Maine’s Farms for the Future Program

-1- Maine’s Farms for the Future Program Notes for Panel Discussion, “Growing Our Economy through Agriculture” Ohio Farmland Preservation Summit November 1, 2007 What is Farms for the Future (FFF)? FFF is an economic development strategy helping Maine farms. FFF accepts 15-40 farms per year and provides business planning support, in the form of a team, to help the farmer work through an idea for improved long-term viability. When the business plan is complete, the farmer can apply for a grant to cover 25% of the cost of implementing the plan, up to $25,000. Examples of projects include new buildings or vehicles for marketing, retrofitting buildings for more efficiency, acquiring additional land, developing irrigation or fencing, adding new equipment, or giving the farm a “face lift” to attract more visitors. Farms receiving a grant must agree not to sell lots for development for 5 years. FFF Program Goals protect farmland acreage, with working farm businesses on it prevent decline of locally-owned farms in Maine due to lack of profitability provide financial and organizational support to farm businesses that show a high likelihood of success but lack the complete resources necessary to transform (See page 17 for more detail on our goals.) FFF Concept & Program History       Concept emerged upon observation that traditional farms need help evolving to keep up with changes in the industry FFF is modeled after successful Massachusetts program begun in the late 1990’s Maine pilot program ran from 2001-2003, supported by $200,000 of state funding, $145,000 of SARE funding, and approximately $250,000 of private funding obtained by CEI (nonprofit administering organization) In 2003, a Maine state economic development bond contained $2 million to continue the program. In 2006 & 2007 the Maine State Legislature approved additional General Funds to help program continue CEI provides administrative support for the program, including personnel, offices, and materials. Administrative costs are currently shared between CEI and the state (See more on page 18.) -2- How We Deliver the Service    Farms accepted into program in the fall (independent Review Panel, farms scored on criteria) Teams of advisors are formed to serve each farmer’s needs Advisors are drawn from the University, Small Business Development Centers, Maine Organic Farmers & Gardener, Maine Farmland Trust, state & federal agencies, nonprofit organizations, peer farmers, and professional independent consultants. Team meetings run all winter, facilitated at first by FFF and then by team leaders FFF pays for advisors as well as other business research & planning needs of farmers (software, training, research trips, books) FFF provides farm business plan template – optional for farmer Team progress is motivated by upcoming deadlines to apply for grant funds – a limited window encourages efficiency Successful grant recipients show match funds, protect their farmland, and begin implementing their project; progress is tracked individually      (See more on Page 19.) Current Program Evaluation         More than 140 farms have participated in the FFF business planning process 75 of those have been awarded FFF grant funding Farms agree to share economic data for 3 years We have obtained qualitative and quantitative data on some of these farms; the rest of the data must be collected and studied. We hope to build a more complete picture of FFF’s impact on these farms Results will be presented to the Maine State Legislature in January 2008. State’s 3 official indicators of agricultural health: Net Farm Income, Acres of Productive Farmland, Dollar Increase in Direct Sales. We hope to collect that information as well as:  Gross/net farm income in recent years; financial projections  Changes in farm products and/or market channels entered  Changes in farm jobs retained or created  Owner investment in business, debt management, off-farm income  Changes in production methods, farm ownership, condition of assets  Deviation from the business plan  Changes in quality of life  Attitude towards the value of business planning (See more on Page 21.) -3- Future of the FFF Program    Alumni options New & beginning farmer options Partnerships to address comprehensive changes in ag support systems (See more on these options, page 22.) Farm Viability Program Network – in the works! Farms for the Future stands on the shoulders of – and hand-in-hand with – many other farm viability and support programs. Massachusetts pioneered the unique strategy that we have most closely modeled. New Hampshire piloted a program recently, and Vermont and Connecticut have comparable programs. Preliminary research has indicated that there are also programs in Minnesota, Wisconsin, Iowa, Pennsylvania, New York, Maryland, North Carolina, and Canada. Each state has its own key issues – dairy management, for example, or