Farm Business Transition

By John Berry, Penn State Extension Educator, Lehigh County

Many of the farmers I work for have a tough time with the process of getting their business into the hands of the next owner/manager. The reasons for this are many; no time, unwilling to think about mortality, not aware of what should happen, and uncertainty about losing control are some of the primary reasons often heard. Because of the intimate relationship between most farms and the families that work and live there; the unknowns around a broad family conversation on business transition can be a bit scary.

 

When is the best time to start the discussion?

 

If succession planning has been on your mind remember there are just six weeks left in 2016 and some holiday celebrations coming up. This could be a great time for a discussion with family regarding farm transition and succession planning. It's great that you're thinking about succession planning, but remember, conversations about farm succession are conducted from a business standpoint. Do you really want to turn your Thanksgiving table into a business conference table?  Do you want to take your time around the Christmas tree and turn it into a water cooler discussion on strategic planning?

 

While it may be tempting to start these discussions while family is home and together, make sure you're keeping family time for family and setting aside a special time for holding a family business meeting. If it needs to be connected to a holiday to have family present, think about sending out a formal invitation and agenda to the meeting ahead of the holiday, with a set time and date for the meeting later in the holiday weekend.

 

When should I start planning?

 

You may have heard the old Chinese proverb. “The best time to plant a tree was 20 years ago, the second bet time is now.” That same principal can be applied to succession planning.  It really is NEVER too early to start planning for the future, but it can become too late to start!  Almost everyone knows a family torn apart by disagreements following the passing of a loved one. This often happens because they never found the time to put their plans down on paper.

 

You can never tell what tomorrow will bring. Starting your succession plan early in your agriculture career can help you save money and can make sure your business continues as you see fit in the case of retirement, death or disability.  If you create a plan early in your career, it does not mean you are done.  A good succession plan is reviewed and improved often to make sure it still fits with the wants and needs of everyone involved in the operation.

 

Shared Kitchen Incubators - A Great Place to Start Your Business

By Winifred McGee, Penn State Extension Educator, Dauphin County

A new year signals the time to think about new enterprises – exploring how, and where, to begin profiting from a “family favorite” recipe. The 2011 Food Safety Modernization Act, and subsequent FDA rules, have made it a bit more challenging (but not impossible) to start a food business, in that even if state regulations allow a food product to be made in an inspected home kitchen (in Pennsylvania, referred to as a “limited food establishment”), when the food goes regional or national, FDA requires that all products be made in a commercial kitchen.

For the start-up food venture, a shared kitchen offers an affordable, safe, legal place to launch. Instead of investing a large amount of money in designing and equipping your kitchen, a modest fee allows access an established commercial kitchen on a timeslot basis.

Loading the food dehydrator at Field to Fork Ag Incubator
Photo by Katie Kinka, Southern Alleghenies Planning & Development Commission

As you begin to search, you will learn that not all shared kitchens are created equally – and knowing the type of assistance you need makes a world of difference when searching for the “right place.” For instance, you may just need a shared use kitchen – that is, a place that provides space and equipment to multiple food business owners for the commercial preparation and handling of food that will be sold. This type of kitchen will likely be accessed very affordably, because no other services beside kitchen access will be offered. In a fast-changing environment like food business, you will have to keep up on food code and the current acceptable methods of production, as well as making, marketing and selling your product if you select a shared use kitchen – but many food businesses have gotten their start in just such a place.



The next step up is a shared kitchen incubator – at which you will not only access commercial equipment and facilities, but also benefit from “supportive services,” that apply to food production and business management. There will be an on-site manager who can help you navigate the complex network of regulation, packaging and distribution to have the best opportunity for a profitable enterprise. Because of the increased level of service, the per-hour rate will probably be higher than that of a shared use kitchen – but depending on the complexity of product and marketplace, this can be money well-spent.



