What Are USDA Risk Management Programs? 

by Jake Jacobs, UVM Crop Insurance Education Coordinator

Farming is risky business. No matter how well your farm is managed, or the steps you take to reduce the risks in your operation, unexpected events can cause losses that may severely impact your farm’s viability. The United States Department of Agriculture (USDA) provides programs for farmers and ranchers to help manage the many types of agricultural risk that they routinely face operating their enterprises and to moderate potential losses. 

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Jake Jacobs, UVM Crop Insurance Education Coordinator

Crop Insurance USDA crop insurance programs are available to producers as a tool to help manage production and market risks on farming operations. Crop insurance programs are administered by the Risk Management Agency (RMA) and are available only from private insurance agents licensed by USDA. Like other types of insurance, you need to decide what risks you want to cover and enroll prior to any loss. Once you find out about your crop insurance options, you can then make an informed decision about enrolling or managing those risks some other way. 

Disaster Assistance  USDA also provides disaster assistance programs through the Farm Service Agency (FSA). These programs help agricultural producers recover from natural disasters that cause losses not covered by other programs. An example of a disaster assistance program available through FSA is the Noninsured Disaster Assistance Program (NAP). 

Price Support  Through FSA, farmers and ranchers can access programs and services that provide financial assistance in the form of loans or market loss assistance. Examples include Commodity Loans, Facility Loans and the Dairy Margin Protection Program for Dairy Producers (MPP-Dairy). 

Your Risk Management Plan The only truly predictable part of farming is how unpredictable it can be! Consider those factors that pose a risk to your enterprise and make decisions about how you can minimize losses caused by unplanned weather or market events. 

An insurance agent can present all the insurance options and programs available for your farm. To find an agent licensed to sell crop insurance in Vermont, go to the RMA Agent locator.

This material is funded in partnership with USDA, Risk Management Agency, under award number RM17RMETS524005. Any reference to commercial products, trade names, or brand names is for information only, and no endorsement or approval is intended. Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the United States Department of Agriculture. University of Vermont Extension, Burlington, Vermont. University of Vermont Extension, and U.S. Department of Agriculture, cooperating, offer education and employment to everyone without regard to race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or familial status.

USDA LogoLogo for the University of Vermont College of Agriculture and Life Sciences

 

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Posted in Financial Mgmt, Insurance, Resources for Beginning Farmers, Risk management

Spotlight on Golden Well: A Farm offering much more than vegetables

Early season rains are one of the pragmatic reasons why Nicole and Ryan have been looking differently at their farm, which they purchased in 2015.  For two years running, their farm, Golden Well, suffered a loss. In 2016, the bridge and road to their farm in New Haven, Vermont was shut down for repairs, so customers had minimal access and in 2017, the New Haven River hopped the banks and flooded their planted fields.  Now, in spring 2018 with the New Haven River running high, Nicole and Ryan are prepared.

As Nicole says, “When you put numbers on paper you expect the projections to come true.  But things happen.  In our first year, the bridge out and the closed road foiled all our plans. How do you build a farmstand when people can’t get there?”

Golden Well New Haven River

New Haven river bordering Golden Well

Nicole and Ryan have figured out this challenge. Because of flooding and marketing risk, they have shifted to growing berries and fruits, and instead of a traditional CSA, they offer farmstand credits.

For example, you buy credit for $200 or $300 and then you can pick what you want, when you want with a bonus of 10% extra credit. This also means more flexibility for Golden Well to offer the produce that they have when they have it without being constrained by a growing season that is different than they expected

This coming season, farm events with prepared foods are new features including farm to ballet and the Community Farming Project where the community is invited to come get their hands dirty – an intersection between CSA and a community garden.  Golden Well also offers Airbnb stays at the farm. Overall, farming now represents only a small slice, of Golden Well’s income. Its number one earner is its Kombucha called “Apis” now selling in over 20 shops in Vermont. Ryan, working with a distributor this year to expand sales, says, “Everyone I know who is farming has job off the farm or another enterprise.”

Golden Well Kombucha

Apis Honey Kombucha at Golden Well

How did young farmers with big ideas afford their farm?

Nicole and Ryan worked closely with Steve Paddock, Vermont Small Business Development Center to create an enterprise budge and business plan for the next five years. With this in hand, they were able to apply for a loan to purchase their farm from VEDA and FSA loan as co-lenders.   They also received an operating loan at 1% from FSA through their young farming program. Another requirement for this operating loan was to show three years of filing Schedule F for farming income on their tax returns. For more information on loans, see FSA’s Farm Loan Compass.

