The CSA: A vital tool for small farms near urban populations.

Wholesale Markets:  Moving a lot of product quickly is the chief advantage of the wholesale market. While roadside stands, CSA, and the farmer's market require a high level of customer service and personal involvement on behalf of the farmer, this type of marketing/selling involves a few key relationships with a limited number of agents or buyers. Because of the demand for large quantites, small farmers can band together to sell the same or similar crops to a single buyer or group of buyers with only one set of negotiations. Beyond the advantages of this strategy lies that facts that wholesale prices will be below the direct-marketing prices. Packing, cleaning, and a requisite general uniformity of the product are requirements that can also add extra labor and expense on the production side. While diversity is generally considered a key to the success of the small farm over the long term, farms that  possess micro-climates or  specific soil-types that are especially suited to growing a specific crop (ie: sandy loam  for root crops or the tempering effect of a large body of water for fruit crops) can utilize wholesale outlets to move large quantities of these specific crops. It is important to note that wholesale marketing can be an excellent adjunct to other strategies, in that it paralells and complements the crop/product diversification strategy. (9)(10)(11)

Restaurants : Selling to restaurants requires a special skill-set from the farmer in that he must have the ability to develop a working and flexible relationship with the head chef, owner, or buyer. Once this relationship is established, the farmer can often influence what crops/products the restaurant buys and features. When the restaurant recognizes and trusts the farmer as a reliable source of high quality product, the restaurant can feature a farmer's product by name on the menu or in daily specials. This name-brand marketing will be a value added benefit that will carry-over to all segments of the farm marketing strategy. A key element that can influence buyers in this market would be the farmer's ability to offer semi-processed forms of his product such as peeled potatoes, washed and sliced carrots and certain produce chopped and salad- ready. Additionally, special "tags" such as "locally-grown," "ethically-raised" and "hormone-free" can enhance a menu and be a important selling and price point for the seller (farmer), buyer (restaurant) and consumer (restaurant patron). (12) (13)(14)(15).    Tagging Your Product to Make It Unique:  In every sector of commerce making a product unique so that buyers take notice is the essence of marketing and advertising. The successful marketeer searches trends and societal "quirks" and gears his product to appeal to those characteristics. Food socialogist Amy Guptill points out that " . . .all marketing involves emotional and conceptual symbols. Food corporations spend huge sums developing and promoting brands that people associate with 'wholesome goodness.' Small farmers can play that game either long distance (label/certification) or  face-to-face (locally) and they have the (unique) advantage of  authenticity."  Over the course of time, a farm's name or region can become synonymous with quality or a certain desirable food characteristic, i.e.: Vidalia Onions, Horizon Milk (organic), Dole pineapple. Other key tags capitalizing on the health trend would include: "hormone-free",  " anti-oxident", " no genetically enhanced ingredients," "free range." Creating brands that identify with traits or trends is a nuanced difference that sets a product apart from similiar competitors and ultimately brings a premium price. (16)(17)(18) link to a unique illustration of tagging for your market

Organic Farming : Retooling for the Future: Once the pariah of the commercial farming industry and the  perceived bastion of kooks and hippies, organic farming is now the fastest growing sector of agriculture, producing products that command premium prices. Beyond the immensely important moral, ethical, and philosophical considerations for the small-scale farmer in this realm is the tremendous marketing opportunity organic farming presents. Currently, demand for organic products far exceeds the domestic supply and production-capacity of the number of existing U.S. organic farms. It is market so ripe that during the period 2000-2008, organic acreage increased 41%, dairy cows - 87k to 200k, and laying hens- 2.4 to 342 million. For established farmers full or partial conversion to organic methods can involve philosophical changes that go against the grain of practices that have been firmly entrenched since the end of World War II. and been abetted by the state and federal governments as well as the majority of land-grant colleges. Today, these same institutions have well- established and expanding support-systems in place to encourage and promote organic farming that lend scientific and economic aid and creedence to the movement.The federal 2012 Farm Bill contains solid funding for the sustainable and organic farming community with a myriad of grants and and opportunities for farmers seeking to convert acreage to organic culture or to begin organic operations.(19)(20)(21)

