Posts Tagged: foothill farming
We like to get farmers and ranchers together and ask them this question: What could go wrong? Preferably after they've had a good night's sleep and a filling breakfast and at a time of year when their farms and ranches are relatively quiet. It is not the happiest of conversations, to say the least. But we feel that talking about farm and ranch risks, and hopefully, taking steps to create resilience in the face of these challenges, is critical to the success of agricultural businesses. Having a plan of action in the face of unforeseen crisis can be the difference between making it and losing it all.
Here are a few topics that came out of recent Risk Management discussions held during our Farm Business Planning short course and Farmer-to-Farmer Networking Breakfasts (for info on both of these events, visit our Foothill Farming website.)
Human Risk – What happens if you get hurt or sick?
This is not a fun topic. Knock on wood, you will be fit as a fiddle into a ripe old age. But what if? You need to buy health insurance. Period. You don't have the money or time to deal with being uninsured when you need health care. Take it from a gal who's racked up hundreds of thousands of dollars in medical bills, health insurance is well worth the investment.
You also need to have an Operations Manual. Do it right now! Write down each enterprise that your business relies on and the basics of keeping it functioning from day to day. It can be rough but should be enough information that a person could read the thing and keep everybody/thing alive. Print it out and keep it in an obvious place, like a binder that says “Operations Manual.” Tah Dah! Your business just became more resilient.
Now you need a designated person/persons who can read the Operations Manual and run your farm in your absence. Employees are a good place to start as they probably have a good idea already. How about a neighbor or good friend? Have them over for a cup of tea and show them where the operations manual is kept. Maybe walk through a typical feeding of the animals or watering the greenhouse. How about a farm buddy system? I'll be your emergency farmer if you'll be mine.
Marketing Risk – What if there is a sudden change to your sales outlets?
Marketing risk is a much tougher nut to crack and prepare for. We build our businesses around projected sales to retail outlets, restaurants, and farmers' markets. What if one of those outlets suddenly became unavailable? You've produced the product and may not have another buyer lined up, so what options do you have?
Jim Muck of Jim's Produce has a good strategy. He tries to always have three potential outlets for a farm product, e.g. Restaurant A, Restaurant B, and Grocery Store X. While he may have made a commitment to Restaurant A for the season, he knows that if Restaurant A were to go out of business both Restaurant B and Grocery Store X would likely be interested in the product he was supposed to sell to Restaurant A.
So what are your options? Would your wholesaler buy more? Do you have a relationship with a Farmers' Market Association that will allow you to attend a market at the last minute? How about a place that will always take a bulk order to make jam or salsa? As Paul Muller of Full Belly Farm says, a successful farmer must spend her time “100% farming and 100% marketing.” Take a moment to identify your most risky marketing outlet and create a back-up plan for that product.
Legal Risks – Are you above board with your employees?
If you aren't filing payroll tax and covering workers with workers compensation insurance, you're walking on thin ice (and technically, breaking the law.) While talk of the costs may have dissuaded you from hiring employees the right way, it's time to make the switch. And if you think you can't afford minor costs like payroll tax and insurance, you may have bigger problems in your production plans than you realize. These costs are insignificant enough that you should be able to pay for them if you can afford hired labor. The risk of getting busted for violating labor laws is significant and fines could very well put your farm or ranch out of business. Time to read up on how to follow the law (getting legal?.
Financial Risks – How well do you understand your Cash flow?
It is likely that your farm and ranch business goes through ups and downs in your cash flow cycle. Our work is largely dependent on the seasons and cycles of animals and therefore there are times when we have a lot of cash coming into the business and there are times when there is not a lot coming in. For many of us, when we have the least amount of cash coming is also when we have a lot of cash going out! Create a cash flow budget for your farm that shows the months across the top and different categories of income and expense along the side. You can then go through and project income and expense by month. This will help you plan for when cash is short, and budget more stringently when income is strong. Another strategy to weather a lopsided cash flow is to move major bills and payments to times of the year when you have income. For example, pay for liability insurance in August instead of February.
