Every July at the Southern Extension Committee Meetings, Southern Ag Today likes to take the opportunity to recognize our authors for all their hard work. We look at all the articles written over the past year May 2022 – April 2023 and decide which were read, viewed, and shared the most using our analytics. We are pleased to announce our 2022-2023 winners.
Streams of grant funding such as broadband support, the infrastructure bill, FEMA disaster prevention, and business attraction often come in large waves and encourage rural communities to improve local capacity and infrastructure. When generating ideas, planning, and creating strategies and action plans to apply for a grant, it is key to conduct a feasibility analysis. Take the time to evaluate if the local community has the resources, time, and inputs needed to take on the project as well as the resources and capacity to sustain the effort.
The overarching goal of a feasibility analysis is to understand “is this a viable idea to proceed with” (1). Feasibility studies often include market analysis, technical analysis, financial analysis, as well as environmental and social impacts (1,2,3,4). Results should help the community understand if the effort balances the financial, social, and environmental costs with the benefits (3). The analysis should focus on both the feasibility of implementing or building the effort as well as maintaining it. Many communities skip the assessment of maintenance, and when programs fail or fizzle, infrastructure degrades or incurs deferred maintenance costs.
While some feel feasibility analysis can discourage a community from dreaming big, leaders should “know what they have to work with” (4) and focus on developing aspects in the community that can succeed. If projects or programs are not feasible, the community can prioritize a different effort or focus on building the capacity and partnerships needed to address feasibility concerns.
There are many good reasons for starting a Cooperative, such as collaborative marketing, processing, distribution, or administration. And there are many different goals for cooperatives to pursue, such as enhancing local food systems, increasing resources and funding, and even sharing philanthropic or community development goals. With all the potential cooperative purposes and goals, how does a group of individuals start the conversation about how they would like to form their cooperative?
One way is to start with a set of proposed by-laws formed by a similar cooperative and have this new group of individuals voice their desires on how they would edit them to fit their situation. This method is suitable, especially if coordinated with an experienced cooperative development professional (these people are typically located at land grant colleges and cooperative development centers in each state).
There is one potential drawback to the face-to-face development scenario, and that is ensuring that all members have voiced their concerns. To this end, the South Carolina Center for Cooperative Development developed an online cooperative development tool called “The Cooperative Challenge.” A link to this survey is located here https://clemson.ca1.qualtrics.com/jfe/form/SV_aeCSaXEpEKJp3GS
Participants can take this challenge to see how they will work together; the best part is that it is anonymous and involves a hypothetical cooperative, not their specific cooperative. Producers can voice their concerns without being singled out. To date, this tool has been used with three groups to help them discuss the more difficult cooperative development topics. Some of the most controversial questions are:
Patronage dividends: how much will be distributed versus retained by the cooperative?
Capitalization: how much debt versus equity contributed by members?
How restrictive should the cooperative be with members selling outside the cooperative?
How does a new member join the cooperative, and how does a member leave the cooperative?
Should the cooperative accept products from non-members to fulfill contractual obligations?
What measures should be taken if a member does not follow the rules, such as selling outside the cooperative or not delivering acceptable produce?
How much should the cooperative pay a general manager, and what benefits are provided?
The survey findings will be analyzed within the next year to see how different groups responded to the same questions. It will be interesting to note if there are differences in the concerns of conventional farmers versus niche-product farmers, new farmers versus established farmers, and those relating to different product types (i.e., organic produce). In the meantime, this survey tool is available for interested producer groups and cooperative extensions. Also, if needed, a QR code is available so that this survey can be taken using a mobile phone.
Richards, Steven. “Interested in Forming a Cooperative? Take the Cooperative Challenge!” Southern Ag Today 3(22.5). June 2, 2023. Permalink
Photo by RDNE Stock project: https://www.pexels.com/photo/variety-of-fruits-and-vegetables-8540920/
As a continuation of part 1 of our “How Much Can I Sell This For?” series, we dive deeper to determine how to set our price targets.
It is important to know how much has been invested in order to recoup the cost. Next is to generate revenue greater than the investment in order to be profitable. Capture ALL costs of carrying out a particular activity, often referred to as production or variable costs. This varies according to how much is produced of a certain item. Think of inputs like fertilizer, seeds, irrigation, labor, etc. that will go up as you produce more. Not all crops will have the same inputs or amount of inputs so it is specific to what you are growing. Generally, total cost will go up but the cost per unit produced will go down as you produce more.
Second, there are various costs of operating a business such as insurance, rent, property taxes, utilities, and depreciation. They are not specific to a particular crop but an overall cost to the business. It is important to know these too and then allocate them in a reasonable method. This is where it can be part art and part science. How much of the electricity bill do you charge to the tomato crop for instance? One method would be segmenting the production of your farm, and if tomatoes are roughly 20% of your farm production, you will allocate total general overhead expenses at 20%. Perhaps some costs are allocated completely if it only applies to one enterprise. Another method would be charging a percentage, 10% for example, on top the direct production expenses, as an estimate of overhead costs for the crop. With the second method, a way to check for accuracy is totaling the estimates charged from all crops and seeing if it is close to the actual overhead for the year. If so, the estimate is suitable. Otherwise, you may need to change your percentage or use a different method.
We have done a quick calculation on 1 acre of tomatoes to demonstrate both the art and the science needed to set price targets. The examples and numbers have been simplified and do not reflect actual production costs (Table 1).
Table 1. Example: Total Costs (Allocated and Estimated) for Field-grown Tomatoes (one acre)
To be conservative, we’ll use the allocated method which estimates a greater cost, $11,500. This starts to give targets for marketing the product. The $10,000 of direct cost is the first revenue goal. But ultimately $11,500 or greater needs to be generated for long term profitability. Meaning we are covering the production costs and a portion of the operating expenses for the business.
For further analysis, this can be broken down by yield or expected yield (Table 2). The price per lb. and price per box end up being the same number in the end, but it is a different way to evaluate the information depending on how you plan to sell.
An additional piece of the puzzle is the cost associated with participating in a specific market. If you know there is a market fee, there is mileage, and labor hours, that must be factored in as well. In Part III of “How Much Can I Sell This For?”, we will discuss how to evaluate your marketing expenses.
Extreme weather events seem to dominate the news. According to the National Oceanic and Atmospheric Association, the number and cost of climate related disasters in the United States is on the increase. While some events can be devastating, other events such as droughts, snow events, heat events, rising sea levels, or wildfire can also disrupt communities. The ability to anticipate and respond to climate related events defines the capacity of a community to be climate resilient.
Designing community resiliency plans is the work of every community. Because environmental, geographic, and demographic variables are unique to every community, every community will need to create their own working strategy. The National Oceanic and Atmospheric Association (NOAA) offers communities a useful five step resilience planning process, US Climate Resilience Tool Kit (https://toolkit.climate.gov/): 1) understand exposure, 2) Assess vulnerability and risks 3) Investigate Options, 4) Prioritize and Plan, and 5) Take action.
Following these planning steps can help community leaders assess risk factors and shape action response plans for their community. Helpful information and resources to assist communities in their planning include:
I see Change website – https://www.iseechange.org/. A resource for a citizen science approach to recording changes in climate.
Communities become more climate resilient when they work together to improve their readiness and response to climate disruptions. Start the conversation in your community today!