transition away from tobacco. Some of the Northeast states have a much stronger emphasis on farmland protection, as population growth and land values explode. Some programs are housed within state Departments of Agriculture, some within nonprofits, some within Universities, and some are partnerships. We program managers are aware of each other and sometimes we talk, but we have yet to seriously network or compare notes. We anticipate that peer networking will be entertaining and enlightening – and will help us avoid many forehead-slapping moments! The program coordinators in Maine and Vermont are currently spearheading the effort to bring together Farm Viability Program managers at a conference in Vermont in the summer of 2008. Farm Business Planning Team, Buckwheat Blossom Farm, 2005 -4- A Farmer Story Stutzman’s Farm is a 100-acre, third-generation, vegetable and fruit farm in Sangerville (pop. 1200, median household income $28,000). The farm and farmstand is a local landmark and a beehive of activity in the summer. Sid and Rainie Stutzman grew up locally, raised two boys on the farm, and have hired hundred of local high school students over the years. Until the 1960’s the farm was primarily a wholesale potatoes and dairy operation; at that point Sid’s father added more retail vegetables and strawberries. Vegetable output has increased slowly and steadily at the farm over the years. In 2000, a new and larger farm store was built to accommodate increases in business. A small kitchen and bakery were soon added, along with a new greenhouse which allowed the growth and selling of seedlings and excess plants. Between 2000 and 2003, annual sales increased by 30%; however, labor and other costs also dramatically increased. The owners realized that there was great potential, but the current farm infrastructure and demand on the soil would not be able to keep up. The Stutzmans’ vision was to make the farm more profitable, easier to maintain and able to operate as a new generation took over. Their business plan analyzed past performance, finding that 30-37 % of their land use was for wholesale potatoes but only 20-27% of the farm’s total income. The remainder of the land produced fruits and vegetables for retail sales. Working with a crop agronomist and learning how to use Excel and QuickBooks were essential parts of this analysis. The Stutzmans decided to slowly transition away from the wholesale potato market. They outlined attainable goals for planting, marketing, operating, and capital expenditures. 1) Transition away from wholesale potatoes towards higher-gross-per-acre retail vegetables 2) Improve and expand the farm store by adding more bakery space/equipment, more products, more organized parking and visibility, and expanded outdoor display area 3) Introduce labor-saving devices for harvesting, washing and packing vegetables 4) Upgrade the soil tillage practices with a lighter tractor and implements, in order to conserve and improve the farm's soil They expected the change to be complete in six years by subtracting 1 acre of wholesale potatoes each year and substituting it with 1 acre of higher profit vegetables to be sold in the farm store. Cucumbers and tomatoes are highest netting crops, so it is logical to predict that much of the land taken out of potato production will go into these crops. The financing and in-kind labor needed to implement the plan, which cost about $100,000, was feasible. Equipment was planned for purchase over a two-year period with the help of the FFF grant, loans from a local credit union, and finance packages offered by equipment dealers at low interest rates. The equipment bought from dealers was be set up on 60-month payment plans with down payments coming from the grant funds. Funding to cover the rest of the costs was gained through a home equity loan. Since implementing their changes they have experience several seasons of crummy weather, but say they are doing just fine. The new parking lot is making a big difference. Perhaps the best result of all is that their oldest son and daughter-in-law, who are poised to inherit the -5- farm and are now enthusiastic (rather than mystified) about what they will have to work with. Sid Stutzman wrote the following to his Maine Representatives and Senators, in support of the program: I am writing to you in support of the Farms for the Future program. As a farmer, and a participant of the Farms for the Future Program, I can tell you first hand what a difference this program has made in our economic situation. The farming ways are passed down from generation to generation, from father to son and mother to daughter. That was good enough for many years, but the changing economic environment has added a complexity that has made it hard for most of us to understand that some of those ways just don't work anymore. Through our participation in the Farms for the Future program, we were given the