Ag Opportunities * Vol 13, No 2 * July-August 2002 Pricing Your Product by Mary Peabody (Women’s Agricultural Network Vol. 1, Issue 2 ) There’s probably nothing more stressful than setting prices for the first time. "What if it’s too high?" "What if it’s not enough?" While there are some tips and techniques that can help you establish fair prices, there are no absolutes. What is a "fair" price? It’s a price that reimburses you for the labor and inputs plus a little for profit while still providing good value to the customer. The first step in establishing a fair price is to understand what you have invested in a product. These production expenses can be tricky to identify. Expenses are generally divided into two categories: fixed and variable. The fixed costs are those which stay the same in spite of your production levels. Examples of fixed costs include: rent or mortgage payments; taxes, insurance; equipment payments. Variable costs are those costs that vary with the production level. Examples include seeds, feed, hourly labor, and packaging. Start by tracking your expenses. Keep a log of where you spend your time. Track equipment hours-what equipment did you use and for how long? Keep a log of all expenditures from ordering the seed to displaying the product at the market to the bag you send it home in. The unit price of your products should include: the variable costs of producing it; a portion of the fixed expenses consumed and some profit. Failing to add in the profit means you’ll never do more than recoup your costs. Profit allows you to make money that you can invest in your business or for your retirement. Here are a few tips to help with pricing: Do... * Know what the market ranges are for the products you produce. What are the lows and highs during the season for sellers in your market area? * Adjust your prices frequently to reflect reality. * Calculate Break-even Costs to determine how many units you’ll need to sell. * Be honest, fair, and ethical in your pricing strategies. * Set your prices as though your livelihood depends on it-even it doesn’t. Don‘t... * Undercut prices to gain customers. * Sell substandard product at premium prices. * Rely on catalog or supermarket prices as a guide for you. They generally reflect volume discounting that you probably can’t afford to offer. * Apologize for your price or your product (if it’s not good enough to sell, then don’t sell it). * Give away food free just to get rid of it (if you have more than you can use then donate it to a local food pantry). When you give food away you send a message that food has no value. Wild Fruits Could Prove Berry Fruitful (Missouri Ruralist, Feb 2002 ) Some wild Missouri fruits and berries could become viable crops, if cultivated, says Andrew Thomas, a Univ of MO researcher. He is conducting experiments at MU Southwest Research Center near Mount Vernon to determine whether elderberries and pawpaws — both native Missouri plants — can be profitably produced and processed into value-added products. Thomas is growing elderberries at two locations in southwest MO, comparing 33 different cultivars. Most existing commercial elderberry cultivars come from NY and Canada, he says, but "there’s no doubt we can find material more suited to cultivation here." The researchers hope to release cultivars suited to Missouri. Part of the elderberry study examines pruning management. "When you have to prune out the old wood every winter, it’s very labor intensive." Thomas says, "But you can brush-hog the plant to the ground, and it will grow back and bear fruit." While, selective pruning is likely to result in higher yields, is it worth it, he says. "Maybe the best thing is to brush-hog it every two years. That’s what we want to find out." Thomas believes there is "a growing market for this fruit. There are a growing number of wineries that use it." There’s also a jelly, jam and syrup market. "You make your jelly, put a label on it that says something about the Ozarks, and you could probably sell it in Branson for about $5 a jar. If the right people tap into this market, it could really take off." Pawpaw is the largest fruit native to North America. Thomas says, "Paw-paw trees grow all over Missouri, especially Southern Missouri." Although many wild pawpaws produce good fruit," as with most native wild fruit trees, there is tremendous room for horticultural improvement." Thomas is starting a study of pawpaw cultivars at the Southwest Center, the State Fruit Experiment Station in Mountain Grove and at an Oklahoma location. Co-op Sells at Farmers' Markets Five growers who rent land from the New England Small Farm Institute in Belchertown, Massachusetts are winding up their third season of marketing together. After several efforts at cooperative marketing that weren’t satisfactory, they think they have found a winning strategy. The five are selling their produce cooperatively at farmers’ markets, after giving up on a cooperative CSA and farm stand. "It’s working out great," said Jeremy Barker-Plotkin, one