Entrepreneurship as an Engine for Innovation and Adaptation

When we hear the word entrepreneurship, we usually think of the profitability leg of the sustainable agriculture three-legged stool: the willingness to take risks and try something new in order to make a profit. 

However, like entrepreneurs in other fields, farmers and ranchers are often motivated by more than just monetary goals. Vision, leadership, innovation, independence and the ability to adapt, especially during periods of change or stress, are all traits of entrepreneurs. As an entrepreneur, you’ll always be using a variety of means to sustain your business, and flexibility is critical to your success. Even if you don’t consider yourself to be a risk taker or a true “entrepreneur,” taking steps to improve your business skills and to cultivate a talented, motivated workforce will make your operation more resilient and forward looking. 

Some characteristics of successful farm businesses:

• Vision, innovation and adaptability, which are particularly useful in periods of change and/or stress (in a word, resilience)
• Good human resources management, including positive labor relations, good working conditions and leadership development
• Strong networks with technical service providers (to obtain needed information in a timely manner), peers (to exchange ideas) and customers (to build reputation and markets)

Vision, Innovation and Adaptability

With slim profit margins, environmental challenges and constant change in the areas of technology, consumer preferences, markets and regulations, all farmers have to be ready to adapt. But having vision, skills and a plan to assess emerging opportunities—and to recognize what isn’t working well—is the difference between keeping you out in front of difficult times versus always reacting to them.

Your vision for your business and your life is the big picture of what you want to do and where you want to be in the future. For it to be a sustainable vision, it should go hand in hand with cultivating an ecologically based, resilient and diversified farming system. Grass-fed beef, niche crops for ethnic markets, value-added products or emerging commodities, such as hemp or lentils and peas (for health-food markets), are examples of products that can add new income streams to your business, for yourself and potentially for another generation. At the same time, they present opportunities to add new crop rotations and cover crops to your operation, which can help you overcome ongoing production challenges such as extreme weather conditions, herbicide-resistant weeds, and issues around water quality and scarcity. Your vision for yourself, your business and your land should all complement each other.

A vision for your life and your farm might start at a personal level, but it’s best to refine it through formal business planning processes that involve relevant family members, partners and employees. Business planning is important not just for beginning farmers but also whenever you’re considering a major change. It’s probably not a bad idea to review your plan every few years and make necessary updates. The planning process helps you:

• Evaluate production alternatives
• Identify new market opportunities
• Determine how you’ll produce and sell something new
• Manage the financial risk of a new venture
• Communicate your ideas to lenders, business partners and family
• Keep track of your progress and adjust course as needed

The SARE book Building a Sustainable Business can walk you through the details of developing a business plan. 

Members of the Kansas City Food Hub, a farmer-owned cooperative, have latched onto a business idea they expect will be good for their members and for the greater community. To meet the needs of children with food allergies they are marketing packaged, allergen-free foods to local school districts.

“Because we were small farmers, we knew we would struggle providing menu items for an entire school population, so the idea of solving a major problem for a small percentage of the population was born,” says farmer James Leek, who is helping organize this project for the co-op, which is supported by two SARE grants (FNC20-1232 and FNC19-1175). “It has been easy to talk with the schools, as they are eager to solve this problem.”

The co-op has created, tested and advertised a range of popular menu items, such as gluten-free pasta dishes, and they continue to refine their business model so that it’s cost effective at the scale their customers need. When schools’ food purchasing was disrupted by COVID-19, the co-op broadened their strategy by marketing their allergy-free products to small grocery stores, cafes and directly to consumers.

Many resources are available to help if finance, business management or marketing aren’t your favorite topics. Maybe a trusted family member or employee would like to take on responsibility in these areas. You can also gain support through peer networks or pick up some of these skills at conferences. Most state Extension offices have resources and business specialists available to provide in-depth help.

Social Networks and Use of Advisory Services

Many farmers and ranchers might have an independent streak, but high-performing businesses don’t go at it alone. They have strong networks with technical service providers (to obtain needed information in a timely manner), peers (to exchange ideas), and customers (to build reputation and markets). These relationships were discussed in the previous section, Community Connections. 

Networking with other local farmers and technical service providers is a very effective way of solving problems, responding to adversity and identifying opportunity. When presented with a challenge or an opportunity, ask yourself: Are you an expert in this? Is this confusing? Are you unsure what to do? Who are you bouncing ideas off of to evaluate and test your ideas? Do you know where to look for information? To grow and sustain your business, seek out those communities or individuals that can support you in finding your answers. 

