MAKING BUSINESS SUCCEED, PART TWO: FRESH THINKING FOR FARMERS

Seafood-Plate-Medium

This article was published in the August 2013 edition of the Maine Eagle, a local community magazine serving the central Maine area. Get your free copy today at many stores and businesses.

Read the Maine Eagle monthly to enrich your life with Maine’s best read.

This article is a continuation of a four-part series dedicated to improving the operational effectiveness and efficiency of businesses in four key Maine industries. When small Maine family business wins everyone wins. Here I discuss how Maine farmers and fishermen can improve sales and profits during the difficult economic times we live in.


Is Food Just a Commodity?
How your farming or fishing business answers this question will have a profound impact on your sales and profits.

Food sold as a commodity will be priced at the absolute minimum because its distinguishing features will be minimized.

Food sold as a gourmet item will be clearly differentiated from competitors and will allow you, the producer, to charge a higher price.

When it comes to the food products you grow and harvest would you rather sell a Ford or a Mercedes?


Product Differentiation: Food With a Face
One clear way to differentiate your food products from competitors is to sell food with a face: your face. Advertise your agricultural products by linking them to your own personal story. Where did your farm come from? What is the family history of your business? How do you raise your crops or catch your fish and lobster? Show pictures of your business, its tools, tractors, lobster boats, and people. Social media can help with this. These personal details make your business and your products different (and better!)

Does Burger King show pictures of where their beef and chicken come from? I don’t think so.

Few things are more personal than the food we eat. Food with a face satisfies a public hunger for personal, local products backed up by a human story. Create this business model and use it to please your customers and maximize the value of the products you sell. Don’t allow the beautiful fruits of Nature and your hard work to become mere faceless and soulless commodities.

Every farm has a human face and a story to tell.

Most Maine farmers and fishermen are family businesses passed down through the generations. If you don’t know how to tell the story of your business ask yourself how your father or mother or grandfather or grandmother would describe it. Quote them and don’t worry about winning a literary prize for your words. Sincerity is what matters the most and this is what people care about.

Food with a face has a long history. Consider Colonel Sanders and KFC, Dave Thomas and Wendy’s, Aunt Jemima’s pancake syrup, and Quaker Oats. What worked for these companies and brands could work for your business too. No food is too raw or too simple that it could not be personalized and differentiated from competitors.


Farm to Table Disintermediation
The farm to table movement is all about buying local super-fresh food where people know what they are eating and where it came from. It’s about supporting our Maine communities as well as obtaining the freshest and most wholesome food possible.

Research proves that farm to table practitioners provide healthier, better tasting food. See:

Parish, L. (2011). Farm-to-table trends. Journal of Business (10756124), 26(17), 11.

The profits earned by middlemen brokers can be deleted and shared by farmers, fishermen, and food buyers including restaurants. Middlemen and brokers tend to make food a commodity by diluting the personal connections between where food is grown, caught or harvested and where it is consumed. Where did the beef come from in your last McDonald’s hamburger? You probably don’t want to know and neither do I.

The farm to table business model allows food retailers and restaurants to boast about their direct connections to local farms and fishermen. Consumers want this and will pay for it.


Organic Food is Exploding
In 2002 the US Dept. of Agriculture (USDA) first established its own national standards for organic food. According to USDA statistics organic food sales were approximately $27 billion in 2012 and are expected to grow 7.4% per year, double the growth rate for non-organic foods. In 2012 organics accounted for 3.5% of all food sales. See:

Organic Food


This premium market has substantial potential for future growth.


Food Is Culture
Food is a way of life and a crucial part of all the great cultures of the world. Much of what I know about food and cooking was taught to me by Jeff Smith, the Frugal Gourmet. Every Saturday I would watch his food show which taught about simple, honest cooking with the very freshest ingredients and a deep understanding of where the food and the cooking came from.

The Frugal Gourmet taught about the history of food as well as cooking. Where did bread come from? Pasta? Pizza? Coffee? The answer to each of these questions was a wonderful 30-minute educational show.

Good food is not just about how, but also why. Food is a physical solution to cultural problems of food storage, surviving winter, facilitating long distance travel, healing, celebration, and honoring the passage of the seasons of Nature and the important rituals of life. Each of these concerns links food with a specific culture and a specific time in history. To learn about food is to learn both culture and history.

In the 1970’s Maine experienced a ‘back to the land’ movement comprised of people who left cities and returned to farms and food production as a way of life. This was their deliberate choice. We are all richer today because of them. See:

Maine's Back-To-The-Land Movement


Today another wave of would-be farmers is returning to the land. Companies fire people. But Nature won’t fire you. If you learn her rules and observe them you will have a job for life. This fact is extremely attractive to many people and we can expect to see more young people take up farming here in Maine and nationwide either as a means of earning a living or as a supplement to other sources of income. See:

A Return to Farming

 
Key Tax Rules for Farmers and Fishermen
Even farmers and fishermen have to deal with the Taxman. This has been a fact of life for thousands of years.

IRS Publication 225 contains comprehensive information on the special tax rules which apply to farmers and fishermen. Unincorporated farms report their income on Schedule F. One key difference for farmers concerns inventory valuation. Farmers can choose to utilize the farm-price method or the unit-livestock price method for estimating the cost of inventory for tax purposes. These methods may be easier and simpler than the alternatives.

And if at least two-thirds of your income was from farming or fishing you are excused from making federal and Maine estimated tax payments. Instead, farmers and fishermen must file their tax returns and pay all tax due by March 1 of the following year. See:

Key Tax Rules for Farmers & Fishermen


Thoreau Was Right
One of Thoreau’s most important points about life is that the quest for luxury can make us feel poor. In his masterpiece Walden and in lesser-known works like Faith In a Seed he showed how very simple activities like raising your own green beans could be the basis for a rich life. Thoreau liked farming not only because of the produce it yields but also because of how the process of farming shapes people:

“What you get by achieving your goals is not as important as what you become by achieving your goals.”


Farmers, fishermen, restaurateurs, customers and everyone else will profit from understanding these ideas, which cost nothing since wisdom is the common property of everyone. It’s free.

Fresh green beans from your backyard garden, sautéed in garlic and butter and served with Maine potatoes is a miracle of Nature that costs almost nothing, except your time and care. You can be the beneficiary of the sun, the wind, the soil and the rain which Nature uses to grow and deliver to us her great fruits, the profits of her work, and yours. Always remember that when you work with Nature you are in a partnership. She is in charge most of the time.

It is the people who have turned their backs on Nature and who seek luxury who suffer the most in our current seeming Age of Austerity. But the wisdom of Nature has not been diminished or lost. Nature hasn’t cut back. The sun shines just as bright, the soil of Maine is as fertile as it ever was. Rainbows are just as brilliant as they always have been.

It is the folly of people that makes us all blind to the vast beauty and wealth around us and within us. In many (but not all) cases poverty is an illusion that must be rejected. The very worst poverty of all is ignorance, of not knowing what to do. You too can have faith in a seed and embrace Nature as your boss.

“Nature herself makes the wise man rich.”

Cicero

 

LEGAL DISCLAIMER

George Adams
Certified Public Accountant Master of Business Administration
Tel: (207) 989-2700 E-Mail: GeorgeAdams@IntelligenceForRent.com
450 South Main Street: The HQ of IQ
Brewer, Maine 04412-2339

©2015 Copyright George Adams CPA MBA. All Rights Reserved.