You may also determine the need for small-scale co-packing – allowing trained workers who are already familiar with commercial equipment and recipe conversions to make valuable contributions to your venture. One such facility here in Pennsylvania is the “Field to Fork Agricultural Incubator,” which opened its doors at the Greater Johnstown Career and Technology Center in Johnstown Pennsylvania in September 2016. Joining “Field to Fork” not only means accessing the CTC’s commercial kitchen, but allows you to enlist the knowledge and skills of culinary arts students who are working towards their ProStart Certification, and are available to work side by side with kitchen tenants. As with all shared kitchens, “Field to Fork” is focused on specific targeted groups – local value-added producers with smaller crop yields and food entrepreneurs who need a place to start. Products that can be most easily created in this kitchen are non-organic, jarred fruits and vegetables, dried foods, and baked goods. During its pilot phase, use of the kitchen will be available on a first come, first serve basis. Dry storage and cold storage are also available for a monthly fee. 



In short, shared kitchen incubators do provide the environment necessary for food businesses to start, grow and succeed – by offering not only the right equipment and environment but many services that simplify and economically provide just what is needed in today’s food industry.

Climate Change and Fiscal Sustainability: Conservation and Risk Management Programs

by HeatherManzo, Penn State Extension Educator, Allegheny County

This article is the last in a four-part series for Passages discussing how the agricultural community can better understand and address a changing climate. PASA, in partnership with Penn State, was awarded a U.S. EPA Environmental Justice grant (#96335501) for educational programs related to climate change and agriculture. This grant supports this Passages series, several field days and webinars, and pre-conference tracks at the recent 25^th Farming for the Future conference. Join us as we explore Farming in a Changing Climate.

This last article in the series highlights the fiscal sustainability of farms by providing an overview of crop insurance, conservation and risk management programs available through the USDA.

 

The Farm Bill is renewed every five years in order to reflect the changing needs of the agricultural community. This cycle includes specialty funding for small, new, low resourced, organic, minority and urban farms₁. USDA is comprised of many agencies, which are interested in reaching these non-traditional types of agricultural operations in addition to traditional large-scale agriculture and commodity operations. The goal of this article is provide an overview the agencies and allocations available to farming operations of all sizes and styles.

Predicting weather has always been a part of the delicate dance of farming and the seasons. It is true that working with nature via sustainable farming practices such as soil building, contouring and cover crops can help increase the resiliency of a farm in the face of a changing climate. However, farm income can be lost by unforeseen natural disasters such as severe storms; prolonged weather events like drought can reduce yields by destroying crops, land and infrastructure. Farms are a business and crops are the inventory and that value must be protected in order to allow for fiscal survival when natural events occur. This is the premise for crop insurance, which is just one program available to support fiscal sustainability.

Climate related weather events are costly, and on the rise, so much so that the National Oceanic and Atmospheric Administration (NOAA) created a searchable online database known as ‘The Billion Dollar Club’₂. This resource tracks weather and climate related events such as super storms, winter storms, floods, and wildfires that cause US$1 Billion or more in damage, of which there were ten in 2015 alone, and three of those occurred in Pennsylvania. These ten events caused 155 deaths and economic devastation in many sectors. Climate change scientists at Columbia University’s Earth Institute and Tufts University are currently analyzing data to understand what agriculture looks like in Pennsylvania under various climate change models, in order to understand what opportunities and interventions farmers may consider as part of the USDA Agriculture and Food Research Initiative (AFRI) funded Enhancing Food Security in the Northeast (EFSNE) grant₃.

A recent example of crop damage attributable to weather fluctuations which will likely hit home for many readers is the damage fruit trees suffered in April 2016. A warm March was followed by hard frost and freeze in some areas of the state. NOAA classified the 2015-2016 winter as the warmest on record in the lower 48 states with the average temperature across the US 4.6°F higher than the average temperature recorded in the last 100 years₄. It is too early to tell the extent of the yield and related economic impacts will be from this weather event. According to early estimates of yield impact from the Penn State Fruit Research and Extension Center in Biglerville, Adams County, fruit growers are expecting 85-90 percent of a full crop of apples, 75-80 percent of a full crop of peaches and 50 percent of a full crop of tart cherries₅. Damage was most significant to apricots, plums and pears due to early dormancy breaks, with peaches and apples fairing slightly better₆.

According to the 2012 PA Ag Census, agriculture in PA is valued at US$7.4 Billion annually, and $160 Million of that comes from tree products including fruit and nuts₇. The economic and social impact of all agricultural efforts shapes the fabric of our communities and the landscape that Pennsylvanians call home. This is recognized by the federal government via allocations programs designed to protect the industry, primarily through the United States Department of Agriculture (USDA). Farms and businesses wanting to apply for federal grants and contracts simply need to obtain System for Award Management (SAM) and Duns & Bradstreet (DUNS) numbers, which are free via a short form and take a couple of weeks to process. Let’s examine some of those programs.

