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Creating Cash Flow Projections | The Farm Labor Dashboard

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Creating Cash Flow Projections | The Farm Labor Dashboard

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In developing your workforce plan, you want to make sure that you have adequate cash on hand to cover your payroll expenses. A cash flow projection (or cash flow budget) is an estimate of the amount of money you expect to flow in and out of your business. It includes all your projected income and expenses.

Monthly cash flow projections can help identify when you can expect to experience cash shortfalls in your production year. If you anticipate a temporary cash shortage, you might explore opening a line of credit or a short-term operating loan to help bridge the gap. Planning ahead is a key management strategy.

Here are some resources to help you develop cash flow projections:

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In developing your workforce plan, you want to make sure that you have adequate cash on hand to cover your payroll expenses. A cash flow projection (or cash flow budget) is an estimate of the amount of money you expect to flow in and out of your business.

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Budgets | Center for Crop Diversification

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Budgets | Center for Crop Diversification

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Budgets are useful for planning your operation, developing a realistic business plan, applying for financing or grants, and evaluating potential crops.

Click below to download the spreadsheets

2022 Vegetable and Melon Budgets (Large Scale) (CCD-BG-10), University of Kentucky (.xlsx)

2022 Vegetable and Melon Budgets (Small Scale) (CCD-BG-11), University of Kentucky (.xlsx)

For printable versions of the 2022 vegetable and melon budgets, please visit http://www.uky.edu/ccd/content/vegetable-and-melon-budgets-2022

Includes the following Crops:

Asparagus Production Budget for Kentucky (2016), University of Kentucky (PDF)

Economic Considerations for Apple Production in Kentucky (CCD-FS-14) (2020), University of Kentucky (PDF)

2017 Kentucky Blackberry Cost and Return Estimates (ID-149), University of Kentucky (PDF)

Blueberry Budgets for Kentucky (2019), University of Kentucky:

2019 Blueberry Cost and Return Estimates (CCD-BG-2) (PDF)

2019 Highbush Blueberry Budget - Pick Your Own Marketing (CCD-BG-3) (PDF)

2019 Highbush Blueberry Budget - Wholesale/Retail Marketing (CCD-BG-4) (PDF)

Peach Cost and Return Estimate Spreadsheet (CCD-BG-12) (PDF)

2019 Interactive Peach Budget Spreadsheet (CCD-BG-13), University of Kentucky (.xlsx)

2019 Peach Budget Spreadsheet (CCD-BG-13), University of Kentucky (.pdf)

Kentucky Matted Row Strawberry Profitability Estimated Costs and Returns (CCD-BG-5) (2019), University of Kentucky (PDF)

Sample Budget for Small-Scale Commercial Tomato Operations, University of Tennessee Extension, 2022 (PDF)

Sample Budgets for Large-scale Bell Pepper Operations and the Impact of Phytophthora Blight on Farm Revenue and Costs, 2022, University of Tennessee Extension (PDF)

Enterprise Budget for Cherry Tomatoes, Practical Farmers of Iowa

2016 Kentucky Grape Costs and Returns: Budget Summaries and Assumptions, University of Kentucky (PDF)

Grape Production Budgets for Kentucky (2016), University of Kentucky:

Vinifera Wine Grape Varieties (PDF)

French-American Hybrid and American Wine Grape Varieties (PDF)

Table Grape Varieties (PDF)

Wine Grape Regional Marketing and Price Outlook (2011), University of Kentucky (PDF)

Winery and Vineyard Feasibility Workbooks, Iowa State University Extension

Nursery, Greenhouse, and Ornamental Crops

Greenhouse Cost of Production Budgets, Rutgers Cooperative Extension

Virtual Grower, USDA

An energy cost calculator for greenhouse growers.

Pot-in-pot System Cash Flow Worksheet (2009), University of Kentucky (.xls)

Ornamental Gourd Production in Kentucky, University of Kentucky (PDF)

Other budgets and budgeting tools

Potential Profits from a Small-Scale Shiitake Enterprise, University of Kentucky (PDF)

Beginning Farmer Center and Leopold Center Enterprise Budgets, Iowa State University

Numerous fruit, vegetable, nursery, and other crop budgeting tools that could be adapted to Kentucky.

Clemson University Enterprise Budgets, Clemson University

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Budgets are useful for planning your operation, developing a realistic business plan, applying for financing or grants, and evaluating potential crops.

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Small Scale Budgets | NC State Extension

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Small Scale Budgets | NC State Extension

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If you need more information or training to make use of these publications and budgets, or you have edits and errors please email Derek Washburn: dawashbu@ncsu.edu.
Individual Small Scale Vegetable Budgets
The budgets below have detailed introductions, assumptions, and capital expenses. They assume a best case scenario for yield in a given production season and that all…

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Software Tools for Small Farms - Young Agrarians Business

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Software Tools for Small Farms - Young Agrarians Business

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This article was originally written by Chris Bodnar, and was published in COABC's BC Organic Grower, Volume 16, Number 3, Summer, 2013. It has since been expanded and updated by YA staff. Find more farm business resources on our FARM BUSINESS TOOLS PAGE
Many organic farms have a special binder. The binder holds field records, crop plans, a multitude of to-do lists and miscellaneous notes. The binder is sacred; should it ever go missing, the following year's organic inspection would be a nightmare. The farm's operations depend on a bundle of papers that, with one drop in a mud puddle, could cause a lot of unnecessary stress.

Whether your record keeping involves such a binder, spreadsheets or any other systems you've developed over the years, you are likely aware of the value of the information you have accumulated over the years. Moving your record keeping to a specialized digital program can help to make this information more useful and more organized.
Quick Links:
If you're looking for info on customizable online storefronts, check out our Ecommerce for Farmers blog post!

DIGITAL RECORD KEEPING

LiteFarm was born out of the Centre for Sustainable Food Systems at the University of British Columbia and is now being developed by a global team of staff, students, and contributors. LiteFarm is a free and open source farm management tool made for current and aspiring sustainable farmers. LiteFarm has been co-designed by farmers, with ease of use as it's top priority.

It's features are designed especially for the needs of sustainable and diversified farmers. It allows you to:

Get everyone on the same page with real-time tasks and notifications

Find information you need quickly with a simple, searchable, map-based interface

Enter data once to seamlessly tie your operations, inventory, and payroll together

Understand profitability on a crop-by-crop basis

Compare product prices by time and location throughout the season

Discover payment for environmental services (PES) schemes you may qualify for

Make organic certification a breeze with one-click document submission

See automatically generated "seed to sale" timelines for all crops on your farm

Make audits and verifications easy by inviting verification officers to your farm instance

https://www.litefarm.org/
If you using LiteFarm let us know about your experience in the comments.

It would stand to reason that a record keeping program designed by organic farmers to meet the expectations of organic certification programs would best meet the needs of organic farmers. This is certainly the case with software tools like COG-Pro.

COG-Pro is designed to keep track of records from the point of developing your seed order right through to recording harvest yields and sales. If used to its fullest extent, growers can track seeds through the entire growing process using lot numbers from seed packages, generate seed records (e.g. demonstrate your search and use of organic seed), produce fields plans, seeding records, fertility records and harvest records.

In addition to crops, COG-Pro also offers modules for Good Agricultural Practices (GAP) record keeping as well as for livestock records. A feature of the software allows growers to provide a read-only password to Verification Officers and Certification Bodies to review records prior to site visits.

COG-Pro is cloud-based. This means data is stored on remote servers so you can access your account from any computer with an internet connection and you don't have to worry about backing up files. More than one person can access your account at the same time and anyone with the account password can enter information to records.

COG-Pro features an intuitive and simple interface design. When using the program on a desktop computer, the layout looks like a notebook with tabs. This makes the software easy to understand and use. COG-Pro can be used on all mobile devices as well as desktop computers. The company's support service is exceptional.

Our farm business began using COG-Pro this past season. We highly recommend the software.

COG-Pro costs $79/year for its crop module, $129 for the crop and GAP modules or the crop and livestock modules or $159 for the crop, GAP and livestock modules. There are prices for a 2 year subscription that provides a discount. https://cog-pro.com

VeggieTables is perfect for small to mid-size organic farms because it has all of the features of COG-Pro with a few additional features, like labour and expense tracking. It also supports multiple user accounts so different individuals can enter data, allowing you to better manage workers.

One of the most compelling features is that it works offline, so you can make changes while working without a signal (i.e. in the field) and sync the changes to the cloud later when you have Internet access.

In addition, VeggieTables is aesthetically clean and simple to use. It normally costs $89/year plus $19 per additional user. However, a special offer is available to readers of Young Agrarians. Sign up with Promo Code "YA2015" to get a completely free account, no strings attached. http://veggietables.org/

Note: We've had reports that the support for VeggieTables may be experiencing some technical difficulties. If you run into issues let us know so we can update this listing.

This product attempts to bring together a range of functions from farm mapping and crop planning to record keeping and harvest records.

In AgSquared, growers are able to set up a work plan for the season. Tasks can be assigned to specific dates or time periods. Work plans can then be generated and printed for specific days, weeks or months. Once completed, planned tasks can be checked off and then become records of tasks completed.

The program is cloud-based and they have developed a mobile version so it is accessible through desktop, laptop, tablets and phones. AgSquared offers various webinars to help learn about the program's features. It also provides unlimited e-mail support.

The major drawback of AgSquared is its complexity. The program's creators have big plans, but some of what the software is designed to manage seems overly complex, if not unrealistic. The flash-based interface ran too slowly over our internet connection. Very little about the program felt intuitive.

AgSquared subscriptions come in three levels. Simple Farm is $10 user/mo for up to 5 users and provides farm mapping, record keeping and task management. Total Farm provides everything in the previous version plus streamline your record keeping and workflows, create crop plans, harvest forecasts and budgets and produce a range of useful reports on yields, finances and food safety. Total Farm costs $50 / user/ mo on up to 500 acres. There is also a third-tier option called Enterprise that is a fully customizable solution for your farm record keeping, pricing based on the scope of your needs. http://www.agsquared.com

HarvestBoard isn't live yet, but offers a free trial year until they launch.

HarvestBoard is the holistic software solution for diversified farms. Use HarvestBoard to:

Create apersonalized online storeto sell your inventory of diversified farm products.

Consolidate ordersinto harvesting and packing lists.

Link directly withreports and invoices.

Helpincrease your client-baseand the amount you can sell with ease.

The service is currently free to use but will eventually charge a 1.15% fee on all invoices processed through the site.
https://www.harvestboard.ca/
Farmbrite has a more holistic take on farm software. You can track livestock, crops, equipment, accounting and more. They give a free 14-day trial of the software for growers and livestock owners. There are a whole range of features from crop planning to harvest, farm mapping and weather, livestock management, genealogy records and grazing, equipment and maintenance records and a whole accounting section to track your profits and expenses.

In Farmbrite, you can plan your crops from seed order all the way to your harvest profits. Make notes quickly with the use of QR codes in the field. Track your livestock records and health on the go. Track vaccination and growth records, bill of sale, genealogy charting, grazing and more. You can also track your profits and expenses in the accounting section, track your equipment records, services, images and files and keep a To-Do list by the map of your farm. There are lots of quick view reports to give you an idea of where you are on the daily.

The program is cloud-based and mobile enabled so you can use it on a tablet, computer or mobile phone (native mobile version is in testing now and should be released soon).

Farmbrite has a help forum where you can search help items, find help through unlimited email support or you can call and talk to someone if you need more help.

Their pricing is set up so you can either pay as you go or all at once. It starts at $15 a month/$165 a year for Basic, or $30 a month/ $275 a year for Crops or Livestock, or $50 a month/$385 a year for their Professional version that has everything. https://www.farmbrite.com/

Tend is an all-in-one platform that allows farmers to plan their crops, keep records, manage daily operations and track sales, all in a user-friendly platform available on any device connected to the web. When you create a plan in Tend, you're presented with a road map to achieve your production goals: automatically generated tasks, projections of your yield & income, seed ordering amounts, and a map of where each crop will be planted.

Point of Sale Payment Processing

Do you ever have to decline sales at the farmers market because people don't have enough cash? Want to take deposits for larger advance orders? Square allows you to accept credit, debit, and mobile payments using your smart phone. Low transaction fees, one free magstripe card reader (readers for contactless and chip cost $59), and no need for a merchant account make this an economic way to accept sales you might otherwise lose. Plus, you can track all sales for the day (no cost for using the app to track cash sales), include inventory and you can even sync your Square account to Quickbooks, providing easier integration with your bookkeeping tasks. End result: capture non-cash sales while building data about the number of daily sales, average size of sales and products sold, all to help you better understand your customers' choices. Software tools like Square typically charge you a percentage of the value of the transaction - Square charges 2.6% plus 10 cents for each sale. There are no additional account or processing fees and no minimum amounts. Cash is deposited into your bank account the next business day. https://squareup.com

Shopify Lite is a $13 CAD monthly plan that gives you access to Point of Sale technology to take in-person payments that connect to the Shopify back end. The app is easy to use and includes offline functionality. What's great about using this option for your physical payments is that if you do end up wanting to upgrade to a website, your sales records and inventory information sync automatically to your online store and other sales channel integrations like Facebook, Amazon and Instagram. https://www.shopify.ca/lite

A new product from Canadian payment processing company Moneris allows small businesses to accept debit cards as well as credit cards via their mobile phone. Payd Pro provides a pin pad that syncs to your phone or tablet via bluetooth, allowing customers to enter their PIN without compromising security. Credit Card transactions are charged a 2.65% fee while debit transactions are included as part of the overall $19.95/month plan fee. https://go.moneris.com

The major advantage to accepting more plastic payment at farmers markets is that it reduces the risk of losing money through theft or carelessness. Of course, you do need to make sure your phone or tablet isn't stolen!

CSA Management Software & Online Pre-Designed Storefronts

Years ago I was at a breaking point with our farm's CSA program. In order to provide adequate service to members, I was spending far too many hours on e-mail and phone while navigating overly-complex spreadsheets. Despite best efforts, mistakes were made and parts of the program that relied on volunteers were hit-and-miss.

Moving to an online program allowed us to streamline our sign-up procedure, better communicate with members, manage harvest lists, sales records and packing lists, produce weekly delivery route sheets and even print our box labels from the software. By using an online store option available, members have been able to purchase additional items in their boxes. In a recent delivery, extra store orders increased the value of that week's CSA deliveries by 50 percent! Our members report an increased satisfaction with their experience and our lives are much easier.

The programs noted below can be used by farmers for CSA management as well as by buying clubs to manage orders and deliveries. Most also have a pre-designed online storefront feature. If you're looking for more customization in an online sales platform, check out our Ecommerce for Farmers blog post.

CSA subscription sales and online storefront, which can be embedded into your website. Multiple third party integrations. https://www.barn2door.com/

Create shares and add-on products, share customization, member management, and distribution tools. Owned by Local Harvest, a national directory of family farms and farmers markets.

Fees are 2% of sales with a minimum of $100 of sales per month. Credit card transaction fee not specified. Note: This platform does not offer an online storefront function, only CSA subscription and management. https://www.csaware.com/

Farmigo offers both CSA management and an online storefront. In the Farmigo system, the grower sets up pick-up locations, delivery routes and share options. Subscribers can then sign-up and manage their accounts online. Farms can choose to accept payments through Paypal, a merchant account, electronic cheque and or personal cheque.

During the delivery season, farmers can design their box contents, generate harvest and packing lists, print box labels and delivery routes and generate personalized e-mails to subscribers. A mobile app allows the farmer to manage subscriptions on the go, including sending e-mail confirmations to customers when deliveries are made.

Farmigo provides an exceptional user interface and support. The program is intuitive both for the farmers as well as for the customer. The software is easy to use and the interface is attractive. After signing up with Farmigo, farms are paired with a support person who provides weekly training sessions and holds the farm to a work plan to ensure the CSA is ready to accept sign-ups by the target date identified by the farm.

Farmigo charges 2% of the value of deliveries with a $150 monthly minimum. You only pay for months when you have a delivery. With this fee structure, Farmigo is best suited to CSA programs valued at least $7,500/month. http://www.farmigo.com/

Harvest Hand offers both CSA management and an online storefront. Arriving in early 2015, Harvest Hand is a Canadian option for CSA management. Developed for a farm in Nova Scotia, the software has been tested by a number of different CSA farms in recent years and is now being offered to all CSA farms.

