1. New York State’s 1999 Agritourism Business Study
Diane Kuehn
SUNY ESF
Hi! Today I’m going to talk about the 1999 New York State Agritourism Study. This study was done by the New York Sea Grant Program and the Cornell University Farming Alternatives Program. My presentation today will focus on the results of this study and how they have been used by agritourism business owners across New York State. I’ll also discuss how the study was conducted. Although the size of the agritourism industry in New York has increased since 1999, the results are still pertinent to agritourism operators today.
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2. What is an agritourism business?
A farm-based business that is open to visitors for recreational purposes.
First of all, what is an agritourism business? The definition that we used for this study is a farm-based business that is open to visitors for recreational purposes. This definition includes the word “recreational” because the recreational experience is what separates agritourism from other farm-based businesses.
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3. Some examples of recreational activities…
Tours
Specialty products
Production demonstrations
Hayrides & sleighrides
Petting zoos
Product tastings
Historic buildings
Exhibits
Some examples of recreational activities that take place on farms include: tours, shopping for specialty products such as crafts or homemade foods, production demonstrations, hayrides and sleighrides, petting zoos, product tastings, touring historic buildings, viewing exhibits... The list goes on and on. Again, these activities focus on the experience – whether it’s an educational experience or entertainment. The experience is the focus of agritourism.
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4. Purposes of this study
To identify the profitability of agritourism for farm businesses in New York State.
To estimate the economic impact of agritourism on New York State.
To identify cost-effective business management and marketing strategies.
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The purposes of the study were three-fold:
First to identify the profitability of agritourism for farm businesses in New York State. Prior to the study, we didn’t have any data to support the idea that agritourism adds to the profitability of farm businesses. Before we could recommend that farm businesses add agritourism components, we really needed to see if these component were profitable.
Second, we wanted to estimate the economic impact of agritourism on New York State. We felt that in order to get legislative support for our agritourism industry, we really needed to prove that agritourism does have a positive impact on our state’s economy. The study did help us do this.
Third, we wanted to identify cost-effective management and marketing strategies for agritourism businesses. Because the expenses associated with operating any farm business are high, we thought that it was essential that businesses owners have as much information as possible about which strategies work and which don’t. [NEXT SLIDE]

5. Methods - Part I Customer survey
299 customers of 6 agritourism businesses across New York State
The study was comprised of two parts: a customer survey and a business owner survey. Fifteen businesses across New York State originally agreed to help us with the customer survey by asking their customers to fill out a survey card. By the end of the summer of 1999, we had six businesses out of the original fifteen that had actually collected customer surveys for us. We ended up with 299 customer surveys.
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6. Methods - Part II Comprehensive mailing list Business owner survey
2,416 farm-based businesses
Business owner survey
Random sample of 2,000
Response rate of 38.8% (n=645) from qualified sample
Estimated 2,087 agritourism businesses
The business owner survey took a lot more effort to conduct that the customer survey. There was no comprehensive mailing list for agritourism businesses at the time of the survey so we first had to compile a mailing list of businesses that we thought were involved in agritourism. We ended up with 2,416 businesses on the initial mailing list. From this, we selected a random sample of 2000 businesses. We then eliminated the businesses that indicated that they were not agritourism businesses. From this qualified sample, we ended up with a 38.8% response rate and 645 responses. We estimated that we had 2,087 agritourism businesses in New York State.
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7. Business owner questionnaire
Type of business & components
Income and expenses
Promotional strategies
Customer markets
Management strategies
Concerns
Future plans for business
The business owner survey was broken down into seven main topics: type of business and recreational components, the income and expenses of the businesses, the promotional strategies used by each business and their effectiveness, who the customers were, management-related strategies used by the business owners, the concerns of business owners, and the business owners’ plans for the future. I will be discussing each of these topics in more detail later.
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8. Percent of respondents by business type
Farm stands 37%
Christmas tree farms 12
U-pick operations 10
Maple products 9
Greenhouses & nurseries 9
Wineries 6
Livestock breeding/sales 5
Farm-based B&Bs 3
Others 9%
This table shows the breakdown of survey respondents by business type. The “N=645” in the lower right hand corner indicates the number of business owners who responded to this question. You’ll see this information on most of the slides.
The most common type of agritourism business in New York State is farm stands which made up 37% of all survey respondents. Christmas Tree farms and U-pick operations were also common.
The “other” category at the bottom of the list had 9% of all respondents. This category consists of the most unique agritourism businesses in the state. Businesses like petting zoos, corn mazes, hunting preserves, and perennial farms are included in this category because there wasn’t a large enough number of each to put them into separate categories.
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n=645

