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Wednesday, May 28, 2014

Season Extension Possibilities for Your Fruit And Vegetable Crops

by Lynn Kime, Sr. Extension Associate, Dept. of Agricultural Economics, Sociology, and Education

Selling produce and small fruits before or after traditionally produced local crops usually commands higher prices.  Think of what you pay for produce in the store during the "off-season" and what you pay for the same things during the traditional, local "in-season."  You almost always pay higher prices early and later, or when produce is delivered from non-local sources.  Capturing these higher prices with season extension can be something to strive for with your own operation.  Your customers will appreciate having these products from a local source instead of purchasing products from non-local sources.

It may be too late to consider season extension for your small fruit and vegetable operation for this spring, however, planning now for fall season extension may still pay dividends for this crop year.  There are several methods to extend your growing and marketing seasons for this year.  These include row covers, high tunnels, and greenhouses.

Strawberries growing under row covers
Row covers are traditionally used during the early spring months to "push" the plants to flowers and produce earlier than without row covers.  These may be the least expensive and easiest to use since they are installed in the field but are usually removed during the morning hours to allow the soil to warm.  If used for strawberries for example, you may be able to begin harvest one to three weeks ahead of producers not using this method, allowing you to market earlier and capture the early season market.  Prices can be as much as 10% to 20% higher which usually offsets the additional costs.

High tunnels can be heated or not heated.  If using a heating system, you will be able to plant earlier than without additional heat and remain in production later in the season.  The earlier you plant, the earlier you can produce and market.  Tomatoes and peppers are common crops produced in high tunnels for spring and fall, but you can produce these crops and greens later into fall and capture the locally grown, late season prices for your production.  For example, early season tomatoes may sell for $15-$40 per box as opposed to $10-$20 per box during periods when other producers are harvesting field grown tomatoes.
Peppers growing in a high tunnel

I know one grower who produces strawberries into September and October in his high tunnel.  I asked him what price he can expect for locally grown strawberries in October.  His answer was "Whatever I want."  This marketing strategy has worked very well for his operation.

Greenhouses may be used to start plants in early spring to reduce the cost of purchasing plants on the open market.  You can also produce more plants than you need for your operation and sell the excess to other producers or your customers at farmers' markets.
Crops growing in a greenhouse

Greenhouses will also extend the harvest through the fall and beyond as long as you can produce the crop(s) and still remain profitable even when including heating costs.  You will need to track all costs and keep your budgets up to date to be sure you still maintain the profit margin you desire.

I know this is a busy time of year, but you can still have a tunnel installed in time for fall use.  You should determine if you can market the additional production and what prices you may receive.  The research may expose an additional marketing opportunity for your operation and result in additional income and profit for the year.

Tuesday, May 20, 2014

Gear up for Summer Tourism Season! Local Food Growers Capture New Markets

by Carla Snyder, Extension Educator, Adams Co.

Food-based tourism is more popular than ever.  Exemplified by TV shows like Anthony Bourdain's No Reservations and Parts Unknown, celebrity chefs are taking to the tourism circuit around the globe.  Great Britain's Alan Coxon, a multi-award winning chef and TV show host, was named the ambassador of food this month, meaning he will be promoting Great Britain's food, beverage, and tourism industry as a whole.

Known by many names, gastronomic tourism is a measured food trend across the globe.  Once focused solely on the wine industry, food-based tourism, that is travel planning focused on educational, cultural or experiential activities surrounding the local food of each visited region, is now a significant trend in the local food sector.  According to Quan and Wang, when data was just beginning to be gathered, over one-third of all travel dollars were devoted to food purchases.  For many travelers, culinary based tourism extends much further from the plate.  It includes attendance at local food festivals, tours of local farms, a visit to the farmers' market and private dining experiences at many of these locations.  According to 2012 World Tourism Organization data, eating-related activities are the second most favorite activity of all tourists visiting the U.S.  This translates into a substantial opportunity for agri-tourism farms as well as those selling directly to the public or local foods-based restaurants.

Local farmers are cashing in on this trend in a big way, but with one-third of all tourism spending floating around waiting to be captured, the market hardly seems saturated.  If you happen to be located near an established tourism epicenter, like Gettysburg, PA, transitioning to this trend is easy.  One small, diversified family farm is offering their first on-farm supper in June.  Rettland Farms has paired up with local chef Josh Fidler, his 154 Supper Club, and chef Sam Strock to offer a night under the stars.  Seats were opened first to their community support agriculture members, those who are already local supporters of the farm, and then to visitors at large.  Participants to this exclusive dinner will be treated to a tasting menu of six local food dishes sure to fill their bellies and provide ample conversational topics for an educational and fun evening on the farm - the makings of a perfect tourism experience.