Harvest Hand integrates CSA management software with a template for the farm's web page. E-mails to members are done through the software and logged on the farm's blog (also on the website). This is an attractive option for farms who need a simple web site and e-mail management option in addition to their CSA software. Web site templates offered thus far are basic. Farms with developed web pages can seamlessly integrate the Harvest Hand platform into their existing site. I expect to see more as the folks behind the product develop their software further and respond to farms' needs.

Harvest Hand charges a flat fee of $10 for each member in your CSA (the first 10 members are free). You are charged this fee up front when members sign up. While it appears attractive, farms should do the math to compare their costs with each software program before making a decision.

Harvest Hand offers a complete package to farms who would like to keep their money in Canada and need an integrated web site, CSA management and blog capacity. Plus, the people behind the product are down-to-earth and energized to roll out their product to more farmers. http://www.harvesthand.com/

Harvie is another option for CSA management and online storefronts. Harvie helps farms selling through a CSA / farm share model increase retention (+15-30% year-over-year retention) and meet sales growth targets while increasing overall profitability. To accomplish these goals, Harvie focuses on providing a better member experience that includes customized shares, flexible share sizes and flexible weeks. At the same time, Harvie streamlines administration so the customer-friendly features do not drive farmers crazy with logistics.

Harvie is also a marketing and customer service platform, as they provide a customized marketing plan to meet your membership goals and also handle customer service inquiries in tandem with the farmer. There is a one time set up fee of $500, a 7% transaction fee and 2.9% plus 30 cents per transaction for credit cards. Learn more at Harvie.farm

Local Line offers it all in one place. Their sales and delivery platform helps farmers, wholesalers, food hubs, and farmers' markets sell their products (including CSAs) online and keep organized. Increase your order size, keep organized and save time with their e-commerce, CRM, inventory and logistics modules. There's also an option to embed onto your own website.

Local Line's features are built for farmers:

An online store with categorized products, online payments and order lead times

A product management feature to easily track and update all your products, prices, and inventory

Organize your delivery and pickup schedule with customized delivery plans and pickup locations

Customer management tool allows you to track orders and payments and automate follow-ups

Centralize your orders, send invoices, and collect payments with ease

Pricing for farmers and CSAs is $49.99 per catalog per month, for wholesalers and food hub is $79.99 per catalog per month, and for markets and co-ops is $14.99 per vendor per month.

They also have a product called Local Line Sites for creating customizable online storefronts check out our Ecommerce for Farmers post for more details.

Start your free trial today at localline.ca

Local Food Marketplace also offers it all in one place. LFM will help you streamline your business from start to finish - including planning production, harvest lists, packing lists, invoices, and payments. They support producers and food hubs selling to consumers, restaurants, grocery stores, institutions, and CSAs.

Pricing: $499-$999 setup fee, then a monthly fee based on features.

Learn more at: https://home.localfoodmarketplace.com/

Local Orbit

Local Orbit has been acquired by Local Line and is moving everyone over to that platform. Local Orbit is no longer accepting new signups.

The Open Food Network software platform allows farmers to sell produce online, at a price that works for them. It can be embedded in your own website, or hosted on theirs. It has been built specifically for selling food so it can handle tricky measures or stock levels that only food has - a dozen eggs, a bunch of parsley, and a whole chicken that varies in weight, anyone?

It's a great shopfront to sell food through as an individual enterprise, but where it really gets exciting is when there's a community of farmers working together.

This platform does not offer CSA management. Learn more: https://openfoodnetwork.ca/

There are a lot more platforms than listed here. Check out this chart from youngfarmers.org

A Note About Food Hubs

Farmigo, Local Food Marketplace, Local Line, and Open Food Network offer multi-farm/food hub features if you're looking to collaborate with other farmers.

The BC Association of Farmers' Markets is working with Local Line. Some successful Co-ops like the Kettle Valley Food Co-op in Grand Forks, BC, and the (currently inactive) Kootenay Farms Marketplace out of Creston both use Local Food Marketplace.

The platforms can be used in different ways. You can choose for consumers to directly purchase products, then arrange independently with all the farmers to get their products. In contrast, Kootenay Farms Marketplace asked all the producers they were working with to drop off their orders once a week at a central aggregation point and cooler where a staff member would then organize orders. Customers pick up orders that were paid online.

For someone thinking about starting an online marketplace or regional food hub, here's a great point to consider from the start! Coordinator of Fields Forward Society - the organization that piloted the online Kootenay Farms Marketplace, Elizabeth Quinn found that an aggregation and distribution service requires a minimum of around 300 orders per week to be viable due to staffing, insurance, building rental, software fees, and more since the 75% of sales went back to the producers and food processors. Whereas they were only receiving between 10-15 a week in their pilot year of this initiative.

In Summary

Regardless of what program you choose for your record keeping and/or business management, your data will only be as good as the database that stores your information. To set up your account to function the way you want it to work will require a number of hours of work doing data entry and organizing your farm's information. Start planning early for a transition next season to ensure you have enough time in the off-season to prepare.

Finally, make sure to investigate and ensure the product you choose meets your needs. Take time to talk with representatives from the companies before subscribing. Take advantage of free trials to play around with the product before committing. Once you choose a product you will be building a database of historical information about your operations. It will be difficult to change products in the future - not to mention the time it takes to set up another new system in the first place!
Find more resources for your farm on our FARM BUSINESS TOOLS PAGE

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Small Farm Software Tools - Young Agrarians

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This article was originally written by Chris Bodnar, and was published in COABC's BC Organic Grower, Volume 16, Number 3, Summer, 2013. It has since been expanded and updated by YA staff. Find more farm business resources on our FARM BUSINESS TOOLS PAGE Many organic farms have a special binder.

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Ten Frequently Asked Questions of Start-up Food Business Owners | Oklahoma State University

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Ten Frequently Asked Questions of Start-up Food Business Owners | Oklahoma State University

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Questions are a natural part of the business formation process. Francis Bacon, the famed English philosopher, once said "Who questions much, shall learn much and retain much." One question spawns another, and eventually a body of knowledge is developed. While all businesses have common questions (for example, see OCES Fact Sheet T-9005), food business entrepreneurs usually have their own common set of start-up questions. The Robert M. Kerr Food & Agricultural Products Center (FAPC) at Oklahoma State University has helped entrepreneurs answer these questions since 1997. Ten of the most common are:

1. Is there a market for my food product?

2. What does it take to operate a food business?

3. What legal structure should I use for my business?

4. What are my production/manufacturing options?

5. What permits/licenses do I need, and where do I get them?

6. What is a business plan, and how do I develop one?

7. How do I "protect" my product's name or logo?

8. How do I market my food product?

9. What are the appropriate food safety procedures for my product?

10. Where can I go for help?

1. Is there a market for my food product?

Most food businesses start with a product idea or a family recipe, but with little information on the market potential of the product. Family members and friends may have suggested the entrepreneur market the product, but does that constitute the product's marketability?

A good starting point is to perform an Internet search for similar products, and to visit a few supermarkets. If these searches indicate the availability of similar products, a market for the product probably exists. However, the presence of similar products also means the existence of competitors. Carefully consider how other products are made and their packaging, marketing tactics and prices. If your product has some unique advantages over the competition, but can also be sold within the same price range, there may be some market opportunities.

Ask store managers or wholesale representatives if they'd be willing to carry your product. Provide samples to people other than your family members and friends, and ask for their opinions on all aspects of the product (flavor, visual appeal, packaging, label, etc.). Take their advice into account when making decisions about your product.

2. What does it take to operate a food business?

Too often, a food business entrepreneur focuses on the product and not his/her ability to operate a small business. The start-up business owner must be able to fill several roles, or have partners or employees who can fill those roles. The answer to this question requires an honest assessment of your own capabilities and skills. It also requires an objective assessment of your weaknesses, your resources (i.e. money and time), and-if applicable-your family situation. Only you can answer this question, and you must do so before committing to the business idea.

You must be able to determine if you:

Are a self-starter.

Can make good financial and time allocation decisions.

Have the physical and psychological stamina to operate a fledgling business.

Have the ability to perform basic business record-keeping (e.g. production records, employee records, and accounting/tax preparation).

Can work alone when necessary.

Can balance the business and family life.

Rarely does a food-business entrepreneur possess all of these qualities. Some develop qualities while trying to establish their business: reading/researching, attending workshops, taking classes and/or finding business advisors. Others find a partner with complementary strengths or hire skilled people with general business or specific food industry experience.

3. What legal structure should I use for my business?

There are several options for business structure. Most small businesses in the U.S. are operated as sole proprietorships because they are simple to start and the business income is included as part of your personal income for tax purposes. However, sole proprietorships also have the disadvantage of unlimited personal liability exposure.

Because of capital needs or to avoid personal liability exposure, business structures other than sole proprietorships are very common for food businesses. Options include general or limited partnerships, limited liability companies (LLCs), subchapter S corporations or subchapter C corporations. Each structure has certain advantages and disadvantages. Start-up owners are encouraged to contact legal and accounting experts to determine the best structure for their business needs.

4. What are my production/manufacturing options?

Owners of start-up food businesses often cannot afford to buy or build their own facilities. As a result, they may use co-packers, incubator kitchens or otherwise rented commercial kitchens.

A co-packer is an already-established food processor who makes products for others at a contracted price. Co-packers already have all the equipment, licenses/permits, and personnel to meet your processing needs, and contracted production keeps those resources in use when the plant might otherwise be idle. The FAPC fact sheet titled "Food Processing Using a Co-Packer" ( FAPC-106) can help you identify and select an appropriate co-packer.

Incubator kitchens are commercial kitchens designed specifically for use by start-up food businesses. Multiple start-ups share the facilities with each renting either space in the facilities or securing specific days/times to use the equipment. Incubator kitchens usually have stipulations on their patrons, such as required training or operating procedures. They are also generally intended to be temporary processing facilities with the expectation that the food business will eventually grow large enough to utilize a co-packer or develop its own processing facilities.

Other options for processing may include using a restaurant's kitchen (on off days or after operating hours), or even a licensed/inspected kitchen in a church or school. Before considering such options, make sure local zoning laws do not prohibit "manufacturing" activities in the city areas where these kitchens exist.

5. What permits/licenses do I need, and where do I get them?

Some licenses and permits are common for virtually all businesses, such as zoning, sales and use tax permits, and an Employer Identification Numbers (EIN). These may vary by city and/or state. Other licenses and permits are specifically related to operating a food business. Food-specific licenses and permits are generally similar for all businesses operating in the same state. Importantly, there may be instances where both the business and you as an individual are required to have separate licenses.

Information on most common business licenses and permits can be obtained from sources such as a city/county clerk's office, the county Cooperative Extension Service office, the local chamber of commerce, the Oklahoma Tax Commission or the State Department of Commerce. For example, zoning permits are typically received from a city or county office. The Oklahoma Tax Commission can provide sales and use tax collection permits, a manufacturer's sales exemption permit, and help you set up an Oklahoma tax withholding account. An EIN, which is necessary for any business with paid employees, requires that the business owner contact the Internal Revenue Service. A local building permit may also be required if you are building or renovating facilities for your food business.

Before a food business pursues specific licenses and permits, it needs to be registered with the U.S. Food and Drug Administration (FDA). According to the 2002 Bioterrorism Act and the Food Safety Modernization Act of 2011, any facility that manufactures, processes, packs or holds food intended for human or animal consumption must register with FDA before starting its activities.

Food-specific licenses and permits vary by the type of product manufactured and how/where the product is sold, and may include local, county and state permits/licenses. A food- manufacturing permit and a plan review application are common requirements for food processors. Food-service vendors may also need a food-service establishment permit, a mobile food-service license, a temporary (mobile or non-mobile) food service permit, food-handler permits, Food-Service Operator Certification, and/or a peddler's license. State and local health departments can help you determine the appropriate licenses and permits for your business.

6. What is a business plan, and how do I develop one?

A business plan serves as the guidebook for how you will operate the business and includes your goals and objectives for the venture. It also identifies the products/services, the market and the management team. A complete plan includes a market study, promotional strategies, current and projected balance sheets, income statements and cash flow analysis. Business plans are useful as a guide for you and your partners, but they may also be required by potential investors, lending institutions and grant-providing entities. In some cases, customers such as large retailers require you to show them your business plan.

There are many resources to help you develop your business plan. Small Business Development Centers and the Service Corps of Retired Executives (SCORE) are excellent sources for plan-development assistance. Additionally, computer software programs are available to "walk you through" the steps of business plan development, and many websites exist that provide example plans. Workshops for developing a business plan are offered by universities, community colleges and career-tech schools. FAPC offers a workshop specifically for food business entrepreneurs developing a business plan and provides a fact sheet titled, "Developing a Business Plan for Value-Added Agricultural Products" (AGEC-909).

7. How do I "protect" my product's name or logo?

The name and logo for a company's products are intellectual property and are important to the development of brand recognition. To protect your intellectual property, make sure you trademark the name and logo. Trademarks are available on three levels: local (very limited geographic region), state and federal. State trademarks can be received from the Oklahoma Secretary of State's office and receive only in-state protection, while federal trademarks awarded by the U.S. Patent and Trademark Office (USPTO) are nationally protected.

Assistance with trademarks can be obtained from a number of sources, including the OSU Patent and Trademark Resource Center (affiliated with the USPTO) located in OSU's Edmon Low Library. The Oklahoma Cooperative Extension Service also provides a fact sheet titled "Intellectual Property: Protecting Your Business Assets with Patents, Trademarks, Copyrights and Other Tools" ( T-4147) to help you pursue trademark protection.

8. How do I market my food product?

The first step is determining the marketing channel on which you plan to focus: food service, retail or fundraiser. Each channel requires different marketing efforts. Once a channel has been selected the process for developing a "marketing mix" begins. "Marketing mix" is a general phrase used to describe the various strategies incorporated by a business to reach its intended customers. Using the four "P's" - Product, Price, Place, Promotion - is one way a company may create the marketing effort that works best for the goals of the company. The four "P's" can be described as follows:

Product: Each product has three levels. The core level includes the actual functional benefits that consumers demand from products in this food category, such as specific ingredients, nutritional characteristics, flavor and convenience factor. The next level is the actual physical image of the product. The quality of packaging, package shape/style and the visual branding of the product all play important roles. The final level of a product is it the augmented level. This level is the non-physical part of the product that adds a perception of value to the consumer. One example of the augmented product level is a product guarantee or warrantee.

Price: Pricing issues are related to the nature of the target market. Higher prices may be expected for a unique, high-end gourmet or specialty product, but an item that is more homogeneous with other food products in a given category will most likely be competitively priced. A wise entrepreneur will determine price based on several factors, including the price range of competitors, the cost of manufacturing the product plus an acceptable profit margin, and/or consumer willingness-to-pay for a specialty product with an identified set of product characteristics (e.g. gourmet, organic, etc.).

Place: Place is also commonly referred to as distribution. Distribution plans differ for products that are sold directly to the consumer versus products that are sold in retail or food-service outlets. A company focusing on Internet sales is marketing directly to the consumer. Conversely, a company focusing on retail grocery store sales will generally have a distribution chain that includes a wholesaler or distributor.

Promotion: Promotion relates to how a business persuades consumers to purchase its products. There are many methods for promoting a product, and each one reaches the target market in a different way. Tradeshows, couponing, direct mail and advertising are all different promotional aspects of a marketing plan.

The four P's determine a company's ability to reach and retain members of its target market. Research and experimenting with the marketing mix are beneficial in creating successful results for a company.

9. What are the appropriate food safety procedures for my product?

Food safety procedures vary somewhat by-product and process, but the basic food safety procedures for all foods include the following steps:

Conduct an analysis of food-safety hazards associated with your food or with your manufacturing process. Common examples of analyses include checking for bacterial pathogens, soils, chemicals and insects in the food product.

Identify and implement tools to reduce or eliminate food safety hazards. This may include improving temperature controls, appropriate ingredients and usage, water/moisture control and storage conditions.

Package your food products so they remain safe and clean.

Label your food so consumers know exactly what they are eating but without revealing your recipe. This includes listing allergens and nutritional information.

Label your food so consumers know how to handle your product once they receive it. This might include listing appropriate storage or cooking temperatures, expiration, or "best by" or "use by" dates on the packaging.

