The Journal of Extension - www.joe.org

October 2019 // Volume 57 // Number 5 // Ideas at Work // 5IAW1

Improving the Viability of New Farmers' Operations Through the Use of Profit Teams

Abstract
Profit teams comprise multiple consultants engaged to support farmer decision making by holistically analyzing farm challenges. We tested the idea of using profit teams to help advanced beginning farmers, those who are beyond start-up but have been in business less than 10 years, address constraints to growing their businesses. These new entrepreneurs often have entered agriculture without a family farming history or a connection to Extension. We describe the processes of selecting farmers and administering teams, and we highlight significant improvements in quality of life, production, and profitability reported by 35 farmers. Our lessons learned may guide other educators and funders in developing profit teams for their beginning farmer clients.


Anusuya Rangarajan
Director, Cornell Small Farms Program
Ar47@cornell.edu

Kathleen McCarthy
Beginning Farmer Project Coordinator, Cornell Small Farms Program
Kmm485@cornell.edu

Daniel Welch
Extension Associate
Business and Succession Planning Coordinator, NY FarmNet
Dlw56@cornell.edu

Cornell University
Ithaca, New York

Introduction

With 40% of established U.S. farmers aged 65 or older, there is a clear need for new farmers in the country (U.S. Department of Agriculture National Agricultural Statistics Service, 2014). Yet many structural, institutional, and social trends challenge entry into farming (Sirrine, Eschbach, Lizotte, & Rothwell, 2016). Educational programs include training for starting farm businesses (Thilmany McFadden & Sureshwaran, 2011), but few are targeted specifically to assisting farm entrepreneurs after start-up and through their 10th year of business (Freedgood & Dempsey, 2014). These farmers need individualized support to resolve constraints to long-term viability. Many new farmers enter agriculture with no family or community connection and lack awareness of professional consultants, Extension personnel, or peer mentors who can support their business decision making (Hancharick & Kiernan, 2008).

We tested the concept of using new-farm profit teams to address business challenges and isolation experienced by advanced beginning farmers (those who are beyond start-up but have been in business less than 10 years). A profit team is a multidisciplinary group of consultants who together evaluate an existing farm system, identify weak links, and recommend changes to management for improved profitability (New York Farm Viability Institute, 2018). A profit team offers a holistic and personalized analysis of farm challenges.

Establishing New-Farm Profit Teams

Sixty farmers applied to participate in the new-farm profit team project in 2015 and 2016, and 40 were accepted. Farmers were required to have been in operation 3 to 9 years and to have grossed at least $10,000 the prior year. Preference was given to farmers who articulated a clear need for a profit team, demonstrated a growth trajectory, maintained financial records, and evidenced community engagement.

Each farmer agreed to engage a profit team for at least 18 months, attend a training retreat, pay 20% of consultant fees, be open to making changes based on advice, and report on the impacts of the endeavor on quality of life, production, and profitability.

After we visited a farm to clarify the farmer's goals, we awarded the farmer with up to $2,000 to hire consultants to assist with problem solving to reach those goals. Generally, a farmer's profit team included multiple consultants, Extension educators, and project staff. Approximately $80,000 was distributed across 35 farms. Five farmers withdrew from the project due to time constraints associated with off-farm employment.

Two in-person training retreats we conducted helped farmers connect with new peers as the projects spanned numerous commodities and locales. Farmers inspired one another by sharing descriptions of how the profit teams were supporting their business decisions. We also offered workshops focused on common challenges, such as whole-farm planning, marketing, leadership, labor, and time management.

We used a standardized pre- and postprogram farmer survey to evaluate changes in farmers' access to business resources as a result of their participating in the new-farm profit team project and benefits of the retreats. We compiled five case studies highlighting the farmers' challenge, the consultants engaged, changes to farm management, and lessons learned.

New-Farm Profit Team Impacts

Of the 35 participants completing the program, 13 farmers increased gross sales by 15% or greater. Also, 70% to 90% of the farmers reported improvements to quality of life, financial planning, and profitability as a result of their work with a profit team (Table 1).

Table 1.
Percentages of Farmers Reporting Various Benefits of Participation in a New-Farm Profit Team Project (n = 35)

Area of improvement Percentage reporting benefit
Farm business management 90%
Profitability (long or short term) 83%
Marketing 80%
Record keeping 80%
Labor management 77%
Quality of life 73%
Financial planning 70%

Farmers were asked about obstacles they faced. The median number of obstacles was significantly reduced from six at the start of the project to three at the end of the project (p = .015). Lack of access to necessary business networks, proper business and financial planning, and farmer training were the three obstacles most reduced as a result of working with a new-farm profit team.

In the postprogram evaluation, 100% of respondents reported feeling more confident about running a farm business, and 94% reported having new tools to guide decision making as a result of the project. Participants also noted a number of areas in which their business resource needs had been met (Table 2). The only resource that was not improved as the result of a new-farm profit team was access to adequate labor, in part due to increased labor needs from business growth on several of the farms.

