PLAN. PRODUCE. PROFIT. WORKSHOPS PLAN. PRODUCE. …

Microsoft PowerPoint - Threlfall Intro Workshop 2.pptxPLAN. PRODUCE. PROFIT. WORKSHOPS PLAN. PRODUCE. PROFIT. WORKSHOPS University of Arkansas Workshop Team
Project Director: Dr. Renee Threlfall, Research Specialist, Institute of Food Science and Engineering
Project CoDirector: Dr. Jean Francois Meullenet, Head, Department of Food Science and Director, Institute of Food Science and Engineering
Dr. Steve Seideman, Extension Food Processing Specialist, Institute of Food Science & Engineering
Dr. Daniel Rainey, Associate Professor, Department of Agricultural Economics
Rusty Rumley, Staff Attorney, National Agricultural Law Center
PLAN. PRODUCE. PROFIT. WORKSHOPS
Southern Extension Risk Management Education grant program.
PLAN. PRODUCE. PROFIT. WORKSHOPS ARKANSAS FOOD INNOVATION CENTER: FOOD SCIENCE DEPARTMENT, UNIVERSITY OF
ARKANSAS, 2650 N. YOUNG AVE., FAYETTEVILLE, AR 72704 WORKSHOP 1: STARTING A FOOD PROCESSING BUSINESS | complimentary registration
Thursday, January, 29, 2015 from 68 pm & Saturday, January 31, 2015 from 13 pm WORKSHOP 2: GUIDE TO STARTING A FOOD PROCESSING BUSINESS | $20 registration, includes lunch Saturday, February 21, 2015 from 85 pm WORKSHOP 3: STARTING YOUR FOOD PROCESSING BUSINESS | complimentary registration AprilJune, 2015
For More Information:
http://afic.uark.edu/training.html
PLAN. PRODUCE. PROFIT. WORKSHOPS In a series of three workshops, workshop participants will learn how to produce
commercial food products in our local food systems. Those attending the first and second workshops will explore the process of taking a product from concept to the
commercial market as well as the fundamentals of starting a food processing business. Participants in the third workshop will be selected on a competitive basis from previous
workshop attendees and will receive assistance from the personnel and use of the facilities at Arkansas Food Innovation Center in commercializing their product.
PLAN. PRODUCE. PROFIT. WORKSHOPS WORKSHOP 2: GUIDE TO STARTING A FOOD PROCESSING BUSINESS | $20 registration, includes lunch
Saturday, February 21, 2015 from 8 am-5 pm Workshop Agenda
Workshop Overview Produce Behind the Product
Business Plans and Marketing Food Safety and Preservation
Food Processing and Equipment Lunch Client Panel
Food Ingredients and Packaging Food Product Labeling
Food Processing Regulations Workshop Summary
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Arkansas Food Innovation Center Plan. Produce. Profit: Starting a Food
Processing Business
ARKANSAS FOOD INNOVATION CENTER
The Arkansas Food Innovation Center (AFIC) was created to assist entrepreneurs and small businesses with food product development and food manufacturing.
AFIC is a part of the University of Arkansas System Division of Agriculture.
The Center’s mission is to advance the local food industry in Arkansas by providing a center to encourage agribusiness through the establishment of new food products and processing capabilities.
AFIC Video https://www.youtube.com/watch?v=8LEGvNQygC8&feature=youtu.be
PRODUCTS
The Arkansas Food Innovation Center specializes in assisting entrepreneurs in developing and producing value-added products mostly from fruits and vegetables. Value-added products are created by using a
raw commodity to increase its value – cooked, sliced, pickled, dried, etc.
Creating value-added products allows options to use food crops that ripen during the summer throughout the year
Product/Process Development Our service center is a certified/inspected facility that can be used for product
development and to process products for commercial markets. Assistance is available for required certification of products and the completion of
federally required documents.
Labeling Creating your nutrition facts panel Assuring your label conforms to federal requirements Printing labels
Analytical Services pH Water activity (Aw) Sugar level (Brix) Shelf-life
Training Workshops are offered on food processing topics http://afic.uark.edu/Training.html.
SERVICES
FAYETTEVILLE PUBLIC SCHOOLS
Tomato sauce was produced using Arkansas- grown tomatoes and used in public school cafeterias. In 2013, 3,400 lbs of tomatoes
were produced into 221 gallons (221 110 oz bags) of tomato sauce.
In 2014, 6,280 lbs of tomatoes were produced into 410 gallons (410 110 oz bags) of tomato sauce.
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ARKANSAS HUNGER RELIEF ALLIANCE
Spaghetti sauce was produced from Arkansas-gleaned tomatoes for distribution in their food banks network and to raise funds for their program. In 2013, 480-16 oz glass jars of spaghetti sauce
was produced. In 2014, 14,000 lbs of tomatoes were produced into
8,808 16 oz glass jars of spaghetti sauce.
