Chris Howard: 00:01
Well, I’m prepared to talk about the different livestock options for crop insurance, as well as the different types of farm risk. Yeah, that’s about it.
David Handley: 00:15
Our approach to this whole thing is that it’s part of a good business management plan. You have to have risk management built into it so that when things do happen, you’re still gonna be here next year.
Colt Knight: 00:27
Sounds good to me. You guys feeling it? You’re excited? You’re ready to be here?
Chris Howard: 00:33
It’s gonna be great.
Colt Knight: 00:39
Welcome to the Maine Farmcast. I am your host, Dr. Colt Knight, associate extension professor and state livestock specialist for the University of Maine Cooperative Extension. And today, I am joined by two really close friends and colleagues, Chris Howard and Dr. David Handley.
David Handley: 00:58
Good morning.
Chris Howard: 00:59
Good morning, Colt.
Colt Knight: 01:01
They do not like being on microphone. If you would think that I have a spotlight shined at them right now, we’re in an interrogation room. They are so stiff. I bet I could bounce a quarter off of them at the moment.
Chris Howard: 01:15
Listen, give us a whole crowd of farmers and we’re fine. We’ll talk forever.
Colt Knight: 01:21
They’re loosening up a little bit. But we are going to talk about today one of their fun topics: risk management and crop insurance. But first, I’d like to get to know them a little better. And I’m gonna start with Chris. Chris, who are you and what do you do?
Chris Howard: 01:46
So I’m Chris Howard. I work for the University of Maine Cooperative Extension, and I am the project manager for UMaine’s crop insurance and risk management program. And that is funded through a grant from the USDA RMA.
Colt Knight: 02:08
And how did you get here? I mean, how did you get to be in Extension at the University of Maine?
Chris Howard: 02:13
Well, I am a UMaine graduate, class of 2003, and then I got my master’s in 2007. And I did my graduate work at Highmoor Farm, which is one of the University of Maine research farms down in Monmouth.
Colt Knight: 02:29
Best apples ever.
Chris Howard: 02:33
And I also joined the education part of Extension in 2018, and I was part of the produce safety team. So I did that for a little bit, and I’ve worn other hats as well through UMaine Extension.
Colt Knight: 02:58
I got to know Chris because she was the grant administrator for the Maine New Farmers Project. And you’ve probably heard me talk about that a lot on the podcast and out doing extension programming, but Chris is the glue that held that whole thing together. I think, technically, Dr. Handley and I were the principal investigators on that, but Chris did all the work. We just got to do the fun talks and make videos and stuff. So
Chris Howard: 03:24
That was a fun project. I do hope to get refunded for that project in the future, through the USDA.
Colt Knight: 03:32
Yeah, I do too. And then Dave, we don’t have a lot of fruit and vegetable specialists on the podcast. I think you’re the first.
David Handley: 03:43
What an honor. Let’s see, I’ve been with the University of Maine Cooperative Extension for almost forty-three years at this point, and all of that time has been at Highmoor Farm, the Agricultural Experiment Station, because that’s where we do research on berry crops and vegetables in addition to the great apples that you mentioned there. So I work with farmers who grow vegetables and small fruit, mostly in pest management and evaluating new varieties and things like that. So I came into crop insurance and risk management kind of kicking and screaming and backwards because as the program developed and USDA really wanted to start promoting risk management among small farmers, because before it had always been pretty much row crop growers, they made some money available for this program to start pushing farmers toward it and say, hey, this stuff’s available if you guys would just pay attention to it. And I got to supervise the professionals who were doing that.
David Handley: 04:37
And then as the professionals would go on and move up in the world, people like Tori Jackson and so forth, there’d be these interim gaps where I would kind of have to take over. And through that, I came to realize how important an aspect this is of business management, especially for new and beginning farmers, to have some thought about the risks that they’re facing as a business manager and how they can ameliorate those risks.
Colt Knight: 05:02
It’s a big word. I like it. Ameliorate. I learned that one in grad school. My first abstract, I got to use that word.
Colt Knight: 05:13
As you can imagine, the small fruit and veg specialist and the livestock specialist, we don’t interact a whole lot on extension programming. But I did get to know Dave quite well through our extension agent association, both on the state and national level, and we’ve gotten to work together quite a bit over the years. And then we got to know each other really well administrating the Maine New Farmers grant. So it’s a pleasure to have both Chris and Dave on the podcast today because I get to talk to them all the time. But normally, when I call and talk to them, it’s because something’s wrong or I need something.
