1. Traveling Tobacco Road: Diversifying Risk in a Post –Tobacco Era Presented By: Ben Beale Extension Educator St. Mary’s Co

2. Overview of Program Southern Maryland Farm Viability Grant Program The purpose of the Southern Maryland Farm Viability Enhancement Program ("Program") is to improve the economic bottom lines and environmental integrity of participating farms through the development and implementation of Farm Viability Plans ("Plans"). These comprehensive, yet focused farm plans, which are to be developed by teams comprised of farmers and other agricultural, economic and environmental consultants, will be aimed at suggestion ways for farmers to increase their on-farm income through such methods as improved management practices, diversification direct marketing, value-added initiatives and agro-tourism. Southern Maryland Farm Viability Grant Program The purpose of the Southern Maryland Farm Viability Enhancement Program ("Program") is to improve the economic bottom lines and environmental integrity of participating farms through the development and implementation of Farm Viability Plans ("Plans"). These comprehensive, yet focused farm plans, which are to be developed by teams comprised of farmers and other agricultural, economic and environmental consultants, will be aimed at suggestion ways for farmers to increase their on-farm income through such methods as improved management practices, diversification direct marketing, value-added initiatives and agro-tourism. Tri-County Council of Southern Maryland

3. The Process Administered by the Tri-County Council, with grant funds from the tobacco buyout program Administered by the Tri-County Council, with grant funds from the tobacco buyout program My Role: Provide leadership in development of plans, provide information and education in subject areas, identify other resources, and work as a team in overall review of submitted plans. My Role: Provide leadership in development of plans, provide information and education in subject areas, identify other resources, and work as a team in overall review of submitted plans.

4. Why Plan?

5. Components of a Plan Executive Summary Executive Summary Vision Vision Mission Mission Define objectives Define objectives Market and Competitive Analysis Market and Competitive Analysis SWOT analysis SWOT analysis Marketing plan Marketing plan Production or operational plan Production or operational plan Financial plan Financial plan Supporting Data Supporting Data

6. First Step: Vision and Mission VISION VISION We are a family farm whose work is a reflection of ourselves. We are known for our practical involvement in producing quality products for a demanding customer. Our farm provides food for a growing community, income to support a growing family, and the values to enable the next growing generation. We are a family farm whose work is a reflection of ourselves. We are known for our practical involvement in producing quality products for a demanding customer. Our farm provides food for a growing community, income to support a growing family, and the values to enable the next growing generation.MISSION/OBJECTIVES The following goals are integral to achieving our mission: The following goals are integral to achieving our mission: Operational Goals: Increase our level of efficiency, especially with regard to grain and beef production through increased economy of scale and management. Increase our level of efficiency, especially with regard to grain and beef production through increased economy of scale and management. To be completely transitional within the next five-year period, meaning the farm has a viable future and each member has the opportunity to earn a fair income. To be completely transitional within the next five-year period, meaning the farm has a viable future and each member has the opportunity to earn a fair income. To position greenhouse operations and management capacity to stand on its own. Aggressively pursue relationship with Bell and look for opportunity to expand. To position greenhouse operations and management capacity to stand on its own. Aggressively pursue relationship with Bell and look for opportunity to expand. Financial Goals: Maintain low debt load, especially in reference to fixed assets. Maintain a debt-to-asset ratio of less than.25. Maintain low debt load, especially in reference to fixed assets. Maintain a debt-to-asset ratio of less than.25. Aggressively expand new operations, with stability of income reaching the point existing before the buyout. Aggressively expand new operations, with stability of income reaching the point existing before the buyout. Produce average net income of $25,000 for each farm operator without reliance on tobacco buyout funds within six years. Produce average net income of $25,000 for each farm operator without reliance on tobacco buyout funds within six years.