In New York, already a famed destination for wine-focused tourism, growers are taking advantage of the new hard cider trend.  Cider Week, an event brand that has spread across the country celebrates what they deem "America's oldest libation."  With events from New York to Washington in the months of October and November 2014, this tourist-marketed experience offers full-day celebrations gathering apple growers and hard cider makers from each region to celebrate this hip, ultra-local trend.  Events offer demonstrations, tastings, local food pairings and socializing space for foodie tourists and locals alike.

For agricultural producers, marketing to capture tourism dollars may be easier than you think.  Simple changes such as telling your customers where you grow and how you sell your products may make all the difference.  Producers have noticed an upswing in restaurant sales after talking to shoppers at their farmers' market stands about which restaurants in town buy their products.  This enables the foodie driven shopper to not only visit your stand while they take in the scene at the farmers' market but suggests a restaurant for them to visit while in town that serves your locally produced goods.  When it comes to tourism, word of mouth says it all.  Be sure to encourage customers that buy directly from you as well as businesses that purchase your product to promote their use of your local products on websites like tripadvisor.com and yelp.com.  One local food comment can go a long way to entice the right food-focused tourist.

Wednesday, May 14, 2014

Choosing a Legal Structure for Your Agricultural Business

by Heather Mikulas, Extension Educator, Allegheny Co.

Choosing a legal structure for your business is one of those tasks that can feel overwhelming to the small farm or value-added business enterprise.  The reasons for researching, selecting, and creating your business's legal framework are many.  This guide is meant to serve as an overview and a starting point for a conversation with your accountant and attorney, with the end goal of selecting a structure which shields the primary assets of the owner from any type of potential litigation or liability claim that may occur from business activities.


Sole Proprietorship
Hanging a shingle is an easy, fast way to begin making business transactions.  This straightforward approach automatically puts your business in the category of a sole proprietorship.  The business is you, and you are the business for all intents and purposes.  Nothing has to be done to set up this arrangement, unless the business is operating under a fictitious name.  The concern for the business owner is that there is no legal framework to shield the business owner's individual assets from those of the business.

Partnership
A partnership is a single company owned by two or more people, and may need to be registered with the State (Pennsylvania does not require registration by General Partnerships).  Each partner contributes to all aspects of the business's management plan, financials, and share of profits and losses, and should include an exit or dissolution plan.  Profits or losses from the partnership pass through to the named partners at tax time, rather than having the business file taxes.

Limited Liability Corporation (LLC)
A very common structure small businesses use is a LLC, which stands for Limited Liability Corporation.  It provides the liability protection of a corporation with the tax structure of a partnership, while providing for operational flexibility.

Non-Profit
Non-profit status, or incorporating as a 501(c)3 is unusual for agricultural enterprises, but not unheard of.  Farms with a mission focused on food justice or education, for example, are those that may qualify for this status.  Surplus revenue must be used to achieve the mission of the business, rather than be dispersed as profit.

Cooperative
The cooperative is owned by those who use its services, and profits are distributed to the user-owners.  There is a board and members have voting rights.  This is common in agriculture, where high capital infrastructure such as packing, storage, trucks, or processing facilities can be purchased, used, and collectively owned by cooperative members to the benefit of all.  If there are surplus profits, coop members are taxed once on the profits and not at the corporate level.

C Corporation
The C corporation is in and of itself a legal entity liable for its potential debts.  This is a complex structure which is usually reserved for large companies with many employees, and is not common in the family farm or business model.

S Corporation
Profits, and therefore taxes, can pass through the S corporation to the individual shareholders.  It is possible to create an S Corp sub-chapter on an LLC.  As in the C corporation, this structure is not common with farms and small food businesses.

In closing, it is wise for the small agriculture business owner to be educated about business structures and liability implications in order to protect primary assets.  A small amount of planning and investment in engaging professionals where needed can protect the future of the business and its owners.

Additional Resources
Ag Risk Center at University of Minnesota
Penn State University Ag Law Center
Pennsylvania Department of Revenue
U.S. Small Business Administration
UC Davis Small Farm Center
USDA Risk Management

Friday, May 9, 2014

Are you Using a Mobile Payment System? Part II: Best Practices and Cyber Liability Insurance

Last week we introduced some of the basic policies and procedures a business owner should implement to keep their customers’ data and their business safe (Are You Using a Mobile Payment System? Part 1: Keeping Customer Data Safe).  We will finish the discussion this week by talking about being compliant and about insurance you may want to consider to further protect your business.