Colt Knight: 05:47
So this is kinda nice just to sit here and have a normal discussion without any pressure. So I guess we should jump right in and kinda tell us about the program, what it is, who it’s for, and what they offer.
Chris Howard: 06:06
Yeah. So the risk management and crop insurance program is geared towards all farmers in Maine. So new farmers, experienced farmers, everyone in between, people that want to have a farm. Everyone needs to think about their farm risk. So we like to talk about farm risk in five different categories.
Chris Howard: 06:31
So the one that people often think about is production risk. So that’s, you know, adverse weather, bugs, diseases, and all of that. But there are other risks that you need to think about on the farm, and that has to do with knowing your business and making sure you’re prepared as a business person. Because a farm is a business. And a lot of people forget about that because, you know, cute piglets and, you know, and they don’t like to think about actually making money and paying back the loans and stuff like that.
Chris Howard: 07:15
So the other types of risks are market risks. So that is anything that you have to buy onto the farm that might change in price, like the feed costs. Financial risks has to do with your farm’s financial stability. So what you have for capital, what you have for cash flow, and all of that. Then there are legal risks.
Chris Howard: 07:58
So this has to do with laws and regulations that you have to pay attention to in terms of your farm. And then there’s human risk. So what do you have for labor? And how safe is your labor on your farm? And do you have health insurance for yourself and your labor?
Chris Howard: 08:27
And how safe are your people that are working for you on your farm? So those are the different types of risks. And we like to talk about all of those risks just so people don’t get bogged down with just the production side. Because you can have all those risks under wraps, but then if you’re not paying attention to the other ones, you’re not going to have a successful business.
Colt Knight: 09:00
Oh, that sounds good. So if someone was interested in learning more about the risk factors, how would they go about doing that?
Chris Howard: 09:10
Well, do we have an opportunity for you? We are running annually. We run a Business Planning for Producers course. And this is a ten-week course. It starts at the November.
Chris Howard: 09:30
And it’s once a week, in the evening, online. I believe it’s Thursdays throughout the winter. And this is a good place for you to learn about all of the business risks and also to understand the different sections of a business plan. So by the end of the course, you should have written all the different pieces of a complete business plan. And you’re able to sit down with an instructor, an educator from UMaine, to go over the business plan.
Chris Howard: 10:12
And you should be able to use it to obtain financing by the end of the course.
Colt Knight: 10:17
We’ve talked about business plans on the podcast before, and they’re a crucial step when it comes to farming. Because I find so many folks get into farming as a lifestyle, and they wanna convert it to a business. And sometimes your lifestyle goals and your business goals are conflicting. Like, I wanna raise cute mini Highland cows, but there’s no market for those. And how do we make money?
Colt Knight: 10:44
So you end up just spending money. So is it a hobby or is it a business? And whenever we have a business, you have to have a business plan so that you can figure out just how much is it gonna cost, how much are you gonna make, what are the risks, how are you gonna market, advertise. And I think that’s where a lot of farmers fall short, is treating the farm as a business. There’s no God-given right to be a farmer.
Colt Knight: 11:14
You know, if you don’t handle the P’s and Q’s, you’re not going to make it.
David Handley: 11:18
I would agree. And I’d say one of the biggest faults I see with people getting into any farm business is not going into it with your eyes wide open. Like you say, they’re blinded by the piglets or they’re blinded by the cute little cows. And it’s really a question of how much money do you have to throw out a window at this time?
Colt Knight: 11:35
Yeah.
David Handley: 11:36
And if you don’t want to throw money out a window, now you’ve got to plan. And not only do you have to plan about buying the pigs and what’s going to, the food and the health factors that are going to be bothering you later, but it’s also what happens if something comes and the cost of feed goes up ten times, or you run into disease problems, you lose half your animals. Are you going to be in business next year? Can you afford to continue to finance yourself if there’s no money coming in? The answer is usually no, but there are ways to protect yourself, and that’s kind of what these programs are designed to do.
