Family Farm Series Publications:
Marketing for the Small Farmer
How to Establish and Operate a Roadside Stand
Quick Links
This publication was prepared by Michelle Woods, Senior Editor, and Anne
Zumwalt, Contributing Editor, of the Direct Marketing Program, California
Department of Food and Agriculture. The authors acknowledge the valuable
assistance of Nita Gizdich, Gizdich Ranch, Watsonville; Tom Haller, California
Association of Family Farmers (CAFF); Bob Kirtlan, Jr., Silver Bend Farm,
Clarksburg; and David Visher, University of California Small Farms Center,
Davis.
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Farming is more competitive today than ever. Escalating production prices
and stagnating crop prices are forcing many farmers to search for new
ways to increase their share of the retail dollar. One popular marketing
option which allows farmer to receive a higher return for their crops
is roadside stands.
Roadside stands come in a variety of shapes and forms, ranging from seasonal
wooden stalls to year-round rural attractions which include pie shops,
gift boutiques and refrigerated produce displays. Some roadside stands
specialize in a single product, such as strawberries or apples. Others
offer a wide variety of fresh and processed fruits, nuts, and vegetables.
Instead of paying packers, shippers and brokers to market their crops,
roadside marketers sell directly to consumers from their farms. Some farmers
market all of their crops at roadside stands to compliment conventional
marketing options. Here are some of the benefits enjoyed by roadside stand
farmers:
* Cash sales, immediate payment.
* More control over crop prices.
* Low volume is not a handicap.
* Use of family labor.
* Packing, sizing, labeling, and container exemptions.
* The opportunity to test new products and receive valuable feedback from
consumers.
Some of the barriers roadside stand farmers may encounter include:
* Zoning restrictions.
* Insurance liabilities.
* Business licensing regulations.
* Health and sanitation codes.
* Weight and measures specifications.
* Fire and police ordinances.
* Long hours.
* Distraction from other farm duties.
* The need to diversify.
* Fixed overhead, regardless of profit or crop cycles.
Many farmers realize greater net profits from roadside stand sales than
from conventional marketing channels. Before you decide to open a roadside
stand, it is important to weigh the benefits of direct marketing against
the obstacles you may encounter. By reading this manual and talking to
farmers who operate existing roadside stands, you will be able to determine
if this is the right marketing option for you!
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1. Will your family support you? Most small farmers rely on family members
for a significant portion of the labor required to run a successful roadside
operation. It is important to know if your family is willing and able
to help you and if they are prepared to make a long-term commitment. If
family labor is not available, you must determine where your employees
will come from.
2. Do you have a suitable location for a roadside stand? Easy access to
your farm is important to the success of a roadside stand. A heavily traveled
highway or road is probably the best location. Stands located close to
urban areas or tourist attractions also enjoy a high volume of business.
3. Are there established roadside stands nearby? How will they affect
your operation? Neighboring roadside stands are not always a source of
competition. You may be able to grow a crop that will compliment crops
grown by surrounding farmers. Roadside stands can even be successful if
several farmers in a particular area grow the same crop. Consumers are
more likely to visit a roadside stand if they have the option of stopping
at other farms while they are in the area.
4. Do you enjoy dealing with the public? As a roadside marketer, you will
be asked questions about crop varieties, recipes and growing methods.
Successful roadside farmers have also discovered that it pays to become
acquainted with their customers on an individual basis. By simply remembering
the names of a few customers, many farmers have cultivated a loyal clientele
of repeat patrons.
5. Are you prepared to operate your stand seven days a week during peak
season? Successful roadside stands are typically open eight to ten hours
a day, seven days a week during peak season.
6. Can you produce sufficient quantities to supply a roadside stand? If
not, are sufficient quantities available locally?
7. How will a roadside stand fit into your current farm operation? Will
you have to make significant changes in order to establish a stand? How
will these changes impact you financially?
8. Will your insurance company cover your on-farm marketing activities,
especially U-Pick?
9. Are you prepared to make a long-term commitment? Few roadside stands
are successful overnight. It may require several years to build the volume
of traffic to an acceptable level. This is particularly true if you plan
on marketing the majority of your crops through a roadside stand.
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Proper planning is essential to the success of a roadside stand. In addition
to deciding which crops to plant and how long to stay open, roadside farmers
must be prepared to make changes in their accounting systems and expand
their knowledge of health regulations and zoning laws.
Setting Goals
Goals can assist roadside farmers with decision making and long-range
planning. Tobe effective, goals should be measurable, attainable and time-specific.
Lay out your goals in writing and include the steps you will have to complete
to achieve them.
Crop seasons can be extended by rotating planting dates and varieties
so that you have a steady stream of product over a given period of time.
Growers can also extend growing seasons by re-selling produce purchased
from neighboring farms. Growers who choose this last option should contact
the California Department of Food and Agriculture Market Enforcement Branch
about obtaining a re-sale license at (916) 654-1237.
Deciding What to Plant
Before making any planting decisions, it is important to determine if
direct marketing will be incidental to your farm operation or used as
a primary marketing method. Farmers who use roadside stands as a primary
marketing method are usually most successful when they stagger plantings
and grow several different kinds and varieties of produce. Apples, peaches,
strawberries, melons, cherries, tomatoes, sweet corn, green beans, pumpkins
and squash are some of the higher volume crops sold at roadside stands.
There are several farmers, however, who grow only one crop and do quite
well.
Farmers who operate year-round roadside stands often use season extenders
during periods when they do not have many crops to sell. Popular season
extenders include canning supplies, potted flowers and plants, seeds,
bedding plants, cider, jams, jellies and candy.
Operating Hours and Selling Season
To a great extent, storage facilities and the crops planted will determine
the selling season of a roadside stand. A stand's operating hours are
dependent upon the volume of traffic during various hours of the day,
the amount of produce available for sale, and the availability of sales
help. Many small stands are only open on weekends, when the volume of
traffic is highest. Larger stands may stay open seven days a week. Some
experimentation may be necessary to discover the best operating hours
for your stand.
Developing a Budget
Expenses to consider when developing a budget for a roadside stand include
insurance, depreciation, operating expenses/overhead, labor, waste, and
the cost of growing the crops you sell. Also factor in a salary for yourself
or a return on your investment. Base your salary or your investment return
on the opportunity cost of operating the stand (i.e., the profit you could
earn if you sold your crops through other marketing channels.)
Records Management
Records management is necessary for two reasons: (1) to develop standards
for measuring success and (2) to prepare tax forms and government reports.
At a minimum, separate records should be kept for home grown produce,
purchased produce, daily sales, operating expenses, and payroll.