tools and the expertise to do new things like write a business plan, learn a new computer program and talk with market experts provided to us by the program. These are things that your grandfather can't help you with and quite frankly things we never would have been able to learn without our association with this wonderful program. From my perspective it's a new world from our father's day and I believe only the new and better-educated farmers will survive. Thank You, Sid & Rainie Stutzman, Sangerville, Maine One of the advisors on the Stutzmans’ farm team also wrote to the Maine State Legislature: Here's my two cents worth regarding the Farms for the Future program. It's great. The first part of the program provides a team to work with farmers who have a new idea, are just starting out, or who want to move their farm operation up to the next level. The teams are tailored to meet the needs of the farmers and their goals. Most teams consist of 3-5 people. The team provides technical assistance, moral support, and networking so that the farmers can write a business plan that will allow them to achieve their personal and business goals. This is an important rural economic development program. I have been fortunate enough to be on or part of around six different teams. On some teams I have been called in to provide technical information (usually a nutrient management plan). I have been the team leader on two teams -- one currently working with a farm in the mid-coast region. The farmers do the work of putting together the business plan -- and it is hard work. It is extremely gratifying as the plan takes shape; realization sets in that it is viable, and then as it is implemented. The implementation phase consists of a grant program that provides 25% of the proposal costs up to $25,000 maximum. I think this compares favorably with other grant programs that provide economic development in the state. Not too much money, but enough to kickstart a viable proposal. I hope some participants will share their success stories with you because that is their story to tell, not mine. Regards, Lauchlin W. Titus, Certified Professional Agronomist also President of the Maine Vegetable and Small Fruit Growers Association -6- The Stutzmans’ Farmstand, Sangerville, ME. The small but important addition shown here represents increased space and better staff flow between the bakery, the walk-in cooler, and the staff entrance from the fields & washing station. The Stutzmans also redesigned their parking lot and added labor and soil saving devices. -7- Maine Agriculture & Innovations in Marketing and Processing Why does Farms for the Future think farmers should bother to explore new markets? There are many types of farms in Maine, and our goal is not exclusively to convince folks to switch to direct markets. However, direct marketing is certainly the fastest growing opportunity here in Maine. Direct market options are focus of several recent University of Maine studies, as well as the focus of several “Eat Local” community development campaigns. Our current State Agricultural Policy focuses on local communities: “Like their counterparts across the country, Maine commodity farms will continue to get larger and fewer, and we must assure that they remain competitive. We have a special opportunity in Maine to grow a local agriculture where Maine farms supply nutritious food to local and regional consumers, and are closely integrated with their local communities.” Our brand-new “Support Local Agriculture” license plate provides annual funds to the Maine Ag in the Classroom program. -8- Following is a basic overview of Maine’s agricultural sectors and a sampling of interesting local strategies for production and market development. Total Farms in Maine: 7,196 “Rural Resident” Farmers – total 5,061 farms  Defined as those who earn less than $10,000 Gross Farm Income  Average annual net profit (-$5,000)  Hold 18% of active farmland acreage  Hold 45% of idle farmland acreage “Marginally Profitable” Farmers – total 1,797 farms  Defined as those who earn $10,000 to $250,000 Gross Farm Income  Average annual net profit $26,000  Hold 35% of active farmland acreage  Hold 23% of idle farmland acreage “Profitable” Farmers – total 338 farms  Defined as those who earn greater than $250,000 Gross Farm Income  Average annual net profit $45,000  Hold 47% of active farmland acreage  Hold 32% of idle farmland acreage One of the State’s questions is - what will impact a Rural Resident Farmer’s ability to hold on to the idle land in the absence of profitability? In particular, older Rural Resident Farmers who control the land need help for transfer of property to profitable enterprises (or, gulp, development!) to preserve their retirement funds. Maine NET Annual Profits, PER FARM, by Sector Eggs & Poultry: Potato & Vegetable: Dairy: Greenhouse & Nursery: Beef: Sheep & Goat: Hogs: $190,000-$220,000* $50,000 -$60,000 $35,000 - $45,000 $25,000 -$1,000 -$5000 -$10,000 *There are one or two very large egg farms that affect this. -9- Trends in Marketing and Processing Innovation   Strong Farmers’ Market Growth New CSA models:  A prepaid balance  Senior Farm Share.  