Colt Knight: 12:12
Yeah. And if you’re opening a greeting card store, you don’t have to worry about fluctuating feed prices or fertilizer availability and pricing or whether the weather is gonna totally wipe out your crop this year, whether the market is up or down on greeting cards, you know. So it’s a tough business. You really gotta want to be in it, and you really gotta pay close attention to all the financial aspects. Yeah.
Chris Howard: 12:41
And another good part about the Business Planning for Producers course is it really teaches you how to do some market analysis. And it also teaches you how to do enterprise budgets. And so maybe you already have the Highland cows, but you also wanna add something else in, a different enterprise. So it teaches you how to budget for that, and run the numbers and see if they make sense. So there’s lots of different aspects.
Chris Howard: 13:21
And another part of the course is you get to meet ag service providers from all around Maine that can help you throughout the life of your farm. And that has been, through our evaluations, the most valuable part of the course itself. So
Colt Knight: 13:43
That’s I think that’s one thing that we lost during the pandemic was the connection part and being able to collaborate with different organizations and things, and the community that comes along with actually sitting down in a location and having a class or a meeting, meeting your friends, your neighbors, your ag service providers. And
David Handley: 14:08
don’t forget, even before you take that course, if you just want to get a taste for what we’re talking about, there’s some really good online sources that Chris and our project administrator, Steph Wright, have put together. So you can go online, you can look at the website, and there’s even tools there where you can line up what you’re thinking about doing and it can actually start cranking some numbers for you. And looking at that, you’re not committing yourself to anything at that point, you’re just looking at what’s available, what’s out there, and the things you need to be thinking about if you’re going into this as a business, or even if you’re already started, what’s ahead? Because we find that oftentimes when a new person is starting out, they get very excited, they’re rolling along, things are going good. But then about year ten, they kind of hit a wall.
David Handley: 14:57
And oftentimes it’s because they suddenly realize that I’m getting on a little bit. Maybe I want to have a family. Maybe my partner wants to, we’ve realized that I’ve got a partner in this business. They’ve been working off farm. Can we get to the point where they can work on farm?
David Handley: 15:14
All kinds of things tend to happen in that little window there. And that’s one of the things that we’re trying to help farmers do is bridge that gap where maybe a hobby or an interest or a part-time job becomes a full enterprise.
Colt Knight: 15:25
We see that with livestock production and just really any entrepreneurial activity. You’re so gung ho about it at first. You’ll do anything to make it work. And so that means working twenty-four hours a day, seven days a week. And then at some point, you do get the fatigue.
Colt Knight: 15:42
You hit that wall. And, you know, is your business able to survive if you’re not the one? I believe Dave Ramsey calls it the treadmill phase. So if you’re not running the treadmill, does the business keep going? And so a lot of times the answer is no.
Colt Knight: 15:59
So it’s like you’re the secret sauce that makes it work, and how do you transition out of that?
David Handley: 16:04
And one of the things this course will do is when you’ve reached that point, maybe the answer is I need to hire on one, two, three people. And that brings a whole nother aspect into it, a whole nother level of risk that Chris mentioned before that you need to think about.
Colt Knight: 16:19
So before we get into the crop insurance side of things, and we’re still talking about risk, I wanna hear fun stories about some risk that you have encountered and helped mitigate over the years. We have to keep it anonymous, of course. As
David Handley: 16:37
I like to say, well, and you’ve dealt with this yourself in a different phase, but I work with berry crops. Well, the fact is that we live in Maine and not all berry crops are going to be successful here, but some people coming into the state, usually from other places, think, why isn’t somebody growing this particular crop, bananas or whatever, you know?
Colt Knight: 16:58
Usually there’s no reason for it.
David Handley: 17:00
Right. And usually in my case, it’s grapes, wine grapes especially.
Colt Knight: 17:04
Oh yeah.
David Handley: 17:05
And they have a romantic idea about, you know, sitting on their porch with a glass of homemade wine, Chateau Moi, you know, and they call and they want to do this. And oftentimes they don’t have farming experience. So I view it as my job in Extension, the first part of that education, is to try to talk them out of it because the risk is too high. You know, we’ve got lots of problems here. There’s a reason that we’re not a Napa Valley.
David Handley: 17:30
Our growing season is too short. Our winters are too cold. And that market’s already taken, frankly. But having said that, if you really want to go forward with this, I will help you as much as I can. I just want you to go into it with your eyes wide open.