Insurance
Contact your insurance agent in the early stages of planning your roadside
stand. Most insurance companies are willing to extend existing farm policies
to cover direct marketing activities. The cost of insuring a roadside
stand increases with its complexity. Farmers selling value-added or processed
food products, whether produced on-farm or purchased from an outside source,
should inquire about product liability insurance. Most insurance companies
doing business in California will not write new policies for U-Pick operations
involving ladders.
Personnel
Since most roadside stands are open seven days a week during peak season,
it may be necessary to hire supplemental labor. The type of employees
you hire can have a dramatic impact on sales. Before you advertise a position,
write a description of the skills needed to perform the job. Require every
person who applies for the position to fill out an application. Give all
applicants equal consideration, but only interview the people who meet
your criteria.
After you hire a new employee, help him or her to become familiar with
your farm and the crops and varieties of produce sold at your stand. Make
a habit of regularly informing your employees about advertisements, harvest
schedules, and any other plans that affect the stand. The wages that you
pay will depend on what is considered acceptable in your area. In order
to retain good workers, it will be necessary to offer periodic raises.
For growers concerned about overhead, bonuses and profit sharing programs
are an effective way to compensate employees and are often less costly
than raises.
It is not unusual for labor to account for over fifty percent of the
cost of operating a roadside stand. Most roadside farmers, there is no
way to avoid this expense. However, it is possible to implement policies
to encourage peak performance from your employees:
* Post a list of housekeeping jobs employees can do during slack times
such as restocking bins, sweeping, or preparing new signs or displays.
* Require all workers to sign in and out.
* To help customers identify employees, require them to wear distinctive
badges or aprons.
Recruiting good workers can be difficult. Some possible sources of employees
include: friends and relatives of current employees, neighbors, high school
and college students, school teachers, (during the summer season), retired
people, classified ads, and state employment agencies.
Safety Checklist
1. Make sure your parking lot has separate entrances and exits.
2. If dust is a problem, consider paving your parking lot or covering
it with gravel.
3. Maintain a clean, sanitary sales area. Keep all floors clear of produce
and debris.
4. Store produce and other food products so that they will not be contaminated
by vermin.
5. Make sure all electrical equipment is safe and childproof.
6. Install barrier shields or covers to protect consumers from moving
equipment.
7. Prepare a written report of any customer related accidents which occur
in the parking lot or on the market premises. Be sure to contact your
insurance agent as well.
8. Post traffic flow signs.
Security
Roadside stands are subject to many common security problems, including
theft, vandalism, and mishandling of funds. Here are some policies you
can implement to help you tighten the security controls at your stand.
1. Make sure your cashiers know how to handle cash properly
a. Keep cash register drawer or cash box closed except when making change.
If two or more employees are working in the stand at one time, designate
one person as the cash handler.
b. Call out the price of each item as it is rung up on the cash register.
c. Place payment on the shelf of the cash register or beside the cash
drawer while making change for customers.
d. Count backwards when making change. For example, if a $10.00 bill is
tendered to pay for a $6.45 purchase, the cashier should count, $6.50,
$7.00, $8.00, $9.00, and $10.00 as he or she places $3.55 in change into
the customer's hand.
2. Try to make daily bank deposits. Only keep enough cash on hand to
make change. During peak season, it may necessary to remove large bills
from the register several times a day.
3. Lock your stand after operating hours, especially if you store produce
or other valuables in it.
4. If your stand is located a long distance from your home, consider
installing outside lighting to discourage vandals and thieves.
Government/Local Regulations
When it comes to government and local regulations affecting roadside
stands, there is good and bad news. The good news is that the California
Department of Food and Agriculture (CDFA) exempts growers who sell to
consumers from roadside stands adjacent to the pint of production, U-Pick
fields and certified farmers' markets from sizing, standard pack and certain
container and labeling requirements. The bad news is that there is an
abundance of other government regulations which affect growers who market
their crops directly. Some of these regulations are explained below.
Zoning Laws: Zoning laws govern whether a piece of property may be used
for a specific purpose: commercial, residential, agricultural, etc. Zoning
laws usually permit growers to construct and operate roadside markets
on their farms. Building permits, however, may be required to insure compliance
with local codes. For more information about zoning laws, contact your
county planning commission.
Labor: If you employ farm hands or seasonal laborers, you may already
be familiar with many of the employment regulations affecting roadside
stand employees. If not, you should be aware of these pertinent facts:
* There are limits on the number of hours children under the age of 16
can work and the types of jobs that they can perform. The U.S. Department
of Labor prohibits under age workers from performing any job considered
hazardous. The restrictions on farm children employed by their parents
are less stringent.
* Roadside stand farmers are responsible for calculating employees' payroll
taxes and deductions. This includes state disability insurance, employment
and training taxes, unemployment insurance, social security, and federal
and state income taxes. Depending on your gross annual sales and the ratio
of processed to resale products that you stock, some of the taxes and
deductions may or may not apply. Call your local Employment Development
Department for more information.
Marketing Orders and Commissions: Marketing orders and commissions are
set up to aid in the marketing of a particular commodity and establish
standards for size, grade, and/or maturity. There are a few which also
regulate when a commodity may be harvested and sold to the public. All
of the crops listed below are currently affected by a marketing order
or commission. If you plan on selling any of these crops, contact the
CDFA Marketing Branch for the manager of the appropriate order or commission
at (916) 445-5141.
Almonds, Figs (dried)
Apricots, Grapes (table)
Artichokes, Grapes (tokay)
Avocados, Grapes (wine)
Beans (dried), Honey
Beef Kiwi Fruit*
Cantaloupes*, Lemons*
Celery, Lettuce
Citrus, Melons
Dates*, Milk
Nectarines*, Raisins
Olives, Rice
Oranges*, Strawberries
Peaches*, Tomatoes
Pears*, Turkeys
Pistachios, Walnuts*
Plums*, Wheat
Potatoes, Wine
Prunes
* These crops are allowed a direct marketing exemption in certain circumstances.
Health Regulations
The California Uniform Retail Food Facilities Law (CURFFL) exempts direct
marketing farmers from most structural and operational requirements provided
that the market is located on land controlled by the farmer and the only
items sold at the market are shell eggs, fruits, nuts, and/or vegetables.
Direct Marketing farmers are required to meet the following conditions:
* All food must be stored at least 18 inches off the floor. Food stored
in a walk-in refrigeration unit must be at least five inches off the floor
(food stored on a pallet should meet this requirement).
* Food preparation is prohibited. Article 2 Section 27522 of CURFFL defines
food preparation as a "packaging, processing, assembling, portioning,
or any operation which changes the form, flavor, or consistency of food."
Some county environmental health offices interpret Section 27522 as prohibiting
the cutting of samples. Trimming of outer leaves, stems, stalks, tops
and roots is permissible.
If you are interested in setting up a pie shop, cider press, or other
food preparation facility, you should contact your county environmental
health office for further direction.
CURFFL is a state law enforced by county environmental healthy offices.