PINK HOUSE (pH) ALCHEMY
pH Alchemy produces flavored simple syrups, and the products are sold at local farmers markets a local coffee house. The company has processed ~1500 bottles of simple syrup.
GREAT FERMENTATIONS
Cat and John Swenson started Great Fermentations to create value-added products for their farming operation and developed fermented vegetable products containing both probiotics and prebiotics.
The products – Crunchy Kraut and Jalapeno Slices – are sold at Ozark Natural Foods, farmers’ markets and the Farmer’s Table Café in Fayetteville.
BERNICE’S HUMMUS
Denise Rohr and A.B. Merritt are owners of Bernice's Hummus, a product developed and produced since April 2013.
Their product is marketed in Fayetteville at Ozark Natural Foods and Marvin’s IGA.
Farmhouse Cupboard
Meredith DeVera and Rachael Harris are owners of Farmhouse Cupboard launched in January 2014.
Farmhouse Cupboard bakes and sells Macaroon Chewies at the Bentonville Farmer's Market and retail distributions in Arkansas and Oklahoma.
The workshops are sponsored through a grant entitled “Fostering Enterprise Diversification to Expand Local Community Food Systems” from the Southern Extension Risk Management Education grant program.
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JF Meullenet Department of Food Science
& Institute of Food Science and Engineering
University of Arkansas
Step 1: Tour Contact Mike Davis to schedule an appointment to tour the AFIC facility:
[email protected] (479) 5753095
Please be prepared to discuss some of the relevant details associated with manufacturing your product. Along with an introduction to the facility, the tour allows us to determine whether or not we have the necessary equipment capabilities.
Step 2: Contact ADH/FDA
Contact William (Will) Hastings at the Arkansas Department of Health (ADH):
(501) 6612576
• Complete the ADH application and submit the $35 annual fee
•Go to the FDA’s website and register your facility: http://www.fda.gov/Food/GuidanceRegulation/FoodFacil ityRegistration/default.htm
Step 3: AFIC Agreement
You will need a letter from the Food Science Department permitting the use of AFIC.
Step 4: Purchase Insurance
Product liability insurance is required and may be purchased at https://www.fliprogram.com/
The annual cost for the insurance is $299.
Please list the University of Arkansas SystemDivision of Agriculture as an additional insured.
Step 5: Test Batch
•We recommend that you process a test batch or two while you are completing all of your paperwork.
•Develop your Standard Operating Procedures (SOP) •Product that is made in test batches will not be sold but can be given away as samples.
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Step 6: GMP Training
You must complete Good Manufacturing Practices (GMP) training prior to processing. The workshop is hosted quarterly by the Department of Food Science & Engineering.
•No cost •1 day/4 hr
Step 7: Other Requirements
•Product recall plan •Allergen Plan •FDA processing documents •Packaging •Product Labels •Nutrition Facts Panels •Others
PERSONNEL
Arkansas Food Innovation Center Contact Mike Davis, AFIC Manager 479.575.3095, [email protected]
Affiliated Scientists Steve Seideman, Food Processing Extension Specialist 479.575.4221, [email protected] Renee Threlfall, Research Scientist, Fruit Processing 479.575.4677, [email protected]
The workshops are sponsored through a grant entitled “Fostering Enterprise Diversification to Expand Local Community Food Systems” from the Southern Extension Risk Management Education grant program.
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PLAN. PRODUCE. PROFIT. WORKSHOPS Introducing the Robert M. Kerr Food and Agricultural Products
Center
Some of the workshops we offer • Accredited Basic HACCP Workshop
• Basic Training (Entrepreneurial Workshop)
• Certified Barbecue Judging Class • Continuous Improvement Tools for Beginners
• Food Safety for Small Farms/Businesses
• Food Allergen Workshop
• Food Defense Workshop
• Quality 101 Workshop
Pilot plant services
Other FAPC services
•Product formulation / Process development
Visit the FAPC website for information about services, workshops, and other educational events.
http://www.fapc.biz
Stillwater, OK 740786055
For More Information
Steve Seideman
STEPS TO STARTING A FOOD BUSINESS
•Have an Idea or Concept •Start Developing a Business/ Marketing Plan
•Decide Manufacturing Mode •Get Sales
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•Come up with something.
•Anything just to start thinking. It will change over time
•Find a consumer need and fill it.
•Flavor ideas are not good. Find out “what is hot” in the minds of consumers.
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•Have brainstorming sessions
•Talk to a lot of people. Some people may not appear to be brilliant but they are potential customers and they have money
• Look at the dairy fieldThe mother of Creativity.
•Go to other places/things. E.g. dairy products, tools, farming, other cultures and lifestyles
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• Entrepreneur Wally Amos
Mary Kay Ash
Mary Kay Cosmetics
H&R Block
Mrs Field Inc
Ford Motor Co
WHERE DO IDEAS COME FROM?