David Handley: 17:45
And we do have some successful grape growers and wineries, but it’s a handful and they’re people who did their homework.
Colt Knight: 17:51
Yeah. And you mentioned wineries, and this has always been a pet peeve of mine because there was a—I don’t know. When did the small-scale winery fad really hit? Was it the late nineties, early two thousands when it started, like, going through the roof? Yeah.
Colt Knight: 18:08
And every local town had their own winery. And I remember I was dating a lady at the time that really loved those, and we would go on these tours and things. And then I realized that so much of that is just a scam because they plant their grapes. So they’ll have two acres of grapes at this winery, and then they’ll have their tastings and their cheeses. And they bring people in as tourism to buy their wine and so on and so forth.
Colt Knight: 18:35
Well, they’re not making hundreds of cases of wine off two acres of grapes. They’re buying their juice from California like everybody else in the world does pretty much.
David Handley: 18:46
Right. So if you’re buying a bottle of Pinot Noir from a Maine winery, that’s not
Colt Knight: 18:52
Yeah, they didn’t.
David Handley: 18:53
We can’t grow those.
Colt Knight: 18:53
They didn’t grow those grapes here.
David Handley: 18:55
But usually the growers are upfront about it. They’re just trying to display their talents as a vintner and a winemaker more than a grower. Having said that, we do have a few growers who are trying to make all Maine wines, all estate-produced wines, but they have to have a backup plan because there’s going to be that year where they have a crop failure. And that backup plan is either buying grape juice, which as I said, most of them are upfront on, or they use other fruits. So that’s why in Maine, we have blueberries—actually can make a darn nice wine.
David Handley: 19:23
And we have some growers who are doing that, making some decent wines. And then you have apple wines and pear wines, strawberry wines, raspberry wines. Frankly, I’ve never met a strawberry wine I really cared for
Colt Knight: 19:34
at all, but That was really big in West Virginia with strawberry wine and blackberry wine. But the problem was, it was just like drinking sugar straight up. I don’t know if that’s part of the process or they have to put that much sugar in the must to taste.
David Handley: 19:49
Loaded with sugar, and it’s hard for the bacteria to break all that down is one of the problems. So you’re going to end up with a sweet, heavy dessert wine. And like you said, a wine like that, you’re not going to compete with the big boys. You’re focused on a very local market. And usually in a case like that, you’re looking for tourists and stuff.
David Handley: 20:06
Agri-tourism is a big part of your business if you’re going to get into that kind of thing. Think probably less so with the animal folks.
Colt Knight: 20:12
It’s getting bigger and bigger. Okay. It’s something that we’re starting to get into at this point.
David Handley: 20:18
But a lot of vineyards and even now, I think even with orchards, a big part of the business is doing wedding receptions and parties and things like that. It’s more of a location in agri-tourism than it is the product we’re going to
Colt Knight: 20:30
sell. I’ve worked with several producers to transition from an existing livestock operation into a wedding venue operation.
David Handley: 20:40
Right. Now your business plan changes pretty dramatically.
Colt Knight: 20:44
And I have to get a lot of outside help for that because, you know, you start getting into permitting. And when you transition from a family farm to a commercial operation, then, you know, there are codes and sprinklers and, like, you know, where do you get the water to run the sprinklers, and you have to go dig a pond so you have a water reserve in case the water shuts off. And it was just a big deal. It was not as easy as I thought.
Colt Knight: 21:13
I was like, man, you’ve got this beautiful big barn. You could just make this a wedding reception area and you’ve got your pasture.
David Handley: 21:20
And that’s when, you know, Chris and I talk about this all the time. Did you get into this? Do you want to be a farmer or do you want to be a businessman? And oftentimes when it comes to making a switch like that, even if it’s going from someone who sells wholesale to going to a pick-your-own operation, now you’ve got people coming on your farm, your risk changes. You’ve got to take a look at your insurance policies.
David Handley: 21:42
It might not be crop insurance, but liability insurance that you’re looking at. And most people don’t get into farming because they love working with the public. In fact,
Colt Knight: 21:52
it’s quite
David Handley: 21:52
the opposite.
Colt Knight: 21:53
Most folks are into the livestock farming aspect because they don’t wanna be around people. They wanna be around their animals. If you’re gonna run a niche market, small-scale livestock operation, you have to market to people.
