The age-old question for a farm financial adviser has been “Is the money moving from the business across the kitchen table into the owner’s pockets or is the money moving from the owner’s pocket across the table, out the door-yard and into the business?” There is no question that investment capital is needed for people starting or expanding a modern maple enterprise. UVM Extension has published nine start-up investment profiles to demonstrate the estimated investment required for enterprises at different scales.
Go to the Maple Business Resource Library at www.maplemanager.org to find the investment profile that will help with your planned start-up or expansion.
The research finds that smaller start-ups might require $50-$60 per tap for the production investment plus an additional $25-$45 per tap for land purchases when the appraisal is $1,500-$2,500 per acre. Larger enterprises from 10,000-20,000 taps could require a slightly lower investment of $40-$50 per tap in production systems plus that same additional $25-$45 per tap if a property purchase is part of the plan.
International Maple Syrup Institute Explores U.S. Promotion Programs This week the International Maple Syrup Institute Board of Directors will gather for their annual meeting to discuss a number of key issues facing the maple industry. One topic on the agenda will be the progress being made to explore different promotional program options for the United States. As the maple industry grows the IMSI seeks to understand different ways maple producers can work together to expand the market for maple syrup. The research committee plans to produce a series of articles later this year to share how different U.S. specialty crop groups have developed unified promotional programs and the different mechanisms that have been used to organize these initiatives.
New Northeast Maple Benchmark Report UVM Extension has published the newest report that documents ongoing financial research with maple businesses. The 2020 NE Maple Benchmark is available at www.maplemanager.org on the Maple Business Resource Library page. A deeper look at the results is coming in the July newsletter.
Sign up for program updates when you visit www.maplemanager.org and you will receive the monthly newsletter on maple business development, markets and economics.
Maple sap harvesting has been underway in many US regions. Now well into March, the season is in full swing.
If you are in the business of selling sap or thinking about starting to, UVM Extension has business resources available to help. For example, you can use our Sap Pricing Calculator to determine the price per gallon paid to the seller or determine Profit and Loss from Sap Hauling
The Economic Advantage of Sap-Only Specializing in sap production and selling sap in a business-to-business transaction offers many advantages. Sap sellers are able to reduce their capital investments and focus specifically on sap production activity. Recent research shows that sap-only enterprises may require just 50% of the capital investment compared to a similar sized sap-to-syrup processing business. A typical 5,000 tap enterprise on previously owned property is estimated to require $100k-$120k in sap collection investments. For the same enterprise to invest in syrup processing capacity at least another $110k in capital start-up is expected. Sap sellers can focus their labor and attention to high yielding sap harvest systems without spreading skills and attention into the business of syrup processing, grading, packaging and sales.
Syrup processors see a significant advantage from sap purchasing as well. The investment in a sugar house and the processing equipment is significant. Many syrup processors are seeing the benefits of sizing their facility in order to purchase-in additional sap and increase their equipment usage to enhance profitability. These relationships also enable successful maple brands to supply more customers and focus on the market development logistics to expand maple demand.
UVM Extension offers two online short courses for current and prospective maple producers that begin in late October. Each course includes four classes (1.5 hours each), once per week, and teaching assignments that get participants completing real time analysis and making immediate decisions to enhance their business. Registration in now open for the Maple Business Planning and Maple Financial Planning short courses.
For more information see the course descriptions and registration information on the Events page at www.maplemanger.org. Or click the file below to view or share the informational flyer.
University of Vermont maple, business development and forestry specialists will present a series of online webinars starting July 21st 2021. Session information and registration is now available for eight sessions offered from late July through October. Register now on the Upcoming Events page at www.maplemanager.org or download the program schedule here: UVM 2021 Maple Webinar.
Topics will include: red maple syrup research, forest carbon, financial benchmarks, maple start-up investment profiles, sap-only enterprises, Northeast forest tax policy and more. Presenters will include: Abby van den Berg (Research Associate Professor), Anthony D’Amato (Director UVM Forestry Program), Mark Isselhardt (Maple Specialist), Mark Cannella (Extension Associate Professor) and Chris Lindgren (Forest Business Coordinator).
The UVM Extension Maple Business program has published several new resources for maple business owners and forest landowners. The following publications add to the growing list of guides and financial planning calculators at www.maplemanager.org:
Legal Entity Structures for Maple Producers: This guide describes several legal entities appropriate for single or multiple owners of a maple business. Set-up and maintenance considerations for LLC’s, LLP’s, partnerships and joint ventures will help existing and new owners find the right entity to meet their ownership goals.
Joint Venture Template: This document includes the major considerations that partners should discuss and agree upon when setting up a joint venture.
Northeast Maple Business Benchmark (2019): This most recent report summarizes financial performance and business metrics from a sample of maple enterprises in the northeast United States. Business records from 6,000 – 60,000+ taps maple businesses demonstrate investment requirements, cost of production and profitability.
by Betsy Miller UVM Extension Farm Business Educator
This time of year finds the staff of UVM Extension Agricultural Business holding one-on-one budget/business coaching sessions around the state. Typically, these are a time to prepare year-end financial statements or a budget for the coming year, discuss capital investments and anticipated changes to the business, and/or do some financial analysis of the business. This year as we help farmers prepare their year-end statements and review the past year, we are seeing many farms that received CARES Act or VCAAP funds.