9. Percent of respondents by NYS tourism region
5.6%
7.9%
9.8%
27.0%
9.9%
We also broke down the respondents by where their businesses are located in the state. This type of information is especially useful for people who are thinking about opening or expanding an agritourism business since it can help determine how much business competition exists.
By looking at this map, you can get an idea of where agritourism businesses in New York State are concentrated. For example, the Finger Lakes Region in the center of the state has 27% of the businesses. Most of these are wineries which is an important fact to understand for business owners who are thinking of opening a winery.
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9.6%
6.5%
7.3%
11.3%
5.0%
<0.1%
n=645

10. Estimated income & profit of agritourism businesses
Total estimated gross income $ million
Total estimated net profit
$25.77 million
Average estimated net profit per business
$12,347
Next we used the estimated number of businesses in the state to identify the total estimated gross income which was just under $211 million. This income is just from the agritourism components of the businesses. In other words, if a farmer has a wholesale crop operation and sells some of his products at a farm stand, only the farm stand income would be included.
Next, we subtracted from the income the costs of running the agritourism businesses and got the net profit. As you can see, the net profit is much lower than the total income, and this is because the expenses of running an agritourism business are high.
We also estimated the net profit per business at $12,347 which may seem low until you consider that agritourism businesses are usually seasonal and the agritourism components may only comprise a small proportion of the entire farm business.
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n=399

11. Business profitability
Greenhouses & nurseries $25,669
Farm stands 15,221
U-pick operations 12,006
Other 11,479
Christmas tree farms 8,308
Maple products 7,074
Farm-based B&Bs 4,110
Wineries 3,604
Livestock breeding/sales $860
We also examined the profitability of each type of business. Greenhouses and plant nurseries were the most profitable, followed by farm stands, u-pick operations and the unique businesses in the “other” category.
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n=399

12. Cost-effective Advertising
Type Effectiveness Cost
Word of mouth High None
Direct mail High Moderate
Sign High Moderate
Brochure High Moderate
Newsletter High High
TV ad Moderate High
Newspaper ad Moderate High
Radio ad Moderate High
We asked business owners to indicate on the survey what types of promotion they used for their businesses and the effectiveness of each for attracting customers. The most effective was word-of-mouth advertising which is of course free. Word of mouth essentially drives the most profitable agritourism businesses. However, the important thing to remember with word-of-mouth is that it only works if the visitor has a positive experience at a business. In other words, if you want word-of-mouth to work, you have to really focus on providing a quality recreational experience for visitors. Word-of-mouth may also take several years to really begin working well, so it’s a good idea to use a mix of promotional strategies besides just word-of-mouth.
Direct mail, signs, and business brochures were also found to be highly effective but at a moderate cost. Newsletters, and TV, newspaper, and radio ads were found to be moderately effective at a high cost.
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13. Where do customers come from?
County business is located in 58%
Other NYS counties 30
Other states 9
Canada 2
Other countries 1%
The next slides focus on who agritourism customers are. We found that most customers –58% -- reside in the county in which the business is located. 30% come from other counties in New York State. This is important because it tells us where to focus the majority of our promotions – in other words, primarily in New York State and nearby counties. However, it’s also important to realize that certain types of businesses, such as bed and breakfasts and wineries, may attract more visitors from out-of-state. So, where you market also depends on the type of business you have.
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n=569

14. Age of visitors Children 11% Teens 7 20-39 years 28 40-54 years 31%
Looking at the age of customers also revealed something important about our visitor markets in New York. We attract mainly children and adults. The children often come with school groups, but primarily come with their families. Our businesses also attract a large group of people over 55. So, we basically have two groups of people we should promote to – families and older adults.
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n=569

15. Other visitor demographics
Group size 2-4 people
Length of stay Day trips (79%)
Gender Females (57%)
Males (43%)
This information comes from the customer survey. The groups size supports the idea that we are attracting families. Most people are coming for day trips. We also found that 57% of the people who come to agritourism businesses in New York are female. Women are also more likely to be the planners of agritourism trips, so it’s important to gear any promotional work that you do to women.
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16. What do customers look for?
Friendliness of staff 71%
Activities at farm 58
Farm animals 33
Barns/Historic buildings 32
Restaurant/Snack bar 24
Gift shop 16%
We also asked customers what they look for in a farm-based business. 71% indicated that they look for a business with friendly staff. This is crucial for business management. If you have employees who are grouchy, do not have them work with the customers. Put them in a back room somewhere. Customers expect friendly staff and if they don’t get that, they probably won’t come back.
58% of the customers also indicated that they are looking for on-site activities at the farm. Again, this gets back to the idea that customers are coming to agritourism businesses for the recreational experience. Activities provide that experience. If customers just want a Christmas tree, they could easily purchase one at a store. It’s because they want the experience of cutting one down with their families that they go to Christmas tree farms. So again, the experience is what’s important.
Farm animals and viewing historic buildings such as barns can also influence the experience. When we think of farms, we think of farm animals and barns. These things add to the rural atmosphere which is part of the experience. In New York right now, many farmers are having difficulty preserving historic barns because of the costs of repairing them. In order to preserve them, our state is using a pilot program that provides grants to a small number of farmers per year to restore barns. Preserving these barns is crucial to agritourism because visitors expect this rural atmosphere. It all comes back to the experience. [NEXT SLIDE]
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17. Top 5 activities customers would like to participate in
Sampling local foods and produce 47%
Wine tastings 44
Picking fruits and vegetables 43
Horseback riding 36
Going on a hayride 34%
We also asked customers what activities they would like to participate in in the the future. The top two were tasting local foods and wines. Picking fruits and vegetables was also popular, as was horseback riding and going on a hayride. This once again indicates that customers are looking for a recreational experience when they visit an agritourism business. All of the activities on this list depend on having the visitor interact with the farm. And that’s what visitors are looking for – that interaction.
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n=267