Colt Knight: 22:09
Right. And open yourself up to people.
Colt Knight: 22:09
And, you know, that’s a common failing.
David Handley: 22:12
And often that person isn’t you. And it’s important that you understand that, and you need to bring someone on the operation who can fill that role.
Colt Knight: 22:19
Yeah. So, yeah, we talk about that all the time with small-scale livestock production.
David Handley: 22:25
Yep.
Colt Knight: 22:27
Okay. So we heard about grapes. Is there anything else? Oh, Chris has got a story. I can just see her eyes.
Colt Knight: 22:32
She’s got real water.
Chris Howard: 22:32
Yeah. Working with the new farmers for as long as we have, we’ve come across quite a few folks who have had their career, and now they want to do some farming. Maybe it’s a hobby, but they’re looking to start a farm. And when we kind of dive down a little deeper, you know, what is your why? Why are you doing this?
Chris Howard: 23:05
What, you know, what is your goal? They oftentimes will say, well, I don’t need to make any money. I just want to feed the public. I’m going to grow all of this food and give it away to the food banks. And I’m gonna have, you know, gleaners come on the farm and, you know, help me get all the food off.
Chris Howard: 23:32
And like, okay. Well, there are a lot of things we need to think about. And first of all, really, you don’t need to make money? You don’t—you really have a humongous pot of money that you’re just going to throw away into this? So there’s a lot that goes into that that we really have had to help people break down and understand what exactly they’re getting into.
Colt Knight: 23:58
I’ve worked with quite a few folks that have that same model and they never make it. Yeah. It’s too overwhelming. Yeah. It’s amazing.
Colt Knight: 24:09
Even when you’re, like, giving food away to the food banks, there are still regulations involved with that.
Chris Howard: 24:14
Yeah. Yeah. There’s a lot that goes into it that people don’t understand. Yes, it’s important work. And yes, it’s definitely needed.
Chris Howard: 24:25
But you still have to have a business plan around it so you understand what’s happening to your finances and that you have all the other risks covered. So
Colt Knight: 24:39
So, talking about risks—so one of the risk mitigation strategies is insurance. So tell me all about crop insurance because I know absolutely nothing about crop insurance.
Chris Howard: 24:52
Well, there are a lot of different crop insurance policies, and most of them are through the USDA RMA. And the one that is most sold here in Maine is based on the rainfall index. And so this is weather data that has been gathered by NOAA for fifty, sixty, seventy years now. And so the policy I’m talking about is the pasture, rangeland, and forage insurance. Some people call it the rainfall index policy.
Chris Howard: 25:43
And so that’s all about, is there a drought? And is there a drought in your area? So what happens is the USDA puts a grid over the state and each grid block is 17 miles square. And so whatever grid block your farm is in has an average rainfall taken over the last fifty years. And if the rainfall this year in that area is less, then you would get a payout.
Chris Howard: 26:19
So it’s a policy that doesn’t involve any record keeping. You just have to, as you’re buying the policy, choose a two-month period, or multiple two-month periods. So you can choose May to June, and then July to August, but it can’t overlap. You can’t choose May to June and then June to July. And you have to choose the different level that you’re going to.
Chris Howard: 26:52
I think it starts at 50%. So that would be 50% of the market value of your forage. So there are lots of options. And you can go on USDA’s website and work with the cost estimator, and you can choose different things. And you can do it for last year or maybe the last drought year that there was and see what you would have made if you had chosen, you know, July–August at 50%, and see what your payout would be.
Chris Howard: 27:31
The other thing about crop insurance is when you’re signing up for crop insurance or purchasing a policy, the person that you’re working with, that’s going to be an agent from a private crop insurance firm. So these policies are subsidized by the government, but they’re sold by a private insurance company. And so you can talk with the insurance agent and ask them if you qualify for any discounts. And there are a lot of things that would qualify for a discount, such as being a beginning farmer—so someone that has been farming for less than ten years, and that’s owning their farm for the last ten years. And then, you know, if you’re a woman producer or socially disadvantaged, or a veteran, all of these categories qualify for you to have a discount.
Chris Howard: 28:39
So that’s really important to ask about, but I’m sure that any crop insurance agent is going to help you figure that out. So it turns out that if you’re a beginning farmer, you can get some of these policies for next to nothing. And that’s what we, Dave and I, have been really trying to hammer home in Maine. There’s so many people that have been farming for less than ten years that could have these risk management tools in their toolbox for little to no money. And it’s just a great way to really help you get a boost on your business.
