Developing a Small Farm

Your plan for success

Dr. Gordon Johnson, Extension Fruit and Vegetable Specialist

University of Delaware

gcjohn@udel.edu

Laurie Wolinski, Extension Educator, Risk Management

University of Delaware

lgw@udel.edu

Introductions

• Introduce yourself

• What do you want to get

out of the beginning

farmer sessions?

Components of a Beginning Farm

Plan

• Mission - Vision

• Goals

• Resources

• Enterprises, Production

• Markets, Marketing

• Management

• Costs/Returns

• FinancialsLAURIE WILL GIVE MORE DETAIL

Mission - Values

• What do you value?

• How do you

incorporate your

values into your plan?

LAURIE WILL DETAIL HOW TO

DEVELOP YOUR MISSION

Vision Statement

• What do you want to

be

• How do you

communicate that to

others

LAURIE WILL DETAIL HOW

TO CRAFT A VISION

Current Situation and Taking Stock

of Your Resources

• Assets

• Liabilities

• Financial resources

• Human resources

• Physical resources

• Natural resources

Family and personal needs and

concerns

• Current satisfaction

• Risk taking

• Hopes and concerns

• Income goals

• Preferences

• Future

List what qualities you and others

(family, partners) will bring to your

business

Goals

• What do you want to

achieve?

• How are you going to

reach your goals?

• Short term

• Intermediate term

• Long term

Income Goals

• Children’s Project– College Fund

• Hobby Business– Extra Cash

• Partial Income– Supplement

– Half (second income)

– Retirement income

• Full Income– Primary family income

– Sole family income

Deciding on Small Farm Enterprises

• Choices

• Secure market

• Market volume

• Price, price guarantees

• Production practices– How to produce

– Special production needs

– Adaptation to your area

• Cost of production

• Net Returns

List Products That You Want to Grow

and Market – Enterprise Selection

EXAMPLES

• Vegetables

• Herbs, Medicinals

• Cut flowers

• Small fruits

• Tree Fruits and Nuts

• Greenhouse crops

• Nursery crops

• Craft crops

• Other specialty crops

Enterprise Budgets

Pole Lima Bean Budget 100 feet Variable Costs

Variable Costs Unit $/Unit Unit/100 ft TotalFertilizer - KCl lb $0.24 4 $0.96Fertilizer - Urea lb $0.40 0.6 $0.24Fungicide - Agri Fos pt $15.49 0.1 $1.55Gas for Tiller gallon $2.70 0.1 $0.27Herbicide - Glyphosate quart $14.78 0.033 $0.49Insecticide - Bifenthrin 32 oz $10.00 0.2 $2.00Electric for Irrigation Pump kwh $0.11 2.8 $0.31Labor - Clean-up Trellis Maintenance hour $10.00 0.5 $5.00Labor - Cultivation hour $10.00 0.7 $7.00Labor - Pesticide Application hour $10.00 0.6 $6.00Labor - Picking hour $10.00 5.6 $56.00Labor - Transplant Production and Planting hour $10.00 1 $10.00Labor - Twining and Training hour $10.00 0.6 $6.00Media bag $30.00 0.03 $0.90Pots (styrofoam cups) 25 ct $1.02 1 $1.02Seed seed $0.25 25 $6.25Twine tube $15.99 0.1 $1.60

Total Variable $105.58

Pole Lima Bean 100 ft. Budget, Yield

Dependent and Fixed Costs

Yield Dependent Unit Cost

Bags for sale basket $0.09

Labor - Marketing basket $2.50

Total Yield Dependent $2.59

Fixed Costs Unit $/Unit Unit/100 ft TotalProrate Useful

Life (years)

5/8 Bu Basket basket $6.99 7 $9.79 5 10

Irrigation - Drippers each $0.33 20 $1.32 5 10

Irrigation - Tubing 100 ft $18.95 1 $3.79 5 10

Trellis - Landscape timbers post $3.99 2 $1.60 5 10

Trellis - Posts (4x4x10) post $12.47 6 $14.96 5 10

Trellis - Wire (9 ga.) 171 ft $15.99 1.75 $5.60 5 10

Total Fixed $37.05

Pole Lima Bean 100 ft. Budget, Returns

Price

High Average LowLabor Costs

YieldBaskets/100 ft $28 $24 $20

High 9 $86.08 $50.08 $14.08 $112.50

Average 6 $9.84 -$14.16 -$38.16 $85.90

Low 3 -$66.40 -$78.40 -$90.40 $79.92

Make a plan of how you will

produce those crops (or animals)

Marketing

• Who will be your

customers?

• How will you connect

or reach those

customers?

• What will those

customers want?

• What can you

provide? (Grow)

• How big is the market

(can you reach your

income goals)?

