Category: General

By Sarah Bostick

Every five years, the U.S. Department of Agriculture’s National Agricultural Statistics Service conducts a census. The 2017 Census of Agriculture captured in numbers what we see happening all around us: Farming is changing.

GREENER GROWERS

One of the most notable changes is that a growing number of farms in America are run by new and beginner producers — those who have operated a farm for fewer than 10 years.

As of 2017, more than a quarter of all producers in America had farmed for 10 years or less. In 2017, there were 908,274 new and beginning farmers producing on over 193 million acres of land. In Georgia, Florida and Alabama, the percentage of beginning farmers is even higher than the national average: 33, 31 and 30 percent, respectively.

This growing demographic of new farmers is also younger than the average farmer in America: 46.3 years old compared to 57.5 years old. Nationwide, 26 percent of beginning farmers are under the age of 35 compared to only 8 percent of all U.S. farmers.

New farmers are much more likely to operate a small acreage farm. Beginning farmers are also significantly more likely than the average American farmer to work off-farm, earn the majority of household income from off-farm jobs, have a higher debt-to-asset ratio and have a higher expense-to-sales ratio. 

Another reality is that beginning farmers are more likely to be first-generation farmers. For as long as humans have farmed, knowledge and land have been passed down from one generation of a family to another. That time-honored tradition is changing.

The National Young Farmers Coalition (NYFC) is a non-profit organization with a mission of supporting young beginning farmers. In 2017, with the help of 94 partner organizations, NYFC surveyed 4,746 farmers across the nation. The survey (see www.youngfarmers.org/wp-content/uploads/2018/02/NYFC-Report-2017.pdf) showed that 75 percent of the respondents under the age of 40 did not grow up on a farm.

So how is the next generation of farmers learning to farm?

There are countless ways that organizations and individuals are creatively helping new farmers learn. Some of those ways are through incubator farms, farmer training programs, farm apprenticeships, conferences, farmer-to-farmer networks, and college and university student farms.

INTERNING AND VOLUNTEERING

In 2016, I was managing the University of Florida’s Field and Fork Farm and Garden program. The program provides an accessible place for students to get their hands dirty and learn to grow food. The program offered a dozen internships each semester, with many more applications than positions. A bright-eyed sophomore named Ida Vandamme applied that fall.

I still remember Vandamme’s interview. She met us in the carrot field and we showed her how to weed. Without hesitating, she started the delicate work of hand weeding a 150-foot bed. While working together, we asked her formal interview questions. She didn’t skip a beat. She was clearly a natural at thinking, talking and doing at the same time — a skill that is essential in farming.

Most students, including Vandamme, did not get an internship that year. We encouraged them all to volunteer that semester and apply next year. Vandamme took that advice to heart. She became one of the most consistent volunteers, happily harvesting cucumbers and stringing tomatoes while asking an endless stream of questions. She wanted to know how the things she was learning in plant science and sustainable food production classes related to what she was experiencing on the farm. Vandamme got the internship the next year and worked with Field and Fork until graduating in 2018.

TRANSFER OF KNOWLEDGE

One of the first farmers I met when I started my job as the sustainable agriculture Extension Agent in Sarasota County was Tiffany Bailey, a fifth-generation farmer and owner of both Bayside Sod Farm and Honeyside Farm, which produces vegetables. She grew up operating tractors, fixing machinery and understanding how to manage an agricultural business. In my first conversation with Bailey, she told me that she feels privileged that she grew up knowing how to farm and had a family farm to take over when her dad retired. She realized that most young people who want to farm start from scratch and she wanted to find a way to help change that for someone.

A few months later, Bailey decided that it was time to train someone else to run Honeyside. She wanted Honeyside to grow and knew that she didn’t have enough time to do it herself. She decided to hire a farm manager. One of the people who applied for the job was Vandamme.

When asked how qualified she was for the farm manager job that she has now held for a year and a half, Vandamme bursts into laughter and says, “Not at all!” Bailey knew that Vandamme wasn’t an experienced farmer. But she didn’t see this as a bad thing; she saw it as an opportunity.