Overview of USDA Agencies and Selected Programs

The United States Department of Agriculture (USDA) is the federal executive body responsible for developing and implementing policy and funding programs related to forestry, agriculture, food and farming. The following departments are under their purview; note this is not an exhaustive list:

Natural Resources Conservation Service (NRCS)

The Natural Resources Conservation Service provides technical and financial assistance to farmers by working with them on the ground on projects that focus on conservation and the use of technology to improve farm systems. NRCS’s mission is “helping people help the land.” Staff is available to visit farms, get to know the farm and provide consulting on operations as well as suggest appropriate programs. NRCS receives its budget through an allocation system from the federal government to each state. In Pennsylvania, NRCS has regional offices which cover every county, and staff welcomes new relationships with farms and a variety of other land holders.

NRCS programs often operate on an ‘in kind’ basis, meaning that the farmer matches the award amount with equipment, labor and other non-monetary contributions to the project. The farm then receives payments according to an NRCS schedule at agreed upon project milestones. There are many programs available, and when a match is not found with NRCS, there are often resources available through the Farm Service Agency (FSA), and farmers and landholders are encouraged to think of these sister agencies when developing the support network for their business and to be proactive about relationship building. Some NCRS programs of note include:

Agricultural Management Assistance (AMA)

The goal of this program is to reduce risk in production by voluntarily addressing water management, water quality and erosion control by incorporating conservation into farming operations. Farms can have sales of over $1,000, and an implementation cost of 75 percent up to $50,000.

Conservation Stewardship Program (CSP)

This program assists land owners to maintain existing conservation efforts and adopt new conservation efforts including: water, energy, soil, air and habitat. Payments are performance based; contracts are five years with a $200k cap.

Conservation Innovation Grants (CIG)

As the name implies, CIG support development and adoption of innovative approaches and technology to improve conservation of agricultural land.  This grant is flexible in that any project proposal that ties back to that goal of improving conservation may be considered. EQIP is a funding vehicle under the CIG umbrella. Funding levels up to $75k per project with a 50/50 match, therefore a total project of $150k can be accepted.

Environmental Quality Incentives Program (EQIP)

EQIP is commonly known as the high tunnel grant’ because it commonly supports high tunnel projects. The mission of this grant is more expansive that that—its goal is for farms to adopt technology practices and planning to increase growing efficiency through improving wate and air quality, reducing erosion and sedimentation,  and improving created habitat. This grant has ten year contracts, and special incentives for beginning, socially disadvantaged and limited resource farmers. For these categories of growers, up to 50 percent advance on project materials/services is possible to get the project off of the ground.

Farm Service Agency (FSA)

Often, if a match is not found with NRCS, the Farm Service Agency is the next stop. FSA programs are designed to help small farmers to access funds through its microloan and other programs.

 

Rural Development (RD)

The role of USDA Rural Development is to improve the economy and quality of life in rural communities through economic development, loans, grants and technical assistance for community empowerment projects. The Value Added Producer Grant Program (VAPG), available annually and usually announced in spring, is a funding option for those looking to add value to farm products, expand marketing, processing and creating new market opportunities for value-added products are goals. Beginning, small and socially disadvantaged farmers and ranchers may receive priority.

Planning grants are up to $75,000 and working capital grants are up to $250,000. The deadlines are July 1, 2016 for paper applications;  June 24, 2016 for electronic applications

 

RMA

The Risk Management Agency administrates and operates many programs, including all crop insurance programs through the Federal Crop Insurance Corporation (FCIC). Crop insurance plans are sold through private insurance agencies in the private sector. The mission of RMA is to strengthen the economic stability of agricultural producers and rural communities through risk management tools.

There are newer crop insurance programs for small, organic, diversified and non-traditional ag production including aquaculture and mushrooms. Insurance for these types of growers have benefits such as: exemption from administrative fees, reduced out-of-pocket premium expenses, additional subsidy, increase in the substitute yield adjustment, and production history from farming operation they have been involved in previously. An overview of several program in these categories follows:

Organic Crop Insurance

This program provides coverage for certified organic acreage as well as transitional acreage, including any crop grown using organic farming practices.

