Small-Scale Intensive Farming: Lowering Risks and Increasing Profits Andy Pressman LINC Urban Farm Wilmington, NC October 10, 2013 Photo: SPIN-Farming®

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Bringing New Farmers to the Table 4

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What is a Small Farm? USDA defines as farms with $250,000 or less in sales. Accounted for 91% of all farms in 2007 (only 56% of US food production). 60% had less than $10,000 in sales (noncommercial). Over half were direct sales to customers Avg. age 57.1 years old *Information from USDA 2007 Census of Agriculture Source: The Winter Harvest Handbook by Eliot Coleman

Beginning Farmer’s (10 years or less) 78% of farmers ranked “lack of capital” as a top challenge for beginners, with another 40% ranking “access to credit” as the biggest challenge. 68% of farmers ranked land access as the biggest challenge faced by beginners. 70% of farmers under 30 rented land, as compared to 37% of farmers over % of farmers ranked apprenticeships as among the most valuable programs for beginners. 55% of farmers ranked local partnerships as one of the most valuable programs, and 49% ranked Community Supported Agriculture (CSA) as a top program. Source: National Young Farmer’s Coalition

The State of Urban Farming: Enhancing the Viability of Small and Medium-Sized Commercial Urban Farms Gross Sales (if sales) $1 million or more $500,000- $999,999 $250,000- $499,999 $100, ,999 $50,000- $99,999 $25,000- $49,999 $10,000 - $24,999 Less than $10,000 Percent production in city core Total

Farm for Profit, Not Production ( Profit = Income –Expenses) In 2010, 64% of farms had negative operating profits. It pays to plan! Guide in decision making, decreasing risks, and monitors progress Write it down Photo: Dennis Chamberlin

A Farm Business Plan 1) Summary. 2) Mission/objectives. 3) Business description (location, history, values, land, products). 4) Marketing plan (where, to whom, prices). 5) Production plan (planting/harvest schedule, fertility, pest management, irrigation, suppliers, etc.). 6) Financials (cash flow projection, financial statements, how much money you need to borrow and what for). 10

National Organic Program The Organic System Plan Description of practices & procedures. List of inputs. Description of monitoring system. Description of recordkeeping system. Description of management practices and physical barriers to prevent contamination/comingling. 11

Whole-Farm Planning Connection between what we farmers value the most in life & the kinds of activities/production we choose to pursue. Link between chosen activities and the health of farm’s resource base. Written plan is a working document – management decisions are accountable to farmer’s quality-of-life. 12

Holistic Management (Income – Profit = Expenses) 1.Determine who the decision-makers are and what resources (including $) are available. 2.Create a holistic (farm and/or family) goal that represents shared values. 3.Test decisions towards the goal. 4.Monitor progress towards goal & take corrective action as needed.

Setting Goals 1.Quality-of-life statement (I want……….happiness, financial security, good relationship, spiritual fulfillment, meaningful work, challenges, healthy food, ecological balance, self-sufficiency…….). 2.Forms of Production. 3.Future Resource Base (You, landscape, community). 14

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Evaluating a Farm Enterprise Personal Resources Experience Personality Farm-Site Characteristics Market Potential/ Demographics Infrastructure and Information Support

How Much Revenue Does Your Farm Need to Make? Say your net income goal is $30,000. A common net income goal is 25% to 30% of your gross income. $30,000 /.25 = $120,000. Gross revenue would need to be $120,000. Are your land and markets adequate?

Revenue Potential Determine # marketing weeks + yearly targeted revenue = average weekly revenue. Example Targeting $40,000/year, over 20 marketing weeks = average weekly revenue = $2,000 per week. Is that Realistic? 18

The True Cost of Farming 19 Used to help make decisions about pricing, expansion, and new directions. Compare Markets Expense per bedCost per bed ¼ hr chisel$5 ¼ hr final bed prep$7.00 seed costs$ hour direct seeding$ hours cultivating$50.00 Harvesting and washing$ Boxes$50.00 Total in-field costs$ Gross sales per bed$2200 Net Return/ bed$1982

Holistic Financial Planning (Income – Profit = Expenses) Four Steps: 1.Allocate profit 2.Recognize debt 3.Categorize expenses Wealth generating Inescapable Maintenance 4.Monthly monitoring 20

Market Analysis Before Farming Where am I going to sell/who is customer? Size of customer base? Location of customer base and influence? Sell directly to consumers? Sell wholesale to commodity market? Who is my competition? Season price fluctuations to expect? Quality standards to meet? Time and fuel to reach markets? Legal or food safety considerations?

The Centerpiece Strategy Low initial start-up costs. High gross-profit margin. Relatively low maintenance requirements. High cash flow relative to expenses. High demand, low supply in marketplace. High product distinctiveness. 22 Photo: Foggy Meadow Farm

Activity Do you have a business goal that defines your values and desired lifestyle? If you have a goal, does it define systems to operationalize it (ie. communication, time management, record keeping, financial planning, risk management, employee training, conflict resolution,….)? Challenges/Solutions? 23