Imagine visitors strolling through a well-stocked farm market or picking from a field of multi-colored flowers. Maybe they’re bunking down on a working ranch or vacationing in a well-appointed apartment overlooking a dairy farm. Perhaps they’re taking a road trip to an on-farm ice-cream parlor showcasing the rich milk produced onsite. These agritourism activities are just a few of many with potential to augment a farming operation’s bottom line.
With farmers a shrinking 1 percent of the United States population and the popularity of the farm-to-table and buy-local movements, the public is eager to reconnect with agriculture. They want to purchase homegrown products and channel their “inner farmer” through in-person visits. Adding an agritourism venture to an existing farm may be an opportunity for extra income with the bonus of the chance to serve as an ambassador for agriculture, educating customers as you work.
The term agritourism can be used interchangeably with “agrotourism,” “farm tourism,” “agricultural tourism” or “agritainment.” While most states have legal descriptions of what agritourism is, a simple definition is whenever the public intersects with the agriculture sector to purchase goods or services or for education, recreation or entertainment.
The National Agricultural Law Center gives a more expansive definition of agritourism: “It is the crossroads of tourism and agriculture. Stated more technically, agritourism can be defined as a form of commercial enterprise that links agricultural production and/or processing with tourism to attract visitors onto a farm, ranch or other agricultural business for the purposes of entertaining and/or educating the visitors while generating income for the farm, ranch or business owner. Any definition of agritourism should include the following four factors:
- combines the essential elements of the tourism and agriculture industries
- attracts members of the public to visit agricultural operations
- is designed to increase farm income
- provides recreation, entertainment, and/or educational experiences to visitors
According to the Agricultural Marketing Resource Center, the U.S. Census of Agriculture shows an increasing trend in agritourism as well as direct-to-consumer sales of agricultural products. The Census of Agriculture first used the term “agritourism” in a question in their 2007 survey. By 2017, they recorded a 67 percent increase over the 10-year span between the surveys.
The 2017 survey identified 28,575 farms offering agritourism and recreational services resulting in $949 million in sales. That survey also reported direct sales of agricultural products brought in $2.8 billion for 130,056 farms.
There are numerous ideas for agritourism ventures you may consider. To name just a few, there are on-farm stays, farm produce stands, you-pick vegetable, fruit or flower farms/orchards, cut-your-own Christmas tree farms, hayrides, corn mazes, petting zoos, and vineyards, breweries and distilleries with tasting menus. The list goes on.
Although it may not immediately spring to mind, charging for recreational activities on your farm or ranch are also forms of agritourism. Allowing fishing, hunting (wild game, geodes, fossils, arrowheads, mushrooms, wildflowers, etc.), professional photography, horseback, bike and ATV riding, skiing and snowmobiling, and the like—these are all use of agricultural land for recreational purposes. Adding an event center to the property, perhaps with farm-to-table catering services, for weddings, meetings and reunions would also be considered agritourism. Educational events such as farm open houses, school tours, farming demonstrations and agriculture history museums would also fall under the agritourism umbrella.
Does It Fit Your Farm?
When considering if agritourism is right for you and your farm, you must consider a number factors. However, the critical question is whether you—and/or whoever from your family and staff would be handling customer relations—enjoy dealing with people? At the core agritourism involves interacting with people with an emphasis on public relations and customer service.
In addition to being farmers and customer service providers, agritourism operators are also business managers, salespeople and educators. Additionally, they often wear other hats—chefs, gardeners, animal scientists, artists, mechanics and carpenters, event planners and more. Are these abilities that you have? If not, are you willing to research and learn new skills? Or will you hire others for some of these tasks?
If you’ve answered “yes” to the “Are you a people-person?” question, begin by assessing the strong points, assets and resources you have to draw from on your farm. Take stock of things such as:
- available buildings, equipment and supplies
- your location with respect to major thoroughfares and population centers
- the skill sets and availability of staff and family members to help in the business
- available space for retail sales, events, parking and possibly hosting overnight guests
- available cash and credit for start-up costs
Also, make a list of what you would need to build or acquire to begin operating an agritourism enterprise. Evaluate what it would take to install facilities such as public restrooms, parking lots, a business office, a sales floor, dining space, lodging and so on. Are you willing and able to put time and money into adding any needed equipment and facility upgrades to open the proposed agribusiness?