Whole-Farm Revenue Protection

This is a comprehensive insurance program providing a safety net for the entire farm, and was first available in 2015. The program is crop neutral; anything is covered and is available in every county in the U.S. The policy covers levels up to 85 percent of revenue and can be combined with single crop policies.

Noninsured Crop Disaster Assistance Program (NAP)

Crops considered uninsurable under other programs are covered under NAP when low yields, loss of inventory, or prevented planting occur due to natural disasters, excessive heat, insect infestation and plant disease.

Noninsured Crop Disaster Assistance Program (NAP) for Underserved Farmers

Beginning, socially disadvantaged and limited resource farms, and those farms that are organic and sell at direct market prices are able to receive higher coverage levels than under the regular NAP program. The goal is to level the playing field for organic and direct market farmers who have been farming less than 10 years. Additionally the $250 service fee is waived, and policy holders enjoy a 50 percent premium reduction.

 

The business of farming can be just as challenging as difficult weather conditions or pest problems. It can be worthwhile to occasionally think of the farm in business terms. Those crops, animals and farm products are the revenue generator necessary to allow a farm to continue from one season to the next. Build relationships with staff of the mentioned USDA offices and Extension to create a network of professionals dedicated to protecting and preserving your farm.

Sources:

1.2014 Farm Bill http://www.usda.gov/wps/portal/usda/usdahome?navid=farmbill

2. NOAA’s Billion Dollar Weather and Climate Disasters: Table of Events http://www.ncdc.noaa.gov/billions/events

3. USDA AFRI EFSNE - http://agsci.psu.edu/research/food-security/research-projects/production

4. NOAA Winter 2015-2016 weather analysis - http://www.ncdc.noaa.gov/sotc/summary-info/national/201602

5. Penn State Fruit Times and email with FREC staff: http://extension.psu.edu/plants/tree-fruit/news/2016/assessing-fruit-bud-survival-and-crop-potential

6. Lancaster Farming: http://extension.psu.edu/plants/tree-fruit/news/2016/assessing-fruit-bud-survival-and-crop-potential

7. PA Ag Census: http://www.agcensus.usda.gov/Publications/2012/Online_Resources/Rankings_of_Market_Value/Pennsylvania/

Managing Cash Flow for Your Farm

Cash flow statements are very useful – they may very well be the first place where a farmer will spot a trend in business performance that may benefit or harm the operation in the long run. Cash flow statements show the business’s liquidity, the ability to pay expenses as they come due.

In accounting, there are both active statements and reflective statements.

Active Statements

The cash flow statement, a record of the dollars that came into and went out of the farm, is considered an “active” statement because it is completed multiple times throughout the year. The cash flow statement should be regularly compared to projected cash flow budgets, estimated cash in-flows and out-flows that will occur in the business in an upcoming period. This helps the farm manager to identify how the cash in-flows and out-flows that were expected differed from or mirrored what actually occurred.

Reflective Statements

In comparison to the cash flow statement, the balance sheet and the income statement are “reflective” statements because they are completed on one particular day of the year in which the farm manager is able to see how the business has progressed. With careful management of cash, the farmer has power over his or her business dealings. Business owners and agricultural producers in particular need to take time to document all sources and uses of cash within a business to keep their “finger on the pulse” of their operation.

Updating Cash Flow Statements

To be effective, farmers should regularly update their cash flow statements. What does “regularly” mean? The answer to this question varies based on whether you have a very seasonal operation (such as selling Christmas trees) or a business that receives cash throughout the year (such as a dairy farm). It is recommended that new financial managers begin with a cash flow statement that has monthly intervals. Although there is a bit of work keeping the statement current, having monthly statements provides an early warning of cash deficits or surpluses. By using the cash flow statement and the cash flow budget the farmer can make well informed management decisions such as when to purchase new equipment, or when to open a line of credit to cover cash deficit periods.


After keeping track on a monthly basis for a while, you may find that quarterly or six-month cash flow statements and budgets meet your need because the funds don’t change that much month-to-month. On the other hand, if you grow and direct market fresh vegetables for example, you may need to use a weekly cash flow statement through the summer, because of fluctuations in the variety of produce sold and the demand for each item throughout the growing season.


