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Gee, how am I going to pay for this new farm?. Finding the Perfect Farm Enterprise. Terry E. Poole Extension Agent. The Land Slide. Man is financially successful He saves money Dreams of being gentleman farmer Begins looking at real estate ads Looks at some land
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Gee, how am I going to pay for this new farm? Finding the Perfect Farm Enterprise Terry E. Poole Extension Agent
The Land Slide • Man is financially successful • He saves money • Dreams of being gentleman farmer • Begins looking at real estate ads • Looks at some land • Makes sizeable down-payment • Sells house, puts equity in farm, and borrows the rest
The Land Slide • Needs job to pay debt • Too tired from off-farm job to do anything with the farm • Weeds grow • Honeymoon is over, feels frustrated • Trapped with big debt, thinks farming doesn’t pay • Dream vanishes • Puts farm on the market
What Do I Produce? • What Ag interests do I have? • What resources are available? • Can I afford to do what I want? • Will the farm support what I select? • How will I establish, manage, harvest, store, or feed my selected enterprise? • Is there a market for my product? • Is there a knowledge, or support base? • Will there ultimately be a profit?
Gallery of Enterprise Hopefuls The history of small farms is littered with the names of “get rich and can’t miss” enterprises that lost money and did miss. These enterprise non-traditional animals include the llama, Vietnamese pot-bellied pig, emus, buffalo, alpacas, and ostrich. Some people did make money with these animals, but they were the ones who got in early and sold the breeding stock. We do have people who are having some success with alpacas, but these are very talented and creative folks who work very hard to make this enterprise successful.
What is a “Perfect Farm Enterprise”? • Is it an enterprise that makes a bunch of money for the farm operator? • Is it an enterprise that makes the farm family operators comfortable and farming enjoyable? • Is it a combination of both?
Selecting an EnterpriseThe Do List • Be original, select enterprises that are not being done by the larger farms - the easy stuff is already being done • Diversify - spreads out your risk • Experiment - that is how you learn • Locate, develop new market niches - the early bird gets the worm
Selecting an EnterpriseThe Don’t List • Market to middlemen - you want to sell directly to customer • Hire outside labor - increased costs and unreliability • Get too far in debt - remember nobody went into small farming to get rich • Overwork yourself on the farm - remember why you got into farming
Selecting an Enterprise • Interest vs. Work • Scale and Capital * over-expansion = “The Poorhouse” • Avoid Over-working • Diversification * hedge against drastic changes • Fitting Enterprises Together * aids efficiency in the operation
Name of the Game:Niche Marketing • Identify markets • Determine special needs • Position yourself to serve those markets • Find out what the larger producers can’t supply: What is too small for them? • Look for ways to differentiate your product, not only from what you grow, but how you grow it, what you do with it, or how you package it, or market it.
Some Examples of Current Niche Market Trends • Fresh, in-season local produce • Color, (white eggplants, blue potatoes) • Nostalgia, (traditional American comfort foods, i.e. corn-on-cob, corn bread, vegetable varieties from several years ago) • Organic foods, people believe it is safer • Unusual, edible and cut flowers
Be Resourceful • Need to be innovative, use what’s around • Use less expensive buildings, covers • Buy used equipment • Equipment should have multiple uses • Don’t buy more than is needed • It may be cheaper to hire out the work • It may be cheaper to buy a product than produce it • Develop enterprises that can fit together
Selecting an Enterprise • Be sure that the enterprise fits the goals and budget you have outlined in your business plan. Check the cost in family resources: • physical • financial • lifestyle • privacy • labor • time
Selecting an Enterprise • Check on the farm resources: • land • water • buildings • machinery • equipment
Small Farm EnterpriseObjective: High Value / Acre ~ select enterprises that have the potential to return high value per acre to cover both fixed and variable costs ~Limited land requires a high return on investment per acre if the farm is to be profitable.
Why High Value Enterprises? • Small farms by their nature, are limited resource farms. • This means that one, or more critical farm related components are absent on the farm. • This absence will ultimately restrict, or limit what can be done on the farm. • Frequently land is the limiting factor.
Why High Value Enterprises? • In the NE region, small farm operators are also burdened with high land prices. • High land costs contribute to high fixed costs. • To be profitable, an enterprise has to generate enough income to cover the farm’s fixed and variable costs.
