Developing business plans & practices

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Developing business plans & practices Eric & Joanna Reuter Chert Hollow Farm, LLC

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Developing business plans & practices . Eric & Joanna Reuter Chert Hollow Farm, LLC. General principles & goals. - Minimize debt, expenditures & off-farm inputs Base management & income on natural resources Use diversification to manage work & risk Experiment, record, and learn - PowerPoint PPT Presentation

Transcript of Developing business plans & practices

Page 1: Developing business plans & practices

Developing business plans & practices

Eric & Joanna ReuterChert Hollow Farm, LLC

Page 2: Developing business plans & practices

General principles & goals- Minimize debt, expenditures & off-farm inputs

- Base management & income on natural resources

- Use diversification to manage work & risk

- Experiment, record, and learn

- Plan & farm for the long-term

- Maintain an attractive & well-kept farm

- Make a living from the land and enjoy it

- Maximize self-sufficiency, especially in food

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Working with what we havePROS:- Rich bottomland soil- Isolation & protection- Good timber- Good potential pasture- Reliable county water

CONS:- Limited good, flat soil- Degraded upland soil- Little infrastructure- Restrictive microclimate- Difficult access

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Chert Hollow Farm overview- Certified Organic vegetable farm

- Primary focus: 200 varieties of produce - Includes smaller amounts of fruits, grains, & herbs

- Secondary focus on farm & home production- Dairy & meat goats, chickens, swine, and timber

- 2011-2012 transition from farmers market to CSA program

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“Farm for profit, not production”- Plan all activities around net/gross ratio- Farm 1: $50,000 - $45,000 = $5,000: 10%- Farm 2: $10,000 - $5,000 = $5,000: 50%Who can expand/meet goals more easily?- Net goal $30,000:

- Farm 1 needs $300,000 gross- Farm 2 needs $60,000 gross

- Plan for long-term needs

Efficiency matters; the less you spend, the less you have to earn

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Choosing management- What methods will you use, at what cost?

- Reducing off-farm inputs, and closing loops, is very effective at saving money

- Records help identify hidden costs & labor

- For us, Certified Organic helps with these goals- Records become a planning tool

- Methods limit off-farm inputs

- Closed loops save money

- Justifies higher prices

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Management examples- Plan crop/animal rotations to fit more into area- Consider cyclical on-farm inputs

- Saving cover crop seed- Start a manure herd- Grow winter forage for livestock/poultry

- Analyze labor & material choices

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Choosing methods & inputs- Think efficiency- Consider costs of any methods/inputs- Run tests of different methods/inputs- Consider whole-year results, not per-crop- We chose mostly manual methods

- Cheaper & more reliable- Less weather-dependent- Allow intensive growing- Quality of life

- However - Time & labor-intensive- Limits some crops

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Methods examples:- Tomatoes: in a 4’ wide bed, we tested 1 row vs. 2

- In theory, two rows gives more yield & more income, though with more cost

- In practice, single row plants seemed healthier, larger, and more productive, with lower costs

- Edamame: in a 2.5’ wide bed, we tested 1 or 2 rows at plant spacings from 2”-8”.- 2 rows (12” apart) yielded more and shaded weeds, though tight spacings hurt. Ideal method for us is 2 rows with 6” spacings.

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Analyzing space, yield, time, and income together

- Consider one 100’ bed for summer & fall (using Johnny’s yield data per 100’)

- Zucchini 200lb x $2/lb = $400, July onward

- Leaving zucchini alone may mean no fall crop; removing in mid-August allows for fall crop:

- Zucchini 100lb x $2/lb = $200 PLUS

- Fall greens (kale, collards, mustard) 75lb x $8/lb = $600

- Which is better, $400 or $800?

- You can still keep zucchini going through frost by planting other beds later, after mid-summer crops like garlic come out.

- Efficient space use & willingness to move on can effectively raise yields & income

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Choosing products- Consider more than customer popularity

- Labor & input needs- Harvest & storability- Market presence & competition- Sales ceiling- On-farm viability

- Loss leaders are fine, if intended

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Products examples- Sweet corn

- Popular, but not lucrative - needs equipment. We don’t grow it for sale because we can get more money elsewhere.

- 100’row yields ~100 ears x $.50/ear = $50

- Slicer tomatoes- Easiest crop for gardeners and everyone grows them. Market

is always swamped at peak and customer appreciation is relatively low. We don’t grow many for market.

- 100’ row yields 150lb x $3/lb = $450

- Herbs- Lucrative in small amounts, but hard to scale up, and need to

be very fresh. We don’t overdo it with these.

- Garlic- Low pest pressure & input needs, most work comes during

non-peak times, stores well. We grow lots. Still has a ceiling.- 100’ row yields 300 heads x $2/head = $600

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Using on-farm resources- What do you have on-hand to close loops?

- Chert Hollow:

- limited open land, lots of timber

- on-farm logging creates value & saves money

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Labor needs- How to pay?

- IRS allows farm non-cash

payments, no witholding

- Liability- Volunteers/interns/visitors

can be forced to sue you

- Internship rules- Government requires internships to

demonstrate education links, & more- Otherwise may run afoul of labor laws

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Risk ManagementUncertainties/risks

- Climate/weather, disease/pest threats

- Changing regulations (food safety, etc.)

- Customer demands, competition

- Contamination of crops (pathogens, long-lived herbicides, gov’t sprays)

- Lawsuits

- Injury/illness

Responses- Diversified crops &

adaptable methods

- Pay attention, have alternative plans, member of Farm to Consumer Legal Defense Fund

- Research, test, innovate, market

- Organic methods and certification

- LLC, liability insurance (?), document attention to safety

- Health insurance, safety conscious

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Diversity- Market diversity

- Draw in many types of customers

- Ecological diversity- Consider disease, nutrient use, & ecosystem

- Income diversity- Multiple income streams buffer the unknown

- Labor diversity- Spread workload over more time & tasks

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Agritourism- Attract, educate, &

impress customers

- Charge a fee to attach value to your time

- New income stream

- Gain feedback & ideas

- Promotes openness

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Time management

- Always consider the value of your time

- Ask “What’s in it for me?”

- Assess relative uses of time

- Going to market takes two days; will I make enough to justify that?

- 2 ten-hour days: 20hr x $8 = $160

- Plan around core principles

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Business plans are dynamic

- Continually assess, revise, and adapt as needed

- Deeply tied to individual circumstances

- Conditions on the ground

- Skills and interests of the farmer

- Resources available

- Every farm should have a different focus, resulting in an effective whole

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Thank you

Questions?