Cash flow statements and budgets can be created for the entire farm operation or for a specific enterprise, or profit center on the farm. For example, a dairy farm might have several enterprises in addition to dairy production, such as custom work, hay sales, and maple syrup production. Analyzing a specific enterprise allows the farm manager to determine whether an enterprise costs more than it generates in revenue. An enterprise budget helps the farm manager determine whether a new enterprise might be feasible.

Article adapted from Farm $en$e©, Farm Management Tools for Financial Success.

Farm $en$e© farm financial management courses are offered every fall and winter in multiple locations in Pennsylvania. Contact Juliette Enfield or Miguel Saviroff  for more information.
The Farm $en$e© text will be available for purchase through Penn State Agricultural Publications in November 2016.

Contact Information

Juliette Enfield

Extension Educator

Email: jse15@psu.edu

Phone: 814-563-9388

Miguel Antonio Saviroff, MS

Extension Educator

Email: mas60@psu.edu

Phone: 814-445-8911 x144

Developing a Tasting Room Loyalty Program Part 1

By Dr Kathy Kelley--Professor of Horticultural Marketing and Business Management and Dana Ollendyke-- Extension Associate

If you are a winery owner, you most likely have some type of “case club” or “customer loyalty” program in place, or you have thought about implementing one at your tasting room. Whatever you call it, the intent is probably the same – you try to reward customers who purchase large quantities of wine from you in the form of a discount and/or invitation to special events.

A customer purchase of multiple bottles of wine (photo credit Efired/ Dollar Photo Club).

If crafted and administered correctly, these programs benefit the customer and the tasting room, but sometimes they do not provide the desired return on investment. This blog series will help you take a look at your current (or potential) loyalty program and decide whether your program needs to be tweaked or radically changed in order to be more successful.

What should a loyalty program do for your business? Simply put, your loyalty program should help increase your tasting room’s profits. A research paper written by Sports Loyalty International, a customer loyalty program developer, outlines some of the general benefits of creating a loyalty program.

By enrolling in a loyalty program, members: 

• may be less likely to “defect” and purchase from another winery
• could increase their spending over time 
• and could be more responsive to promotions.

These factors could reduce your marketing costs since you will have information about their preferences and habits, allowing for a more targeted promotional effort. 

Additionally, customers may shift spending to “higher margin products”, and members could refer your program to friends and family based on their positive experience.

The next post in this series will focus on your business's goals for the loyalty program.

What Activities and Events Might Drive Customers to Your Tasting Room? Part 1

By Dr Kathy Kelley--Professor of Horticultural Marketing and Business Management, Abigail Miller-- Master's student in the Penn State Plant Sciences Department, and Dana Ollendyke-- Extension Associate


In 2014, researchers at Penn State, Rutgers, Cornell, and New York University collaborated on a wine marketing study funded by the USDA. Data were collected through a 15-minute Internet survey (22-24 October 2014). Participants residing in New Jersey, New York, and Pennsylvania were screened for not being a member of the wine industry, being at least 21 years old, and for having purchased and drank wine at least once within the previous year. A total of 977 participants qualified and completed the survey.

With approximately “81% of [Pennsylvania wine] sold directly from wineries” (http://bit.ly/1LygxFl), one of the issues we investigated in last year’s survey was what a winery could offer to encourage winery tasting room visits and increase the frequency of these visits.  While, in some cases, we investigated broad categories and factors, we have plans to delve deeper in an upcoming survey to see what could motivate consumers to visit a winery tasting room and barriers survey participants feel prevents them from visiting.

Interest in winery activities and events

Today’s visitors do much more than just taste the wine at a tasting room; rather, there are opportunities to tour the vineyard and the wine-making facility, participate in classes, attend festivals, and much more (http://bit.ly/1JtOEHK).

But should a winery go through the process of planning, implementing, and evaluating an event or activity?

Data from a study conducted by researchers at Texas A&M University and Sam Houston University showed that, for Texas wineries, there was “a positive correlation between wineries that offer services such as tasting rooms and tours and gross sales… [thus] the more tourism services a winery offers, the higher their potential for gross sales” (http://bit.ly/1NSBgRx),

OK, so, with all that could be offered – what activities and/or events might garner the greatest consumer interest?