One more employee consideration

Aside from informing employees about how to handle, use, and store mobile devices it may be prudent to include background checks during the applicant screening and hiring process (bit.ly/1ftpQaA), if you do not already.  Some pre-hire background checks include requesting credit and criminal records (http://1.usa.gov/1uvVxV9).  Businesses that ask employees to handle payments, regardless if they are mobile device-based, have the right to require such background checks (http://1.usa.gov/1o36hbK).

Strategy for PCI compliancy

We introduced the concept of the PCI (Payment Card Industry) Security Standards Council and being compliant with their standards, but what does the entail?  The following table summarizes the responsibilities of the small business owner and the six goals that comprise “security best practices” (http://bit.ly/Oz1G1j).
Source: PCI Security Standards Council 
The PCI also has resources for small businesses, which they consider to be more vulnerable to security breaches than large companies, and several short videos to further demonstrate how retailers can protect consumer data (http://bit.ly/1rZWa5e).

What cyber liability insurance can offer

You may already have a comprehensive insurance policy or riders that protect your business incase of theft, fire, disaster, and even when essentials employee are unable to perform their duties.  As mobile payment systems and threats to these systems have evolved so has the insurance industry.  Cyber liability insurance is one such addition and “is designed to protect businesses” from:

Lawsuit damages
Lawsuit defense costs
Breach notice costs
Data restoration costs
Breach extortion costs (http://bit.ly/1iUntyb)

The following site includes a list of questions that can help you assess your level of risk and issues that should be discussed with an insurance agent (http://bit.ly/1rZK0sX).  Just a few of those listed include:

“What security controls can you put into place that will reduce the premium?
What is expected of you to reduce or limit the risks?
What and how big [of] a difference to your future premiums will a claim make?
Do all portable media/computing devices need to be encrypted?
Are malicious acts by employees covered?”

This source further suggests asking potential insurers if you, the small business owner, will have to participate in post claim tasks (e.g. alerting customers about the breach) or if they provide “a point of contact” to oversee all processes after a claim is initiated.

What might cyber liability insurance cost?

Of course costs vary by type of business, geographical market, and factors that impact your general policy (e.g. number of policies held, number of claims within a certain period) but according to one source “a cyber add-on to an existing liability policy might cost $300 a year while a separate policy could cost $1,000 or several multiples of that” (http://bit.ly/Sxrgqv).  Other sources state that policy premiums can be much higher (http://bit.ly/1shcr7Q).  Having cyber liability insurance may “pay off” even if a claim is never filled.  According to once source: “Cyber insurance also can help boost your business by giving customers and business partners more confidence in you” (http://bit.ly/Sxrgqv).

After a breach is detected

So, what do you do when you experience a security breach?  Insurers and IT security experts stress notifying the authorities and your insurance company as soon as a breach is expected. Also, finding and repairing the breach quickly is crucial, as well as keeping records of all procedures that were followed after the incident (in addition to having a good record keeping system to begin with; http://bit.ly/1uwoAb3).

Though no one ever wants to experience this type of disaster, taking precautions, being diligent in your practices, and being prepared is a must.  As our use and dependence on technology grows, with all the associated benefits and advantages such systems provide, it can only be assumed that business owners will need to be aware of possible security situations of which they will need to be aware.  

Kathy Kelley is a professor of horticultural marketing in the Department of Plant Science
Robert C. Goodling, Jr. is an extension associate in the Department of Animal Science

Thursday, May 1, 2014

Are You Using a Mobile Payment System? Part 1: Keeping Customer Data Safe

We have blogged a bit about mobile payment systems and the benefits they offer consumers and small businesses (Why You Might Want to Consider Offering Mobile Payments); however, what does a small business owner need to consider before implementing a system or when they switch mobile payment companies?  As with every business decision, the owner needs to do some research and make sure that the proper guidelines and procedures are followed to ensure a good experience for all. 

This week’s blog, the first of a two-part series, will focus on some of the security considerations pertaining to the device itself.  Next week’s blog will discuss measures, including insurance, small business owners can take to protect their businesses should the mobile device go missing or worse.  

What is at stake?

You very well could experience a security breach that (though not restricted to using a mobile device to collect payments but applicable to every method you use to collect cardholder data) with consequences that include:
An example of a mobile payment card reader.  Wikipedia.org
  • cost of reissuing new payment cards,
  • fines,
  • termination of ability to accept payment cards, and
  • "going out of business" (bit.ly/1iwnFUd).  
Still, even with these penalties, many businesses have been able to process credit cards with mobile payment systems without experiencing any problems.