Colt Knight: 29:22
I’m curious. What’s the definition of those new farmers that have been farming for less than ten years? Like, so if I grew up on a farm and then I moved off of that farm and went to college or whatever, then as I settle as an adult, wanted to start a farm. Does my clock start then, or does it start
Chris Howard: 29:42
back when
Colt Knight: 29:42
I grew up on a farm, or is it just the new business that you’re starting?
Chris Howard: 29:46
Yeah. It’s the business that you’re starting. And if you’ve been working for another farm and then you branch out on your own, that’s when the clock starts again. So it’s not the accumulation of your life’s amount of farming. You know, I started haying when I was 10 years old.
Chris Howard: 30:07
It doesn’t start then.
Colt Knight: 30:09
Yeah. I think some folks get tripped up on that. They’re like, well, I’ve been farming my whole life, but you are a new beginning farmer because you just started your business here recently.
Chris Howard: 30:19
Right. And they might not want to qualify themselves like that. But, I mean, financially,
Colt Knight: 30:25
it’s a good call.
Chris Howard: 30:26
Right. Exactly. Yeah. So, I mean, that’s probably the easiest policy to understand, the pasture, rangeland, and forage. But there are some others.
Chris Howard: 30:43
The Livestock Forage Disaster Program is mainly for drought in terms of grazing losses, as well as wildfires. And that one is also based on the drought monitor. And then there’s the Livestock Indemnity Program. They like to abbreviate all of these. So that one’s LIP.
Chris Howard: 31:13
And that covers the loss of livestock due to an adverse weather event, like a hurricane or something like that, or disease, or maybe getting attacked by predators, that type of thing. So that one only pays up to 75%. So none of these crop insurance policies are going to pay 100% of your losses. So they are not something that is going to make you rich whatsoever, but they are going to keep you—the whole point of it is to try and keep you from going under.
Colt Knight: 31:53
And when they evaluate your crops, is it that day what the market value is nationally that the USDA puts out?
Chris Howard: 32:04
That’s right. Yeah. And you can find that information on the RMA website.
Colt Knight: 32:11
Mhmm.
Chris Howard: 32:14
And one of the other things I wanted to mention was this year, 2025, we are in a drought. I’m sure everyone noticed. But we have recently here in Maine been designated—it’s about 30% of the state now—has been designated as D3, severe drought. And that has triggered some disaster assistance money through the Farm Service Agency with USDA, so FSA. And one of the disaster assistance programs is called ELAP, Emergency Assistance for Livestock.
Chris Howard: 32:58
And so that will pay if you need to transport water to your livestock or transport the livestock to a water source, or inspect and treat them for a certain disease or that type of thing. So everything surrounding a drought. So that’s what that program is. And that’s not a policy, a crop insurance policy that you sign up for ahead of time. That’s something that’s triggered by the disaster designation of D3.
Chris Howard: 33:33
And you can go to your FSA office, a USDA service center in your county, and ask for that disaster assistance. And that brings up a good point about, if you are a farm in Maine, you should go see FSA and register yourself with them. That’s a little bit of paperwork, but they walk you right through it. And what that will do is it will set you up for some of this disaster assistance in the future. So if you’re not registered with FSA, then you won’t be able to tap into this emergency assistance money when it becomes available.
Chris Howard: 34:23
Sometimes it’s an automatic payment. When they decide that there’s a weather event and it has taken out one certain crop, everyone that grows that crop will get a payment automatically if they’re registered with FSA. Other reasons to register with FSA is to qualify for other grant programs or loan programs, sometimes through NRCS, like the Greenhouse Program through them. What else?
David Handley: 35:00
Just the basic disaster insurance policies.
Colt Knight: 35:04
Yes.
Chris Howard: 35:04
Right.
David Handley: 35:05
And that, again, you have to be registered with FSA to take part in that, but that’s low-cost emergency relief. And it’s like Chris said, this is not designed to be a big payout when something happens, but it is designed for very low premiums to pay like 50% of your loss. And you can buy up on that if you want. If you say 50% is not going to save me, I need to go up to 65, 75. Yeah, you can do that.