With financing in place for their farm purchase, Nicole and Ryan were able to combine their two pursuits, wellness and farming, which started off in separate locations, to one integrated place – Golden Well Sanctuary for Spirit and Nature.  Nicole now runs a popular nine-month course called “Women’s Wisdom – Voices of the Well.”  She has put to great use her entrepreneurial and creative skills, many of which she learned from her mother who ran a fashion business. As Nicole describes, “The way I was raised gave me confidence. I was not boxed in to certain way of living or thinking.  Exposed to lots of cultures. I had spirit of adventure.  I visited my grandmother in Vermont. She sewed, gardened, and made pies, eight at a time. She could can all her food for the winter.”

Golden Well farm house

Golden Well farm house and barn

What advice do Ryan and Nicole give to new farmers considering farming or a farm purchase?

Nicole and Ryan say, “Maybe we would have bought this place with partners.”  Nicole adds, “I work an 80-hour week and have a young daughter so there’s a lot of pressure.” Ryan mentions, “Surviving as a small farm is very difficult. If we want to farm in that way, we need to form more cooperatives to reach wider and larger markets. It’s hard to meet the demands when you’re dealing with massive distribution channels, which have constant availability and consistency.  Through cooperatives, this could be possible.”

Nicole and Ryan also point to NOFA-VT farmer services . They worked with a farm mentor, Mimi Ornstein, who helped them set realistic goals. As Nicole describes, “these were not just monetary, but also lifestyle oriented – what’s sustainable in terms of hours for our lifestyle. We updated our business plan and made projections and matched up hours with outcomes and we started managing time according to what’s financially sustainable.”

Vermont has “amazing” resources on offer to help farms in enterprise and business planning including Vermont Small Business Development Center and UVM’s Farm Viability Program.  Nicole advises, “As tempting as agritourism may sound, make sure you know about the red tape with your town.”   When considering a new enterprise, in addition to the finances, some legal  questions to address are:

  • What are the permitted uses in your town’s zoning regulations for your property?
  • What uses require applications with the State?
  • Is a yurt or other farm-related structure considered an accessory unit?
  • Are farm-to-table dinners a farm use or a business use?

It’s worth reading your town’s plan ahead of time to learn about your town’s strategic goals so you’re working with them, not tilting at windmills.  Working more closely with town planners early on can avoid problems later.   If agreements are made, Nicole suggests getting them in writing, as memories can be short.

Summing up, Nicole adds, “With small farming, the margins are small and nature is unpredictable, so it’s important to find ways to diversify and grow relations with your community of farmers, colleagues, customers, and mentors.  And just as important is having enough of a relationship with your land to understand its rhythms and its unique gifts.”

Posted in Farmer Profiles, Financial Mgmt, Goals, Land access, Marketing, Quality of Life, Resources for Beginning Farmers, Scaling up

Spotlight on Golden Well: Bees and Floods Bring New Life to Farm & Sanctuary

By Suzy Hodgson, UVM Center for Sustainable Agriculture

Moving beyond farming and their apiary, Nicole and Ryan have created a novel healing center, retreat, and event space “devoted to re-potentiating our relationship with the living earth.” Their place is called Golden Well Sanctuary for Spirit and Nature in New Haven, Vermont.

Nicole describes what she means by re-potentiate, “living in a relationship with the earth rather than extracting and dominating the earth as we’ve done for hundreds of of years.” Her inspiration comes from looking back at indigenous ancient ways of interacting with the earth. She tells me why she was first attracted to the New Haven location, “We were magnetized by this place. It was synchronicity to us getting here.  I liked the diversity of landscape – river, wetlands, ecology, and social aspects. We can invite people to enjoy the river.”  But the river proved to be both a blessing and a curse.

Golden Well Nicole & Ryan

Nicole Burke & Ryan Miller, Golden Well Sanctuary

As Ryan her husband describes, “We were looking for a place for our bees, and this place just happened to be awesome – we didn’t have a checklist of must haves.”  In 2012, they moved their bees, six hives with about 80,000 bees in each hive to the New Haven farm.

