Financial

Financial factors are important to consider when evaluating an alternative crop. For blackberries, producers should understand the possible risk and return associated with establishing and maintaining blackberry plants and marketing the fruit that they produce. Producers may ask several questions when assessing blackberry production’s financial viability. Is the selling price high enough to cover my production costs and provide an economic return? Are blackberry market opportunities accessible and stable? Is crop insurance available? These and other key financial issues should be researched thoroughly when determining whether to proceed with blackberry production.

Selling Prices

Like for all crops, selling prices influence blackberry production’s profitability potential. Typically, producers sell blackberries based on price per pound. At the grower level, USDA only reports Oregon blackberry prices. It doesn’t share current prices for other states or a U.S. average. The following table lists fresh and processed Oregon blackberry prices from 2010 to 2012. The average blackberry price increased gradually during the three-year period. On average, Oregon producers have earned more than twice as much per unit for fresh blackberries relative to processed blackberries. During 2012, fresh blackberry prices in Oregon averaged $2.11 per pound, and processed blackberry prices averaged $0.76 per pound.

Oregon Blackberry Season-Average Grower Prices, Commercial Acreage, Dollars Per Pound

Production Costs

Blackberry plants have perennial root systems that produce biennial canes. Thus, they differ from traditional row crops because the plants must establish themselves before they consistently produce high-yielding fruit crops. Blackberry plant life may vary depending on the plant’s care and fit with the growing environment. For 15 years, blackberry plants may produce fruit, but yields tend to be strongest in the third year to eighth year. Establishment involves testing the soil; preparing the site; planting the blackberries and seed grass; and caring for plants, including applying fungicides and removing weeds.

In fruit production years, operators will incur several variable and fixed costs. Variable costs, or those that shift based on production output, include those associated with spraying fungicide, mowing between rows, removing weeds, pruning the canes and harvesting the berries. Labor for these activities represents a large expense, especially when relying on hand labor for harvesting. As producers grow and produce blackberries, fixed costs that they’ll incur include expenses related to using machinery and equipment, an irrigation system, a refrigeration system and land to support the blackberry operation.

To access a blackberry production budget, go to Blackberry Cost-Return Budget. Using this costs-returns budget as a template, producers may customize the revenue and cost assumptions to fit their unique operations and estimate the financial viability of planned blackberry operations.

Crop Insurance

During the early 2000s, USDA created a pilot crop insurance program for raspberries and blackberries. The agency offered the program in selected California, Oregon and Washington counties. In August 2006, however, USDA terminated the program.

The most recent farm bill, passed in early 2014, includes provisions that may open the opportunity for blackberry growers to access crop insurance. Through the Whole-Farm Revenue Protection program, which USDA will launch in 2015 and expand in later years, producers may access insurance coverage for specialty crops, organic crops and diversified production systems. Given current crop insurance programs, a producer choosing between a commodity crop and a specialty crop may only have had insurance coverage available for the commodity. Initial provisions outlined in the Whole-Farm Revenue Protection program include discounted rates for diversified operations and 50 percent to 85 percent coverage levels. Specific program details will be available later.

The Noninsured Disaster Assistance program may also provide protection to blackberry growers. To be eligible for the coverage, producers must earn less than $900,000 in average adjusted gross income, pay an annual administrative fee and report losing at least 50 percent of the crop or planting 35 percent or less of the planned acreage due to disaster. The 2014 farm bill expanded the program to insure 50 percent to 65 percent of established yield at 100 percent of the average market price.

For More Information

Ames, Guy K. and Patrick L. Byers. 2006. Growing Blackberries in Missouri. Missouri State University. Mountain Grove, MO 65711.

Ernst, Matthew and Timothy Woods. 2008. 2008 Kentucky Blackberry Cost and Return Estimates. University of Kentucky Cooperative Extension Service. Lexington, KY 40546.

Johnson, Renee. 2014. Fruits, Vegetables, and Other Specialty Crops: Selected Farm Bill and Federal Programs. Congressional Research Service. Washington, DC 20540.

Jones, R.T. and J.G. Strang. 2005. Growing Blackberries & Raspberries in Kentucky. University of Kentucky Cooperative Extension Service. Lexington, KY 40546.

Nesbitt, Monte, Jim Kamas and Larry Stein. n.d. Blackberries. AgriLIFE Extension. Texas A&M System. College Station, TX 77843.

Office of Communications. 2014. New Pilot Program Offers Coverage for Fruits and Vegetables, Organic and Diversified Farms. USDA. Washington, DC 20250.

Risk Management Agency. 2006. Termination of the Pilot Raspberry Blackberry Crop Insurance Program. Washington, D.C. 20250.

Farm Financial Assessment

Farm financial performance and records are important to consider when evaluating a new alternative crop. Past financial performance, current financial condition and the capacity to take on risk influence alternative crop adoption viability. If you need external financing to kick start your entry into alternative crop production, then your lender will likely want to see a good business plan and, if available, financial and production histories.

Financial recordkeeping systems are important for tracking financial performance and making decisions. You can keep records manually through a written system or electronically through a computerized system such as Quicken or Quickbooks. For you to make sound decisions, financial records need to be kept current and accurate.

Information from financial statements and income tax records can measure a farm’s financial position and performance. The balance sheet, statement of cash flows and income statement are three important financial statements. Balance sheets communicate the financial condition of a farming business on a specific day, such as the beginning or end of the year. They share detailed information about a farm’s assets, liabilities and equity. The statement of cash flows (cash in, cash out) shows cash receipts and cash expenditures during a certain time period. The income statement reports the revenue, expenses and profit during a given time period. Historical balance sheets, statements of cash flows and income statements demonstrate how the business has performed. Additionally, these statements can be used to project the business’ future performance. IRS Schedule F and 4797 tax forms are important to existing producers for accurately conducting accrual-adjusted financial analysis.

Key financial measures also help to evaluate a farm’s financial condition. Numerous financial measures can help with evaluating a farm. Usually, these measures tend to look at the profitability, financial efficiency, liquidity and solvency of the business. Examples include return on assets, the operating expense ratio and the debt-to-asset ratio. Lenders typically use a set of key measures when they evaluate loan applicants. Key financial measures can also help with benchmarking your farm relative to other operations. Benchmarking data can be obtained through developing good relationships with other local farmers who are willing to share some of their key financial measures. Alternatively, you may try contacting state recordkeeping business associations, universities or extension services.

Many tools and spreadsheets available online may assist producers in developing financial statements, keeping records and conducting financial analysis. Additionally, accountants, bankers and other business specialists are good resources who may assist with assessing farm financial performance.

For More Information

Measuring and Analyzing Farm Financial Performance (Purdue)

Worksheets for Measuring and Analyzing Farm Financial Performance (Purdue)

Farm Finance Scorecard (Minnesota)

Establishing and Using a Farm Financial Record-Keeping System (eXtension)

Farm Analysis Solutions Tools (FAST) (Illinois)