Grocery Stores and Locally Grown Produce: No marketing sector capitalizes on the "tagging your product strategy" like the retail- grocery store produce department. "Locally-grown" and health related tags, such as "heart-healthy", "organic" and "anti-oxident" all command particular attention from the consumer and premium pricing for the farmer in this market. Today, both chains and independent grocers aggressively seek and promote locally grown produce to the point of inviting local farmers to present their products in-store. The keys to gaining a foothold in this market are to actively develop a working relationship with the produce manager/buyer, consistantly deliver an on-time high-quality product, labeled and packed to the stores specifications and then maintain a communication link with the produce manager/buyer. Large quantities of product can be moved through this venue but it is important to realize that the price paid by the store will generally be 35-40% below that of the farmer's market and roadside stand. This pricing downside however, may be mitigated if the farmer is able to offer adequete supplies of unique products such as hierloom apples and vegetables and new variations of products with unique colors or flavor characteristics (seed companies and extension services can be helpful here). This niche marketing done in cooperation with the aggressive advertising generally provided by the store itself can create a premium market opportunity for both parties and a destination point for consumers looking for unique produce.(22)(23)(24).

Bringing the Customer to the Farm

Multi-Crop U-pick : A Destination Marketing Strategy

Discussing  Farming in the Context of a Business: A Few Points to Ponder
 Going Forward 

·        Define what is to be produced on the  farm. While diversity has proven to be successful in farms based on a sustenance/surplus model (the predominate pre-WWII model), modern small farmers must be keenly aware of local markets and opportunities to fill niches that corporate farm  competitors find unprofitable or impossible to fill within their own operational constraints. Though specialization can have a negative connotation within some sustainable-agriculture  purist circles, it does have a pragmatic application when dealing in the modern ag-markets that rely heavily on local markets, grocery stores, restaurants, and  various incarnations of the growing CSA movement. In all the aforementioned  outlets, producing consistent quantities of very high-quality products is a  requisite. That said, there is still room and a degree of necessity for  diversity on the farm when well managed and thought out; as illustrated by the  example of “grass farmer” Joe Salatin in Michael Pollen’s Omnivore’s  Dilemma.   In this small farm model, Salatin  successfully skirted most chemical/petroleum inputs that are the norm in the  majority of current farm models, exploiting diversity by utilizing animal wastes (manure) and instinctual habits of livestock (his main product)  to  feed his other marketable crops, combat insects, and to a degree, control weeds in his pastures.  In short, an exception in a world of specialization and  extremely complex in terms of successful implementation but certainly worth a mention in this section, but not  for everyone (and certainly not for the novice or beginning farmer). (38)      Core crop selections can be matched to available markets and sychronized to provide income sources that span the entire year. Click image to view how VanScoy Farms has developed this strategy in the Columbus, Ohio market. (39)      Analyze the Tangible and Semi-Tangible Assets of the “Farm” as a business entity. This analysis is, on one hand, no more or less than an inventory with an honest opinion attached. The most tangible components in this inventory, and the easiest to obtain, are the physical, including cash on hand, number of arable/production acres, irrigation resources, buildings, and equipment. These  can, on one level, be expressed in terms of numbers but the real analysis, and  the “honest” opinion part of the equation comes when we move to the next level where true value is determined in “real-world” applicability; four examples: 1)You may have $10k in the bank but how much of that $10k are you willing to  invest in your farm to upgrade your equipment, buy seed, erect a greenhouse, loan to your farm to cover the day-to-day operational costs and most importantly supplement cash-flow [more on cash flow later]. 2) A barn on your property is old and in need of a roof, but its stone foundation is buried into a hill making it a perfect storage facility for late-season cabbage and potatoes,  crops your neighbors can’t consider because of the exorbitant costs involved in building and operating a climate controlled facility, thus giving you market advantage . 3)  You have 100 acres that are, on first analysis, arable and potentially productive but a  closer look reveals that 17 acres aren’t tillable until early June, when they dry out. In essence almost 20% of your land is not production-ready for a number of vegetables that must be planted by Memorial Day or earlier in order to meet market/harvest demands. 4) A closer look at that same wet area on your farm  reveals a number of springs above your fields that remain active throughout the growing season. With the addition of drainage in this area and a collection system such as a pond or a one-thousand gallon poly-tank, you  now have an asset that will enable you to increase the yield and market crops  that respond positively to supplemental water, such as root crops like melons,   sweet corn, and strawberries.  As illustrated, this second-tier type of  evaluation takes  conventional accounting practices to a level beyond mere numbers and provides a more precise lens in which to view the “farm,” particularly in terms of projections and  potential, a key component of the “business plan.”   .