• Ideas are a dime a dozen. Everyone has ideas on how to do something cheaper, easier, faster, etc. than existing companies. The difference is that entrepreneurs make their ideas become realities.
•For example, take Famous Amos Cookies. Anyone can make cookies but he took his cookies to the marketplace where people who don’t have time to bake can buy them.
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•Dr Rainey will cover in more detail.
• Just start thinking about your new product and who will buy, how will they know about it, what are they will to pay for it ?
•This is a game like Monopoly and you always win.
•Starts you dreaming about your business.
•Spend lots of time here. It will save you in the long haul.
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•Who is your competition ?
•How to label, package the product ? •What is the needed shelflife?
•What is a fair price ?
•How will people know about your product and where to get it?
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•Food Channels •What will it cost to produce the product?
•Distribution networks •What are the drivers of the product line?
•Any brand loyalty (e.g. bacon window appearance, brand name, consumer image)
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FOOD CHANNELS
•There are basically 2 channels in food distribution 1)Retailthe goal is to give the consumer what they want at a price they are willing to pay. Examples are further processing over commodities.
2)Food Service (Restaurants)Make food products that address restaurant concerns such as food safety and the shortage of good labor (Precooked, marinated, seasoned etc).
3)Sales over websites are coming along.
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•This channel represents food stores like Walmart, Kroger , Dillons, etc
•They are very consumer oriented
•Heavy up on marketing; All trying to get consumers to buy their product.
•Crowded; Competitive
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THE FOOD SERVICE CHANNEL
• Includes fast food up to fine table clothe restaurants •Fastest growing channel. •Use brokers from large full service distributors like Sysco and U.S. FoodService to brokers that just take orders.
•The brokers do the local selling and can go from just taking orders to delivery.
•Not heavily marketing oriented
Food Service Sales
•Since the 1970s, the percentage of food eaten away from home has been steadily increasing. In 1999, 49% of the food dollar was spent in food service, 41% was spent in retail stores and 10% at other food retailers (cstores, warehouse clubs).
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Wages /Benefits are up
•Food Safety Fear of E Coli/Listeria lawsuits
Linked to labor quality
•Reduced labor in the kitchenpreportioned, seasoned, marinaded, premade. They want to heat and serve.
•Precooked for food safety reasons •Want creative menu ideas and novel cooking methods. “Show me something new”
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•Have more disposable income.
•Older are sick of self denial and younger lead a more decadent life style.
•Time starved; Want it “now”
Drive through confessional in California
“Toot and tell or go to Hell”
Starbucks Kiosk in California churches
New Changes –last few years
Consumers are now wanting;
•TO buy local from local farmers
•TO keep their money away from big companies who use “chemicals”
•Preference for “artisan” type foods. •Want a story with their food – how it came about. 17 18
Value Added Foods
•We live in a “Value Added” society.
•Many of our grandparents or great grandparents raised their own hogs and chickens, grew produce in a garden, made their own furniture and probably made their own farm implements.
• In our current society and because of the industrial revolution, it is now cheaper and easier to buy pork, eggs, produce, furniture and farm implements than it is to make it yourself.
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A Word About Marketing
•Facts do not sell a product. •Emotions sell products. Watch some TV ads some timeWhat message are they selling??
•For example, Dockers pants are not sold on the strength of the material or stitching but how well people who wear them entice members of the opposite sex. Sounds ridiculous but it works.
•Romanticize the product. Make it emotionally appealing in some way to the customer.
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•Copacker Mode •Self-Manufacture •Use the Arkansas Food Innovation Center
•Cottage Industries Act
If Making Yourself
•Regulations – Filing with ADH and FDA, specs, Understand all regulatory rules of safety (GMPs, HACCP, SSOPs, SOPs, Prerequisite Control Programs)
•Design your packaging and label •Do a “cost buildup”(all costs) •Are all ingredients necessary and functional? • Is the right equipment available? (both size of equipment and adequate for purpose).
•Will you be getting the needed shelflife?
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• Learn to live with rejection.
•Continue to refine your marketing strategy the rest of your life. Always listen to your customers.
•Sell to everyone, everywhere. Never stop.
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WORRIED ABOUT THE BIG GUYS?
• Some entrepreneurs worry that they cannot compete with the big manufacturers.
•Understand that businesses, over time, will evolve. The big food companies of 50 years ago have gone by the wayside and next businesses have taken over their territory.
•Whatever your invention, build a moot around it – Bill Gates
• Remember the big food retailers of the 1950s and 1960s A&P and Kroger? They are not nearly as large as they once were due to other food retailers like Albertsons, Ralphs, Wegmans that were entrepreneurs in the 1950s and 1960s.
