Category Archives: Farm Finances

Dairy Cost of Production Workshop January 24, 2024

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Join UVM Extension for a workshop led by Joanna Lidback, dairy farmer and principal financial consultant with Adirondack Management Services. Joanna will help farmers understand key financial concepts and how to calculate cost of production and breakeven milk price.

This in-person event will be held at People’s Trust Company in St. Albans, VT on January 24 from 10 am – 3pm. This is a free event, with lunch included, and registration is required. In the event of inclement weather, this event will be rescheduled to January 31.

To register please visit: https://go.uvm.edu/dairyfinancial

Vermont Agency of Commerce Flood Relief Grant- Up to $20k Apply Soon!

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The VT Agency of Commerce and Community Development (ACCD) has announced an emergency assistance grant program that businesses and farmers will be eligible to apply for. The application portal is expected to open by the middle of this week. Funding will be available on a first come – first served basis. Business owners should prepare in advance and be ready once the application portal is opened.

The Vermont Agency of Commerce and Community Development is hosting a live webinar tomorrow at this LINK HERE, on  Wednesday, August 2nd at 10:00am to provide information on their Business Emergency Gap Assistance Program (BEGAP).

The application is expected to include 15 questions , many of which are similar to the SBA Loan application questions, including:

  • A list of your damage – property damage, physical damage, inventory, equipment, supplies – everything you lost, or supplies you purchased to clean up after the flood
  • An insurance estimate/damage assessment – an estimate from your insurance company showing your assessed loss. 
  • Assessments of repairs – how much will it take to get back up and running? 
  • Estimates for physical repairs
  • Photos or videos that can portray the damage that you faced. 

Watch for updates at the ACCD Storm Recovery Resource Center and see the most recent press release from July 27th describing the coming program.

Maple Start-Up Investment Guides and Profitability Research

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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.

Sap Selling Season

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A sap hydrometer measures the sugar content in a load of sap.

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.

Visit www.maplemanager.org for more maple business resources.

Registration is Open for UVM Maple Business Short Courses

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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.

Maple-Classes-Flyer_Fall-2021Download

New Maple Business Reports – Summer 2021

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Sap hydrometer measures sugar content.

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.

Visit www.maplemanger.org for maple business development and forestry resources today.

Did I Make A Profit Last Year?

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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.

Support for Farms Applying to Covid-Relief Grants

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UVM Extension Farm Viability business advisors are working with the Vermont Housing and Conservation Board (VHCB) Viability network to offer assistance to all farmers with the Vermont Covid Ag Assistance Program . VHCB has an intake form here to request assistance with your grant application.

The deadline for grant applications is October 1, 2020. To learn more about the program visit the website: VT Covid-19 Agricultural Assistance Program

 A number of other programs have emerged to provide funds or support services to farms across Vermont. See the Ag Covid Program Directory below. This document includes several links to grants, FSA payment programs and educational events.

Ag-Covid-Program-Directory-9-8-20Download

Vermont Small Farm Viability and Conservation Report

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UVM Extension has released a report that documents conservation adoption and economic viability on Certified Small Farm Operations. Conservation and Farm Viability on Vermont Small Farms (FBRR035) is available online. This report summarizes responses from over 170 Vermont farms to a 2019 survey. UVM Agricultural Business explores the current situations that business owners face and the major issues moving forward.

Northern New England Dairy Webinars from UNH, UMaine, and UVM

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By Tony Kitsos

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 reduction goals.

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 their plants.

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.