Bailey said she decided to take a chance on hiring Vandamme to manage her farm because “It is important to think about the responsibility that you have as an agriculture leader. You get to positively impact someone’s life. It doesn’t always work great. You have good days and bad days. But at the end of the day, the thanks you get from the people you have empowered to learn to grow food is amazing.”

Hiring Vandamme forced Bailey to get all the details out of her head and create systems that other people could easily plug into. “If only you know how to do everything, you can’t grow and you can’t further your impact,” says Bailey. “You are going to stay where you are.”

Bailey has some advice for established farmers who want to be part of training the next generation of farmers: The transfer of technical knowledge has to be hands-on. “Keep it teachable and keep it repeatable,” she advises. What doesn’t work is thinking that everyone is going to be good at doing everything from the get-go — that take times.

Vandamme has some advice, too: Aspiring farmers can’t be scared to take the leap when an opportunity presents itself. For Vandamme, applying for a job managing a 10-acre vegetable farm was her big leap.

“Coming to Honeyside is the best thing that has ever happened to me,” says Vandamme. “I think I won the lottery with Tiffany.”

For Vandamme, a young first-generation farmer, the hardest thing to learn about managing a farm has been putting all the little pieces together into the big picture. Bailey is committed to helping her with this process.

Vandamme dreams of owning her own farm someday. Land access is the No. 1 barrier to farming for young farmers, and Vandamme is no exception. Bailey hopes that Vandamme stays with Honeyside for a long time. But she knows that Vandamme will probably move on someday — either to start her own farm or work on a larger farm. Bailey hopes that by the time Vandamme moves on, she will leave with the skills she needs to succeed as the next generation of farmers.

Farming in America is changing. Farming was once something that the younger generation learned from their parents, just as land was passed down through the generations. As more and more farm kids grow up and leave the farm, that generational knowledge is being lost. But it doesn’t have to be lost, and you can be a part of making sure that deep agricultural knowledge is passed on. I encourage new and established farmers to reach out to one another in the great American tradition of cultivating the next generation of farmers.

By Kimberly L. Morgan and Jessica Ryals

In nearly all introductory economics courses, the agricultural industry serves as the primary example of a “perfectly competitive” market structure. In theory, farmers are not able to set prices for their products, and instead “take the price” offered by market buyers. To achieve profitability, a grower works year-round to find ways to reduce costs, such as growing a single crop or renting more land, to take advantage of management expertise and investment in equipment.

Let’s look at the other side of the profit equation to explore opportunities for Florida’s small- and medium-sized farmers to find ways to improve revenues. We can do this by identifying markets where they have some measure of influence on market prices.

We describe markets in which firms may offer their products by setting their own prices as “imperfectly competitive.” Why are markets considered imperfect? What does this mean to farmers and buyers? What are the added costs and benefits related to stepping into imperfect markets?

Successful ventures into imperfect markets are motivated by the farm manager’s decision to intentionally focus on solving the why lurking behind a customer’s buying decision. For example, why do we eat turkey on Thanksgiving, and maybe Christmas, but rarely during the rest of the year? Are there a lack of turkeys at other times of the year? Why can my class of college freshman rattle off the names of more than 10 apple varieties, but struggle to identify which nuts are picked off trees versus harvested from the ground? In this article, we highlight the power of marketing management to communicate and deliver added value to customers, which can result in higher farm revenues.

DEFENSIBLY DIFFERENTIATE

When farmers find ways to invest in marketing activities, intentionally carve out a targeted segment of buyers, and invest effort in building long-term relationships with customers, they become “defensibly differentiable.” The defensibility results from the ability of the farmer and the customer to nurture this relationship over time. The differentiation is built around the needs and wants unique to the target market and known only to involved parties. Higher profits are driven by tracking the marketing costs and setting prices to capture improved revenues that reflect the value of this shared information.