Professional Development

Participating in social networks with peers and advisors isn’t something you would do only when you’re planning a big change or are faced with a sudden challenge. You should think about networking as an ongoing form of professional development. As with any profession, agriculture is evolving, and it’s important to maintain both your knowledge and your skills, and to stay up to date with current market trends, production strategies and relevant regulations. Regularly attending conferences or workshops and networking with peers are great ways to both hone your skills and stay connected to new information and opportunities.

Developing a relationship with local educators and organizations that engage in sustainable agriculture research is a great way to get new ideas and put them into action on your farm. (See the box “Innovation Begins on the Farm: Conducting On-Farm Research.”)

Human Resources Management

If you’re the owner and/or operations manager of a farm, you’re also likely both a leader and a boss. Your employees are your human capital: They are an asset, and the more you invest in them, the more they can contribute to the growth and resilience of your business. Successful entrepreneurs need to be equipped with a range of skills to hire, retain, cultivate and motivate a team of high-quality employees.

Good employees increase farm profitability not only by helping you innovate, solve problems and operate efficiently, but it’s also cheaper to find and retain good people than it is to replace mediocre ones every few years. When you think of your team as people with families in your community, then it’s especially important to reflect on the kinds of jobs you’re offering and to make sure they’re good ones.

The Farm Labor Dashboard, hosted by the University of Vermont in collaboration with six state Extension programs, includes a range of resources to help you recruit, hire, train and retain non-family employees.

Vital Communities, a community development nonprofit in New Hampshire, used focus groups and surveys during a 2016 SARE-funded project (ONE16-275) to learn how farmers can improve their retention and recruitment practices. While it may come as no surprise, farm employees reported that good benefits, growth opportunities and clearly stated expectations—through a job description, training protocols and regular communication—were among the most valued aspects of a good workplace.

As population dynamics between rural and urban areas continue to shift, with many farm-raised kids moving out and urban dwellers moving in, farmers oftentimes report that qualified workers with agricultural skillsets are becoming harder to find. This challenge makes it especially important to consider the ways you can make your farm a desirable place to work.

Leadership and People Skills

Your first thought might be that as a boss or manager your job is to make sure the day-to-day work is done right. This may be true, but you also need to think about your leadership qualities. As discussed earlier, it’s important to have a vision for the farm and everybody involved with it, and leadership is about enacting that vision. This means making important decisions and seeing that the work is done with your big-picture goals in mind, including the role of your employees in sustaining that vision. Leadership is also about creating a culture where employees feel motivated and engaged as opposed to disinterested or unhappy.

Effective leadership requires an awareness of your management style. An overbearing “do what I say” approach is generally considered less effective than a more participatory, performance-based approach. Two-way communication should be encouraged: You share written goals, strategies, and financial and production performance data as they relate to key decisions and expectations, and you listen when employees share their concerns, aspirations and ideas about what’s working and what should be done differently. For more about being a good communicator, see “The Importance of Interpersonal Skills” in the Health and Wellbeing section.

Good On-Farm Relations

To attract and retain good employees, create a good position, set clear expectations, offer fair compensation and maintain a positive working environment that demonstrates their value. Consider strategies that let your employees know they’re accountable for their work and that you respect their contributions, such as:

• Craft an employee’s job description so that it clearly describes the duties and performance standards expected for the position.
• Keep updated documents like procedures manuals, employee handbooks and activity logs, which help ensure work is done correctly. 
• Conduct regular staff meetings and performance evaluations, and use these sessions as an opportunity for employees to share concerns, ideas and other feedback. (For farmers lacking human resources skills, crafting a good evaluation plan can be a challenge. They should be periodic enough that workers have time to meet expectations, should include actionable information and should have a clear path to improvement.)
• Develop performance standards for each position and back them up with incentive payments or bonuses when targets are met. Making it a point to tell your employees that you value their strengths and accomplishments can also be a rewarding form of “payment.” 

Also, it’s important to offer a realistic living wage for your area. While the best approach to employee compensation is tying payment to performance, this can be a difficult system to establish on a farm, since much of the farm’s overall performance is beyond the control of individual employees. You may need to think creatively about how to do this, for example by offering tenure bonuses for long-time employees, incentive payments for doing general maintenance tasks or following safety protocols, or bonuses for arriving to work on time consistently. Other ways to motivate employees include creating a system of pay grades associated with increased levels of responsibility that improve the farm, and encouraging employees to seek out training and certifications that help them move up.

