Developing business plans & practices

1. Developing business plans & practices Eric & Joanna Reuter Chert Hollow Farm, LLC

2. General principles & goals - Minimize debt, expenditures & off-farm inputs Base management & income on natural resources Use diversification to manage work & risk Experiment, record, and learn Plan & farm for the long-term Maintain an attractive & well-kept farm Make a living from the land and enjoy it Maximize self-sufficiency, especially in food

3. Working with what we have • PROS: • Rich bottomland soil • Isolation & protection • Good timber • Good potential pasture • Reliable county water • CONS: • - Limited good, flat soil • Degraded upland soil • Little infrastructure • Restrictive microclimate • Difficult access

4. Chert Hollow Farm overview • Certified Organic vegetable farm • Primary focus: 200 varieties of produce • Includes smaller amounts of fruits, grains, & herbs • Secondary focus on farm & home production • Dairy & meat goats, chickens, swine, and timber • 2011-2012 transition from farmers market to CSA program

5. “Farm for profit, not production” • Plan all activities around net/gross ratio • Farm 1: $50,000 - $45,000 = $5,000: 10% • Farm 2: $10,000 - $5,000 = $5,000: 50% Who can expand/meet goals more easily? • Net goal $30,000: • Farm 1 needs $300,000 gross • Farm 2 needs $60,000 gross • Plan for long-term needs Efficiency matters; the less you spend, the less you have to earn

6. Choosing management - What methods will you use, at what cost? - Reducing off-farm inputs, and closing loops, is very effective at saving money - Records help identify hidden costs & labor - For us, Certified Organic helps with these goals • Records become a planning tool • Methods limit off-farm inputs • Closed loops save money • Justifies higher prices

7. Management examples • Plan crop/animal rotations to fit more into area • Consider cyclical on-farm inputs • Saving cover crop seed • Start a manure herd • Grow winter forage for livestock/poultry • Analyze labor & material choices

8. Choosing methods & inputs • Think efficiency • Consider costs of any methods/inputs • Run tests of different methods/inputs • Consider whole-year results, not per-crop • We chose mostly manual methods • Cheaper & more reliable • Less weather-dependent • Allow intensive growing • Quality of life • However • Time & labor-intensive • Limits some crops

9. Methods examples: • Tomatoes: in a 4’ wide bed, we tested 1 row vs. 2 • In theory, two rows gives more yield & more income, though with more cost • In practice, single row plants seemed healthier, larger, and more productive, with lower costs • Edamame: in a 2.5’ wide bed, we tested 1 or 2 rows at plant spacings from 2”-8”. • 2 rows (12” apart) yielded more and shaded weeds, though tight spacings hurt. Ideal method for us is 2 rows with 6” spacings.

10. Analyzing space, yield, time, and income together • Consider one 100’ bed for summer & fall (using Johnny’s yield data per 100’) • Zucchini 200lb x $2/lb = $400, July onward • Leaving zucchini alone may mean no fall crop; removing in mid-August allows for fall crop: • Zucchini 100lb x $2/lb = $200 PLUS • Fall greens (kale, collards, mustard) 75lb x $8/lb = $600 • Which is better, $400 or $800? • You can still keep zucchini going through frost by planting other beds later, after mid-summer crops like garlic come out. • Efficient space use & willingness to move on can effectively raise yields & income

11. Choosing products • Consider more than customer popularity • Labor & input needs • Harvest & storability • Market presence & competition • Sales ceiling • On-farm viability • Loss leaders are fine, if intended

12. Products examples • Sweet corn • Popular, but not lucrative - needs equipment. We don’t grow it for sale because we can get more money elsewhere. • 100’row yields ~100 ears x $.50/ear = $50 • Slicer tomatoes • Easiest crop for gardeners and everyone grows them. Market is always swamped at peak and customer appreciation is relatively low. We don’t grow many for market. • 100’ row yields 150lb x $3/lb = $450 • Herbs • Lucrative in small amounts, but hard to scale up, and need to be very fresh. We don’t overdo it with these. • Garlic • Low pest pressure & input needs, most work comes during non-peak times, stores well. We grow lots. Still has a ceiling. • 100’ row yields 300 heads x $2/head = $600

13. Using on-farm resources - What do you have on-hand to close loops? - Chert Hollow: - limited open land, lots of timber - on-farm logging creates value & saves money

14. Labor needs • How to pay? • IRS allows farm non-cash payments, no witholding • Liability • Volunteers/interns/visitors can be forced to sue you • Internship rules • Government requires internships to demonstrate education links, & more • Otherwise may run afoul of labor laws

15. Risk Management • Responses • Diversified crops & • adaptable methods • Pay attention, have alternative plans, member of Farm to Consumer Legal Defense Fund • Research, test, innovate, market • Organic methods and certification • LLC, liability insurance (?), document attention to safety • Health insurance, safety conscious Uncertainties/risks • Climate/weather, disease/pest threats • Changing regulations (food safety, etc.) • Customer demands, competition • Contamination of crops (pathogens, long-lived herbicides, gov’t sprays) • Lawsuits • Injury/illness

16. Diversity • Market diversity • Draw in many types of customers • Ecological diversity • Consider disease, nutrient use, & ecosystem • Income diversity • Multiple income streams buffer the unknown • Labor diversity • Spread workload over more time & tasks

17. Agritourism - Attract, educate, & impress customers - Charge a fee to attach value to your time • New income stream • Gain feedback & ideas • Promotes openness

18. Time management - Always consider the value of your time - Ask “What’s in it for me?” - Assess relative uses of time - Going to market takes two days; will I make enough to justify that? - 2 ten-hour days: 20hr x $8 = $160 - Plan around core principles

19. Business plans are dynamic - Continually assess, revise, and adapt as needed - Deeply tied to individual circumstances - Conditions on the ground - Skills and interests of the farmer - Resources available - Every farm should have a different focus, resulting in an effective whole

20. Thank you Questions?