·        Analysis of Intangible Assets: the   real tactical advantage. The “farm” is a living, breathing organism; always evolving and always in flux.  While it takes physical assets to build a farm, it is the presence and quality of the “intangibles” that make the farm run and ultimately make the farm a success. Prior to discussing specific examples of intangible assets on the farm, it is important to define in business/accounting terms just what an intangible is and understand its value or potential value in terms of dollars and profit.  First and foremost, the most valuable asset of any business is the expertise and competence the owners and staff bring to the business. This intellectual resource (termed in a number of ways including: intellectual or human capital) is both the heart and the brains of the operation; and ironically, in accounting terms, is considered to have no monetary value unless it is quantified as part  of a deal that involves a merger or acquisition. In conjunction with the concept of intellectual resources as a valuable-yet-intangible-asset is the notion that each company will have a set of systems and procedures that it has developed to  run the company, often the product of trial and error and problem solving; this  body of knowledge is often termed as “structural capital.” Linked to and spawned by both intellectual resources and structural systems and procedures, is the component “goodwill and relationships” with customers, vendors, and business contacts. These are the lubricants and catalysts that move a business in a  positive direction, if these elements are wisely maintained and tended to. When taken as a whole, it is these“intangibles” that have the most value to a  business in that they are, by-in-large, assets that must be developed, learned,and generally acquired over periods of time by humans who are dedicated to seeing a business succeed, much in contrast to tangible assets that can be  bought and sold on the open market by anyone with the cash to do so. In the real world of farming the giant role of the intangible asset cannot be understated. The skill-set that the farmer or the farming team possess and develop are the  “farm.” In that respect, when analyzing the intangibles it is incumbent to honestly assess the problem-solving abilities, educational background, “people skills,” ambitions, and drive of the individuals that will be moving the farm through its various incarnations in response to market conditions, weather and climatic conditions, government regulations, etcetera. Defining the necessary management roles (for example: who performs accounting functions, marketing and selling, crop production, livestock management, and keeps up with new trends and digital technologies), and then who fills these roles, is of equal or greater importance/value to the farm success than who’s driving the tractor or milking  the cows in the modern small farm model.  Within the purview of the aforementioned team is an analysis of an analysis in regards to “the goodwill and relationships” portion of the business. Reviewing these intangibles in greater detail, the stability of the farm and the farm’s ability to “weather” less than ideal conditions all revolve around the farmer’s ability to deal within the world of business. That includes: reliable relationships with vendors who supply the goods and services that keep the day-to-day operations moving forward (tire repair services, seed and fertilizer dealers, parts vendors), with customers (local produce buyers, store  managers, CSA members), and of tantamount importance, financial institutions (credit unions, banks).  Everything within the farm is connected to everything else.The intangibles are the glue that holds it all together and, at the same time, the farmer must be keenly aware that when it comes down to business: the farm is not an island unto itself, but an integrated entity within the world at large.           Provide for Budgeting, Planning and Cash Flow: “Forced” Realities. Accountants deal in   real numbers, the stark realities of a small business that owners/farmers often avoid seeing or often, wanting to see. Long range planning provides a template for direction, and combining this planning with “real” numbers, yields a budget. Not only does the budget provide discipline and financial constraints on the operational aspects of a particular profit center (i.e.: the entire costs of bringing a new crop to market) but the process of putting that budget together puts the realities, in terms of hard-cash, of a new idea or direction  under real-life scrutiny. If an idea doesn’t work on paper, it has little  chance of surviving in practice in a real world environment subject to   influences that are, at best, difficult to foresee or predict; such as weather, market conditions, insect/disease problems, and cash flow. [A word about cash flow: Defined, cash flow is the incomings and outgoings of cash (hard-liquid-spendable-available). There is an old axiom in business that  states “Cash flow is king (in business).” While a positive cash flow is important in an emergency, its most important role is to provide needed funds for regular/cyclical expenses that fuel the business, like payroll, timely vendor payments (discounts can often be realized for early payment-they add up!) and rents, leases etc.  Good cash  flow is not a solid indicator of the health of a business, however; from a  day-to-day operational and pragmatic perspective, an adequate cash flow lessens stress on the owners/managers, in that financial obligations can be met in a timely manner. It is important to remember that interest and late fees resulting from the delayed payments have a serious impact on profit margins. In terms of Budgeting and Planning, these types of penalties are often difficult to foresee and quantify, and as such can mean the difference between profit and loss in a cropping strategy that turns out to be marginal. Strategies for enhancing cash flow include: 1) lessening reliance on loans and financial institutions  2) increasing sales  3) cost reduction  4) raising prices on high demand or specialty crops like early and late season offerings,  5) shortening payment terms with vendors or creating “cash-only” outlets such as roadside stands  6) negotiating lower interest loans and refinancing when cash markets are available.  When formulating budgets and planning future strategies, cash flow needs to be  projected and considered in terms of real numbers within these processes. SUMMARY The overall business plan  that is derived from attaching real numbers to the goal of creating a profitable farming operation consists of an amalgam of analytical processes : 1.  The vision itself: what will the farm produce and who will buy the product? 2.     An understanding of what the farm has to offer in terms of  physical characteristics and in terms of the skills, ambition, and the motivation of those who will carry the vision forward. 3.     A cohesive budget and a plan to meet or improve the positive side of the budget. Within this budget the farmer must make careful considerations to assure that there is a positive cash flow. 4.      A view shared by  the principles in the endeavor that farming is a business that is subject to  many exogenous influences and as such, flexibility, patience, and persistence must occupy an important space within the plan.

