Research First, Act Second

by Michelle Kowalewski, Penn State Extension Educator, Susquehanna Co.

I recently received a call from a local dairy producer who is currently in business with his father.  His father plans to retire from the business in several years and the son would like to explore options with beef cattle production.  The reason for his call was to find our more information about certified organic.  The producer was very unfamiliar with the process to become a certified organic operation, but this is where his research began - by asking the question!  Whether you are already in an agribusiness or just looking to develop a business, it's important to research your industry.  Ask yourself the following questions:

• What products and/or services should I consider?
• What will it take to start this business enterprise?
• What is the current economic landscape for this business?
• Who will be my customers?
• What are my options for reaching my customers?
• What potential revenues can I expect?

Once you have considered these questions it's time to start your research.  Take a broad look at the industry (agriculture) in your area and then narrow in on the specific product you'd like to produce or service you'd like to provide.  Try looking at past, current, and future trends and try to understand how your product can fit in the marketplace.  Sources for your research can include:

• Trade publications related to your area of interest
• Visit federal, state, and local agricultural websites
• Educational classes or webinars
• Case studies

Attend educational workshops to learn about your area of interest

Perhaps one of the best methods of research is to conduct a farmer interview.  There is no better way to learn then from firsthand experience.  Talk to producers who are willing to share their experiences, both good and bad, is invaluable.  To find a farmer to interview, think of people you know or get names of potential producers from service providers in your area.  Once you've identified the person(s) you'd like to interview, come up with a list of questions and call to see when they would be available.  Try to pick a time during their "slow" season.  It's best to talk with multiple farmers - all will have different opinions and this will help you weigh out your decisions on what enterprise might be best for you.

Proper market research will help assure your that your preliminary market plan is addressing everything you need to do to prepare, promote, and sell your products.

From Battlefield to Farmland

Once military veterans retire from serving our country, they may find it hard to find a job that fits their skill set.  An organization called The Farmer Veteran Coalition (FVC) is working to help join unemployed veterans with farming, an industry that is in desperate need of new people entering the field (pardon the pun!).  As those in the farming industry know, starting to farm is not easy.  The costs of land, time, equipment, and labor as well as the shortage of land are all barriers to entering the industry.

This matchup of veteran and farmer seems to be a good fit thinks Tia Christopher, the chief of staff of FVC.  She says, "Even in these rough economic times, the agriculture field offers many viable career options. Job opportunities include everything from shipping and managing to vegetable farms and vineyards. Along with the economic opportunities, working with the land and animals has proven to help veterans heal from the trauma of war. I like to think that after living through some pretty traumatic experiences it's cathartic to watch things grow."

FVC is helping veterans to start farming in rural as well as urban farm settings.  Currently, the organization has a network of 600+ veterans in 47 states.  To help veterans establish a farm, the FVC has a grant program that has given over $200,000.

Christopher also says, “The future of FVC is very exciting. This month we launched our used farm equipment exchange and donation program (FEED), which will match unused farm equipment and implements with deserving Farmer Veterans in Iowa and California (our pilot states). We are also working on FVC chapters across the country. Lastly – two of our main focuses going forward are working with women veterans in agriculture and in financial literacy for beginning Farmer Veterans."

To read more about the FVC program, please see the article "The Farmer Veteran Coalition".  

As a farmer, do you think this program will help bring new people to the farming industry?  What kind of information is critical for the FVC to teach veterans before starting a farm?  Would you be interested in being a mentor for this program?

Real-life Marketing Decisions

by John Berry, Penn State Extension Educator, Lehigh Co.

Row crop farmers are challenged by several sources of risk.  These sources of risk include production, price, finance, legal, environmental, health, and government policy.  The focus here is marketing risk.  "Market Risk" is translated into English as - the risk that prices will fluctuate.  We plant a crop expecting a harvest and from our perspective - a rising commodity price is good.  Declining prices, prices below break-even, and price uncertainty are often viewed as not good. This is price risk.

Farmers have several tools available for use as choices when contemplating managing price risk.  The most common tools are cash grain contracts, futures contracts and option contracts.  The most significant and basic opportunity for managing price risk is the proper use of a revenue-based crop insurance product.  The concept behind managing price risk is to establish a "safety net."  This safety net is intended to minimize the potential for financial loss.  One important point to recognize is that minimizing the potential for loss usually comes at a cost.  We must pay for our price risk management tools.  Many farmers combine tools to achieve a balanced approach to price risk management.

To help farmers more deeply understand grain markets and perhaps even put together a grain marketing plan, Penn State Cooperative Extension and Allendale, Inc. partnered to produce a recorded webinar.  Using materials developed by Extension in Pennsylvania and Minnesota, as well as commercial products from Allendale, the webinar is intended to enhance farmers' grain marketing understanding and skills.

Check out this timely archived video soon!

Optimizing Your Farm Machinery Costs

Do you know how much it costs to operate each piece of farm equipment you own?  It's important to know the per acre operating cost of your equipment so you can accurately determine your cost of production.  For example, to grow an acre of corn, you would need to determine the costs associated with seed, fertilizer, water, labor, and machinery and then divide by the number of acres you have.  With this value, you can thus set the sale price of your crops to ensure a profit.  The video below describes why knowing your machinery costs is so important.