Product Development
1) Totally New Products – Nacho Cheeseflavored Doritos
2) Value –Added Products – Individually wrapped cheese slices; IQF vegetables
3) Product Improvements – self rinsing pizza crust
4) Line Extensions – cheese chunks in hot dogs
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Concept Market Introduction
• Have an idea
• See Mike Davis fill out his form (packaging and equipment issues?)
• Sign UA Documents and get insurance
• Get label approved through Mike Davis
• Make small pilot plant batch – finalize it
• Get labels, packaging and ingredients ordered
• Write your manufacturing specification, Register with Arkansas Dept Health and FDA
• Make production batch test it
• Start selling it listen to your customers . : “Seek first to understand; then to be understood.”
• Implement your marketing plan 27 28Photo courtesy of IFS&E
Horticultural Considerations for ValueAdded Food Products
Luke Freeman
Program Technician
• Shelfstable product
cooksmarts.comnewyork.seriouseats.com Fedandfit.com
– Increasing revenue
– Utilizing excess produce
– Product in offseason when demand is high
afortune906.webfactional.com ayearinredwood.wordpress.com
– Nutritional value
• Niche for unique regionallybased product
brooklynbrine.com
udyam.co
brevidia.com
afic.uark.edu
www.vegkitchen.com
www.precisionnutrition.com
betcheslovethis.com
terrachips.com
img2.timeinc.net
Bubbies.com
Squash (June – September)
Storage Conditions: Fruits & Vegetables
This bulletin was reprinted with permission from Kansas State University Cooperative Extension Service, Manhattan, KS. Written by Karen L. B. Gast, Extension specialist, Post Harvest and Marketing.
For information about UMaine Extension programs and resources, visit extension.umaine.edu. Find more of our publications and books at extensionpubs.umext.maine.edu.
Once a crop is harvested, it is almost impossible to improve its quality. Losses of horticultural crops due to improper storage and handling can range from 10 to 40 percent. Proper storage conditions—temperature and humidity—are needed to lengthen storage life and maintain quality once the crop has been cooled to the optimum storage temperature.
Fresh fruits and vegetables are living tissues, although they are no longer attached to the plant. They breathe, just as humans do, and their composition and physiology continue to change after harvest. They continue to ripen and, finally, they begin to die. Cellular breakdown and death (senescence) are inevitable, but can be slowed with optimal storage conditions. Fresh fruits and vegetables need low temperatures (32 to 55°F) and high relative humidities (80 to 95 percent) to lower respiration and to slow metabolic and transpiration rates. By slowing these processes, water loss is reduced and food value, quality and energy reserves are maintained.
Relative Humidity
Transpiration rates (water loss from produce) are determined by the moisture content of the air, which is usually expressed as relative humidity. At high relative humidity, produce maintains salable weight, appearance, nutritional quality and flavor, while wilting, softening and juiciness are reduced. Leafy vegetables with high surface-to-volume ratios; injured produce; and immature fruits and vegetables have higher transpiration rates. External factors affecting transpiration rates are temperature, relative humidity, air velocity and atmospheric pressure. High temperatures, low relative humidity and high air velocity increase transpiration rates.
Relative humidity needs to be monitored and controlled in storage. A hygrometer or a sling psychrometer, not the appearance of the produce, should be used to monitor humidity. Control can be achieved by a variety of methods:
1. Operating a humidifier in the storage area.
2. Regulating air movement and ventilation in relation to storage room load.
3. Maintaining refrigeration coil temperature within 2°F of the storage room air temperature.
5. Wetting the storage room floor.
6. Using crushed ice to pack produce for shipment.
7. Sprinkling leafy vegetables, cool-season root vegetables, and immature fruits and vegetables with water.
Table 1 lists the optimum relative humidity for the storage of several fruits and vegetables.
Temperature
Respiration and metabolic rates are directly related to room temperatures within a given range. The higher the rate of respiration, the faster the produce deteriorates. Lower temperatures slow respiration rates and the ripening and senescence processes, which prolongs the storage life of fruits and vegetables. Low temperatures also slow the growth of pathogenic fungi which cause spoilage of fruits and vegetables in storage. Table 2 contains a list of fruits and vegetables classified by respiration rates. Producers should give special care and attention to proper storage conditions for produce with high to extremely high respiration rates—those crops will deteriorate much more quickly.
It is impossible to make a single recommendation for cool storage of all fruits and vegetables. Climate of the area where the crop originated, the plant part, the season of harvest and crop maturity at harvest are important factors in determining the optimum temperature. A general rule for vegetables is that cool-season crops should be stored at cooler temperatures (32 to 35°F), and warm-season crops should be stored at warmer temperatures (45 to 55°F). There are exceptions to this rule, though. Table 1 lists optimum storage temperatures for commonly grown Kansas fruits and vegetables.