Weekly CSA delivery boxes.  Weekly pick-up at farm.  CSA “add-ons” from neighboring farms. Winter CSA shares. Buying Clubs Hybrid models: CSA/Buying Club/Farmers’ Market Farm Fresh Connection (local vegetable brokering) Agritourism Appropriate Scale Processing Units       Strong Farmers’ Market Growth The number of farmers’ markets in Maine has grown from one market in Portland in 1970 to 67 markets in 2004 spanning the entire state. I believe the count for 2007 is upwards of 80. The more successful markets, the more opportunities for farmers to make direct sales and build loyalty. A 2005 study by the University of Maine found that 75% of urban consumers will travel only up to 10 miles to farm direct markets. Explosion of CSA models (“Community Supported Agriculture”, also known as “subscription” or “membership” farming) With over 80 CSA farms, 3500 total shares available - and counting! - Maine's CSA community is just beginning to show its potential for transforming relationships with food and farms. There is no formula to a CSA. Each is unique as the community supporting it. The bottom line is that people make commitments to farms, and in return farmers make commitments to produce for their members the freshest, most flavorful, highest quality food possible. Some examples of CSA innovations include: A prepaid balance that can be spent down at farmers’ markets during the season. A common formula is one where $100 paid to the farm by April equals $110 to spend between July and October. Senior Farm Share. A federal program that purchases $50-$100 shares of farm produce for low-income seniors. The farmers and the community recruit seniors and help them manage their balances. - - 10 - - Weekly CSA delivery boxes. The farmer packs an assortment of veggies in a box and drops it at your home. Increasingly popular is an option where the farmer drops packed boxes for a cluster of members at a workplace, school, or church. This allows the farmer to zero in on groups of enthusiastic customers with minimal effort for marketing & delivery. Many organizations support the CSA philosophy and will even help the farmer promote the CSA among employees/members. In the spring of 2007, the Maine Council of Churches (an alliance of faiths for environmental and social common good) sponsored a CSA Fair in Portland, ME. Farmers from all over Maine were invited to set up displays and recruit customers. Weekly pick-up at farm. There is an assigned day of the week for you to visit the farm and either collect a pre-packed box or pack your own box from bins of vegetables on display. CSA “add-ons” from neighboring farms. For an extra fee, a vegetable CSA could include a weekly amount of goods from other farms - cheese, chicken, honey, berries, or yogurt, for example. This is a win-win-win situation. Winter CSA shares. Farmers in Maine are getting creative about extending the harvest. CSAs are being developed to include winter greenhouse greens, root & storage crops, frozen meats, canned & frozen produce, eggs, and dairy. This is a “new” concept in Maine and farmers usually have to partner with each other to scrape together enough to constitute a substantial share. But based on observations, I predict that the number of winter shares available will double EACH year over the next several years. - - - Buying Clubs Groups of consumers self-organize to buy in bulk from a farmer. Usually clubs are focused on breaking up products that are too large for a small household and/or can be stored. Frozen meats are a perfect example: a young couple doesn’t have the space for a whole freezer’s worth of beef cuts, but 4 couples can get together and divide the cuts from one animal. The farmer knows he/she will sell the entire animal and comfortably invests in raising and processing it to order. Early on, the farmer may require pre-orders before the season begins, but with experience, the farmer can make an educated guess about the amount of product that will sell. The farmer can then simply send out reminders and an order sheet as it gets closer to processing time. The consumer group and the farmer agree on a delivery date and location. The farmer makes one big delivery and the consumers take care of distribution on a local, informal level. This is an excellent way to reach a critical mass of consumers in higher-income areas. For example, a grass-fed beef & pork farmer in the mountains of western Maine has connections in Portland, Boston, and even Nantucket. She can easily gather 10-20 customers in each location who will take everything she can raise, at premium prices – and with minimal deliveries! - 11 - Hybrid models: CSA/Buying Club/Farmers’ Market