David Handley: 35:33
But it’s like any other insurance program: the more payback you want, the more you’re going to have to pay in premiums. But we’re fortunate in that USDA is subsidizing this at a fairly high level, especially for beginning farmers, because they want those guys to get over that gap and be successful farmers beyond the beginning point. So that’s why this exists, to be able to insure them. But on the other hand, you as a grower, as a farmer, need to have some buy-in, you have to ante up. And that’s what this whole bit is about—premium. So the days of just handing out disaster money because something happened are fading fast.
David Handley: 36:12
You have to show, prove that one, you’re a viable farm operation or can be a viable farm operation, and two, that you have some buy-in. So I know there’s a lot of resistance to get involved on some people’s parts with government programs and so forth, but you got to pay if you’re going to play really in this game, and you have to register with USDA through FSA. And they’ll walk you through it, as Chris said, and most of it is pretty reasonable if you come at it from a business perspective.
Colt Knight: 36:40
Yeah.
Chris Howard: 36:44
There are two more programs that I wanted to mention that are specific to livestock, and one of them is the Livestock Gross Margin. So this one kicks in when your feed costs go up, which is happening right now, or the value of your product goes down. So there are three different types of this. One is for dairy cattle. So if milk prices go down or feed costs go up, that would trigger a payment.
Chris Howard: 37:17
One is feeder cattle and one is swine. So there are some of these policies being sold in Maine. And the other one I wanted to talk about is Livestock Indemnity Program. Actually, no, I already mentioned that one. So, yeah, so that’s all of the ones specific to livestock that I would take a look at if I were a livestock grower.
Colt Knight: 37:48
Is there anything else that we need to know about risk management and crop insurance?
David Handley: 37:53
There are some whole farm policies, and these can be with midsize farms down to very small farms, and these, rather than insuring animals or crops or forage or something, actually look at the farm income. And basically what you’re doing is insuring that income. And so this does require some record keeping in that they’re going to want to—you can’t just go up and say, this is how much I expect to make. They want some level of assurance that you actually can make that much. And what they’ll do is look back into your tax records. And if you’re okay with that, you’re comfortable with that, they can then create a program for you because a lot of growers not only are growing a few cows or a few pigs, they may have some pumpkins, they may have some strawberries, they may have—you know, that’s our own insurance policy.
David Handley: 38:38
One of the ways we insure our business is to diversify. So if I do have a failure in the strawberry field, I’ve got other crops that can back me up and pull me out of hot water. But this is looking at that as a whole and saying, if there’s something so wrong that your income level is below levels that are going to allow you to survive, we can come in and help you out with it. So that one’s a little more involved. We’re trying—these are relatively new policies. We’re trying to promote them a little bit because we do have so many small, diversified farmers.
David Handley: 39:06
And it does require a little more effort on your part to have a business plan and to have those records so FSA can look at it and set something up for you. But they’re worth investigating if you’re a diversified farmer in a small operation and you want to be able to insure the risk that you’re taking.
Chris Howard: 39:23
So those are the Whole-Farm Revenue Protection. And they’ve also created this new one called Micro Farm. So if you make, I think it’s less than $350,000, something like that, then you would qualify for that program. But again, what David said is they take a lot of record keeping. And the other educational program I wanted to mention was, we have a QuickBooks for Farms workshop coming up in early November, and that’s taught by an instructor who has taught QuickBooks education for about thirty years.
Chris Howard: 40:06
And for at least the last ten, he’s been teaching it to farmers. So he’s a very knowledgeable person to have as an ally for your farm. So as you’re getting to know the QuickBooks program, he would answer questions any time after you take the course. And we’re also going to run an intermediate one in January. So it’s important to understand that you’re not just keeping sales records; you also need to keep records about inventory you have and information about your customers.
Chris Howard: 40:50
And this is something that programs like QuickBooks can help you do.
David Handley: 40:56
It’s a great way to check up how you’re doing, and farmers don’t do that enough. At the end of the year, sit back, look at the books and say, how am I doing? And where I’m making money, where I’m losing money, where I
Colt Knight: 41:06
I can confirm a lot
David Handley: 41:06
of farmers
Colt Knight: 41:07
don’t want to know.
David Handley: 41:10
But that’s how you’re going to succeed, you got to know.