Food business owners must learn and understand various food safety protocols, such as HACCP (Hazard Analysis and Critical Control Points), GMP (Good Manufacturing Practices)and GFSI (Global Food Safety Initiative). Assistance with food-safety procedures for specific products and educational programs for food safety protocols are provided by FAPC. Health inspectors can also provide recommendations for safety procedures and training materials.

10. Where can I go for help?

There are a number of local, state and national resources to help answer questions from food business entrepreneurs. FAPC is a good place to start, and its team of business and marketing professionals can answer many of your questions or point you to the appropriate agency for answers. Contact FAPC at 405-744-6071 or learn more about FAPC's helpful materials and educational programs at www.fapc.biz.

Other sources for information and assistance include:

Oklahoma Department of Health

800-522-0203

www.ok.gov/health/

Oklahoma Department of Agriculture, Food and Forestry

Market Development Division, 405-521-3864

www.oda.state.ok.us/mktdev

Oklahoma Department of Commerce

800-879-6552
www.okcommerce.gov/
Oklahoma Tax Commission

800-522-8165
www.tax.ok.gov
Small Business Administration

800-827-5722

Small Business Development Centers

800-522-6154 (ask for the nearest office)
www.osbdc.org
Service Corps of Retired Executives (SCORE)

800-827-5722 (ask for nearest office)
www.score.org
REI Oklahoma

800-658-2823
www.reiok.org
Internal Revenue Service

(Form SS-4, Employer Identification Number)

800-829-3676

Local Chamber of Commerce

Career Technology Centers

Online Information

Summary

These 10 questions are only some of the questions a food business owner might ask. Business owners may also need answers to questions about ingredients suppliers, finding and using a food broker, insurance, employee issues, confidentiality and non-disclosure agreements, and others. The resources listed in this fact sheet are excellent places to get help for the additional questions you will have.

Rodney Holcomb
FAPC Agribusiness Economist

Erin Johnson
FAPC Business & Marketing Client Coordinator

Chuck Willoughby
FAPC Business & Marketing Relations Manager

Andrea Graves
FAPC Business Planning & Marketing Specialist

Jim Brooks
FAPC Business & Marketing Services Manager

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Ten Frequently Asked Questions of Start-up Food Business Owners - Oklahoma State University

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Frequently asked questions to consider when starting up a food business.

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Farm Planning and Recordkeeping | NC State Extension

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Farm Planning and Recordkeeping | NC State Extension

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Clicking on the translation link activates a free translation service to convert the page to Spanish. As with any Internet translation, the conversion is not context-sensitive and may not translate the text to its original meaning. NC State Extension does not guarantee the accuracy of the translated text. Please note that some applications and/or services may not function as expected when translated.

Estoy de Acuerdo / I agree

These Microsoft Excel spreadsheets were developed by Dr. Joel Gruver back when he was a NC State University student and farm manager for the organic demonstration farm at the Center for Environmental Farming Systems (CEFS) in Goldsboro, NC. Joel developed these tools to help plan for the Community Supported Agriculture (CSA) program at CEFS. If you use these spreadsheets, please email Joel with feedback as to their usefulness.

Note: Open and save these spreadsheets to your computer, then you can enlarge them for better viewing and enter data from your own farm. These sheets are meant to be adapted to fit your own operation. You may have different growing conditions and different planting times, yields, number of CSA shares, etc.

1. Crop Scheduling for Continuous Harvest

Number of weeks to harvest (for scheduling seeding and planting dates)

Starting transplants

Setting transplants into the field

Direct seeding

2. Planning Spreadsheets for CSA and Farmers' Markets

Produce availability calendar for 34 vegetable crops

Calendar for designing CSA "full share" composition

Calendar for designing CSA "half share" composition

Calendars for farmers' markets

Farm totals = CSA shares + farmers' markets produce

Field production information related to total farm sale goals; this sheet calculates:

number of plantings

number of harvests

total row feet needed

total amount of seed needed

row feet needed per planting

nitrogen needed per planting

potassium needed per planting

value ($) per crop

total acreage

gross revenue

Yield and production data

Other Resources

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These Microsoft Excel spreadsheets were developed by Dr. Joel Gruver back when he was a NC State University student and farm manager for the organic demonstration farm at the Center for Environmental Farming Systems (CEFS) in Goldsboro, NC. Joel developed these tools to help plan for the Community Supported Agriculture (CSA) program at CEFS.

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Record Keeping - Carolina Farm Stewardship Association

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Record Keeping - Carolina Farm Stewardship Association

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Carolina Farm Stewardship Association - advocates, educates, and builds connections to create sustainable food systems in the Carolinas centered on local and organic agriculture

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Excel spreadsheets you can use to calculate your farm's profits and losses

NCAT, Financial Record Templates (excel file)

UWisc & SSAWG (Jim Munsch), 2014 Veggie Compass Profitability Worksheet (excel file)

Cornell, High Tunnel Account Book (excel file)

VT Veg and Berry Growers Association (Thomas Case), Multiple Market Sales & Production spreadsheets (excel file)

Word documents YOU CAN USE TO keep your own farm's records

Riddle & Ford, Record Keeping Form Templates for Organic Farmers (.doc)

Vegetable Record keeping Templates and Examples (.doc)

Livestock Record keeping Templates and Examples (.doc)

Grain Record keeping Templates and Examples (.doc)

Farm Record keeping Templates (.doc)

The Farm recordkeeping templates include multiple forms:
-List of Organic Certification Records
-Field History Sheet
-Newly Purchased Land or Rented Land Verification
-Seed Verification Form
-Field Activity Log
-Input Use Record
-Compost Production Record
-Neighbor Notification Letter
-Verification of Adjoining Land Use
-Buffer Crop Usage
-Crop Harvest Record
-Crop Harvest & Storage Record
-Clean Transport Affidavit
-Split Operation or Parallel Production Crop Record
-Audit Control Summary
-Complaint Log

PDFs that include great templates for record keeping systems

Riddle & Ford, Organic Vegetable Operation Record Keeping Systems (.pdf)

Mississippi State University, Hoophouse Record Keeping Template (.pdf)

University of Florida, Livestock Records (.pdf)

University of Florida, Rainfall & Irrigation record (.pdf)

University of Florida, Field Records (.pdf)

Farmers' Legal Action Group, Templates for Small-Scale Fruit and Vegetable Growers (.pdf)

ATTRA, Forms, Documents, and Sample Letters for Organic Producers (.pdf)

ATTRA, Documentation Forms for Organic Crop and Livestock Producers (.pdf)

ATTRA, Organic Orchard, Vineyard and Berry Crop Documentation Forms (.pdf)

ATTRA, Organic Market Farm Documentation Forms (.pdf)

ATTRA, Organic Farm Seed and Planting Stock Record (.pdf)

ATTRA, Organic Field Crops Documentation Forms (.pdf)
CFSA's Record Keeping Tool Review
There are a number of commercially available record keep tools on the market and while many of them offer a free trial, we went ahead and reviewed them for you! We hope you find this information useful when thinking about purchasing software for your own use.

DOWNLOAD THE FULL REPORT: Record Keeping Software
Record Keeping Resources in our Organic Transition Handbook
The Organic Farmer's Business Handbook https://www.carolinafarmstewards.org/organic-transition-handbook/ by Richard Wiswall - a speaker at CFSA's 2011 Sustainable Agriculture Conference.
A Complete Guide to Managing Finances, Crops, and Staff-and Making a Profit

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Record Keeping - Carolina Farm Stewardship Association

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Record Keeping Templates Excel spreadsheets you can use to calculate your farm's profits and losses NCAT, Financial Record Templates (excel file) UWisc & SSAWG (Jim Munsch), 2014 Veggie Compass Profitability Worksheet (excel file) Cornell, High Tunnel Account Book (excel file) VT Veg and Berry Growers Association (Thomas Case), Multiple Market Sales & Production spreadsheets (excel file) Word documents

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Vegetable: Crop Production Budgets | Center for Agriculture, Food, and the Environment at UMass Amherst

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Vegetable: Crop Production Budgets | Center for Agriculture, Food, and the Environment at UMass Amherst

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Center for Agriculture, Food, and the Environment

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Below are "Process Budgets" for various crops grown in Massachusetts. A Process Budget is a description of the production practices followed in growing a crop, the resources required, and the costs involved. They are typically expressed on a per acre basis. The dollar amounts in these budgets are outdated and for reference only. The spreadsheet format allows you to use these sheets with your own numbers to quickly calculate a production budget and estimate net revenue for a wide variety of crops.

Each Process Budget describes only one of several such budgets that can be developed for a particular crop. Just as there are several alternative sets of production practices and equipment complements that can be used to grow the crop, there are correspondingly different process budgets.

Process Budgets provide a valuable framework and analytical process that individual growers may use for analysis of input requirements and production costs on their farms. It has additional usefulness since, once a "base" process budget has been developed, it can serve as a benchmark for assessing differences in input costs and returns associated with other production systems and equipment complements.

The production system and inputs required for these Process Budgets were developed by an "Expert Panel". The Panel was composed of a number of growers and Extension System vegetable specialists. This information was then assembled in the attached format by Robert L. Christensen with additional assistance from John Howell and Frank Mangan of the University of Massachusetts, and Mike Sciabarrasi and Otho Wells of the University of New Hampshire.

Each Process Budget is organized as follows:

Table 1. A description of the crop production operations, generally in the sequence in which they are performed during the growing season. Included is the identification of equipment units used, frequency of the activity, and machine and labor hours required.

Table 2. A summary of the labor required for each crop operation, skill level involved, wage rate, and labor cost per acre.

Table 3. A listing of cash expenses other than labor and equipment. Each expense item is identified along with units required, price per unit and total cost per acre.

Table 4. An estimation of machine operating and ownership costs involved in growing and harvesting the crop expressed on a per acre basis.

Table 5. A summary of the costs estimated in Tables 2, 3, and 4. It should be noted that charges for the use of land, for management inputs (other than labor), marketing, taxes, and other non-production related costs are not included.

Table 6. A presentation of anticipated wholesale gross revenues as yield and price are varied.

Table 7. Returns, net of the costs considered in the budget.

These production budgets are based on wholesale prices. They include costs for containers, but not for trucking (which vary depending on distances), or sales commissions (which do not apply in many situations). For retail marketing, shipping containers will not be needed, but various retail costs such as sales labor, transportation if a farmers' market is used, insurance, advertising, and roadside stand costs such as utilities will need to be addressed.

To download the spreadsheet file for customizing or editing click on the link below.
The Center for Agriculture, Food and the Environment and UMass Extension are equal opportunity providers and employers, United States Department of Agriculture cooperating. Contact your local Extension office for information on disability accommodations. Contact the State Center Director's Office if you have concerns related to discrimination, 413-545-4800 or see ag.umass.edu/civil-rights-information.

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Below are "Process Budgets" for various crops grown in Massachusetts. A Process Budget is a description of the production practices followed in growing a crop, the resources required, and the costs involved. They are typically expressed on a per acre basis. The dollar amounts in these budgets are outdated and for reference only.

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Have You Reconciled Your Bank Statements Recently? | Center for Agricultural Profitability

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Have You Reconciled Your Bank Statements Recently? | Center for Agricultural Profitability

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Example Reconciliation Worksheet

It's the beginning of the month, and last month's bank statement arrives. What do you do with it? If it goes directly into your filing cabinet, you are missing an important step in the bookkeeping process - reconciling. Reconciling is the process of making sure one record of a financial account is consistent with another. For most farms and ranches, this act usually takes place between the bank statement and the checkbook register or financial accounting software such as Quicken or QuickBooks.

The first step to the reconciliation process is to gather documentation including your bank statement, deposit slips, receipts, and invoices for the previous month as well as your checkbook, and a reconciliation worksheet (download example here. Note that some banks will print a reconciliation worksheet on your bank statement.

Start by reviewing each transaction on the bank statement for accuracy against the respective deposit slip, receipt, or invoice. Is the amount of each transaction, correct? If your bank made an error, you need to notify them of the mistake.

You may also find through this process that your bank statement shows transactions that have not been recorded in your check register or financial accounting software. You will need to make new entries for these missing transactions. Most often missing transactions include service fees, interest deposits and automatic transfers.

Repeat the review process with your check register or financial management software. Evaluate each entry for accuracy. If you find an inaccurate transaction in your check register, you will need to write in a correction entry. In most accounting software, you should be able to update the amount of the debit or credit.

During this review process of your check register denote what checks and deposits that appear on the bank statement. Most check registers have a column that allows you to write in a checkmark to signify that the transaction has cleared.

Through this process you might identify uncleared checks and deposits. An uncleared or outstanding transaction is a check or deposit that has not yet been recognized by the bank. On the reconciliation worksheet add the uncleared deposits to the ending bank balance or subtract the uncleared checks.

At the end of this process, the adjusted bank balance on the reconciliation worksheet should match your check register or financial software balance. You should file a reconciliation worksheet with your bank statement.

Bank Statement Reconciliation Example: Jon & Joan received their June bank statement for "Case Farm" and must prepare a bank reconciliation for the following items. The bank statement contains an ending balance of $56,776.00 on June 30th, whereas the Farm check register shows an ending balance of $57,999.90.

They found the following discrepancies between their bank statement and check register.

1. Jon incorrectly recorded a deposit on June 5. The correct deposit amount was $11,011.10. It was recorded as $11,011.00.

2. The bank statement shows a service charge of $15.

3. The bank statement shows interest income of $48.

4. On June 29th, Case Farms issued check #233 for $8,933 that has not yet cleared the bank.

5. On June 29th, Case Farms also deposited $10,000 but this did not appear on the bank statement.

6. An Automatic Clearing House (ACH) payment for electricity was paid from the bank account for $190.

On the reconciliation worksheet, Jon & Joan had to credit the account for the outstanding deposit and debit the account for the uncleared check as shown below. In the check register below, the entries on June 30 were created during the reconciliation process. Jon & Joan had to credit the account for the $0.10 from the June 5 deposit and the interest earned on their account. They had to record debits for the service fee and ACH transaction. Now, the "adjusted bank balance" on the reconciliation worksheet is equal to the balance shown in the check register of $57,843.00.

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Have You Reconciled Your Bank Statements Recently?

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Break-even Pricing, Revenue and Units, G648 | MU Extension

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Break-even Pricing, Revenue and Units, G648 | MU Extension

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Editor's note
See the Break-even Anaylsis Tool (XLSX) for related information.

Alice Roach
Senior Research Associate, Applied Social Sciences

Ryan Milhollin
State Specialist, Agricultural Business and Policy Extension

For a value-added agricultural business, break-even pricing informs how to price a value-added product. If a product's market-accepted sales price is greater than its break-even price, then the business can feel more confident in the financial feasibility of offering the given product. This publication shows how to determine a value-added agricultural product's break-even price, revenue and unit sales from a cost perspective.

Note, the need to understand your break-even point also applies when producing farm commodities. However, commodity producers are price-takers, not price-makers. Producer-owned, value-added businesses should operate as price-makers. As a result, they can better anticipate a product's sales price and decide whether the difference between the sales price and the break-even price provides an acceptable return for their investment and the risk they assume when producing a product.

Determining the cost of production

Value-added agricultural business owners assess a business' financial potential by computing production costs, establishing an expected sales price based on substitute goods and determining whether they can produce a product for that price.

Typically, value-added businesses incur two types of production costs: variable costs and fixed costs.

Variable costs: These costs change directly in proportion to production volume changes. In other words, a one-unit increase in production would mean a one-unit increase in variable costs. Some examples are costs of direct materials or supplies used to make a product, shipping charges, delivery charges and part-time employee wages.

Fixed costs: These costs don't change in response to production volume changes. In other words, production volumes can increase or decrease, but fixed costs stay the same. Some examples include rent, interest on debt, insurance, equipment, business licenses and full-time employee salaries.

Note, for a business that substantially increases its production output, its variable costs per unit may change if it can purchase larger input volumes and receive quantity discounts. Similarly, if a business substantially increases its production output, then it may require added property or equipment and, therefore, increase its total fixed costs. For illustrative purposes, this publication assumes that variable costs per unit and total fixed costs don't change.

Estimating variable and fixed costs is just one step involved in computing a break-even price. A value-added business must also project the number of units it will sell. Forecasting sales can be tricky, however. Businesses typically overestimate demand. Selling fewer units than expected results in a per-unit cost that's more than expected. When value-added businesses make this error, many producer-owners reduce the salary they earn, and outside income, such as farm income, must subsidize the value-added business. To gauge how production costs per unit would vary in different scenarios, a value-added business may develop a sensitivity analysis table. The table would show the expected break-even price and revenue given varying unit sales, costs or other decision variables. Creating a sensitivity analysis allows the value-added business owner to determine best- and worst-case scenarios.

