New Vermont Maple Business Benchmark Report

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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

 

Business Clinics for Farm Owners

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. 


VT Ag Business Today: Produce Cost Studies, Food Safety Grants and more…

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.

Use Pre-Mortem Analysis to Prevent Project Failure

When you are planning a bold farm diversification or expansion who do you want on your planning team?  An ultra-advocate….”we can do this!” or the devils-advocate… “here is something that  could really go wrong!”.  Consider the premortem analysis process. Don’t wait to complete the  postmortem debrief after the project fails. At that point it is too late. The team can learn from the mistakes but it will be too late to recoup sunk capital, time and possibly relationships that suffer from the failure.The premortem analysis takes an important look at all the factors that can wreck your project. It is a key process to anticipating these risks, fine tuning the plan and building in sufficient contingencies.. Business advisers can facilitate this process or business owners/project leaders can do it within their groups.

Feasibility planning regularly suffers from over-optimism or key leaders that are over-invested in success (at all costs!). The project premortem is an essential step in the planning process. Here is a list of key steps to complete the project premortem

  • Gather key projects members and stakeholders that have already been briefed on the anticipated project goals.
  • Make the announcement “the project has failed”.
  • Team members must  start with the brainstorm first (don’t try to problem solve). Ask participants to list 2-3 the things that caused the failure. Ideally, get people to develop their list independently without group conversation. Create space for all team members to get their perspective into the process.
  • Team leaders and/or the group reviews the premortem symptoms and ranks the highest priority items.
  • Look for ways to strengthen the project plan.

Farming is a risky business and certain farms are challenged to retain profits. At any point in the business planning process it is OK to ask, “is there more evidence pointing to project failure compared to success? Can this be a viable project?”

The premortem perspective will bring your farm planning to a higher level. Forcing projects to fail on paper will improve a manager’s ability to make them work in real life.

 

Farm Viability Network Resources

On February 17, 2017 the VT statewide farm viability business planning network members met to share current research and resources to advance farm business plans.The session included farm business benchmarks, feasibility studies and conservation easements.

The Farm to Plate Viability Indicators Task Force is collecting key benchmarks and indicators for produce, livestock, maple and other ag sectors in VT. Picture the scene, 17 business planners adding notes to a group spreadsheet and punching calculators to document business metrics used to evaluate performance and management: labor expense ratio for produce farms, gain per day for grass-fed beef finishing, debt repayment margins for robotic dairies. The task force will be publishing key benchmarks later in 2017.

Rose Wilson shared recent feasibility projects she has been working on. Right now, enterprise analysis projects for organic enterprises including grass only milk, laying hens and pork is underway. Spoiler…. these enterprise are challenged to break even at the current cost and market price levels. More studies include….

Feasibility Study for a Leased Vegetable Storage Facility, Rose Wilson This reports explores the demand and business  feasibility for a shared-use leased vegetable storage facility.

Northeast Kingdom Agricultural Transportation Feasibility Study, Rose Wilson
This report presents different freight service delivery solutions and includes cost analysis, route mapping and other business considerations.

The meeting concluded with an extended panel featuring the VT Land Trust Farmland Access Program.  A key discussion centered on  on farm labor housing and appraisal considerations relating to collateral values and credit decisions. Conservation easements continue to be an important way to meet conservation goals, facilitate farmer exit planning and provide affordable farmland access for new farm businesses.