Posts Tagged: Placer County

Expect the Best and Prepare for the Worst: Understanding the Risks of Agriculture

We like to get farmers and ranchers together and ask them this question: What could go wrong? Preferably after they've had a good night's sleep and a filling breakfast and at a time of year when their farms and ranches are relatively quiet. It is not the happiest of conversations, to say the least. But we feel that talking about farm and ranch risks, and hopefully, taking steps to create resilience in the face of these challenges, is critical to the success of agricultural businesses. Having a plan of action in the face of unforeseen crisis can be the difference between making it and losing it all.

Here are a few topics that came out of recent Risk Management discussions held during our Farm Business Planning short course and Farmer-to-Farmer Networking Breakfasts (for info on both of these events, visit our Foothill Farming website.)

Human Risk – What happens if you get hurt or sick?

This is not a fun topic. Knock on wood, you will be fit as a fiddle into a ripe old age. But what if? You need to buy health insurance. Period. You don't have the money or time to deal with being uninsured when you need health care. Take it from a gal who's racked up hundreds of thousands of dollars in medical bills, health insurance is well worth the investment.

You also need to have an Operations Manual. Do it right now! Write down each enterprise that your business relies on and the basics of keeping it functioning from day to day. It can be rough but should be enough information that a person could read the thing and keep everybody/thing alive. Print it out and keep it in an obvious place, like a binder that says “Operations Manual.” Tah Dah! Your business just became more resilient.

Now you need a designated person/persons who can read the Operations Manual and run your farm in your absence. Employees are a good place to start as they probably have a good idea already. How about a neighbor or good friend? Have them over for a cup of tea and show them where the operations manual is kept. Maybe walk through a typical feeding of the animals or watering the greenhouse. How about a farm buddy system? I'll be your emergency farmer if you'll be mine.

Marketing Risk – What if there is a sudden change to your sales outlets?

Marketing risk is a much tougher nut to crack and prepare for. We build our businesses around projected sales to retail outlets, restaurants, and farmers' markets. What if one of those outlets suddenly became unavailable? You've produced the product and may not have another buyer lined up, so what options do you have?

Jim Muck of Jim's Produce has a good strategy. He tries to always have three potential outlets for a farm product, e.g. Restaurant A, Restaurant B, and Grocery Store X. While he may have made a commitment to Restaurant A for the season, he knows that if Restaurant A were to go out of business both Restaurant B and Grocery Store X would likely be interested in the product he was supposed to sell to Restaurant A.

So what are your options? Would your wholesaler buy more? Do you have a relationship with a Farmers' Market Association that will allow you to attend a market at the last minute? How about a place that will always take a bulk order to make jam or salsa? As Paul Muller of Full Belly Farm says, a successful farmer must spend her time “100% farming and 100% marketing.” Take a moment to identify your most risky marketing outlet and create a back-up plan for that product.

Legal Risks – Are you above board with your employees?

If you aren't filing payroll tax and covering workers with workers compensation insurance, you're walking on thin ice (and technically, breaking the law.) While talk of the costs may have dissuaded you from hiring employees the right way, it's time to make the switch. And if you think you can't afford minor costs like payroll tax and insurance, you may have bigger problems in your production plans than you realize. These costs are insignificant enough that you should be able to pay for them if you can afford hired labor. The risk of getting busted for violating labor laws is significant and fines could very well put your farm or ranch out of business. Time to read up on how to follow the law (getting legal?.

Financial Risks – How well do you understand your Cash flow?

It is likely that your farm and ranch business goes through ups and downs in your cash flow cycle. Our work is largely dependent on the seasons and cycles of animals and therefore there are times when we have a lot of cash coming into the business and there are times when there is not a lot coming in. For many of us, when we have the least amount of cash coming is also when we have a lot of cash going out! Create a cash flow budget for your farm that shows the months across the top and different categories of income and expense along the side. You can then go through and project income and expense by month. This will help you plan for when cash is short, and budget more stringently when income is strong. Another strategy to weather a lopsided cash flow is to move major bills and payments to times of the year when you have income. For example, pay for liability insurance in August instead of February.