Table 2.
Percentage Change in Farmer Access to Business Resources Over the New-Farm Profit Team Project Period (n = 16)

Percentage
Access to farm business resources Initial Final Change
Grants 7 75 68
Agriculture education (training and workshops) 13 81 68
Credit 27 88 61
Cooperative Extension support services 38 94 56
Farm infrastructure (buildings, irrigation, etc.) 38 88 50
Business plan resources 50 100 50
Financing 20 69 49
Tractors or farm machinery 56 100 44
Technical agricultural consulting 19 63 44
Marketing strategies 38 81 43
Information on how to expand 8 50 42
Peer network 47 88 41
Financial record keeping system 69 100 31
Help finding new markets 13 44 31
Social media/websites 60 88 28
Internet access 69 94 25
Experienced farm mentors 33 56 23
On-farm apprenticeships or on-the-job training 20 31 11
Secure access to land 88 94 6
Labor 50 44 -6

Lessons Learned

Use of new-farm profit teams is a viable strategy for supporting advanced beginning farmers. Key lessons learned were as follows:

  1. Project developers should time farmer recruitment to allow profit teams to make recommendations prior to the start of the subsequent production season.
  2. Those farmers who are well organized and have clear goals typically benefit the most from working with a profit team.
  3. An Extension facilitator should help a participating farmer prioritize goals, identify consultants, and manage timelines. Facilitation time for a team is about 15 hr.
  4. Use of in-person onboarding and written agreements ensures that farmers have clarity on timelines and deliverables.
  5. Coordinating on-farm meetings with all consultants at one time is challenging. It is more likely that a farmer will meet one-on-one with the multiple consultants advising his or her project.
  6. Hosting a retreat for a cohort at the start of the project is beneficial. Learning about other farmers' plans and getting feedback provides participants with ideas for how best to use a profit team.
  7. A list of farm consultants should be developed in advance of the project. Farmers need help identifying consultants, and providing such help on an individual basis takes additional staff time.
  8. When Extension educators on a profit team do not bill for their time if a farm is in their service area, farmers can divert funds to other consultants and build wider networks.

Conclusion

With the new-farm profit team project, we succeeded in connecting advanced beginning farmers to consultants and Extension educators who could help address business challenges. One farmer noted, "The ability to hire a consultant was huge." Another said, "Most new farmers are uncomfortable with the idea of hiring professionals to help solve problems." Many participants also shared their appreciation for networking with peers at the retreat. One farmer noted that the project shifted his perspective and "changed [participating farmers] from nose-to-the-grindstone isolationists to better [community] integrated farmers—even with those farmers with dissimilar enterprises." Another individual reflected, "Networking with the other farmers and creating a support system was the best part." The participating farmers learned the value of investing in consultants and networks as growth opportunities that can have lasting impacts on quality of life and profitability. We hope that our lessons learned will guide other Extension educators in implementing new-farm profit teams with their advanced beginning farmer clients. Although grant support is needed for implementation, the benefits to new farmer development we observed justify such investment.

Author Note

Kathleen McCarthy was the beginning farmer project coordinator at the Cornell Small Farms Program and managed the profit team project from March 2017 through May 2018.

Acknowledgments

The project described here was a collaboration of the Cornell Small Farms Program, New York Farm Viability Institute, and NY FarmNet and was made possible with funding from the National Institute of Food and Agriculture, U.S. Department of Agriculture, under award number 2015-70017-22882 and the NY Farm Viability Institute.

References

Freedgood, J., & Dempsey, J. (2014). Cultivating the next generation: Resources and policies to help beginning farmers succeed in agriculture [PDF]. Retrieved from http://www.farmlandinfo.org/sites/default/files/AFT_BF_08-27-2014lo_1.pdf

Hancharick, A. L., & Kiernan, N. E. (2008) Improving agricultural profitability through an income opportunities for rural areas program. Journal of Extension, 45(5), Article 5FEA3. Available at: https://www.joe.org/joe/2008october/a3.php

New York Farm Viability Institute. (2018). Using a dairy profit team. Retrieved from http://www.nyfvi.org/default.aspx?PageID=2380

Sirrine, J. R., Eschbach, C., Lizotte, E., & Rothwell, N. (2016). The New FARM Program: A model for supporting diverse emerging farmers and early-career Extension professionals. Journal of Extension, 54(4), Article 4FEA1. Available at: https://joe.org/joe/2016august/a1.php

Thilmany McFadden, D., & Sureshwaran, S. (2011). Theme overview: Innovations to support beginning farmers and ranchers. Choices, 26(2). Retrieved from http://www.choicesmagazine.org/choices-magazine/theme-articles/innovations-to-support-beginning-farmers-and-ranchers/theme-overview-innovations-to-support-beginning-farmers-and-ranchers

U.S. Department of Agriculture National Agricultural Statistics Service. (2014). 2012 Census of Agriculture highlights: Beginning farmers (ACH12-5). Retrieved from https://www.nass.usda.gov/Publications/Highlights/2014/Beginning_Farmers/Highlights_Beginning_Farmers.pdf