of the vegetable growers in the coop, which is called Lampson Brook Farms. "As we learn to work with each other better, each of us is able to produce the crops we like best." The arrangement also allows the farmers to attend only one farmers’ market a week, while selling at three. Plus, the farmers believe that having a market stand stocked abundantly with the produce from five farms attracts more customers and increase sales over what each farmer would make if they were selling individually. "On weeks we haven’t had our full display, we don’t get as many people over to the stand," Jeremy said. The coop has two vegetable growers, a cut flower grower, an egg producer and a greenhouse grower who specializes in red bell peppers and passionflower plants. They attend the markets in Cambridge, Amherst and Sturbridge. Two big issues face growers who are marketing together: allocating production, and dividing work. As far as production goes, the two vegetable growers stay away from the red bell peppers and cut flowers, because others in the group are already producing them. But those two vegetable growers have had to negotiate which crops each of them will grow. The first season, one did early crops, and the other did later crops, which worked because the early-crop farmer was busy with a wedding and honeymoon in late summer and the late-crop grower was out of the country in spring. Once they were both available to work all season, they had to fine-tune the division. They tried alternating succession plantings, but that didn’t work because many crops came on at the same time anyway and then they would have to negotiate who got to sell what. Finally they decided to specialize in the crops they like to grow. One grower likes to grow with a two-row planter and cultivator, whereas the other likes to grow intensively with hand tools, so that has pointed them to different crops. This year, they overlapped only on potatoes, garlic and winter squash. Dividing the marketing work load has also been a challenge. Two of the members don’t work at all in marketing and the others put in varying work hours. So how to compensate each member fairly? Jeremy thinks they have come up with a good system, after several false starts. Now they take 15% of each grower’s sales and save it in the coop’s account. They reserve a small amount for start-up expenses the following year, and then distribute the rest to the worker members in proportion to the number of hours they worked. So each member gets paid for the produce he or she contributed, and receives a bonus based on how many hours of work they gave to the coop. The five members arrived on the land rented by the Small Farm Institute around the same time. A CSA that has previously operated from the farm "had some better years and some not-so-great years," Jeremy said. "The problem was not being able to attract a solid group of members. We’re a town over from Amherst (home to the Univ of MA), in a more conservative town, and we hadn’t had the easy sell a lot of the CSAs in Amherst had." The five growers abandoned the pure CSA model and instead set up a farm market at the farm. They sold "Farm Dollars" to people to use at the farm stand, but also welcomed cash sales from neighbors. In addition to their own products, they also sold meat, honey and other items from growers not in their marketing coop. But the farm stand was not a success, primarily because it was not in a well-traveled location. Once the coop had sold the Farm Dollars, the growers felt obligated to keep it open even though they weren’t making any money. When they switched to the farmers’ markets this year, they didn’t sell Farm Dollars for fear they would again be obligated if the arrangement didn’t work out. Now that they have met with success, they may resume sales of Farm Dollars that can be redeemed at the farmers’ markets. Spray Weeds With Vinegar? Some home gardeners already use vinegar as a herbicide, and some garden stores sell vinegar pesticides. But no one has tested it scientifically until now. Agricultural Research Service scientists offer the first scientific evidence that it may be a potent weed killer that is inexpensive and environmentally safe—perfect for organic farmers. ARS researchers tested vinegar on major weeds—common lamb’s-quarters, giant foxtail, velvetleaf, smooth pigweed and Canada thistle—in greenhouse and field studies. They hand-sprayed the weeds with various solutions of vinegar, uniformly coating the leaves. The researchers found that 5- and 10-percent concentrations killed the weeds during their first two weeks of life. Older plants required higher concentrations of vinegar to kill them. At the higher concentrations, vinegar had an 85- to 100- percent kill rate at all growth stages. A bottle of household vinegar is about a 5-percent concentration. Canada thistle, one of the most tenacious weeds in the world, proved the most susceptible; the 5-percent concentration had a 100-percent kill rate of the perennial’s top growth. The 20-percent concentration