Transcript Slide 1

Small-Scale Intensive Farming:
Lowering Risks and Increasing
Profits
Andy Pressman
LINC Urban Farm
Wilmington, NC
October 10, 2013
Photo: SPIN-Farming®
Helping People by championing small-scale,
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agriculture and farm
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Bringing New Farmers to the Table
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What is a Small Farm?
• USDA defines as farms with
$250,000 or less in sales.
• Accounted for 91% of all
farms in 2007 (only 56% of
US food production).
• 60% had less than $10,000
in sales (noncommercial).
• Over half were direct sales
to customers
• Avg. age 57.1 years old
*Information from USDA 2007 Census of Agriculture
Source: The Winter Harvest Handbook by Eliot
Coleman
Beginning Farmer’s (10 years or less)
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78% of farmers ranked “lack of
capital” as a top challenge for
beginners, with another 40% ranking
“access to credit” as the biggest
challenge.
68% of farmers ranked land access as
the biggest challenge faced by
beginners.
70% of farmers under 30 rented land,
as compared to 37% of farmers over
30.
74% of farmers ranked
apprenticeships as among the most
valuable programs for beginners.
55% of farmers ranked local
partnerships as one of the most
valuable programs, and 49% ranked
Community Supported Agriculture
(CSA) as a top program.
Source: National Young Farmer’s Coalition
The State of Urban Farming:
Enhancing the Viability of Small and Medium-Sized
Commercial Urban Farms
Gross Sales (if sales)
$1 million $500,000- $250,000- $100,000- $50,000or more
$999,999 $499,999 249,999 $99,999
Percent production
in city core
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$25,000$49,999
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$10,000 Less
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$24,999 $10,000
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Farm for Profit, Not Production
(Profit = Income –Expenses)
• In 2010, 64% of farms had
negative operating profits.
• It pays to plan!
• Guide in decision making,
decreasing risks, and monitors
progress
• Write it down
Photo: Dennis Chamberlin
A Farm Business Plan
1) Summary.
2) Mission/objectives.
3) Business description (location, history, values, land,
products).
4) Marketing plan (where, to whom, prices).
5) Production plan (planting/harvest schedule, fertility,
pest management, irrigation, suppliers, etc.).
6) Financials (cash flow projection, financial statements,
how much money you need to borrow and what for).
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National Organic Program
The Organic System Plan
• Description of practices &
procedures.
• List of inputs.
• Description of monitoring
system.
• Description of
recordkeeping system.
• Description of management
practices and physical
barriers to prevent
contamination/comingling.
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Whole-Farm Planning
• Connection between what
we farmers value the most
in life & the kinds of
activities/production we
choose to pursue.
• Link between chosen
activities and the health of
farm’s resource base.
• Written plan is a working
document – management
decisions are accountable
to farmer’s quality-of-life.
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Holistic Management
(Income – Profit = Expenses)
1. Determine who the
decision-makers are and
what resources (including
$) are available.
2. Create a holistic (farm
and/or family) goal that
represents shared values.
3. Test decisions towards the
goal.
4. Monitor progress towards
goal & take corrective
action as needed.
Setting Goals
1. Quality-of-life statement (I want……….happiness,
financial security, good relationship, spiritual
fulfillment, meaningful work, challenges, healthy food,
ecological balance, self-sufficiency…….).
2. Forms of Production.
3. Future Resource Base (You, landscape, community).
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LINC
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Evaluating a Farm Enterprise
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Personal Resources
Experience
Personality
Farm-Site
Characteristics
• Market Potential/
Demographics
• Infrastructure and
Information Support
How Much Revenue Does Your
Farm Need to Make?
• Say your net income goal is $30,000.
• A common net income goal is 25% to 30%
of your gross income.
• $30,000 / .25 = $120,000.
• Gross revenue would need to be
$120,000.
• Are your land and markets adequate?
Revenue Potential
Determine # marketing weeks + yearly targeted revenue =
average weekly revenue.
Example
Targeting $40,000/year, over 20 marketing weeks =
average weekly revenue = $2,000 per week.
Is that Realistic?
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The True Cost of Farming
•Used to help make
decisions about
pricing, expansion,
and new directions.
•Compare Markets
Expense per bed
Cost per bed
¼ hr chisel
$5
¼ hr final bed prep
$7.00
seed costs
$50.00
1 hour direct seeding
$20.00
5 hours cultivating
$50.00
Harvesting and washing
$100.00
Boxes
$50.00
Total in-field costs
$282.00
Gross sales per bed
$2200
Net Return/ bed
$1982
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Holistic Financial Planning
(Income – Profit = Expenses)
Four Steps:
1. Allocate profit
2. Recognize debt
3. Categorize expenses
Wealth generating
Inescapable
Maintenance
4. Monthly monitoring
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Market Analysis Before Farming
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Where am I going to sell/who is customer?
Size of customer base?
Location of customer base and influence?
Sell directly to consumers?
Sell wholesale to commodity market?
Who is my competition?
Season price fluctuations to expect?
Quality standards to meet?
Time and fuel to reach markets?
Legal or food safety considerations?
The Centerpiece Strategy
• Low initial start-up costs.
• High gross-profit margin.
• Relatively low maintenance
requirements.
• High cash flow relative to
expenses.
• High demand, low supply in
marketplace.
• High product
distinctiveness.
Photo: Foggy Meadow Farm
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Activity
• Do you have a business goal that defines your values and
desired lifestyle?
• If you have a goal, does it define systems to operationalize it
(ie. communication, time management, record keeping,
financial planning, risk management, employee training,
conflict resolution,….)?
• Challenges/Solutions?
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