Next, you’ll need to define your goals for new business and, based on those, narrow down the list of possible agritourism businesses you want to consider. Things to think through would include but not be limited to:
- What type of agritourism venture fits into your work and family schedule?
- What type of guest experience and goods and services do you intend to offer?
- Based on your current or proposed facilities and the area where you live, what types of agritourism would be a good fit?
- Do you want seasonal business such as you-pick produce or a year-round one such as an on-farm bed and breakfast?
- Do you want to host people at your farm or would you rather interact with them off the farm at area farmers’ markets or make deliveries to their residences?
- Do you have, or can you acquire, the knowledge and facilities to offer an authentic, unique, safe, fun and educational experience to customers?
Business & Financial Planning
One crucial step that many find daunting is budgeting and funding. Establishing a good working relationship with a banker will be important if you need to borrow to begin business, but also if long-term plans include expansion of the agritourism venture down the road. Sandy Hacker, a commercial/agriculture loan specialist, has worked in banking for 11 years with six at Bippus State Bank, located in northeastern Indiana. The bank has a long history of working with farmers since opening in 1911.
Hacker offers important advice to prepare before meeting with a banker.
“Be realistic with your anticipated costs and earnings,” she says. “As a lender, we will look at your projections with a conservative eye. When your proposal is added onto your baseline financials, we want to see that you have the realistic potential to generate enough earnings to cover all your expenses and debt obligations, along with family living expenses and taxes, and still have a cushion upon which to grow.
“If the numbers aren’t falling into place, it might be an opportunity to consider funding or guarantees offered by the United States Department of Agriculture or the U.S. Small Business Administration to help mitigate some of the risk involved. Commercial lenders often work in conjunction with those agencies to meet a borrower’s needs.”
She says that the bank will do a standard credit analysis. They’ll ask to see a current balance sheet or financial statement that shows what you own versus what you owe and the most recent three years of federal tax returns (personal and business entity). Hacker explains from that information the bank can piece together the trends of various financial indicators to see if you’re generating enough earnings to cover your existing debts and still have enough left for a cushion against a bad year.
If things are a go, then the bank would like to see your plans for the new venture. These could include: a building/project proposal; drawings or plans; cost estimates; additional equipment needed; increased labor needs; permits; insurance, including liability; packaging and marketing. It could also include any other items that will put the finishing touches on your venture such as special training, professional advisors, etc. Finally, they’ll want to see what you will use for collateral or down payment.
While this sounds like a lot of homework on your part, keep in mind that you’re asking a lender to put a considerable amount of money into your vision.
“Please do what you can to help us see your vision as clearly as you do,” Hacker says. “We want to set you up for success, but if the conditions aren’t right, the answer may be a ‘no’—for now. Go back, sharpen your pencil, be realistic with your expectations and build your cash reserves—whatever it may take to make your vision a reality down the road.”
Once you’ve established a relationship with your lender, keep the conversation going. Plan visits at the office or on the farm, give timely annual business reviews and discuss future plans. Hacker urges business owners to be proactive when things go off track and stay in touch with their lender who can explore ways to help with a potential snag before it becomes a bigger problem.
Another possible source of funding may be applying for grants through various government programs, business organizations and agriculture groups. Writing successful grant proposals takes practice, so research the process and ask for help from those with experience.
Four more key business-planning tasks are staffing (job descriptions, hiring and pay scale), creating a goods and services price list, signage and marketing. When starting a new agritourism business here is some other paperwork that needs to be on the checklist:
- building and business permits and inspections (might include retail food sales, food service and liquor licenses if applicable)
- sales tax paperwork
- registering a business name and creating a legal business entity
- keeping employee records, possibly providing employee health insurance, reporting FICA tax withholding and filing I-9 forms
- filing business tax returns and issuing W2s and 1099 forms
- completing annual property tax report forms
- reviewing land and water use and sewage regulations and zoning laws
Safe & Secure
Another critical piece of the business planning puzzle is to assess public and employee safety, security and insurance coverage. Develop an emergency preparedness plan that would include things such as fire and accident prevention, emergency evacuation, how to deal with medical emergencies and so on. Theft prevention and what to do if property is damaged should also be considered.
Turning to insurance, consider the need for specialized or increased liability coverage and possibly additional coverage for property loss and damage of things related to the agritourism venture. (Liability and property insurance are two different types of coverage.)