Though not an exhaustive list, we focused on activities and events that were more commonly found when we investigated wineries online and also based on popular press articles. As an example, an event that has been offered at some wineries and restaurants is a “Paint Nite,” during which attendees paint a certain picture by following an instructor while enjoying wine or other alcoholic beverages (for example, https://www.paintnite.com/). We were interested in learning if this activity appealed to our participants, and, if so, how much. Below is a table with data pertaining to the level of interest our participants expressed based on the seven activities/events that we tested.




As you can see, “tasting events,” “tour of the winery and vineyard,” and “food vendors from local restaurants,” were the three activities that had the highest level of interest (86.3%, 83.0%, and 78.9%, respectively), and are often interdependent of each other.

It makes sense that if someone is going to visit a winery tasting room that they would be interested in tasting the wine, but there are opportunities to offer “tasting events” that go a beyond the norm – perhaps they could be based on a theme, focus on your new release, be an exclusive tasting with limited seating, or your winery tasting room could be one of the stops on a local food tour.

And, although separate categories in our survey, winery tastings and tours are a natural pairing. Most likely you already offer a tour and subsequent tasting, but can you take your standard tour and split it up into several? The goal of this strategy would be to encourage even more frequent visits.

Château Élan Winery & Resort located in Atlanta, GA offers six different tour options, five are private and one is offered on a regular basis. While all six tours end in a tasting, each is unique with a different focus (http://www.chateauelan.com). The private tours focuses on each of the following: 1) the vat room, 2) the wine making process, 3) the vineyard, 4) an experience with the wine maker, and 5) a session on other Georgia food products.





More data on winery activities and events will be discussed in part 2 of this series.




Additional Research and Thesis Advisory Team Members:


• Jeffrey Hyde, Professor, Agricultural Economics, The Pennsylvania State University


• Denise Gardener, Extension Enologist, Department of Food Science, The Pennsylvania State University


• Brad Rickard, Assistant Professor, Charles H. Dyson School of Applied Economics and Management, Cornell University


• Ramu Govindasamy, Professor, Department of Agricultural, Food and Resource Economics, Rutgers University


• Karl Storchmann, Clinical Professor, Economics Department, New York University; Managing Editor, Journal of Wine Economics


• Rob Crassweller, Professor, Professor of Tree Fruit, The Pennsylvania State


University



The project “Developing Wine Marketing Strategies for the Mid-Atlantic Region” (GRANT 11091317) is being funded by a USDA Federal-State Marketing Improvement Program grant, whose goal is “to assist in exploring new market opportunities for U.S. food and agricultural products and to encourage research and innovation aimed at improving the efficiency and performance of the marketing system.” For more information about the program, visit http://www.ams.usda.gov.

What is Cause Marketing? Part 3

By Dr Kathy Kelley, Professor of Horticultural Marketing and Business Management, and Dana Ollendyke, Extension Associate


This post will continue to outline some of the important topics to consider in deciding if a cause marketing plan is right for your business. (Post 1 and Post 2 in this series have been published in previous weeks.)

Promote that you are also accepting donations

In addition to selling a product or two where the proceeds go directly to support the cause, let customers know that they can also donate funds to the cause.  You, as the business owner, may assume that consumers would automatically understand that there is more than one way to support a cause; however, it may not occur to consumers that they can make a donation in place of making a purchase.

Involve customers in selecting the cause

Two separate strategies can be used to involve consumers in selecting the cause:

• ask consumers to nominate a cause and then vote on the one that will receive all the donations.
• allow consumers to choose from a group of causes that would receive the donations.

This second technique is what ONEHOPE Wine has embraced. The brand donates half of all profits to a list of causes including: Cure Alzheimer’s Disease, Support Our Veterans, Save Our Planet, and several others. Each wine is associated with a specific cause. In Image 1, you can see that half of the profits for the 2009 Santa Barbara Reserve Chardonnay helps fund research to find a cure for Alzheimer's Disease.

Image 1.  Bottle of OneHope wine that benefits research to find a cure for Alzheimer's Disease.

Involve employees

Finally, employees should be asked to do more than just collect donations or indicate what purchases support the cause.  Involve them in the process of selecting the cause and associated administration needed to support events or activities.  The more employees support the effort, the more likely they are to alert customers that your business is involved in collecting donations to help those in difficult situations.

As with any new marketing program, it is very important to DO YOUR RESEARCH to determine if this is the right path for your business. 