Freezing Injury. Temperatures that are too low can be just as damaging as those too high. Freezing will occur in all commodities below 32°F. Whether injury occurs depends on the commodity. Some can be repeatedly frozen and thawed without damage, while others are ruined by one freezing. Table 1 shows the highest freezing point for most fruits and vegetables. Table 3 lists susceptibility to freezing injury. Produce that is likely to be injured by one freezing is classified as “most susceptible.” The “moderately susceptible” produce will recover from one or two freezings. Produce which is “least susceptible” can survive several freezings without injury.
Injury from freezing temperatures can appear in plant tissues as loss of rigidity, softening and water soaking. Injury can be reduced if the produce is allowed to warm up slowly to optimum storage temperatures, and if it is not handled during the thawing period. Injured produce should be marketed immediately, as freezing shortens its storage life.
Chilling Injury. Fruits and vegetables that require warmer storage temperatures (40 to 55°F) can be damaged if they are subjected to near freezing temperatures (32°F). Cooler temperatures interfere with normal metabolic processes. Injury symptoms are varied and often do not develop until the produce has been returned to warmer temperatures for several days. Besides physical damage, chilled produce is often more susceptible to disease infection. Table 4 lists susceptible fruits and vegetables, and characteristic symptoms of chilling injury.
Storage Facilities
Crops that require different storage conditions will need three different storage facilities.
Cold storage (temperatures 32 to 36°F).
Cool storage (temperatures 40 to 55°F).
Warmer storage (temperatures 55 to 60°F for sweet potatoes, squash, pumpkins or similar crops).
A recording thermometer can be helpful in determining whether storage facilities are maintaining ideal conditions and are not fluctuating. A maximum/minimum thermometer could be substituted. The thermometer should not be the same as the thermostat controlling the refrigeration equipment. Relative humidity also should be monitored with a hygrometer or a sling psychrometer.
Controlling and monitoring temperature and relative humidity will enable a grower to maintain optimum conditions for maximum storage life of the crop, and to minimize crop damage from chilling, freezing and/or too-high temperatures and water loss from the crop. Close attention to storage conditions will yield returns through greater customer satisfaction, less waste and spoilage, and in the flexibility to hold a crop without significant storage losses to wait for better markets.
References
Hardenburg, R.E., A.E. Watada and C.Y. Wang. 1986. The Commercial Storage of Fruits, Vegetables, and Florist and Nursery Stocks. USDA-ARS Agriculture Handbook Number 66 (revised) 136p.
Table 1. Commonly grown fruits and vegetables with recommended storage conditions for temperature and relative humidity approximate storage life under optimum conditions and highest freezing points.
Commodity Temperature (°F) Rel. humidity (percent) Approximate storage life
Freezing point (°F)
Berries
- Elderberries 31–32 90–95 1–2 weeks —
- Gooseberries 31–32 90–95 3–4 weeks 30.0
- Raspberries 31–32 90–95 2–3 days 30.0
- Strawberries 32 90–95 3–7 days 30.6
- Cherries, sour 32 90–95 3–7 days 29.0
Cherries, sweet 30–31 90–95 2–3 weeks 28.8
Grapes, American 31–32 85 2–8 weeks 29.7
Nectarines 31–32 90–95 2–4 weeks 30.4
Peaches 31–32 90–95 2–4 weeks 30.3
Pears 29–31 90–95 2–7 months 29.2
Plums and prunes 31–32 90–95 2–5 weeks 30.5
Quinces 31–32 90 2–3 months 28.4
VEGETABLES
Artichokes, Jerusalem 31–32 90–95 4–5 months 28.0
Asparagus 32–35 95–100 2–3 weeks 30.9
Beans, dry 40–50 40–50 6–10 months —
Beans green or snap 40–45 95 7–10 days 30.7
Beans, lima 37–41 95 5–7 days 31.0
Beans, sprouts 32 95–100 7–9 days —
Beets, bunched 32 98–100 10–14 days 31.3
Beets, topped 32 98–100 4–6 months 30.3
Broccoli 32 95–100 10–14 days 30.9
Brussels, sprouts 32 95–100 3–5 weeks 30.5
Cabbage, early 32 98–100 3–6 weeks 30.4
Cabbage, late 32 98–100 5–6 months 30.4
Cabbage, Chinese 32 95–100 2–3 months —
Carrots, bunched 32 95–100 2 weeks —
Carrots, mature 32 98–100 7–9 months 29.5
Carrots, immature 32 98–100 4–6 weeks 29.5
Cauliflower 32 95–98 3–4 weeks 30.6
Celeriac 32 97–99 6–8 months 30.3