While originally only a home for bees, the owner then offered Ryan and Nicole some land for planting a garden.  In the fall of 2012, they planted 1000 bulbs of garlic.  Expecting a baby, Nicole’s thoughts turned to how she could plant enough food to feed her growing family.  The first season was a successful one; planting a ¼ of an acre, Nicole and Ryan fed their family and sold surplus produce at the Vergennes farmers market.  To supplement their farm income, Ryan worked making hard cider at Champlain Orchards.

Building on this successful start, Golden Well launched their CSA in 2013 with 15 members, growing to 25 members in 2014, 35 members in 2015 and by 2017, their CSA had 50 members.  But in June 2017, disaster struck. The New Haven River hopped the bank and flooded all four acres, which they’d planted, bar 1/3 of an acre.  Their emerging crops were underwater.

“The original concept of a CSA had changed … people want a return.”

Some CSA members were understanding and empathic in accepting the loss, but others were not and expected refunds. As Ryan describes,  “The original concept of a CSA as a community-supported farm has changed and is more like a commodity these days, not really shared.  People have spent money on a CSA share and they want a return.”

Faced with mixed responses to a really tough CSA season, when the flood hit, Nicole and Ryan also lost their wholesale contracts and had no produce for two farmers markets and their own farmstand.  While Nicole and Ryan thought they had crop insurance coverage with the Farm Service Agency, it appears that the disaster relief coverage they had was far from sufficient.  “We lost $50,000 worth of produce, a seed purchase of $4000, but we were reimbursed for only $1400.”  This could mean the time to reassess different types of risks  a farm faces and find an insurance product, which covers these risks adequately.

While Nicole and Ryan took a closer look at the risks and rewards of farming, they decided to make a shift away from more crop production, and instead are finding rewards by “refocusing on community as the heart of agriculture and sustainability.”  As Nicole describes, “we’re bringing food security and accessibility to the forefront and we’re doing this by growing with people. This year is the start of our Community Farming Project.

Golden Well Kombucha

Apis Honey Kombucha at Golden Well

More like a community garden with experiential learning, Nicole says, “we’ve had loads of enthusiasm.”  People are interested in participating for a number of reasons, some love vegetable gardening but find it can be lonely; others are too busy to grow their own food but want to have some connection, and others enjoy CSA produce but find buying a share upfront, too much of an investment.   Nicole and Ryan also offer participatory farming, farm-to-table meals, healing sessions, women-centered courses, airbnb, and brew honey kombucha.

“Having a diversity of enterprises can be a way to manage risks”

In surviving the flood and crop losses of June 2017, Nicole and Ryan learned resiliency and how having a diversity of enterprises can be a way to manage risks.  Now, as kombucha sales take off and healing courses fill up,  actual vegetable production has shrunk to be a small part of Golden Well.  Though small in dollar terms, growing food remains an essential part of the whole experience. Nicole is sanguine about future prospects, “Food is gift from nature not a commodity – we take care of her, she takes care of us. It’s reciprocity.”

Posted in Farmer Profiles, Financial Mgmt, Goals, Insurance, Quality of Life, Risk management | Tagged , ,

Managing Agricultural Risk

By Jake Jacobs, UVM Crop Insurance Education Coordinator

Spring will be here soon, and this winter we’ve already had some glimpses of the weather to come. Now is a good time to update your farm business plan, including assessing how you will manage all the types of agricultural risk that can threaten your farm’s viability.

Do you know the five types of risk that challenge every agricultural enterprise?

  • Production: What will our crop yields be this year? How will environmental conditions impact production?
  • Marketing: Will we be able to sell our crops for a fair price? What will we do if there is an unexpected market shift?
  • Financial: How can we manage our debt load? What do we do about inflation or other economic variables?
  • Legal: What are we liable for?   What do we do if someone – worker, customer, visitor – gets hurt on the farm? Are there environmental risks?
  • Human Resource: Who will do the work if I am unable to do so?   How can we find and retain good employees?

Do you have plans in place that will minimize each of these risks? For production and marketing risks, consider crop insurance. There are more options available, including some that are particularly suited to the types of diversified farming operations that are often seen in Vermont and the other New England states. The cost of insurance premiums are subsidized by the federal government, but you should also find out if your farm qualifies for some of the special provisions such as waived registration fees for beginning farmers, additional premium assistance such as the whole-farm premium subsidy for two or more qualifying commodities in the WFRP policy, or opportunity to use prices that more accurately reflect market values for organic production.

Your insurance agent can present all the insurance options and programs available for your farm. To find an agent licensed to sell crop insurance in Vermont, go to the RMA Agent locator.

