Risk Management Education with NY Horticultural Producers

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Risk Management Education with NY Horticultural
Producers

• Wen-fei Uva, Ph.D.
• Cornell University
• WL32_at_cornell.edu
• 607-255-3688

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Overview of the New York Risk Management Program

• Research (special projects with RMA)
• AGR Case Studies and Education (2000-01)
• Specialty Crop Producer Survey (2001-02)
• Education (NE Center for Risk Mgmt Ed)
• Marketing Clubs (2001-present)
• Risk Management Newsletters Web-site (2001)
• Business Analysis and Industry Performance
  Benchmarks (2002-present)
• State Targeted Risk Management Grant
• Train-the-trainer Workshops Marketing Clubs
  (2001-02)
• Business Planning Curriculum (2002-03)

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Major Participants

• Dept. of Applied Economics and Management faculty
• Dr. Jerry White
• Dr. Mark Stephenson
• Other faculty and staff
• Cornell Cooperative Extension Educators
• Horticulture Specialists
• Farm Management Specialists
• Others
• Risk Management Agency
• NASS-NY
• Farm Credit
• Farm Bureau

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Building a Holistic Risk Management Plan

• Production
• Marketing
• Financial
• Legal and Environmental
• Human Resources

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Why Marketing?
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Supply-Chain Movement Toward the Middle
Shared Responsibility

• Retailers are asking grower-shippers to share the
  majority of functional tasks within the supply
  chain
• Retailers grower-shippers endorse the resulting
  partnerships

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Grower/Shipper Strategies
Growers need to stay flexible and responsive to
buyer needs.
More coordinated effort with buyers, processors
and other growers
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WHY AGRICULTURAL FIRMS DONT COOPERATE?

• Independence Fragmentation Of All Sectors
• Diversity in the industry
• Options exist without cooperation
• Distrust Among Various Industry Participants
• A Financial Weaning Via Survival Of The Fittest
• Where is the Incentive?
• Is it bad enough yet?
• Is there an effective leader?

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What is a Marketing Club?
Presented by Cornell Horticultural Business
Management and Marketing Program

• A marketing club is a group of people who meet
  regularly with the common goal of increasing
  their knowledge of marketing concepts.

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What can a Marketing Club do?
Presented by Cornell Horticultural Business
Management and Marketing Program

• Formal or informal discussion/sharing to learn
  from each other
• Targeted and continuous learning
• Real-time marketing information
• Hands-on practices
• Peer-support groups
• Trade or Market as a Group
• Others..

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3 Key Ingredients
Presented by Cornell Horticultural Business
Management and Marketing Program

• Interested Producers
• 15-25 -- Interested and committed
• Determine goals, topics and activities
• Facilitators
• Meeting arrangements
• Educational resources
• Help the leader and the group
• Group Leader
• One of the producers a catalyst
• Encourage participation
• Coordinate planning of future programs

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First Meeting Interest Meeting
Presented by Cornell Horticultural Business
Management and Marketing Program

• A marketing workshop
• Prepare participants in the basics
• Get participants to similar level of knowledge
• Gauge level of interest
• What is a marketing club?
• Potential benefits
• Brainstorm marketing issues of participants
• Set a time for the next meeting to
• Set goals plan for future meetings
• Select interested topics activities
• Pass out responsibilities

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How did We Support the Marketing Clubs?
Presented by Cornell Horticultural Business
Management and Marketing Program

• Mini-grants to horticulture extension educators
• 7 fruits, 2 greenhouse, 1 vegetable
• Provided training on organizing marketing clubs
• Flexibility is important
• What would you call the group?
• What would the group do?
• Provide marketing resources
• Speakers
• Marketing materials

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What Did We Learn from the Experience?
Presented by Cornell Horticultural Business
Management and Marketing Program

• Participants need to have a common goal
• Wyoming County vegetable growers
• Erie County greenhouse growers
• Western and Eastern NY fruit growers
• Be workload sensitive
• No crop season meetings
• Plan ahead for meetings and tours
• Assign responsibility
• Build leadership
• Establish ownership self-directed
• Build a future after extension involvement

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Risk Management Web-sites
Presented by Cornell Horticultural Business
Management and Marketing Program

• Under the Horticulture Business Management and
  Marketing Program web-site http//hortmgt.aem.cor
  nell.edu/programs2.htm
• RM workshops, MC activities, RM newsletters
• Link to the NY Agricultural Risk Management
  (ARM-NY) web-site http//agrisk.cornell.edu/
• Information for dairy and field crop operations
• Considering crop insurance calculator
• Business planning curriculum (Power Point
  presentations, video streaming, print materials)

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Risk Management Newsletters

• 9 Newsletter Articles
• Subjects identified by growers and extension
  educators
• Some examples
• Managing Marketing Risks
• Building a Safety Net with Crop Insurance
• How Risk Tolerant Are You?
• Understanding Income Fluctuations
• The Big Five Types of Agricultural Risks
• Newsletters for Small Farms

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Helping Growers Manage Financial Risks

• Expanding the Cornell Greenhouse and Fruit Farm
  Summary Programs
• Expand the greenhouse business participation and
  expand the program from NY to include PA and NJ
  growers
• Expand the fruit farm business analysis program
  from WNY to include statewide.
• Goals are to help growers conduct financial
  analysis benchmark industry financial
  performance

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Participating Businesses Contribute

• 2 4 hours of meeting time
• Annual cash receipts and expenses records
• Business assets and inventory information
• Other business operation information

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What Does the Business Receive from Participating
in the Project?

• One-on-one meetings with a business management
  specialist
• A customized business analysis report
• Financial Statements income statement, balance
  sheet, and cash flow statement
• Financial Analysis cost and ratio analysis
• Efficiency Measurements cost and return
  efficiency
• The industry financial benchmark report
• Access to the web-based database (fall 2003)

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Size of Greenhouses in the 2000 Summary
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Scope of Greenhouses in the 2000 Summary
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Establishing the Square Foot Week Concept

• Comparing different sized businesses can be
  tricky.
• Volume size weeks of operation
• Square Foot Weeks Sq Ft Weeks Used.

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Greenhouse Business Benchmarks

• Industry averages by marketing channels
• The data are also divided into quintiles
  representing the top 20, second 20.
• Each greenhouse business can see where they fall
  in each performance measure.
• Performance measures of the Top 20 of ROA

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Participations and Activities

• The Greenhouse Business Analysis Program
• 29 greenhouses participated in 2001
• 49 greenhouse participated in 2002
• NY, PA, NJ and MI participation in 2003
• The Fruit Farm Business Analysis Program
• 12 farm participated in 2002
• Participation from 40 farm expected in 2003

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Participations and Activities cont.

• Workshops and Training
• Business analysis training was offered in 2002 NY
  regional winter grower schools
• The Apple Grower Decision-Making Workbook
• In-depth business analysis course has been
  requested by two NY greenhouse grower groups
• Training is planned in summer 2003 for MI
  educators on using the business analysis program
  to work with GH growers
• Beta Version of the Web-based Searchable Database
  will be trialed in 2003

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• Thank you !
• Discussion!