Why is there so much concern about compromised data or a security breach associated with mobile devices? 

As you can imagine, and maybe it has happened to you, it is easier to misplace a smartphone or other mobile device compared to a register or computer that is either tethered to something or too heavy or bulky to just carry off without anyone noticing.

A safeguard that is suggested includes securely storing the device, in a safe for example, when not in use or fastening the device to a heavy, bulky item (such as a desk or counter) with a combination lock and cable, much as you would a laptop or desktop.  Concern is further based on “traditional security controls such as [anti-virus], firewalls, and encryption [not having] reached the level of maturity needed in the mobile space” (bit.ly/1ftLIm3). 

How can a small business owner using a mobile payment system protect customer data and their business?

Let’s first start with the device that you will use to collect payments.  A list of equipment and systems can be found here (Why Mobile Payment Systems Might Work for Your Business), but you’ll also need to consider device ownership, who can use the device, and (in certain instances) whether an employee can use the device for more than just collecting payments. 

If you are not already familiar with the PCI (Payment Card Industry) Security Standards Council, they work “to educated stakeholders (merchants, processors, financial institutes, and similar) about the PCI Security Standards…and promotes the awareness of the need for payment data security to the public” (www.pcisecuritystandards.org), in essence “keeping your customer’s payment card data secure.” bit.ly/1ix8PN3.  Retailers who accept credit cards are required to be compliant with the standards (next week’s blog will include an overview on how to be complaint).

Device ownership: BYOD vs COPE


The PCI strongly discourages what is referred to as BYOD (bring your own device), which involves employees using their own mobile device to process consumer credit card payments.  Instead the device should be owned by the business, regardless if it is used solely for “payment and acceptance for transaction processing” or for both business and personal tasks (bit.ly/1hayiqv).

Some companies do buy corporate-owned personally enabled (COPE) devices which they distribute to managers and other employees who process payments at remote locations.  In such instances these businesses permit employees to use the device for both business and personal use.  This allows the business to install and update software that might not necessarily be appropriate for an employee-owned device (bit.ly/1iCHYyj).  Updates can be pushed to devices and the business can seize the device when needed.  This particular arrangement is not unreasonable as employees are often provided with desktops, laptops, and tablets to use in their homes and when traveling. 

Basic mobile device security policies

Some of the more recognized security policies that you should implement:

•    Don’t store any sensitive cardholder data on the mobile device, or on any electronic equipment for that matter.  If you are using the smartphone or tablet and/or a mobile app to save customers’ addresses, birthdates, etc. for the purpose of keeping track of purchases (i.e. loyalty program) take steps to encrypt the data and only collect and store what is absolutely necessary. 

•    Be selective about what apps you download to the device and question why apps might need access to contacts, calendars, location services, etc. on the device.
Source: Pixabay.com

•    Require each employee who needs to have access to mobile devices to have a unique username and password.

•    Employees should be trained on how to properly use the device and owners should educate them on how to maintain device security. 

•    Don’t “jailbreak” or “root” your devices (iPhone, iPad, iPod touch, Android phone or tablets).  Jailbreaking or rooting a device allows the owner to download “additional applications, extensions, and themes” not available at the Apple App Store (bit.ly/1luD6Mb); however, Apple states on its website that doing could: shorten battery live, allow for security vulnerabilities, cause apps to crash, prevent future software updates, and similar (bit.ly/1iDCiEq).

•    Update your operating software.  Often you will get a notification but check the setting on each device often in case a push notification doesn’t go through. 

•    Keep apps up-to-date, too.

•    Beware of phishing emails (emails from individuals posing as legitimate companies with links to malicious software) and SMS texts.  Don’t click on any hyperlinks or URLs that look suspicious. 

All of these procedures, and other applicable best practices, should be included in your employee handbook and operations manual.  Just as you would expect your employees to adhere to a code of conduct when dealing with customers you should expect the same for those who have access to business-owned mobile devices.

No matter what type of device, mobile or stationary, that is used to collect payments it is the retailer’s responsibility to ensure that customer payments processed properly and that only the appropriate data is stored – and that it is stored correctly.  In next week’s blog we will continue the discussing and help you further ensure that you are operating a safe mobile payment system and have a policy in place for any issues that might occur with either a missing device or compromised cardholder data.

Kathy Kelley is a professor of horticultural marketing in the Department of Plant Science
Robert C. Goodling, Jr. is an extension associate in the Department of Animal Science