can do this in about 2 hours. Spot spraying of cornfields with 20 percent vinegar killed 80 to 100 percent of weeds without harming the corn, but the scientists stress the need for more research. If the vinegar were sprayed over an entire field, it would cost about $65 per acre. If applied to local weed infestations only, such as may occur in the crop row after cultivation, it may only cost about $20 to $30. The researchers use only vinegar made from fruits or grains, to conform to organic farming standards. ARS is the US DA’s chief scientific research agency. What it Takes Farmers are entrepreneurs at heart. They share many characteristics that are needed for business success. A successful farmer has the ability to make decisions. Farmers rely on comprehensive records and outside information to make timely business decisions. Farmers may be independent, but they also build and nurture networks. The local coffee shop or farm elevator served as the networking hub for years. Today successful farmers extend their networks by taking active roles in farm organizations, commissions, and the like. Good negotiation and interpersonal skills are a must for today’s farmers and ranchers. They are required not only for marketing and purchasing arrangements, but also to give farmers the flexibility to adapt to changing agricultural conditions that affect profitability. Is farming right for you? If you are contemplating becoming a farmer or rancher, take an inventory of your interests, talents, finances, and assets. Look at other resources, including your spouse and those you might hire in your farm operation. Create a farm plan to serve as a guide. Rely on the plan to help with timely decision making for your farm or ranch, including the decision of when to start. Contact: Joy Johnson joyj@cfra.org for information on beginning farmer financing and other resources. NOTE: I spoke with Joy and she is willing to take calls from Missouri farmers! IN PRINT *Seasonal Dairy Grazing: A Viable Alternative for the 21st Century* detailed case studies of six northeastern and midwestern US farms, available at www.grassfarmer.com. *Community Supported Agriculture Resources for Farmers or Producers* at www.nal.usda.gov/afsic/csa/csafarmer.htm; a printed version is free from Alternative Farming Systems Information Center, National Agricultural Library, Beltsville, MD, 301-504-6422, afsic@nal.usda.gov. *The Farm as Natural Habitat: Reconnecting Food Systems with Ecosystems* $25, from Island Press, 1-800-828-1302. *Land-Grant Universities and Extension into the 21st Century: Renegotiating or Abandoning a Social Contract* by George McDowell, $34.99, from ISU Press, 1-800-862-6657. *Marketing on the Edge: A Marketing Guide for Progressive Farmers* $25, from North American Farmers’ Direct Marketing Assn, 1-888-884-9270, nafdma@map.com, www.nafdma.com. *Organic Agriculture Worldwide 2002: Statistics and Future Prospects* 4th Edition, is online www.soel.de/inhalte/publikationen/s/s_74_04.pdf. Organic farming research projects by agency scientists are featured in the cover story article in Agricultural Research magazine (Feb 2002) from USDA’s Agricultural Research Service, and available at www.ars.usda.gov/is/AR/archive/feb02. *2002 Directory of Least-Toxic Pest Control Products* listing over 2000 items and commercial sources, $15 from Bio-Integral Resource Center, PO Box 7414, Berkeley, CA 94707, 510-524-2567, www.birc.org. *Designing Feeding Programs for Natural and Organic Pork Production* Describes how to develop swine feeding programs for organic certification. Suggests diets to use according to pig size and pasture supplementation. $ 8.00. Call 800-876-8636, or email: order@extension.umn.edu. *Organic Land Care Standards: Practices for Design and Maintenance of Ecological Landscapes* $20 from Northeast Organic Farming Assn, 411 Sheldon Rd, Barre, MA 01005, 978-355-2853, www.massorganic.org. *Guide to Environmental Labels* a searchable database of eco- labels and certifying organizations, online from Consumers Union at www.eco-labels.org. *Phenology Web Links: (1) Sequence of Bloom, Floral Calendars, What’s in Bloom; (2) Birds, Bees, Insects and Weeds* a resource guide to using phenology in IPM, on-line at www.attra.org. *A Primer on Agritourism and Ecotourism Startups and Management*is $20, and *Agritourism and Nature Tourism in California* a how-to manual, is $25, both from Small Farm Center, Univ of CA, One Shields Ave, Davis, CA 95616, 530-752- 8136, sfcenter@ucdavis.edu, www.sfc.ucdavis.edu/agritourism/agritour.html. *Selling Produce to Restaurants: A How to Marketing Guide for Small Growers* Call Diane Green 208-263-8957, greentree@coldreams.com, $10.00 *Pest Management for Herb Bedding Plants Grown in the Greenhouse* Manual contains insect and disease identification and management guidelines, as well as scouting and record keeping information. Also includes information on disease management, blights, root rots, mildews, rusts, fungal diseases, bacterial diseases, viruses, insects and