The Farmer as Entrepreneur

Final Report for CS05-036

Project Type: Sustainable Community Innovation
Funds awarded in 2005: $9,950.00
Projected End Date: 12/31/2006
Region: Southern
State: Louisiana
Principal Investigator:
Mike Tarantino
Iberia Industrial Development Foundation
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Project Information

Abstract:

Introduction

In the South Central region of coastal Louisiana devastated by Hurricanes Katrina and Rita, the sugarcane industry has sustained the rural economy for three centuries. With generations of families having lived the farming lifestyle and passed on the knowledge, love of the land, and physical infrastructure from generation to generation, the industry is facing forces never seen before.

Family farms have operated as small businesses with most having little true business experience or formal training to assist them in implementing and utilizing some of the business practices that might allow them to navigate the current business climate.

“Farmers as Entrepreneurs” was created to fill a void that currently exists by providing access to information, technical assistance and training to the farming community. The process is designed to promote wise and productive choices for future uses of these family farms, their assets and natural resources.

Project Objectives:

“Farmers as Entrepreneurs” created a process where farmers view themselves as business owners and make connections to the local business community. To achieve this goal, data was needed to document the impact the farmers where experiencing due to recent and proposed import legislation. The progam was also designed to provide a local support mechanism and methodology for producers, landowners and others to utilize when considering new business ventures and diversification opportunities. Business technical assistance to area farmers and affected businesses was designed with the use of seminars, workshops and one-on-one counseling.

These objectives were achieved by coordinating with the local county agent, the general manager of the local sugar co-op, and the involvement of area agriculture bank lenders. A core group of interested farmers was created and roundtables were established. Several farmers considered and instituted new endeavors during the process. Several others are now considering new directions because of devastation from the storms.

A dialog has been created and lines of communication opened which allowed for joint endeavors after the hurricanes.

Research

Materials and methods:

As the economic development hub for Iberia Parish, IDF has established systems to provide small businesses with information and programs to keep their businesses strong and growing. Technical assistance is available through seminars, workshops and one-on-one counseling sessions. “Farmers as Entrepreneurs” utilized this established system to serve as a bridge for farming families to access the many programs and services available to other small business owners. Through the use of Round table meetings, seminars, workshops and networking luncheons, the program brings focus to the targeted group and creates links to the general business community networking system.

Research results and discussion:

Through its existing committees and links to state and federal agencies, IDF gathered existing information on the current state of the sugarcane farming industry. An industry that is now in its third century, sugarcane is currently produced on over 450,000 acres with an impact of $1.7 billion. The number of farms in Louisiana has decreased from 2308 in 1963 to 718 in 2005. Many of those remaining have been driven out by the devastating hurricanes of 2005. This information was included in the state wide long-term recovery plan titled “Louisiana Speaks” which has been communicated through out the state with community “charettes”, newspaper, radio and television coverage. This process was a community wide assessment with resident input to assist in the development of future planning.

While implementing this initiative several local producers expressed interest in applying for USDA value-added producer grants in an attempt to supplement their sugarcane farm income with other innovative crops that had been studied and found promising by the LSU Ag Center. In each case it was learned that there had been no market impact study completed on the crop so the farmer was unable to complete the grant process. To date, no one in the Iberia Parish area has been able to successfully apply for a producer grant although many are attempting to “go it alone” in finding ways to diversify their farming endeavors.

Participation Summary

Educational & Outreach Activities

Participation Summary

Education/outreach description:

Although the program did not included the development of any specific publications, coordination with the “Louisiana Speaks” program initiated by the State of Louisiana did include the publication of the “Iberia Speaks.” – Iberia Parish Hurricane Recovery Program Poject Summary, 2005-2006. This document is available through the Louisiana Recovery Authority, the Iberia Industrial Development Foundation, and local governmental entities. It was widely distributed once completed in March 2006 and contains specifics on some of the community projects needed for future development of the area.

Project Outcomes

Project outcomes:

A primary goal of the “Farmers as Entrepreneurs” program was to create a process where farmers view themselves as entrepreneurs to ensure their future viability in a changing environment. Success in this overall objective can be measured in several ways. First and foremost, a dialog was established between a core group of innovative farmers, the LSU Ag Center representatives and the community business network. This dialog will be further reinforced by the naming of the local co-op mill manager to the IDF Board of Directors. Secondly, this pilot program, as expected, created interest among various stakeholders such as area agricultural lenders, CPA’s and other business professionals interested in sustainable community development. Finally, the community has begun to understand the economic significance of the sugarcane industry and the need to make good choices with those resources. A subject that has received significant attention since the 2005 hurricane disasters.

Recommendations:

Potential Contributions

This initiative identified two major areas of concern as farming families struggle with the need to develop into business entrepreneurs. The first is to find sources of income that can supplement sugar production both to add to the bottom line and to even out cash flow deficiencies. The second is to develop expertise in the art of managing the expense side of the income statment for the family farm. Bank lenders have expressed concerns over the farmers lack of understanding of business financial statements, what the numbers mean and how to improve profitability by focusing on the numbers. Future success will be aided by the continued development of financial communication between lenders and farmers.

Future Recommendations

Based on the outcomes of the “Farmers as Entreprenures”, IDF is interested in implementing a new initiative titled “Managing the Margins: Pathway to Pofitability”. This new program creates partnerships with Ag Lenders and works on two parallel tracks to help family farmers understand and use their financial data to increase their bottom line profitability while increasing opportunities for community diversification and long range planning.

This initiative will work on two tracks with the help of banks and area CPA’s while partnering with LSU Ag, USDA staff, University economists, community development entities and historic allies to create discussion of ways to increase family farm bottom line profitability through the use of margin management techniques and community development programs, especially those created by congress in the wake of Hurricane Katrina and Rita especially the tax incentives in the Gulf Opportunity Zone legislation.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.