Family Systems and Farm Business

Emotional Anxiety, Entanglement, Conflict…finding a Family Leader, Neutrality and Coach-ability. These were the concepts discussed at a December training for Farm Viability business advisers provided by Erik Thompson ( http://www.thompsonleadership.com/ ). Dr. Murray Bowen described the natural emotional processes that shape how families and social units function. Bowen Family Systems Theory provides valuable concepts for farm families and farm business advisers seeking to advance common family goals and aspirations in a productive way. It is not easy! Some of the highest risk forms of chronic anxiety in a family system manifest themselves in forms of avoidance and “over-tolerance of irresponsible behavior.”

To move past that, families and family coaches need to test their own emotional maturity to promote the best outcomes. Family leaders will develop , according to Bowen ” ….with the courage to define self, who is as invested in the welfare of the family as in self….whose energy goes to changing self rather than telling others what to do….”

Family coaches and  business consultants work to establish emotional neutrality and emphasize coachability from their clients. For more on Family Systems click this link to the Vermont Center for Family Studies :   http://www.vermontcenterforfamilystudies.org/

You can also check out trainings for Social Sustainability on Farms training programs through Northeast SARE: http://www.uvm.edu/~vtsare/?Page=projects.html&SM=submenu.html

Milk Prices Dropping: New MPP Deadline Dec 19th

The USDA has extended the application deadline for the Dairy Margin Protection Program to December 19th. Milk price forecasts are showing significant decline in prices over the next several months.

Bob Parsons, University of Vermont Ag Economist, has shared these figures below that show the probability of margins dropping below various coverage levels….

“From the table below, the % numbers are the probability of return over feed cost dropping below the amount on the left hand column.  For example while the expected return over feed costs for March-April is $8.52, the probability of it dropping below $7 is 18% and 10% chance of dropping below $6.50. Remember that in the past that when milk prices drop, they tended to drop further than the markets predicted.”

Margin Level Nov-Dec 2014 Jan-Feb 2015 Mar-Apr 2015 May-Jun 2015 Jul-Aug 2015 Sep-Oct 2015 Nov-Dec 2015 Jan-Feb 2016
Expected $12.91 $9.20 $8.52 $8.64 $9.18 $10.13 $10.12 $9.79
< $8.00 - 13% 39% 39% 30% 15% 21% 29%
< $7.50 - 6% 28% 29% 21% 10% 15% 23%
< $7.00 - 2% 18% 20% 15% 6% 10% 17%
< $6.50 - - 10% 12% 10% 3% 6% 12%
< $6.00 - - 5% 7% 6% 1% 4% 8%
< $5.50 - - 2% 4% 3% 1% 2% 5%
< $5.00 - - 1% 2% 2% - 1% 3%
< $4.50 - - - 1% 1% - - 1%
< $4.00 - - - - - - - 1%

December 5th Deadline, Dairy Margin Protection Program

The deadline for enrollment in the Margin Protection Program for Dairy has been extended to Friday December 5th. MPP is a  revenue risk management tool for dairy producers when the difference between the price of milk and price of feed falls below coverage levels that farmers themselves choose. Dairy producers should contact their local USDA Farm Service Agency office to get information on enrollment this week. This weeks deadline marks the last chance dairy farms will have access to this program until 2016.

Information about the MPP-Dairy is available from USDA Farm Service Agency at this website: USDA FSA , MPP DAIRY

An online decision tool is available for farmers to use at this website: MPP DECISION TOOLThe tool allows a farmer to see the financial impact of how MPP enrollment would impact their business at different selected coverage levels. Instructions on how to use the tool are available on the website.

Farm Business Specialist Dennis Kauppila (UVM Extension) has created a simple worksheet that can be filled out while using the online decision tool. The sheet allows you to see how this program would impact your farm had the program been running in 2009 and 2012. Download the worksheet here: MPP-Dairy 3 year tables-1

Here is a list of Vermont FSA offices: VERMONT FSA COUNTY MAP (click your county on the map to get contact information)

Crop Storage Workshops and Profitability

UVM Extension Ag Engineer Chris Callahan will be offering crop storage workshops this fall. Click this link for details on events in October: Crop Storage Workshops

Inventory turnover and asset turnover are key factors to consider when you make the investment in crop storage. “Turnover” ratios provide efficiency measures that reveal how much bang you get for your buck. Here are two possible ways to improve these ratios: a) select high “value per volume” products for long term storage and b) move more product through the storage unit over the course of the year (more turns).

Quick example 1: Farmer Mark grows $25,000 of potato and has them all in storage on January 1. He sells them all winter and hits gross sales of $22,000 (there are always losses!). The cooler sits empty until next season. Thats 1 turn on the inventory, not so great. How could he improve? He could  grow a  $15,000 beet crop that fills the storage unit from July – October before the potatoes go into storage. Now he’s moving more product and increasing efficiencies by getting more product sales from the same storage investment.

Quick Example 2: Farmer Beth fills a walk in cooler with a variety of root crops in October, turnips, carrots, beets and even some cabbage. She wants to increase her profits next year. She wants to figure out which crop is worth the most in relation to the volume it requires. To keep it simple, she fills a .5 bushel box with each crop and multiplies weight x sell price. She could drop the lowest value per volume crop and grow more of the higher value per volume crop. She better factor in her marketing plan the selling costs though, high value crops may cost more to market…better keep the calculator out.

Click this link for October Crop Storage Workshops

 

Meetings to Explain Dairy Margin Protection Program

What is your plan to handle dairy milk price volatility and feed cost shifts over the next 3 years? Informational meetings are planned for October 13-17  throughout Vermont to explain the program to dairy farmers and business specialists.