While wrapping up my work with one farmer, they commented that at least they made a profit in 2020. Technically, yes, the bottom line was black. On the one hand, they are right to feel relieved. In a very trying year when all was said and done the government funds provided the relief they needed and kept them going. On the other hand, however, this doesn’t necessarily mean that their business was profitable.
When a farm takes in a significant amount of extraordinary income—in this case relief funds— how do we interpret the financial statements to assess the performance in the fiscal year? In the case of the VCAAP funds, they were based on a farm’s “normal” operations and meant to replace the measurable impact of the pandemic on the business. In theory, the addition of these funds could help to normalize the cash flow impact and the result would be a “typical” year. Other relief funds were not as directly tied to replacing lost income and therefore the result is more nebulous.
As I’ve reviewed farm financial statements this year, I’ve concluded that when we record 2020 financials, we should report them with an asterisk and be careful not to draw too many conclusions about the health or profitability of the farm based upon them. Projecting for 2021 and beyond will be challenging as we try to predict what “the new normal” will look like. Don’t let 2020 derail you from efforts to achieve your financial goals.
This report highlights results from a survey of Vermont farm and food businesses conducted during August and September 2020, with a total of 223 respondents. The survey was distributed via a number of non-profit, business, and state agencies in Vermont. Respondents included farms, food and farm product retail, agritourism operators, on-farm food processors, food and beverage manufacturers, nurseries/greenhouses/garden centers, and food hubs/aggregators. Overall, we find the majority of respondents experienced a COVID-19 business impact, especially in market and financial ways. We also find that the majority of respondents had business changes they wanted to make, but couldn’t because of a lack of financial resources, inadequate equipment, or personal challenges. While the majority of respondents didn’t apply for COVID-19 grants and programs, those that did were significantly more likely to agree they had the financial resources to make necessary business changes. We also identify help recovery strategies including the need for market assistance to shift to online platforms. Finally, we identify that the majority of respondents indicated perceived stress at the time of the survey, further highlighting the need for mental health resources related to COVID-19. We discuss future opportunities for recovery efforts and resilience in the Vermont food system.
I recently had the opportunity to work with and advise three farm business owners in structuring the transition of their businesses to prospective buyers who were not family members or neighboring farmers. As advisors, we often hit a wall when farmers express to us that there is no “next generation coming along”; that their children and relatives are not interested in becoming farm owners. Many family members state that they have no interest in working that hard for so many hours only to have too little money to show for it. Others say that they just want to follow their own path to success, usually outside of agriculture and the family business. Such was the case for all three of these farm businesses.
Each farm took a couple of years to find a young, knowledgeable and energetic person to bring in to their thriving businesses. They wanted to show them the ropes while they had the energy and health to provide mentorship. Let’s face it… with the way values of farmland, cattle and machinery have risen over the last 20 years, it’s extremely difficult for a young farmer to walk into a bank and borrow enough money to buy the business and then survive through the first two years of operating expenses unless there is plenty of cash to start with. Lenders do not want to see a new farmer fail for lack of cash and equity. The current owner has to make a decision: Do I sell outright to another farmer or bring someone new into the business? The approach is similar to that of a typical transfer – determine a period of time to “get up to speed” on the existing business, another block of time to begin the sure and steady transfer of certain assets to the incoming owner and then an outright purchase at the end of the trial period.
In each case, the owners had set up a combination of asset transfer for revenue increases over a specified schedule. The implicit agreement was: “Make this business better and more profitable over the transition period and it will be good for both of us.” In these scenarios there is mutual benefit from the continued and increased success of the business. Careful attention must be paid to the development of a sound exit strategy – one that covers both parties in case of a falling out or a change of heart. So gather in all of your trusted advisors, lay out a plan, let them shoot holes in it, restructure, and most of all don’t give up. There is a new generation of farmer anxious to get started with the right tools for success.
The Vermont Agency of Agriculture, Food and Markets has announced it will begin accepting applications the week of August 17th for the new Agriculture and Working Lands Assistance grants program. This program is designed for non-dairy farmers, poultry/livestock producers and farmers’ markets. Applications will be accepted and awarded on a first come-first served basis until October 1st. VAAFM is hosting online informational webinars for applicants and service provider organization supporting the business owner application process this week and next week. See the VAAFM grants webpage to get application and grant information: Agriculture and Working Lands Assistance grants program.
On May 5th and 7th I had the
opportunity to represent Vermont as part of the Northern New England Dairy
Discussion webinars hosted by the University of New Hampshire’s Elaina Enzien.
Extension dairy specialists Peter Erickson, Mike Sciabarrasi, Carl Majewski and
Seth Wilner (New Hampshire), Gary Anderson and Rick Kersbergen (Maine) and I
offered participants some sound dairy management strategies to help deal with
the recent low milk prices and new pricing models. We focused on “right sizing”
animal numbers, switching from 3x to 2x milking frequency, ration adjustment
and using milk to feed animals on the farm as means to achieve cooperative
Also on the webinars were Catherine DeRonde from Agrimark,
and Leon Berthiaume from DFA /St Albans to discuss the two-tier milk pricing
model and what producers in each cooperative can expect for the remainder of
the summer. Milk market volatility is now being driven by supply and
distribution chain challenges brought on by the COVID-19 pandemic, with both
cooperatives forced to take measures to reduce the flow of milk coming in to
The series proved to be timely and very popular, with over 140 participants registering for the two-day session. A link to presentation materials and the video recording of the webinars can be found HERE at the UNH website. We plan to continue the series throughout the summer, with the next session being held on Tuesday, June 16th. Find more information and register HERE.