18. Top 5 other activities customers participate in
Visiting parks
Attending festivals
Camping
Visiting historic sites
Fishing
Next, we asked visitors about the activities that they participated in other than those they did at the agritourism business. Visiting parks was number one, followed by attending festivals, camping, visiting historic sites, and fishing. This information can help with business promotion. For example, since we know that many of our customers camp at a nearby state park, we can put business brochures in the brochure racks at the park. Since we know that visitors are coming to fish in Lake Ontario, we can make sure that business signs are located on major travel routes to the lake. So this kind of information can be very useful for businesses.
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19. Top 5 Concerns of Responding Business Owners
Liability & liability insurance
Marketing, promotions, & advertising
Labor costs & other labor issues
Government regulations
Taxes
We also asked business owners what their main concerns are. The number one answer was liability and liability insurance. Liability is a big concern in New York State (I’ll talk more about liability in a minute). Business owners are also concerned with marketing and promotions, labor issues (especially finding dependable labor at affordable wages), government regulations, and taxes.
This type of information has been important for our government officials to hear about – many of our state legislators are trying to help with the liability issue right now, partially because of the results of this survey.
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n=492

20. Liability 84% indicated that liability is a concern n=614
84% of the survey respondents indicated that liability is a concern. Agritourism businesses in particular are susceptible to liability concerns because most farms are not built with customer safety in mind -- Customer safety is thought about when the business owner decides to open the business to visitors, not before. Liability insurance is also very expensive in New York State, and this cost reduces the profit of many agritourism businesses.
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21. How respondents protect themselves from liability
Have liability insurance (90%)
Regularly make repairs (71%)
Add safety precautions (41%)
Risk analysis
Incorporate
Have visitors sign a disclaimer
Manage visitor behaviors
Business owners shared with us the steps they take to protect themselves from liability. Most have liability insurance and regularly make repairs. 41% also add safety precautions such as fences and hazard signs. Others have conducted a risk analysis of their business. Many owners have incorporated so that the corporation’s assets are liable rather than their personal assets. Some owners have visitors sign a disclaimer. Unfortunately in New York State disclaimers do not hold up in court, even though they do in most states. Many business owners also keep an eye on visitor activities so that they can prevent potentially dangerous situations.
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22. During the next five years, owners plan to...
Expand their business 64%
Invest more funding in business 34
Hire more employees 21
Incorporate their business 8
Go out of business 7%
We also asked business owners what their plans were for the next five years. Most planned on expanding their business in one way or another. This is an indication that agritourism in New York State is still increasing. 7% plan on going out of business -- about a half of these for retirement reasons – the other half because of a lack of profitability.
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23. Conclusions
Agritourism is useful for increasing the profitability of farm businesses.
Successful businesses...
utilize strategies to reduce costs
develop partnerships
have friendly staff
create unique recreational experiences
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To sum up, we found that agritourism is useful for increasing the profitability of farm businesses. Although adding agritourism components to farm businesses was not profitable for about 25% of the survey respondents, the other 75% of businesses were profitable because of agritourism.
But what makes a business successful? First of all, we found that successful businesses are able to reduce their costs. Some do this by developing partnerships, others use low cost group liability insurance. Many different strategies were used. Successful businesses also developed strong word-of-mouth advertising which grew because of their friendly staff and the unique, quality recreational experiences they offer. The uniqueness of businesses was also very important. The very unique businesses had little competition from other businesses and people were generally willing to travel farther to visit them. So uniqueness was very important.
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24. Questions? www.nysgtourism.org
That’s the end of my presentation. If you would like to get a copy of the two reports that came out of this study, just go to my Sea Grant web site at and you can print them out for free. Are there any questions?
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