Farmers in central & southern Maine are experimenting this year with a winter “order system” in Portland. Farmers will set up stands in their normal weekly downtown location, and fulfill pre-ordered deliveries of root veggies & other winter products. Some farmers will offer their products together and will take turns staffing the stands. This draws on the loyalty of the core CSA group, the visibility of the farmers’ market set-up, and the convenience of custom delivery. This level of commerce has no formal category and hence often goes unnoticed in economic indicator measurement. Farm Fresh Connection (local vegetable brokering) Farm Fresh Connection (FFC) began as a nonprofit venture, then grew into a for-profit subsidiary of a nonprofit organization (the Maine Sustainable Agriculture Society), and in the summer of 2007 was turned over to its operator as a for-profit entity. The original intent was to help farmers replace their medium-to-large-sized accounts (which were disappearing due to supermarket consolidation) by recruiting institutional purchasers and brokering produce. Early customers included several Maine colleges, universities, and hospitals. FFC has evolved to also serve restaurants, farmstands, and “boutique” produce markets. FFC is run primarily by one person, who works with food purchasers (schools, hospitals, restaurants, etc.) interested in having fresh, local food. FFC creates a database detailing the purchaser's specific needs, then meets these needs by getting desired items from Maine farmers and supplying them according to the purchaser's requests. Farmers from around the state bring their products to one of two central locations on a regular basis, and these items are packaged and distributed across Maine six days a week. Products include many vegetable and fruit varieties, meats, cheese, eggs, and honey and maple syrup. FFC distributes the food through a local shipping company, and requires that purchasers buy at least four cases of goods at a time – thus, they consider themselves a “wholesale” distributor. Agritourism A 2007 study by the University of Maine indicates that agritourism activities generate $28 million in sales, and support 1,700 full and part-time farm jobs. About ¼ of Maine’s current agritourism farms established their business in the last 5 years. Many farmers used to rely on wholesaling to regional markets, but as that option has become less vi able, Maine farms have had to diversify. Many have found ways to attract consumers directly to the farm with a variety of products and activities. The most common diversifications here include: retail-style farm stores with a variety local food products retail and workshops for farm-related crafts (such as fiber arts) tours or participatory educational activities (maple syrup tours, pick-your-own, farm day camps, cheesemaking workshops, etc.) - 12 - - entertainment & recreation activities (corn mazes, hay rides, cross-country skiing, nature trails, musical events, harvest festivals) offering prepared baked goods along with hot beverages and soups, and a simple place to sit adding greenhouse & nursery elements such as tools, bagged soils, and garden items offering facilities for conferences, reunions, and weddings Maine has always attracted tourists to the coast, mountains, and deep woods. The state is actively developing the economic and social potential for links between Maine’s agriculture and tourism industries. Appropriate Scale Processing Units Changing regulations and economic conditions have forced many of Maine’s regional meat & poultry processors to either close or transition to “custom-only” in the last 5-10 years, leaving farmers with few or no options for inspected meat processing. Also in the last few years Maine reduced its total number of dairy inspectors from 3 to 2, which unfortunately corresponded with an explosion of small-scale milk, yogurt, and cheese producers. Maine has about 22 artisan cheese producers, several of whom won first place awards at the American Cheese Society in 2007. The backlog of work for meat & dairy inspectors has contributed to long waiting periods for smaller scale farmers who want to get licensed or simply continue their operations. Their personal resources are stretched while they hold on to inventory. Meanwhile demand is far outpacing supply for small-scale dairy and meat products in Maine and farmers In some cases new technologies are available to help farmers deal with the regulatory environment. Two examples are mobile milking parlors and mobile poultry processing trailers. The term “mobile” is misleading; these aren’t actually units that drive around servicing farms (although that has been researched here). They are more like “pre-fab” houses that arrive on wheels, fully outfitted and ready to be set on a simple foundation and hooked up to water & electricity. Inside they are lined with washable stainless steel and fiberglass