Interpretations of CURFFL may vary from county to county.
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Poor location is one of the major causes of roadside stand failure. When
evaluating a site for your stand, these factors should be taken into consideration:
* The population of surrounding cities and their distance from the stand.
* The traffic on the road where the stand is to be located.
* The per capita income of your potential consumer base. Some farmers
believe that consumers from middle and low income neighborhoods are more
likely to shop at roadside stands than other consumers.
* The size of neighboring roadside stands and their distance from the
proposed site.
* Is there room for expansion? It is usually better to expand away from
the road, rather than parallel to it. This will permit you to expand parking
in two directions as your business grows.
The ideal location for a roadside stand is a straight level stretch of
land adjacent to a busy highway. The entrance to the stand should be close
enough to the road so that it can be seen by passing motorists, but not
so close that entering and exiting the parking lot is a hazard. Consumer
studies indicate that most people will only drive ten to twenty-five miles
to a roadside stand. If your farm is not located within a twenty-five
mile radius of an urban population or tourist attraction, establishing
a profitable roadside stand could be difficult. To increase your potential
for success, you may want to consider joining a farm trail or eventually
developing your farm into a rural attraction. To obtain an estimate of
the number of motorists who drive by your farm, call the California Department
of Transportation.
Buildings
The actual physical structure of a roadside stand can range from an open
framed, wooden stall to an air conditioned stucco building with swinging
glass doors. If you are opening a roadside stand for the first time, and
you want to house it in a building, use a refurbished barn, shed or other
existing structure. If you must build a new structure, keep it inexpensive
and simple. You can expand as your sales increase. Many roadside farmers
sell their crops from picnic tables when they are first starting out.
Plan the interior of your roadside stand and the amount of space you
will need for storage, displays, and aisle space, then calculate the stand's
exterior dimensions. Cold storage and preparation areas should be as large
as the sales area. Aisles should be at least five feet wide to allow for
good customer flow and ease in restocking. Strategic location of your
plumbing and cold storage will permit you to expand at a minimal cost
in the future.
Structures with open fronts or sliding doors are conducive to large displays,
allow for convenient delivery of produce, and are easy to lock up at closing
time. If you display produce outside, use an umbrella or awning to protect
it from exposure to the elements. Consider appearance and decor when you
are planning your stand. Try to create an environment that will attract
customers and be uniquely yours.
Parking
Roadside stand parking lots should be convenient, level and safe. Entrances
and exits should be at least thirty feet wide. The best design for a parking
lot is perpendicular stalls divided by a center lane which can accomodate
two-way traffic. Perpendicular stalls make better use of space and provide
convenient access to parking spaces. They are also safer since they encourage
shoppers to look both ways before backing up. Angled parking is only useful
if your want to set up a one-way traffic flow through the parking area.
Construct your parking lot at the side or rear of the stand, leaving the
front display visible.
There are two basic methods of estimating the amount of parking space
your customers will need:
1. Design the parking lot so that it is four times larger than your sales
area.
2. Allow for fifteen parking spaces per 100 customers.
An accurate estimate of the number of customers who patronize your stand
during peak season is needed for the second method.
A common size for a parking space is nine and a half feet wide by 18
feet long. Parking spaces should be marked using paint or chalk. Allow
24 feet for each parking aisle. Use concrete parking blocks or hay bales
to protect your customers and keep cars at least five feet away. from
buildings and walkways. Asphalt parking surfaces are the cleanest and
the most appealing; however, gravel lots are less expensive and control
dust just as effectively.
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Most farmers depend on retailers, packers, and brokers for their merchandising
needs, but as a direct marketer you are responsible for merchandising
your own crops. Three key areas you should focus on when preparing a merchandising
plan are display, price, and customer service.
Displays
Produce displays can enhance or detract from the overall image of a roadside
stand. An abundant, well-tended display will draw new customers and encourage
them to spend more money. A sparse, unkempt display will attract minimal
amount of attention and may be perceived as an indication of inferior
quality.
Try to make your displays as appealing as possible. Contrasting the colors
of produce when you stock bulk bins has a very positive psychological
effect on shoppers. Place red delicious apples beside green Granny Smiths
or bright orange carrots beside white cauliflower. For farmers who raise
apples and oranges, studies have shown that red-orange combinations have
a strong impact on the human eye and memories of these colors are retained
by the mind for long periods of time. Contrasting the textures and sizes
of produce is also an effective merchandising tool. Lay long, slender
vegetables and fruit horizontally in display bins, rather than pointing
them upward. If you do not have a lot of variety, create a color mixture
with packaging or signs. Many roadside farmers find fixtures with narrow
compartments which slope upward conducive to creating colorful, attractive
displays. Produce displayed in this type of fixture also tends to require
less trimming and maintenance.
Product placement is another important consideration when planning a
produce display. The purpose of product placement is to arrange the location
of your displays so that they will immediately entice shoppers who walk
into your stand. Roadside farmers who offer a full line of fruits, nuts,
and vegetables often find it effective to group produce according to usage.
Customers find this method of product placement very convenient.
Staple vegetables - potatoes, sweet potatoes, onions, cabbage.
Staple fruit - apples, oranges.
Cooking vegetables - squash, sweet corn, peas, okra, beans.
Salad vegetables - lettuce, celery, peppers, tomatoes, cucumbers.
Seasonal vegetables - melons, peaches, grapes, kiwis.
Value added products - juice, jams, jellies, flavored nuts, herb vinegars.
Other roadside farmers plan their displays around power and impulse items.
A power item is a product which initially attracts customers to a roadside
stand and is commonly featured in advertising. Sweet corn, strawberries,
apples, and peaches are all examples of power items. An impulse item is
a product that a customer purchases spontaneously after seeing the item
displayed. Gift packs, nuts, honey, apple peelers, and pea shellers are
examples of impulse items. Although customers do not actually plan to
buy impulse items, they account for over half of the purchases made at
roadside stands.
Looking for an inexpensive way to decorate your roadside stand? Try nailing
peck and half peck baskets to walls at a tilt. In addition to creating
a charming country look, the baskets will provide more space to display
impulse items.
Custom parcels of fruit, nuts, jams, and juices make excellent gifts
for holidays and special occasions. Encourage your customers to create
their own gift parcels by stocking colorful wooden baskets, fancy cardboard
boxes, and decorative straw.
Some farmers prefer to distribute power items throughout the stand in
order to lead customers to impulse items. These farmers may even display
power items in areas that customers usually avoid, such as outside walls
and inside comers. Others, find it more effective to display impulse items
near check-outs and power items at the front of the stand so that customers
will make a commitment to buy something as soon as they walk in. Farmers
who use this method believe that failure to place power items in a prominent
spot will discourage shoppers from venturing beyond the front door.
