By Cheryl Wixson
There are certain times in the life of your farm or business when circumstances beyond your control – such as the death of your partner, health of a family member, loss of a facility due to fire or other disaster – require that the business enterprise cease operation for a period of time. In the business sense of the word, this option is characterized as mothballing.
Mothballing is defined as the practice of putting functional equipment and/or facilities into storage so that they are no longer being operated but can be used again in the future. A number of reasons exist for mothballing, the primary being that its keeps equipment under the ownership and control of the business while retiring it from current operation.
This spring, our value-added, MOFGA certified organic specialty food company was notified that we had less than 30 days to relocate our business and find a new aggregation, storage and processing facility. Given the size that we had grown our company based upon the capacity of this facility, this was a situation in which circumstances were beyond our control. Rather than close the business or temporarily relocate the production facility, we determined that mothballing the production line was the best alternative.
A decision during a critical life path moment is difficult, but organic production encourages people to think in terms of system health and management for resilience and dynamic equilibrium. In the mothballing process, we used a holistic systematic approach based loosely upon the NOFA publication “Whole-Farm Planning, Ecological Imperatives, Personal Values and Economics,” written by Elizabeth Henderson and Karl North, with these four steps:
The first step is to perform to an inventory, which includes people, assets (both physical and mental, property and equipment) and liabilities. You need to know both the farm and business assets and liabilities. Assets include raw ingredients, finished product, stored product, materials, seeds, equipment, land and more. If you practice whole farm planning, this may be only an update. List everything and be thorough. You’ll need the information later!
Be sure to include people in your inventory for both their assets and resources. In our situation, we had numerous offers to help with moving or selling product that were invaluable in the transition process. People are a fundamental part of holistic management; suppliers, CSA members, other businesses and farmers are all part of the greater whole of the biological communities and ecosystems and are important resources.
Liability assessment is also critical. What are the bills, notes, mortgages and payment terms? When mothballing parts of the business, you will need to generate enough income to be current on all liabilities.
Which leads to the second step: Whenever possible, liquidate. Cash is king. Sell equipment, inventory, raw materials and goods to be used in manufacturing. Cash allows business flexibility and allows the business to continue to make payments on all notes and mortgages if necessary.
Next, consolidate. Square footage equals storage equals money. The more you own and the more you sprawl, the more it costs. For example, because of our increased efficiencies with economy of scale, we were purchasing jars by the pallet and had nine pallets of jars in inventory. Although they were sold for less than the purchase price, the sale generated needed cash and consolidated inventory, reducing the required storage space.
When consolidating, group things together and organize them. Keep a written inventory. All records must be kept together and be easily accessible!
Once the part of the business is mothballed, regroup. This is a time for evaluation and setting goals. Given this new set of circumstances, what are your life goals? How does the business or farm move you toward or away from your goal?
Henderson and Karl recommend that you test your decisions based upon three questions:
Value: Does the farm or business bring about the quality of life that you value?
Forms of production: Does the farm or business help you succeed in the things you want to do in life?
Sustainability: Will this farm or business lead you toward or away from the kind of community and neighborhood you desire?
Organic production and farming and managing for sustainability is a balancing act. Unpredictable events happen. Our objectives change with time and maturation. A resilient farm or business uses the holistic planning and decision-making process to systematize our instinctive sense of the ways of the universe so that we can produce for a healthier present and a more peaceful future.
Cheryl Wixson is MOFGA’s organic marketing consultant. In May, when Coastal Farms and Foods in Belfast closed, she mothballed the production line of Cheryl Wixson’s Kitchen. She welcomes your thoughts and questions at [email protected].