mites, whiteflies, aphids, spider mites, thrips, plant bugs, scales, fungus gnats, slugs, caterpillar, beetles and inspections. The manual can be downloaded for free at www.hort.uconn.edu/ipm/greenhs/htms/herbman1.htm *Direct Sales of Agricultural Products to Consumers in the Northeast* by Stephan J. Goetz, James W. Dunn and Brian Lego is now on the web at http://www.cas.nercrd.psu.edu/Publications/RCBusReports/RcbrNo3. pdf. Report presents data on direct sales of agricultural products to consumers in counties in NE US, concepts involved in marketing margin analyses, and resources related to direct sales of agricultural products to consumers. IN THE NEWS The new ISU Extension Organic Agriculture site, http://extension.agron.iastate.edu/organicag/ went online in March. The mission of the site is to educate producers, consumers and policy makers in the research and extension activities in organic agriculture both on-farm and in the Universities. The site contains a variety of information about organic agriculture, including the recent report "Long-Term Agroecological Research (LTAR) in Iowa: An Economic Comparison of Organic and Conventional Grain Crops." Organic growers: Deadline for becoming certified is Oct. 21. Those selling more than $5,000 worth of goods a year must be certified by that date under the new National Organic Program set up by USDA. Growers can be certified by accredited agents. USDA has a list of the agents it has certified so far. More will be added over time. Includes 28 private agents in various states, 10 state-accredited agents and four foreign-accredited certifying agents. For the complete list, go to www.usda.gov/news/releases/2002/04/0172.htm. Once certified, growers can use the organic label on products. National standards offer four labeling options, based on the percentage of organic ingredients. Goods can be labeled "100% organic," "organic" (at least 95% organic ingredients by weight, excluding water and salt) and "made with organic" (70%-95% organic ingredients). Those products with less than 70% organic content must list the organic ingredients. (The Kiplinger Agriculture Letter, May 3, 2002) Researchers at Ohio State University have answered the age-old question of whether mulches tie up nitrogen as they decompose. After a three-year study, they found thatcomposted yard wastes have a low carbon-nitrogen ratio, hence a higher nitrogen content. As the organic matter decomposes, nitrogen is released and plants grow well without additional fertilization. In fact, adding fertilizer had no effect, indicating that the plants were getting all they needed from the mulch. Mulches of ground wood pallets have a high carbon-nitrogen ratio, so the decomposition microbes must take nitrogen from the soil, reducing growth unless additional fertilizer is applied. The ground wood, however, increased the resistance of plants to insect pests. Mulches of pine nuggets are resistant to decomposition, so they have little effect on soil fertility and they suppress weeds longer. For a free copy of the report, ask for #397 from SCT/OARDC, 1680 Madison Ave, Wooster, OH 44691, 330-263-3780. (Growing for Market, May 2002) New Market Farming Mailing List with a focus on micro to broadacre, organic to sustainable to conventional with emphasis on natural, biointensive, permaculture, ecological, biological, clean-raised/chemical-free, regenerative, biodynamic methods and materials. To subscribe or unsubscribe, information about the list, set or change user configuration, access to posting and browsing the message archives: http://lists.ibiblio.org/mailman/listinfo/marketfarming. The Organic Materials Review Institute has listed listed Plantskydd Animal Repellent as an organic deer repellent, effective in protecting shrubs and trees from deer, elk, moose, rabbits and opossum, is now available to home gardeners in ready- to-use liquid or powder concentrate. USDA’s Economic Research Service has devised new categories for describing small family farms. First, the definition of "small" includes any farm with less than $250,000 a year in sales. In comparison, "large family farms" have sales of $250,000 to $499,999 and "very large family farms" have sales of $500,000 or more. There are also "nonfamily farms." In 1998, 91% of farms were small, and small farms accounted for 68% of the land owned by farmers. But 66% of production came from large family farms, very large family farms and nonfamily farms. Here are the new categories for small family farms: *Limited resource - Gross sales less than $100,000, total farm assets less than $150,000 and total operator household income less than $20,000. *Retirement - Small farms whose operators report they are retired, except those considered limited- resource farms. *Residential/lifestyle - Small farms whose operators report a major occupation other than farming (excludes limited-resource farms). *Farming-occupation/low sales - Small farms with less than $100,000 in sales whose operators report farming as their main occupation. *Farming-occupation/high