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Specialty Agriculture in Virginia

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  1. Specialty Agriculture in Virginia A Growth Opportunity Charles R. Green, Virginia Department of Agriculture & Consumer Service

  2. Specialty Agriculture • Non- traditional agribusiness products, including commodity items not traditional to Virginia • Value-added agribusiness products or processes • Traditional agribusiness products which are marketed or distributed using new / innovative channels

  3. Examples of Specialty Agriculture • Extended season produce • Identity preserved grains • Organic products • Bio-fuels • Further processed food items • Alternative forest products • Agritourism / Agritainment

  4. Specialty Agriculture • The emphasis of specialty agriculture is adding value to a product or process

  5. Why Specialty Agriculture? Why Add Value?

  6. Importance of Specialty Agriculture • Potential for greater return on investment or greater return per acre than traditional commodity items • Allows agribusiness producers to take advantage of competitive advantages gained through diversification and / or differentiation • Greater long-term growth potential for specialty agriculture products than traditional commodity items

  7. Status of Farming in VA Today • Smaller acreage farms, compared to national average • Increasing land prices per acre • Increasing production costs • Growing disconnect between value of farm production and retail food prices

  8. Increasing Land Values in Virginia

  9. Farmers Retain a Small Portion Consumers’ Food Expenditures

  10. Creating Value vs Capturing Value • Capturing value is a function of altering the distribution of value in the agricultural production chain, or by cutting costs • vertical integration, cooperatives • Creating value is a function of altering the actual or perceived value to a customer • Unique or branded products, identity preserved or specialty products, bundling such as agri-tourism

  11. Creating a Competitive Advantage: Ways of Adding Value • Producing and marketing real or perceived quality attributes • Reducing transaction costs • Bundling products • Owning assets along the supply chain for further processing

  12. Remember that no competitive advantage is sustainable, indefinitely

  13. Value Added Action • Discover and research a value added opportunity • Plan for a value added opportunity • Take value added action

  14. Discovering and Researching a Value Added Opportunity • Does this enterprise offer good profit potential? • Is this enterprise adaptable to my area? • Do I have experience with this enterprise? • Do I have, or can I get, the resources to produce this product? • Am I willing and able to approach many different people for advise?

  15. Discovering and Researching a Value Added Opportunity • Does market research and development appeal to me? • Am I willing to spend as much effort in marketing as in production? • Is this something I will enjoy? • Can I set realistic P&L goals for the enterprise? • Am I in the position to take a few risks to make more money?

  16. Planning for a Specialty Ag. Venture & Creating a Business Plan • SWOT analysis • Choosing a strategic direction • Pursue growth • Sustain current business level • Retrench • Selecting direction objectives • Market penetration • Market development • Product development • Diversification • Set Marketing & Financial Objectives • Culminate into a business plan

  17. Take Action • Use business plan to pursue financing and initiate the business

  18. VDACS Integrated Approach to Supporting Specialty Agriculture Clearinghouse for financial resource information Marketing services Technical resource

  19. Financial Resources • Business & Industrial (B&I) Guaranteed • Loan Program; USDA Guaranteed loans by commercial lenders to rural businesses. • Business & Industrial Direct Loan (B&I Direct) Program; USDA Direct Loans to Rural Businesses that do not qualify for bank financing in rural areas. • Direct Farm Ownership and Operating Loans; FSA Government Loans to Family Farmers and Ranchers for Farm Ownership and Operating Purposes U.S. citizens unable to obtain credit through commercial sources • Guaranteed Farm Ownership and Operating Loans; FSA Guaranteed Loan helps family farmers obtain commercial credit U.S. citizen unable to obtain credit elsewhere

  20. Financial Resources • Intermediary Relending Loan Program (IRP); USDA Loans for establishing revolving loan funds to provide financing for rural businesses and community development • Rural Business Enterprise Grants (RBEG); USDA Grants for assisting small and emerging rural businesses to nonprofit and public bodies • Rural Business Opportunity Grants (RBOG); USDA Assist in the economic development of rural areas • Rural Cooperative Development Grant Program; USDA Grants for improving economic conditions of rural areas through development of new cooperatives

  21. Financial Resources • Small Business Innovation Research Program (SBIR); USDA Grants for feasibility studies and product research and development to small businesses • 7(a) Loan Guaranty Program; SBA SBA guarantees loans made to small businesses by lenders • 504 Certified Development Company Program (CDC); (SBA) Loans for building, improving, or purchase of a site or facility; and purchase of major equipment/machinery • SBA MicroLoan Program;Very small loans and training primarily for business start-up • Small Business Investment Companies (SBICs); SBAVenture capital and business start-up capital typically for companies with high-growth potential

  22. Financial Resources • Down Payment Farm Ownership Loan Program; FSA Assist beginning farmers and ranchers to purchase a farm or ranch • Loans for Socially Disadvantaged Persons; FSA Farm purchase and operating loans targeting socially disadvantaged groups • Rural Business Investment Program (RDIP); USDA and SBA Promotes economic growth and creates job opportunities in rural areas • New Markets Venture Capital Program (NMVC); SBA Promotes economic development in low income areas • Value Added Producer Grant Program; USDA Grants used for marketing value-added agricultural products

  23. Financial Resources • Renewable Energy and Energy Efficiency Program (REEEP); USDA Assist in purchase of renewable energy systems & efficiency improvements • Virginia Business Assistance Loan Guarantee Program; VBA Deficiency guaranty up to $500,000 • Virginia Capital Access Program; VBA Loss protection to participating banks • Small Business Environmental Compliance Assistance Loan Fund; VBA • VBA Economic Development Loan Fund; VBA Gap financing to small businesses • Southside Tobacco Region Capital Access Program; VBA Loan loss reserve fund for banks • USDA Cooperative Services Program; Helps rural residents start new cooperatives and improve the operations of existing cooperatives

  24. Technical Resources • Regulations • Product and industry standards • Inspection • Collaboration with cooperative extension • Specialty ag. research grants

  25. Marketing Resources • Virginia Grown program • Virginia’s Finest • VDACS Domestic & Int’l Marketing • Trade shows • Buyers’ tours • Retail promotions • Market Access Program

  26. Contact Virginia Department of Agriculture & Consumer Service Charles R. GreenProject Manager, Specialty Agriculture804.786.3501 Charles.green@vdacs.virginia.gov