Photo Credit: Mark Isselhardt
Escalating trade disputes are reverberating through US farm sectors and our US specialty products. Farming sectors could become minor bargaining chips or worse, collateral damage, as high impact manufacturing interests drive the policies. In Vermont the two primary ag drivers of dairy and maple may get caught up in the fuss. Ironically, our suffering US dairy economy and dairy families have been pitted against Canadian farm owners and a supply management system that has facilitated viable milk prices for smaller farm operations. The liquid gold of maple flows freely across the US/Canadian border. At least it did. In 2017, 62% of Canadian syrup exports came to the United States ( US Maple Statistics)
Have Canadian imports been flooding US markets with cheap syrup? Until recently most US bulk syrup was purchased on parity with Canadian market price after currency exchange adjustments. Again, Canada has a market management strategy to stabilize prices (for better or worse) and US producers received the benefits of price predictability.
Branding could be equally important in future trade policy. In Vermont we have enjoyed an explosion of artisan cheese in the past 20 years. Vermont makes darn good cheese. But we fall prey to a cultural delay on developing the necessary protections to promote or protect our regional foods. For years many award winning Vermont cheeses have been “cheddars” “tomme” “french alpine”. Now we are seeing regionally named products like Rupert . Will US producers organize themselves to adopt the legal process verification that European food-rich regions have mastered with Champagne (the legal process) and Cheddar (the verb!)?
The USDA has extended the sign up deadline for the Dairy Margin Protection Program to June 22nd. USDA-MPP Extended Deadline Notice
Dairy farms should seriously consider this program. See our previous post in May with more details.
The sign-up period for MPP coverage in 2018 will close on June 1, 2018.
If you’re shipping milk you should check out how the USDA has revamped the Margin Protection Program (MPP) for 2018. Premiums have dropped, especially for Tier I pricing (less than 5 million lbs of milk). Here’s how it works.
The program makes payments when the monthly margin between the U.S. all-milk price and national average feed costs falls below the level of coverage chosen by the producer. Above the basic $5 margin level for the first 5 million pounds there are supplemental coverage options available for purchase in 50-cent increments. Supplemental coverage can extend up to $8/cwt. The program pays on one-twelfth of a producer’s annual production history, multiplied by the percentage of supplemental coverage chosen, from 25% up to 90%, plus the remaining coverage provided on the farm’s production history at the basic $5 level. Once a farm enrolls in the MPP it is committed to the program through 2018. Farmers must have an up-to-date Form 1026, signifying that they meet conservation requirements, in order to participate.
For example, if you use 3,000,000 lbs milk production history and the $8.00 MPP level and elect to insure 90% of that production you could receive an estimated $13,897 in total payments. At a premium cost of $4,196, that’s a net return of $9,701 for the whole year, after premiums are covered. The January, February and March margins are set, and in the above scenario, the payout so far in 2018 is $8,798, more than covering the $4,196 premium. This program is worth revisiting!
For more information, follow this link to the MPP Decision Tool where you can make inputs specific to your farm. The sign-up period for coverage in 2018 opened on April 9 and will close on June 1, 2018. The U.S. Department of Agriculture is allowing farmers to opt out of coverage for 2018. For more information, contact your local USDA Farm Service Agency (FSA) and ask about MPP or read this MPP Factsheet.
Photo Credit: Mark Isselhardt
UVM Extension has published the newest 2016 VT Maple Benchmark report. This report shows financial analysis and profitability for a group of syrup businesses that range from 2,500 to 20,000 taps. Download a copy of the 2016 report now.
In 2016 maple market prices had dropped significantly but very high production yields for many participants resulted in stronger profitability for 2016 compared to 2015. Bulk maple producers showed a wide range of cost of production from $1.62 per pound to $2.52 per pound with an average cost of $2.00 per pound. Overall costs on a per pound basis declined in 2016 due to high production yields. Several historically high performing businesses, however, will be challenged to stay profitable as market prices drop below $2.25 per pound and/or they experience only “good-to-average” yields. This is a growing concern for maple sugar makers from 8,000-15,000 taps that rely on maple income for household income.
Many maple businesses have already or plan to diversify market channels. There is no guarantee that higher wholesale or direct market prices can compensate for the costs and time associated with serving those new customers. The reality, however, is that bulk maple businesses that drop below financial break-even levels will seek to find alternative ways to market syrup in order to stay in business. Several participating businesses in this project have demonstrated that a mixed marketing plan that includes bulk sales and some direct sales can preserve profitability and reduce the risk of uncontrollable bulk market prices.
The VT Maple Benchmark project will continue in 2018! Starting in May our business educators will begin completing 2017 financial analysis with maple sugar makers and sap only enterprises. Contact Mark Cannella for more information (Mark.Cannella@uvm.edu) . This year the project specifically needs more producers from 15,000 taps – 50,000 taps to register.