There are other kinds of compensation you can offer to workers that might be as attractive to them as the level of their wage. These can include (in an approximate order of low- to high-cost ideas):

• A set and consistent work schedule that includes clear expectations and strategies for taking vacation and holiday time
• Free farm produce or meals
• Gear such as work clothing or boots
• Moving expenses
• Child or elder care
• Subsidized housing or utilities
• Paid leave
• Retirement programs
• Health and dental insurance

Beyond compensation, think about what makes your farm a unique and attractive place to work. For example, do you have family friendly policies, a set schedule, opportunities for career advancement, a positive and respectful work environment, or a social justice mission? Having shared values and understanding of the farm’s place in the community will help you attract and retain quality employees who are eager to contribute to the sustainability of your farm enterprise.

Accommodations

There are many accommodations you can offer employees to show that you value them and to make them more comfortable and invested in their work. Family benefits are especially important, such as parental leave and child care. Also, a pregnant woman shouldn’t be asked to do tasks that are too physically demanding, dangerous or that risk exposure to harmful chemicals. When a mother is nursing, offer regular breaks for nursing and provide access to a dedicated, private nursing facility.

Also, look for ways to improve conditions around physical labor. We all know farm work is difficult, with repetitive tasks often performed in hot or wet conditions, but does the job have to be that way 100% of the time? This is something to think about when creating a new position.

When difficult labor is unavoidable, add diversity of tasks to people’s daily schedules to limit the amount of time they spend on repetitive and demanding work, such as stooping in rows or carrying heavy boxes. Also, make sure they have the appropriate gear, food, water and break time when doing difficult work. As much as you can, match people to tasks based on their physical ability. Learn how you can implement small changes that improve ergonomics and reduce the likelihood of sudden or chronic injuries in the guide Simple Solutions: Ergonomics for Farm Workers, published by the Centers for Disease Control and Prevention.

Some farmers or their employees may experience a disabling condition in their lives, either as a result of their work or otherwise (e.g., arthritis, amputation, respiratory impairment, or vision or hearing loss). The National AgrAbility Project provides training, resources and direct consultation for farm managers as well as for employees so that people with disabilities can maintain gainful employment in agriculture and contribute meaningfully to a farming operation.

Contact the Department of Labor’s Wage and Hour Division for regulatory information on agricultural employment, including laws around wages, overtime, recordkeeping, child labor, housing, transportation and field amenities, for employees as well as migrant and seasonal workers.

Risk Management

Risk management is also a huge part of entrepreneurship. As a business owner, you must be able to adapt to current needs in your communities, shifting markets and changes in the climate. The Extension Risk Management Education program (https://extensionrme.org) identifies five broad categories of risk that can affect agricultural businesses:

• Production risk, such as the effect of weather, pests, diseases and other factors on farm production
• Price or market risk, such as the prices received for farm products, cost and availability of inputs, and access to markets
• Financial risk, such as the influence of volatility in prices, yields and income on liquidity and the ability to repay debt; changing interest rates, credit rules and credit availability
• Legal/institutional risk, such as government policies and regulations related to food production and marketing, environmental issues, commodity and income support programs, etc.; legal liabilities that farms and ranches can face
• Human risk, such as labor issues, succession and asset transfer, estate planning, health and personal issues such as divorce

There are many ways to manage these forms of risk, such as buying crop insurance, entering into production or marketing contracts, or diversifying enterprises and marketing channels. In addition, proactive steps geared toward creating a well-organized operation that employs sustainable production practices can mitigate many anticipated and unanticipated risks. For example, implementing a business plan, following good employee management practices, using good recordkeeping practices, building assets and pursuing value-added markets all help. Emphasizing soil health, resource conservation and biodiversity are also critically important, especially to mitigate production risks associated with climate change.