Rationale • Typical grains, forages, livestock, and crop production will not be profitable on a few acres. • Small farm operators need to develop enterprises that are unique and do not compete with larger farms. • It will take some hard work to locate and develop new markets.
Attractively displayed produce will draw customers to your stand at farmers markets. Unusual and uncommon items such as red raspberries and cut flowers will also attract customers to you, who will buy other items from you while they are there.
Notice how the folks operating this stand have put their cut flowers together into attractively wrapped bouquets. This helped them to draw customers to their stand and to receive a higher price for their flowers.
Small Farm Enterprise OptionsObjective: High Value / Acre • Rent your land • Organic animals, dairy, produce • Landscape plants • Meat goats • Free range chickens • Rabbits • Fee hunting • Wine grapes • Cut flowers, herbs • Small fruits • Greenhouse
Selecting an Enterprise • Before selecting any farm enterprises, do your homework. Learn all you can about the prospective enterprise. • Will the enterprise fit into your lifestyle, personal interests, farm plan? • Make this a family decision. • Crunch the numbers. Do a budget. Is this going to be profitable? • Is there a market?
Specialty Crops • Specialty crops are crops that are not usually grown by large farms. • Often the demand for these items falls within the area of a niche market. • Niche markets can be profitable when you are the first to exploit it. • Specialty crop production requires a lot of homework, experimentation, and field work.
Oriental Vegetables • Among specialty crops, the oriental vegetable group has tremendous potential for profitability. • Oriental cooking has a strong following among a wide range of people in the region. • Food stores have a very limited selection of fresh oriental vegetables. • The market is wide open.
Oriental Vegetables • Most oriental vegetables are very nutritious, being high in fiber, minerals, and amino acids. • Some are very ornamental in appearance and can fit the bill as an unusual looking vegetable. • Little is known about growing them in this region. Some experimentation needs to be done for growing and marketing.
Oriental VegetablesGreens • Amaranth (Hinn Choy) - Chinese spinach, considered an ornamental in the U.S. • Garland Chrysanthemum (Shungiku) - A true flowering chrysanthemum that flowers. It is edible and used as an herb. • Japanese Mustard (Mizuna) • Chinese Mustard (Gai Choy)
Oriental VegetablesChineseCucurbits • Bitter Melon (Foo Gwa) - This is a vegetable, not a fruit. • Winter Melon (Doan Gwa) - This is a staple in both China and and Japan. All parts of the melon are eaten. • Fuzzy Gourd - This is a smaller, earlier producing relative of the winter melon.
Oriental VegetablesChinese Cucurbits • Sweet Melon (Chung Gwa) - Similar to cantaloupes and honeydew melons. • Chinese Pumpkins (Nung Gwa) - Revered for their nutritional and medicinal properties, they can be used the same as winter squash and pumpkins. • Chinese Okra (Cee Gwa) • Chinese Cucumbers (Kee Chi)
Oriental VegetablesSnow Peas • Snow Peas (Ho Lon Dow) - They are easy to grow, prolific yielders, and bring top dollar at markets. They combine the best qualities of snap beans and garden peas.
Oriental VegetablesChinese Beans • Adzuki Beans - Cultivated for thousands of years in the Far East. • Fava Beans • Mung Beans - represent most market bean sprouts • Edible Soybeans (Soy) • Yard-Long Beans (Dow Gauk) - known as asparagus bean
Oriental VegetablesChinese Cabbages • Chinese Celery Cabbage (Pe Tsai) - tastes like celery, looks like Romaine • Chinese Mustard Cabbage (Bok Choy) - considered two vegetables in one, using both the leaves and ribs • Chinese Broccoli (Gai Lohn) - all parts of the plant are edible
Oriental VegetablesOther Vegetables • Asparagus Pea (Bin Dow) - tastes like asparagus, the entire plant is edible • Burdock (Ngau Dow) - leaves and stems are prepared like spinach and asparagus • Chinese Eggplant • Chinese Radishes
More Non-Traditional EnterprisesArtificially Dried Hay • High quality hay is always in short supply. • There is always a premium on quality. • Quality alfalfa and timothy are in demand. • The horse industry is growing in the region. • There are many horse and livestock owners who do not make hay. • Solar or natural gas dryers have been used. • Will need some land for this enterprise to be profitable.
