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Loan Terms

4/2/2015

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It can be tempting to try to finance capital purchases with the shortest-term loans possible. I don’t think anybody really likes debt, so we want to get out of it as quickly as we can. Shorter loans also tend to come with lower interest rates, lowering the overall cost of borrowing money.

But that lower interest rate comes at a cost – it increases the borrower’s risk. Short-term loans have higher minimum payments, and require you to service the debt regardless of what else happens in your business.

Cash is king, and it pays to stay flexible. You never know what crises or opportunities might come your way to change the availability of cash in your operation.

You can always pay off a loan early, but it’s much harder to extend it once you’ve signed the loan documents.

(By the way, it’s never advisable to use an annual crop note [a cash flow loan] to finance capital purchases. Borrowing on a long-term note and paying it off the same year is a much more prudent course of action.)

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Sell to Your Lender

3/26/2015

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A loan for your farm is an investment in your business by another entity. Your lender wants to know that the money they invest (via a loan) is going to give them the returns (interest and principle) you promise.

In addition to financial factors – do you have collateral? Is there a business plan in place? – your lender will want to see that you have a solid understanding of business requirements, in addition to an ability to perform or effectively delegate business functions.

Taxes and Accounting – Do you know the difference between operating expenses and capital purchases, and account for them appropriately? What taxes will your business be liable for? When do you need to make deposits for employee withholding and your own tax liability? Do you show smart decision-making when it comes to timing purchases to manage tax liability?

Insurance – What kinds of insurance does your enterprise require? Farm vehicles may require additional commercial coverage if driven by employees. Certain customers may require product liability insurance. Farmers markets may require certain levels of liability coverage.

Legal Requirements – What regulations does your farm face? Are there labeling restrictions to the way you want to market your product? Where can you sell your product? What inspections or licensing do you or your processor need to get into the markets you want to access with the form of product you are proposing to sell? Do your trucking plans require special licensing? What are the environmental and zoning regulations that apply to farms and facilities in your state and county?

Employment Compliance – Does your plan for hiring and compensation meet legal requirements? Do you understand state and federal overtime rules and when you need to comply with them? Have you arranged for workers compensation insurance? Are you clear about if and when your farm’s activities stop being “farm activities” as defined in your state? Do you aware of the requirements of OSHA and the Worker Protection Standard as they apply to your operation?

Showing that you understand the business shows that you understand what it takes to not get derailed by the “not farming” part of farming.

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Empty Holes

3/19/2015

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If you want people to work faster, set the pace for them.

The summer after high school, I worked on a fish processing ship in the Bering Sea. I stood in front of a belt of trays, and put the fish into the trays, heads down and belly to the right. I put 120 fish in the trays every minute, because that’s how many trays went in front of me every minute. Nobody ever told me it was an option to go slower - the machine set the pace. Empty trays went by me, and I knew exactly what was expected of me.

Five years later, a farmer put me on a transplanter pulled behind an International 504. The 504 didn’t  have a creeper gear, although it did have a “torque amplifier” that slowed it down. When I told Richard that he was driving too fast for me to possibly keep up, he replied that the tractor was going as slow as I could go. The empty pockets on the transplanter told me very clearly what I needed to do. So I learned to keep up, and to do what the machine expected of me.

The water wheel transplanter that I bought at Rock Spring Farm didn’t help our fastest workers set plants any faster. But it set the pace for slower workers, and encouraged them to keep up. The empty holes in the soil were there to be filled, so the holes got filled before they disappeared behind the workers.

Empty trays, missed pockets, and blank holes create a dissonance for workers that moving slowly down a field doesn’t.With a machine, the feedback is baked right into the system. Workers see, second by second, exactly what the expectations are for the speed of their work. It provides a far more immediate feedback than counting how many beds or bunches are completed every hour.

(The same thing can be accomplished without a machine if you provide shoulder-to-shoulder leadership to your workers. When you work alongside your employees to show them how fast and how well a job can be done - and continue to do so while the job gets done - you create much the same effect as the empty trays on the filet machine belt.)

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Inoculate Your Transplant House

3/12/2015

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Aphids suck. Literally. And they poop sugar – a bad combination that can result in stunted and deformed plants, disease transmission, and fungal growth on your plant. They are often born pregnant – female aphids can carry young that are already carrying young, just like Russian nesting dolls – which combined with a life cycle as short as seven days, can give rise to rapid and destructive population increases.

They also seem to come from nowhere. Even in an isolated greenhouse that was allowed to freeze out over the winter, aphids will suddenly show up to ruin your day. Peppers are especially prone to damage from aphids in the greenhouse, especially in the low light, high temperature conditions of early spring.

Pesticides suck, too – even organically approved pesticides are no fun at all to spray. Especially in a diversified greenhouse, trying to scout out and make targeted applications on a few dozen plants creates all kinds of problems, from how to mix up such a small batch of pesticides to how to provide appropriate intervals before worker reentry.

Fortunately, inoculating your transplant production house with beneficial insects early in the season can help suppress pest populations until light and temperature balance out. I’ve had exceptional results with releasing a variety of beneficial insects before scouting or sticky traps turned up any problems.

In fact, releasing beneficials before you see a problem lets the bugs do the scouting for you. If you’ve got a small population of aphids or other prey, a flood of beneficial insects will do a much better job of rooting them out.

Early releases also help you stay ahead of the predator-prey population cycles. Out in the world, prey populations (say, rabbits) increase ahead of the predator population (say, coyotes). As the population of rabbits increases, the population of coyotes does, too. Eventually, the population of rabbits peaks and starts to go down; then there are too many coyotes for the available rabbits, and their population starts to go down, as well.

If you’re using beneficial insects (predators) to control pests (prey), you want to introduce the beneficials when there are less pests than the beneficials can consume. Yes, some of the beneficial insects won’t have enough to eat, but that just makes them highly motivated to root out and kill the pests that are damaging your plants. An early introduction of beneficial insects really helps to keep pest populations from ever getting out of control.

At Rock Spring Farm, on the 43rd latitude in northern Iowa, I liked to flood the transplant house with a variety of beneficial insects around the third week of March. I had great success with the garden packs available from Hydro-Gardens – the “Greenhouse” pack did nice work in my 3,000 square-foot heated greenhouse, with lacewings and ladybugs to attack the aphids, as well as whitefly parasites, thrip predators, and spider mite predators - as well as beneficial nematodes to work on any early fungus gnat larvae.