surfaces. Farms for the Future can play a role in helping farmers determine if these units are right for their situations. There are the up-front costs and the on-going costs to consider, plus the life expectancy of the units and the payback period. Of course, the farmer also needs to consider the target market area and the farm’s capacity to produce for a niche market. We recommend that farmers also work with organizations who have taken the lead on researching these options. For example, the Maine Micro-dairy Development Collective exists to support and promote Maine’s artisan dairy producers and processors. They have been at the forefront of effort to bring mobile milking units to Maine. They have built and leased a prototype unit and plan to build and lease more. Average cost of the units is $12,000 to purchase, or $4,000 down and $200/month to lease. The lease option allows the farmer to decide whether micro-dairying is viable. This photograph is of a larger scale mobile milking parlor in Monmouth, ME. It’s designed for about 25 dairy cows. The parlor backs up and parks, just like a box truck, into a hoop - 13 - barn, and presto - the farmer has an instant (yet durable) milking infrastructure at a much lower capital investment than a framed barn & milking parlor. The Maine Cooperative of Poultry Producers has encouraged the development of mobile poultry processing units and is launching a cooperatively-owned and -run unit in central Maine as we speak. Farmers will pay a small, fixed membership fee and then a variable processing fee based on use. The unit will be inspected and approved by Maine’s Department of Agriculture. The photographs below show the exterior and interior of such a unit. This particular unit is located on a diversified organic, ninth-generation family farm in Eastern Maine. - 14 - - 15 - - 16 - Farms for the Future Program Goals & Philosophies Farmland Preservation protect farmland acreage, with working farm businesses on it provide farmers with a comfortable introduction to the concept of farmland protection, with the hopes that they might consider more permanent protection Agricultural Economic Development prevent decline of locally-owned farms in Maine due to lack of profitability provide financial and organizational support to farm businesses that show a high likelihood of success but lack the complete resources necessary to transform encourage and support farmers in building financial management skills encourage and support farmers in developing new products, new marketing channels, improved practices, and successful business relationships encourage and support farmers in the creation of long-term land-use plans, covering soil & water management and future ownership contribute positively to strategic alliances necessary for rural entrepreneurship: connections between producers, consumers, technology, business, and research, in Maine and nationally - - - Program objective as stated in law: The program provides a selected farm with assistance in developing a detailed business plan that involves changes in the farm's operation to increase the vitality of the farm and investment money to help implement the plan. In rules: The Legislature identified the need for providing farms with assistance in developing business plans to help those farms change farm operations to make them more viable and profitable. Title of original legislation: An Act to Preserve the State's Farm Economy and Heritage - 17 - FFF Concept & Program History The concept began to emerge in 2000 when Maine’s agricultural leaders saw that many traditional farms were not evolving to keep up with changes in the industry. The formula that worked for previous generations of farmers (often, selling to one wholesale market or processor) is not always proving viable in the face of international competition, changing consumer preferences, and consolidation of markets & processors. Many farmers are often very good at what they do, but “what they do” simply isn’t resulting in sufficient profitability anymore, and they find themselves struggling to keep up. As with any industry in transition, farmers need to think differently, to learn new skills and develop fresh strategies. Not all farmers will want to change. But for those who do, business plans can provide them with solid financial analysis and help crystallize their thoughts into a series of clear steps. Once the plan is complete, capital investment is usually required to kick it into action. The Massachusetts Department of Agriculture began a similar program in the late 1990’s and a recent survey showed that farmers who participated predicted increased net annual income increases of over $20,000. Maine’s Farms for the Future program was modeled on this successful initiative. The original legislation and funding for FFF came together in 2000 and the first round of assistance was launched in 2001. A 2-year pilot program was