Production Risk – Do you have a plan for wildfire?

We farm in a part of California with a particularly high threat of wildfire. Now is a great time to get your wildfire plan written down and understood by all involved. Do all of your properties have at least two exits? What will happen to your livestock if you happen to be out of the area when a fire threatens your farm? Did you know that Cal Fire does not want you to leave sprinklers on when you evacuate and would rather you place buckets of water around structures? Do you maintain 100 feet of defensible space around all outbuildings? There are a lot of great resources available online to help you get started creating a plan. Start off by reading this Foothill Farming blog post on wildfire planning: http://ucanr.edu/sites/placernevadasmallfarms/blog/?blogpost=19003&blogasset=24945

One of the most important parts of managing risk on your farm is preparing yourself for the emotional toll that accompanies all of these scenarios. By taking a moment to think through a list of potential risks and what actions you'll take in the face of these risks, you are making yourself more resilient. Understandably, an initial reaction to these scary situations is to avoid thinking about them altogether. By looking at these risks as hypothetical situations, we are training ourselves and our businesses to react effectively if and when we need to.

For more information on the types of risk your farm or ranch needs to prepare for, visit the Risk Management section of our Foothill Farming website: http://ucanr.edu/sites/placernevadasmallfarms/Farm_Business_Planning-_new_2/FBP_Risk_Management/Risk_Management/

The Farmers' Market Load List- Try It, You'll Like It!

Winter, my friends, is upon us. Does it always come so quickly? Though my mind spins with the ‘what ifs?’ of this closing season, I love the optimism and potential that December and January seem to always bring. With more hours of darkness in the evening, not only am I getting more sleep, I am also finding more time to dream of my “next year” farm. Oh, the “next year” farm, that beautiful beacon of financial stability and production perfection. There is not a weed in the field, the market tables are piled high with a huge selection of quality products, the animals are behind their fences, I am rested and look beautiful, and the bank account is busting at the seams. I always say (or heard said once and now repeat often), “To be a farmer you must be an optimist.” We learn from our mistakes and build upon failure, year after year after hopeful year.

How, exactly, do you learn from your mistakes? The qualitative data often seems undeniable. I remember not selling those bunches of X at market. I remember how long it took to harvest and process Y.   But what of the real numbers? Perhaps the crop that in my mind seems a waste of time is actually making money due to low production costs and high sticker price. Maybe my market stand-by, the crop I always sell out of, is actually losing money because of the cost of labor at harvest. As farm business owners, we need to capture this data in order to make truly informed decisions about what we should produce. You, of course, have to grow what you love, but you also need to grow what makes you money if you want to continue farming as a profession.   For those of us that sell at Farmers’ Markets, the market load list is an important tool that we should all be taking advantage of.

A load list is a way to document which crops you bring to market, the quantity you bring, the unit you sell each crop by (bunches, pounds), the price per unit, and the amount leftover at the end of market.   Most farmers’ markets require you to fill out a load list for their own records though they do not take price into account. A well-kept load list will help you to figure out which crops are making money and which may be losing money. It will also help you understand sales trends (beginning vs. the end of the month; seasonal fluctuations) and help you understand the most efficient quantity of product to bring to market (not too much, not too little, but just right.)

It can be a challenge to implement a load list. I suggest thinking about a system that will work for you and your farm. Is no one filling out the harvest notes making it tough to know what quantity of which crop is loaded in the market truck? Maybe a label on each box with quantity is all you need. Then, whoever sells at the farmers’ market can quickly fill-in a load list. Is the load list kept in a tucked away location in the farmers’ market supplies and always forgotten? Try keeping it in the cash box.  There is no reason to re-invent the wheel- ask for two copies of the load list required by your market and take one home. And yes, if you are on top of your game, you will enter these sales numbers into your spreadsheets, etc., when you get home and count your cash, but don’t worry if you would prefer to file them away until later to look at. If you have done the latter, now is the time to pull them out and determine which crops are making and losing money.   With smart decision making based on actual sales data, your “next year” dream farm might actually come true!

