Vermont Maple Conference Maple Profitability: Managing for the Long Haul Mark Cannella University of Vermont Extension Mark.Cannella@uvm.edu Website: blog.uvm.edu/farmvia/

The Manager Critical Skills Production Marketing Management “What you measure is what you promote”

Scale and Sweet Spots The profit points may be the painful points Single owner Partners Partners plus Employees

Top Performers Low Depreciation High Income vs. Investments No Single Marketing Strategy (different ways to get to profits)

Low Depreciation Depreciation: Average 20% of Gross Income Range 5% - 36%

High Investment : $55 + per tap One Way to Get There High Investment : $55 + per tap High Production: 5 lbs per tap Low Labor: 7,000 + taps per person Bulk Price Whatever you do, know the business you are in and do it well

Average Investment : $35- $45 per tap Another Way to Get There Average Investment : $35- $45 per tap Average Production: 3.85 lbs. per tap Average Labor: 1 FTE per 3-4,000 taps 65 % Bulk 35% Direct Retail

Business Cycles 58 Year Old Owner: Needs to reinvest ? Sell Sap Initiate Transfer Plan Capital Gains? Start Planning!

Business Cycles 58 Year Old Owner: Needs to reinvest ? Sell Sap Initiate Transfer Plan Capital Gains? Start Planning! 30 Year Old Prospective Owner seeks to get in. Debt Service Real Estate Costs

Thank you: Anonymous Producers Website: blog.uvm.edu/farmvia/ VT Maple Benchmark 2014 Thank you: Anonymous Producers Website: blog.uvm.edu/farmvia/

Objectives Information Based Decision Making Cost Analysis for Producers Public Benchmarks

Financial Methods Operating Income - Expenses Accrual Adjustments on Inventory & A/P & A/R Depreciation: Straight-line method on purchase price Valuation of Owner Labor $18/hour…. Going to $22 No Real Estate Costs!! THIS IS NOT CASH FLOW!!!!

2014 Producers 17 Producers Taps < 5,000 Taps: 7 5,000 – 8,499: 4 5,000 – 8,499: 4 8,500 – 14,999: 3 15,000 + : 3 RO: Early Adopters Markets: 9 Bulk Producers 8 Mixed Market

2015 -2016 2015 Analysis to be finalized this winter 2016 Financial Collection started last week…. Stay tuned

Investment Good investments? They directly increase Gross Revenue Decreases Labor input Increase Production

So, at $50 per tap a 3,000 tap enterprise has spent at least $150,000 in intermediate assets (equip and improvements)…not including the purchase of forest land. 8,000 tap enterprise at $42 per tap = $336,000 12,000 taps at $38 per tap = $456,000

The average production level in 2014 was 0. 38 gallons per tap or 4 The average production level in 2014 was 0.38 gallons per tap or 4.3 lbs per tap

Expenses as a % of Income Fuel (Evaporator Only) 3% Labor (Paid) 7% Supplies 6% Electric

Expenses as a % of Income Variable Cost Total 38% Fixed Cost Total (not including depreciation) 18%

Non-Cash Items Unpaid Labor 19 % Depreciation 20%

COP for Operations Per Tap $ 9.15 Per Gallon $ 23.25 Per Pound $ 2.09

COP for Operations: detail

COP with Depreciation Per Tap $ 12.04 Per Gallon $ 30.36 Per Pound $ 12.04 Per Gallon $ 30.36 Per Pound $ 2.72

COP with Depreciation: detail

Full Economic Costs

Costs Per Tap

Adaptive Changes Buying Sap ! Seeking New Markets Direct Market: A) Scaling-Up: COP should be competitive to embark on direct marketing (not the reverse). B) “Preservation Mindset”

Adaptive Changes Is adding taps always the answer? Increase yields from current taps Invest time into more marketing