Estimating a break-even price

A value-added agricultural business operates as a price-maker. It sets a product's price after calculating the product's break-even price. This makes value-added agricultural businesses different from commodity-driven businesses.

In commodity agriculture, the break-even price refers to the per-unit cost of production. As commodity price-takers, farmers develop marketing plans to obtain a price that is higher than their per-unit cost of production. For instance, if a farmer produces 20,000 bushels of corn, then knowing the variable and fixed costs of production easily provides the per-unit cost of production. The producer would sell when revenue potential (market price plus government subsidies) is more than the per-unit production cost.

Defining your assumptions

The following example for Soy Candles LLC - a fictitious value-added business that uses soybean oil to make candles - shows how to define the break-even point assumptions and calculate a product's break-even price. As a first step, the business estimates its variable and fixed costs. Using the assumptions in Table 1, the per-unit variable cost totals $1.45. Fixed costs sum to $42,588.
Table 1. Determining break-even price assumptions for soybean candles made by Soy Candles LLC.
Next, the business must project the number of units sold. For this example, Soy Candles LLC projects it will sell 20,000 units next year.

Finding the break-even price

With assumptions in place, use the following equation to calculate the break-even price. For Soy Candles LLC, its break-even price is $3.58, given the $1.45 per unit in variable costs, $42,588 in fixed costs and sales of 20,000 units.

Variable cost per unit + (Total fixed cost/Projected unit sales)

$1.45 + ($42,588/20,000)

$3.58 = break-even price

Table 2 provides a sensitivity analysis. It shows how the break-even price changes for different unit sales projections. If the business projects it will sell 20,000 units, then the break-even price is $3.58 per candle. Soy Candles LLC can use this information to set a price for its candles. To cover all of its fixed and variable costs, the price per unit would need to be at least $3.58 if the business sells 20,000 units.

Suppose actual unit sales reach only 18,000 units. In that case, the break-even price should have been $3.82 to cover all variable and fixed costs. If Soy Candles LLC sold 18,000 candles at $3.58 per unit instead of $3.82 per unit, then its revenue would decline by $4,320 (18,000 units x $0.24 per unit). The sensitivity analysis illustrates that even small differences between expected unit sales and actual unit sales cause notable changes in the break-even price.
Table 2. Sensitivity of break-even price to changes in annual projected unit sales.
Using break-even price to set a product's price

After a business projects a product's break-even price, it must set a markup pricing strategy. The price premium added to a break-even price depends on end-user demand and the business' profit goals. To identify an appropriate sales price, a value-added agricultural business should conduct market research and assess the prices of substitute goods. Once a producer-owner has projected a sales price, he or she can determine break-even revenue and units.

Projecting break-even revenue

Break-even revenue equals the amount of revenue a business needs to earn so it neither makes nor losses money. To compute break-even revenue, a value-added agricultural business must know its product's selling price and variable and fixed costs.

The following example assumes Soy Candles LLC sells 20,000 soybean candles, and it assumes the variable cost per unit totals $1.45, fixed costs sum to $42,588 and the selling price per unit equals $5.

Fixed costs/[1 - (Variable cost per unit/Selling price per unit)]

$42,588/[1 - ($1.45/$5)]

$59,983

Soy Candles LLC must annually earn $59,983 in revenue to break even. The sensitivity analysis in Table 3 shares how break-even revenue changes given alternative sales prices.
Table 3. Sensitivity of break-even revenue to changes in sales price.
Forecasting break-even sales units

To determine the number of units a business must sell to neither make nor lose money, it can calculate break-even sales. Break-even sales considers a product's sales price and its variable and fixed costs. Again, collecting information about the price of substitute goods can help businesses choose an appropriate sales price.

For soybean candles made by Soy Candles LLC, suppose the variable cost per unit is $1.45, fixed costs sum to $42,588 and the selling price per unit is $5. Applying this information to the following formula will project break-even sales units. Given these assumptions, Soy Candles LLC would need to sell 11,997 units annually to break even.

Fixed costs/(Selling price per unit - Variable cost per unit)

$42,588/($5 - $1.45)

11,997

For alternative sales prices, Table 4 shows a sensitivity table for break-even units. If Soy Candles LLC increases the sales price to $5.50 per unit, then it would need to sell 10,516 units per year to break even. If it were to discount the candle unit sales price to $4.50 each, then it would need to sell 13,963 units to break even.
Table 4. Sensitivity of break-even sales units to changes in selling price.
Keys to break-even estimations

To establish break-even revenue, units sold and price, a value-added agricultural business must know its production costs. Knowing your break-even price and realistically projecting your costs, sales price and unit sales will help your value-added agricultural business operate profitably.

Producer-owned, value-added businesses face a unique challenge in that the producers must manage and operate two businesses: the farm business and the value-added business. Thus, they may not easily be able to allocate costs between the farm and the value-added business. Ideally, charge market prices, not the cost of production, for all inputs the value-added business uses. Careful management and financial planning will ensure the long-term success of both businesses.

Original authors
Joe Parcell, Nancy Giddens and Melvin Brees

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Alice RoachSenior Research Associate, Applied Social SciencesRyan MilhollinState Specialist, Agricultural Business and Policy ExtensionFor a value-added agricultural business, break-even pricing informs how to price a value-added product. If a product's market-accepted sales price is greater than its break-even price, then the business can feel more confident in the financial feasibility of offering the given product.

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Center for Agricultural Law and Taxation

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Center for Agricultural Law and Taxation

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Center for Agricultural Law and Taxation

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Center for Agricultural Law and Taxation

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Center for Agricultural Law and Taxation 211 Curtiss Hall 513 Farmhouse Rd. Ames, Iowa 50011

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USDA and a bankruptcy trustee in Texas are at odds over a new law, the Dealer Trust Act, and how to move ahead with $119.3 million in potentially unpaid claims tied to a Ponzi and check-kiting scheme involving a cattle operation in Kentucky and Texas

New issue of The Feed coming next week!
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Dairy Revenue Protection Program offers dairy producers risk protection

As part of our #WorkInAg series, newly elected NASDA President @OklahomaAg Secretary @blaynearthur recently shared about her day-to-day role in boosting her state's economy and global food systems through supporting Oklahoma #agriculture. Read the blog: https://www.nasda.org/cultivating-growth-arthur/

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The NALC Quarterly Newsletter: 3Q23

The National Agricultural Law Center compiles and publishes a quarterly newsletter highlighting recent and upcoming events and resources. The newsletter...

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DOL, DHS, and USDA Launch New Proposed Rules and Initiatives Affecting H-2 Programs

The H-2A program allows agricultural employers to hire foreign workers when there is a shortage in domestic labor. According to Philp...

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The nation's leading source for agricultural and food law information.

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How Much Should You Charge? Pricing Your Meat Cuts

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How Much Should You Charge? Pricing Your Meat Cuts

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It doesn't matter if you are selling halves, quarters or single cuts, you need to know your cost of production first. What are your costs of raising that animal from day one until the day of slaughter? In any business endeavor, keeping good records is essential to knowing if you are going to be profitable or not. Once you know your cost of production, there are some tools you can use to help you determine what price you may want to attach to your fine, farm-fresh product.

Mike Debach of the Leona Meat Plant in Troy, Pennsylvania, has a nifty process you can use that will help you figure out your costs after processing so you can determine your retail price. For this example, understand that the cost of production will vary depending on the breed of the animal and production methods (i.e., grain-fed, grass-fed). According to Dr. John Comerford, retired Penn State faculty, the percentage used to determine the "carcass weight" varies depending on what kind of animal it is (beef, hog, lamb), what breed the animal is, and the method of production. So, for this example, let's say we have a grass-fed, Angus steer that dresses out to a hanging carcass weight that is 58 percent of its live weight and your cost to get that animal to slaughter weight is $1.35 per pound of live weight.

Determining the cost of your animal

1. Start with your per pound cost of the live animal (as mentioned before, your cost to raise that animal).

2. Divide this amount by 58% to get your "hanging cost." (That animal is now a "carcass" after it is slaughtered. This determines your new cost per pound at "carcass weight.")

3. Add in your processing fees, trucking, etc., to the "hanging cost."

4. Divide the total by 65% to get your "cut-out" cost (breaking the carcass down into individual cuts of meat).

5. Divide your cut-out cost by the percentage mark-up you desire to reach the "retail value" price you will ultimately charge.

Example

1. Cost of the live animal = $1.35 per pound

2. $1.35 divided by 58% = $2.33

3. $2.33 plus $0.65 (per pound processing fee) = $2.98

4. $2.98 divided by 65% = $4.58

5. This is the final cost of your animal becoming single cuts of meat
$4.58 divided by 75% = $6.11

A sale price of $6.11 per pound would give you a 25% return on your product.
As you can see, in every step of the process there is a reduction to your final yield of finished product. So, your cost per pound will go up with every step from live animal to cut and packaged product. The above example will give you a rough estimate which can help you to remain profitable. Keep in mind, it is a "rough" estimate. A lot of variables can change these percentages. For example, how much fat was on the animal? What kind of cuts are you requesting? Are you getting bone-in or boneless cuts? If you want boneless cuts, this will reduce the total pounds of product returned to you from your butcher.

What kind of animal you are processing will also make a difference in the percentage of product you ultimately receive. Dr. Christopher Raines, former Animal Science professor, has a handy sheet that describes the average percentage of yield in the butchering process for pork, beef and lamb.

Dr. Raines' document says when converting an animal into a carcass, the average percentage of yield for pork is around 70 percent, beef 60 percent and lamb 50 percent. Turning that carcass into individual cuts of meat; the average yield for bone-in cuts is 75-80 percent of carcass weight for pork, 65-70 percent for beef, and 70-75 percent for lamb. Dr. Raines points out that aging and further processing can decrease your final product weight. If your butcher is hanging (aging) the carcass for two weeks, there is moisture loss due to evaporation. If you are curing hams and bacons from your pig, applying a heat process to your meat cuts may also reduce your final yield.

Using these tools, you should be able to make a rough estimate on the amount of product you will have for sale, what your costs are, and what you will need to charge your customers to remain profitable.

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How Much Should You Charge? Pricing Your Meat Cuts

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It doesn't matter if you are selling halves, quarters or single cuts, you need to know your cost of production first. What are your costs of raising that animal from day one until the day of slaughter? In any business endeavor, keeping good records is ess

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Project ReFED: September 2023 Newsletter

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Project ReFED: September 2023 Newsletter

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Project ReFED: IIRA’s latest initiative 🍏

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Business Considerations when Scaling to Wholesale Markets

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Thinking about scaling to wholesale or institutional selling? Read this first!

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Thinking about scaling to wholesale or institutional selling? Read this first!

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Farm Business Entity Flowchart - Farm Commons

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Farm Business Entity Flowchart - Farm Commons

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This section provides farmers with tools to help choose the best business entity for their farm operation: Entity Comparison Chart and Choose Your Entity Flowchart. Consciously choosing an entity is the first and probably most important step in running a successful farm operation. These charts will help farmers narrow down the options based on certain factors or characteristics of the business entity.

Warning: Are you already a corporation?

If you are already a corporation, don't do anything until and unless you consult a tax professional. There can be serious tax implications when changing to another entity. While it can still be useful to go through the process of determining the best entity for you, if you decide on another entity, be sure you consult with your accountant or tax attorney before switching.

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This section provides farmers with tools to help choose the best business entity for their farm operation: Entity Comparison Chart and Choose Your Entity

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Great resource to develop a contingency plan for your farm. Also includes considerations when succession planning.

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Purdue University - College of Agriculture

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Learn how you can prevent a code red situation for your family, business or farm operation by having a completed Code Red plan. This new tool developed by the Purdue Women in Agriculture Team is a must-have tool for every family, business, and farm operation. The tool includes important information such as passwords, bank account information, rental agreements, insurance papers and power of attorney documents, and much more in one easy location. After completing the Code Red plan, it should become the "go to" tool if something happened to a key member of the management team. We hope this tool will help farm families then turn a code red situation into a code green and the business can continue to operate on a daily basis. Code Red also can be a tool that helps families get motivated to get started on estate and/or succession planning.

Do you want to order your own Code Red flash drive or download the Excel file?

For more information about Code Red, please contact any member of the Purdue Women in Agriculture Team.
Questions about Code Red? Need technical support? Please contact Bryan Overstreet with issues.

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Learn how you can prevent a code red situation for your family, business or farm operation by having a completed Code Red plan. This new tool developed by the Purdue Women in Agriculture Team is a must-have tool for every family, business, and farm operation.

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Selling Strategies for Local Food Producers, g6222 | MU Extension

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Selling Strategies for Local Food Producers, g6222 | MU Extension

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Figure 1. Fresh, local produce sold at a farmers market.

Bill McKelvey
Project Coordinator, Division of Applied Social Sciences

Mary Hendrickson
Associate Professor, Division of Applied Social Sciences

Alice Roach
Senior Research Associate, Division of Applied Social Sciences

For many farmers, marketing and selling represent challenging tasks, especially when they sell directly to consumers. However, consumers increasingly appreciate tasty, healthy food purchased from farmers with whom they can talk, ask questions and build relationships. This trend makes directly marketing fresh and unique food products a rapidly growing opportunity for producers.

For farmers to succeed at selling direct through farmers markets (see Figure 1), roadside stands and restaurants, they must hone skills in sales, marketing, production and financial management.

In any business, marketing and selling go hand in hand. Marketing includes deciding what to produce and how to price, distribute and promote a product. Selling, on the other hand, describes the techniques used to entice buyers to purchase the seller's products. Developing strong selling skills is critically important to acquiring and keeping customers in a direct marketing enterprise. Although many farmers may be intimidated by selling, remember that selling skills - just like other skills - can be learned.

The selling techniques described in this guide are customer-friendly and ethical. The guide provides practical advice on how to increase sales by building a loyal customer base. Its approach to selling - adapted from the book Win-Win Selling (Wilson Learning Library, 2003) - takes readers through a four-step selling process:

1. build relationships with customers,

2. discover customers' needs and preferences,

3. advocate for one's products, and

4. provide quality service.

Much of the information centers on selling face-to-face at farmers markets. In addition, a number of tips are appropriate for those who sell their products directly to consumers at roadside stands and to chefs and other food service professionals.

Before you start

Selling is just one part of operating a successful direct-marketing business. Good production skills and superior postharvest handling techniques can ensure you offer high-quality products that command premium prices. Likewise, thorough knowledge of your farm's financial condition can ensure that you employ the right pricing and advertising strategies to gain the most profit.

Identifying competitors - for example, supermarkets and other farmers market vendors - can also help ensure success. At the end of the day, you want customers to spend more of their dollars with you. This means that you must constantly improve your skills and look for competitive advantages. Although product quality, farm financial planning, pricing and merchandising topics are beyond this guide's scope, you can find related resources in the Resources section at the end of this publication and through University of Missouri Extension publications and county offices.

Figure 2. Essential selling strategies for local food producers.

Build relationships with your customers

In any business, building relationships with customers is key, particularly when marketing directly to customers. However, building customer relationships takes time, and it relies on you being personable and paying attention to a few basic details. The following suggestions intend to help you make a good first impression and begin building a loyal customer base.

First, pay attention to your personal appearance.
Consciously or unconsciously, customers may base their purchasing decisions on their first impression of you. Be clean, neat and reasonably well-dressed and -groomed. This doesn't mean wear your nicest outfit when selling. A clean pair of blue jeans and a fresh shirt are acceptable attire for farmers. Also, consider wearing a name tag or having your farm logo inscribed on shirts and hats.

Second, engage customers as soon as you can at the market so they don't go elsewhere.
If you are able, then stand rather than sit. Make eye contact with customers and avoid wearing sunglasses if possible. Smile. Say "Hello, how are you today?" Avoid spending too much time looking at your smartphone. The idea here is to be inviting and make it easy for customers to visit your stand and get to know you both as a farmer and as a person.

When customers visit your stand, make an effort to learn their names and something about them. This allows you to address them by name and strike up casual conversation when they visit again. When working with chefs, do some homework to learn their names before you make your first sales call. If the market is slow, then keep busy by restocking or straightening the stand, passing out samples or having a partner placed in front of the stand to draw in people.