Here is a sample load list spreadsheet created by the USDA:

http://www.flaginc.org/wp-content/uploads/2013/03/RT_market_load_list.pdf

 

UCA 118

Generating energy from forest products

Thinning a forest of woody materials has multiple objectives. It can increase the resiliency of the remaining trees from the effects of fire, drought, pest and disease; it can improve habitat quality for wildlife including watersheds; and it can make it easier for firefighters to protect human lives and livelihoods when a fire is burning. There are several ways thinning is carried out:  cable logging, feller bunching, conventional tractor skidding, hand-thinning and piling, and mastication. One of the issues with thinning is the disposal of biomass that is non-merchantable (e.g., branches, tree tops, small diameter trees). Typically this material goes into large slash piles. For the most part, these piles are left in the forest to break down naturally under winter rain and snows, and are later burned. Because of strict air quality rules, forest managers have very small windows of opportunity to burn these piles, so they are often left on the landscape for many years, sometimes becoming a fire hazard themselves.

Forested communities are searching for ways to deal with this residual biomass that will improve the health of the forest ecosystem; improve and protect critical watersheds and wildlife habitat; reduce the amount of air pollution by removing the piles instead of burning them; and reduce the critical fire danger to their communities. The Placer County Biomass Program is taking up this challenge by chipping the slash piles and trucking the chips to a biomass facility to be converted into electricity.

Outside of Foresthill, Calif., the Tahoe National Forest American River Ranger District and the Sierra Nevada Adaptive Management Project (SNAMP) have been collaborating on a study of forest fuels reduction treatments carried out on national forests. The eight-year ‘Last Chance’ study involves independent third party research by University of California scientists of the integrated effects of forest thinning on fire hazard, forest health, wildlife, water quality and quantity, and public participation. The Placer County Biomass Program, in conjunction with the Tahoe National Forest, the Sierra Nevada Conservancy (SNC) and the Placer County Air Pollution Control District, proposes to remove some of the biomass waste from the Last Chance project to provide an alternative to open burning of the piles. Local contractors are hired to grind the material on-site, load the material into chip vans, and bring the material to market within 60 miles of the Last Chance site to create green, renewable electricity. Placer County estimates that roughly 3,000 Bone Dry Tons (BDTs) of biomass can be removed. According to UC researchers, one BDT burned in a typical commercial boiler fuel will produce 10,000 pounds of steam and 10,000 pounds of steam will produce about 1,000 horsepower or generate 1 megawatt hour (MWH) of electricity.

The economics of this project will be used as part of the assessment of locating a biomass energy facility in the Foresthill area. The removal of these biomass piles will greatly reduce the possibility of catastrophic fire to the local communities on the Foresthill Divide. The improved forest and watershed health will be noticed by the local community and the surrounding county which derives recreation and watershed benefits from the American River area. In addition, several tons of air pollutants will be avoided by removing the pile burns from this area which is currently a federal non-attainment basin that carries both business and health risks to the local population.

Though this project is of benefit to the Foresthill community, other communities in the wild-land urban interface aren’t as lucky. According to Brandon Collins, research scientist at the Pacific Southwest Research Station and UC Berkeley, the lack of funding to chip and remove slash piles and the lack of infrastructure or facilities to take the chips to, makes it impossible at this time to remove that biomass at a larger scale.

“There is so much woody material on the landscape as a result of fire exclusion, it could take decades to really get a handle on it," Collins said. "However, any effort to remove thinning residues from the forest and to also get a benefit from it, such as energy, is great and should be supported.”

Slash pile in Tahoe National Forest, Last Chance project.

Slash pile under a controlled burn.

Workers bunch slash.

Slash piles are chipped and trucked to biomass facility.

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