Displaying produce in containers can also enhance the image of a roadside
stand. There are many types of display containers available to roadside
farmers including: wooden baskets, craft paper bags, plastic bags, and
mesh bags. Display containers should protect the commodity being displayed
and be easy to transport. This last point is especially important since
consumer research indicates that people like to take display containers
home. If the cost of the display container is not included in the price
of the product, post this information in a conspicuous place so that consumers
will not be surprised when they reach the check-out counter. Some roadside
farmers have established a voluntary recycling policy where customers
are refunded for returning used containers in good condition. This helps
reduce overhead and brings customers back to the market for more shopping.
Select your container sizes according to your customers' needs. Seniors,
busy professionals, and children prefer small sizes, while home canners
and people with large families prefer to buy in bulk. There are advantages
and disadvantages to pre-packing produce in display containers. Roadside
marketers who prepackage during slow periods have more time to spend with
customers during peak business hours and can often reduce their sales
floor staff. Customers are less likely to handle and bruise produce displayed
in containers. Many containers make produce look more attractive. The
farm name and logo can be put on the container, as a reminder of where
the produce was bought. Prepackaging also encourages customers to buy
larger quantities. One of the major disadvantages to prepackaging is cost.
Containers are expensive. While prepackaging can eliminate the amount
of sales floor help roadside farmers need, additional labor may be required
to fill containers. Many consumers like to inspect produce for defects
before purchasing, and this is more difficult when items are prepackaged.
Price
The price of produce sold at roadside stands is an important issue for
farmers and consumers. Most farmers open roadside stands to increase their
share of the retail dollar. By marketing directly, they are assuming many
of the responsibilities typically performed by packing houses, wholesalers,
processors, and retailers, and expect a higher return for their crops
than they would realize through other marketing methods.
Although quality and freshness are the primary concerns of roadside customers
they do expect produce sold at roadside stands to be somewhat cheaper
than produce sold in grocery stores. Consumers who shop at roadside stands
are forsaking many of the conveniences offered by modem supermarkets,
such as local proximity and one-stop shopping. They expect to be compensated
for their troubles in the form of lower prices.
There are a few exceptions to this generalization: (a) roadside stands
with an extremely high quality image which attract customers even though
prices are steep; (b) roadside stands which advertise low prices and are
shopped primarily for bargains, and (c) rural attractions, which tend
to appeal to customers who are more interested in entertainment than the
practical aspects of shopping. Location can also effect prices. Stands
located within a few miles of a city, on a frequently traveled road, or
near a tourist attraction or recreational area have the luxury of charging
higher prices, while markets located off the beaten track must often charge
lower prices in order to attract customers.
Roadside farmers are most successful when they set their prices somewhere
between the wholesale and retail level. In addition to monitoring the
prices at grocery stores, farmers should consider the following variables
when developing a pricing strategy.
1 .Production and harvesting costs.
2. Quality and selection of produce.
3. Location of the market.
4. Customer income.
5. Volume.
6. Demand and supply of the product.
7 .Prices of neighboring stands.
8. Operating expenses/overhead.
If you purchase produce from neighboring farmers for resale at your stand,
you can determine your selling price by consulting the supermarket produce
ads, or you can use the margin method. The margin, generally used by retailers,
is a percentage of the selling price. The following example illustrates
how to calculate prices using this method.
If you need a 30% margin on a 30 cent item, 30 cents = 70% of the selling
price.
The selling price = (100/70) x .30 cents = 42.9 or .43 cents
If you purchase by the box or crate:
Selling price = (Cost of goods)/($1.00 - (desired percent))
For example: ($6.50)/($1.00 -.30) = ($6.50)/(.70) = $9.29
Divide the selling price by the number of items in the carton, say 24,
= 39 cents. Once you have determined what the prices of your products
should be, you must decide how you will communicate this information to
your customers. People respond differently to corn priced "five for
$1.00" than they do to corn priced ".20 cents per ear".
The following are several approaches to retail pricing which have proven
effective. You may want to use one approach, or a combination. Experiment
until you find the mix that works best for you.
The prices of all products sold at roadside stands should be clearly
posted. People sometimes are hesitant to ask about prices which are not
posted may walk out without buying anything. Posting prices presents roadside
farmers with an opportunity to share information about crop varieties,
cooking methods, and nutritional content. Prices can be posted on signs,
containers, or on the actual product using magic markers, label guns,
pre-printed labels, or even a grease pencil.
9's Pricing -All prices end with the number 9. For example, 99 cents,
39 cents, etc. 9's pricing appeals to consumers' bargain hunting instincts.
For some reason produce selling for .99 cents a pound appears to be less
expensive than produce selling for $1.00 a pound. 9's pricing is only
recommended if you have a cash register or calculator.
5's Pricing - All prices end with the number 5. For example .55 cents,
$1.25, etc. There is conflicting information about the appeal of 5's pricing.
Some experts believe that consumers find it attractive because it is more
"farm-like" and less commercial. Others believe that it is more
business like.
2 for Pricing - All items are priced "2 for $1.00", "2
for 69 cents" etc. There are two advantages to this pricing strategy
(a) it increases sales volume by encouraging multiple purchases (b) consumers
feel like they are getting a bargain by buying two instead of one.
One Price Multiples - A product is priced as a single value, but savings
is offered to consumers who make multiple purchases. For example, a farmer
using one price multiples may sell potatoes for .39 cents a pound, or
3 pounds for $1.00.
Customer Service
In order to cultivate repeat sales, you must offer your customers reliable,
efficient, and friendly service. Shoppers will not return to a market
where the clerks are rude, the facilities are dirty, or the produce is
of inferior quality. A study conducted by the University of Tennessee
Cooperative Extension revealed that consumers consider a shopping expedition
to a roadside stand to be a positive experience when the following elements
are present:
* Safe, attractive and clean facilities. No pests, especially flies and
roaches!
* Convenient check-out patterns.
* Informed, helpful sales staff.
* Fresh, quality produce. Inspect displays frequently; throw away bruised
or damaged produce.
* Recipes and varietal information.
* Well stocked displays.
All scales used at roadside stands to weigh produce must be sealed. Call
your County Agricultural Commissioner or Sealer of Weights and Measures
for more information.
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Every roadside stand farmer needs to advertise and promote. You may have
the best product, service and prices in the state, but you will not be
successful if you can not attract enough customers. Advertising provides
information about your products, hours of operation, market location and
prices. Any form of advertising can be used to get your message across.
However, before you select an advertising medium it is important to know
the desires of your customers. A survey can help you gather valuable information
about your customers: where they live, how they found your stand, and
how often and how much they buy. You can use this information to target
your advertising and promotion. Use the following plan to start mapping
out your strategies. Remember, this is a working plan and should be adjusted
as needed.
Developing a Promotion Plan
Situation Analysis: What is your current situation? Identify barriers.
