Edition #12

September 23, 2023

Good morning and welcome to the Braintrust Ag newsletter. **Live-feed of farmers’ reactions when the Braintrust Ag newsletter hits their inbox ⤵️

A few notes to begin:

• Next SOIL Gathering is Thursday, Sept 28. Haven’t selected a topic yet, so send me a message with what you’d like to discuss.

• If you or someone you know is a student in higher education agriculture field, I’d like to hear from them. I may have an opportunity for them. Shoot me an email: [email protected]

• Lifetime, unlimited access pricing is going up in October 🚀. If you haven't already done so, join now to take advantage of the introductory price of $99.

Alright, let’s get to the topics that will help you build a strong, sustainable agri-business.

-Clint

Here’s what we have this week:

• 🚜 Power Washing & Grant Writing

• 🌱 Seeds

• 🏦 Loan Glossary

• 🐂 Livestock Risk Protection

• 🤝 Ag Business Transition Phases

• and more…

“AG-ADJACENT” SIDE HUSTLES Part 2

Idea Breakdown

We’re going to continue looking at some ag-adjacent side hustles and do a breakdown on them.

Catch up on the first installment and the second installment by clicking the links.

Let’s dive in.

Equipment Pressure Washing

It’s a bit different than your local car wash…

Description: Farm equipment is increasingly becoming more expensive and often are the largest non-land investments on an operation. One of the keys to proper maintenance and preserving the resale value is giving them a bath before they’re tucked away in storage.

Enter a mobile power washing business to travel to farms and wash machinery post-planting, post-applicating, and post-harvest.

Potential Add-Ons

Could offer more than just equipment pressure washing services, like:

• Interior vacuuming and detailing

• Blowing off w/ air compressor

• Waxing, polishing, buffing

• Grain bin & dryer clean-up

• Livestock barn disinfection

Start-Up Costs: Low/Medium

Depending on the services offered and available assets, this side hustle has a range of low-medium costs to get started.

• Mobile pressure washer

• Mobile air compressor

• Shop-vac

• Pickup

• Soap/polish

• Ladder/safety harness

• Cordless buffer and other miscellaneous hand tools

The Good:

• High demand

• One-person jobs

• Flexible schedule

• Up-sell services potential

• Word of mouth advertising

• Little prior training & knowledge needed

• Proximity to landowners, farmers, and ranchers

The Challenges:

• Seasonality

• Travel Radius

• Equipment costs/rental availability

• Proving the value to potential customers

Here’s what I’d do:

Make some flyers and hang them up/pass them out at local elevators, feed stores, equipment dealerships, and gas stations where farmers are hanging out. Post your services on Facebook and Craigslist.

Offer a flat-fee for the common equipment (combine, tractors, grain cart, planters, sprayer, etc). Mention you also provide the add-on services for an additional charge.

For the first few jobs, rent the necessary equipment (pressure washer, shop vac, buffer, etc) and take care to do the best job possible. Word of mouth advertising will be a key to growth. So, impress your customers with your professionalism and work quality.

Eventually, buy the bigger equipment and even become a distributor for the soap and polish you’re using. This lets you buy at wholesale prices (higher margin) and add extra income through product sales.

As your ag-adjacent side hustle grows, consider setting up a “route” and get customers to commit to being on your list annually. Potentially, you could purchase a second set of equipment, hire another person, and expand your service territory.

Keys to Success:

• Timeliness and work quality

• Answer the phone

• Dial in pricing

• Upsell to higher margin services

Conclusion

This ag-adjacent side hustle checks the box on our two-part test, which is:

1. Does it compliment your current or future farm enterprise?

2. Does it put you in proximity of other farmers & landowners to build relationships?

A mobile pressure washing business has low barrier to entry and truly embodies a side hustle. This could be achieved debt-free and offers flexibility and scalability. With escalating costs of equipment, I expect the demand for these services to continue to climb.

Mini Breakdown

Program/Grant Writing

There’s piles of federal, state, and local grants, loan programs, insurance programs, and other subsidized money available to producers. Two challenges with that: 1) many are not aware of all the opportunities, and 2) the applications are generally a pain in the neck. Your job is to solve both of those challenges… and get paid to do so.