Eye on Equity: Entrepreneurship

Along with its environmental consequences, the consolidation of power in today’s food system among large agribusiness corporations results in less autonomy and reduced profit margins for small- and medium-scale farmers. According to the National Farmers Union, farmers receive only $0.14 of every dollar that consumers spend on food. (Learn more at The Farmer’s Share.) In 2020, farmers whose primary occupation was farming and who had farm sales of less than $350,000 generated a mean income of $6,085, whereas the mean income for farmers with sales of more than $350,000 was $271,466, according to the USDA Economic Research Service. Furthermore, 53% of the farmers in the former group had negative income in 2020, compared to only 13% in the latter group.

A lack of equity in our food system and in the institutions that support farmers makes it more difficult for all small- and medium-scale farms to succeed, but there’s a disproportionate effect on those farmers and communities who are marginalized. Likewise, farmworkers must be treated with fairness and dignity in order for our agricultural communities to truly thrive. They are easily exploited in the current food system, and their health is particularly at risk due to its intensive, concentrated nature, for example through exposure to harmful pesticides or deadly pathogens, exemplified in an extreme way by major COVID outbreaks in crowded meatpacking plants and housing facilities in 2020.

Democratizing the Food System

The concentration of wealth, ownership and power among a small number of large corporations in our food system limits both the influence of consumers and farmers, and the economic opportunities for farmers. Increasing democracy in the food system, among other things, means encouraging production and marketing models that give consumers the ability to make food buying decisions based on their values, while at the same time providing fair compensation to farmers who respond to those values.

Direct marketing and local food systems offer many examples of how more democratic models can mutually benefit consumers, communities and producers because these models are effective at connecting farmers and consumers who have shared sustainability values. For example, CSAs allow consumers to share financial risk with farmers, and they’re willing to do so because they “know where their food is coming from.” Cooperatives empower farmers by giving them a stronger position to assert their interests when dealing with agribusiness suppliers and buyers (see the section Community Connections). Similarly, food hubs and values-based supply chains help small-scale farmers reach like-minded consumers at larger scales than they can through direct marketing. Urban farms and garden-based education programs can help improve health and wellbeing in marginalized communities that are poorly served by the larger food system. 

Located in the Atlanta metropolitan area, the nonprofit HABESHA, Inc. (Helping Africa By Establishing Schools Home and Abroad) provides one example of how farmers and communities can work together to democratize the food system. HABESHA runs several training and education programs to help turn children, teenagers and young adults into urban food growers, with an emphasis on the culture and history of the Pan-African identity, leadership development and sustainable living. Executive Director Cashawn Myers has used two SARE grants (LS18-296 and LS20-322) to develop the HABESHA Works and HABESHA Agriculture Leadership Opportunity programs, which together provide both incubator-based farm training and advanced skills in leadership, social/emotional intelligence and business development to new and established urban farmers.

“By affecting these areas of the farming business, the community receives the benefit of having a growing and sustainable local economy. Over time, the growth and sustainability of these businesses may potentially lead to the increase of employment opportunities for the Black Belt population.”

Cashawn Myers, Executive Director of HABESHA, Inc. (Helping Africa By Establishing Schools Home and Abroad

Farmers, consumers and community groups have tools at their disposal to have a voice in enacting positive change in local food systems. Food policy councils are one example. Originally formed mostly as municipal entities decades ago with the rise of sustainable agriculture, today’s councils have evolved and are more typically organized by local nonprofits to serve as broad-based coalitions that advocate for community friendly policies and programs related to food and agriculture. Providing a venue for both knowledge sharing among diverse collaborators and for advocacy, councils can influence local policy in the areas of access to healthy foods, land use planning, economic development, regulations regarding urban farming or community gardening, and much more.

The Coalition of Immokalee Workers, discussed in the section Fair Treatment of Farmworkers, provides another example of how farmworkers can leverage the power of consumers to enact change in the food system.

Structural Racism’s Effect on Agriculture

Historical patterns of racism in society, institutions and public policy have had the lasting effect of stripping wealth away from farmers of color through land loss and a lack of access to capital and technical support. Throughout American history, at the same time that farmers of color were being kept away from sources of wealth, white farmers were enjoying easy access. Among the many consequences of this injustice today is that many farmers, especially Blacks, Hispanics and Native Americans, continue to be at a disadvantage when trying to draw on resources to grow their businesses. At the national level, these issues are being acknowledged and addressed to an extent, for example through large class action settlements such as Pigford (Black farmers) and Cobell (Native American landowners), and through USDA programs geared toward meeting the needs of limited-resource and socially disadvantaged producers. 

