By Chris Lucha, Gustavo Ferreira, and Gordon Groover
Over the past decade, there has been a consistent decline in agricultural operations, creating concerns about the long-term viability for many rural communities. As seen in table 1, the number of farms, total acreage of those farms, and total crop land has been on the decline since 1997. In addition, the average principal operator age has steadily increased, meaning that the knowledge and resources base of current owners and managers are not being passed on to the next generation. According to the Virginia Department of Agriculture and Consumer Service (VDACS), agriculture is the largest industry in Virginia and the economic impact of agriculture on Virginia’s economic growth or decline will be felt to a greater extent in rural Virginia. Production agriculture accounts for almost $2.9 billion in total output and provides jobs to nearly 60,000 Virginia farm workers. This is primarily value of farm output and does not include the value-added products that results in $26 billion of total economic activity (VDACS).
Counter to this trend, Virginia’s wine industry has increased. VDACS reports that in 1979, Virginia had only six wineries covering about 286 acres. Jump ahead to 2007and the number of wineries has increased to more than 130, spanning over 3,000 acres in vineyards. In 2013 the industry reported a 75% growth with 228 wineries (Virginia Wine). In addition to the wine industry, the tourist industry has been growing from about one million tourists in 2005 to about 1.6 million in 2010 (Rimerman 2010). More recently, the Virginia Tourism Corporation (VTC) points out that the tourism sector of Virginia generated $4.5 billion in domestic travel revenue in 2011, an eight percent increase from 2010. The tourism sector in Virginia is on the rise, as it also created 207,000 jobs in 2011 (VTC). Therefore, combining a declining agricultural sector and a booming wine industry with the increasing tourism sector could provide additional revenue to create and economic activity in rural areas to support declining revenues in the traditional agricultural sector. These contrasting issues will illustrate the importance of agritourism and its possible benefits.
Section 1. Agritourism: How is agritourism defined and what ventures are included in agritourism?
Agritourism has the potential to be a profitable business option or a costly venture. We generally know what the meaning of agritourism, formally, Virginia law defines it as “any activity carried out on a farm or ranch that allows members of the general public, for recreational, entertainment, or educational purposes to view or enjoy rural activities, including farming, wineries, ranching, historical, cultural, harvest-your-own activities, or natural activities and attractions. An activity is an agritourism activity whether or not the participant paid to participate in the activity” (Code of Virginia § 3.2-6400). Although Virginia law’s definition is specific, there are a wide variety of definitions from the simple to the complex. For example, Weaver and Fennell (1997) state: “rural enterprises which incorporate both a working farm environment and a commercial tourism component” (357) and Harrison Pittman (2006) states: “any business conducted by a farmer or processor for the enjoyment or education of the public to promote the products of the farm and to generate additional farm income” (2). Overall, an agritourism operation must be a combination of tourism and agriculture, designed to attract individuals, increase the operational income, and provide either of the following benefits to its visitors: recreation, entertainment, and/or educational experience (Pittman 2006).
Section 2. Potential Benefits
There are a vast amount of benefits associated with the creation of an agritourism operation, none bigger than the potential to generate additional income, while leaving agriculture production as the primary focus (Tew and Barbieri 2012). Although it is relatively low risk source of revenue, there is an increase in legal or liability risk, which cannot be considered trivial and may inhibit individuals from adopting. Although not explained here, there are many ways to manage and minimize the liability risk of agritourism operations. Overall, the potential additional revenue can improve profits at a minimal extra cost.
Some benefits include, educating the general public about agricultural and food production, the need for preservation of agricultural land, creating and supporting local businesses and increasing the volume of traffic to local venues (Pittman 2006). Social education and entertainment is the bulk of the benefits, but by increasing traffic flow, one can increase the potential for monetary gain as well as increase awareness and create a self-sustaining marketing technique (word of mouth). In small, localized communities, this can be extremely beneficial. Overall, the perceived economic benefits of agritourism can have a potential positive impact for the on-farm family income, while making a contribution to local businesses and communities through increased sales tax, local employment, and overall stimulating the local economy (Tew and Barbieri 2012).
There are many benefits to agritourism, but what makes this the right avenue to provide these economic and non-economic benefits? To put it simply, it is convenient. Diversification through agritourism is a relatively low capital investment in terms of infrastructure, labor or equipment (Tew and Barbieri 2012). Those operators looking to agritourism as an option are more likely to utilize existing resources to increase revenue. Farmers will look to those activities within the spectrum of agritourism that do not interfere with current farm production , while taking advantage of the flexibility of individuals’ schedules and experiences (Tew and Barbieri 2012).
Section 3. Obstacles and Challenges
Although a seemingly beneficial venture to increase farm net returns, there are challenges that must be addressed before a farm based agritourism enterprise is implemented. Some of these challenges are shown in figure 1, but the largest issue or challenge is the political challenges related to Virginia law compliance. These include compliance to zoning permits, environmental health regulations, and liability and insurance. According to a California survey, this is the leading obstacle or challenge to California farmers (Rilla et al. 2011). This is very applicable to Virginia farmers as well because Virginia farmers must comply with certain policies and procedures. One example would be the use permits that must be acquired to allow an agritourism venture to take be conducted.
Figure 1: Major Challenges Rated by California Operators
Source: Rilla et al. 2011
Farm operators are responsible for the welfare and safety of individuals on the farm that are participating in educational and recreational activities. This is the purpose of liability or legal insurance, which can be considered a challenge in itself because it can be costly and many farmers express concerns of being sued (Rilla et al 2011). It is important to note that in Virginia, there is explicit and specific wording on liability concerns for an agritourism venture. Individuals must be in compliance with posted warnings in the Code of Virginia § 3.2-6402, as well as have full disclosure, good intention, and non-negligent behavior (Code of Virginia § 3.2-6401). Differing from California and their survey, the statutes for Virginia are well stated and should create minimal problems for compliance by a farm operator. Most of the challenges associated with the implementation of an agritourism venture are challenges related to the starting of any small business. We can see from figure 1 that promotion and advertising is another challenge. It seems that the easiest and least costly way to mitigate this is to set up a website as the vast majority (78%) in the California survey had websites regardless of their budget or size. Signs and newspaper advertisements are other cost minimizing ways to alleviate the challenge of marketing.
Section 4. Conclusions
In times of declining agricultural revenue in Virginia, agritourism has been a proposed solution to supplement the losses and stimulate growth. With agritourism ventures come many potential benefits, both economic and non-economic, as well as some challenges. Given the individual operators circumstances, it may be appropriate to weigh these benefits against the challenges to come up with an appropriate solution. If agritourism is a possible solution to the given circumstance, further evaluation may be required to see the least costly venture or event within the spectrum of agritourism that is most viable. Further research in this field, as well as the advice of successful operators will provide insight to the growing field of agritourism.
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 Graduate Student, Department of Agricultural and Applied Economics, Virginia Tech
 Instructor and Extension Economist, Department of Agricultural and Applied Economics, Virginia Tech
 Extension Economist, Department of Agricultural and Applied Economics, Virginia Tech