Objective and Goals: What are your objectives? Be specific, i.e. "I
want to increase my customer base by 20 people per week, or I want to
hold two special events this spring."
Strategy: What strategies will you use to achieve your objectives? Include
any production planning you will have to do.
Budget: What should your budget strategies be to achieve your goals.
Action: Establish a time line for achieving your objectives.
Measurement: Include a system for measuring your achievements. You may
find it helpful to include this in your strategies and/or action plan.
Advertising
Television and radio ads are expensive and their effectiveness is difficult
to measure. Newspapers are less expensive and allow you the option of
advertising in several different ways: classified ads, food sections,
box ads, etc. Many farmers promote their stands by talking the local news
media into doing a public interest or community service story.
Design a logo and incorporate it into your advertising. Container labels,
signs, bumper stickers, hats, shirts, aprons, and vehicles are all wonderful
places to put your logo and generate name recognition for your farm.
Overall, word-of-mouth seems to be the most effective form of roadside
stand advertising.
Roadside Signs
Signs are very important to the success of a roadside stand. Signs are
often the factors which determine whether or not a motorist will stop
to make a spontaneous purchase. An effective sign that is clearly visible
from the road, helps to direct customers to your stand. Place your primary
sign one-half mile from your farm. Use follow-up signs if your stand is
in a secluded location.
Roadside signs can inform customers about hours of operation, crops,
prices, and special events. Be creative! Incorporate pictures or your
farm logo into your signs. Try painting farm information on plywood cut-outs
of fruits or vegetables. Use of a "country" theme helps to promote
the rural image.
If your stand is location on a busy highway, use large letters in your
signs so that motorists will have enough time to slow down and stop after
seeing them. When choosing colors, remember that black letters painted
on a light colored background are quite effective. Letters that are twelve
inches high with one inch brush strokes can been seen at 3,000 feet. Seven-inch
letters can be seen at 200 feet.
The Lady Bird Johnson Highway Beautification Act of 1965 prohibits signs
from appearing within 660 feet of all federal highways. Consult with county
officials before erecting your signs. They can tell you where and how
your signs may be posted.
Farm Trails
Farm trails are organizations comprised of growers in a specific geographical
area who publish a map indicating where regional farms that sell directly
to consumers are located. To cover the costs of printing the map and other
promotional activities, farm trail members are required to pay annual
dues. In some instances, local businesses, agricultural groups and nonprofit
organizations will sponsor a farm trail to help underwrite printing costs.
There are several advantages associated with farm trail membership. By
pooling their promotional dollars, growers can reach more consumers and
take advantage of advertising mediums which they may not otherwise be
able to afford. Farm trails have much of the same allure as shopping malls.
A large variety of products are available for sale by several different
vendors in a defined space. This appeals to consumers' preference for
choice. Farm trails also draw consumers from long distances, allow growers
to specialize without loosing sales, and controls the influx of peddlers.
Many experienced roadside farmers believe that classified advertising
is only effective in small, hometown newspapers. These growers have found
that classified ads placed in large urban paper are easily overlooked.
Food section box ads are much more effective in large newspapers.
In addition to map distribution and radio and newspaper advertising,
many farm trails sponsor annual harvest festivals. A few trails distribute
logos or signs for members to post at their farm gates. For a complete
list of California farm trail organizations, contact the Direct Marketing
Program at (800) 952-5272.
Special Events
Festivals, seasonal attractions, and charity fund raisers are a few of
the special events that you can hold to bring customers to your farm.
An additional benefit of special events is the opportunity to cultivate
media attention, improve customer relations, and receive name recognition
for your farm.
Rural Attractions
Many customers visit roadside stands just for the opportunity to experience
rural life. For some city dwellers, a visit to a roadside stand may be
their only chance to see a farm and enjoy the benefits of country living.
Some farmers are capitalizing on this phenomenon by turning their roadside
stands into rural attractions.
Farmers who operate rural attractions put more energy into entertaining
their customers than traditional roadside growers. Popular activities
at rural attractions include: farm tours; train, helicopter and hay rides;
craft shows; fishing ponds; petting zoos; food booths; and displays of
antique farm equipment. Although rural attractions are often quite profitable,
they do require additional employees, increased insurance coverage, and
depending on the county you reside in, additional licenses and permits.
Farmers who are establishing a roadside stand for the first time, should
wait a few years before expanding in this direction.
Written Material
Brochures and other written material distributed at roadside stands can
be as simple as a single page flier or as complex as a multiple page newsletter.
What ever you decide upon, make sure that your written material is eye
catching, accurate, and includes your farm logo.
Written material serves several important purposes. It can provide customers
with information about harvest dates. Written material with recipes and
nutritional information can be stuffed into customers' bags at the check
out counter. Many growers maintain consumer mailinglists* and mail written
material or postcards to customers when their crops are ready. In some
instances, mailing fliers and newsletters is more cost effective than
newspaper advertising.
* Holding a raffle, which requires customers to write their names and
addresses on an entry card, is a good way to develop a mailing list.
Back To The Top
The preceding guide suggests methods which have proven successful in
establishing roadside stands. Other organizations that provide information
about roadside stands include:
Calif. Assoc. of Family Farmers (CAFF) P.O. Box 363
Davis, CA 95617 (530)756-8518
A non-profit organization dedicated to
promoting successful family farms.
California Farm Bureau Federation (916)446-4647
Check your local telephone directory for the Farm Bureau office in your
county.
County Agricultural Commissioners Provide local agricultural information.
Check you local telephone directory under county government.
County Health Department
Provides information about health permits and regulations pertaining to
food facilities and processed products. Check you local telephone directory
under county government.
Farmers' for Roadside Signs
640 Cabrillo Highway
Pescadero, CA 94060
A group of farmers working to promote legislation permitting farmers to
advertise along roads and highways.
Small Farm Center
University of California
Davis, CA 95616
(530)752-8136
A resource organization which provides publications, information and
assistance with small farm topics.
County Cooperative Extension Office A resource organization which provides
assistance with farm topics, gardening, and food preservation. Check your
local telephone directory under county government.
Twelve years ago, the typical roadside customer was a housewife who purchased
bulk quantities of produce for canning and freezing. Today, most women
work outside of the home and do not have time for these activities*. As
a result, roadside farmers are rapidly losing an important part of their
consumer base. Consumers who can and freeze purchase three times more
fruits and vegetables than consumers who buy produce for immediate consumption.
To maintain a profitable volume of sales, roadside farmers must attract
three times as many customers as they did twelve years ago.
* A notable exception to this generalization are ethnic communities,
whose members are more likely to continue the tradition of buying direct.
Back To The Top
Appendix 1 Sample Farm Management Ledgers
Prepared by:
Dr. Karen Klonsky,
Extension Specialist
Dept. of Agricultural Economics
University of California, Davis
Appendix 2 "Keeping Track of Your Business
and Records" and "Cash Flow Planning"
Excerpts from:
Getting Started in Farming on a Small Scale
United States Department of Agriculture.