Third, be reliable.
Show up on time, keep regular hours, and have adequate supplies of your product. Customers may not trust you if they don't know when you'll be at the market, when you'll arrive with a delivery, how long you'll be open for business or how much product you'll have. If selling to a restaurant, then reliability can help with gaining and maintaining customers. For instance, if a hailstorm wipes out your spinach or deer season closes your meat processor, then tell the chef as far in advance as possible that you won't be able to deliver an order. With advance warning, chefs may take the lack of product in stride and still order from you. Without upfront communication, you may lose the entire account.

Fourth, share your knowledge about your products and skills.
Customers are often interested in the nutritional value of different foods, how foods are grown or processed or what makes your offerings special. This is especially important if you sell specialty or ethnic products. Customers also appreciate hearing about how your products are used by other satisfied customers.

Fifth, go the extra mile for customers.
Offer to carry or cart-out purchases if you have extra help. Allow customers to leave purchased items at your stand until they've completed their other shopping. Always try to deliver more than the customer expects. Give away something extra or throw in a sample of a new product to regular customers. These and other services demonstrate your commitment to your customers and show them how much you appreciate their business.

Finally, be pragmatic, and have a sense of humor.
You will not satisfy everyone all of the time. Placing reasonable expectations on yourself and others - and being able to laugh at yourself on occasion - will allow you to keep a good attitude and attract customers. Also, if you don't feel outgoing enough for direct marketing, then find someone in your family or hire someone who is. Remember to educate your team about your products and the importance of providing great customer service.

Discover your customers' needs and preferences

Discovering needs and preferences takes time, patience and a good ear. It also follows naturally from a commitment to building relationships with customers and getting to know them personally.

For instance, you might arrive at market with a truckload of the best yellow-fleshed watermelon in the county, but if customers are not familiar with this variety, then you may also leave the market with a truckload of yellow-fleshed watermelon.

To find out what customers want, consider these two strategies:

First, when talking to customers, ask questions about their preferences.
For instance, ask, "Are you looking for anything special today?" or "Are you preparing any special meals this week?" If a family is shopping with children, then ask the kids, "What's your favorite vegetable?" You can also relate your products to the season or upcoming holidays by asking, "Are you planning to do any canning this year?" or "Will you cook out for the Fourth of July?" Listen carefully to what customers say. If you are taking orders, then restate orders to be sure you heard them correctly. Keep a notepad and pen nearby to record orders, comments and special requests.

Second, do some homework.
Research the latest consumer trends by subscribing to lifestyle magazines (e.g., Martha Stewart Living; O, The Oprah Magazine; Real Simple), searching the internet, reading blogs and following influencers on social media. Look for information about the types of products you sell. Stay abreast of the latest developments in direct marketing and farming. Use this information, along with what you learn directly from your customers, to adjust your product selection to better meet your customers' needs.

Advocate for your products

Once you've developed a relationship with your customers and have a good idea of their expectations, match their needs with your products. Implementing the following practices creates a partnership with your customers rather than selling them something they don't need.

First, balance between sharing information about your products and socializing with customers.
Talk about your products' nutritional qualities or how to store, preserve and use them. With chefs, talk about the ease of using your products in the restaurant or your products' unique flavors and qualities. For instance, mention the rich flavor of your grass-fed meat or how well your egg yolks hold up when they're fried sunny-side up. Realize that most people like receiving some information, but they don't necessarily want a lecture. Keep the conversation light and friendly. To share more information, pass out informational fliers, or include your website and social media URLs on your business card.

Second, consider sharing recipes to show consumers how to use your products, especially if they are new or unique.
Consumers tend to like simple, seasonal recipes with only a few ingredients. Gather recipes in the off-season, and print them on tear-off notepads with your farm logo and contact information. You can also share recipes through e-newsletters and social media.

Third, offering samples can introduce new or in-season products.
Before offering samples at a farmers market, consult with your local health department and check the market's rules. Generally, samples should be fresh and served in individual cups on a covered tray. Keep a trash can nearby for waste disposal. When providing samples to chefs, take small quantities of your product to the restaurant with some information about your farm. Briefly talk with the chef if possible. Check back a week later to see if the chef liked your product and would like to place an order.

Fourth, make signs or announcements to let customers know about products that will be available soon.
A simple sign can read, "Fresh shiitake mushrooms available next week. Special price: $5 per 1/2 pound while supplies last." Or, as customers leave with their purchases, you might say, "Next week, we'll have our first harvest of oyster mushrooms. Visit our stand early because we'll only have a few pounds available early in the season." Give customers a reason to visit your booth again and the opportunity to become preferred customers. Also, if you sell many products, consider offering one each week at a reduced price. Everyone likes to feel like they are getting a deal. Announce such weekly specials. A sign might read, "This Week's Special: Winter Squash, 2 for $5." Or, you might say to customers, "We have a special on #2 canning tomatoes this week. They're slightly blemished but will make great sauce or salsa. Here's a copy of our family's salsa recipe."

Fifth, add a little flair to your presentation.
Wear a costume or make periodic announcements to passersby about new or special products. Be sure to use discretion though, and be considerate of other vendors and shoppers.

Finally, remember to ask for the sale.
Be specific with your pitch. Assume the sale by asking questions that will make a sale regardless of the answer. The best questions have two choices with no negative outcome (i.e., no loss of sale). For example, rather than asking, "Would you like to buy some eggs?" say "Would you like just a dozen eggs this week, or would you like to take an extra dozen to have on hand?" Other examples: "How many pounds of beans can I get for you today?" and "Would you like the green peppers or the red peppers or both?"

You can assume the sale subtly. If a customer is wavering between two products, then say, "How about getting the fresh spreadable cheese to use on toast and this aged cheese to sprinkle over salads?" In this example, the customer is more likely to buy two items, not just one, from you.

If you ask for the sale and it doesn't happen, then you may need to make another attempt to discover your customers' wants and needs. To increase your sales, however, you ultimately must ask for the sale. Many sales don't happen without the ask!

Provide quality service

You may be familiar with the following adage: a satisfied customer will tell fewer than five people about your business, but a dissatisfied customer will tell at least 10 people. This demonstrates two important points. First, satisfied customers are essential to any business. Second, word-of-mouth publicity can make or break a business. With this in mind, focus on strengthening relationships with existing customers by providing outstanding service using the following tips.

First, once the market opens, serving customers should be the first priority (see Figure 3).
All other activities such as talking with other vendors or rearranging the display should wait until the customer is served. Also, thank customers as they leave and make it clear that all products are guaranteed.

Figure 3. High quality customer service helps producers stand out.

Second, provide prompt service, especially during busy times.
However, try to give each customer attention. Develop a way to serve customers in order and acknowledge customers who are waiting in line. Make eye contact with waiting customers, tell them that you'll be with them in a moment, and thank them for their patience. If possible, then offer waiting customers a sample or a pamphlet about your farm. When selling to chefs or other direct customers, return phone calls or emails within at least 24 hours to avoid losing the sale. To manage extremely busy periods, consider hiring employees, recruiting family members or making prepackaged items available.

Third, address any post-sale dissatisfaction politely and promptly.
Whatever you do, avoid arguing with customers. Acknowledge all complaints, apologize, and take appropriate steps to remedy the problem. Consider asking customers how they would like a situation resolved. Once the complaint is resolved, thank the customer for bringing the complaint to your attention and make a note of the complaint for future reference. Keep in mind that it takes more energy and effort to gain new customers than it does to keep existing ones. Even when customers have negative experiences, they will likely return to purchase from you again if they feel complaints were resolved appropriately and quickly.

Fourth, if selling to chefs, then accommodate the restaurant's needs.
Samples can introduce your product to a chef, but provide enough product and package it well so the chef can experiment. Good packaging will allow you to show that your product will be consistent from package to package and standardized by weight or count. With this information, a chef can confidently order the necessary amount.

Print current, easy-to-read price lists and leave them with samples. Price lists can introduce new products to the chefs, especially if you highlight the variety of products you have available. Also, make ordering easy. Some chefs will place orders after their dinner service closes, which means you are likely to lose the sale if you can't take email or Internet orders.

You will need to deliver products on a regular basis at predetermined times convenient for the chef. Because chefs have limited storage on-site, delaying your delivery by even a day can disrupt the restaurant's menu and damage your relationship. You will also need to include a separate, legible invoice with products you deliver. Invoices are usually passed to the bookkeeper, who must understand the information to process a timely payment.

Explore beyond the basics

Although providing outstanding customer service is a proven way to build and strengthen relationships with existing customers, you can improve service by following these practices.

First, when interacting with customers, find other products to sell to them.
Take note of what they have in their shopping bags or on their restaurant menus and offer complementary items. Remember their previous purchases, ask how they enjoyed those items, and ask if they'd like more. If customers want items you don't carry, then recommend other vendors who do carry those items.

If you see a regular customer carrying a competitor's product, then offer a sample of your own product with an appropriate promotion to encourage them to visit your stand next week. For instance, "I see you purchased some tomatoes down the way. I've planted this really great variety this year that I think you'll like. Try this one at no charge, and if you like it, come back next week to see me."

Second, consider creative ways to communicate with customers throughout the year.
Many farms use newsletters and social media to stay in touch with customers. Collect customers' contact information from a guest book or sign-up sheet and ask how they prefer to receive communications from you. Add an e-newsletter subscription page to your website and promote it via social media. On your website, place widgets that link to your social media pages.

Third, think about hosting events, classes or contests.
Scheduling an open house, farm tour or on-farm meal shows you appreciate your customers. Sponsor free classes on preserving foods. Partner with a local chef to offer tasting parties or cooking classes. Have a drawing or recipe contest.

Finally, make a concerted effort to evaluate and improve your service.
Record yourself during busy times with a video or audio recorder. Listen to and watch other vendors. Tour other markets, visit other roadside stands, or go to supermarkets to check their selection, display and prices. Put yourself in your customers' shoes and think about your business from their perspective. Some businesses measure customer satisfaction through customer surveys, meetings with customers or customer complaints and compliments. The goal is to reflect on successes and failures and be willing to change.

Summary

Succeeding with direct marketing takes time, effort and attention. It requires producing a quality product and building lasting relationships with customers. It also takes a combination of skills - and ideally, a group effort - to create a lasting, profitable enterprise.

Marketing directly to consumers also has many rewards. As a farmer, you can gain greater control over production and marketing decisions. You have the opportunity to use unique marketing strategies and earn retail prices for your products. You also become a valued community member and gain satisfaction from both your work and the relationships you build with community members.

Resources

Growing for Market

I'm Right and You're Wrong: Do's and Don'ts in Customer Service. 2005. Jody Padgham. University of Wisconsin Cooperative Extension Publication No. A3811-10. Madison, Wisconsin.

Marketing - Selling the Whole Truckload. 2013. Gail Hayden. California Farmers' Market Association.

Marketing the Market (PDF). n.d. Jerry Jost and Mercedes Taylor-Puckett. Kansas Rural Center Sustainable Agriculture Management Guide MGIOA.1. Kansas Rural Center, PO Box 133, Whitting, Kansas 66552.

Missouri Department of Agriculture. Missouri Grown program.

Missouri Farmers Market Association

National Retail Report - Local and Organic (TXT), USDA Agricultural Marketing Service.

Networking Association for Farm Direct Marketing and Agritourism. Address: PO Box 30481, Indianapolis, IN 46220. Phone: 855-623-3621.

The New Farmers' Market: Farm-Fresh Ideas for Producers, Managers, and Communities. 2015. Vance Corum, Marcie Rosenzweig and Eric Gibson. Sustainable Agriculture Research and Education (USDA).

Postharvest Handling of Fruits and Vegetables. August 2000. Updated March 2020. Janet Bachmann and Richard Earles. ATTRA Publication #IP116. Phone: 800-346-9140 (English) and 800-411-3222 (Spanish).

Strategies to Attract and Keep Customers. 2005. Jody Padgham. University of Wisconsin Cooperative Extension Publication No. A3811-1. Madison, Wisconsin.

Successful Nonverbal Communication: Principles and Applications. 1986. Dale G. Leathers. Macmillan Publishing Company, New York, New York.

Sustainable Agriculture Research and Education (SARE) program. This USDA program funds projects and conducts outreach designed to improve agricultural systems. Information on grants and publications available on the website.

Win-Win Selling: The Original 4-Step Counselor Approach for Building Long-Term Relationships with Buyers. 2003. Wilson Learning Library. Nova Vista Publishing, Herentals, Belgium.

Zingerman's Guide to Giving Great Service. 2004. Ari Weinzweig. Hyperion, New York, New York.

Original authors: Bill McKelvey, Mark Hendrickson and Joe Parcell. The authors acknowledge the assistance of John Emery, Lane McConnell and Ann Wilkinson in the preparation of this guide.

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Selling Strategies for Local Food Producers

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Figure 1. Fresh, local produce sold at a farmers market.Bill McKelveyProject Coordinator, Division of Applied Social SciencesMary HendricksonAssociate Professor, Division of Applied Social SciencesAlice RoachSenior Research Associate, Division of Applied Social SciencesFor many farmers, marketing and selling represent challenging tasks, especially when they sell directly to consumers.

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Farmers Market Food Safety Guide | Illinois Farm Bureau

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Farmers Market Food Safety Guide | Illinois Farm Bureau

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The Farmers Market Food Safety Guide was developed to provide standards, guidelines and consistent information to Illinois vendors and market managers to provide fresh, safe and quality food to the consumer. In an eﬀort to bolster local food entrepreneurship while ensuring food safety, the Farmers Market Food Safety Guide oﬀers advice on food items that may be sold, conditions that must be met at the point of sale and helpful tips on food safety. The guide also contains information regarding some of the risks involved with foods often distributed at farmers markets and basic guidance on safe transportation, delivery and display of foods.

The Farmers Market Food Safety Guide represents a collaborative eﬀort between the Illinois Department of Public Health's (IDPH) Food, Dairies and Devices Section and a joint membership of representatives from county farmers markets, agricultural production associations and local health departments. A special thanks to local health departments, IDPH, Illinois Department of Agriculture, Illinois Farmers Market Association, Illinois Farm Bureau, Illinois Specialty Growers Association, University of Illinois Extension, The Land Connection and all other organizations that made updating this document possible.

We want to hear what you think of the guide.
Do you have questions? Did we leave anything out? Please submit your feedback using the form below.

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The Farmers Market Food Safety Guide was developed to provide standards, guidelines and consistent information to Illinois vendors and market managers to provide fresh, safe and quality food to the consumer.

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2023 Winter Webinar Series - Legal Food Hub

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2023 Winter Webinar Series - Legal Food Hub

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Posted on January 20,2023

Laws of the Land: What to Know About Your Farm BEFORE You Commit Wednesday, Feb 1st, 12:00-1:15EST Presenters:Attorney Laura Hartz and Attorney Stacey Caulk, Drummond Woodsum

You've heard the phrase 'location, location, location' when it comes to choosing a home. It's no different for farmers when choosing a site for their farm business. All sites come with unique conditions that impact the farm's viability, including physical characteristics, zoning restrictions, federal and state permitting requirements, and pre-existing third-party rights of neighbors, landlords, tenants, easement holders, or lenders. This webinar will cover the who, what, how, where, and most importantly, why, of identifying the unique characteristics and regulatory requirements tied to your future farm property before you sign on the dotted line.

Hosting a Food Focused Event: The Legal Side of a Delicious Activity Wednesday, February 8th, 12:00-1:15EST Presenters:Corie Pierce, Bread and Butter Farm VTDr. Lisa Chase, University of VermontAttorney Andrew Marchev, Fellow at Vermont Law School

Hosting an event with food on your farm is a great way to gather your community, educate the public about farming, and grow your business. Join this webinar to learn about next steps to safely and legally offer samples, host a tasting, farm to table meal, or other event with food on your farm. During the session we will hear from Corie Pierce, owner of Bread and Butter Farm in Shelburne, Vermont and regular host of burger nights. We will also hear from Andrew Marchev, Legal Fellow at the Center for Agriculture and Food Systems and Lisa Chase, Agritourism Expert at University of Vermont Extension.

