UVM Extension Farm Viability provides individualized business planning support to commercial farm owners in Vermont. We have a small number of spaces left in our program for farms seeking to develop business plans or complete business analysis by Spring 2016. Sign up now or contact the program for more information. Once the winter roster is full we will begin to enroll participating farms on a short term waiting list for next years program cycle. Eligible farms are required to have been in business for at least 3 years and show gross sales of at least $15,000 in the most recent year.
UVM Extension Farm Viability works with farms to develop business plans, complete enterprise analysis, prepare cash flow budgets/financial analysis and develop farm succession plans. Coming up this winter, our staff will also be providing additional business education programs. Watch our website for the schedule of winter 2016 programs.
The VT Agency of Agricuture, Food and Markets posts weekly Farmers Market Pricing Reports at this site: http://agriculture.vermont.gov/localfooddatatracking
These reports provide a nice way to observe the pricing trends for direct market sales. If you are already selling directly, take a look and see how your prices compare to low, high and average prices.
Covering the cost of marketing: Many small farms default to direct markets on the assumption that the higher prices received are enough to compensate for the expenses of serving these markets. The price reports provide data to crunch the numbers to compare current wholesale prices vs. direct market prices to consider your best options.
Here is a partial budget exercise using September white potato prices:
9/13/15 Report: Organic White Potatoes: $2.50 average per pound
I can currently wholesale ORG white potatoes for $0.90 per pound or $1,800 per ton equivalent. If I were to bring them to farmers market, I could potentially gross $2.50 per pound or $5,000 per ton equivalent. Let’s crunch…
- Farmers market = 200 pounds per week
- market days per ton (2,000 lbs /200) = 10 days
- market labor = 10 days x 6 hours x $12 per hours = $720
- packaging = $0.25 per pound (labels, carton/bag) = $500 per ton
- market fee (day fee): $35 x 10 days = $350 per ton
- Fuel: 30 mile round trip x 10 days (@$0.13 per mile fuel) = $39 per ton
- packaging product (retail bags): (100 lbs per hour @ $12 per hour)= $0.12 per pound or $240 per ton
- Gross Sales $5,000 less market expenses of $1,849 = partial net $3,151 per ton
- $3,151 = 63% of gross sales retained for production and profit
- Cost to Market: $0.92 per pound
- Wholesale sales = 750 pound per delivery
- delivery days per ton (2,000 / 750) = 2.7
- delivery labor = 2.7 delivery x 3 hours round trip x $12 per hour = $97 per ton
- packaging = $.70 per bag per 50 lbs = $28 per ton
- fuel: 90 mile round trip x 2.7 trips (@ $0.13 per mile fuel) = $32 per ton
- packaging product (from bins to bags): (500 pounds per hour @ $12 per hour) = $0.02 per pound or $40 per ton
- Gross Sales $1,800 less marketing expense of $197 = partial net $1,603 per ton.
- $1,603 = 89% of gross sales retained for production and profit
- Cost to market: $0.10 per pound
There is no right or wrong decision here. The big trade off is time vs. money… the direct market farm makes much more money but has also invested ~80 hours to prep and market 1 ton of spuds. The wholesale producer earns a smaller margin but has only spent ~12 hours to prep and market 1 ton.
Download the full report here:
[PDF] Broiler Demand at Small Grocers 2012-2013, FBRR-011
In the fall of 2012 University of Vermont Extension distributed a survey to a group of small grocers asking about chicken and egg demand in their stores with a focus on regionally-produced products. Follow-up phone interviews were conducted through the fall of 2013 to get additional feedback from the buyers in these stores. The goal of this work is to understand the demand for local poultry products and to also provide guidance for poultry farmers preparing to conduct their own market research.
The reports provides details about which attributes consumers are looking for in poultry products and also the specific service expectations that small grocers have for farms selling them them poultry.
Click here to view or download the full report:
[PDF] Broiler Demand at Small Grocers 2012-2013, FBRR-011
The American Farm Bureau Federation and Georgetown University have launched a challenge program to support entrepreneurship throughout the rural United States. They will award a $30,000 prize to the winner.
Do you have a creative business or business idea? Check out the details for this challenge and imagine what $30,000 would do to get your idea launched.
Rural Entrepreneurship Challenge
On May 15th the Vermont Farm and Forest Viability Program organized a meeting of statewide farm business specialists for a training session on farm marketing plans. Participants included service provider organizations,independent consultants and a guest presentation by Myrna Greenfield (Good Egg Marketing). Here is a summary of the conversation when advisers were asked, “How much time should a business owner spend to develop a marketing plan?”
Adviser A: One successful business spent up to two years completing the market research and developing a plan before they began farming. They researched the population demographics and competition in various regions in order to select a location to farm and a strategy to sell their products.They grew a vegetable business to $250,000 in sales in five years.
Adviser B: It depends how much is at stake. Owners that can afford to lose all their investment might take their vision, launch the business and try to develop a plan on-the-fly. This happens more than we realize and most times the business will fail. If you can’t afford to take that risk you need to determine an overall break even level for the entire farm first. Before you start the business you need to complete the market research and confirm you can generate the needed sales to reach break even. A smart manager can then adapt a new plan once you have passed the break-even target.
Adviser C: That all sounds great but many farms are already in operation and they want to launch new enterprises. I advise them to try things out on a small scale. Run a test year to produce and sell the goods. You’ll need to set aside part of the “farming” day to initiate relationships and learn how to sell the product. Identify how much risk you are willing to take and test out the idea at a scale where you can sustain the losses if it fails but also get enough information to understand if it is feasible to continue.