Agriculture Information Bulletin Number 451
Appendix 3 Daily Sales Ledger
Accounts Payable Ledger
Wanna Gro Company
| Date |
|
Invoice Number |
Payment |
Outstanding |
Balance |
| Feb |
10 |
1287 |
|
220.00 |
220.00 |
Hero Farms
| Date |
|
Invoice Number |
Payment |
Outstanding |
Balance |
| Feb |
15 |
33062 |
|
350.00 |
350.00 |
| |
20 |
|
200.00 |
|
150.00 |
General Ledger
Accounts Payable
| Date |
|
Explanation |
Payment |
Outstanding |
Balance |
| Feb |
28 |
|
|
570.00 |
570.00 |
Cash Disbursements and Receipts journal
| Date |
|
Check Number |
Explanation |
Payment |
Deposit |
Balance |
| Feb. |
1 |
|
Beginning Balance |
|
|
500.00 |
| |
12 |
|
Farmers Market |
|
98.00 |
598.00 |
| |
19 |
|
Farmers Market |
|
55.00 |
653.00 |
| |
20 |
1102 |
Hero Farms |
200.00 |
|
453.00 |
| |
22 |
307 |
Brian's Organics |
|
210.00 |
663.00 |
Purchases Journal
| Date |
|
Account Name |
Invoice Number |
Credit Amount |
Cash Amount |
| Feb. |
10 |
Wanna Gro |
1287 |
220.00 |
|
| |
15 |
Hero Farms |
33062 |
350.00 |
|
| |
|
TOTAL............................ |
|
570.00 |
0 |
Sales Journal
| Date |
|
Account Name |
Invoice Number |
Receivables Amount |
Cash Amount |
| Feb. |
2 |
Brian's Organics |
307 |
210.00 |
|
| |
12 |
Farmer's Market |
|
|
98.00 |
| |
19 |
Farmer's Market |
|
|
55.00 |
| |
20 |
Comer Store |
308 |
330.00 |
|
| |
27 |
Comer Store |
309 |
25.00 |
|
| |
|
TOTAL............................ |
|
565.00 |
153.00 |
Accounts Receivable Ledger
Brian's Organics
| Date |
|
Invoice Number |
Outstanding |
Payment |
Balance |
| Feb |
2 |
307 |
210.00 |
|
210.00 |
| |
22 |
307 |
|
210.00 |
0 |
Corner Store
| Date |
|
Invoice Number |
Outstanding |
Payment |
Balance |
| Feb |
20 |
308 |
330.00 |
|
330.00 |
| |
27 |
309 |
25.00 |
|
355.00 |
General Ledger
Accounts Receivable
| Date |
|
Outstanding |
Payment |
Balance |
| Feb |
28 |
565.00 |
210.00 |
355.00 |
Back To Beginning of Appendix
Back To The Top
If possible, for convenience and accuracy, set aside a room or portion
of a room for your "business center." There you can keep records
without their being disturbed or lost. If you have many dealings with
people, the room should have an outside entrance and be situated so it
is closed off from traffic from the rest of the house. That arrangement
provides a businesslike setting for business transactions and gives other
business people a feeling that you know precisely what you are doing.
Types of Records
Keep both financial and non-financial record books and files in your office.
You should keep non-financial records on matters such as livestock and
crop production schedules; livestock health, breeding. and feeding, and
important coming events.
You can obtain good farm account books at most county Extension Service
offices. Most farmers use a "cash accounting" system, with "single
entry" procedures considered easiest for farming needs.
Your records should help you keep track of:
(1) Financial affairs, bills paid, income received, accounts payable,
accounts receivable, inventory control, and status of such agreements
as leases or contracts for use of migrant workers.
(2) Legal and Institutional obligations such as income tax filing, social
security accounting, historical records for estate purposes, cost basis
of real property, and insurance coverage and claims papers.
(3) Business activities evaluations of profits and losses, detection of
strong and weak points in your organizing and managing, and your net worth.
On a balance sheet, your assets minus your liabilities equal your net
worth. A net worth statement shows your financial position at a given
time.
(4) Budget details and future planning so-called input-output relations.
To carry out such functions, your records should have these separate
categories:
(1) Asset and liability account (balance sheet or net worth statement).
This lists your resources and assets. Including their value, and claims
or liabilities against them. You might wish to keep track of your "accounts
receivable-debts owed to you-here, along with loans and accounts payable,
interest and principal payments, and unpaid principal balances owed.
(2) Receipt and expense account (income statement), This document also
makes up part of your cash flow account, but is kept separate too.
(3) Cash flow account. This account combines receipts and expenses with
principal and interest payments plus now loans and cash purchases for
the capital account.
(4) Production and statistical records. These records help you analyze
performance and budget production and management changes.
(5) Farm business analysis. By studying your records, you can get ideas
for future management decisions. You can compare financial worth and production
efficiency over the years as your records accumulate.
(6) Farm operation or "enterprise" accounts and records. If
you have more than one type of crop, or a combination of crops and livestock,
you may want to separate each for purposes of your analyses.
If you move out of the small-scale category, you may be able to afford
a professional accountant to keep your records and give you financial
advice.
Until then, you're mainly on your own, although you may be able to get
help not only from your County Extension agent but from leaders of one
of the farm organizations having local active members.
Depreciation
For tax records, you should know about various ways of accounting for
depreciation for tax purposes. Depreciation procedures help you extend
over several years the cost of certain capital items that you own and
use. When you depreciate an item, you count part of it as an expense in
each year of its "depreciable life."
Check out the IRS "Farmer's Tax Guide," No.225, to determine
how tax depreciation regulations apply to land, poultry, machinery, and
equipment; to dairy, breeding, and draft animals that are bought rather
than raised from a mother animal that you own, and to storage facilities,
buildings. fences, paved areas, certain kinds of timber, drain tiles,
wells, and established orchards.
The method of depreciation may affect the type of general farm accounting
you use. There are regulatory limits on how rapidly you can depreciate
various items on the farm.
The common methods of depreciation are usually explained and illustrated
in detail in IRS' "Farmer's Tax Guide," published annually and
available from your district IRS office.
Your tax adviser can explain to you which of various depreciation methods
might be most beneficial to you.
You may be able to get advice and help from your Extension agent or from
a farm organization's tax expert.
If you are young and expect to have more taxable income as you get older,
you may benefit from slow recovery of investment through depreciation.
Rapid recovery may be best when you expect less taxable income in the
future, as when you have retired. Then you may be able to used deferred
tax dollars to make new investments or sell the property before the end
of its useful life."