Obviously, you want to use your equipment as efficiently as possible.  Using equipment that is old and outdated can be just as cost-prohibitive as using expensive, over-sized equipment that is unnecessary for your acreage.  A tool like a machinery cost calculator (like this Iowa State University "Estimating Farm Machinery Costs" calculator found under the Machinery heading) can help determine your cost per acre.  Calculators like these can help you determine fixed and variable costs, depreciation, and cost benchmarks.

A machinery cost calculator is also helpful in the decision making process of buying equipment.  Is buying new, used, or leasing your best option?  You might also determine that a new machine just isn't in your budget, but it is a necessary tool in your farm operation.  You can use your machinery cost calculator to find out if other options like sharing, renting, or custom work are feasible.


As a farm owner, have you calculated your machinery costs lately?  When buying new equipment, have you used this calculation?  Have you had to re-evaluate how you use certain machines because the cost per acre was higher than you expected?

Convenience is King for Female Shoppers (part 2)

In my post from 2 weeks ago, I wrote about a National Grocer's Association and Supermarket Guru survey concerning where and how consumers shop.  There was so much good info in the research that I couldn't fit it all into one post!

As the survey respondents reported, an important issue for female shoppers is getting in and out of the store in a short amount of time.  Over 40% of respondents said that checkout time was their biggest concern when shopping.  To remedy this issue, shoppers reported that they preferred expanding current technologies instead of trying new ones.  For instance, blink fast technology (5.2%) and walk through RFID (9%) ranked lower than adding more self checkouts (17.4%).  Not surprisingly, the most popular solution to checkout times for respondents (49.5%) was adding more open registers.

Female shopper using self-checkout.

Researchers also studied how much shoppers were spending and how often.  In 2011, 14% spent $136 or more per week on groceries.  That figure keeps increasing-- from 21.4% in 2012 to 22.1% in 2013.  Also, over 60% of shoppers only visit the grocery once (32.4%) or twice (31.2%) per week, while less than a quarter of shoppers visit the grocery store three (17.2%) or four (6.6%) times per week.

Combining this knowledge with that of my previous post, retailers should re-evaluate the image and experience their store portrays.  Since spending less time at the store is so important to shoppers (as well as only wanting to visit once or twice per week), it's important for retailers to provide a streamlined approach to shopping while still addressing the top concerns of shoppers--top quality perishables, easy-to-read shelf tags, a clean and neat atmosphere, and a safe area surrounding the store.

As a food retailer, is checkout time a big concern for your customers?  How often do customers visit per week?  What are your customers' biggest concerns when shopping?

Does Your Business's Color Scheme Have Any Bearing on Customer Spending?

Over the weekend, I read a very interesting article in Real Simple magazine titled "How Color Affects Your Spending".  Although the article doesn't go into too much detail, the experts consulted (including marketing professors, a retail-strategy firm founder, and the executive director of the Pantone Color Institute) do give some interesting information about consumer perceptions of color choices.  Are your colors attracting customers to spend or driving them away?  Below is a description of how a few popular colors are perceived by customers.

Black-  Symbolizes sophistication and can make lower-end products seem more high-end.

Blue-  Symbolizes trust and dependability.  In a 2003 study published in the Journal of Business Research, customers were 15% more likely to return to a business with a blue color scheme as opposed to a business with an orange color scheme.

Orange-  Symbolizes fairness and affordability.  Usually used by stores where low prices are one of their top priorities.

Red-  Symbolizes an alarm or stop sign, so customers may be more wary to spend.

Yellow-  Symbolizes energy and increases appetite.  This color is popular with fast-food restaurants who want you to make a last-minute stop as you drive by.

What does your business's color scheme mean to your customers?  Have you recently changed color schemes?  If so, have you seen a change in sales?  How will this information help you to design signage in your store?

Convenience is King for Female Grocery Shoppers

The National Grocer’s Association and Supermarket Guru recently conducted a survey (which is discussed in the article "How Women Shop") concerning where and how consumers shop.  Not surprisingly, females are the main shoppers (75.7%) and their biggest concerns when grocery shopping are "accurate shelf tags (74.6%), clean and neat surroundings (83.7%), and a safe environment outside the store (61.2%)."

Woman and her son grocery shopping.

Neat, easy-to-read shelf tags.

This information is very telling for retailers.  Are your shelf tags neat, easy-to-read, and accurate?  Is the inside as well as the outside of the store neat and tidy?  Is the parking lot well-lit and safe for your customers?  Your answers to these questions should all be "YES"!  If not, resolve these issues immediately and observe how customers react.  







Another important issue for survey respondents was the quality of their perishable items.  Items that were seen as "very important":

High quality, well-stocked produce.

• high quality produce (90%)
• high quality meats (71.4%)
• high quality seafood (45.5%)
• high quality bakery (32.4%)

Also in regard to product quality, 82.7% of survey respondents wanted ample time in product dating to extend shelf life of their purchases.

As a food retailer, how do these survey results compare to your own observations in your store?  Are you surprised by any of the results?  What changes will you make in your store to better suit these concerns?

As a consumer, are your shopping needs similar to the survey results?  What else can retailers do to attract you?

Stay tuned for another post in the near future with more results from this survey!