Production Risk – Do you have a plan for wildfire?
We farm in a part of California with a particularly high threat of wildfire. Now is a great time to get your wildfire plan written down and understood by all involved. Do all of your properties have at least two exits? What will happen to your livestock if you happen to be out of the area when a fire threatens your farm? Did you know that Cal Fire does not want you to leave sprinklers on when you evacuate and would rather you place buckets of water around structures? Do you maintain 100 feet of defensible space around all outbuildings? There are a lot of great resources available online to help you get started creating a plan. Start off by reading this Foothill Farming blog post on wildfire planning: http://ucanr.edu/sites/placernevadasmallfarms/blog/?blogpost=19003&blogasset=24945
One of the most important parts of managing risk on your farm is preparing yourself for the emotional toll that accompanies all of these scenarios. By taking a moment to think through a list of potential risks and what actions you'll take in the face of these risks, you are making yourself more resilient. Understandably, an initial reaction to these scary situations is to avoid thinking about them altogether. By looking at these risks as hypothetical situations, we are training ourselves and our businesses to react effectively if and when we need to.
For more information on the types of risk your farm or ranch needs to prepare for, visit the Risk Management section of our Foothill Farming website: http://ucanr.edu/sites/placernevadasmallfarms/Farm_Business_Planning-_new_2/FBP_Risk_Management/Risk_Management/
As we farmers and ranchers determinedly pace the rows of trees, as we tread upon the fields of foliage and flowers, and herd our stock across green and brown pastures, an underworld of microbiology and geology hums beneath our feet. Hold a handful of soil in your hands and you hold billions of micro-organisms. More importantly, you hold the cornerstone of productivity on your farm. With all of the work required by the production of food and fodder, it is easy to overlook the significance of soil. It is also easy to postpone the improvements to the soil that can greatly impact the yields and health of farm plants and animals. It is vital for all farmers, ranchers, and orchardists to incorporate soil building into our annual routines.
The first and most important step in improving your farm and ranch soil is to understand the make-up of your soil and create an action plan for improvement. To do this, you will need to take a soil sample for analysis. To accurately take a soil sample for analysis by a professional laboratory, a very specific protocol must be followed. Please watch our recently published video on soil sampling for more information (https://youtu.be/eo2pS9mSZi8) We also have a publication on taking a soil sample for analysis available on our Foothill Farming website (http://ucanr.edu/sites/placernevadasmallfarms/files/142586.pdf).
Once you have your results from your soil test, you will need to spend some time interpreting the information. This is often a sticking point for farmers- all of that chemistry and so little time to understand what to do. Soil is a complicated living system and making a mistake in what and how much you add to your soil can have dire consequences for your crops. That sounds scary, so no wonder farmers are intimidated.
The good news is that you can ask the soil lab that analyzed your samples to give you recommendations for soil amendments and application rates. If your farm is organic be sure to tell the lab that you want organic advice, otherwise you will get conventional farming suggestions. The soil lab, at a minimum, should be able to tell you how much nitrogen, phosphorous, and potassium, you will need to apply in order to achieve good yields. Depending on the lab and the tests you requested you can also get recommendations for how much and what kind of lime to apply; if you need trace minerals like boron, sulfur, or zinc; and how many tons of compost you should add. Different soil labs use different test methods so it is a good idea to use the same lab to test your soil each year. In other words, once you get going on a soil fertility plan from one lab, stick with it. Soil building takes years so you must be patient and consistent in both your testing and following of the lab's recommendations.
You do not have to get recommendations from a soil lab. You can learn how to read your soil test results and then develop your own soil building plan. To learn how to read soil lab test results start by taking one of the interpreting soil test results workshops offered by the UC Cooperative Extension. Be sure to keep an eye on the event calendar on the Foothill Farming website for the next workshop.