Farm Viability Program Helps Farmers Turn Profits
- By Jon Reidel
With more than 30 years of farming under his belt, Jack Brigham decided it was time to take a hard look at his farm’s financial situation. His dairy farm had survived just fine over the years, but times were changing, and he wanted make sure the future of his seven-generation farm was secure.
“Farmers don’t tend to look at numbers,” says Brigham, who runs Holyoke Farm in St. Albans. “I didn’t want to be the guy who after 200 years had to sell our farm for housing lots.”
For help, Brigham turned to the UVM Extension Farm Viability program, a service launched more than a decade ago to provide business management assistance to farmers. After a series of financial assessment meetings with Extension educator Tony Kitsos, Brigham decided to make the bold move of turning his conventional dairy farm into an organic one. Like many of the management decisions reached by farmers in consultation with Extension educators like Kitsos, the urge to go organic was based on UVM research. Of particular use in this case was the work of Bob Parsons, an Extension economist in the Department of Community Development and Applied Economics who, among other topics, conducts cost-of-production research studies on the transition to organic dairy.
“Tony helped us develop a business plan that led to us getting a loan,” says Brigham. “The program really helps people take a hard look at the numbers instead of just plowing ahead without a plan and hoping things just work out, which is kind of what I did for years.”
Brigham is among the 80 or so clients that the UVM Extension Farm Viability Program assists each year by providing business management education and support. The development of a business plan is essential and used to create a baseline from which to measure financial performance, establish an equity position and potential borrowing power. Once the farmer's goals are established, the next step is to secure funding for what could involve major six figure investments in equipment.
Take Peter and Madonna Rainville in Fairfax, Vt.. After their farm burned down four years ago, Kitsos worked with them to create a financial path to restore and improve the operation with the addition of high-tech equipment. “I suggested they invest in robotic milkers, and it seems to have worked out well for them so far,” Kitsos says.
Loans are a key way for farms to stay on top of technological advancements. Between 2012 and 2013, the Farm Viability program, partially funded by the Vermont Housing Conservation Board, helped 10 farmers secure $750,000 in loans (out of the $882,000 for which they applied). The program’s Northeast Kingdom Dairy Viability Project completed business plans with 42 dairy farms in the three northeast counties between 2010 and 2012, and helped secure farm loans with an average value of $124,300.
“We don’t make any recommendations until we look at the full financial picture and understand what each person's goals are," Kitsos says. Sometimes that involves making some painful suggestions. “There have been a few times where it was clear that they were going to continue to lose money, so we advised them to shut down the farm,” he says. “That’s never an easy decision, but I’ve had people thank me for it years later.”
Collecting research data to inform practice
Farm Viability Program director Mark Cannella, a farm business specialist, says his staff of four educators in Rutland, Berlin, St. Albans and Bennington uses their academic, field and agribusiness experience to ensure that farmers are given the best possible advice for how to grow a sustainable business and turn a profit. They also rely on mini-grants for applied research that can be used to help farms deal with issues ranging from pasture management to improved record keeping with the use of new software programs.
“We’re starting to see some changes in the kind of help people need,” says Cannella, whose program also relies on data from UVM's Center for Sustainable Agriculture. “We’ve always helped with succession planning within the family, but we’re also seeing an increase in the number of farmers having to bring in non-family members."
Canella says the program has started compiling data from the more than 500 farms it has helped over the years, including statistics like loan flow, total acreage, average jobs retained and other key metrics to inform future practice. For example, more than 90 percent of farm managers reported that their ability to manage their business improved through the program; 85 percent said they improved their understanding of the direction they want to take their business; and almost 50 percent documented changes they made through the business planning process to improve the workplace environment for owners and employees. All participants demonstrated improved skills in accounting, financial analysis, planning farm investments, sales and marketing and strategic planning, according to a survey.
“The development of a good multi-year business plan with follow-up to make sure it’s being implemented effectively is one of the best ways we can help famers be successful,” says Doug Lantagne, dean and director of Extension. “Farms operate on tight margins, so if you don’t know if you are losing equity, you aren’t going to be around very long. Some still keep records in shoe boxes. Our job is to help them evaluate their financial situation and devise a plan to improve their bottom line. We have a limited budget, but we never turn a farm away.”