You may find it necessary for tax purposes to designate and allocate the
total farm purchase price among the various parts of real and personal
property-stored crops, growing crops, livestock (market and breeding),
equipment, farm improvements (buildings, fences, tiles), residence, and
land.
Ask a taxation expert about how the latest tax laws affect you.
Tax Reporting Methods
In reporting your income to IRS, you generally may choose between the
cash or accrual methods, using either a calendar-year or fiscal-year reporting
period, if you are just starting your farm business. However, if you have
filed a tax return previously, whether for a calendar year or a fiscal
year, you must continue to use the same reporting period unless you get
IRS permission to change. If you are adding to an already established
farm business, you do not have the option to change your reporting method
or reporting period without obtaining IRS permission.
IRS permission to change from an accrual to a cash method of reporting
income is not easy, but not impossible, to obtain. Both methods have advantages
and disadvantages. Discuss the matter with your Extension agent and other
tax advisers to get their opinions.
The method you selected could be crucial. As an example, if you held one
year's crop, such as corn or dry beans, into the next year and found yourself
selling 2 year's crops later the same year-that might increase your income
that year and put you in a higher tax bracket.
Unlike crops, sales of dairy or breeding livestock are based on capital
gain. These are not easy matters to handle, so ask your tax advisers lots
of questions until you feel you understand what's best for you.
Most farmers file tax reports on a calendar-year basis. That simplifies
keeping up with information on rule changes and getting tax forms.
On the other hand, choosing a fiscal year beginning March 1 or April 1
might more clearly show the normal cycle of your farm business. You might
also find a professional tax consultant available more easily after the
first quarter peak tax-return season.
Cash Flow Planning
In any event, one of the first and most important steps in moving into
any kind of farming is to build a potential cash flow analysis for a span
of several years, and then fill in each year with an annual cash flow
plan, also called a cash budget. In this way, you chart how much cash
will flow in and out of your farm business.
Presumably what you are driving toward is an investment that will bring
you some profits over the long run, as well as some positive and controlled
negative cash flows over various short runs.
The cash flow analyses can help you anticipate cash flow shortages during
certain periods so that you can arrange for loans or draw from savings.
It you have a cash flow plan showing possibilities of a profit over a
long term, you may find lenders willing to make loans.
To survive, in the long run, your business must either reach and maintain
a positive cash flow or have a source of subsidy, such as a part-time
job or a pension which can help you make up for losses.
Some farming-such as a swine finishing operation-could generate favorable
cash inflows within a year or so of initial investment.
An orchard, on the other hand, provides an example of an enterprise that
will show a cash outflow over a number of years before cash inflows results.
In this latter type of investment, negative cash flows are usually subsidized
from other sources, such as your full- or part-time job, pension, savings,
or loans which you can pay back over a number of years before, and perhaps
after, sales from your orchard occur.
Investment in a machine shed is an example of a cash outflow-expense-with
little prospect of additional visible cash inflow. Any ultimate benefit
may come from holding down your machinery repair costs and helping maintain
its resale value longer. Such benefits are something you can point out
on a cash flow chart spanning several years. Check this with your tax
adviser, too.
Knowing about the various types of investment you are dealing with during
your planning can give you an important feeling that you know where you
are going and will help reduce your prospects of becoming what some farm
management experts call "a creditor's nightmare."
Your long-term and short-term cash flow charts are tools to help you with
financial plans and expectations for the future. You will want to rethink
them regularly as new events cause you to re-evaluate your situation.
In fact, you probably will want to re-develop your annual cash flow plans
at the beginning of each calendar year.
You may want to combine your cash flow plans for your farm business and
family living into one. Some people call that a "system" of
cash flows.
In past generations, cash flows on small farms were so small that not
much long-term financial planning was required. Today, careful financial
management is needed to submit detailed income tax reports to the Federal
Government and most State governments. In addition, real estate taxes
vary widely between farming and non-farming activities in some areas.
Your cash flow charts may well help you avoid a reputation for insolvency
by alerting you that you may be short of cash when bills come due. The
needed cash must come either from receipts from sales of your products,
non-farm income, or funds borrowed from your own reserves or some lender.
Generating the cash requires a complex combination of production, marketing
and financing decisions. You as a farmer constantly will be making decisions.
As emphasized earlier, producing a crop, of corn, say, or a number of
hogs or sheep for slaughter usually uses up cash. You don't get a return
until you sell the product. Sometimes you will not get paid at the time
your product is ready to sell, as when it may be stored for a better price
at a later time. Grain, nuts, or honey are some examples.
If you delay sales, then you must have a source of cash during storage.
And that delay should bring you enough greater return to pay for the added
cost of borrowing. Otherwise, your delay will be costing you more than
if you had sold immediately.
On the following page is a portion of a sample cash flow planning form
designed for either quarterly or monthly entries. You'll have to decide
which is most helpful. You also may wish to compare this form with material
in appendix I, which has a guide for appraising your resources prepared
by John S. Huddleston of the Virginia Extension Service.
Cash Flow Planning Form
| |
|
Month or Quarter
|
Cash flow for 20___ , Data Completed __/____/20___
Name: ____________________ |
Total Budgeted for Year |
Amount Budgeted |
Actual Results |
Difference |
| 1. Beginning cash balance (demand deposits plus currency) |
|
|
|
|
OPERATING RECEIPTS:
2. Crops and food |
|
|
|
|
| 3. Livestock and livestock products |
|
|
|
|
| 4. Government payments, patronage dividends & custom work |
|
|
|
|
| 5. Other |
|
|
|
|
CAPITAL RECEIPTS:
6. Breeding livestock |
|
|
|
|
| 7. Machinery and equipment |
|
|
|
|
| 8. Other |
|
|
|
|
| 9. Non-farm income |
|
|
|
|
| 10. TOTAL CASH AVAILABLE (add lines i through 9) |
|
|
|
|
OPERATING EXPENSES:
11. Labor hired (including employer taxes) |
|
|
|
|
| 12. Repairs |
|
|
|
|
| 13. Rents and leases |
|
|
|
|
| 14. Seed |
|
|
|
|
| 15. Fertilizer, lime, chemicals |
|
|
|
|
| 16. Custom machine hire |
|
|
|
|
| 17. Supplies |
|
|
|
|
| 18. Livestock expense (breeding, Vet., etc.) |
|
|
|
|
| 19. Gas, fuel, oil |
|
|
|
|
| 20. Storage and custom drying |
|
|
|
|
| 21. Taxes (real estate and personal property) |
|
|
|
|
| 22. Insurance (property, liability. crop) |
|
|
|
|
| 23. Utilities (electricity. gas, telephone) |
|
|
|
|
| 24. Marketing and transportation expense |
|
|
|
|
| 25. Auto (farm share) |
|
|
|
|
| 26. Other |
|
|
|
|
| 27. TOTAL CASH OPERATING EXPENSES |
|
|
|
|
LIVESTOCK AND FEED PURCHASES:
28. Feeder and breeding Livestock |
|
|
|
|
| 29. Feed purchased |
|
|
|
|
CAPITAL EXPENDITURES:
30. Machinery and equipment |
|
|
|
|
| 31. Building and improvements |
|
|
|
|
OTHER EXPENSES:
32. Family living withdrawals |
|
|
|
|
| 33. Non-farm business and investments |
|
|
|
|
| 34. Income tax and Social Security |
|
|
|
|
| 35. Intermediate and long-term loan payments-principal |
|
|
|
|
| 36. Intermediate and long-term loan payments -interest |
|
|
|
|
| 37. TOTAL CASH REQUIRED (add lines 27 through 36) |
|
|
|
|
| 38, CASH AVAILABLE LESS CASH REQUIRED (Line 10 minus line 37) |
|
|
|
|
| 39. Money to be borrowed -operating loans |
|
|
|
|
| 40. Intermediate and long-term loans |
|
|
|
|
| 41. Operating loan payments-principal |
|
|
|
|
| 42. Operating loan payments -interest |
|
|
|
|
| 43. Ending cash balance |
|
|
|
|
LOAN BALANCES (at end of period):
44. Current year's operating loans |
|
|
|
|
| 45. Previous year's operating loans |
|
|
|
|
| 46. Intermediate and long-term loans | |
|
|
|
Cash Inflow or Income
On most farms, cash income, or income inflow as some accountants call
it, is relatively easy to keep track of. If you raise feeder pigs, for
example, you might sell most of them at the same time and get just a single
large check. But if you manage bees for honey and sell their product through
many small outlets, including a roadside stand, your receipts will be
numerous and require considerable time to keep track of properly.
