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.

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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

Getting Your Farm Going – USDA Website is Here to Help

By Jake Jacobs, UVM Crop Insurance Education Coordinator

If you are looking to get a start in an agricultural enterprise, bring on your ideas and enthusiasm! USDA’s new farmer website is dedicated to programs and resources just for new farmers and if you have never explored the site, take some time to check it out.

On the home page you will find a number of menu options. The website’s discovery tool will ask you a short series of questions to zero in on the information and resources you may need based on your location, the enterprise, markets and business model you are considering. When you click “Apply,” the tool will provide a custom list of resources and contacts specific to the information you provided.

USDA also offers many benefits and incentives for a variety of programs and products for beginning farmers. Here are just a couple of important examples.

  • Financing: FSA makes and guarantees loans to farmers who are unable to obtain financing from commercial lenders. Also, a new farmer has access to an affordable interest rate (not to exceed 3 percent above FSA’s direct farm ownership interest rate) and is able to purchase land on installment with a smaller down payment than conventional real estate loans.
  • Crop Insurance: When purchasing crop insurance, the Risk Management Agency (RMA) provides beginning farmers with exemptions from paying some administrative and buy-up fees, additional 10 percentage points of premium subsidy for additional coverage policies (buy-up) that have premium subsidy, use of the production history of farming operations where beginning farmers were previously involved in the decision making or physical activities, and an increase in the substituted yield for yield adjustment, which allows a replacement of a low yield due to an insured cause of loss, from 60 to 80 percent of the applicable transitional yield (T-Yield) for the crop in the county.
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Spotlight on Kate Spring, Good Heart Farmstead

By Suzy Hodgson, UVM Extension Center for Sustainable Agriculture

A vegetarian for six years, Kate Spring, Good Heart Farmstead, had been interested in sustainable farming since graduating with an Environmental Studies and English degree in 2009. But after reading Pollan’s Omnivore’s Dilemma, Kate wanted to revisit her relationship with animals and meat. As she describes it, “my main impetus and reason to start farming was to start eating meat. I’d learned a lot about food systems and wanted hands-on experience on a small farm, to see what it’s really like to raise livestock. It was a pretty personal way into farming.”

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Kate’s first job was working with Mari Omland and Laura Olsen at their farm, Green Mountain Girls Farm.  Kate described her first day, “On day one, I milked goats and helped raise chickens, turkeys, pigs, and lambs. I was Green Mountain Girls’ first employee so I did a little bit of everything, from moving animals to new pastures, to helping set up their Community Supported Agriculture (CSA). I got a taste of all those things.”

I was Green Mountain Girls’ first employee so I did a little bit of everything.

Getting a closer relationship with local farming and food, Kate realized that she not only loved the farming, but also relished the interaction with customers. At her next job, she was ready for some management experience and was hired as a school garden supervisor. This was her second summer farming but first time in a management role at Calypso Farm, an educational farm in Fairbanks, Alaska. Kate ran the summer program for kids and managed the CSA.  She met Edge, her husband-to-be, who was in his fourth year at Calypso and was key staff member.

Working with kids 10 to 14 years old, Kate saw how farms can have a large impact on food accessibility, particularly in a low-income area.  As Kate found out, “Most kids didn’t know anything about vegettables. With the sun never setting during an Alaskan summer, veggies grow really fast providing lots of learning opportunites. Calypso played a transformational role in the neighborhood with kids feeling pride in their surroundings, a sense of belonging and contributing.”

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What Kate learned at Calypso inspired her and provided the framework for starting her own farm in Vermont.  Looking back to the start, Kate realizes her farm looks different than her and Edge’s original inspiration. As Kate explains, “When we started, our original vision was creating a full diet, full-year farm feeding 40 families. We had an idea for a big homestead to feed families with sheep, chicken, turkeys, pigs and a separate CSA for veggies. It was too much for two people to do all that at once, if we wanted to do everything well.”

It’s easier to have someone come water veggies than wrangle a sheep if we want to go camping. 

Finishing their fifth season in 2017, Good Heart Farmstand is fine tuning, figuring out what they do well. Over three years, they’ve dropped the livestock, focusing instead on salad greens for wholesale markets, particularly restuarants. As Kate puts it, “we were more effective veggies growers than livestock farmers. And the price of seeds is less than the price of grain. We also enjoy the lifestyle and flexibility, as it’s easier to have someone come water veggies than wrangle a sheep if we want to go camping.” Moreover, Edge and Kate found that accessing veggie markets at the price they needed to cover the costs was easier than the price point needed for pasture-raised meats.

Summing it up, Kate says, “Our farm is ‘what we like doing, what we’re effective at doing, and what we can sell well.”

Posted in Farmer Profiles, Goals, Leadership, Marketing, Quality of Life, Resources for Beginning Farmers | Tagged

Should I Have Crop Insurance?

By Jake Jacobs, Crop Insurance Education Coordinator, University of Vermont

Finances are especially tight for many Vermont farmers right now. Is it worthwhile to pay for crop insurance? To answer that question, farmers need to carefully evaluate their business risks as well as the costs and potential benefits of crop insurance.

Know Your Risks. Without crop insurance, what production and revenue risks is your agricultural enterprise exposed to? Start by assessing your farm’s projected bottom line. How much does your profitability depend on the productivity of your crops? How volatile is the market for your product(s)?

Crop insurance is one risk management tool, providing financial security for farmers and their businesses in the event of a weather-related disaster, a shift in market conditions or certain other unforeseeable circumstances. The unpredictability of market conditions and the weather can devastate a farm’s profitability and the indemnity payments received from crop insurance can make the difference between a catastrophic business loss and the ability to continue farming following a shattering event.

With provisions implemented in the 2014 Farm Bill, crop insurance is an integral part of U.S. farm policy. Today, crop insurance protects more than 90 percent of the nation’s planted acreage, and as a public-private partnership, it replaces more costly disaster bills that were used in the past. With federal subsidies, crop insurance is more affordable and the expanding options make coverage available to more producers, including specialty crop growers, organic producers and new and beginning farmers.

A crop insurance indemnity payment won’t match what a farmer can receive from harvesting a good crop. As with homeowner’s or auto insurance, the farmer has to pay a deductible and any loss has to be verified. But crop insurance may provide some peace of mind in the face of variable conditions in an inherently risky business.

Take action now so you can make an informed decision. Contact a licensed crop insurance agent to determine the best coverage and program for your farm. Consider crop insurance as part of your overall farm business plan to decide if it fits into your risk management efforts. You can find a licensed crop insurance agent by going to

Not sure how to select a crop insurance agent?  What matters is the quality of service and how well the agent meets your needs. Here’s how most farmers would describe a good agent.

The 2018 deadline for most spring-planted crops is March 15, 2018.

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USDA is an equal opportunity provider and employer. This material is funded by partnership with USDA, Risk Management Agency, under award number RM17RMETS524005

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