Risk Management Education with NY Horticultural Producers Wen-fei Uva, Ph.D. Cornell University Presented by Cornell Horticultural Business Management and Marketing Program

Overview of the New York Risk Management Program Overview of the New York Risk Management Program u Research (special projects with RMA)  AGR Case Studies and Education ( )  Specialty Crop Producer Survey ( ) u Education (NE Center for Risk Mgmt Ed)  Marketing Clubs (2001-present)  Risk Management Newsletters & Web-site (2001)  Business Analysis and Industry Performance Benchmarks (2002-present) u State Targeted Risk Management Grant  Train-the-trainer Workshops & Marketing Clubs ( )  Business Planning Curriculum ( ) Presented by Cornell Horticultural Business Management and Marketing Program

Major Participants u Dept. of Applied Economics and Management faculty  Dr. Jerry White  Dr. Mark Stephenson  & Other faculty and staff u Cornell Cooperative Extension Educators  Horticulture Specialists  Farm Management Specialists u Others  Risk Management Agency  NASS-NY  Farm Credit  Farm Bureau Presented by Cornell Horticultural Business Management and Marketing Program

Building a Holistic Risk Management Plan u Production u Marketing u Financial u Legal and Environmental u Human Resources Presented by Cornell Horticultural Business Management and Marketing Program

Why Marketing? 2000 Food Dollar Presented by Cornell Horticultural Business Management and Marketing Program

Supply-Chain Movement Toward the “Middle” Retailers are asking grower-shippers to share the majority of functional tasks within the supply chain Retailers & grower- shippers endorse the resulting partnerships Presented by Cornell Horticultural Business Management and Marketing Program

Grower/Shipper Strategies “Growers need to stay flexible and responsive to buyer needs.” “More coordinated effort with buyers, processors and other growers” Presented by Cornell Horticultural Business Management and Marketing Program

WHY AGRICULTURAL FIRMS DON’T COOPERATE? Independence & Fragmentation Of All Sectors  Diversity in the industry  Options exist without cooperation Distrust Among Various Industry Participants A Financial Weaning Via “Survival Of The Fittest” Where is the Incentive?  Is it bad enough yet?  Is there an effective leader? Presented by Cornell Horticultural Business Management and Marketing Program

What is a Marketing Club? common goal A marketing club is a group of people who meet regularly with the common goal of increasing their knowledge of marketing concepts. Presented by Cornell Horticultural Business Management and Marketing Program

What can a Marketing Club do? Presented by Cornell Horticultural Business Management and Marketing Program Formal or informal discussion/sharing to learn from each other Targeted and continuous learning Real-time marketing information Hands-on practices Peer-support groups Trade or Market as a Group Others…..

3 Key Ingredients Presented by Cornell Horticultural Business Management and Marketing Program Interested Producers  Interested and committed  Determine goals, topics and activities Facilitators  Meeting arrangements  Educational resources  Help the leader and the group Group Leader  One of the producers – a catalyst  Encourage participation  Coordinate planning of future programs

First Meeting – Interest Meeting Presented by Cornell Horticultural Business Management and Marketing Program A marketing workshop  Prepare participants in the basics  Get participants to similar level of knowledge Gauge level of interest  What is a marketing club?  Potential benefits  Brainstorm marketing issues of participants Set a time for the next meeting to  Set goals & plan for future meetings  Select interested topics & activities Pass out responsibilities

How did We Support the Marketing Clubs? Presented by Cornell Horticultural Business Management and Marketing Program Mini-grants to horticulture extension educators  7 fruits, 2 greenhouse, 1 vegetable  Provided training on organizing marketing clubs Flexibility is important  What would you call the group?  What would the group do? Provide marketing resources  Speakers  Marketing materials

What Did We Learn from the Experience? Presented by Cornell Horticultural Business Management and Marketing Program Participants need to have a common goal  Wyoming County vegetable growers  Erie County greenhouse growers  Western and Eastern NY fruit growers Be workload sensitive  No crop season meetings  Plan ahead for meetings and tours  Assign responsibility Build leadership  Establish ownership – self-directed  Build a future after extension involvement

Risk Management Web-sites Presented by Cornell Horticultural Business Management and Marketing Program Under the Horticulture Business Management and Marketing Program web-site:  RM workshops, MC activities, RM newsletters Link to the NY Agricultural Risk Management (ARM-NY) web-site:  Information for dairy and field crop operations  Considering crop insurance calculator  Business planning curriculum (Power Point presentations, video streaming, print materials)

Risk Management Newsletters Presented by Cornell Horticultural Business Management and Marketing Program 9 Newsletter Articles  Subjects identified by growers and extension educators  Some examples: Managing Marketing Risks Building a Safety Net with Crop Insurance How Risk Tolerant Are You? Understanding Income Fluctuations The Big Five Types of Agricultural Risks Newsletters for Small Farms

Helping Growers Manage Financial Risks Expanding the Cornell Greenhouse and Fruit Farm Summary Programs  Expand the greenhouse business participation and expand the program from NY to include PA and NJ growers  Expand the fruit farm business analysis program from WNY to include statewide.  Goals are to help growers conduct financial analysis & benchmark industry financial performance Presented by Cornell Horticultural Business Management and Marketing Program

Participating Businesses Contribute: 2 – 4 hours of meeting time Annual cash receipts and expenses records Business assets and inventory information Other business operation information Presented by Cornell Horticultural Business Management and Marketing Program

What Does the Business Receive from Participating in the Project? One-on-one meetings with a business management specialist A customized business analysis report  Financial Statements: income statement, balance sheet, and cash flow statement  Financial Analysis: cost and ratio analysis  Efficiency Measurements: cost and return efficiency The industry financial benchmark report Access to the web-based database (fall 2003)Access to the web-based database (fall 2003) Presented by Cornell Horticultural Business Management and Marketing Program

Size of Greenhouses in the 2000 Summary Presented by Cornell Horticultural Business Management and Marketing Program

Scope of Greenhouses in the 2000 Summary Presented by Cornell Horticultural Business Management and Marketing Program

Establishing the Square Foot Week Concept Comparing different sized businesses can be tricky. Volume = size * weeks of operation Square Foot Weeks = Sq Ft * Weeks Used. Presented by Cornell Horticultural Business Management and Marketing Program

Greenhouse Business Benchmarks Industry averages by marketing channels The data are also divided into quintiles representing the top 20%, second 20%…. Each greenhouse business can see where they fall in each performance measure. Performance measures of the Top 20% of ROA Presented by Cornell Horticultural Business Management and Marketing Program

Participations and Activities The Greenhouse Business Analysis Program 29 greenhouses participated in greenhouse participated in 2002 NY, PA, NJ and MI participation in 2003 The Fruit Farm Business Analysis Program 12 farm participated in 2002 Participation from 40 farm expected in 2003 Presented by Cornell Horticultural Business Management and Marketing Program

Participations and Activities – cont. Workshops and Training Business analysis training was offered in 2002 NY regional winter grower schools The Apple Grower Decision-Making Workbook In-depth business analysis course has been requested by two NY greenhouse grower groups Training is planned in summer 2003 for MI educators on using the business analysis program to work with GH growers Beta Version of the Web-based Searchable Database will be trialed in 2003 Presented by Cornell Horticultural Business Management and Marketing Program

Thank you ! & Discussion!