This material is funded in partnership with USDA, Risk Management Agency, under award number RM17RMETS524005. Any reference to commercial products, trade names, or brand names is for information only, and no endorsement or approval is intended. Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the United States Department of Agriculture. University of Vermont Extension, Burlington, Vermont. University of Vermont Extension, and U.S. Department of Agriculture, cooperating, offer education and employment to everyone without regard to race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or familial status.

USDA LogoLogo for the University of Vermont College of Agriculture and Life Sciences

Posted in Financial Mgmt, Insurance, Risk management | Tagged

Growing a business: Part 2 of Spotlight on Good Heart Farmstead

By Suzy Hodgson, UVM Extension Center for Sustainable Agriculture

With five years of farming behind her, Kate Spring, Good Heart Farmstead, has the experience to respond to feedback from CSA members and to balance her job with her farmer partner and husband, Edge. After starting out their farm with livestock, Kate and Edge discovered that their CSA customers really liked their salad greens. Building this part of the farm business meant dropping the meat and eggs from their plan and becoming more specialized.

While focusing on the business of growing and selling greens, Kate describes how she and Edge divide what needs to be done, “Edge manages our wholesale accounts and talks to chefs, builds relationships with them and runs our Montpelier restaurant and CSA drop-offs. I do the marketing and communications, our farm’s website, and run our on-farm CSA pick-up.”

Good Heart Farmstead

With one acre in production on a hillside with well-drained soils, Good Heart Farmstand has managed their production risks by identifying their best piece of land which is ideal for vegetable growing. Other parts of their property were too wet.

“We both work in the field, and we both make decisions about what to do. We’re thinking about eventually adding an employee. So far, we’ve had two folks do work for trade to help us out.”

Kate is now focusing on business planning with NOFA through the Farm Viability Enhancement Program to make the farm more sustainable. There are several eligibility requirements to the program including:

  • at least 3 years of experience managing for working on a farm,
  • producing at least $10,000 of gross farm income in the most recent tax year, and
  • committed to the business of farming in the next year.

Building on the UVM whole farm planning course Kate completed back in 2013, the viability program provides help with cash flow projections and analysis to ensure the farm can pay its future bills.

Looking back, Kate remembers, “Our original idea was to have a full-diet CSA, and to produce everything for about 40 families. The scale we were at was more of a big homestead, and we found we weren’t able to produce meat at a competitive price at such a small scale.”

 A key question was: How many people do we want to feed and can we feed?

“What’s been important is that we’ve learned to really engage with potential customers to know what they want and to better understand the market we’re in or trying to enter. Each year, we make financial projections, which we break down into where we thought we’d be and where we actually are. While last year, we didn’t end up where we’d hope, some years we have met our targets.”

Over the past couple years, Good Heart Farmstead has shifted more production to wholesale than the CSA from 75-80% CSA and 20-25% wholesale to a roughly even split. While Kate does work in a non-farm customer service job during winter months, her goal is for any off-farm work to be a choice based on her interests, not out of economic necessity. The intention is for both Kate and Edge to work 100% on the farm, and not require any additional off-farm income to be sustainable.

Going into season six, Good Heart Farmstead is still in the growth phase and over the next two years, plans to be on operating on a more sustainable basis for their business.

Kate’s advice for young people considering farming

  1. It’s important to have hands-on farming experience, whether crop growing or livestock and to work on a couple different farms at different scales and in different markets;
  2. It’s just as important to learn how to run a business, as you need business skills;
  3. Invest in education such as a whole-farm planning class; and
  4. Attend conferences and join organizations like NOFA-VT and the Veg & Berry Association.

Kate also has some go-to books for inspiration, practical advice and a reality check. They are The Organic Farmers Business Handbook: A Complete Guide to Managing Finances, Crops, and Staff – and Making a Profit by Richard Wiswell, and The E-Myth Revisited: Why Most Small Businesses Don’t work and What to Do About It by Michael Gerber.

Over the years, Kate and Edge have realized that in building a sustainable farm, they’re doing more than farming work and have taken on many roles; they’ve become customer service specialists, local food advocates, the CFO, and the CEO.

Read more on how working your way on farms can be a great way to gain experience, expertise and insight into what it takes to succeed as a farmer.

Posted in Farm labor and human resources, Farmer Profiles, Financial Mgmt, Goals, Marketing, Quality of Life, Resources for Beginning Farmers | Tagged