Markets

• Wholesale with middleman

– Grower/shipper channels

– Local wholesale

– Auctions

• Wholesale direct (B to B,

backdoor)

– Restaurants

– Institutional

• Direct On-farm

– Farm stand/farm store

– U-pick

– CSA/Subscription pickup

• Direct Off-farm

– Farmers markets

– Direct delivery

– Off farm store

– CSA/Subscription drop

– Internet/Mail order

Selling to Restaurants, Chefs

Selling at Auctions

Selling to Institutions• School, college

– Farm to school

• Hospital

• Corporate campus

• Government entities

Selling to Local Retailers• Local Markets

• Farm Markets

• Country Stores

• Produce Vendors

• Small Chain

Supermarkets

Selling to local wholesale buyers

• Limited operation area

• Pick up at your farm

• Deal directly with buyer

Selling to Brokers, Packers, Repackers

• Local, regional, national

• May contract for your

crop

• They pack

• May provide harvest

services

• No farm identity normally

if they pack

Selling to Terminal Market Buyers and

Distribution Companies

• Deliver to their

warehouse

• Specific standards,

strict standards

– Competing against

large producers

• Maintain your brand

Selling to Regional Supermarket Chains

or Food Service Providers

• May deal with produce

buyer for the chain

• May deal direct with

produce manager in

each store

• Delivery

– direct to store

– distribution centers

• Farm pick up programs

• Specialty product

companies

Selling to Large Chain Supermarkets

– Warehouse

• All produce must be received at this warehouse facility for distribution to Safeway stores – No direct

farm to store sales.

• A grower must enter a Vender agreement with Safeway, and a vendor number and account must be

established. A cooperative may act as a vender for several farmers.

• A Safeway produce Vendor must have the following:

– 1. A Continuing Commodity Agreement with Safeway, which is a responsibility and liability waiver

– 2. $2,000,000 product liability insurance

– 3. A PACA license for in state and out of a state produce sales, or a business license for in state sales only

– 4. Federal I.D. number

• All produce must meet US Grade 1 standards or higher as defined by the Safeway Acceptable Minimum

Quality Standards, provided to vendor/farmer.

• Specific varieties may be required as well as grading and packaging standards defined by Safeway.

• LIL, Less than a Truckload Volume” will be accepted at the warehouse, as well as mixed produce loads.

Direct Markeing

• Is direct marketing for

you?

• Opportunities

• Resources

• Personalities - People

• Management

U-pick

Farmer’s Markets

Farm Stands, Farm Markets

Grow and Sell Greenhouse

or Nursery

Community Supported

Agriculture - CSA

What is it and how does it work?

Background and Philosophy

• A community of

individuals or families

pledges to support a

farm (or group of

farms).

• Idea thought to

originate in Japan in

the 1960’s

Organization of CSA’s

• Who runs the CSA?

– Individual farm owner, for

profit

– Cooperative of several

farmers, for profit

– Community owned farm

employing a grower, produces

only for the members

– Non-profit owned farm (such

as a foundation), usually

dependent on volunteers to

do the work with some paid

staff

– Communally owned and

operated farm, the community

members do the work

How is the Farm Supported

• Most commonly pre-paid

shares

– CSA member agrees to pay

at the beginning of the

season

– Farm provides a certain

amount of what is in season

or that is available (box or

basket of produce, one

dozen eggs, one brick of

cheese, for example) at

regular intervals (weekly) to

each member according to

their shares.

Other Potential Member Support• CSA organization

– Specific responsibilities

– Administration

• Assist with production

labor on farm

– CSA work day

– Specific job assignments

• Assist with packing and

distribution

– CSA packing day

– CSA distribution day

• Record keeping

• Communications,

newsletter, promotion,

recruitment

• Goal setting

• Apprenticeships,

internships on the farm

• Youth projects, family

projects

Direct marketing small scale

livestock products

• Eggs

• Holiday Turkeys

• Pastured, grass fed,

organic

– Poultry

– Goats and sheep

– Beef

• Freezer pork

• Rabbits

On-farm, restaurants, farmers markets,

butcher shops

Marketing Plan

• Market analysis

– Customers

• Targets, demographics

– Sales potential

• Market needs, trends,

growth potential

• Competition

– Product Position

• Local, natural, organic,

fresh from grower,

unique, etc.

• Marketing Strategies

– Pricing

– Distribution

– Advertising

– Customer Service

• Sales forecast

– Yearly

– Seasonal

– Monthly

Assessing Overall Costs, Returns, and Profits

Per market

day or

delivery x 20

times

Estimated

Estimated

Value-added products

• Changing what you produce in ways to make it worth more

• On-farm processing

• Production systems –organic

• What else can you do to add value to what you produce?– Creations

– Presentation

– Variety

– Identity

– Information

List Some Value-Added Product

Possibilities From Your Farm

What Opportunities do You See?