16 Lesson Plans to Prepare Small and Mid-scale
Farmers to Enter Food Hubs, Groceries,
Restaurants and Cooperatives
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Module 3.3
Record Keeping
for Wholesale
Enterprises
Please see ‘Module 3 – Business Management’ for
additional teaching resources.
What records are necessary for
wholesale marketing?
• Good news! –
• No additional requirements are set by the USDA,
the FDA, or other governing body to transition
from selling retail to selling wholesale.
• The requirements depend on the request of the
entity purchasing the product.
• What follows are reminders of information,
recommendations, and guidance for farmers pursing
a transition to wholesaling their products.
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A Transition to Wholesale
Channels
• Although no new records are legally required, a
devout commitment to records mentioned in 3.1 (and
a few more) will greatly benefit the entire farm
operation.
• Most farmers see wholesaling as an important
part of diversification to help stabilize revenue,
product flow, and cash flow.
• Margins are likely to be different when first
selling wholesale compared to retail (lower or
higher).
• Over time it is frequently observed that
economies of scale and scope will reduce costs
per unit.*
*A potential benefit to increase profitability over all
market channels.
Record Keeping
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• Did you operate strictly with payment upon
delivery of goods?
• IOUs
• Extending lines of credit to customers
• Yes, you’re likely to become a “bank”
• IOUs are known as Accounts Receivable (A/R)
• Very similar to Accounts Payable (A/P)
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Record Keeping – A/R and Invoicing
• A/R is an asset (at least on your Balance Sheet)
• When you sell goods on credit you set a Term
• A Term is defined as the number of days given to
honor the paying of the bill
• Clarity is necessary with length of the term and
actions if the agreement is not honored
• Remember to follow-up with customers to ensure
timely repayments
*Use Caution* Most sales on
credit should be to frequent
or special customers who are
periodically invoiced.
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Record Keeping – Options
• CenterPoint from Red Wing Software
• Sage 50 (previously Peachtree) from Sage Software
• QuickBooks from Intuit Inc.
• Many others – choose what is right for you and your
farm!
Make sure whatever option you choose allows for
invoicing (full inventory management and A/R aging
reports etc. are nice too )
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Farm Management
• With additional market channels you will need to
optimize for each channel
• Detailed records will
• help optimize sales paths
• make analyzing financial and operations
performance possible
• be necessary for applying for insurance or loans
• and more!
* Effective management of your farm depends on
accurate measurement *
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Strictly Management Record
Keeping Options
• Veggie Compass
• Richard Wiswall
• AgSquared
• FINPACK
• Many others – again, choose what is right
for you and your farm!
*If adding in a new system to your farm it is beneficial to have
your new and old programs easily transfer information, e.g.,
FINPACK has an accounting interface with QuickBooks. *
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Sales – Historic Records and Sales
Records
*** Know everything about your products! ***
• Products
• Planting and harvest dates
• GDDs and GDUs
• Yields
• Grades
• Forecasting
• Sales and prices
• Break-even price
• Update costs
• Trends and weather
* Ordering CANNOT be difficult for the buyer *
Sales – Pricing
These terminal markets are a direct reflection of what
is going on in the wholesale market. If you are not in a
contract these prices will be factors on the ability to
move product!
• A Terminal Market is a central site for trading of commodities, often in a metropolitan area.
• Hunts Point Cooperative Market
USDA daily price reports
NOFA-NY price resource
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Sales – Risk and Insurance
• Liability insurance for selling products
• Minimum suggested coverage of $1-2 million
• Ask purchasers what they require (this could
easily be as high as $5-7 million)
• Farming is one of the ten most dangerous
occupations
• Key person insurance policy
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Sales – Food Safety and Traceability
It is recommend all farms transitioning to wholesaling
become GAPs certified as purchasers are demanding the
certification.
“Initial analysis of the data shows that there is a
positive gain for investing in GAPs, regardless of
farm size, meaning that money spent implementing
GAPs results in larger returns despite the initial and
on-going costs.”
(http://www.gaps.cornell.edu/documents/GAPs_report.pdf)
Most, but not all, purchasers are demanding GAPs or
other third party audits on the conditions of farms and
processing facilities.
Financial assistance is currently offered by Hannaford,
Wegmans and others.
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Sales – Food Safety and Traceability
• Traceability for safety, liability, and certainty.
- kosher, halal, vegetarian, vegan, organic, etc.
• In the near future we may see consumers and the
government demand entire food chain traceability.
• The most important part of traceability is building
trust with the consumers who want to know what
they are eating.
• Keep records at least as long as the normal expected
life of the product.
• Please see ‘Module 5 – Food Safety’ for more
information on traceability.
Putting It All Together!
The biggest part to remember is many of the records you will need to keep for audits, marketing,
business analysis and management are not mutually exclusive.
Make sure your record keeping decision allows for inventory management including accounts receivable
and invoicing of customers.
You need to be willing to follow buyer requested audits.
Many of the records you need for GAPs, organic, and FSMA certifications will cover much of what you
need for buyers.
Be smart and don’t double (triple or more) your work.
Thank you! – Questions or Comments?