Celery 32 98–100 2–3 months 31.1
Chard 32 95–100 10–14 days —
Chicory, witloof 32 95–100 2–4 weeks —
Collards 32 95–100 10–14 days 30.6
Corn, sweet 32 95–98 5–8 days 30.9
Cucumbers 50–55 95 10–14 days 31.1
Eggplant 46–54 90–95 1 week 30.6
Endive and escarole 32 95–100 2–3 weeks 31.9
Garlic 32 65–70 6–7 months 30.5
Greens, leafy 32 95–100 10–14 days —
Horseradish 30–32 98–100 10–12 months 28.7
Jicama 55–65 65–70 1–2 months —
Kale 32 95–100 2–3 weeks 31.1
Kohlrabi 32 98–100 2–3 months 30.2
Leeks 32 95–100 2–3 months 30.7
Lettuce 32 98–100 2–3 weeks 31.7
Melons
- Cantaloupe (full slip) 32–36 95 5–14 days 29.9
- Casaba 50 90–95 3 weeks 30.1
- Crenshaw 45 90–95 2 weeks 30.1
- Honey Dew 45 90–95 3 weeks 30.3
- Persian 45 90–95 2 weeks 30.5
- Watermelon 50–60 90 2–3 weeks 31.3
Mushrooms 32 95 3–4 days 30.4
Okra 45–50 90–95 7–10 days 28.7
Onions, green 32 95–100 3–4 weeks 30.4
Onion, dry 32 65–70 1–8 months 30.6
Onion sets 32 65–70 6–8 months 30.6
Parsley 32 95–100 2–2.5 months 30.0
Parsnips 32 98–100 4–6 months 30.4
Peas, green 32 95–98 1–2 weeks 30.9
Peas, southern 40–41 95 6–8 days —
Peppers, chili (dry) 32–50 60–70 6 months —
Peppers, sweet 45–55 90–95 2–3 weeks 30.7
Potatoes, early crop 40 90–95 4–5 months 30.9
Potatoes, late crop 38–40 90–95 5–10 months 30.9
Pumpkins 50–55 50–70 2–3 months 30.5
Radishes, spring 32 95–100 3–4 weeks 30.7
Radishes, winter 32 95–100 2–4 months —
Rhubarb 32 95–100 2–4 weeks 30.3
Rutabagas 32 98–100 4–6 months 30.0
Salsify 32 95–98 2–4 months 30.0
Spinach 32 95–100 10–14 days 31.5
Squashes, summer 41–50 95 1–2 weeks 31.1
Squashes, winter 50 50–70 1–6 months 30.5
Sweet potatoes 55–60 85–90 4–7 months 29.7
Tomatoes mature—green 55–70 90–95 1–3 weeks 31.0
Tomatoes firm—ripe 55–70 90–95 4–7 days 31.1
Turnips 32 95 4–5 months 30.1
Turnip greens 32 95–100 10–14 days 31.7
Watercress 32 95–100 2–3 weeks 31.4
Table 2. Fruits and vegetables classified by their respiration rates (at 41°F).
Class Respiration rate Btu/ton/24 hrs
Commodity
Very low <5 Nuts, Dates, Dried Fruits and Vegetables
Low 5–10 Apple, Grape, Garlic, Onion, Potato (mature), Sweet Potato
Moderate 10–20 Apricot, Cherry, Peach, Pear, Nectarine, Plum, Cabbage, Carrot, Lettuce, Pepper, Tomato, Potato (immature)
High 20–40 Strawberry, Blackberry, Lima Bean, Raspberry, Cauliflower
Very high 40–60 Artichoke, Snap Bean, Green Onion, Brussels Sprouts
Extremely high
>60 Asparagus, Broccoli, Sweet Corn, Mushroom, Spinach, Pea
Table 3. Fruits and vegetables classified by susceptibility to injury by temperatures below 32°F.
Group 1, Most susceptible Group 2, Moderately susceptible Group 3, Least susceptible
Apricots Apples Beets1
Beans, snap Cabbage, new Cabbage, mature and savoy
Berries (except cranberries) Carrots1 Kale
Cucumbers Cauliflower Kohlrabi
Eggplant Celery Parsnips
Lettuce Cranberries Rutabagas
Okra Grapes Salsify
1Without tops
Table 4. Fruits and vegetables susceptible to chilling injury when exposed to temperatures below their optimum range and above 32°F.
Commodity Approx. lowest safe temperature (°F)
Symptoms of injury from below – optimum temperatures
Apples-certain cultivars 36–38 Internal browning, brown core, soggy breakdown, soft scald
Asparagus 32–36 Dull, gray-green, limp tips
Beans (lima) 34–40 Rusty brown specks, spots, or areas
Beans (snap) 45 Pitting and russeting
Cucumbers 45 Pitting, water-soaked spots, decay
Eggplants 45 Surface scald, alternaria rot, blackening of seeds
Melons
- Cantaloupe 36–41 Pitting, surface decay
- Honey Dew 45–50 Reddish-tan discoloration, pitting, surface decay, failure to ripen
- Casaba 45–50 Same as above, but no discoloration
- Crenshaw and Persian 45–50 Same as above, but no discoloration
- Watermelons 40 Pitting, objectionable flavor
Okra 45 Discoloration, water-soaked areas, pitting, decay
Peppers, sweet 45 Sheet pitting, alternaria rot on pods and calyxes, darkening of seed
Potatoes 38 Sweetening
50 Decay, especially alternaria rot
Sweet Potatoes 55 Decay, pitting, internal discoloration; hard core when cooked
Tomatoes
- Ripe 45–50 Water soaking and softening decay
- Mature-green 55 Poor color when ripe, alternaria rot
Information in this publication is provided purely for educational purposes. No responsibility is assumed for any problems associated with the use of products or services mentioned. No endorsement of products or companies is intended, nor is criticism of unnamed products or companies implied.