(Please note: Hydro-Gardens needs to receive orders by noon Mountain time on Thursday in order to ship beneficials the following week, so it’s important to get ahead on placing your order – another reason why it doesn’t pay to wait until you see a problem starting to develop before you put the good bugs in your greenhouse.)



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My New Farmer to Farmer Podcast

3/5/2015

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I'm so excited that I wanted to put that in all caps!

Last Friday, we did a soft launch of my new Farmer to Farmer Podcast, and now we're ready to share it with the world!

You can subscribe and download on iTunes, or, for the Android-inclined, get it on Stitcher.


For over twenty-five years in the organic and local farming business, I've benefited tremendously from farmers sharing their knowledge, stories, and inspiration with me. It's what inspired me to work with the MOSES Organic Farming Conference for over thirteen years, and it made me a better farmer at every step of the way.

I created the Farmer to Farmer Podcast to provide a fresh and honest look at what it takes to make your farm work, from a variety of perspectives. The show features down-to-earth conversations with experienced farmers - and the occasional non-farmer - about everything from soil fertility and record-keeping to getting your crops to market without making yourself crazy. In the episodes I've recorded so far, we've talked about everything from employment philosophy and the best techniques for weed control in carrots to making your way as an organic vegetable farmer in the heart of conventional corn and soybean country.

We've already published episodes with Liz Graznak, Lisa Kivirist, Allen Philo, and John Peterson, and we've got more great guests lined up and on the way.

Please take a listen, and leave a review on iTunes or Stitcher (or both, if you really love it!) - your ratings and reviews are a critical part of moving the Farmer to Farmer Podcast up in the lists and search results, and help me get the Farmer to Farmer Podcast out to more people.

From the reviews on iTunes:

  • This is the type of farming podcast I have been looking for. It provides valuable insight into other operations and the minds of their operators. Chris is an excellent host and his decades of experience allow him to ask the perfect questions to provide a valuable and informative interview with talented and wise growers. Thanks to Chris for putting together such an amazing resource for growers, new and veteran.

  • Honestly, I found myself laughing out loud, shedding a tear (thanks, Liz!), and wishing I wasn't driving so I could take notes, as I listened to this podcast. It is the perfect mix of farmer's stories along with practical, usable knowledge for new and established farmers alike. Great job, Chris. We want more!

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Tool - 3M Peltor EARbud Noise Isolating Headphones

3/4/2015

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I'm a huge fan of the 3M Peltor EARbud Noise Isolating Headphones.  Hearing loss is cumulative - you lose a little bit of hearing every time you expose your ears to loud noises - so it’s important to take steps to preserve your hearing. These keep the bad noises out while letting you listen to podcasts, audiobooks, and Jimmy Buffett albums (you can listen to other music, too, but why?). Protect your ears and give a little gift to your brain at the same time.

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How to Water Plug Trays

2/26/2015

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Watering transplant plugs is more of an art than a science – and good watering (not to mention just keeping the plants alive!) makes a critical difference in the health of your transplants, and ultimately your crops. Unfortunately, it also takes a significant amount of time at a point in the growing season when farmers can least afford it, and the art aspect of the job makes it hard to delegate. But it can be done.

When Rock Spring Farm made the transition from soil blocks to plug trays, we faced a significant challenge. We made the change because, even with the mechanical block maker that we had used for years, soil blocks required so much labor and care both when we made them and when it was time to set them out in the field. Because of the relatively large amount of soil in each block, and their ability to share water between blocks, soil blocks grew great transplants without much attention. While they were easier to fill and set out in the field, plug trays required a great deal more care as we grew them, particularly when it came to watering.

When to Water

I like to water at mid-morning. By then, the sun is up in the sky and the greenhouse has warmed up enough that the water you put on the leaves of the plants will dry quickly. If you leave the plants wet overnight, you increase the potential for fungal germination and bacterial propagation.

Like most things that matter on the market farm, good plug tray watering takes management – you can’t treat every tray in the greenhouse the same, and every day is different. Shorter days, cloudier weather, high humidity, and lower temperatures will result in plants that require less water. In addition, the maturity of the plant can make a dramatic difference in water needs. It’s easy to overwater young plants, and just as easy to underwater mature plugs.

Location in the greenhouse can also cause variation in how quickly plants use available water. Areas with lots of air movement will dry out faster, and can result in significant variation even in adjoining flats. Bench edges often dry faster than centers.

You shouldn’t assess water needs by how the plant looks – you want to anticipate drought stress, rather than respond to it. Because water is heavy, lifting the trays can give you an idea of water left in the potting medium. Pull plants out of their cells, or look at the bottom of the tray, to see if the soil mix at the bottom of the cell has moisture in it. If you squeeze the root ball, a little water should drain out of it.

How Much to Water

In the small space of a plug tray, the air space in the maintained more by how much water is added than by the particle size of the root medium. Unlike for large, potted plants, leaching is not recommended unless salt levels are excessive – and that won’t be likely in an organic system.

Don’t rely on your eyes. You can’t accurately assess the moisture in the cells just by examining the top of the cell. More than once, I’ve pulled plugs out of trays only to find that the bottom of the cell was bone dry and completely hydrophobic; the only way to rewet it was to set the tray in a tank of water.

In deciding how much to water, ask yourself a few questions: Based on the current size of this crop, how fast will it use the water that I apply? How big is the cell relative to the plant? What does the weather look like for the rest of the day? Regardless of the conditions, the goal is to adequately saturate the root media to sustain the plant to its next irrigation.

For shallow plug trays, you don’t need to fill the soil to capacity in order to have even water distribution throughout an individual cell. Consistent overwatering leads to waterlogging and nutrient leaching, and should be avoided, unless you have a need to flush the salts out of the planting mix; this shouldn’t be a concern in most organic fertility systems.

How to Hand Water

For most small farms, hand watering is the obvious choice. Choose an appropriate nozzle – I recommend a fan-shaped nozzle rather than a round one, as the rectangular pattern creates more consistent results than a round one.
Adjust the water pressure just enough so that the individual streams of water from each hole hold together nicely. Too much pressure is unnecessary and can wash seeds and smaller plants; too little pressure can result in large, blobby streams of water with much the same results. I really like to have a quarter-turn ball valve on each watering wand to allow the user to adjust the water as she goes, to account for changes in water pressure over the course of the job.

Start by spot watering, bringing every plug in the greenhouse up to a similar water level.