Here’s what I’d do:

1. Choose a niche (geographical, products, management practices, etc)

2. Scour the internet and compile a list of all the federal, state, and local programs that would benefit your niche

3. Notify all producers within your niche that 1) the programs exist, 2) you will apply for them on their behalf, and 3) it’s easy for them

4. Figure out how long it takes to fill an application out, and charge them a flat fee to apply & submit (as you get more efficient, your profit increases)

5. Establish a referral program and automate the process as much as possible

6. Notify your prospect list of all new programs that come out

7. Talk about it online and scale

This is a good one that has very low start-up costs, little seasonality, high flexibility, high demand, and high scalability.

Do you have an ag-adjacent side hustle idea you’d like to see a breakdown on? Email [email protected] and it might be featured in an upcoming newsletter.

RESOURCES UPDATE

A handful of resources available for download I’d like to highlight:

Complete Business Finance Series

Fractional CFO Joey DeWit has put together an entire course on understanding your small business’ financial aspects. Complete with PDFs, Templates, and a Video.

Located: Resources > Business Finance Series

Machinery Cost Calculator

Understand the costs of one of the largest expenses on your operation: machinery. Use this calculator to evaluate the ownership and operational costs of your equipment and compare upcoming purchases.

Located: Resources > Farm Machinery Resources > Machinery Cost Calculator

Weekly Management Meeting Agenda

With harvest in full swing and seasonal employees helping out on the operation, keep everyone on task by holding weekly management meetings. Use this sample agenda to keep meetings on task and increase efficiency.

Located: Resources > Miscellaneous > Weekly Management Meeting Agenda

SEEDS

• 💸 Dollar Displaced: There’s speculation around a new, global currency designed to replace the US dollar as the standard for world trade. This article explains the why, likelihood, and impact of seeing something like that happen.

• 🫘 Soybean Solutions: You’ve put in the time and effort to nurture a soybean crop to harvest. Don’t leave profits out in the field with this breakdown of how to pick up more cash per acre by reducing header loss.

• 🥛 Dairy Dumping: Dairy farmers who were forced to dump milk during a natural disaster are eligible for up to $250K in compensation from the new Milk Loss Program. This article outlines which years and events are covered and what’s included in the payment formula.

• 💰 Exercise Efficiency: Margins are thin and efficiency is crucial to maximizing profits. Here’s 5 easy ideas to improve farm efficiency and get you thinking about boosting the bottom line.

•  🍎 Fruit & Fun: This Missouri farm is diving into agri-tourism to carve out a business niche that sets them apart from traditional, commodity driven operations.

• 🐄 Dairy Data: John Deere and robotic milking innovator DeLaval are teaming up to create the Milk Sustainability Center which is designed for providing farmers with the data needed for a holistic view of their dairy operations.

FINANCE

Borrowing money is serious business. And the professional lenders and experienced borrowers are familiar with the terminology. But you may not be.

Don’t let loan financial jargon trip you up.

I put together a comprehensive Loan Terminology Glossary to help you understand what you’re signing your name to.

Use it to:

• Avoid Confusion

• Compare Loan Types

• Ease The Loan Application Process

ESP SPOTLIGHT

Endorsed Service Providers are pivotal to the Braintrust Ag community. These industry experts know their professional services niche and how they directly impact farmers, ranchers, and other ag business owners. This week, I’d like to direct your attention to our newest ESP, Joseph Vesey with Fiduciary 1031 Exchange Solutions.

If you’d like to learn more about the ESP program, click here.

LIVESTOCK INSURANCE

Livestock Risk Protection Summary

I kept hearing about LRP, but frankly didn't know much more than "it's like crop insurance for livestock."

So, in an effort to learn more, I reviewed the USDA's 48-page Handbook.

Here's my [inexperienced] summary:

What is it?

Livestock Risk Protection is a risk management tool that provides protection against a decline in market prices for livestock.

How does it work?

It works by allowing producers to purchase insurance coverage based on the expected market price of their livestock.

→ If the actual market price falls below the coverage price, the producer can receive an indemnity payment to help offset the loss.

