Risk Management Education Risk Management Education with NY Horticultural with NY Horticultural

ProducersProducers

Wen-fei Uva, Ph.D.Cornell UniversityWL32@cornell.edu607-255-3688

Presented by Cornell Horticultural Business Management and

Marketing Program

Overview of the New York Risk Overview of the New York Risk Management ProgramManagement Program

Research (special projects with RMA) AGR Case Studies and Education (2000-01) Specialty Crop Producer Survey (2001-02)

Education (NE Center for Risk Mgmt Ed) Marketing Clubs (2001-present) Risk Management Newsletters & Web-site (2001) Business Analysis and Industry Performance Benchmarks

(2002-present) State Targeted Risk Management Grant

Train-the-trainer Workshops & Marketing Clubs (2001-02) Business Planning Curriculum (2002-03)

Presented by Cornell Horticultural Business Management and

Marketing Program

Major ParticipantsMajor Participants

Dept. of Applied Economics and Management faculty Dr. Jerry White Dr. Mark Stephenson & Other faculty and staff

Cornell Cooperative Extension Educators Horticulture Specialists Farm Management Specialists

Others Risk Management Agency NASS-NY Farm Credit Farm Bureau

Presented by Cornell Horticultural Business Management and

Marketing Program

Building a Holistic Risk Management Building a Holistic Risk Management PlanPlan

Production MarketingMarketing FinancialFinancial Legal and Environmental Human Resources

Presented by Cornell Horticultural Business Management and

Marketing Program

Why Marketing?Why Marketing?2000 Food Dollar2000 Food Dollar

Presented by Cornell Horticultural Business Management and

Marketing Program

Supply-Chain Movement Toward the “Middle”

Retailers are asking grower-shippers to share the majority of functional tasks within the supply chain

Retailers & grower-shippers endorse the resulting partnerships

Presented by Cornell Horticultural Business Management and

Marketing Program

Grower/Shipper Grower/Shipper StrategiesStrategies

“Growers need to stay flexible and responsive

to buyer needs.”

“More coordinated effort with buyers,

processors and other growers”

Presented by Cornell Horticultural Business Management and

Marketing Program

WHY AGRICULTURAL FIRMS WHY AGRICULTURAL FIRMS DON’T COOPERATE?DON’T COOPERATE?

Independence & Fragmentation Of All Sectors Diversity in the industry Options exist without cooperation

Distrust Among Various Industry Participants A Financial Weaning Via “Survival Of The

Fittest” Where is the Incentive?

Is it bad enough yet? Is there an effective leader?

Presented by Cornell Horticultural Business Management and

Marketing Program

What is a Marketing Club?What is a Marketing Club?

A marketing club is a group of people who meet regularly with the common goalcommon goal of increasing their knowledge of marketing concepts.

Presented by Cornell Horticultural Business Management and

Marketing Program

What can a Marketing Club What can a Marketing Club do?do?

Presented by Cornell Horticultural Business Management and

Marketing Program

• Formal or informal discussion/sharing to learn from each other

• Targeted and continuous learning• Real-time marketing information• Hands-on practices• Peer-support groups• Trade or Market as a Group• Others…..

3 Key Ingredients3 Key Ingredients

Presented by Cornell Horticultural Business Management and

Marketing Program

• Interested Producers 15-25 -- Interested and committed Determine goals, topics and activities

• Facilitators Meeting arrangements Educational resources Help the leader and the group

• Group Leader One of the producers – a catalyst Encourage participation Coordinate planning of future programs

First Meeting – Interest First Meeting – Interest MeetingMeeting

Presented by Cornell Horticultural Business Management and

Marketing Program

• A marketing workshop Prepare participants in the basics Get participants to similar level of knowledge

• Gauge level of interest What is a marketing club? Potential benefits Brainstorm marketing issues of participants

• Set a time for the next meeting to Set goals & plan for future meetings Select interested topics & activities

• Pass out responsibilities

How did We Support the How did We Support the Marketing Clubs?Marketing Clubs?

Presented by Cornell Horticultural Business Management and

Marketing Program

• Mini-grants to horticulture extension educators 7 fruits, 2 greenhouse, 1 vegetable Provided training on organizing marketing clubs

• Flexibility is important What would you call the group? What would the group do?

• Provide marketing resources Speakers Marketing materials

What Did We Learn from the What Did We Learn from the Experience?Experience?

