Update: On October 1st 2018 the new United States-Mexico-Canada Agreement (USMCA) was announced…details are still emerging (10/4/18) Original post written on 9/30/18. Canada placed a 10% tariff on US maple syrup exported into Canada in 2018. While some US syrup or US finished maple syrup goods do get sent to Canada the volume is small. This trade dispute retaliation from Canada is not expected to have huge impact on US maple syrup distribution. Canada exports far more syrup into the United States. The overall US-Canada trade situation that include steel, aluminum and other products will have a more pronounced impact on maple equipment and manufactured goods crossing the US-Canada border.
Roughly 62% of Canadian export syrup reaches the United States. The result is that over half of maple syrup consumption in the United States is Canadian syrup. The UVM Extension Maple Business team ran a rough calculation on the 2017 value of Canadian syrup imported into the United States. The Canadian imports represent roughly 18 million maple taps at the prevailing US maple yield per tap.
A look at recent and defunct trade agreements…..
Comprehensive Economic and Trade Agreement (CETA) was approved in 2017. CETA includes Canada and the European Union. The agreement removes tariffs on Canadian syrup imported into the European Union. The US is not part of this agreement and US syrup is subject to an ~8% tariff when imported into the EU.
Trans Pacific Partnership (TPP) Trade Agreement
This agreement between many nations was set to eliminate the 17.5% tariff on US (and Canadian) maple syrup entering Japan. Japan represents a significant existing export market for Canadian maple syrup and a possible growth area for US exports in the future. The United States pulled out of this trade agreement in 2017 and the tariffs on US maple remain in place.
The New Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) This agreement was made by the remaining TPP nations without the United States. Under that deal the tariffs on Canadian syrup imported into Pacific nations will be phased out in the next few years.
Posted by Betsy Miller, UVM Extension Farm Viability Coordinator
On August 13, 2018 Agri-Mark hosted a Dairy Summit in Albany, NY. This was an opportunity for farmers and dairy industry representatives to discuss the current state of dairy pricing and to offer proposals for a new structure.
Proposals posted on the website share a common theme of supply management and price stabilization. Many suggest a pro-active approach lead by co-ops. Expansion of current farms and entry of new farms into the business are both areas that offer challenges to the idea of a quota system. All seem to agree that this is a complex problem that doesn’t have an easy solution.
Proposals are available to read and comment on at this site: https://dairyproposals2018.com
The UVM Extension Farm Viability program provides one on one business planning to farm owners in Vermont. For more information see the program summary page.
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
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.
Steady rains throughout many parts of Vermont have caused delays for farms of all types. USDA Risk Management Agency (RMA) crop insurance products can adjust for delayed plantings or plantings completely prevented under certain circumstances. See this attached Prevented Planting Information Sheet that explains how crop insurance adjusts for prevented planting.
If you want to learn more about crop insurance options for your business contact UVM Crop Insurance Educator Jake Jacobs: 802-656-7356 or Jake.Jacobs@uvm.edu
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.
Photo: Lisa Borre
UVM Extension is holding legal education workshops for farmers on December 15th (Vergennes), 16th (Randolph) and 20th (Enosburg). This workshop will focus on farmer rights and responsibilities as a new regulatory framework is established.
- Legal Education Presentations
- Break-out Groups: Compliance, Liability, Leases
- Farmer to Farmer Networking
- Participants will develop short term legal risk management plan
Presenters include: Tony Kitsos & Mark Cannella, (UVM Extension), Annette Higby, (Attorney at Law)
Register Now at: https://www.eventbrite.com/e/water-quality-regulations-and-legal-education-for-farmers-tickets-29757524557