You also must keep track of cash on hand from other sources, such as a
pension, a job, investment credit refunds, or money resulting from reduced
taxes.
Cash Outflows or Expenses
Cash outflows include operating expenses, principal and interest payments,
taxes of various types, and family-living costs.
Operating expenses may be fairly easy to estimate except when they include
investment in cost-savings types of equipment. Sometimes operating expenses
will be reduced as a result of trading an old machine in on a new one,
but the costs are not easy to calculate.
For tax and record purposes, some expenses must be divided between your
farm and your personal living budget. Items that are divisible include
utility bills, your automobile, real estate taxes, and property insurance.
Wages are paid for work done by your children for farm work legally deducted
expenses under Federal income tax regulations. You should keep proof of
all payments. Canceled checks serve well.
You must pay a social security tax on any employee to whom you pay$150
or more per year. You should get a copy of IRS Circular A, dealing with
Federal employment taxes the law requires you to pay.
The law does not require you to pay social security taxes for your own
dependent children, but they must have their own social security cards
if employed by others.
Other cash out flows will include insurance premiums. You will need both
casualty and liability insurance. Part-time farmers can be "wiped
out" by a fire, a hurricane, a tornado, or an accident involving
other people or property. You could be held liable for accidents caused
by your children or part-time employees. Such insurance usually can be
obtained under a "blanket" farmowner's policy that is less expensive
than individual coverages bought separately.
Casualty insurance should include a clause for theft as well as the usual
fire and wind coverage. Coverage should include buildings, building contents,
equipment, and livestock.
Regarding theft, cattle and hog rustling seems to be increasing in many
areas. In Iowa, rural areas reported theft of more than 2 million dollars
worth of livestock, equipment, and related items in 1979.
Liability insurance should cover (1) damage or injuries caused by your
workers, equipment, or animals, and (2) injuries to people on farm property
that occur as a result of possible negligence.
You may want to consult an insurance agent on your needs. An agent can
help you answer three basic questions about potential losses: (1) What
are chances of such losses occurring? (2) What are the consequences; that
is, can losses be suffered without seriously disrupting family living
or farm operations? (3) How much will it cost to insure against the losses?
Your principal and interest payments on loans are important items of outflow
or expenses. At times, they may cause a shortfall in your cash flow and
require you to dig into savings or renegotiate a loan over a longer repayment
period.
Your tax payments also are part of cash outflow. Sometimes, in the short
run, some investments can generate tax savings from investment credits
or from accelerated depreciation methods, points also detailed on a later
page.
You also want to know about Federal and perhaps State fuel tax refunds
if you use a non-highway vehicle such as a gasoline-burning tractor on
your farm. Contact your State tax department or Extension agent for details.
For the Federal refund, use form 4136 and file it with your annual Federal
tax form.
In some States, farmers are exempt from state sales taxes on costs paid
for certain farm production items or their repair or maintenance. However,
materials used in repair, construction, or remodeling or real estate are
not generally exempt. Check with your Extension agent.
In some areas, especially near big cities, you may find farmable land
owned by a non-farmer who would like to pay the lower farm real estate
tax than the "developed" acreage tax. The non-farmer owner may
rent you his or her land to farm at a modest rate so as to qualify for
the lower real estate tax.
If your farm nets a profit, you will have to allocate part of your cash
flow to pay higher taxes. Besides studying the sample flow chart in these
pages to make your plans, you will want to study Schedule F of the Federal
income tax form. Carefully note whether the latest tax law changes have
you report items such as sale of farm capital items - which might include
dairy cows and breeding animals - differently than you report sale of
other farm products.
Back To Beginning of Appendix
Back To The Top
| Date |
Crop |
Begining Inventory |
Ending Inventory |
Waste |
Quantity Sold |
Price |
Total |
| 4/9 |
Corn |
100 boxes |
25 boxes |
5 boxes |
70 boxes |
$10 per box |
$700 |
This ledger can assist roadside farmers in tracking daily sales. At the
end of each day, compare the "total" column with the amount
of money in the cash box. They shoud match. When planning schedules, refer
to past seasons' ledgers to determine which crops sold well and which
did not.
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Beierlein, James G. and Connell, Cathleen, M., Managing for Success:
A Manual for
Roadside Markets, Pennslyvania State University, 1986.
Blackely, Ransom A., Planning for Roadside Market Success, Illinois Fruit
and
Vegetable Growers Convention, 1985.
Chandler, Jeff., California Small Family Farmers: Who They Are, How They
Operate, and What They Need, California Energy Commission, 1987.
Corum Vance., California's Roadside Farmstands, CDFA Direct Marketing
Program, 1987.
Wallace, William H., Establishing a Roadside Market Cooperative Extension
Service, Univeristy of Rhode Island, Bulletin 159.
Direct Farm Marketing, Oregon State University Extension Service Circular
945, 1978.
Marketing Alternatives for Small Farmers, National Fertilizer Development
Center, Tennessee Valley Authority, 1979.
"Tips on Running Roadside Farinstands", Small Farm News, Small
Farm Center, Jan./ Feb. 1987.
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