To make money, farmers need to track customer data because it serves as the market feedback needed to make decisions to build their defensible market strategy. Prices tell the buyer what the farmer has invested in supplying the food and communicate why the food serves as the best choice to meet the buyer’s needs.

The consumers’ actions up to and including the decision to buy the food informs the farmer about why that item is their preferred choice. Armed with this data, the farmer discovers the answers to the economic questions of what to produce, for whom, how much and when. This keeps customers returning to the farmer while also attracting others with similar demands. Empowered with market intelligence, farmers can make annual production and marketing decisions to protect their clients from competitors and cultivate their share of the target market.

Why would a farmer be willing to invest in understanding individual food buyers’ wants and needs and setting their own prices? The food system works the way it does because it has proven to be efficient and effective over time. Keeping up with every person’s tastes and preferences is an impossible task for a single farmer. Identifying a market segment of buyers who are willing and able to spend their food dollars on a specific set of food products requires committed effort and the ability to react quickly in response to dynamic situations and unexpected events.

As experienced farmers know, acquiring the necessary knowledge of market trends to communicate a “price story” requires time, effort, and perhaps, additional risk to the farm business. Added marketing costs and regulatory requirements beyond the farm gate, which include packing, storage, distribution, shipping, etc., must be factored into the pricing strategy.

BUILD CONNECTIONS ONLINE

The key element that is driving opportunities for farmers to compete in imperfect markets is access to relatively cheap technology. Online platforms such as Facebook, YouTube and Instagram are useful to build connections that shrink the distance between farm and customers. Farmers can use these platforms to position their farm story and attract the attention of key influencers.

Farmers can also share their relationships with their extended networks, which capitalizes on their investment in these promotional tools. Once a marketing campaign has begun, marketing managers can collect data generated by social media platforms, internet orders and mobile purchasing apps. This can capture real-time market reactions to messages aimed at communicating the value of product offerings.

The Southwest Florida Fresh (swflfresh.com) website was created by the University of Florida Institute of Food and Agricultural Sciences in response to the devasting impacts of Hurricane Irma (2017), and more recently, the COVID-19 pandemic, on Florida’s southwestern farmers. The platform reduces distribution complexities and provides a regional brand for local producers, while meeting customer expectations for fresh local produce available at convenient venues. With consistent branding aimed at sharing each individual farm story, customers will continue to recognize and seek out your farm products across market outlets.

SUMMARY

Imperfect markets offer farmers improved profit margins, driven by the ability to set prices, based on knowing why people buy. Remember, that first customer costs a lot of money and time to attract, and data gathered along the way is valuable information. Long-term profitability for farmers who defensibly differentiate their food offerings is reliant on building loyalty and trust with customers, finding ways to encourage them to spend more at each visit, and incentivizing them to share their experiences with their friends and family networks.

By Kimberly L. Morgan and Tara Wade

Wanna go fishin’? Have you ever wondered why we don’t ask who wants to go catching fish?

Entrepreneurial adventures in farming may be compared to the distinction between fishing and catching any fish at all, regardless of hours spent throwing out a line, varying techniques, bait types, pole qualities and past experiences at previously abundant locales. Similarly, the farm financial planning process tends to be viewed as murky and mysterious. As a result, financial planning is often underutilized and misinterpreted. This is especially true when farmers are looking to make changes in existing operations or venturing into new enterprises.

While financial documentation is viewed as a tedious task, it is the bedrock of any decision about farming.  Further, any future financial decisions should be made in tandem with production, marketing, legal, regulatory and human resource management to ensure all departments are considered prior to the investment.

Business risks are defined as “uncertainty that matters.” This article highlights key aspects of the enterprise budget useful to address and mitigate the uncertainties that are inherent to entrepreneurial pursuit of farming for profits.

Enterprise budgets are long-run planning tools. They differ from other budgets, such as income and cash flow statements, balance sheets and owners’ equity statements, which are used to study past farm financial performance. Enterprise budgets give farmers the numbers needed to make timely allocations of resources (land, labor and capital) specific to growing conditions that capture the feasible production and marketing costs and revenues.