Eligibility Requirements

Requirements include having an insurable interest in the livestock, meeting certain ownership and management requirements, and complying with other program rules, like:

-NRCS & FSA rules
-Recordkeeping
-Federal Regs
-State Regs
-Reporting
-Deadlines

Premium Calculation

Premiums are based on the expected market price of the livestock, the coverage level selected by the producer, and other factors.

(Example at the end)

Indemnity Calculation

Indemnity payments are based on the difference between the coverage price and the actual market price, as well as other factors.

(Example at the end)

Deadlines

There are various deadlines producers must be aware of. These deadlines vary depending on the type of livestock and the insurance period selected by the producer.

Eligible Livestock

The Handbook provides detailed information on the eligibility of these types of livestock:

-Feeder Cattle
-Fed Cattle
-Swine

Roles & Responsibilities

The handbook outlines the roles and responsibilities of the various parties involved in administering the LRP Plan of Insurance.

These parties include the Federal Crop Insurance Corporation (FCIC), the insurance company, and the producer.

Coverage Levels

Levels range from 70% to 100% of the expected market price, and the premium cost varies accordingly.

Premium Subsidies

There are premium subsidies available to producers who meet certain eligibility requirements.

→ These subsidies can help reduce the cost of LRP coverage.

Policy Provisions

The Handbook includes information on various policy provisions that may or may not affect producers in various situations.

Example Premium Calculation

An operation has 100 head of steer feeder cattle and expects to market the feeder cattle at a target weight of 7.5 cwt each.

The PAF is 100%. The insured share is 100 percent.

The expected ending value is $78.95 dollars per live cwt and the insured selects a coverage price of $75 per live cwt.

For this coverage price the rate is 1.3990%.
The example premium subsidy is 35 percent.

The Premium is calculated by:

(1) 100 head times 7.5 cwt equals 750 cwt
(2) 750 cwt times the coverage price of $75 equals $56,250
(3) $56,250 times the PAF of 1.00 equals an insured value of $56,250
(4) $56,250 times the insured share of 1.00 equals an insured value of $56,250
(5) $56,250 times the rate of .013990 equals $787 total premium
(6) $787 times the producer premium subsidy percentage of .35 equals $275
(7) $787 minus $275 equals the producer premium of $512

Example Indemnity Calculation

An operation with 1,000 head of hogs, a target weight of 1.85 cwt, an insured share of 100 percent, and a coverage price of $52.25 per cwt, the actual ending value is equal to $44.80 per cwt.

Since $44.80 is less than the coverage price of $52.25, an indemnity is due.

Indemnity is calculated by:

(1) 1,000 head times the 1.85 target weight equals 1,850 cwt
(2) Subtracting the actual ending value of $44.80 from the coverage price of $52.25 equals $7.45/cwt
(3) Multiplying 1,850 cwt by $7.45/cwt equals $13,783
(4) Multiplying $13,783 by the insured share of 1.00 equals an indemnity payment of $13,783

To really dive in, the entire USDA Handbook is available here.

SUCCESSION/TRANSITION

Recently, I was reminded of the importance of transitioning the business management roles of an operation long before the asset ownership is transferred.

When someone unfamiliar with making the majority of a farm’s decisions, gets hit with taking over both the business management responsibilities as well as the ownership responsibilities, it can be overwhelming.

Unfortunately, the unexpected sometimes happens, and the successor inherits both the decision making and ownership burdens at the same time. Through the owner generation’s estate.

But, ideally the business is transferred in four phases:

This will set the successor up for a more harmonious outcome.

MEME OF THE WEEK

That’s a wrap, folks.

Until next week, thank you to everyone involved in ag. Come engage on the new platform & let’s grow profitable ag businesses together.

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DISCLAIMER: All content, communications, and resources provided by Braintrust Ag, its principals, operators, or members is intended to merely be educational and entertaining. Nothing published by Braintrust Ag should be relied on as legal, financial, investment, or other professional advice. Investments and legal matters involve substantial risk and are not suitable for all individuals. It is recommended to enter into a client relationship with an ESP for obtaining professional advice.