developed with support from the Maine Department of Agriculture ($200,000 of general funds), SARE ($145,000) and Coastal Enterprises, Inc. (over $250,000). CEI is a nonprofit community development corporation with programs statewide in workforce development, affordable housing, small business counseling & loans, marine and agriculture resources, and subsidiary community venture and investment companies. CEI handles all program administration, working closely with the Maine Department of Agriculture to refine and improve the program. In 2003, the citizens of Maine voted to continue the program with a $2 million bond which enabled the program to grow in size and extend into 2007. FFF has demonstrated enough success that in 2006 and 2007, the Maine State Legislature approved general funds to continue providing the service. I have been told that it is remarkable to make the transition from pilot to bond to general funds in only a few years. Originally, CEI provided administration at no cost to the state. As private funds for this purpose have diminished and FFF becomes more established as a state program, the cost of administration is slowly shifting to the state. However, the flexible, independent approach to administration has worked well for the program and the partnership between CEI and the state is strong. It’s likely that CEI will seek additional private funds and some form of partnership will continue. - 18 - How We Deliver the Service Farms are accepted into the program in the fall. Each farm receives a team of advisors, based on the nature of the ideas they want to explore. This team meets all together on the farm for an initial meeting, and then team members often work one-on-one with farmers on financial analysis, facility design, resource management, marketing strategies, etc. Advisors come from: - State and federal agencies (for example, our state horticulturist or beef industry specialist, a dairy inspector, our farmland protection coordinator, our NRCS professionals, and the Maine Small Business Development Centers - SBDC) - The University of Maine (most notably Cooperative Extension educators and specialists) - Nonprofit associations (such as the Maine Organic Farmers and Gardeners Association, Maine Pork Producers, the Maine Micro-dairy Collective, or the Maine Farmland Trust) - The private sector (crop consultants, business consultants, accountants, QuickBooks instructors, marketing specialists, energy & equipment consultants, grant writers, other farmers, orchardists, bakers, supermarket produce managers, lawyers, etc.) FFF pays advisors for their work on teams. In many cases we are able to negotiate lowered consultant rates since folks are generally interested in helping farmers. In the case of the University, SBDC, and some nonprofits where we are using up to 15 professionals at a time, we negotiate a year-long contract that helps cover some of the cost to their organization. These professionals are generally very involved and often their moral support plus their detailed knowledge is a key factor of success. FFF arranges each farm’s team, gets the ball rolling at an initial meeting, and then monitors progress. We provide a business plan template that farmers can use if they wish. The template is about 20 pages long (lots of white space!) and covers three basic areas – operations, marketing, and finance. It’s written in bullet-point format, almost as if it’s “interviewing” the farmer. In theory, the farmer needs to start with short answers to each bullet point question, and then can edit the results into a smooth flowing narrative. We refine this template every year, based on feedback from farmers and advisors. There are many models out there to help small businesses write plans, but none fit our needs exactly – so we made our own. Another favorite: Farming Alternatives: A Guide to Evaluating the Feasibility of New Farm Based Enterprises. Publication NRAES-32, available via your Extension or at www.nraes.org There is a lot of coaching and relationship building that happens during the process. This is mostly facilitated by the FFF program administrator. In addition to meeting with team members and writing their plans, farmers are often visiting other operations, taking classes, and finally getting their numbers organized with financial software. They usually need a lot of help turning all that raw information into useful decision making, and keeping the momentum going. The FFF program administrator’s job is to help farmers organize the - 19 - process, keep their eyes on the prize (the business plan deadline), and ensure that team members are doing their jobs. When plans are complete, the farmer has the option to apply for a grant to cover 25% of the cost of implementing their projects. There are two grant deadlines every year, and only those currently in the business planning phase can apply (meaning last year’s group can’t apply for