Then, holding the fan-shaped nozzle so that it is pointed straight at the crop, walk the full length of the bench holding the wand at a consistent height above the crop. Go just past the end of the bench, then turn around and take another pass on the next set of cells that didn’t receive water on the first pass.

Multiple light passes can help to achieve more consistent results. Also, you might want to offset any behavioral differences that occur between the beginning and end of your watering sessions by starting at a different end of the bench each time; or work from the edges in one day, and from the centers out the next.

Automatic Watering

If you go with an automatic watering system, you will need to add more management and observation to accommodate the automation. I have worked with more than one transplant operations that installed automatic watering systems to save labor, and promptly drowned their plants.

Make certain that your sprinkler system lines up with your benches – this sounds obvious, but even the best-designed system will fail if it’s not installed correctly.

Once again, spot-watering is a key element to automatic watering if you don’t want to dramatically overwater or underwater some trays.

Keep an automatic watering log to provide an ongoing feedback tool. Note the time of day, weather conditions, and how long you ran the system on each bench each time you run the system. Over time, this can help to develop a feel for how much and how frequently to water. At Rock Spring Farm, we ran the water once in the morning, and checked again at mid-afternoon to assess whether we needed to water again.

Managing Employees

Watering plug trays isn’t a job for just anybody on your crew. It takes sensitivity and a will to excellence to do a good job at this critical task. But it can be delegated if you create a reliable system. I recommend limiting watering to one primary and one secondary staff person. And an individual will gain a sense for the variations in water needs according to location and growth stage that is hard to communicate – it is an art, after all.

If you choose to delegate this task, you’ll want to have a plan for monitoring and oversight on a regular basis. Take the time to walk the house on your weekly field walks – this can be a great way to institute this critical success habit early in the season, before you get to the field. You might even want to do this if you water your transplants yourself.

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Tool - Dramm ColorStorm

2/24/2015

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The Dramm Color Storm is a metal fan-shaped nozzle with a built-in quarter-turn valve. I’ve picked out the purple one here, but you should feel free to choose your own color.  Also available from Gempler’s.

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Margins, Middlemen, and Civilization

2/18/2015

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If you want to get a raw agricultural product to somebody who eats it, you've got two options:

1. Do the middleman's job.
2. Pay the middleman to do his job, either by writing a check or by accepting a lower price for your product.

Both have a cost. If you do the middleman's job, you're going to spend time, money, and focus on something other than farming.

Or, you can let the middleman do his job - that place where he spends his time, money, and focus.

And that can be an opportunity for both of you to prosper.

Here we have an example of civilization.

That's not to say that you should always pay the middleman, but it's worth asking and answering this question: "What value does the middleman add for my farm and for my customers,and at what cost?” If the value seems too low relative to the cost, you should ask the question: “When I take on the middleman's job, what does that really cost me?

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Margin Math

2/12/2015

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If you know the price of a product at one place in the marketing chain, you can use some math to estimate the price of that same product at different points in the marketing chain.

For example, my local natural foods store is selling kale for $2.49. We can use a margin formula to estimate their cost for the product.
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In this case, the price the marketer is charging is $2.49, and we are estimating the margin at 42%. So:
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Depending on how your brain works with math, it might make more sense to think of it this way:
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As another example, let's look at how to estimate the price a wholesale distributor is selling their product for if we use a tool like a USDA price report. According to the USDA's Wholesale Market Price Reports, organic kale in the Chicago terminal market is selling for $27.00 for a 24-count case. We use a different expression of the same formula to estimate the price a wholesale distributor who buys that kale will sell it for:
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In this case, the cost the marketer is paying is $27.00, and the margin they are using to determine their selling price is 23%. So:
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Now, we have an estimate of the price my local retailer is paying to buy their kale from the wholesale distributor - about $35.06 a case, or $1.46 per bunch.

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Understand Margins to Understand Pricing

2/5/2015

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When a company buys your product to sell it to somebody else, they charge more to their customers than they pay you - that's how they cover their own expenses, and how they make money in return for their management expertise, risk, and investment.

The additional amount they charge can be expressed in two different ways: as a markup, or as a margin. A markup describes the additional percentage a reseller makes on the product, whereas a margin describes the percentage of the selling price that a reseller makes over and above the price they paid for it.

Understanding margins can help you estimate the price a store or wholesale distributor is paying for their product. Margins are also part of the language of the trade, so understanding margins puts you on a more professional footing when you talk with buyers.

Margins are useful because they describe the "gross profit margin" that a reseller actually gets. The margin has to cover all of the reseller’s expenses related to selling produce. For example, natural food stores in my area use a 42% margin as their basis for calculating retail produce prices. That 42% of their selling cost has to cover all of the store's direct expenses related to selling produce: the labor, bags, and display items, as well as the overhead costs of running the store: electricity, rent, bookkeeping, cash registers, and everything else.

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In other words, if the store is charging $1.00 for a bunch of parsley, they’ve got $0.42 to cover all of the costs of selling that parsley, because they spent $0.58 to purchase it for sale in their store.

And, even though they use a 42% margin to calculate their prices, they expect to realize only a 35% margin on their produce sales overall, since they lose a certain amount to "shrink," due to spoilage, trimming, blemishes, customer handling, and so forth.

Different outlets have different cost structures, so they use different margins.

A wholesale distributor I've worked with uses a standard margin of 23%. They have lower expenses per unit sold than a retail store does, so they don't need to charge as high of a margin.

In fact, different product lines in a grocery store also have different cost structures, so the margin on canned goods is going to be different than it is on fresh produce, since canned goods don't have the same risk of spoilage and don't have the same labor requirements as fresh produce.

And that's where margins matter to market farmers. When you have higher selling costs, you need a higher margin. When you sell produce at farmers market, your costs - labor, stall fees, shrink - are higher than your cost to sell to a retail store. If you sell at a retail store and at a farmers market, your prices in each of those markets should reflect your costs in each of those markets. It costs the same amount of money to grow a bunch of kale for your farmers market stand as it does to grow a bunch of kale for a retail store, but it costs a lot more to sell that bunch of kale at a farmers market.

We'll continue this topic next week when we get into margin math, so stay tuned!

