licensed and, let’s face it, unlicensed soil-based growers need vast quantities of worm castings for their custom soil blends.
One word of caution.
We’ve heard from multiple sources that cannabis prices tend to decline sharply around 2 years post-legalization as supply overshoots demand.
When cannabis producers get lower prices from their customers, they’ll be looking around for lower input costs from vendors like you.
But we think demand for worm castings overall will not abate for quote some time.
4) Your Mission Drives You
You may be animated by issues of soil health or environmental quality. Or you can’t help but evangelize about the magic of worms.
Your mission does not require market analysis or a complete business plan for you to spend your time and energy on it.
It’s what drives you.
We don’t have that much time on Earth, so you may have made a completely rational decision to pursue a passion for worms and the soil.
5) You Love Worms
I swear it seems like worms secrete some sort of pheromone that makes some people want to handle them.
I hosted my friend Jen of Bennett Compost in Philadelphia for a visit of our small operation a few years ago.
We chatted about this or that for 15 minutes before we realized that we were both just combing our hands over the wiggling worm meat just underneath the surface of the vermicompost. It’s mesmerizing and somehow therapeutic.
If you want to start a business out of something you find therapeutic, that’s a good enough reason to start a commercial worm farm, if just a small one.
Loving worms and being around them is – along with the drive to fulfill a mission – is an intrinsic, not-profit-driven reason that will keep you going, even if the revenue growth is disappointing.
4 Reasons Not to Start a Commercial Worm Farm
Welcome to the buzzkill part of this article!
The points below are meant to be filters, not a stop signs.
Please read this section in its entirety and be honest with yourself about your expectations and motivations.
1) Because You Think It’s Easy
Worms and worm castings are a low-tech product. There is almost no barrier to entry for someone wanting to dedicate some garage space for a new business.
Perceptions of easy production and easy money combine for a siren song attracting unwitting and unprepared entrepreneurs.
The idea of growing high value livestock – and selling their poop of all things – is intoxicating.
Starting a worm business is hard. Full stop.
It’s Difficult Physically
Worm growout trays are heavy. Worm castings are heavy. Precomposted waste for a commercial vermicomposting operation is heavy.
It’s all heavy.
I’m a former athlete, 40-something, and in relatively good shape. Doing worm composting beyond the hobby level kicks my butt.
If you’re older, and especially if you suffer from a disability that restricts your physical exertion, I’d think long and hard before starting a commercial worm farm beyond the hobby level.
Business Growth is Challenging
It’s hard to create a product, make your market aware of it, then entice real people to separate themselves from real money to buy it.
As much time as you put into actually making your product, you may need to spend more time telling the world about it. Competing for your customers’ shortening attention spans means you’ve got to make a quick, compelling case.
But marketing isn’t the only thing you need to do.
If you’re bootstrapping this business by yourself or with a partner, congratulations! You are the CEO, the the operations officer, the bookkeeper, the marketing and sales chief, and the janitor.
Simultaneously executing all of these functions can feel like a game of never-ending Whack-a-Mole.
Rewarding? Yes. Challenging? Of course.
Easy? Hell no.
2) Margins Get Way Thinner As You Grow
There’s something magical about farmers markets.
All financial sense goes out the window and an otherwise frugal consumer has no problem buying a single bran muffin for $8. Or worm castings for $7 per pound.
But when your production grows, you run out of farmers markets.
And when you start chasing larger customers, you’ll find their price sensitivity goes way up.
- They’ll claim that they’re interested in quality.
- They’ll ask for test results and inquire about feedstocks.
- They’ll ask about castings age and production practices.
You’ll answer all of these questions with flying colors.
And they’ll run off to buy from Brand X at a lower price anyways.
But it’s not just the customers. Your competition is likely producing castings for somewhere between 10 to 15 cents per pound. And some of them are happy to sell it for only twice their cost to bulk customers, plus freight.
This goes for worms too. Some of your largest competitors can sell worms for $25 per pound, maybe even lower for large orders. And that includes shipping, which is a significant cost.
Your success at a small scale doesn’t necessarily translate to success on a different playing field. Don’t extrapolate high margins on small amounts of castings to larger, bulk markets.
3) You’re Likely Underestimating the Time & Expense Required
Murphy’s Law dictates that when something can go wrong, it will.
When you start a business, Murphy injects himself with Barry Bonds-level steroids and dopes his blood alongside Lance Armstrong before imposing all sorts of costs on your business.
A power outage here, a flood there. An employee quits. Or maybe, as a wise mentor once remarked to me, your “worms didn’t read the book” and behave how the book said they would.
Even when things don’t go wrong, you can expect your business development and production efforts to take much longer than you might think.
For example, when we produced our own castings here, it took us 9 months to produce a consistent product, using 4 to 5 man hours per week to pre-compost feedstock, feed the worms, and harvest and screen our castings for sale.