Media and Marketing 101 Wednesday, February 15th, 12:00-1:15EST Presenters: AttorneysElliot Brake, Kevan Lee Deckelmann, Chad W. Higgins, Matthew J. Saldaña, Bernstein Shur

As a small business, you are likely using emails, text, and social media to advertise your business and communicate with your customers. You may also have your own webpage spotlighting customer reviews and other content. With all these forms of social media and communication comes a web of laws that are difficult to navigate. During this webinar, a team of attorneys from Bernstein Shur will help you detangle these laws. We will cover topics such as email, text, and social media marketing, claim substantiation, website policies, the proper use of logos and other copyrighted material, endorsements, testimonials, and customer reviews, and other hot topics in advertising law.

Onboarding New Employees Wednesday, February 22, 12:00-1:15EST Presenter:Attorney Tara Walker, Bernstein Shur

Congratulations! Your small business is ready to hire your first employees. This is both an exciting and daunting process. Luckily, we have Tara Walker of Bernstein Shur Portland, Maine who will walk you through this process. Tara will cover common legal traps for the hiring manager in the hiring and interview process, she will provide a checklist of best practices, and recommended documentation for your new employees.
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Selling Value-Added Products on the Farm Wednesday, March 1, 12:00-1:15EST Presenter:Legal Services Specialist Christine Dzujna, Farm-To-Consumer Legal Defense Fund

If you are a farmer interested in opening a farmstand on your property, please join us to learn about key federal, state and local regulations that impact small food producers who seek to make and sell value-added products from home. We will cover what's allowed when selling meat, eggs, dairy, cottage foods such as pickles and baked goods, and more, and explore the legal solutions that can help these businesses grow and thrive.

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2023 Winter Webinar Series - Legal Food Hub

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Laws of the Land: What to Know About Your Farm BEFORE You Commit Wednesday, Feb 1st, 12:00-1:15EST Presenters: Attorney Laura Hartz and Attorney Stacey Caulk, Drummond Woodsum You've heard the phrase 'location, location, location' when it comes to choosing a home. It's no different for farmers when choosing a site for their farm business.

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Legal Food Hub Webinar: Starting Your Farm or Food Business: The Role of Succession Planning - YouTube

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Legal Food Hub Webinar: Starting Your Farm or Food Business: The Role of Succession Planning - YouTube

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Legal Food Hub Webinar: Starting Your Farm or Food Business: The Role of Succession Planning

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Starting and Running a Business - Legal Food Hub

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Starting and Running a Business - Legal Food Hub

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Starting and Running a Business - Legal Food Hub

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How to Choose a Business Structure: A Decision Tree - Legal Food Hub

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How to Choose a Business Structure: A Decision Tree - Legal Food Hub

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As a farmer or food business, choosing a business structure is an important decision with important implications for your business and your personal liability. This decision guide, developed by Conservation Law Foundation, walks you through the different business structures you can consider and weighs the advantage and drawbacks of each option. This guide is a great starting point for businesses thinking about what business structure is right for you.

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How to Choose a Business Structure: A Decision Tree - Legal Food Hub

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As a farmer or food business, choosing a business structure is an important decision with important implications for your business and your personal liability. This decision guide, developed by Conservation Law Foundation, walks you through the different business structures you can consider and weighs the advantage and drawbacks of each option.

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Financial Scorecard - Cornell Small Farms

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Financial Scorecard - Cornell Small Farms

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The terms and associated calculations found here are essential to understanding the financial status of your business. Complete the formulas and insert your calculations into the ranges to evaluate your financial well-being.

For your convenience, you can save your work to return at a later time or have your work sent to you via email!

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Financial Scorecard - Cornell Small Farms

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New Producers & Beginning Farmers | NC State Extension

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New Producers & Beginning Farmers | NC State Extension

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en Español

El inglés es el idioma de control de esta página. En la medida en que haya algún conflicto entre la traducción al inglés y la traducción, el inglés prevalece.

Al hacer clic en el enlace de traducción se activa un servicio de traducción gratuito para convertir la página al español. Al igual que con cualquier traducción por Internet, la conversión no es sensible al contexto y puede que no traduzca el texto en su significado original. NC State Extension no garantiza la exactitud del texto traducido. Por favor, tenga en cuenta que algunas aplicaciones y/o servicios pueden no funcionar como se espera cuando se traducen.

English is the controlling language of this page. To the extent there is any conflict between the English text and the translation, English controls.

Clicking on the translation link activates a free translation service to convert the page to Spanish. As with any Internet translation, the conversion is not context-sensitive and may not translate the text to its original meaning. NC State Extension does not guarantee the accuracy of the translated text. Please note that some applications and/or services may not function as expected when translated.

Estoy de Acuerdo / I agree

There is growing interest in the exploration of farming as a new career in North Carolina and around the country. The primary challenges to new producers and beginning farmers include access to land, access to capital, and farm business planning training and support. This page is a starting point for aspiring producers and farmers to glean resources and knowledge that may answer questions and address challenges.
On This Page

New Producers & Beginning Farmers Resources
Find many local, state and national resources listed below to help you with anything from how to start a farm, to how to grow your local food business, to information on farm business planning. If you can't find what you're looking for, explore the Topics Tab or enter a keyword(s) in the Search Bar.
:Guides & Toolkits

Toolbox of resources for beginning farmers on the business of farming, including NC focused resources on business planning, accessing capital and credit, land access, marketing and more.

Farm Business Planning

Getting into Farming - A Workbook for Beginning Farmers in North Carolina

Resource workbook developed in 2013 by the Bringing New Farmers to the Table Project. Authors: Branan, Andrew, Lee Miller, Marisa Alcorta, Tammy Howard, Hanna Lewis. This resource helps new farmers create a vision and financial plan for their business.

Farm Business Planning

This document from the USDA Rural Development Center lists federal resources that can help beginner farmers find and access federal resources.

Farm Business Planning - USDA Beginning Farmer Resources

The USDA-NIFA beginning farmer and rancher (BFRDP) clearinghouse, providing resources to help you get started farming, as well as tools to help more seasoned producers succeed.

Farm Business Planning - USDA Beginning Farmer Resources

:Programs

Extension Programs

NC State Agricultural Institute's five-week program at Fort Bragg providing hands-on training and an introduction to a variety of careers in agriculture. To learn more about this effort, contact Robert Elliott at , 252-725-4875, or if you'd like to contribute, go to rlellio2@ncsu.edu http://go.ncsu.edu/AgInstituteVeteransFund to make a gift.

New Farmer Training & Leadership Programs

CEFS' Sustainable Agriculture Apprenticeship Program is a hands-on work and study program that trains participants in many aspects of sustainable agriculture production, research, and education, as well as provides networking opportunities across the state.

New Farmer Training & Leadership Programs

State & National Programs

A farmer-led training and support program from Organic Growers School. Learn the skills that are required to start and expand a successful farm business: passion, clear goals, production experience, financial and marketing know-how, and more.

New Farmer Training & Leadership Programs

This website includes resources for new farmers, youth, women and veterans. Personalize your search on the USDA website using the new Discovery Tool .

Farm Business Planning - USDA Beginning Farmer Resources

Carolina Farm Stewardship Association
CFSA is a farmer-driven, membership-based 501(c)(3) non-profit organization that helps people through advocacy, system building and education. Their Sustainable Agriculture Conference generally has beginning farmer workshops and tours. It is based alternate years in Greenville, SC and Durham, NC.

New Farmer Training

Organic Growers School
OGS provides year-round opportunities for farmers and home-growers of all levels. Their Annual Spring Conference in Western NC supports new and existing farmers and gardeners interested in organic and sustainable agriculture.

New Farmer Training

Appalachian Sustainable Agriculture Project
ASAP's mission is to help local farms thrive, link farmers to markets and supporters, and build healthy communities through connections to local food. They also host the Business of Farming Conference each year for new and aspiring farmers.

Farm Business Planning

NCAT's ATTRA Sustainable Agriculture
ATTRA is a program developed and managed by the National Center for Appropriate Technology (NCAT). It provides information and technical assistance to farmers, ranchers, Extension agents, educators, and others involved in sustainable agriculture. Enroll in their online training module, Getting Started in Farming: An Introduction to Farm Business Planning. It has eight lessons that will guide you through the process of imagining and planning a successful farming enterprise.

Farm Business Planning

Incubator Farms in North Carolina
If you have an incubator farm program in North Carolina and would like to have your program listed here, please contact hannah_dankbar@ncsu.edu
Want to start a new Incubator Farm?

National Incubator Farm Training Initiative - "Provides comprehensive one-on-one consulting, educational resources, and professional development opportunities for dozens of organizations throughout North America."

The Farm Incubator Toolkit - "A comprehensive guide to starting and operating land-based beginning farmer training programs."

Incubator Farm Planning Resources
Resources for communities or organizations interested in starting new incubator farms developed through the North Carolina project, Bringing New Farmers to the Table, between 2010 and 2013.

Regional & National New Farmer Support Organizations

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There is growing interest in the exploration of farming as a new career in North Carolina and around the country. The primary challenges to new producers and beginning farmers include access to land, access to capital, and farm business planning training and support. This page is a starting point for aspiring producers and farmers to glean ...

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Right Business Structure for Reducing Legal Risk and Leveraging Opportunity – REGAIN

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Right Business Structure for Reducing Legal Risk and Leveraging Opportunity – REGAIN

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Rachel Armstrong, founder and Executive Director at Farm Commons, discusses the importance of establishing the right business structure and writing the proper organizing document for your farming or ranching operation. The webinar features the nuances between a LLC and corporation, advice on how to build legal resiliency, and bonus content about anti-corporate farming laws, when to consult a separate business structure, and trusts vs business entities.

Learn more about Farm Commons here. Learn more about the Quivira Coalition here.

Watch the webinar recording here.

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Right Business Structure for Reducing Legal Risk and Leveraging Opportunity

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Rachel Armstrong, founder and Executive Director at Farm Commons, discusses the importance of establishing the right business structure and writing the proper organizing document for your farming or ranching operation. The webinar features the nuances between a LLC and corporation, advice on how to build legal resiliency, and bonus content about anti-corporate farming laws, when to consult a separate business structure, and trusts vs business entities.

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Food Safety Training & Certification | Illinois Farm Bureau

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Food Safety Training & Certification | Illinois Farm Bureau

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HACCP Overview and Refresher Course This training course is designed for meat facilities that are currently operating with functioning SSOPs and HACCP programs. The training will review Sanitation and HACCP regulations, discuss the seven principles of HACCP, and walk participates through the process of reviewing and improving existing programs. The course will involve a series of on-line sessions and opportunities for interactive sessions with the instructors. (Note: This class is not intended to teach individuals to develop and implement a new HACCP program.)

If you have any further questions regarding this program, please contact tbunting@ilfb.org

HACCP and Illinois Farm Bureau

Hazard Analysis Critical Control Points (HACCP) is a prevention-based approach to the safe production, handling, and preparation of foods. This tried-and-true system combines best manufacturing practices, standard operating procedures, and sanitation processes for food production facilities to prevent foodborne illnesses in meat, poultry, and seafood. Biological, chemical, and physical hazards can be found in many manufacturing environments. By establishing preventative measures and implementing continual monitoring procedures to avoid such hazards, HACCP allows for the safe and uninterrupted production of food products.

Livestock farms, along with meat and dairy processing, contribute $14.1 billion annually in economic activity in Illinois and are responsible for 52,124 jobs throughout rural and urban areas of the state. Livestock creates demand for Illinois' top two commodities, corn and soybeans, consuming an estimated 112 million bushels and 36 million bushels, respectively. Because of this, Illinois Farm Bureau is dedicated to building an understanding and awareness of HACCP guidelines for small livestock packers and processors and supporting small business owners in pursuing HACCP certification and continued education. The success of these businesses strengthens our food supply chain and local economies. Illinois Farm Bureau's public involvement with and support of HACCP builds a resilient link between farms and consumers.

Food Safety Modernization Act (FSMA)

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HACCP Overview and Refresher Course This training course is designed for meat facilities that are currently operating with functioning SSOPs and HACCP programs. The training will review Sanitation and HACCP regulations, discuss the seven principles of HACCP, and walk participates through the process of reviewing and improving existing programs. The course will involve a series of on-line sessions and opportunities for interactive sessions with the instructors.

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Farm Food Safety Plan Writing Resources | CALS

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Farm Food Safety Plan Writing Resources | CALS

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The FSMA Produce Safety Rule does not require a written farm food safety plan but writing a plan helps growers get organized and focused on produce safety, as well as prepare for buyer requirements and third party audits. Below are just a few links to resources which may help you write a farm food safety plan.

University & Land Grant Resources

Cornell University

University of California

Colorado State University

Kansas State University

Michigan State University

University of Minnesota

North Carolina State University

Penn State University

Rutgers

University of Vermont

Commodity Specific / Industry

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The FSMA Produce Safety Rule does not require a written farm food safety plan but writing a plan helps growers get organized and focused on produce safety, as well as prepare for buyer requirements and third party audits. Below are just a few links to resources which may help you write a farm food safety plan.

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Tips to Consider When Setting Up Your Business

Use the New Farmers Checklist to understand the steps you might need to take before setting up your operation.

Determine the legal structure of your business whether it may be a sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation, nonprofit, or cooperative.

Register your business with your state government.

Obtain a Tax Identification Number from the IRS and your state revenue agency.

Register for state and local taxes to obtain a Tax Identification Number, workers' compensation and unemployment and disability insurance.

Obtain the necessary business licenses and permits.

Understand the legal steps you'll need to take to hire employees.

Learn more about how you can get funding for your operation on our Land and Capital page.

Learn more about opportunities for beginning farmers and ranchers.

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Use the New Farmers Checklist to understand the steps you might need to take before setting up your operation. Determine the legal structure of your business whether it may be a sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation, nonprofit, or cooperative. Register your business with your state government.

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Bulletin #3020, Using QuickBooks™ for Farm Recordkeeping: Considerations for Getting Started - Cooperative Extension Publications - University of Maine Cooperative Extension

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Bulletin #3020, Using QuickBooks™ for Farm Recordkeeping: Considerations for Getting Started - Cooperative Extension Publications - University of Maine Cooperative Extension

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Bulletin #3020, Using QuickBooks™ for Farm Recordkeeping: Considerations for Getting Started (PDF) Developed by Erin Roche, Crop Insurance Education Professional, and Tori Lee Jackson, Extension Educator, University of Maine Cooperative Extension. Reviewed by Becky Adams, Austin Associates, EA Staff Accountant / QuickBooks ProAdvisor, Auburn, ME

For information about UMaine Extension programs and resources, visit extension.umaine.edu.
Find more of our publications and books at extension.umaine.edu/publications/.

Funding for this fact sheet was provided by the USDA Farm Service Agency, Increasing Access to Risk Management Programs through Record Keeping Education, Federal Award #: FA-ME-7-034.
Table of Contents
Farms of all types are choosing QuickBooks™ for their business accounting purposes. QuickBooks™ is a computer-based software program developed by Intuit ® for small to medium-sized businesses. QuickBooks™ offers an efficient and organized method for monitoring the cash flow of a farm business. QuickBooks™ makes it easy to generate reports such as the Profit and Loss Statement and Balance Sheets which can help with end-of-year tax prep. QuickBooks™ uses a double-entry system meaning every transaction is recorded twice-usually as a debit and a credit, making it a "self-balancing" approach to bookkeeping ¹. The software works for both accrual and cash methods of accounting and allows for reporting using each method. When QuickBooks™ is set up to accurately reflect the different enterprises, revenue streams, and expenses of the farm it becomes a powerful tool. The objective of this fact sheet is to focus on a few of the aspects that often create barriers for new users such as evaluating the different versions of QuickBooks™ available and setting up the Chart of Accounts (COA) to be reflective of the farm business.

Choosing the Right Fit

The variety and types of QuickBooks™ versions available can be overwhelming and confusing. QuickBooks™ isn't a one-operating system-fits-all application. In fact a different software package exists for Windows and Macintosh operating systems. Select the version specific to your system. Note that Intuit® releases new versions of QuickBooks™ each year. Selecting the latest version is recommended, but you should be able to use it for years to come. There are also two different types of QuickBooks™ - a Desktop type and a cloud-based Online type.