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The Ruminant Podcast - Culinary Herb Production

2/4/2015

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Jordan Marr at The Ruminant was kind enough to have me on his podcast recently for two episodes talking about successful culinary herb production in a farm operation.  In the first episode, I make the case for focusing on herbs, and discusses the proper sourcing, and subsequent propagation, of herb cuttings.  In the second episode, I talk about how to harvest herbs in a way that strikes a balance between high production and low labor costs.

Episode 34 - Part 1
Episode 35 - Part 2

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Good Records Are A Good Investment

1/29/2015

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Good records are an investment in your business - they increase your productive capacity.

To make good decisions, you need to know the yields you've achieved, the time you've put into completing key tasks, and how much it costs to grow a crop and run your farm. This information is actionable in the short term and in the long term.

Good records increase accountability. When you know how many bunches of kale your crew averages in an hour, you have the ability to set expectations, and that let's people know when they are doing well and when they are doing poorly.

Good records increase your ability to predict the future. If you know how many bunches of kale a worker can pick in an hour, you can predict how long it will take to complete the day's kale harvest, allowing you to set the stage for the next task. If you have good sales, yield, and time records, you create the ability to accurately project how much kale you should grow to meet the demand you expect from your markets, and how many people you will need to hire to get that job done.

Good records also increase your capacity to attract capital in the form of loans. They demonstrate to lenders that you treat your business as a business, and that you have the information you need to make the decisions you need to make to ensure that they get their money back.

Don’t have time for record-keeping? Fortunately, good records help create more time to collect and use your records. When you measure your operation’s performance and use actionable information to make decisions that increase productivity and profitability, you increase the amount of time and money that you can invest in keeping and evaluating your farm’s data.

(By the way, that's good record-keeping from day one. If you are a one-person show on a half acre, it helps to create accountability for yourself and predict your own outcomes. And if you decide to grow your business, you'll need those records to facilitate that growth.)

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Weeds Now or Weeds Later

1/22/2015

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In any cropping operation, you're going to put a lot of energy into weeds - it's your choice if you want to put that energy into preventing them, controlling them, or dealing with them.

Preventing

Prevention takes two forms: an ongoing reduction of the numbers of weed seeds in the soil over a number of years, and the use of crop rotations to set following crops up for success.
If one year's seeding is seven years' weeding, then keeping weeds from going to seed is perhaps the most fundamental principle of weed prevention.

The creative and judicious use of crop rotations can also work to prevent weeds. At Pennsylvania’s Beech Grove Farm, Anne and Eric Nordell combine shallow tillage with the following crop rotation in a technique they call Weed the Soil, Not the Crop.  Complete details of their process can be found in their book.

Year 1: Late-planted cash crop
Year 2: Fallow and cover crops to winterkill
Year 3: Early-planted cash crop
Year 4: Fallow and cover crops to overwinter

At Illinois’ Angelic Organics, Farmer John Peterson emphasizes weed prevention using the following four-year rotation:

Year 1 and Year 2: Perennial cover crop
Year 3: Early-season vegetables followed by winterkilled cover crop
Year 4: Hard-to-weed vegetables

On both farms, fertility is applied to the cover crops, and work is done to prepare the soil for the following year, reducing demands on spring tillage work and labor.

Controlling

Control depends on the right operation of the right tools.

It's easy to invest in weed control tools- it just takes money. It's a lot harder to invest in the will and the systems to use those tools effectively. Invest in basic, versatile tools for weed control - sweeps and knives for the tractor, stirrups for the wheel hoe - then work to get the weed control systems working right before you invest in fancier tools.

Weed control tools must be applied early, often, and well.

Early: The right time to kill weeds is before you can even see them. It takes serious monitoring and awareness to target weeds before they break through the surface, but hoeing or cultivating weeds in the white thread stage hits them at the weakest link in their lifecycle. Every day after they break through the soil surface makes them a little bit stronger.

Often: There is not a magical number of cultivations that constitutes sufficient weed control. You're done controlling weeds when you're done controlling weeds, not after three wheel-hoeings or two hillings. And count on hand-weeding - even with great weed control, a few hardy specimens are likely to slip through.

Well: Time spent adjusting cultivators is an investment, not an expense. Time spent setting things up right ensures that you maximize returns on time you spend driving through the fields. If you farm anywhere other than the desert, you never know when you'll get another chance to kill weeds, so kill every single one you possibly can each time you hit the field with a cultivator, flamer, or hoe.

Dealing

Dealing with weeds is just depressing.

Weeds compete with plants for sunshine, water, and nutrients, reducing your yields. They reduce the airflow around the plants, increasing drying time and allowing fungi to propagate and bacteria to multiply.

Plus, harvesting in weeds takes more time than harvesting in clean fields - and can keep mechanized harvesters from working at all. More time harvesting means more expense, lost opportunities, and lower quality as it takes longer to move crops to the cooler.

I've picked my share of beans in pollinating ragweed, and pulled my share of weeds out of salad greens. And I must say, preventing and controlling weeds is easier on the spirit, not to mention easier on the bottom line.

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Close Calls

1/15/2015

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As a Packer Backer, and as a lover of a close game in sports, I relished the could-have-gone-either-way incompletion that clinched the victory in Sunday’s playoff game.

But at the same time, it was painful to see my team come so close to losing. Dallas and Green Bay were so evenly matched that that one play made all of the difference – had Dez Bryant actually caught the ball (or, rather, had the referee’s interpretation of NFL rules allowed what looked for all the world like a catch to actually count as a catch), Dallas would likely have been playing the Seahawks for the NFC championship this coming Sunday (denying me the satisfaction of a matchup between my two favorite teams).

Although I love a close game in football, there’s no room for close in farming (or in life, really). The further you get from crushing it, the more you leave up to chance. A bad call by the referee, a wet spring, a downturn in the economy – any of these can throw you completely off your game, and end your season, subsume your fields in weeds, or run your business into the ground.

You can’t change the referee’s bad call. You don’t get a do-over when your kicker misses a second quarter field goal. You can’t control the weather.

But if you find yourself behind 26 to 21 at 4th and 2 with 4:06 left in the game, you’ve let luck have entirely too much say.

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Top Seven Mistakes Farmers Make with Lenders

1/8/2015

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I spent a lot of years working with lenders, and I’ve spent a lot of time since then working with farmers who are working with lenders. Last fall, I attended a two-day session for farm educators about investments and credit, and the lenders there shared seven of the biggest mistakes they see farmers - and especially beginning farmers - make when working their lenders.