Adam Stroup is a premier agent with Indiana Farm Bureau Insurance. He says that Farm Bureau does offer coverage to their clients with an agritourism business, and they have a list of their “generally accepted” types of agritourism activities. They provide agritourism liability coverage as an endorsement on a customer’s farm policy, and they can add additional property protection to the farm policy, as needed, for any agritourism buildings, equipment and inventory.
If an agribusiness exceeds $100,000 in revenue per year, then it would need to be covered through a commercial liability policy instead. “It’s best to speak to your insurance agent regarding this coverage and evaluate if it meets the ‘agribusiness’ criteria or potentially needs covered through a commercial insurance policy,” Stroup says.
With Farm Bureau liability pricing for this coverage depends on the type of business, but generally costs $100 to $200 per year, he says. “Then there can be added cost for any structures insured for loss and damage that are specifically used for the agribusiness. Check with your own agent for specifics on pricing and coverage.”
Stroup stresses that there really needs to be thorough discussion with your agent about all activities that would take place with the agribusiness to ensure the appropriate coverages are included.
“Another very important item is to include any business entities for the farm and/or agribusiness onto the liability,” he says. “For instance, if they create an LLC [limited liability company] for a corn maze, that LLC also needs to be added onto the policy, not just the endorsement for the agribusiness liability. And, liability coverage should be reviewed on their policy. Typically the maximum liability coverage available on a policy is $1,000,000, and the price for it is very reasonable.”
One caution, if you plan to incorporate any type of equine activity into your agribusiness or just have equines on your farm, check with your insurance agent on how equine liability insurance is handled by the company you use. Farm Bureau has a specific equine form to complete; it helps the company determine what type of coverage is needed for your equestrian activities. And, of course, coverage for death of or injury to an animal is an entirely different type of policy which may require an agency and company that specializes in that.
Stroup says posting signs with agribusiness liability state laws (and equine liability, if applicable) on your property is a good idea, too. Indiana Farm Bureau offers the agribusiness liability signs to their members, so look for a similar sign for your state. Many state horse councils have the equine liability signs available for purchase.
Another safety assessment task is to research biosecurity and implement measures to safeguard farm visitors and staff as well as your livestock, pets and crops. Consult your veterinarian and/or crop specialists as well as state departments of agriculture, the USDA and university extension programs for more information on adopting biosecurity measures on your farm. Create signage and “house rules” to help visitors understand why biosecurity is important to keep them and everyone on your farm safe.
Finally, consider you and your staff taking CPR (cardiopulmonary resuscitation) and basic first-aid courses, offered through the American Red Cross. Click here to learn about training and certification offered by the Red Cross. Have a first-aid kit available at your business. Also, post the phone numbers for police, fire and rescue, a local hospital and an urgent-care clinic, and your insurance agent, as well as a plan for emergency evacuation and where to shelter in a severe storm.
If your head is spinning after reading this, consider it good practice for owning a business! Then, take a deep breath and take it step by step as you develop ideas for operating your dream agritourism business. Do your homework; review as many references as possible and talk to successful agritourism business owners. Take your time to thoroughly refine a business plan and accept that it will likely take longer than you originally expected.
An agritourism business can be interesting, innovative and fun, but if no one knows about it, then it probably won’t stay in business for long. Marketing is a must do, yet advertising costs money, so creative promotions and doing research about how best to apply the dollars you have to spend will help. Here are some ideas.
- Research the local, area, state and national media markets and decide on the target market best for you at the time so your advertising dollars are spent wisely.
- Consider a mix of print and web-based media, radio and television and social media to spread the word about your business.
- Reach out to key publication editors and local television/radio stations and tell your story. They may be inspired to do a feature on your business, which is free promotion!
- Sign up for free or low-cost listings of your business through local, regional and state tourism bureaus, chambers of commerce and Farm Bureau chapters. Many publish print and/or online tourism guides.
- Form strategic partnerships; team up with other businesses so you may each feature the other’s products and services in your business.
- Join agriculture and tourism organizations and your local chamber of commerce since those organizations often feature member business lists online and in print.
- Create a business logo to use on cards, signs and promotional items.
- Use signs to attract attention to your location and make sure signs are strategically placed.
- Have a booth at local trade and agricultural fairs to spread the word about your business. If booth space is pricey, share the cost and the booth with a complementary business.
- Consider using coupons and promotions to attract new customers or increase business at slower times of the year.
This article originally appeared in the Nov./Dec. 2023 issue of Hobby Farms magazine.