FINAL WORDS: THE MANAGEMENT TEAM
Previously we spoke in general terms in regards to the intangible assets such as
“intellectual capital" that can be the real tactical advantage of a small business, not only in a
business-to-business competitive sense but more importantly when it comes to understanding and implementing the processes that produce products that are viable within the shifting marketplace. A common theme in peer-reviewed research on the composition of successful management teams (beyond pure competency) is the diversity of talents and experience among team members. This diversity
creates a symbiosis within the team that (ironically) is termed “constructive conflict” by Dr. Lawrence G. Weinzimmer in a related article in the Small Business Journal. In a discussion of the building of a management team for small business, Dr. Weinzimmer argues that a team based on diversity creates a system of checks and balances in areas that range from allocation of assets to marketing and beyond, combining years of experience with ‘fresh perspectives.’  In our model we will seek to use the “constructive conflict” concept, in concert with selecting those who have the potential to have a vested
interest in the goals we set forth, to create our management team.  Initially our team will require members who can fulfill the following  roles: 
1.  General Knowledge and Leadership: usually, the owner(s) of the farm who has the long-term vision of the goals and aspirations of the farm always in mind, and who would normally own the highest percentage of all the assets. In a small operation, this person would serve in many capacities,
including marketing and sales.
2.  Financial Officer: ideally this person would take a dispassionate view of the entire operation focusing on fiscal matters with analytical and accounting skills.  Beyond the required technical skill set, this team member must be aggressive in the enforcement of agreed upon budgetary constraints, but progressive enough to look for internal investment opportunities as positive cash positions allow.
3. Technical Expert: while other members of the team may share this
duty, the very complex nature of farming may require a team member that can keep abreast of the latest emerging technologies and have the ability to assess its merit and implement it, with a goal of creating greater efficiencies and higher profits.
4. Day-to-day scheduling, logistics and general manager: this team member converts theory to practice in the field.
The largest caveat we must consider in forming the management team is what we can actually afford, in terms of payroll, to put this team in place and is the additional expense commensurate to achieving the goals of our enterprise. As is generally the case in small businesses, the owners play many roles for many reasons, including pure economics. While a single owner may be capable of operating, selling and managing a small operation with adequate returns for his effort, growth will always be limited by the number of hours he is capable of working. Additionally, inputs in terms of technology and innovation will be constrained by the single owner’s personal perspectives. Putting together a  top-notch management team can both spread burden and provide the fresh perspective that keep a business viable, innovative, and alive. Putting together a top-notch management team also requires money: this means additional income needs to be generated and margins need to be increased. On the farm, this translates to the production of more crops, more physical assets like acreage, and greater efficiencies that produce higher margins. Here again, we can put the cost and benefits of the proposed management team to the “Positive Number/Acceptable Risk” test, with the main questions being: “What number, in terms of income,
must be generated to rationalize the additional payroll?” and “Will this team concept generate geometrically greater benefits (both monetarily and in quality-of-life) than a single owner-operator can achieve?” While the single owner-operator may be able to competently manage aspects of
the business that are outside of the financial realm, the intricacies of  budgeting, taxes, job-costing, analysis, and the management of cash flow require a special skill-set that must operate in an environment that contains the perpetual onus of time constraints. For this reason, our model must, at minimum,
employ a team member, either full or part time, to act in the capacity of a  financial officer.
Finally, included within in our Management Team concept must be outside experts (paid  and unpaid) which include Cooperative Extension agents, a Certified Public Accountant and trade representatives (i.e.: suppliers of seeds, produce buyers, equipment vendors).  (40)