Click this link for a list of sessions and locations: October Schedule: Dairy Margin Protection Program Meetings

New Guide on How to Set Farm Rental Rates

UVM Extension’s new How to Determine the Right Farm Rental Rate Guide was developed to support both farmers and landowners through the process of determining a fair cash rental rate for farmland, equipment and infrastructure in Vermont.

“Farmland and farm infrastructure rental rates can be tough to determine because there are many variables to consider,” says Ben Waterman author of the guide and land access coordinator at the UVM Center for Sustainable Agriculture. “However, the process can be simple. The guide explains common methods so farmers and landowners can forge lease arrangements with confidence.”

Divided into five sections, the 31-page guide describes approaches to:

  • Assess market rental rates;
  • Assess landowner’s costs of owning land;
  • Value equipment and infrastructure in a lease;
  • Factor the farm business’ net returns in the rental rate; and
  • Assess the farmer’s contributions to the lease arrangement

To download the guide now, go to:  http://www.uvm.edu/newfarmer/land/RentalGuide.pdf

Broiler Chicken Demand Research Report

Download the full report here:

[PDF] Broiler Demand at Small Grocers 2012-2013, FBRR-011

In the fall of 2012 University of Vermont Extension distributed a survey to a group of small  grocers  asking about chicken and egg demand in their stores with a focus on regionally-produced products. Follow-up phone interviews were conducted through the fall of 2013 to get additional feedback from the buyers in these stores. The goal of this work is to understand the demand for local poultry products and to also provide guidance for poultry farmers preparing to conduct their own market research.

Broiler AttributesThe reports provides details about which attributes consumers are looking for in poultry products and also the specific service expectations that small grocers have for farms selling them them poultry.

Click here to view or download the full report:

[PDF] Broiler Demand at Small Grocers 2012-2013, FBRR-011

 

$30,000 Prize for Rural Entrepreneurship

The American Farm Bureau Federation and Georgetown University have launched a challenge program to support entrepreneurship throughout the rural United States. They will award a $30,000 prize to the winner.

Do you have a creative business or business idea? Check out the details for this challenge and imagine what $30,000 would do to get your idea launched.

Rural Entrepreneurship Challenge

Irish Visitors meet Vermont’s Ag Lenders

Last week I had the pleasure of bringing 3 colleagues from Ireland’s extension service

Kevin Connolly and James McDonnell, Teagasc, discuss the finer points of chattel loans with Alan Curler, VT Ag Credit Corp.

Kevin Connolly and James McDonnell, Teagasc, discuss the finer points of chattel loans with Alan Curler, VT Ag Credit Corp.

around Vermont. They are part of Teagasc, an Irish organization that is similar to our Land Grant college system.  I studied last year with James, Fintan and Kevin, financial management specialists, when I was on sabbatical study leave in Ireland.

During the week we visited with lenders from USDA’s Farm Service Agency, VT Ag Credit Corporation, and Yankee Farm Credit. Several concepts came up that were very interesting to ‘the lads’ and may help the reader understand ag lending here in Vermont.

1. Each of the lenders talked about a ‘relationship’ with the farm borrower. They called it one of the Five Cs of Credit (see the second page of this article). Borrowers often have a difficult time understanding this, until they have a couple of years of borrowing experience- then they see how important it is to be able to pick up the phone, or send an email to their lender about a certain situation. ‘The lads’ from Ireland said that ‘relationship’ is out the window in their country. It evaporated a few years ago when Irish banks took a direct hit with the bad economy. They miss it- a lender can’t go out on a limb for a farmer who has had a little slip, and the lender knows the farmer will be able to make it right in a year or so. A farm lender sits on the opposite side of the table when a farmer wants to borrow money. But the farmer does not see the lender when the lender is trying to get approval for the farmer’s loan from the loan committee.

2. Each of the lenders talked about ‘Chattel Loans.’ This is making a loan for livestock or equipment (or another asset) using the livestock or equipment at partial collateral for the loan. Lenders in Ireland do not do this anymore. After the Irish economy hit the skids a few years ago, one of their banks had to hire people in the US, and on 2 other continents to try and find the large construction equipment that had been sold (illegally) and moved. The lenders do not want to go through that again. So farmers in Ireland are facing very strict lending rules and regulations. Ireland, as part of the European Union, is under the EU’s Dairy Marketing Quota, that has limited the amount of milk that a farmer can sell since 1984. In the spring of 2015, this quota ends. The Irish government wants an expansion of dairy- this is a product that can be easily exported to bring much-needed cash into the Irish economy. Irish dairy farmers are looking to expand to make more profits. Irish farmers who have not been dairying are considering dairy, since it has been the most profitable sector of the Irish economy. Not having Chattel Loans makes this more difficult.

3. Each of the lenders also talked about Guaranteed Loans. USDA’s FSA can guarantee farm loans made by other lenders. This protects the lender in case the borrower cannot repay the loan. This encourages lenders to make loans. Some lenders (like VACC and Yankee, and some private banks) understand how this works and use the guarantees, others do not understand. Several years ago in the economic downturn in Ireland, one bank failed, and the government decided to rescue other banks. ‘The lads’ did not think that the average person in Ireland would be in favor of guaranteed loans at this time.

4. Yankee Farm Credit is a cooperative, owned and run by farmers who have loans from Yankee. (Yankee also provides various financial services to farmers- members and non-members alike.) There is no coop farm lender in Ireland, but there are credit unions. While we were visiting with people at Yankee in White River Junction, one of ‘the lads’ thought that maybe local Irish credit unions would be interested in and able to lend to area farmers for chattel loans.

These were just a few of the ideas on their list to bring back to Ireland. In a few weeks, I hope to share what is going on in Ireland with farm business plans.