Colt Knight: 41:11
Yeah, you got to know. You got
David Handley: 41:12
to move forward. You got to make changes when changes are necessary. And this is how you know with those changes, often not your gut.
Colt Knight: 41:18
You got to follow the data, not what. Exactly.
David Handley: 41:22
And I would say of the many different things that Chris has done with this program, when I talk to farmers, Lucy, it’s like, that’s when the light bulb goes on. It’s a system that I can keep records in that’s relatively easy to maintain. It’s not something that’s going to take me forever to do. And it allows me to go back and look at my data in all kinds of ways and make changes that I need to make. So it’s a really good course to take.
David Handley: 41:45
It’s really good information to have.
Chris Howard: 41:47
The other thing it does is it’s easy to give the information to your accountant for your taxes at the end of the year.
Colt Knight: 41:56
And if you just absolutely hate computers, we still have a couple boxes of those. Are they New England Farm Account Books is what they’re called? Yep. Yep. The nice ones with the spiral binder that will lay flat that people like so much.
Chris Howard: 42:11
They do. They love them.
Colt Knight: 42:12
I should give you guys those boxes while you’re here.
David Handley: 42:16
I think we gave them to you. I think
Colt Knight: 42:19
Gary Anderson ordered them and then squirreled them away for himself. And then when he retired, we just found them.
David Handley: 42:26
Oh, because we had some boxes at Highmoor and they were in such demand that I did give them away. So yeah.
Colt Knight: 42:33
I don’t ever get any requests for those personally. I think Glenda, the dairy specialist, she gets requests
David Handley: 42:39
for— Yeah. Most of them are dairy farmers who want them, especially the guys who’ve been around for a while. Yeah.
Chris Howard: 42:45
We can pedal them away at the trade show.
David Handley: 42:48
That’s right.
Colt Knight: 42:48
That’s right. It’s a good place to get rid of them. Yeah. Those are going fast. I’m not sure we’ll order anymore.
Chris Howard: 42:55
Yeah.
Colt Knight: 42:57
Yeah. There’s a digital version, but the reason people like the books is because they’re analog and not digital.
David Handley: 43:04
Yeah.
Chris Howard: 43:05
Yeah. Right. A lot of people start with a spreadsheet, and that is a good place to start. But people will find pretty early on that it’s nice to have the program that can spit out reports for you and receipts and paychecks and stuff like that.
Colt Knight: 43:23
I’ve mentioned this before, maybe not on the podcast, but I went to graduate school out West, and we got to tour a lot of multigeneration ranches, you know, ranches that have been working since the eighteen hundreds. And it’s been passed down from father to son, you know, for five, six generations. And every one of those places we went to, they would hold up their handwritten records like a trophy, you know. Great. I could tell you exactly how much it rained on such and such date, how many cows we had, what they brought.
Colt Knight: 43:58
And you got to thinking, it’s like, you know, the reason they’ve been in business for five or six generations is because they kept those records. And they didn’t just keep records. They looked at the records and they made decisions based on the records, and they were able to make improvements and progress with the times.
David Handley: 44:18
Alternatively, one of the biggest issues we run into when there is a succession—moving the farm from one generation to another—if the previous generation hasn’t done a good job of record keeping, the next generation taking it over is often left flailing, saying, how does this happen? How does that happen? And they’re inheriting something they don’t really understand and they can’t because the records aren’t there to get through. And so when you go for a loan or any of this sort of thing and the bank’s asking you questions, it’s like, well, grandpa took care of that or Uncle George took care of that and I don’t have anything. So you’re right.
David Handley: 44:53
You know, success as we move through successful generations really depends on what a good job they did record keeping in addition to their good farm practices.
Colt Knight: 45:02
Well, Dave, Chris, I appreciate you coming on the podcast.
Chris Howard: 45:08
Thanks for having us.
Colt Knight: 45:09
If you’d like to learn more about risk management or crop insurance, don’t hesitate to reach out to Chris. I’m gonna put her contact info in the description. If you go and say hi to Chris, be sure to congratulate her on her National Search for Excellence award she won in Billings, Montana this summer for the New Farmers Project. We’re real proud of her for that. And if you have any questions, comments, or concerns, or suggested episodes, you can email the podcast at extension.farmcast@maine.edu.
Colt Knight: 45:53
I’m getting a thumbs up from everybody.