1. Under-the-Table Transactions
If you don't report cash transactions to the IRS, you can't expect your lender to use them to evaluate your loan application. Lenders can only use what's reported when they decide whether and how much to lend. Repeated under-reporting of income starves farmers for credit in the future, because you haven't demonstrated your earnings stream.

2. Missing Expenses
When you provide financial projections to your lender, make sure you include all of your expenses. Missing expenses are a red flag for lenders, especially if they are familiar with your type of operation. If you're starting on a new enterprise, think through your expenses for land and infrastructure, labor (including worker's compensation and payroll taxes), machinery and equipment, production expenses, advertising and marketing, and overhead.

3. Mixing Capital Expenses into Income and Expense Projections
Capital expenses - purchases of fixed assets with a long-term use - don't belong on your income and expense statement. Capital expenses are incurred infrequently, so they don't reflect on the profit performance of the business in any one given year. It is important to track them separately. (For a more complete explanation see my blog post on revenue expenses vs. capital expenses.)

Likewise, principal payments for loans also don't belong on your income and expense statement, for many of the same reasons.

4. Past Financial Reports Don't Line up with Projections
The categories in previous financial statements should correlate with the categories in your projections. You may know that what you used to call fertilizer you now call soil amendments, but your banker may not.

Your financial statements tell a story. You can't change the names of the characters halfway through.

If you've changed the structure of your accounts in your accounting software, you may need to take the time to make some changes in a spreadsheet version of your report. If you use QuickBooks, it's a relatively simple matter to export reports to Excel (in other words, to turn an Income and Expense statement into a spreadsheet), where you can change the names of categories, or combine and reorganize as necessary.

5. Not Seeing the Project as a Business
Bankers are essentially investors. If you are asking a banker to "invest" in your operation, you need to treat it like a business. When you talk to your lender, focus on the business value, not on getting a feel for the soil (that doesn't mean you can't talk about the triple bottom line - just make sure you talk about the money first, then come around to the environment and the people). If something goes wrong with your loan, your lifestyle choices aren't going to provide much cover when your lender has to explain things to their boss.

6. Costs and Income are Way out of Line with Reality
Past performance is, in fact, a pretty good indicator of future results. If your projections show large deviations from your past performance, a lender is pretty likely to call that into question - and rightfully so! Big change rarely happens overnight, unless there are significant outside influences (like the price of feed or oil) - and those are likely to be beyond your control.

7. Not Accepting Feedback
Your lender should add value beyond just money. If you are working with a farm or business lender, they've probably got more experience than you do in looking at and evaluating a diversity of operations. Listen to what your lender has to say, and think hard about its value, whether it's about changes in your business or just formatting your reports differently.
4 Comments

Surfing the Harvest Wave

1/1/2015

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Picture
When I first started growing perennial herbs for commercial sales, we would harvest only the plants that seemed ready, and only harvest what we needed from each plant. When I started paying attention, I realized that we actually did this in varying degrees in a lot of our cut-and-come-again vegetable crops, such as our kale, chard, parsley, and salad greens.

This seemed like the best way to maximize our yields, but in the end, it really just maximized our work as we spent as much time walking and evaluating each plant as we did harvesting. It also resulted in a field that had a patchwork quilt of regrowth size and quality. A chard plant with eight nice leaves would sit right next to one that had been harvested down to its nubs, or a thyme plant would be half-harvested while the other half was going to flower. And pretty soon, some plants were overgrown and woody, while the remaining plants were over-harvested to meet demand.

At the time, we were rotationally grazing sheep, and I had been reading about proper management of pastures in rotational grazing - basically, you keep the sheep (or whatever other ruminants you're grazing) on a given piece of pasture until it has all been eaten down to the best level for managing the target species in that paddock, then move the herd to new section of pasture; and you manage the grazing to prevent the plants from switching from green vegetative growth to reproductive, flowering growth.

I realized that we could apply some of the same principles to growing and harvesting our herbs and vegetables:
  1. Harvest everything in a section of the bed to the same level;
  2. Create a “wedge” of growth;
  3. Manage plants for vegetative, not reproductive, growth; and
  4. Manage our “grazing” to match the variable growth rates throughout the year.

Most of our herbs and greens at Rock Spring Farm were planted as full 150-foot (and later, 300-foot) beds, with two rows per bed, so our “paddock” size was determined by how many feet of bed we harvested for a given day's needs. If the leaves on a plant were too small to harvest, we cut it right back to the same level as all of the harvested plants around it, and simply threw the too-small portions on the ground. The end result was a section of the bed in which every plant had been harvested to the same level: a crew cut on the thyme plants, or every kale plant left with 6 small leaves.

Harvest started at one end of the bed, and moved steadily down the bed with each harvest. The result was a stepped appearance, as illustrated in the picture.

Rotational grazers call the resulting growth pattern a "grazing wedge"; at Rock Spring Farm, we called it "the harvest wave" (I've always had a fascination with surfing, and waves sound much more fun than wedges). Sometimes the wave got ahead of us - the chard leaves would grow over-mature and develop spots, or the oregano would show signs of flowering - and we would cut back the over-mature portion of the bed to manage crop quality and productivity.

Surfing the harvest wave allowed us to minimize harvest labor by reducing the number of steps taken because it encouraged even regrowth and discouraged workers from hunting-and-pecking their way through the field. It also maximized yields by helping us identify when a section of the bed needed maintenance to stay green, healthy, and growing.

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It's Not Just About Fast

12/25/2014

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I love to work fast. When I worked on a fish-processing ship in Alaska, I would simply show up to work twice each day and put 120 fish each minute into the filet machine, heads down and bellies to the right. What a great job! - I just showed up and cranked all day, then ate and slept and did it again. I lost track of time more than once in that fever dream of fish, as the days and weeks slipped by in the fluorescent hold of the ship.

But it's not just about fast. You can be the fastest fish slinger in the world, but if the filet machine doesn't work, or the fish aren't in the hold, or the crew is sick, you don't get to crank.

I love throwing twist ties around bunches of kale as fast as I can, watching the harvest crates and little kale palms pile up in my wake.

But it's not just about fast. A thousand things have to be done right and at the right time before you get to throw twist ties on the kale leaves.

Before you can even think about the harvest, it's about having the tools and the techniques and the people and the energy you need to get the kale seeded and watered, the ground ready, the plants transplanted, and the weeds and the diseases and the bugs taken care of.

It's about endurance If you blow out your back or push yourself to exhaustion getting the kale plants out to the field, you won't have what it take to seed the rutabagas tomorrow.