Adviser D: A farm owner needs to calculate cost of production on the farm in order to set accurate prices and production targets. That information is needed to identify the most appropriate buyers (either direct or wholesale) for your products. Cost-based pricing is essential to developing a feasible marketing plan.
This was posted as an April Fools joke on April 1, 2014.
We are not aware of any activity that resembles the post written below but we had quite a bit of fun exploring the possibilities. Enjoy.
Here in Vermont we have a small number pig milk start-ups that are combining new research and some good-old creativity to find a niche.Farm business adviser Sam Smith at the Intervale Center says, “I see pig milk and the related products as the next big opportunity for our producers here in Vermont. We have a couple of farmers who have been experimenting and their success has led me to think this is going to be a very lucrative market. If you look at it purely from the perspective of the number of teats per animal, you have three times the amount of teats than a cow, which means three times the profitability!”
What are the reasons for pigs milk? First is the potential to ramp up production quickly. Pig breeding cycles are relatively short making it easy for a farmer to build a herd of milking pigs quickly. Smith says “This is another game changer when compared to cow or goat dairies. You can have a pig dairy online in under six months with a lower capital investment, a great option for beginning farmers. And when you need replacement pigs you have plenty to choose from.”
Pigs, like humans, are a mono gastric species that digests food with one stomach. With a diet closer to humans than cows, pigs milk is also more similar to human breast milk. This amounts to a more digestible and less allergy prone-product. Artisan cheese makers have also been experimenting with the milk as a potential way to further diversify their offerings. Alison Lancet, who operates the farmstead cheese operation magnolia dairy said “We have produced some wonderful blooming rind cheeses with pig’s milk, and plan to have them for sale within the next three months.” Pigs milk is high in fat and is considered ideal for new products like restorative health products. These are part food and part medicine to assist in treating nutritional problems and skin conditions.
Locavore groups nationally have noted that many regulations placed on direct on-farm milk sales are specific to cow or goats milk. Pigs milk is seen as a way to promote community access to farm based products without conflicting with current regulations.
Industry leaders have quietly been evaluating other products too. Many people don’t know that the once iconic 100% pig-skin football has been replaced with mix of natural and synthetic materials to improve it’s grip. Recent pig breeding programs focused on improvements to meat yields had the trade-off of leaner animals which impacted the texture of pig skin. Since 2002 a partnership between American football companies and several in Australian have been evaluating pig skin trials from heritage pig breeds. These are the same breeds being evaluated for dairy production! What a great fit for high school sports programs re-evaluating ways to integrate sustainability into student learning!
What do we think will happen to beef markets? Traditionally we have had smaller producers in VT that often have higher costs of production, processing and distribution. But we have also seen a good deal of innovation in rotational grazing and grass-based beef producers that are able to target customers seeking the various attributes of a grass-based meat. But we can’t lose sight of our competition. Ireland has excelled at all forms of grass based farming, including dairy and beef.Grass-finished beef is the commodity beef in Ireland, it’s the norm.
Check out this article about Irish beef setting their sights on US markets
Understanding price-setting is essential for anyone who produces, buys or sells agricultural products. UVM Extension Farm Viability has just posted a resource sheet that explains how “markups” and “margins” are applied to prices. The “Mark-up and Margins to Set Prices” sheet also provides tables to convert product prices based on common markups and margins we observe in the market place today.
You can view or download the “Mark-up and Margins to set Prices” fact sheet today. Click this link to the Resource Library page and scroll down to find this fact sheet and other resources for farm businesses. http://blog.uvm.edu/farmvia/?page_id=26
What is wrong with this picture? This is a bunch of kale for sale last week at a supermarket. I have a serious problem with the “merchandising” of this product. I have a problem as a consumer and as a farm business specialist. I’ll give you a hint, think of the 5 P’s of Marketing. Did you get it? Narrow it down to two P’s….product and price. Trick question right, I did not tell you the price of this product. Stick with me for 2 paragraphs and I give you the answer.
For this case, the definition of merchandising is the act of promoting products for sale in a retail setting . This is the retailer’s grand chance to do what retailers do…present a product to the customer to make them want to buy it. How is your merchandising? Are you doing a good job getting customers excited to buy your products and then creating a good atmosphere for them to make the final purchase? Remember the 5 P’s of marketing: Product, Price, People, Place and Promotion. Place is covered, I’m already in the store. People: the produce lady smiled at me when I started taking pics of her kale. Promotion: the store sends out flyers and sales updates. Product: Getting warmer….take a close look at this product. Does anyone notice the top of the kale stalk still attached here, about 4 inches worth. I’ve sold kale before, usually we bunch the leaves. On occasion you’ll see a top cut but here is my problem, Price. They priced this product by the pound. So I am paying for the weight of that 4 inches of kale stalk. I would have preferred to see this product priced by the each, so the consumers that got 5 inches of stalk vs. 3 inches of stalk still got the same value in usable kale.
Call me picky or thrifty, but remember… The customer is always right!
The Vermont Small Business Development Center (SBDC) has launched the VT Digital Economy Project. This project can support small business, farms included!, with a variety of business training, advisement and potential grant funds to support the following items:
online presence, websites, social media, cloud computing, market analysis and potential funding to support specific projects where outside consultants are needed.
This is a great opportunity for VT farms that seek to use the internet to market products and communicate with customers. For more information, click in this public flyer from VT SBDC SBDC Launches Digital Economy Project