Wholesale Record Keeping for Farmers

1. 16 Lesson Plans to Prepare Small and Mid-scale Farmers to Enter Food Hubs, Groceries, Restaurants andCooperatives

2. Module 3.3 Record Keeping for Wholesale Enterprises Please see ‘Module 3 – Business Management’ for additional teaching resources. test

3. What records are necessary for wholesale marketing? • Good news! – • No additional requirements are set by the USDA, the FDA, or other governing body to transition from selling retail to selling wholesale. • The requirements depend on the request of the entity purchasing the product. • What follows are reminders of information, recommendations, and guidance for farmers pursing a transition to wholesaling their products. ? test

4. A Transition to Wholesale Channels • Although no new records are legally required, a devout commitment to records mentioned in 3.1 (and a few more) will greatly benefit the entire farm operation. • Most farmers see wholesaling as an important part of diversification to help stabilize revenue, product flow, and cash flow. • Margins are likely to be different when first selling wholesale compared to retail (lower or higher). • Over time it is frequently observed that economies of scale and scope will reduce costs per unit.* test *A potential benefit to increase profitability over all market channels.

5. Record Keeping • Did you operate strictly with payment upon delivery of goods? • IOUs • Extending lines of credit to customers • Yes, you’re likely to become a “bank” • IOUs are known as Accounts Receivable (A/R) • Very similar to Accounts Payable (A/P) test

6. Record Keeping – A/R and Invoicing • A/R is an asset (at least on your Balance Sheet) • When you sell goods on credit you set a Term • A Term is defined as the number of days given to honor the paying of the bill • Clarity is necessary with length of the term and actions if the agreement is not honored • Remember to follow-up with customers to ensure timely repayments test *Use Caution* Most sales on credit should be to frequent or special customers who are periodically invoiced.

7. Record Keeping – Options • CenterPoint from Red Wing Software • Sage 50 (previously Peachtree) from Sage Software • QuickBooks from Intuit Inc. • Many others – choose what is right for you and your farm! test Make sure whatever option you choose allows for invoicing (full inventory management and A/R aging reports etc. are nice too )

8. Farm Management • With additional market channels you will need to optimize for each channel • Detailed records will • help optimize sales paths • make analyzing financial and operations performance possible • be necessary for applying for insurance or loans • and more! test * Effective management of your farm depends on accurate measurement *

9. Strictly Management Record Keeping Options • Veggie Compass • Richard Wiswall • AgSquared • FINPACK • Many others – again, choose what is right for you and your farm! test *If adding in a new system to your farm it is beneficial to have your new and old programs easily transfer information, e.g., FINPACK has an accounting interface with QuickBooks. *

10. Sales – Historic Records and Sales Records • *** Know everything about your products! *** • Products • Planting and harvest dates • GDDs and GDUs • Yields • Grades • Forecasting • Sales and prices • Break-even price • Update costs • Trendsand weather test * Ordering CANNOT be difficult for the buyer *

11. These terminal markets are a direct reflection of what is going on in the wholesale market. If you are not in a contract these prices will be factors on the ability to move product! Sales – Pricing • A Terminal Market is a central site for trading of commodities, often in a metropolitan area. • Hunts Point Cooperative Market • USDA daily price reports NOFA-NY price resource test

12. Sales – Risk and Insurance • Liability insurance for selling products • Minimum suggested coverage of $1-2 million • Ask purchasers what they require (this could easily be as high as $5-7 million) • Farming is one of the ten most dangerous occupations • Key person insurance policy test

13. Sales – Food Safety and Traceability • It is recommend all farms transitioning to wholesaling become GAPs certified as purchasers are demanding the certification. • “Initial analysis of the data shows that there is a positive gain for investing in GAPs, regardless of farm size, meaning that money spent implementing GAPs results in larger returns despite the initial and on-going costs.” (http://www.gaps.cornell.edu/documents/GAPs_report.pdf) • Most, but not all, purchasers are demanding GAPs or other third party audits on the conditions of farms and processing facilities. • Financial assistance is currently offered by Hannaford, Wegmans and others. test

14. Sales – Food Safety and Traceability • Traceability for safety, liability, and certainty. • - kosher, halal, vegetarian, vegan, organic, etc. • In the near future we may see consumers and the government demand entire food chain traceability. • The most important part of traceability is building trust with the consumers who want to know what they are eating. • Keep records at least as long as the normal expected life of the product. • Please see ‘Module 5 – Food Safety’ for more information on traceability. test

15. Putting It All Together! The biggest part to remember is many of the records you will need to keep for audits, marketing, business analysis and management are not mutually exclusive. Make sure your record keeping decision allows for inventory management including accounts receivable and invoicing of customers. You need to be willing to follow buyer requested audits. Many of the records you need for GAPs, organic, and FSMA certifications will cover much of what you need for buyers. Be smart and don’t double (triple or more) your work. Thank you! – Questions or Comments?