funding this year). This cutoff forces farmers to be efficient with business planning, and often provided the motivation to simply get the plan done. Money is a great incentive. I suspect that many of the plans would never be completed if the grant deadlines didn’t exist. I also suspect that the true value of this program is not the grants, but the structure and motivation for farmers to complete written plans. Once the plan is on paper, they can review it, revise it, show it to banks, show it to peers, and use it to remember what they were thinking back in the winter! Farms that are awarded grants must show evidence of match funds, which can come from loans, personal resources, in-kind labor & materials, and or other grants. FFF grant dollars will be released along with the pace of the project and the sources of match funds. Projects are monitored on a case-by-case basis and qualitative & quantitative data is collected for later analysis. Farmers must also sign non-development agreements stating that they will not sell off house lots or develop the land for five years. The program allows them to buy out of this agreement, if necessary, by returning the grant funds to the State. - 20 - Current Program Evaluation Since 2001, more than 140 farms have participated in the FFF business planning process. Nearly 90 of those have completed their business plans and applied for grant funding; 75 of those have been awarded FFF grant funding. Farms agree to share economic data for 3 years after receiving their grants. We have obtained qualitative and quantitative data on some of these farms; the rest of the data must be collected and studied. We hope to build a more complete picture of FFF’s impact on these farms. Ultimately we’ll draw conclusions about the value of this program to the State of Maine, and discover ways the program can be refocused or improved. We are currently contracting with a professional Maine -based research firm who is surveying (by mail, phone, and in person) all of the farms awarded implementation grants. Results will be presented to the Maine State Legislature in January 2008. The official Maine State Indicators of Ag Health are: • Net Farm Income • Acres of Productive Farmland • $ Increase in Direct Sales In our evaluation, we also aim to study:         Gross/net farm income in recent years; financial projections Changes in farm products and/or market channels entered Changes in farm jobs retained or created Owner investment in business, debt management, off-farm income Changes in production methods, farm ownership, condition of assets Deviation from the business plan Changes in quality of life Attitude towards the value of business planning We are lucky to have found a firm who will do all of this and much more, providing objectivity, confidentiality, professionalism, and speed, which allows the administrator to carry on. - 21 - Future of the FFF Program In addition to regular program refinements, we would strongly like to add the following elements to the program: An option for FFF “alumni” to further evolve their business plans, and receive additional grant support (in exchange for additional land protection agreements). This is in response to several requests from farmers who have achieved their stated goals and are now facing new obstacles. A branch of the program for new & beginning farmers. As it is, farmers must own 5 acres in production and actually be selling agricultural products, even if the net profits are negative. Those eligibility cutoffs help direct the program at the sector the legislature intended it for. However, the DEMAND for this type of service is HUGE among those who are just getting into farming. They are often on borrowed land, or trying to grow a small hobby farm into a farm business. Barriers to entry are many, and few programs exist to help them invest. Commercial lenders see them as a higher risk, and most state & federal programs are focused on protecting the farms that are already somewhat successful. Partnering with organizations to address all elements of strong agriculture & healthy economic development. For example, access to affordable land via farmland protection (with Maine Farmland Trust); access to credit & financing (with The Carrot Project); and access to health care & insurance for small rural businesses (partnership not yet identified). The FFF case-by-case approach builds trust and subtlety; the regional organizations’ approaches add breadth and impact. A good business plan can help a farmer identify appropriate strategies, but sometimes the right public & private mechanisms need to be in place for plans to come to fruition. - - Currently, we are pursuing alternative funding to set up pilot models for these ideas. Business Planning and Grants for Maine Farmers Coastal Enterprises, Inc. 2 Portland Fish Pier Portland, ME 04101 207-772-5356 x 114 kcs@ceimaine.org Kerri Sands Farms for the Future - 22 -