Internet Tools to Help You Learn About New Markets, Part 4

By Dr Kathy Kelley, Professor of Horticultural Marketing and Business Management, and Dana Ollendyke, Extension Associate

In our previous post, we discussed using Easy Analytic Software Inc (EASI), which allows users to more easily search Census data.  This post, which will be the final one in this series, will focus on Geographic Information Systems (GIS) reports from the Small Business Development Center (SBDC).

These reports are free of charge to prospective or existing small business owners who are receiving business-counseling services from their local SBDC Advisor.

Some of the reports include:

• Competition maps—These maps show the location of individual competitors in relation to a small business location.
• Competitor lists—These lists can include a competitor’s company name, location, number of employees at each location, whether the location is a competitor’s single location or branch, estimated annual sales volume, the competitor’s NAICS (North American Industry Classification System) and SIC (Standard Industrial Classification) codes and a latitude and longitude coordinate.
• Consumer expenditure comparison reports—These reports help clients evaluate the relative demand for their chosen industry within their local market area, county, state, and the nation.
• Drive time reports—The time it takes to travel to a local store or restaurant can be a significant factor in defining the target market for a small business. These highly detailed maps show the geographic boundaries of a small business’ target market customized to the amount of time considered acceptable to the small business’ clientele (Image 1).

Image 1. A sample Drive Time Map showing the market area that can reach a small business destination in Lakewood, CA within 10 minutes. (Contact your local SBDC for a customized map.)

Certainly, this blog series doesn’t discuss all that is needed to better understand consumers’ attitudes, behaviors, etc. towards wine based on their race and ethnicity. It does, however, provide some tools that are useful in gathering data and learning about the population of racial and ethnic groups you could serve in your community.

There are other components such as the consumer’s level of “acculturation,” which is the “cultural modification of an individual, group, or people by adapting or borrowing traits from another culture” (http://bit.ly/1xEH2NK). To demonstrate this point, we will use an example from Kathy’s family. Her sister-in-law was born in South Korea and came to the U.S. 15 years ago. As she has become more ingrained in U.S. society, some of her habits and preferences have become more “mainstream” American. Not only can food choices, etc. change over time, but as someone becomes “fully acculturated,” their language preference can change from their native language to English (http://bit.ly/1IxluaM) which could impact how you choose to promote your wine.

Another component is to search the Internet for “wine and Asian culture,” “wine and Chinese culture,” etc. to learn about wine style preferences and how wine is consumed (e.g. wine and Coke or wine cocktails). Also, don’t forget to investigate what culturally significant holidays these consumers celebrate.

Regardless, conducting adequate research is crucial when developing a realistic marketing plan. By finding out as much as possible about viable consumers, you will have a much better chance of understanding their needs and wants and hopefully gaining them as customers.

Internet Tools to Help You Learn About New Markets, Part 3

By Dr Kathy Kelley, Professor of Horticultural Marketing and Business Management, and Dana Ollendyke, Extension Associate


In our previous post, we discussed using the US Census Bureau website to obtain demographic data for your specific target market location.  Unfortunately, the U.S. Census data can be overwhelming to search through (we admit that it took us a while to find, figure out how to develop the tables, and make changes), so you may want to access other tools that make the Census data more “user friendly.” Easy Analytic Software Inc (EASI) is an example of one of the tools that we often use to obtain consumer demographic information. EASI provides both paid and free options that allow users to more easily search Census data (instructions for navigating to the free tools can be found here).

Image 1 shows how we created a “Free Complete Report & Analysis.” There are many report options (like population by ethnic race, age, sex, etc.) and this one will give you more information that you may need, but you’ll see in Image 2 that it provides a nice breakdown of population by country of origin. We often use the EASI Ring Study as it provides data based on radiuses you select (we used 10, 30, and 50 miles) from an address you provide (we used a Harrisburg, PA address for this example).

Image 1. Criteria used (address and three radiuses) to create a Free Complete Report & Analysis. Click the “Locate!” button after you enter the address in box 1. Then click “Create Site Study” to access the data you requested.

Image 2. Data at the top of this report provides descriptive statistics of the population density, population, and households by year (including projected growth) within 10, 30, and 50 miles from the address used. The comprehensive report also provides population data of those who were of Asian Indian, Bangladeshi, Cambodian, etc. ancestry and who resided within the three radiuses (Image 3).