When comparing investment opportunities - whether for spending money on equipment or spending time on systems development - the mental exercise of figuring out how much money a new tool or system will save is an easy lure, and with harvest labor taking up such a large share of a vegetable farm's expense, it's tempting to put the time and money into those systems. But we need to think about more than just the cost savings - we  have to think about getting the crop in ahead of a rain, getting the rows straight to make cultivating easy, and getting each job done without leaving yourself gasping for breath at the end of it, too tired to do it again tomorrow or next year.

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Order Propagates

12/18/2014

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Order begets order. And, sadly, order takes energy to maintain, because without energy, things tend towards chaos.

And chaos, wherever it exists - in the field, in the shop, in the office - can be overwhelming. You can't get on top of everything all at once, so you don't get on top of anything. And because the chaos surrounds any small bit of order you do carve out... well, chaos is always nipping at order's edges, and small bits of order have more edges than large bits of order, and things tend to fall apart.

Unfortunately, chaos doesn't just exist without energy. It sucks energy out of the everything that has to interact with it. Weedy fields take more energy to harvest, more water to irrigate, and more inputs to fertilize. Chaotic shops make it hard to find tools when you need them, to maintain equipment so that it doesn't break down, and to fix stuff quickly when it breaks. Disorganized papers and messy desks make it hard to access needed information and track important commitments (like bills).

And they all create resistance. Clean, orderly spaces and systems invite us in and invite others to participate; messy spaces do just the opposite.

My recipe for dealing with chaos? Carve out some order. Get one space, however small, that feels good - that invites you to participate - and ignore the rest for the moment. Weedy fields? Get one bed cleaned up, really well, and commit to keeping it clean. Chaotic shop? Clear off one workbench. Throw the tools and hardware spread across it into a bucket - it's no worse then having them spread across the workbench. Disorganized office? Clear out one file drawer (put it all in a box, if you have to), buy some file folders, and start using them. Get a little success. Let it feel good. And work your way out from there.

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PICNIC Problems

12/11/2014

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Over the years, I've spent some time dabbling in the world of FileMaker database design. (Maybe more than dabbling - I built several databases for my own use when I organized presentations for the MOSES Organic Farming Conference and for managing my farm, and helped design and implement a large project for event and customer management at MOSES.) Recently, I was reminded of a problem that I learned about through the database world - the PICNIC problem.

Sometimes, computer-techie types run into problems that they just can't solve through programming, file structuring, or procedure writing. Often, this is a PICNIC problem - Problem In Chair, Not In Computer.

In any case... I was working on some computer-y issues this past week and getting very frustrated - to the point where I actually picked up the phone to call customer service to try to get some help, whereupon I promptly discovered that the problem was staring me right in the face.

Problem in chair, not in computer.

I spent a lot of time on my farm assuming that the problem was external - that the workforce was lazy, that this one customer couldn't manage their inventory, that the tractor dealer didn't think I was important enough to make me a priority.

Over time - and through a lot of personal and professional pain - I learned that as the manager of the farm, the solutions had to lie with me. Employees not doing what I want them to do? I needed to give them better tools, better structures, and better motivations to get what I wanted out of them. Customer couldn't manage inventory? I needed to help them understand the dates in our lot code, inspect my product in their cooler, and share ways that other customers managed their inventory. Tractor dealer didn't think I was important enough? I needed to find a new tractor dealer.

Gradually, I learned that the problem was with me, not with the people and things that I was interacting with. And even if the problem really did belong to them, I had to take responsibility for making change.

(The funny thing about a PICNIC problem is that if the system design actually took into account human limitations, there wouldn't be a problem in the chair. Can you design your farm systems to take into account your own human limitations?)

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FSMA Comment Deadline Approaching Fast

12/4/2014

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The comment period for the revised proposed Produce Rule for the Food Safety Modernization Act closes Monday, December 15. And the FDA needs to hear from you.

The good news? The National Sustainable Agriculture Coalition has made it ridiculously straightforward to comment on the rule. They have a complete guide to the process, and even a Word document template that you can use to guide your comments. Everything you need is right here: sustainableagriculture.net/fsma/speak-out-today/

The other piece of good news? The voices of farmers and farm supporters made a huge difference during the original comment period – enough so that the FDA took the relatively rare step of making major revisions to their proposal and then re-opening the comment period. We need to make a similar impression this time around – the new proposal is a substantial improvement over the previous proposal, but it still has some serious flaws.

If you raise fresh produce, think you might want to raise fresh produce in the future, or just want access to locally grown fresh produce from real family farms, it is imperative that you take the time to comment on the rule. We’re going to have to live with these regulations for decades to come – the last major revision to the nation’s food safety regulations was in 1938 – so go now to sustainableagriculture.net/fsma/speak-out-today/ and use their great information and tools to make your comments.

There are plenty of issues to address in the proposed Produce Rule, but here are my top four:

Farms should be defined by their activities, not by ownership or geography.

The proposed definition of a farm – which keeps an operation or activity from being regulated under the far-more-stringent rules for processing – should be based on common sense and risk-based distinctions.

The current proposal would define a farm as being under “one ownership” and in “one general physical location.” This lacks clarity and common sense – my own farm utilized two different parcels more than three miles apart, but that certainly did not increase my food safety risk. Neither does owning the property where you grow your produce while leasing a packing shed on a different piece of property nearby.

These are not the science-based regulations that congress called for when it passed the Food Safety Modernization Act. Farms come in all different shapes and sizes and all kinds of ownership structures; the Food Safety Modernization Act needs to accommodate the creativity that farmers use in meeting their resource needs. Anything less threatens the survival of current operations, and creates tremendous barriers to entry for beginning farmers.

Farm activities are farm activities, regardless of where they happen,

The proposed rule regulates the same activity differently depending on where it happens. If you wash your produce, trim outer leaves, or put stickers on your watermelons on your farm, that’s considered to be “farming.” If you do the same activities on your neighbor’s farm, that’s also considered to be farming. But if you wash your produce in a packing house that isn’t on a farm, that’s considered to be processing or manufacturing, and falls under additional regulations.

If washing produce doesn’t present a public  health risk when it’s done on a farm, there’s no reason that it should present a public health risk when it’s done off the farm. This rule would stand in the way of the development of multi-farm CSAs, food hubs, and even farmers markets.

Testing surface water isn’t necessarily connected to safety.

