Completed Project Report


How Do You Know Your Pricing is Right, and Your Investment is Protected?

  • Award Amount: $80,137
  • Regional Center: Northeast Extension Risk Management Education Center
  • Grant Program: 2021 Producers Underserved by Crop Insurance
  • Project Director: Robert Hadad
  • Email: rgh26@cornell.edu
  • Organization: Cornell University Office of Sponsored Programs

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Project Overview

Our project, “How Do You Know Your Pricing is Right and Your Investment is Protected” was created to assist fresh produce growers in understanding their financial status in order to make informed business decisions that ultimately improve profitability. Many farmers price their produce without fully understanding the costs of production. Without knowing their costs, making important business decisions throughout the year increases the risk of losing money. Growers often trade sweat equity for low returns on their investments but find it hard to pay for expansion, improvements, or labor down the road.
Farmers often take pricing for granted without the background knowledge of what it took to get product to market. Having customers give them loads of cash for sales isn’t a measure of how profitable (or even if it is profitable) the business is. Our discussions with participating growers in the project made this point clear. Many set prices based on supermarket pricing in their area. Many set prices based on what their competition at the farmers markets were charging. Others took whatever pricing wholesalers (restaurants) offered. Only a small handful actually kept track of their costs and set prices accordingly.
The majority of project participants who had been farming for more than 5 years, started to realize they needed to increase production volume. To increase production they were faced with decisions of acquiring more land, add equipment, and/or add more labor. How to pay for these changes were definitely not clear to them because they lacked the financial data to make those decisions.
Labor issues were a problem. Farmers wanted to keep their experienced workers for multiple seasons. It took time to train new workers each season. It made sense to do more to keep workers from year to year. Paying enough is one avenue but like in other workplaces, other attributes for the workers were important. Having a clear understanding of the farm policies for workers, providing more advanced training, providing more responsibilities, and having the workers feel they were a valued partner in the business was also important. This project assisted growers in advancing policies to address improving the working environment. A video was created as training tool for farmers to learn how to write an employee handbook using the template provided. A second video tool created was how farmers and employees can overcome issues that can otherwise generate conflicts. Reducing stress and maintaining a healthy work environment is hugely important for owner/worker relations. This tool is titled Diffusing Conflict on the Farm.

In NY as in other parts of the country, extreme weather conditions have played havoc with field production. Too wet. Too dry. Too wet then dry then wet again in the same season contributed to yield losses. New crop insurance programs for specialty crops along with other financial tools that FSA and other agencies provided were available. The produce growers we worked with had little or no knowledge about these programs. Many had misconceptions about eligibility mainly believing it wasn’t for operations of their smaller size. We brought in speakers from some of the county offices to address the growers. Links to their websites for the information was made available.
A cross section of the growers involved in the project represented farms from the organic and sustainable ag communities. Most of the farms were very small (less than 5 acres) and the rest were less than 25 acres. New farmers made up 30%. Beginning farmers made up 45%. The remaining 25% were growers with 7+ years of farming experience. Women and non-gender-specific individuals accounted for 10% of these groups. Urban farms accounted for 5%
The approach we took for initial outreach to growers using online surveys (self assessments on labor, cost of production, and familiarity with crop insurance) did not work very effectively at all. It seems like Extension and other organizations were sending out surveys for everything and the farmers “tuned out” the requests for responses. The pandemic didn’t help.
 The pandemic stymied most of the in-person workshops training and a lot of the in-person one on one follow up. We took to calling farmers we knew to talk over the project and get them to fill out or at least provide verbal information for the self-assessments. Virtual conferences and stand-alone training were held but unlike in-person meetings, the online audiences were smaller than hoped for. When we did have a couple of in-person meetings, attendance was still low owing in part to the late season burn-out of growers. To accomplish what we set out to do, we had to rely on personal contacts with growers. To be less burdensome, we scaled back the self-assessments to simple verbal questionnaires and relied more heavily on just conversations/discussions.

Number of Participants: 162

Outcomes

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