sales - Small farms with sales between $100,000 and $249,000 whose operators report farming as their main occupation. (Growing for Market, June 2002) USDA has started a new web site designed to help farmers, ranchers and the general public learn the latest information about the new farm bill. Farm bill program details, questions and answers, program applications and sign-up forms, as well as other important materials from USDA agencies on farm bill implementation are included on the site. The web site can be accessed from USDA’s official web site at http://www.usda.gov/farmbill or by simply clicking on the 2002 farm bill icon on USDA’s main web site at http://www.usda.gov/. Data accumulated by an Ohio researcher on the flowering times of trees and shrubs, and insect activity, promises to help growers to better predict the emergence of invasive pests before they can harm plants. His work expands on the use of ‘phenology,’ an age-old technique of studying recurring biological phenomena and their relationship to weather, to help reduce insecticide use by landscapers and gardeners. Data collected show that forsythia and star magnolia bloom a day or two before the eastern tent caterpillar appears. Being able to predict the insects’ emergence accurately means one application of pesticide will do the job instead of two or more. Good timing will serve integrated pest management goals by allowing pesticides to be applied when target insects are most vulnerable, and improving the effectiveness of short-lived pesticides with lower environmental impact. "Biological Clocks," is at http://ohioline.osu.edu/sc186. The Missouri Families eNewsletter published by Univ of MO Outreach and Extension & Lincoln Univ has just been released. This free, weekly email newsletter is for MO families providing information about health, human development, nutrition, housing, personal finance, consumer issues, parenting and more. Subscribe to stay informed about practical, yet science-based information about topics for MO families. http://missourifamilies.org/newsletter/sample.htm The Farm Service Agency (FSA) is a first places a beginning farmer should look when needing credit. The FSA targets 70% of funds available for direct farm ownership loans to beginning farmers. It reserves 35% of funds for direct operating loans for beginners. The Center for Rural Affairs has just published an updated description of USDA’s beginning farmer loan programs including how they operate and their basic requirements. http://www.cfra.org/resources/Beg_Farmer_loan_programs.htm ON THE CALENDAR July 15-17 - Grant Writing II Workshop, Springfield, MO. Call 417- 732-6485. July 17 - Agroforestry Workshop, Southwest Research Center, Mt. Vernon, MO. Call 573-884-7991. July 18 - Direct Marketing Meat Meeting, Southwest Research Center, Mt. Vernon, MO. Call 417-466-4225. July 26-Aug 4 - Ozark Empire Fair, Springfield, MO. July 28-Aug 4 - Textile Tides Convergence, Nevada, MO. Call 417- 448-1212. July 30 - Farms, Food and the Future, conference on value-added agriculture, Ames, IA. Call 515-281-5321. Aug 3 - Pasture Improvement Strategies, Linneus, MO. Visit http://aes.missouri.edu/fsrc/index.stm. Aug 8-18 - 100th MO State Fair, Sedalia, MO. Aug 12-14 - Grant Writing III Workshop, Springfield, MO. Call 417- 732-6485. Aug 13 - Advanced Grazing School, Mt. Vernon, MO. Call 417-466- 2148. Aug 27-29 - Beginning Grazing School, Linneus, MO. Call 573-499- 0886. Aug 28-29 - Midwest Dairy Conference, Southwest Research Center, Mt. Vernon, MO. Call 417-847-3161. Sept 10-12 - Advanced Grazing School, Linneus, MO. Call 573-499- 0886. Oct 1-3 - Beginning Grazing School, Linneus, MO. Call 573-499- 0886. Oct 25-26 - Special Forest Products Production and Marketing Conference, Cape Girardeau, MO. Call 573-882-3234, rhoadsj@missouri.edu Oct 31-Nov 2 - National Small Farm Trade Show and Conference, Columbia, MO. Call 1-800-633-2535. Nov 4-5 - MO Forage and Grassland Council Annual Conference, Lake Ozark, MO. Dec 13—Southeast AgriExpo, Sikeston, MO. Green Hills Farm Project Farm Walks July 18 - Smithville, MO, 816-532-3795. Rotational grazing, solar powered water system, meat goats, pasture management, different types of fencing. Aug 15 - Bucklin, MO, 660-695-3482. Pastured poultry and lamb. Sept 19 - Purdin, MO, 660-244-5858. Certified organic, grass- based dairy and milk bottling. Oct 17 - Princeton, MO, 660-748-4824. Katahdin sheep, beef cattle, brown eggs. Nov 21 - Galt, MO, 816- 673-6311. Cow/calf & backgrounding partnership. Started MiG in 1985. Cow herd size is 120 pairs and 40 replacement heifers. MO Organic Assn Farm Tours July 21 - Jensen Gardens, Springfield, MO. Call 417-865-0593. Aug 17 - Aqua Terra Gardens, Springfield, MO. Call 417-833-8535. Sept 15 - Ozark Mountain Organic Garden, Nixa, MO. Call 417-725- 5134. Research Farm Tours Aug 2 - Greenley Farm, Novely Aug 30 - Delta Center, Portageville Aug 28 - Graves Farm, Corning Sept 6 - Hundley-Whaley, Albany Sept 13 - Southwest Center, Mt. Vernon Oct 4 - Wurdack Farm, Cook Station