The FDA has backed off of the crazy requirements for water testing that were present in the original proposal, but they are still asking farmers to test surface water 20 times per year to establish a baseline risk threshold.

Tests would indicate how long farmers need to wait between applying overhead irrigation and harvesting produce, based on… well, here’s what the FDA has to say: 

For example, if you determined (using the procedures described in proposed §§ 112.45(b) or 112.45(c), as applicable), that your agricultural water which is to be used for the purposes described in § 112.44(c) has generic E. coli levels with a GM value of 241 CFU per 100 mL and a STV value of 576 CFU per 100 mL, your water would not meet the microbial quality specified in § 112.44(c), in that your values exceed both the GM value of 126 CFU per 100 mL and STV value of 410 CFU or less per 100 mL. Under proposed § 112.44(c)(1), you would be able to use this water by applying a calculated time interval of 1 day between your last irrigation event (by direct application method) and harvest of the crop. Using a microbial reduction rate of 0.5 log per day, a 1-day time interval would be sufficient to meet the microbial quality requirements specified in § 112.44(c) because it would reduce your GM and STV values to 76 CFU per 100 mL and 182 CFU per 100 mL, respectively.

Do you really want to try to figure that out in August?

Instead, FDA should implement the common-sense solution used by growers and recommended by Cornell University – a several day wait between overhead irrigation and harvest, or cleaning crops with water treated with a wash-water sanitizer, multiple fresh water rinses, or a flowing rinse. The science backs this up, and it’s an easily implemented solution.

Not regulating raw manure use right now is just crazy.

The FDA has proposed to delay the creation of a new standard for raw manure management. This makes sense – I’ve reviewed the research and it is not clear what the appropriate pre-harvest application interval would be. But the research is clear on one thing – the organic standard for raw manure application makes sense. Let’s go with the very workable, very safe 120-day waiting period if the edible portion is in contact with the ground, and 90 days if it isn’t.

Now, go.

Seriously. This is important. Go right now to sustainableagriculture.net/fsma/speak-out-today/ and follow their easy instructions.

2 Comments

Lowering Prices

11/27/2014

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Black Friday has me thinking...

If you decide that you want to lower your selling price, you need to get something substantial for that. Lower prices should only be a reward for the customer who helps you drive down your acquisition costs, increase your utilization, or sell a lot more product.

CSA farmers often provide a discount for early purchases, and I've seen this more and more with the "market CSA" model where customers get a punch card to shop at a farmers market stand. Before you do this, you have to ask: does getting money up front reduce my overall expenses? Can I "borrow" the money from my customers for less than I could borrow it from the bank?

In that same model, you would also want to ask if providing a discount at your stand helps you to make better use of your fields or your product selection? One of the curses and advantages of farming for a CSA is the requirement to grow a lot of different crops - it's hard, but it also means you have the opportunity to get increased value on low-value crops by including them in the same box; for example, we used to include greenhouse greens in a box of winter roots, effectively increasing the value of the turnips by packaging them with the fresh greens.

Finally, does providing a punch card help you sell more product - and does it help you sell enough more product to offset the lost profits from the discounted produce? If you are making a 30% margin on your crops, and you give your customers a 10% discount, you are cutting your profits by a third.

The same questions apply to dropping prices in any situation. Does decreasing your price allow you to sell a lot more product - like moving pallets of broccoli to a wholesale distributor?  Does it drive down your costs - like saving the time and expense of going to farmers market? Does it get you needed cash flow to pay staff until you get to a more profitable crop? (Are you sure?) Does it help you put together a load that includes high-margin crops?

Never lower your prices for the sole purpose of selling products - sales without profit is just work.

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Reap More Rewards at this Winter’s Conferences

11/20/2014

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Every winter, I look forward to farming conferences, where I get to see old friends, get new ideas, make new connections, and find inspiration for the coming year. I can’t imagine farming without that regular coming together of our smaller and extended communities.

And I’ve never been to a farming conference where I didn’t take away enough information to pay back the time and money I spent to get there. Even for the most expensive conferences, the investment pays back quickly, and the new knowledge becomes a permanent asset that provides returns year after year.

Unfortunately, it’s pretty easy to go a conference and let the knowledge slip right on by. Game-changing suggestions, enriching connections, and even bigger opportunities can easily  slip right by, especially when you have to return from an event and get right into the greenhouse or the field. By approaching a conference like an investment, you can make the most of the opportunities and information that come your way.

Get Ready

Just like anything having to do with farming, you dramatically increase your likelihood of great results by taking a little time to prepare.

Set Goals - Once you’ve decided to go to a conference, decide what questions you hope to get answered. I find that it’s easier to get concrete results if you identify specific questions, rather than just an area of interest: “How should I organize my packing shed to maximize workflow and ergonomics?” rather than, “I want to know more about packing shed organization.”

Plan Your Time - Take time to review the workshops, and plan your attendance. Often, organizers post the conference program, with expanded workshop descriptions and updated schedules, in the days or weeks before an event. Figure out where you are likely to get your questions answered, and what presenters you might want to connect with after their workshop is over.

The exhibit hall can provide a rich source of information, as well. Take time to review the exhibitor listings to decide who you want to visit, and what you hope to get out of each conversation.

Prepare Your Kit - Finally, pack your business cards, a pen, and some paper. When that one key idea or one life-changing contact comes along, you don’t want to be stuck without the tools you need to make the most of it.

At the Show

The show isn’t all about work, but a few key actions can dramatically increase the value you get out of the event.

Engage the Material - You can increase your retention by actively engaging with each workshop you attend, rather than passively receiving information. Interpret key points for how they apply to your specific situation, rather than just writing them down - rather than just writing, “Point shovel points down to move more soil into the row,” add a note: “- would help with weedy broccoli!”

At the end of each talk, I like to take a moment to distill the entire talk down to one key point: “I can build organic matter on my farm by allowing cover crops to get through flowering,” or, “I really need to put together an income statement and balance sheet for my farm, effective January 1.”

Identify Actions -  I take prolific notes (it works for me, your mileage may vary), so it can be hard to identify the concrete actions that a speaker helped me realize I need to take. Even where I don’t write down a ton of information, I like to write a dash (-) to the left of each action item; when I scan my notes after the conference, I can quickly identify items to put on my task list, and show that I’ve done it by turning the - into a +.