With only a 16-foot CFT, we were able to produce about 100 gallons of castings per week, an output that got reduced to 60 gallons when we screened out our coarser material. We might have ended up with 240 pounds of screened material, max.
We sold these castings online and netted typically between $1.25 and $2.30 per pound.
At $25 per man hour, that means we spent $125 in labor alone to make roughly $400 of product per week. We’re left with $275 to pay for overhead, pay back equipment costs, etc.
Our mission to help educate vermicomposters made this a worthwhile endeavor.
But as little as we could produce, from a purely financial perspective, it made little sense for the profit from the worm castings alone.
4) Your Competition’s Cheap Worm Castings Are Consistent. And Probably Very Good.
Understanding that they’ll likely never compete with the big boys on price, new commercial worm farm owners market their worm castings like the pour-over coffee joint down the street.
Using words like “small-batch” and “artisanal,” new vermi-entrepreneurs are communicating a carefully-curated feedstock list for their worm bins or CFTs.
This is smart.
But in my experience, many of them are feeding an inconsistent hodge-podge of pre- and post-consumer food waste along with manures and whatever other organic waste they can get their hands on.
Your competition’s worm castings are likely to be very consistent….and I’m going to be honest here….likely pretty good.
I’ve seen compost tests and biological analyses from several larger producers.
I didn’t want them to be good. But they were.
If you’re going to make the case that your castings are better than brand X, be ready to prove it with test results. Consider a biological report from a lab like Earthfort.
And maintain standard inputs and processes to make sure those results are repeatable.
Encouraging side note: Most commercially-bagged worm castings will show poor quality because the packaging choked off oxygen to the microbes inside. While Brand X’s fresh castings might be quite good, they won’t likely be fresh when plucked off the shelves at Home Depot.
Exploit your castings’ freshness and recency of harvest to your customers.
How to Overcome Obstacles to Start a Worm Business
You made it through my Debbie Downer gauntlet.
I salute you, brave vermi-preneur!
If I can put myself in your shoes, here’s how I would attack business development.
Start Small to Validate Your Idea
It’s far harder to go from zero to $10,000 in annual revenue than it is from $10,000 to $100,000 or more.
If you’re bootstrapping your own commercial worm farm (as opposed to taking on investors) and can’t afford to suffer one or more unprofitable years, you would be wise to keep your costs as low as possible.
If starting from zero, delay purchasing or leasing a property for the sole purpose of increasing production. Wait until you’ve gotten your business off the ground to the point where it makes sense to add financial risk.
I don’t know where that point is for you.
But if you’re not independently wealthy *and* starting from zero, then I can just about guarantee that time is not now.
Sell Only to End Users
A business owner with small supply potential must protect profit margin at all costs.
Selling worms or (especially) castings to a local garden center will result in disappointing margins. You can expect the garden center to need to buy your product at a 50% discount to retail.
This won’t likely be enough juice for you.
Anything larger than a Mom & Pop Garden Center may also require you to navigate a vendor approval process, name them as a co-insured on your business insurance policy, make you comply with all sorts of internal company policies, and so on.
Sell direct to the end user whenever you can. And sell at those magical farmers markets whenever possible!
Differentiate Your Product….or Yourself
If you can guarantee a pure worm species or can show a good balance of fungi and bacteria in your castings, then say so!
If you can’t make a compelling case as to why your product is better, there’s still hope. You can make YOU the reason people want to buy from you.
Leverage your knowledge, charisma, friendliness, or commitment to customer service to build trust with your customer base. This takes time, but it creates loyal customers who will be much less sensitive to price.
The paragraph above is the only reason the Urban Worm Company exists. Our blog, videos, e-mails, and free information allowed us to build trust with our readers and viewers.
But they have also differentiated themselves as trusted authorities in the minds of their loyal customers.
You could be the same person in your community and beyond.
Don’t Be Afraid to Resell Someone Else’s Product
Here’s a dirty little secret.
The Urban Worm Company directly produces no products as of 2022. I could literally go for weeks without touching worms or worm castings.
But we *do* have influence over the quality control of the Urban Worm Bag Version 2 produced in China, Urban Worm Bag Eco made in Mexico, the coco coir and jute blankets made in India, and the worm castings produced in the Midwest.
This could be considered inauthentic by some, but it also makes sense for us.
The Urban Worm Company mission is to create, educate, and equip vermicomposters. We don’t grow worms or worm castings ourselves anymore.
By selling products produced elsewhere to equip vermicomposters for a profit, we have more time and resources to dedicate to creating and educating vermicomposters. This process builds trust, loyalty, and educated vermicomposters who can effectively spread the word!
If your ability to produce is limited, I would highly recommend reselling 3rd-party products, whether ours or someone else’s.
If you’re wondering if you’re giving up too much profit by doing that, I would reread the “You’re Likely Underestimating the Time & Expense Required” section above.