7. Market Analysis Identifying areas of competitive advantage that can be exploited in order to meet objectives of the mission statement Identifying areas of competitive advantage that can be exploited in order to meet objectives of the mission statement Market research is thus critical to the process Market research is thus critical to the process Direct marketing requires target market segments, identify key attributes of those segments and form strategy around the needs of that segment Direct marketing requires target market segments, identify key attributes of those segments and form strategy around the needs of that segment

9. SWOT analysis: The SWOT analysis is simply a tool for organizing your thoughts and determining areas of competitive advantage. The SWOT analysis is simply a tool for organizing your thoughts and determining areas of competitive advantage. Looks internally at: Looks internally at: Strength Strength Weaknesses Weaknesses Looks externally at: Looks externally at: Threats Threats Opportunities Opportunities

11. Strengths: Facilities drastically increase throughput and efficiency Able to increase efficiency through feeding own grain Beginning of custom beef will add value to existing line Good at finding high quality feeders at low cost Use of silage and haylage, alternative feeds will further reduce costs Use of ration consultant provides for accurate feed production Existing reputation and brand value to Russell name Capability to produce high quality animals Weaknesses: Limited to current production given local land base Limited ability to harvest forage economically Time constraints with focus on production limit time available marketing Opportunities: Local sale of beef to expanding metro customer base Availability of dairy operations for potential alliances Expanding beef production in area allows for alliances for reduced input cost Proximity to feeder cow/calf operation reduces cost of feeders Threats: Traffic and population concerns over odor Nutrient management regulations-CAFO potential Profit margins require excellent management Consolidation of industry

12. Areas of market differentiation: Price Price Product Product Promotion Promotion Distribution Distribution

13. Operation and Production Plan Farm Execution Plan: Short and Long term Action Items Beef: 2003: Finish 230 head. Sell 220 through Truth and 10 as Freezer Beef. Begin to harvest more haylage and reduce feed cost. Begin to play along with forward contracts. 2003: Finish 230 head. Sell 220 through Truth and 10 as Freezer Beef. Begin to harvest more haylage and reduce feed cost. Begin to play along with forward contracts. 2005: Expand to 250 head--235 to Truth and 15 freezer beef. Look at another barn conversion. Begin to implement forward contracting or futures market. 2005: Expand to 250 head--235 to Truth and 15 freezer beef. Look at another barn conversion. Begin to implement forward contracting or futures market. 2007: Complete herd expansion to 275 head with 255 to Truth and 20 to freezer beef. Seek alliance with other producers to further reduce input cost. 2007: Complete herd expansion to 275 head with 255 to Truth and 20 to freezer beef. Seek alliance with other producers to further reduce input cost.Greenhouse: 2003: Add hanging baskets and additional house. 2003: Add hanging baskets and additional house. 2005: Maintain production 2005: Maintain production 2007: Maintain production 2007: Maintain productionAsparagus: 2003: Begin first harvest and negotiate a constant market 2003: Begin first harvest and negotiate a constant market 2005: Evaluate mature harvest and markets. Decide on acreage expansion and time commitments. 2005: Evaluate mature harvest and markets. Decide on acreage expansion and time commitments. 2007: Maintain production 2007: Maintain productionGrain: 2003: Increase production to 1200 acres. Work on marketing program. initiate alliances with seed companies. 2003: Increase production to 1200 acres. Work on marketing program. initiate alliances with seed companies. 2005: Maintain production at 1200 acres. Have defined marketing plans for entire crop. 2005: Maintain production at 1200 acres. Have defined marketing plans for entire crop. 2007: Renew Lease for next cycle. 2007: Renew Lease for next cycle.Hay/Straw: 2003: Look to increase actual harvestable yield through haylage. Seek sales to dairies. Continue with sales to contractors. Buy in straw if needed 2003: Look to increase actual harvestable yield through haylage. Seek sales to dairies. Continue with sales to contractors. Buy in straw if needed 2005: Evaluate contractor market. Maintain production. Look for advantages in winter and summer annuals 2005: Evaluate contractor market. Maintain production. Look for advantages in winter and summer annuals 2007: Maintain production based upon demand 2007: Maintain production based upon demand

14. Financials Pro-forma income statement Pro-forma income statement Statement of Net Worth Statement of Net Worth any investments any investments show level of risk involved show level of risk involved show who has a stake in the business show who has a stake in the business Planned cash flow statement Planned cash flow statement determine the need for short- term operating loans determine the need for short- term operating loans demonstrate long term cash flow-ex)vineyard and orchards demonstrate long term cash flow-ex)vineyard and orchards Financials should show different enterprises Financials should show different enterprises Where and when money will be needed Where and when money will be needed

15. So get ready, hold on and enjoy the ride. The trying is half the fun.

16. And after all the hard work, you get to reap the benefit of your efforts!

17. The End