Organic Feed Grains and Hay • Interest in organic livestock operations is growing. • These operations are in need of organically grown feedstuffs • Feed crops would include field corn, soybeans, oats, sorghum, wheat, barley, oats, and hay. • Will need some land for this enterprise to be profitable. • The farm will need to be Certified Organic by the Maryland Department of Agriculture.
Organic Animals • Organically produced livestock and small animals have the potential to bring higher prices where people are willing to pay a premium for food they perceive as being safer or healthier. • Organic beef, sheep, free range chickens (meat, eggs), turkey, meat goat, meat rabbit, etc.
Organic Animals • Standards have been developed for organic certification of livestock and certification can be obtained through the Maryland Department of Agriculture. • A market for meat rabbits now exists both in the direct and restaurant markets. • The marketability of meat goats is excellent. • Direct markets for a wide variety of animals are out there to be developed.
Non-Traditional Animals • Putting organic animal production aside, raising some small animals does have some potential for profitability. • Meat goats, meat rabbits, and free-range or pastured poultry for meat/eggs have some attractiveness as potential farm enterprises. • Meat goats and free-range poultry look like they have very strong potential.
Aquaculture • Access to a clean water supply provides an opportunity to develop an aquaculture enterprise. • Cage finfish culture, or recreational (fee) fishing are examples.
Organic Fruits/Vegetables • There continues to be a strong market for organically grown produce. • Organic is perceived by the public to be safer, healthier, and of higher quality. • The “Organic Premium” can be added. • Organic producers are increasing in numbers, try developing new organic crops to stay ahead of competition. • There is a place for creative marketing.
Heirloom and Unusual Vegetables • There is a taste for nostalgia. • A strong market currently exists for vegetable varieties from the past. • The public is also interested in novelty, unusual, or uncommon vegetables like blue potatoes, white eggplants, or other odd colored vegetables. • Sweet ant hot peppers are popular. • These things can be very profitable before competition develops.
Wine Grapes • A market already exists. • Wineries in Maryland have a critical shortage of juice, which requires them to go out of state for juice. • It takes four years for the vines to mature and become productive.
Cut and Dried Flowers • Locally grown cut and dried flowers have a strong market. • There are several florists, direct markets, country stores around the area. • Some homework needs to be done before getting started. • Begin by talking with potential customers and learning what grows well in this area.
Herbs • While the number of herb producers continues to grow, the production of culinary and medicinal herbs has excellent market potential in this area. • In addition to the local market for fresh and dried herbs, there are several companies around the country where medicinal herbs can be sold wholesale. • Herbs in small pots can be sold for the home garden.
Tobacco • This state does not have allotments. • Tobacco can be successfully grown here. • Field drying racks can be used in place of an expensive barn. • Tobacco is still big business in this state. • Tobacco can be very profitable. • Tobacco has a negative public image. • A market already exists for tobacco.
Greenhouse • The production of bedding plants and off-season vegetables has always had a good market. • There are high startup and variable costs • They are expensive to build and heat. • The monetary rewards can be significant. • Greenhouses provide the ultimate in risk management.
Nursery Stock • We are in a rapidly urbanizing region • This has created a huge demand for ornamental plants, trees, and shrubs. • Trees can include B&B and container stock. • Buyers can include local nurseries and landscape companies. • Potentially profitable but with some risk.
Value Added Products • Commonly produced crops can be turned into high value crops thru value added. • Value added can be as simple as packaging a few ears of field corn and labeling it as squirrel food. • Fruits and vegetables can be labeled as gourmet and increase their value. • Processing jellies, canning fruits and vegetables, and breads are options.
Agri-Tourism • Bed and Breakfast • Natural Resource Enterprise - fee fishing - fee hunting - hiking trials - camping • Farm Festivals - Halloween, etc. • Farm Attractions - corn maze - crop circles?
Conclusion • Be sure to do your homework first. • Research the market potential. • Find out what, how to, and how much to produce. • High value also translates to high risk. • Be sure to develop business and marketing plans. • Consider some risk management options such as diversity and irrigation.