Ask Questions - Please, ask questions! Speakers dread having a disengaged audience, and there are few things more unnerving than leaving the requested ten minutes for questions at the end of a talk and facing a silent audience. Remember the questions you wrote down in preparation? Now is the time to get them answered. Questions don’t have to be limited to the material just presented,

Make Connections - Be approachable when you aren’t in a session. Don’t immerse yourself in your phone or the conference materials. Likewise, approach people. Everybody’s there to make connections, and a room full of strangers can be a lonely place. Walk right up, introduce yourself, and ask about the other person.

Make the Most of Connections - Use your business cards liberally - handing out a card is a great invitation to get one from somebody else. Take a moment to write down a note on the back of the card so that you remember the context, or something that you would like to follow up with. The value of a conference connection isn’t always apparent, and I’ve benefitted from connections with connections over the years.

Process Connections in Real Time - at the end of each day, empty the business cards from your wallet, quickly sort them into three piles: the first for those that you absolutely plan to follow up with, the second for those that you want to put into your address book, and the third for, “who is this person?” Throw the third pile away, and keep the other two accessible for when you get home.

For the cards in the first group, write a note on the back about your intended action - “send info on L245 for sale,” or “ask for contact for greenhouse company.”

When You Get Home

You’ll get the most from the conference if you follow up in real time, while the information and connections are still fresh. Reviewing your notes, information, and connections shortly after the event is a great way to increase retention and internalize important messages - and makes certain you don’t get caught up in the work that’s waiting when you get back before you have a chance to fully realize the value of being at the event. By changing the context and the format of the information, your brain uses different pathways to log the same information, improving your ability to remember and access it later.

Identify Actions - Shortly after you get home, pull out those notes. Review the actions you identified, decide if they are still meaningful, and put them into your task management system.

Follow Up with Connections - For the cards that you made notes on about following up, make that happen. Waiting until weeks after the conference allow you to slip from their minds, and any urgency they feel to respond to you can easily go by the wayside. Add everybody else to your address book, and consider reaching out to them on Facebook or through a quick email.

***

A good conference can be a great place to get inspired, chase some intellectual rabbit trails, and meet a ton of new people - but that’s not worth the price of admission all by itself. Those of us in the world of farming have chosen a life where knowledge and connections can turn into real actions to improve the planet, provide real food, and build community, as well as to provide a return to our businesses. A little bit of additional effort - before, during, and after the event - can provide a real boost to the outcomes a conference creates on your farm and in your life.

0 Comments

Better Not Bigger

11/13/2014

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Unfortunately, most of the discussion around scaling up has to do with growing more acres, rather than doing better on the acres we’ve already got. Farming fewer acres leaves us room to grow our own fertility, and to increase our weed control through the judicious use of cover crops and careful tillage – and doing better at growing at your current scale is a prerequisite for increasing the number of acres under production.

Not to mention, increasing yields has amazing compounding effects, especially when it comes to harvest. Totes fill up faster when you have more spinach per square foot or more beans per plant. Plus, crops get back to the packing house and into the cooler more quickly – not only do you have more vegetables faster, you get a higher quality product, too.

Time and time again, I work with farmers who are failing to get top yields because they are missing two key elements of horticulture: weed control and irrigation.

Weed control pays dividends by doing more than just reducing competition. In fields with great weed control, crops like spinach and cilantro have fewer yellow cotyledons and dead leaves, resulting in faster harvests. And if you have plans to mechanize your harvest in any way, good weed control is an absolute must.

Likewise with water – fresh vegetables are made of H2O, and lots of it. The old rule of thumb of an inch of water a week is just that – a rule of thumb. Watering needs vary according to heat, humidity, and stage of growth. Optimum yields may require much more than an inch of water per week – some growers I know apply three or more inches of water during critical growth phases.

Before investing in anything else, take a moment to look into these two critical systems on your farm this fall. Too often, huge improvements can be made without resorting to huge investments – the real issue is the allocation of time and energy into these areas. Doing more with what you have will always be a surer avenue to success – financial, personal, and ecological – than scrambling to do more with more.

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Six Things My Tractor Taught Me

11/6/2014

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When necessary, a tractor works all night. A tractor doesn’t quit because it’s dark, or cold, or because Monday Night Football is on. I don’t think many farm tractors work all night, every night, but when it’s necessary, they perform. On the farm, every year, there are a few days and nights that make a critical difference – to run a successful farm, you’ve got to be willing to get out there and go the extra mile.

Maintenance matters – and there’s more maintenance to do than you think.  Putting the time and money into maintenance makes certain that when the tractor needs to work all night, it can. And maybe more importantly, it means that when you need the tractor to start because the crew is waiting for you or the rain is on its way, it will. Too often, I see clients skimping on the necessary maintenance over the winter due to financial or time constraints – that’s a mistake that just costs more down the road, in increased repair expenses and lost opportunities.

When a tractor’s off, it’s off. On the flip side, a tractor doesn’t do the work half way. It’s either on, or it’s off. When you’re off work, be off work. Find something to do , even just for a few hours a week, that isn’t farming: take Taekwondo, join a reading club, go bowling. Find something to do that allows you to turn off from the farm.

It’s either the gas, or the spark, at least on a gas tractor. I have all the mechanical aptitude of your average ape, so dealing with old tractors isn’t easy for me. However, a neighbor helped me understand early on that you have to go after root cause – if your tractor isn’t working, it’s either got a problem with the amount or quality of the gas the engine is getting, or it’s got a problem with the spark that fires the pistons. Once you know that, the detective work to figure out what’s wrong becomes a lot simpler.

Unless it’s the muffler belt.

In an emergency, step on the clutch. The third farmer I drove tractor for told me that, unless you’re in road gear or going down a hill, if something starts to go wrong with the tractor, just step on the clutch, and you’ll come to a stop. Then you can start to deal with everything else. Despite the generally slow operating speed of a tractor, things can go wrong in a hurry. Stepping on the clutch, killing the PTO, and dropping the forks brings everything to a stop, allowing the operator the chance to take a moment to consider the situation – not a bad lesson in any situation, no matter how fast-moving it seems.

Not everybody can drive straight – especially in the creeper gear. It actually gets harder to drive straight the slower you go, and not everybody can maintain that kind of focus. But it’s exactly the focus you need as a farmer – every bit of attention you pay to keeping that row straight pays off when it comes  time to seed, so you figure out how to keep the tractor straight and the beds evenly spaced. Care and attention matter, and the little things add up.

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