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Introduction
As farmers struggle to find ways to increase farm income, interest in “adding value” to raw agricultural products
has grown tremendously. The value of farm products can be increased in endless ways: by cleaning and cooling, packaging, processing, distributing, cooking, combining, churn- ing, culturing, grinding, hulling, extracting, drying, smoking, handcrafting, spinning, weaving, labeling, or packaging. (1) Today, more than ever, adding value means “selling the sizzle, not the steak.” The “sizzle” comes from information, education, entertainment, image, and other intangible attributes.
Because of the many regulations involved with food processing, some people may choose to add value in other ways. On a larger scale, producer-controlled processing for energy, fiber, and other non-food uses are options. On a smaller scale, items such as flower arrangements, garlic braids, grapevine wreaths, willow baskets, wheat straw weavings, sheep and goat milk soaps, and wool mulch are a few examples. In addition, ideas for providing entertainment, information, and other services associated with direct marketing are abundant.
Besides offering a higher return, value- added products can open new markets, create recognition for a farm, expand the
Introduction ..................... 1
Starting a Food Business ............................. 3
Farm and Food Business Profile: Persimmon Hill Berry Farm ........................ 6
Non-Food Options ........ 7
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ATTRA — National Sustainable Agriculture Information Service is managed by the National Cen- ter for Appropriate Technology (NCAT) and is funded under a grant from the United States Department of Agriculture’s Rural Business-Cooperative Ser- vice. Visit the NCAT Web site (www.ncat.org/agri. html) for more information on our sustainable agriculture projects.
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Contents
By Holly Born and Janet Bachmann NCAT Agriculture Specialists ©2006 NCAT
Adding Value to Farm Products: An Overview This publication discusses the concept of adding value to farm products, the differences between creating and capturing value, and the implications for value-added enterprises. It describes some different approaches to adding value, including starting a food processing business, with a brief look at non- food products. Resources to learn more about value-added agriculture and planning a value-added enterprise are included.
Oats, barley, and some products made from them. Photo by Peggy Greb. Courtesy of USDA/ARS.
Page 2 ATTRA Adding Value to Farm Products: An Overview
market season, and make a positive con- tribution to the community. However, adding value is not a panacea for all the problems rural America is facing. It is a long-term approach, not a “quick fix.” It requires the willingness and ability to take on risk, as well as adequate capital, management skills, and personal skills—such as the ability to interact with the public— to succeed.
Capturing Value and Creating Value Brees et al. (2) make the distinction between a strategy to capture value and a strategy to create value. This distinction is important to understand, because each strategy offers specific opportunities and risks that influence the success or failure of the value- added venture.
For producers, capturing value usually means capturing some of the value added by processing and marketing. For example, the producer’s share of the food dollar has seen a steady decline since 1900. (3) In 2005, the average farmer’s share of the food dollar was 22 cents, down from about 33 cents in the 1970s. (4) The rest of the food dollar goes to processing, distribution, and marketing. More and more, producers are attempting to increase their share of that food dollar by engaging in activities such as direct marketing to consumers, turning farm products into food products, and joining producer alliances and cooperatives that invest in facilities to process their farm products on a larger scale.
Marketing directly to the consumer can be done on a small or large scale and in a variety of ways. Options for the producer who enjoys direct contact with consumers include selling at farmers’ markets and through community supported agriculture systems. Other options include sales directly to restaurants and local institutions, as well as mail order and Internet sales.
Large scale processing through producer alliances, such as agricultural co-ops or limited liability companies, has seen growing interest among producers. These
alliances can offer a way to pool resources and manage risks. In some cases, producers lose marketing or processing facilities when corporate agribusinesses close local facilities. For example, when Iowa turkey farmers lost an Oscar Mayer processing plant and feed mill, the producers formed Iowa Turkey Growers Cooperative and purchased the facility in 1996. (5) The Iowa Turkey Growers Cooperative continues to produce and market whole and further-processed turkey products year round. Research from Purdue University (5) shows that producers do stand to benefit from diversifying into a value-added business related to the producer’s product, when the product is characterized by volatile prices at the farm-gate level but relatively steady prices at the wholesale or retail level. The turkey industry is such an example, and turkey producers benefited from diversifying into processing. In many cases, such as livestock processing, economies of scale can make it impractical for producer alliances to own the entire processing plant, if the alliance is not able to support an operation large enough to achieve those economies.