Image 3. Continuation of report in Image 2.  Population data of those who were of Asian Indian, Bangladeshi, Cambodian, etc. ancestry and who resided within the three radiuses.

These are just a few examples of the many reports EASI can generate for you.  Check out the website to see more detailed demographic information.  Our next tool for learning about new markets is the Geographic Informations Systems (GIS) tool offered by the SBDC which will be discussed in the next post.

Hiring the Right Web Developer for Your Business's Website, Part 2

My last post focused on some of the terminology used to describe different types of web developers including website designer, website programmer, graphic designer, and internet marketing consultant.  It is important to know what each of these people does and how they can help you build a great site for your business.  (Hopefully you can find a web developer who has skills in more than one of these job descriptions.)

As I discussed before, the article "How to Choose a Web Designer" by Karyn Greenstreet has some great tips on hiring the right web developer for your agricultural business website.  Below, I've highlighted some of these great pointers.

• Pay attention to how much they ask you about your business. They should want to get to know you and your business intimately. How else can they design a site that reflects you, your brand, and your business, unless they spend time to get to know you?

• Look at sites they've designed to see if you like their style. Is there a certain feel to ALL their sites, or are they flexible in their designs?

• Ask them if they did the actual graphic and layout design of the site, or if they just did the programming. If they don't do the graphic work themselves, can they recommend a graphic artist?

• Ask them what they know about internet marketing and search engine optimization (SEO). Be sure that they're creating a site for you that meets your larger marketing and business goals. (A pretty site is no good to you unless it generates revenue and prospects.)

• Ask the designer for their fees and what is the estimated cost for the site you want. They may not be able to give you a good estimate until you discuss content and features of the site. Expect to pay between $60 - $125 an hour, depending on their skill and their location. A quality website with good graphic design and layout will cost around $2,500 - $5,000 for a simple business website. If you add a blog, newsletter, shopping cart, autoresponders, email address setup, SEO, membership site, or logo design (or if you have many page on your site), expect the price to be higher.

More tips to follow in Part 3!

Mid-Atlantic Consumer Demand for Ethnic Produce is on the Rise

Why is demand increasing for ethnic produce in the mid-Atlantic?  U.S. Census data indicates New York City, Washington DC, and Philadelphia are among the top ten cities that are majority-minority in population, meaning ethnic minorities account for more than half of the population (Census 2010). U.S. Census data also shows that the mainstream population only increased by 9.7% from 2000 to 2010 as compared to 43% for Asians and 43% for Hispanics (Census 2000, 2010). With this increase in population, there certainly would be an increased demand for ethnic produce and therefore more economic opportunities for producers, wholesalers, and retailers who grow and sell these products.  

To address this increased demand for ethnic produce, researchers at Penn State, Rutgers, the University of Florida, and the University of Massachusetts along with industry members (including farmers, retailers, wholesalers, distributors, etc) gathered earlier this year to discuss research data and trends related to ethnic crops in the mid-Atlantic at the 2014 Ethnic Greens and Herbs Workshop.  One of the projects developed by the research team was the Worldcrops.org website.  The World Crops site provides information about vegetables and herbs that can be grown in the northeastern United States. The emphasis is on crops that are popular among ethnic groups living here and can be grown here.  The site is organized by country. 

Another helpful aspect of the site is the glossary which is available in English to Spanish and vice versa.  A user can easily find the English or Spanish name for a particular type of produce as well as the genus and species of more than 350 entries.  Example 1 shows that an avocado is called an “aguacate” (Spanish), “pagua” (Mexican), or “pahua” (Mexican) and the genus and species is Persea americana.

Example 1.  Screenshot of English to Spanish glossary on Worldcrops.org.

Visitors can also find ethnic crops based on the country of origin.  In the “Go to region” box on the main page, visitors can click on a region and then select a country.  In example 2, Brazil is shown.  The language spoken is Portuguese and some of the main crops used in this country are listed including cilantro, maxixe, and okra. 

Example 2.  Screenshot of "Go to region" listing for Brazil on Worldcrops.org.

If you are an ag entrepreneur and are interested in exploring ethnic crop opportunities, it's imperative that you DO YOUR RESEARCH as you would with trying any new opportunity for your business.  Good luck!