USEFUL FEATURES

A key benefit to the enterprise budget is the ability to assess the opportunity costs, captured as interest paid on operating costs. Economic opportunity cost measures the entrepreneurial value of the enterprise by calculating what farmers must give up to get what they want the most.

One alternative to borrowing annual operating capital and paying a 6 percent interest rate on the loan is to invest those dollars and earn a 6 percent return. The interest rate on the operating loan is charged to the enterprise in the budget to ensure the farmer is recovering this cost. Knowing what they are giving up allows farmers to make informed decisions on whether to choose a new enterprise.

The enterprise budget contains another valuable risk mitigation tool: It allows farmers to examine whether they can stretch their resources into a new venture. Fixed costs, also described as ownership costs, represent long-term expenses that must be paid every year regardless of what commodity is produced or if any are produced at all. A fixed-cost charge in the form of returns to overhead and farm management is represented by a percentage of total operating costs. This percentage captures returns to the farmer’s own long-term investment of their expertise and efforts into this enterprise. Economics tells us there is no such thing as a free lunch, and this is the only financial tool that reminds the farmer to make sure any new activity results in a paycheck to cover their own involvement with the enterprise.

A motivating factor for tackling a new enterprise is the desire to find new ways to use existing resources that are costing the business money yet sit idle all or part of a year, such as equipment, buildings or irrigation systems. The enterprise planning tool allows a farmer to adjust the variable (operating) and fixed (ownership) cost numbers to represent their existing resources and expenses. This can easily be done by utilizing information/numbers from the farm’s historical financial statements.

Another valuable feature of the enterprise budget arises when farmers choose to spend time studying and learning how to utilize the tool to plan for future profits. Specifically, annual updates to the budgets capture information related to changes in input prices and/or technology.

Examples of changes to input prices important to the farm budget are fuel or fertilizer costs resulting from adjustments in trade, labor or regulatory policies. Similarly, changes in technology such as new equipment features and/or availability can significantly impact overhead/fixed costs. Moreover, predicted yields may be changed to allow for varying physical conditions across the state, such as soil health and weather patterns that are specific to a farm location. Estimated costs of materials may be adjusted to capture savings from purchasing inputs in bulk for use across other farm activities or sharing packing and harvesting costs through cooperative arrangements.

Estimated revenues are based on average market prices and can be altered to accurately identify prices received by an individual farmer year over year at each market outlet. This includes sales made through a broker, at a roadside stand or online farmers’ market, or via direct marketing connections like restaurants or retailers.

From the viewpoint of an economist, assessing benefits resulting from the investment in a new enterprise extends beyond the explicit gains in profit. Farmers are often motivated by the implicit gains in managing business risks that may be achieved when adding a new enterprise.

For example, the ability to employ labor year-round may ensure continued access to staff. This reduces the time and stressors related to attracting and training new people repeatedly, while building trusting relationships between owners and employees. This extends to finding ways for the next generation to stay on the farm through expansion into enterprises that provide the foundation for a long-term career in the family business.

INTERNET RESOURCE

To help organize the math behind these economic choices, the University of Florida Institute of Food and Agricultural Resources (UF/IFAS) provides enterprise budgets for a variety of Florida-grown commodities. These decision tools are built collaboratively with economists, horticulturists and farmers who share lifetimes of experience from the fields to provide a baseline of inputs and outputs for an operation.

Visit fred.ifas.ufl.edu/extension/commodity-production-budgets for more information and to access the UF/IFAS Commodity Production Budgets. These tools will help you assess your farm’s readiness to capture your next entrepreneurial field of green. Available enterprise budgets include potatoes, strawberries, tomatoes, green peppers, watermelons, sweet corn, cabbage, tropical fruit, beef cattle and forages, tropical ornamentals, tropical vegetables, citrus and cucumbers.