Finding the Perfect Farm Enterprise: Finding the Perfect Farm Enterprise Terry E. Poole
Extension Agent Gee, how am I
going to pay for
this new farm?
The Land Slide: 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: 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 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. Gallery of Enterprise Hopefuls
What is a “Perfect Farm Enterprise”?: 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 Enterprise The Do List: Selecting an Enterprise The 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 Enterprise The Don’t List: Selecting an Enterprise The 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: 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: 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: 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: 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: 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: Selecting an Enterprise Check on the farm resources:
land
water
buildings
machinery
equipment
Small Farm Enterprise Objective: High Value / Acre: Small Farm Enterprise Objective: 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?: 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. Why High Value Enterprises?
Rationale: 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.
Slide19: 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.
Slide20: 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 Options Objective: High Value / Acre: Small Farm Enterprise Options Objective: 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? Selecting an Enterprise
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. Specialty Crops
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
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 Vegetables
Oriental Vegetables Greens: 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 Vegetables Greens
Oriental Vegetables Chinese Cucurbits: 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 Vegetables Chinese Cucurbits
Oriental Vegetables Chinese 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 Vegetables Chinese Cucurbits
Oriental Vegetables Snow Peas : Oriental Vegetables Snow 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 Vegetables Chinese 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 Vegetables Chinese Beans
Oriental Vegetables Chinese 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 Vegetables Chinese Cabbages
Oriental Vegetables Other 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 Oriental Vegetables Other Vegetables
More Non-Traditional Enterprises Artificially 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. More Non-Traditional Enterprises Artificially Dried Hay
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 Feed Grains and Hay
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
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. Organic Animals
Non-Traditional Animals: 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: 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. Organic Fruits/Vegetables
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. Heirloom and Unusual Vegetables
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. Wine Grapes
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. Cut and Dried Flowers
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. Herbs
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. 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. Greenhouse
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. Nursery Stock
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. Value Added Products
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? Agri-Tourism
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. Conclusion
Thank You Good luck with your new farm enterprise.: Thank You Good luck with your new farm enterprise.