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Farm Scale, Efficiency, and Profitability: Business Planning Matters

Cindy Fake, Roger Ingram, and Daniel Macon

Summary

Over the last decade, a plethora of extension, non-profit, and grant funding programs have emerged to serve beginning farmers and ranchers. Most programs target start-up operations and focus on production skills. University of California Cooperative Extension has been providing beginning farming training to small-scale producers since 2004. However, once farmers have one or two years of production experience, our focus shifts to business training.
Helping producers develop business, marketing, and risk management skills is critical to the long-term economic viability of farms and ranches. Our business training program uses a hands-on, integrated approach; including economic and market analyses, operations planning, and risk management. Training is delivered by a team of extensionists and local producers who provide practical, reality-based tools and advice.
A decade of delivering farm business training and analyzing the economics of farm and ranch businesses has taught us the critical roles of scale and efficiency in building profitable small-scale farm businesses. As a result, we have developed training focusing on profitability analysis, efficiency, and building to a profitable scale.
This presentation will discuss that training and present the results of a phone survey of small-scale producers in the northern California foothills in the process or in need of scaling up. It will describe the challenges in scaling up and key lessons learned from analysis of profitability and scale of small farm businesses. Our experience shows that farms who have streamlined their operations; growing fewer crops, improving labor efficiency, and expanding into wholesale and direct-to-retail markets are more profitable.

Details

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