Presented by Cornell Horticultural Business Management and

Marketing Program

• Participants need to have a common goal Wyoming County vegetable growers Erie County greenhouse growers Western and Eastern NY fruit growers

• Be workload sensitive No crop season meetings Plan ahead for meetings and tours Assign responsibility

• Build leadership Establish ownership – self-directed Build a future after extension involvement

Risk Management Web-sitesRisk Management Web-sites

Presented by Cornell Horticultural Business Management and

Marketing Program

• Under the Horticulture Business Management and Marketing Program web-site: http://hortmgt.aem.cornell.edu/programs2.htm

RM workshops, MC activities, RM newsletters• Link to the NY Agricultural Risk Management

(ARM-NY) web-site: http://agrisk.cornell.edu/ Information for dairy and field crop operations Considering crop insurance calculator Business planning curriculum (Power Point

presentations, video streaming, print materials)

Risk Management Risk Management NewslettersNewsletters

Presented by Cornell Horticultural Business Management and

Marketing Program

• 9 Newsletter Articles Subjects identified by growers and extension

educators Some examples:

Managing Marketing Risks Building a Safety Net with Crop Insurance How Risk Tolerant Are You? Understanding Income Fluctuations The Big Five Types of Agricultural Risks

• Newsletters for Small Farms

Helping Growers Helping Growers Manage Financial RisksManage Financial Risks

Expanding the Cornell Greenhouse and Fruit Farm Summary Programs Expand the greenhouse business participation and

expand the program from NY to include PA and NJ growers

Expand the fruit farm business analysis program from WNY to include statewide.

Goals are to help growers conduct financial analysis & benchmark industry financial performance

Presented by Cornell Horticultural Business Management and

Marketing Program

Participating Businesses Participating Businesses Contribute:Contribute:

2 – 4 hours of meeting time Annual cash receipts and expenses

records Business assets and inventory

information Other business operation information

Presented by Cornell Horticultural Business Management and

Marketing Program

What Does the Business Receive from What Does the Business Receive from Participating in the Project?Participating in the Project?

• One-on-one meetings with a business management specialist

• A customized business analysis report Financial Statements: income statement, balance

sheet, and cash flow statement Financial Analysis: cost and ratio analysis Efficiency Measurements: cost and return

efficiency• The industry financial benchmark report• Access to the web-based database (fall 2003)Access to the web-based database (fall 2003)

Presented by Cornell Horticultural Business Management and

Marketing Program

Size of Greenhouses in the 2000 Summary

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1,440 15,580 29,720 43,860 More

Size (sq ft)

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y

Presented by Cornell Horticultural Business Management and

Marketing Program

Scope of Greenhouses in the Scope of Greenhouses in the 2000 Summary2000 Summary

Ave Size (SqFt) Ave Sales % G.M.All Greenhouses 38,500 576,000$ 27%

Wholesalers 55,500 837,500$ 26%

Retailers 23,000 334,000$ 28%

Presented by Cornell Horticultural Business Management and

Marketing Program

Establishing the Square Foot Establishing the Square Foot Week ConceptWeek Concept

Comparing different sized businesses can be tricky.

Volume = size * weeks of operation

Square Foot Weeks = Sq Ft * Weeks Used.

Presented by Cornell Horticultural Business Management and

Marketing Program

Greenhouse Business Greenhouse Business BenchmarksBenchmarks

Industry averages by marketing channels The data are also divided into quintiles

representing the top 20%, second 20%…. Each greenhouse business can see where

they fall in each performance measure. Performance measures of the Top 20% of

ROA

Presented by Cornell Horticultural Business Management and

Marketing Program

Participations and ActivitiesParticipations and Activities

• The Greenhouse Business Analysis Program 29 greenhouses participated in 2001 49 greenhouse participated in 2002 NY, PA, NJ and MI participation in 2003

• The Fruit Farm Business Analysis Program 12 farm participated in 2002 Participation from 40 farm expected in 2003

Presented by Cornell Horticultural Business Management and

Marketing Program

Participations and Activities – cont.Participations and Activities – cont.

• Workshops and Training Business analysis training was offered in 2002 NY

regional winter grower schools The Apple Grower Decision-Making Workbook In-depth business analysis course has been

requested by two NY greenhouse grower groups Training is planned in summer 2003 for MI

educators on using the business analysis program to work with GH growers

• Beta Version of the Web-based Searchable Database will be trialed in 2003

Presented by Cornell Horticultural Business Management and

Marketing Program

Thank you !&

Discussion!