UVM Extension is also offering maple business planning assistance from May- December to Vermont sugar makers. Contact Mark for more information on maple financial analysis and business planning assistance. Mark.Cannella@uvm.edu
It is the nomination period for the Vermont Dairy Farm of the Year award. UVM Extension has an application form for you to nominate the farm you think exemplifies what an outstanding dairy is… great milk quality, innovation on the farm, progressive management practices, community service and ambassadorship for the industry are all characteristics of past recipients. Thanks to Richard, Bonnie and Tucker at Fairmont Farms for being great 2017 ambassadors for Vermont dairy producers!
Direct questions to either Tony Kitsos or Peggy Manahan ( email@example.com ).
The application can be found on the web at this link http://go.uvm.edu/vdfya and click on “Nominate A Farmer”. Deadline is April 30!
For many years maple sap and syrup producers have referenced the print version sap buying pricing sheet that is regularly posted in industry publications like the Maple News or the annual Maple Syrup Almanac. There is now an online Sap Value Calculator developed by Cornell and Ohio State available for use. Cornell also has the Cornell Sap Buying Spreadsheet available for download (excel version) from their website.
Some sap sellers had historically used a 50% or 60% value share to price sap but those percentages are not necessarily current to all regions. Fast growing maple regions are cited for up to 65% – 70% of final syrup market value being paid to the sap producer. The online Sap Value Calculator and the Cornell Spreadsheets offer more flexibility to target a specific crop share percentage for sap pricing.
Are you looking for more online maple business planning tools? UVM Extension has been awarded a new grant to develop online business planning tools and financial calculators for maple producers. The project starts in June 2018. If you have ideas please contact Mark.Cannella@uvm.edu
UVM Extension farm business educators (Mark Cannella, Tony Kitsos and Betsy Miller) are available to work one-on-one with farmers on their finances and business planning. Reserve a 1½ hour appointment to prepare documents and plans to manage the business. Use the time to develop a balance sheet, update financial statements, review a business plan, consider changes to the business and more. Bring your financial statements, recent records and questions!
The winter-spring schedule has been posted with dates available from mid-January through April at 10 locations statewide.
Register now at this website: http://www.regonline.com/clinicswinter2018 or download the program brochure.
UVM Extension wants to develop new maple business and economic resources to assist producers and industry leaders across the United States.
Take this short 3 minute online survey to tell us what you think. We need to know what topics to work on and how to make programs most accessible to producers.
Maple Business Resources Survey
The Maple Business Benchmark has provided detailed financial analysis to maple producers since 2013. As the industry changes there are many more economic and business management topics to focus research and educational effort towards.
What are the key issues facing the industry?
What are the major constraints that your business wants to overcome?
What are the best resources that will help you manage forward?
Maple Business Resources Survey
The Vermont Farm Viability Service Provider Network met on October 4th. This meeting of consultants and business educators is a place to share current resources to enhance farm business planning in Vermont. Topics of the day:
- NOFA-VT has produced cost of production benchmarks for carrots, onions, lettuce, winter squash and potatoes. The study has also produced whole farm financial benchmarks. Go to the cost of production benchmarks to see the sales per acre, costs per acre and net profit per acre for these crops.
- VT Agency of Agriculture, Food and Markets announced the first round of Vermont Produce Safety Improvement Grants that farmers can apply for to improve on-farm produce safety. Farms can also get support for an On-Farm Readiness Review to have a one on one conversation on how the farm is doing on produce safety in advance of formal inspections.
- Dairy Industry Overview: discussions continue about how the oversupply of conventional and organic milk is impacting farm gate prices. Stagnant or declining prices paired with regulation/certification driven investments present a difficult situation for dairy business owners to navigate. Farm transfer planning is further complicated as the outlook for many dairies remains uncertain. Back to brass tacks, this group talked about the need to revisit accurate and responsible asset valuation on dairy herds and how to develop pro forma statements that negotiate short term cash flow shocks.
- Farm to Institution Spending: active research continues to explore possible opportunities to enhance regional institutional spending (schools, colleges, hospitals) on agricultural products. The looming question remains: What will it take for farms or distributors to find solutions that get the right products to the buyers at the right price.
UVM Extension will offer this free workshop for logging companies on November 8th (Chester, VT) and November 9th (Hardwick,VT). The workshop builds beyond topics covered in seminars last year. Presenters include: Sam Lincoln (VT Dept of Forests, Parks & Recreation), Paul Frederick (VT Dept of Forests, Parks & Recreation), Chris Lindgren (UVM), Christine McGowan ( VT Sustainable Jobs Fund) and Steve Bick (Northeast Forest LLC.). Topics this year include: current legislative issues, 5 smartphone apps for loggers, market/industry updates, business planning, personal finance and much more! Register Now!