Desktop versus Online

There are various factors to consider in choosing between Desktop and Online. Desktop is one-time, downloadable software whereas Online is cloud-based meaning it can be accessed wherever there is an internet connection. Unfortunately, the Desktop and Online types are not identical; they look and navigate quite differently and these features are outlined in Table 1. Lastly, those in the market for QuickBooks™ will notice that there are a variety of versions available for Desktop and Online. Many farmers have had success using the Pro and Simple Start versions. Review the features of each, and, if you work with an accountant - seek their perspective on which type and version of QuickBooks™ they prefer to work with.

Setting Up a Company File

After QuickBooks™ has been downloaded the user will be prompted to set up a company file. A company file will contain the financial information about the business. Here are a few key areas to consider:

Industry: for a farm business select Agriculture, Ranching, or Farming. This will select the default accounts generally related to the farm business and those that will show on the Schedule F income and expense accounts³.

Business organization: choose your type and QuickBooks™ will select the tax forms associated with the organization.

Set an appropriate start date: the start date will depend on a few factors. When it's early in the year choose the first day of your current fiscal or calendar year because this will mean less historical transactions to enter. If beginning with QuickBooks™ later in the year, it may be good to start at the beginning of an accounting period, such as the first of the month, because this will save time on entering historical transactions⁴.

Selecting features: during the set-up, QuickBooks™ will also prompt you to decide on a number of features such as creating invoices, tracking inventory and time. Many of these features you'll need but some may be extraneous. Think carefully about your business needs and accept what you need at the time. You can always re-select these features later. Keeping it simple is a good rule of thumb.

Chart of Accounts

The Chart of Accounts, often referred to as the COA, is the foundation of the QuickBooks™ accounting system because it is a list of accounts that are relevant to your business. Setting up the COA correctly from the beginning will give you the power to understand the profitability of the business. Failing to do so will mean the reports generated may be inaccurate.

COA Account Structure

By selecting Agriculture, Ranching, or Farming during the initial company set-up, the options will be modified to provide a set of income and expense accounts that match the Schedule F tax form. QuickBooks™ has "default" Account Names but these can and should be modified by the user to provide more detail to the user. As new accounts arise or changes occur, accounts can be added or edited on the fly. Table 2 lists some of the different account names and types included in QuickBooks™. There are two main account types and these represent what is on the Balance Sheet and the Income and Expense Accounts. Each Balance Sheet account has its own register to track transactions and balances by account. The Balance Totals are available for assets, liability and equity accounts ⁴. The Income and Expense Accounts track the source of the company's income and expenses. The Income and Expense Accounts do not have their own register and thus there are no Balance Totals.

COA Tips

Keep the COA short and organized. Adding sub-accounts, such as "farmer's market" and "wholesale" to parent accounts such as "sales" can provide more information about which sales channels are most profitable without making the list of accounts too lengthy (Table 2). What if you want to track sales by specific enterprises such as eggs sales versus vegetables sales? In this case, Class Tracking should be used to track revenue by product type. Visit the Preferences tab to turn "on" Class Tracking.

Avoid assigning the wrong type of account to a new account. This is a common mistake that may result in accounts showing in the wrong reports. For example, an account that should show in the Balance Sheet may appear in the Profit and Loss Report if it has been mislabeled.

Enter correct starting balances. When transitioning from another recordkeeping system to QuickBooks™ decide on a date to restart your books such as the first day of the current fiscal year. Find the beginning statement for each bank statement, credit card and loan. This will help when entering the correct beginning balances for the balance sheet items.

Use the Ask My Accountant account. To code questionable transactions that should be revisited with a professional.

Avoiding Common Pitfalls with QuickBooks™

Before adopting a new recordkeeping system such as QuickBooks™, it is important to step back and consider the big picture. A "good" record keeping system is one that is simple, reliable and understandable to others. It is not uncommon to get off on the wrong foot by overlooking a few key items that can put holes in your recordkeeping system and distort the farm's financial picture.

Reconcile your accounts. The accuracy of your record keeping system is only as good as the accuracy of the records used and how consistenly records are entered. Get in a routine. On a daily basis, take the time to enter income and expenses. Schedule time aside every week to pay bills and once a month to reconcile your accounts. Every transaction in QuickBooks™ must be checked and matched to bank records in order for the register to be accurate. This not only means your bank statements but also loans and taxes. For managing transactions that occur every month for the same amount such as an internet bill, QuickBooks™ has a Memorized Transactions option to automate the transaction entry.

Don't Co-Mingle Personal and Work Finances. When first starting a business it's common to take money from personal savings to make purchases, or, to use one credit card for household and business purchases. Keep personal and business purchases separate as much as possible. If personal money is used for start-up costs then categorize it as a loan. Open a bank account or credit card that is strictly used for farm purchases. If you must use personal money, record it using the Journal Entry Module in QuickBooks™.

Back Up Your Company File. On a daily basis save a backup of QuickBooks™ on an external hard drive or thumb drive in order to protect against a computer crash. Also, because transactions in QuickBooks™ are linked it is often better to fix mistakes through editing instead of deleting transactions.

Ask for Help When Needed. Having a bookkeeper or accountant assist in setting up QuickBooks™ can be money well spent and time saved. Many accountants are willing to help you set up your COA from the beginning to ensure you are recording the appropriate data. Look for assistance from someone who has a QuickBooks ProAdvisor certification.

References

¹ McConnon, J.C., and French, F.M. 2002. Keeping Your Business on Track, Bulletin #3004. University of Maine Cooperative Extension.

² Shanks, J. 2016. The Farmer's Office: Tools, Tips and Templates to Successfully Manage a Growing Farm Business. Gabriola Island, BC, Canada: New Society Publishers.

³ Schraufnagel, S., and Vanderlin, J. 2008. Farm Accounting Using QuickBooks™: User's Manual. University of Wisconsin Extension. Retrieved from https://farmanswers.org/Library/Record/introduction_to_farm_accounting_using_quickbo
Information in this publication is provided purely for educational purposes. No responsibility is assumed for any problems associated with the use of products or services mentioned. No endorsement of products or companies is intended, nor is criticism of unnamed products or companies implied.
4 BDH Global Advisors. (2017, June 15). One of The Most Common Quickbooks™ Mistakes. [Blog post]. Retrieved from https://bdhglobaladvisors.com/one-of-the-most-common-QuickBooks-mistakes/
Call 800.287.0274 (in Maine), or 207.581.3188, for information on publications and program offerings from University of Maine Cooperative Extension, or visit extension.umaine.edu. The University of Maine is an EEO/AA employer, and does not discriminate on the grounds of race, color, religion, sex, sexual orientation, transgender status, gender expression, national origin, citizenship status, age, disability, genetic information or veteran's status in employment, education, and all other programs and activities. The following person has been designated to handle inquiries regarding non-discrimination policies: Sarah E. Harebo, Director of Equal Opportunity, 101 North Stevens Hall, University of Maine, Orono, ME 04469-5754, 207.581.1226, TTY 711 (Maine Relay System).
© 2019

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Bulletin #3020, Using QuickBooks™ for Farm Recordkeeping: Considerations for Getting Started - Cooperative Extension Publications - University of Maine Cooperative Extension

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Farms of all types are choosing QuickBooks™ for their business accounting purposes. QuickBooks™ is a computer-based software program developed by Intuit® for small to medium-sized businesses. QuickBooks™ offers an efficient and organized method for monitoring the cash flow of a farm business.

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Farm Employment FAQ - Practical Farmers of Iowa

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Farm Employment FAQ - Practical Farmers of Iowa

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Frequently Asked Questions on the rights and responsibilities for Iowa farm workers and farm employers. FAQ developed with Farm Commons.

The information below does not replace legal advice of a qualified attorney, insurance coverage advice of an underwriter, or tax advice of an accountant. Contact information for the Federal Wage and Labor District office in Des Moines, IA, Iowa Workforce Development, Iowa Occupational Safety and Health (IOSH), and the State of Iowa Wage and Labor division is listed below. Please contact these regulatory agencies directly with specific questions about your situation.

The links to resources and the laws are provided as a convenience only. Please use caution if consulting the text of a law without the guidance of an attorney. Many laws contain terms with very specific legal definitions that may be quite different than an every day definition. Also, court interpretation of a law is just as important as the law itself. These links do not explain how courts have interpreted the law. Farm Commons developed this resource with Practical Farmers of Iowa. Farm Commons is a nonprofit law center dedicated to providing community-based farmers with the business legal resources they need. They are available to help answer legal questions at www.farmcommons.org or by phone at (608) 616-5319.
Farm Employment FAQs

General wage questions

There a few situations in which farm workers may be paid less than minimum wage. First, Iowa farmers may pay workers who perform agricultural labor less than minimum wage if they meet the federal "small farm" exemption. A "small farm" is one that used fewer than 500 "man-days" of labor during a calendar quarter in the previous year. A man-day is any day on which a worker performs agricultural labor for at least one hour. For example, on June 1, three workers perform agricultural labor for two hours before going home. In that situation, the farm incurred three man-days on June 1. If the farm has more than 500 man-days of labor in last year's calendar quarter, he or she must pay minimum wage this year. Calendar quarters are January through March, April through June, and so forth. Please refer to a helpful chart in Appendix B of the FLAG publication "Farmers' Guide to Farm Employees" for assistance in determining if a farm exceeds this exception. Read the legal code, 29 USC Section 213 at: http://www.law.cornell.edu/uscode/text/29/213

The exemption above only applies to agricultural labor. If a farm has workers perform non-agricultural labor, the farmer owes the workers minimum wage for the entire week in which the non-agricultural labor was performed, regardless of the farm's man-days last year. "Agricultural labor" has a very specific legal definition and may not include all functions a farm or farmer may perform; such as farmers' market sales, packaging product grown by a different farmer, and some construction or logging activities. An attorney can provide the best answer, but where consulting an attorney isn't feasible, a farmer can always play it safe by paying the minimum wage.

If an Iowa farm exceeds the 500 man-day exception, the farm must pay workers at least the minimum wage rate. As of March 2016, Iowa and federal minimum wage rates are the same- $7.25 per hour. If the state and/or federal minimum wage rises in the future, farmers exceeding the 500 man-day exception will need to provide the higher wage rate.

There are other situations where Iowa farmers are not required to pay at least the minimum wage. As one example, immediate family members are not owed minimum wage. Parents, spouses, and children are immediate family; siblings and grandparents are not. Many farmers are curious about paying a salary instead of an hourly wage. Paying wages on a weekly basis is allowed. But, if the farm is required to pay at least the minimum wage (because it exceeds the 500 man-day rule) then the hours worked and pay provided must equal at least the minimum wage on a weekly basis. Farmers may not use a salary to avoid the minimum wage where it is otherwise required. (Although there are situations where federal law allows sub-minimum wage rates for salaried employees, most farm-worker positions will not qualify.)

When must a farm business pay workers overtime?
Iowa farmers do not have to pay workers who perform agricultural labor overtime regardless of the size of the farm. Read the code exempting agricultural laborers from overtime pay at 29 USC Section 213 at http://www.law.cornell.edu/uscode/text/29/213

However, the exception only applies to agricultural labor, which is carefully defined and may or may not include things such as packaging products grown by another farmer, selling products at a farmers' market, or transporting vegetables across state lines. If a worker does non-agricultural work in a week, then overtime pay rules apply to all the work performed in that workweek: the employee earns one and a half times his or her regular pay for the hours over 40 worked in that week. See the FLAG publication "Farmers' Guide to Farm Employees" for more information or consult an attorney. Farms with diverse or potentially non-agricultural tasks can play it safe by paying overtime to laborers.

Are there additional requirements if a farm pays wages in the form of food, housing, or other facilities?
An Iowa farm may pay wages to employees in the form of food, housing, or other facilities such as food or transportation. However, providing non-cash wages requires additional rules, calculations and paperwork.

First, the employee must agree, in writing, before employment begins, to the arrangement. The employee must not be required to accept noncash wages a condition of employment. Second, it must be the farmer's practice or the regular practice of other similar farmers to provide the noncash wages.

If a farmer relies on food and lodging to help meet minimum wage obligations, the farmer must follow specific rules for calculating the value. A farmer may only charge so much rent as to cover the reasonable cost to him or her for providing the food or lodging, which is the cost of operation and maintenance of the facilities. However, if the fair market price of the food or fair rental value of the housing is less than the actual cost of maintenance and operation, only the lower amount may be deducted from wages. To summarize, providing food and housing cannot be a source of profit for a farmer. The farmer must keep records showing how he or she arrived at the reasonable cost of the food or housing. For more information on determining the cost of food and housing, see Iowa Administrative Code 875-217.3(91D) and 875-217.4(91D).

The farmer must track the value and deduction from cash wages on each pay stub provided to the employee. Also, he or she must account for the deductions by the week, even if the employee is paid every two weeks. For more information on the recordkeeping requirements for in-kind wages, see Iowa Administrative Code 875-216.27(91D).

See IRS Publication 15b, pages 16 and 17 for more information on the tax implications of in-kind compensation.

Interns, trainees or youth workers

Whether an intern is a regular employee under regular employment laws is a complex legal question right now. This resource outlines the safest position for a farm to take. If the internship position offered by a farmer does not meet the six criteria outlined by the US Department of Labor in Fact Sheet #71, a farmer should treat the intern like a regular employee, which means providing at least the minimum wage if the farm is required to pay at least the minimum wage. Fact Sheet #71 states that a non-employee intern works primarily for his or her own benefit, does not benefit the employer through his or her labors, and may actually impede the employer in accomplishing the productive work of the business in addition to other criteria. Meeting the six criteria will be difficult for most farms. To see the six criteria, visit www.dol.gov/whd/regs/compliance/whdfs71.pdf. For a more thorough explanation of how the criteria may apply to a farm, watch Farm Commons' tutorial on Building a Legally Sound Intern and Volunteer Program for a Farm: https://farmcommons.org/tutorial/building-a-legally-sound-intern-and-volunteer-program-for-farm-work.

Can a farm pay wages in the form of a stipend rather than an hourly rate of pay?
If a farm is required to pay minimum wage to employees, then any stipend must equal at least the minimum wage for all the hours actually worked by the employee. If the farm is not required to pay minimum wage, then employer and employee may agree on a stipend that equals a lower rate of pay.

Is there an opportunity for farms to pay young workers less than the minimum wage during a training period?
If a farm is obligated to pay minimum wage (because the farm exceeded the 500 man-day threshold or because workers perform non-agricultural labor) then the farm may pay beginning workers who are also under 20 years old the Iowa starting wage of $6.35 per hour for the first 90 days.

Where do farmers go for more information on hiring individuals under the age of 18?
The regulations relating to child labor laws in agriculture are complex and are different than non-agriculture child labor laws. Different rules apply regarding the specific age of the young person, the amount and timing of hours worked, and whether the task is considered hazardous or not. Farms hiring youth workers and youth seeking farm employment should consult http://www.dol.gov/whd/regs/compliance/childlabor102.pdf for federal and http://www.dol.gov/whd/state/agriemp2.htm#Iowa for Iowa law.

Volunteers

If individuals perform a service for a farm in exchange for anything of value (like food or housing) those individuals may be considered employees for the purposes of minimum wage, workers' compensation, and payroll taxes. Farmers wishing to manage risk conservatively should treat compensated volunteers the same as they treat employees. Further, if a compensated volunteer is injured, a farm or commercial general liability policy may not cover that injury if the volunteer may be considered an employee. Any farm that works with volunteers should discuss its program in detail with their insurance agent. For more information, watch Farm Commons' tutorial on Building a Legally Sound Intern and Volunteer Program for a Farm: https://farmcommons.org/tutorial/building-a-legally-sound-intern-and-volunteer-program-for-farm-work.

Work crews, migrant workers or independent contractors

An independent contractor is a person who performs work for the farm but is not a farm employee. A person can only be considered an independent contractor if he/she has control over how he/she accomplishes his/her work, if the contractor supplies his/her own tools, and he/she generally provides the same service to other business owners. A farm labor contractor is an individual who supplies or recruits seasonal or migrant workers. Farm labor contractors must comply with federal laws, which are discussed below. See IRS Publication 15a, page 6 for more information on independent contractors and http://www.dol.gov/whd/mspa/index.htm#.ULZQ-9PjlEA for more on farm labor contractors.

Because independent contractors are not employees, the farmer does not owe payroll taxes or withhold wages on their behalf. Independent contractors also do not contribute to the 500 man-days that govern whether minimum wage is owed to workers. This can lead to cost savings. However, the penalties for misclassifying workers in order to avoid taxes are serious. A farm should only consider a worker an independent contractor if he/she meets the several requirements laid out by the IRS, including that the independent contractor must have control over how they accomplish their work, they should supply their own tools, and they should provide the same service to other business owners. See IRS Publication 15a, page 6 for more information.