For agricultural professionals, tailoring your educational activities to better respond to the production, marketing and business management needs of farmers of color can begin with educating yourself and colleagues about issues of systemic racial inequity in agriculture. Two places to turn include the Racial Equity in the Food System workgroup, a national network of Cooperative Extension professionals and community stakeholders, and the Diversity, Equity and Inclusion resources offered through eXtension.org.

The Center for Environmental Farming Systems, a partnership between North Carolina’s land-grant universities and its state department of agriculture, maintains a committee on racial equity in the food system that works with community groups to address issues of structural racism at the level of state institutions. Their goals are to:

• Understand their role in the historical construction of the racial hierarchy (through higher education, agricultural and food systems work)
• Acknowledge their role as gatekeeper and as an ally to communities most impacted by food systems disparity
• Examine their policies, practices and procedures, and work to make those more equitable

Fair Treatment of Farmworkers

Farmworkers are among the lowest paid workers in the country, and they work in some of the most hazardous conditions while their access to health care is very limited. (For more on equity in farmworker health, see the Eye on Equity section in “Health and Wellbeing.”) In addition, their protection under employment and labor laws is inconsistent from state to state and is typically less than the protection enjoyed by all other employment sectors. Sexual harassment, forced labor and poor living conditions are also a reality for many farmworkers.

Hazardous working conditions need not be the status quo. Agricultural systems are human systems that we create, and so we have the ability to create working conditions where workers are safe, respected and fairly compensated.

In 2006, the California Institute for Rural Studies (CIRS) conducted a study of 12 medium- and large-sized farms in California that use progressive labor practices to identify what farm employees valued most in a workplace and what growers saw as the benefit of good labor management practices to their business. Through interviews with farm employees, CIRS identified these top five priorities in a workplace environment, in order of importance:

• Respectful treatment
• Fair compensation
• Year-round employment
• Traditional benefits
• Non-traditional benefits

The 12 growers reported that, along with feeling compelled by a personal sense of obligation, the benefits they saw to maintaining a motivated, talented workforce included (in no particular order):

• Increased retention and reduced training costs
• Reduced management costs for supervision and oversight
• Improved product quality and better prices
• Reduced accidents and lower workers’ compensation rates

CIRS suggests implementing the following labor management practices where feasible:

Low-cost strategies: respectful treatment; regular acknowledgement and appreciation; free food from the farm; personal loans; policies and mechanisms for communication and information sharing; clear grievance procedures; flexible work schedules; a safe and healthy work environment; diversity of tasks; allow social services to conduct on-farm outreach; celebrations, team-building and appreciation parties

Medium-cost strategies: bonuses and profit-sharing; year-round employment; paid time off; retirement plans; educational assistance; opportunities for training, skill acquisition and professional advancement

High-cost strategies: higher wages; health insurance; housing

In Florida, the Coalition of Immokalee Workers’ Fair Food Program (www.fairfoodprogram.org) provides an internationally recognized model for how farmers, farmworkers and retailers can partner to ensure humane working conditions and wages on farms. Some of the largest food retailers in the country, such as Walmart, McDonald’s and Whole Foods, began participating in the program after receiving pressure from a public awareness campaign about inhumane conditions on Florida’s tomato farms, including slavery practices and sexual assault. These retailers now agree to pay a $0.01 per pound premium on tomatoes that goes directly to worker wages, and they agree to buy tomatoes from farms that participate in the Fair Food Program. For a farm to qualify, it must follow the humane practices outlined and monitored by the coalition. These include regular worker-to-worker education about their rights and responsibilities, a grievance reporting system and conflict resolution process, and other best practices that further improve working conditions and wages.

Resources

We present only a few examples of the many organizations that provide valuable resources and support on the topics presented in this publication. Most of the ones listed here work at a regional or national level. Consult with other farmers and educators to identify useful resources at the local and state level.

Regional Extension Risk Management Centers
http://extensionrme.org

Regional Rural Development Centers
https://www.nifa.usda.gov/grants/programs/community-economic-development/regional-rural-development-centers

Many state Extension programs have resources and specialists that can help with various aspects of business management. A few examples include:

Iowa State University Ag Decision Maker
www.extension.iastate.edu/agdm/homepage.html

University of Vermont Farm Labor Dashboard
https://www.uvm.edu/aglabor/dashboard/welcome

University of Wisconsin Farm Management Program
https://farms.extension.wisc.edu