2018 Business Skills Workshops for Logging Professionals—November 7th and 8th

UVM Extension will offer this free workshop for logging companies on November 7th (Rutland, VT) and November 8th (Hardwick,VT). Presentations will cover a range of topics from industry updates to marketing strategies and include new presentations not included in past years. Presenters include: Sam Lincoln (VT Dept of Forests, Parks & Recreation), Paul Frederick (VT Dept of Forests, Parks & Recreation), Chris Lindgren (UVM Extension), Christine McGowan (VT Sustainable Jobs Fund) and Steve Bick (Northeast Forests, LLC). Learn more about the program and how to register!

Maple Markets: International Trade Snap-Shot

US-Canada

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…..

European Union

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.

 

Dairy Summit and Industry Proposals

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.

 

Vermont Maple “In the Middle”

Credit: Mark Isselhardt

As global maple syrup production increases the markets, communities, and business owners are facing changes. Vermont has a long cultural heritage of syrup production ranging from subsistence production to commercial activity for over 100 years. 2018 is no different… for every new maple enterprise setting up to tap 50,000 trees we are likely to have 10+ new hobby producers making their own syrup and selling the excess directly in their neighborhood.

Research on farm economics has demonstrated how farms can often get caught in the middle of the push and pull of dynamic business environments and consumer preferences. The 2008 text Food and the Mid-Level Farm (Lyson, Stevenson, Welsh) explains the dilemma that faces “agriculture in the middle.” The super-small farm can often maintain a specialty niche that serves local or direct clientele. It’s common that these farms might be part-time or lifestyle farms. They may be profitable but it may not matter. The largest scale farms  are  producing goods at low costs and high volumes and they are  serving broader markets that value uniform product, lower price points, and require sophisticated supply chain logistics. What’s left is the farm “in the middle”. These farms are full time jobs for their owner -operators that need to earn a livelihood from risky business activity. They are too big to be accepted in niche markets and too small to compete with the big players.

The recent maple price downturn has begun to reveal where the “middle maple producer” may be. Four years of maple finance benchmark analysis has shown how a reasonable owner livelihood can disappear as the business environment shifts. A small sample of 7,500-15,000 tap maple producers in VT has demonstrated the looming risk for a formerly viable owner-operated bulk syrup enterprise that can’t break even if market prices stay below $2.10 per pound. These businesses can be a too big to pivot into niche direct marketing and too small to compete in the larger wholesale markets. We don’t know where the sweet spot for a commercially viable “middle” operation will be but we do know not to assume it will stay in the same place forever. We also wait to see if a group of informed consumers that value the people and practices of “ag in the middle” will persist.

Trade wars, price uncertainty and agricultural branding

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!)?

Dairy Financial News: Update on USDA’s Margin Protection Program for 2018

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.

 

Online Maple Sap Price Calculator

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

 

 

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.

Recent Reports Explore Regional Food Marketing

Here are two recent reports that shed light on the varying  opportunities and constraints facing the expansion of food sales for New England farmers and food distributors.

“Getting it There”, Farm to Institution New England. This report looks at food distributors in the farm to institution market channel.

“Storage and Distribution Report for the  Northeast Kingdom”, Rosalie J Wilson. Development Services

These organizations are among the many that are working to advance farm to school and farm to institution development.

Food Connects

VT Feed : NOFA VT and Shelburne Farms

Sodexo: VT First