If a farmer works with a farm labor contractor who supplies workers, (and the farm exceeds the 500 man-day threshold) the farmer must make sure the contractor is registered with the Wage and Hour Division of the Department of Labor. The contractor should have a certificate and you may call 1-866-4USWAGE (1-866-487-9243) to verify the validity of the certificate. Additionally, the farmer must comply with several regulations relating to keeping employment records, vehicle safety standards, and housing standards. For more information on these requirements, visit http://www.dol.gov/whd/mspa/index.htm#.ULZQ-9PjlEA

Insurance, injuries and workers' compensation

Although Iowa state law requires all drivers to carry liability insurance on their vehicles, do not assume that car insurance will cover accidents that occur in the course of farm business. The farmer's personal vehicle insurance likely does not cover employees using the vehicle for work, nor will the employee's car insurance cover an accident that occurs while at work. Farmers should ask their agent about a policy often called "hired and non-owned" insurance. Farmers should ask their insurance agent about business vehicle coverage and look through their insurance policy (especially the section titled "exclusions") for more information.

Workers' compensation is insurance that compensates employees for injuries by paying doctor bills, lost wages, and other costs related to the injury along with death benefits to the family and money for lost appendages, for example. Workers' compensation covers employees for all injuries they experience while working, no matter how the injuries occurred. Liability insurance is different. Liability insurance covers certain injuries, or injuries resulting from specific activities, and often requires a lawsuit or finding of employer negligence before compensation is awarded.

Although a farm will often also carry liability insurance, the two are not interchangeable. Most liability policies will specifically not cover any worker who should have been covered under a workers' compensation policy. Last, workers' compensation protects the employer from lawsuits. If a person who is not covered by workers' compensation is injured on the farm, that person can sue the farmer for negligently causing the injury. If workers' compensation is available, the individual must take the compensation provided by the insurance policy; he or she cannot also choose to sue the farmer for negligence.

If a farm's total cash payroll in the year prior was $2,500 or more, then the farm must buy workers' compensation insurance for workers. In calculating the $2,500 threshhold, the farm may exclude wages paid to family members who are employees of the farm. Any farm that exceeds the cash payroll threshold should include all workers who perform labor for the farm on their workers' compensation policy. The penalties for not carrying workers' compensation may include large fines and possible felony charges. You may find the best information on workers' compensation insurance from your insurance agent. The state of Iowa provides more information here: http://www.iowaworkcomp.gov/

A farm is not excused from purchasing workers' compensation for employees who have personal health insurance. If the farm meets the $2,500 payroll threshold it must purchase workers' compensation. If a farm is not required to purchase workers' compensation, the farm might still choose to buy workers' compensation for any volunteers, interns and worker shares or for the farmer him or her self.

Workers' compensation can be a good deal for a farm, primarily because it prevents the injured person from bringing a negligence claim. For example, if a farm gets all work done with three volunteers who each work in exchange for vegetables and receive no cash, the farm may believe it is under the $2,500 threshold and choose not to purchase workers' compensation. However, if one of the volunteers is injured on the farm, that volunteer can sue the farmer for negligence. More likely, however, the volunteer's personal health insurance company would choose to bring the lawsuit, even if the volunteer objects. If the farm's liability insurance excludes coverage for negligence, the farm could be responsible for damages. Workers' compensation prevents this.

Workers' compensation may be a good deal for the farmer and his or her family as well. Workers' compensation coverage is often better than what a personal health insurance policy provides because it can cover lost wages and provide a death benefit to the family.

The best way to find a good insurance agent and company is to ask farmers with an operation similar to yours. If they had a good experience, call their agent. Most insurance companies offer workers' compensation, and if they do not, they know someone who does.
After buying workers' compensation insurance, what does a farm do regarding injuries?

Your insurance agent will provide the necessary information on reporting a claim and the procedures to follow if an injury occurs. The agent will likely provide you with the posters you are required to put up for all employees to view. To learn more on your own, Iowa State University Extension provides a thorough list of employment procedures, including posters at http://www.extension.iastate.edu/agdm/wholefarm/html/c6-58.html.

Paperwork, taxes and wage withholding

Wages might be the biggest expense of hiring employees but there are other costs. When making the decision to hire, a farm should consider these extra costs.

An employer must contribute to Social Security and Medicare on behalf of the employee. The farm's contribution to Social Security and Medicare are in addition to the withholding of some of the employee's wages for his or her contribution to these funds. The farm may also have to pay Federal Unemployment Tax (FUTA). The state of Iowa has similar withholding rules with its State Unemployment Insurance Tax (SUI) administered through Iowa Workforce Development. Local municipalities may have additional taxes or fees for new workers. Although it is not technically a tax, the farm should also factor in the cost of workers' compensation insurance. The precise tax rate that will apply to a specific employee will vary and may apply to cash and non-cash wages. Farmers should call their local Small Business Administration office or municipal economic development office for details on state and local tax obligations. Information on federal tax rates for agricultural employers is located in IRS Publication 51: Agricultural Employer's Tax Guide.

The very first step is to apply for an Employer Identification Number (EIN) from the IRS. This is also referred to as a tax ID number. Businesses can apply for an EIN online at www.irs.gov or by calling 1-800-829-4933. You will also need to register with the state of Iowa at https://www.idr.iowa.gov/CBA/start.asp. These registration formalities enable your business to withhold taxes from employees. Then, the farm will collect one-time paperwork for each employee and setup a system to track hours so the farmer can quickly and easily prepare additional paperwork. If the farm anticipates needing workers' compensation insurance, the farm should call their insurance agent for further information on how to prepare. These are the minimum preparatory steps. See http://www.extension.iastate.edu/agdm/wholefarm/html/c6-58.html for more information, as well as Farm Commons' Tax and Paperwork Checklist for Hiring a Farm Employee in Iowa.

After an employee is hired, what are the farm's ongoing requirements?
The following is a general outline of the ongoing paperwork considerations for employees regarding tax filings. This list is NOT exhaustive and other laws may have other ongoing paperwork requirements. Consult your Small Business Development office for more information on maintaining accurate accounting practices and complying with the many other requirements expected of every employer.

Farmers will need to withhold taxes from each pay period. IRS Publication 51: Agricultural Employer's Tax Guide for further information on how to calculate withholding. Withholdings are then deposited through an online system called the Electronic Federal Tax Payment System with the acronym EFTPS.

Farms will need to file periodic tax returns (monthly, quarterly, or annually depending on the size of the business), annual tax returns, and annual information on their employees' wages. Both the federal government and the state of Iowa have tax and reporting requirements. The table below is a brief guide to the paperwork requirements. However, farmers should consult IRS Publication 51: Agricultural Employer's Tax Guide for further information on federal taxes and the Farmer's Guide to Iowa Taxes at http://www.iowa.gov/tax/educate/78507.html#wh

W-2, Copies A & D - Employer's copies Deliver Copy A to Social Security Administration by March 31st, File Copy D for your records

State Income Tax Withholding Quarterly or Monthly Farms must file each quarter even if they don't have any money withheld to deposit. File quarterly with a total of $0.00 if no funds are withheld to deposit.

65-5300 (07-10) - Employer's Contribution & Payroll Report Quarterly or Monthly Only required if gross taxable wages paid in any calendar quarter during the current or preceding calendar year exceeds $20,000 or the farm employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year

More Information

Other Resources
Tax and Paperwork Checklist for Hiring an Ag Employee in Iowa:

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Farm Employment FAQ - Practical Farmers of Iowa

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Frequently Asked Questions on the rights and responsibilities for Iowa farm workers and farm employers. FAQ developed with Farm Commons. The information below does not replace legal advice of a qualified attorney, insurance coverage advice of an underwriter, or ...

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Beginning Farmers and Ranchers | Farmers.gov

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Beginning Farmers and Ranchers | Farmers.gov

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Learn how USDA can help new farmers with a variety of programs and services like how to start a farm, farm loans, crop insurance, conservation, and disaster assistance.

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Managed Grazing Systems and Fencing for Distribution of Beef

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Intensively managed grazing systems can be a win-win situation, increasing productivity and profits for the operator and improving water quality for the citizens of Missouri. Like all production enterprises, livestock grazing has the potential to produce waste materials that can pollute water. The e…

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https://www.extension.iastate.edu/agdm/livestock/html/b1-75.html

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Walk-through of using Google Maps to Measure Distance

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Walk-through of using Google Maps to Measure Distance

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Really helpful when estimating your fencing costs!

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Curious on how many feet your future fencing project will be? `Google Maps Measure Distance Tool is perfect for the job. Just follow our steps!

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The Fencing Budgets Calculator was developed as a decision aid tool to help Tennessee landowners estimating the cost of fencing their land. The calculator will assist in developing budgets for barbed wire, woven wire, HT fixed knot, HT electric, and poly fence.

Note Regarding Security Settings: The decision-aid file contains macros (examples: buttons for printing and moving from the intro page to the calculator) which are required for the calculator to function properly. Security settings for Microsoft Office or Excel may give you warnings when you open the file regarding the safety of enabling the macros. This will especially be true if your security settings are set to high or very high. The macros in the file must be enabled for the calculator to function properly.

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Fencing Budgets Calculator | Department of Agricultural and Resource Economics

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The Fencing Budgets Calculator was developed as a decision aid tool to help Tennessee landowners estimating the cost of fencing their land. The calculator will assist in developing budgets for barbed wire, woven wire, HT fixed knot, HT electric, and poly fence.

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As the desire for locally grown, niche marketed beef grows, many people are considering feeding cattle for personal consumptions or local sale. Here are some things to consider before you get into finishing beef cattle:

Raising your own beef will not guarantee that it will be less expensive than the grocery store. Costs include purchasing the animal, feed, medicine, bedding, harvest or slaughter expenses, labor, and others. Homegrown beef has the potential to be profitable in a well-managed situation.

Do you have the facilities available to raise cattle, store feed, and transport them to the butcher?

What is your feeding strategy? What equipment will you need and will obtaining equipment prove to be profitable? Where will you be sourcing feed-stuffs?

Do you the equipment to produce and store forages?

What is your marketing plan? Grass-finished vs Grain-finished?

Let's break down a couple of these things so you can decide what will work best on your operation.

Facilities/Housing

One of the most important initial considerations should be whether you have the facility or the financial capabilities to build/buy. Finishing cattle on pasture will be different than finishing cattle in an indoor confinement type setting. Pastured animals may take longer than one growing season to finish, thus harvested feeds would need to be fed during forage dormancy. Continuing to house cattle on pasture during forage dormancy may lead to mud, trampled pasture and reduction of the grass stand. Stocking rate while on pasture is also a factor that needs to be considered. Overstocked pastures can lead to influx of weeds, little forage regrowth, and insufficient available forages for the number of cattle. Appropriate stocking rates vary based on location and forage species. In Illinois, an approximate stocking rate is one cow per two acres.

Facility options for grain-finished operations are vaster than grass-finished. Producers could choose confinement housing, dry-lot housing, crop residue, or a grass-lot in a grain-finishing system. In confinement type operations, it is important to have a manure management plan, to keep waterers free of mud/manure, to have available working areas, and pens to keep sick/quarantined animals.

Feeding

Grain-fed or grass-fed? Despite the never-ending debate, there is room for both within the industry. However, the feeding strategy and ultimately the finished product will be different.

Grass-finished cattle have lower rates of gain, which are heavily dependent on forage quality and weather, with lighter finishing weights compared to grain-finished. Forage species will affect rates of gain, so seeding pastures to grass species more desirable for cattle performance is worthwhile. Stocking rates within a pasture will also affect rate of gain. Implementing a rotational grazing system would be beneficial to those pursuing a grass-fed market. Obviously, grass-finished cattle will require more grazing area and better grazing management. Into the winter months, high quality hay is needed to meet the requirement of the animal. Grass-finished cattle may also require concentrate feeds to reach finishing weights. In most situations, soybean hulls or haylage are recognized as an acceptable roughage and therefore obtain to regulations. If you are marketing your beef under certain label claims, it is important to investigate the requirements to abide by labels and certifications. Grass-finished cattle are generally leaner, which can be both a positive and a negative. Leaner meat will generally have less flavor but is often desired for less fat content, so marketing to a health-conscious consumer can allow for premium prices. Since these cattle will finish at a lighter weight with a different flavor profile, it is important to sell them at a premium to a more niche market to be profitable.

On the flip side, grain-finished cattle have greater rates of gain, higher finishing weights, better dressing percentages, and are generally regarded as more tender and juicier.

Managing a large-scale feeding operation will be different than a smaller system. Feedstuffs, feeding equipment, and management will differ. Consider these ideas for a more local-based market:

Consult with a nutritionist to develop a balanced ration of protein, mineral, and vitamins.

Transition between diets slowly, over several weeks. Switching diets too fast can cause bloat or can take calves off feed which will increase waist, decrease efficiency, and ultimately limit profit margins.

Roughages are important for rumen health. Don't cut them out of the ration. Instead feed them selectively. In the final finishing phase, roughages should make up between 7-20% of the diet. The more roughage included, the less risk of acidosis. However, high roughage diets will result in longer finishing times. Roughages are included in the ration or offered in a free-choice setting, depending on the feeding strategy.

As calves grow, they require more feed. Bunk management and observation is necessary.

When building a ration, consider nutrient composition, available feedstuffs, cost, and storage requirements. Different rations will be more or less profitable depending on location and feed prices. Work with a nutritionist to adjust rations to best fit your environment and goals. For cattle exceeding 1000 lbs. with a rate of gain at 3 lbs. daily, here is a sample finishing diet:

70-75% cracked corn

7-10% dry distiller's grain

1-2% Commercial Supplement

15-20% Hay

Cattle Selection

When selecting cattle for your operation, it is important to consider how well they will fit into your environment as well as where you are buying cattle from.

Here's a quick breakdown of popular beef breeds in the Midwest:

Angus: known for carcass characteristics, feed efficiency, low maintenance

Hereford: fattening ability, docility

Simmental: larger framed, heavy muscled, lean

Charolais: larger framed, heavy muscled, lean.

Limousin: larger framed, lean, high dressing percentage

Beef on Dairy cross: large framed, very lean, light muscled, longer days on feed

The breed you select for your operation should directly correlate to your environment and the goals of your operation. In a grain-fed program, work to maximize carcass weight while maintaining quality. An Angus crossed with a continental breed (Charolais, Simmental, Limousin) would be a good choice in this situation for an Illinois producer. In a grass-fed operation, cattle with small to medium build with high carcass qualities will help to maximize efficiency.

Buying cattle:

If you are running a breeding herd, retaining ownership of calves into your feedlot system is an option. For those who don't have a breeding herd, or would rather purchase calves in, there are a few options.

Direct from producer: Buying calves directly from a producer will allow a clearer genetic background. This will also be beneficial from a health standpoint to better understand the vaccination protocol and health status of the calves.

From a sale barn: Calves from a sale barn can come at a discounted price, however it is harder to form an individual connection with the producer to be able to understand the genetic and health background of the cattle. Inconsistent health can be a challenge when sourcing cattle from a wide variety of producers.

Marketing

Marketing can be one of the greatest tools for beef producers to add value to their cattle. There are endless marketing options that will vary in effectiveness depending on your location and the extent to which they are marketed. This article is helpful when working to build a marketing strategy and to understanding how to be profitable. Niche Beef Production (ucanr.edu)

To Conclude:

Feedlot systems require planning and management. Build your knowledge, access your goals, make a plan, and work to execute that plan.

Understand your market.

Develop a facility/housing strategy.

Work with a nutritionist to formulate a diet.

Select cattle that are ideal in your environment.

Market your cattle strategically.

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Backyard Beef: A guide to small-scale feeding

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As the desire for locally grown, niche marketed beef grows, many people are considering feeding cattle for personal consumptions or local sale. Here are some things to consider before you get into finishing beef cattle: Raising your own beef will not guarantee that it will be less expensive than the grocery store.

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Decision Tools - Agriculture & Business Management

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Management of a farm or ranch operation requires daily decision-making, or more precisely, determining which alternative will most likely allow the agricultural producer to achieve their goals and be as profitable as possible. The tools listed below are excel spreadsheets, designed to help make the decision-making process easier.