Bottom line? You might be better off making an easier dollar than working your tail off to make a buck fifty.
Take it from me.
People want to know how to do this fun, exotic worm thing. And they’re willing to pay you for what’s inside your head. Even if you don’t feel like your worm knowledge is up to snuff, it’s likely light years beyond your audience.
Don’t let imposter syndrome get in the way of you imparting your knowledge on others.
Here are a couple of ways you can build a business on your knowledge alone.
Information is very profitable. The most common way for new commercial worm farm owners to profit from information is by conducting workshops, either on-site or off. Workshops can be paid or unpaid.
If unpaid, they are still a great avenue for sales of worm bin starter kits, worms, worm castings, and other goodies.
Especially in the spring when the interest levels are high, people are willing to pay you for your time, brainpower, and products. These events are awesome for building trust and rapport with your local market.
Digital information products like courses and e-books can be incredibly profitable.
You see, there is a cost in conducting in-person workshops, both in the time to prepare for it and the time to deliver the workshop itself. And that workshop can only serve so many people, meaning that you need to spend time to conduct the next one, and so on.
But the cost to produce and distribute one copy of a digital information product is the same as the cost to deliver 1,000, or 1,000,000 copies.
Information is scalable – more sales without much more work – allowing you to spend time on the physical aspects of your operation.
I’ll warn you that you likely won’t make quit-your-job money selling information products in a very narrow niche like worms and worm castings. Mary Appelhof, author of Worms Eat My Garbage, didn’t die a rich woman.
But digital information – both free and paid – is potentially profitable and a great brand builder.
Take a Different Angle Into the Market
What part of the market can you serve that others aren’t? You’ve got plenty of opportunities to make money with products and services that are one degree removed from worm farming.
Create & Sell Soil Blends
Worm castings are an ingredient for soil; you don’t grow anything in just worm castings. If your customers are going to be mixing worm castings with other – typically lower value – products to make soil, consider offering the soil itself.
The Worm Farm in Durham, CA makes most of its money on blended soils despite calling itself a worm farm. The Arizona Worm Farm derives 80% of its $1,000,000+ in annual sales from blended soils as well.
“Done for you” products like soil blends open you up to a far larger bulk market than just worm castings.
Create & Sell Worm Teas or Extracts
How about worm tea or extract?
One of the largest worm farms in the US has reportedly decommissioned a majority of their continuous flow worms bins. They are now concentrating on worm extract and make gobs of it with small amounts of vermicompost.
You might find your local market is hungry for liquid products. And you can make lots of it with small amounts of compost or vermicompost.
Wanna Learn More About Worm Tea?
Compost tea is an extremely economical way to distribute the magic microbes in compost and vermicompost to a large surface area.
Offer Compost Hauling as a Service
How about hauling compost away from residential and commercial homes?
Our friends at Bennett Compost mentioned above have over 6500 customers in the Philadelphia area. Bennett collects & hauls compost to two different Philly-area locations, only composting and vermicomposting a fraction of what they collect. Bill Richmond of Adirondack Worm Farm makes good money doing this on a smaller scale in New York’s Hudson Valley.
If you’re collecting waste from outside sources for vermicomposting and doing it for free, you may be losing out on tipping fees you might collect from waste producers.
If this interests you, look into joining the Institute for Local Self-Reliance, a decentralized network of smaller “community composters,” some of whom are vermicomposters.
Bins, Equipment, & Accessories
What tools or equipment do vermicomposters need to recycle their organic waste?
Not to give the game away, but the financial engine of the Urban Worm Company is not worms or worm castings sales. It’s the sale of the Urban Worm Bag. Nearly 80% of our sales are either for the Urban Worm Bag or products related to it.
My friend Dan Lonowski of Michigan SoilWorks is a retired automotive R&D engineer.
His continuous flow worm bins are the gold standard in the mid-scale commercial worm bin market. He found a way to combine his engineering chops and passion for vermicomposting into a successful venture.
Blogging, YouTube, and Social Media
Revenue from our web content itself is minimal, but useful posts and videos build trust in our brand and attracts new readers and viewers.
A small minority will become customers. But those customers are very loyal and will buy from you simply because you helped them.
This is not a fast-growth strategy; it takes seemingly forever to gain traction with organic web content.
But once you’ve got a foothold, it is the most bulletproof customer acquisition method you’ll have.
We are less active on social media platforms like Instagram, Facebook, and Twitter but social media plays huge roles for some gardening influencers.
Summary: Charge Forward with Eyes Wide Open
I don’t have a magic formula to grow a business, let alone your business.
But I know for certain that:
- it’s harder than you think
- your competition is tough
- there is no silver bullet system or off-the-shelf program you can buy to lead you to riches
I hope this article was a filter, not a brick wall.
I also hope it gives you food for thought as you consider starting a commercial worm farming endeavor.