With a captured-value strategy, producers may face lower production risks, because production processes are well known and often linked to traditional agricultural production. Even when producers themselves are not familiar with processing, expertise in those areas can be hired. Captured- value ventures face an extremely competitive marketing environment, where demand is high, cost and efficiency considerations are paramount, and high volumes of products must be processed in order to gain effi- ciencies of scale. These ventures are often turning commodities into different commodities and, while value is added, it may not actually be captured by the producer.
For example, producer-owned cooperatives have attempted to enter the wet corn milling industry. However, this industry is extremely concentrated, with the top three firms having more than 80 percent of the market share for corn sweetener, one of the most important wet milling products, and similar market shares for the other wet
Direct Marketing Publications from ATTRA
Direct Marketing
Farmers’ Markets
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milling products. In this case, one commodity, corn, is being turned into another commodity, corn sweetener, and the producer cooperative faces a marketing environment in which it is almost impossible to compete successfully. Indeed, two of the most recent producer-owned cooperatives that attempted to enter the wet milling market, American Crystal Sugar’s ProGold facility and Minnesota Corn Processors, could not compete and ended up being acquired by the top three firms. (5) For more information on getting off the commodity tread- mill, request Moving Beyond Conventional Cash Cropping from ATTRA.
A created-value strategy, on the other hand, relies on products or services that are unique or different from the mainstream equivalent. These often include a real or perceived quality attribute such as organic certification, a brand image, identification with a specific geographic region and/or producer, identity preservation, environmental stewardship, and so on. Creating value can pose higher production risks than capturing value. It usually requires learning new production and marketing skills, dealing with food safety, labeling, and other regulations, and coping with liability issues and insurance. Demand for the innovative product or service must usually be created through advertising, promotion, and consumer education, and this is a lengthy, expensive process. Marketing risks may be lower with a created-value strategy, for if this demand can be established, there is potential for higher, stable prices and little direct competition. Contract agreements for identity-preserved products such as high-lysine corn reduce competition from other producers, for example. On-farm events and activities offer a unique setting that cannot be copied by other producers. However, producers will need to learn new marketing skills, carefully assess feasibility, and develop marketing plans for created-value products or services without established marketing channels.
The amount of value that can be added is affected by whether the enterprise is capturing or creating value. Brees et al. (2) cite
two different approaches to adding value to soybeans—a cooperative venture in a crushing plant, using a captured-value strategy, and producing a new “soy nut” product, using a created-value strategy. The crushing plant in their example added about $1 per bushel from the meal and oil produced. The crushing plant faced narrow profit margins and stiff competition, common challenges for captured-value ventures, where the processing and marketing risks are relatively low.
Producing soy nuts that retailed for $3.95 per 9-ounce package, on the other hand, added almost $420 of value per bushel. While the markets for soybean meal and oil are very large, the market for soy nuts, and thus the total amount of value added, is very limited. Product and market development and compliance with food safety and packaging laws all require time and money. However, for the small-volume producer who cannot compete with the large-volume producers on price, targeting niche markets with a created-value strategy offers the highest likelihood of success.
Many producers combine aspects of both capturing and creating value in their ventures. A producer may create an unusual food product, such as local specialty bread, and sell it at the farmers’ market, capturing more of the food marketing dollar. Food processors may use organic or unusual ingredients, and so on.
Starting a Food Business The food business is extremely competitive and dominated by a few large companies that are driven by cost and price considerations. Food is considered a “mature” industry, which means very little growth in demand. Food manufacturing continues to face narrowing margins and decreasing profits. Retailers are wielding more and more power over food wholesalers and manufacturers, and requiring manufacturers to pay more for shelf space (“slotting fees”), bear more of the product development risk, and provide product uniformity and quality. Smaller processors could have trouble
Food Processing Publications from ATTRA
Grain Processing: Adding Value to Farm Products
Oilseed Processing for Small-Scale Producers
Edible Soybean Production and Marketing
Food Dehydration Options
finding outlets for their products, if they cannot meet scale requirements by the large retail operations that dominate the industry. In this mature industry, the only real growth is in niche food markets, where producers create value by adding special services for consumers, offering quality attributes like organic certification, specialized health products, and so on. They are able to charge prices 30 percent or more over mainline markets. Industry analysts agree that these markets are likely to continue to grow. (7)
The National Association for the Specialty Food Trade (NASFT) defines “specialty foods” as follows:
Foods, beverages, or confections meant for human use that are of the highest grade, style, and/or quality in their category. Their specialty nature derives from a combination of some or all of the following qualities: their uniqueness, exotic origin, particular processing, design, limited supply, unusual application or use, extraordinary packaging or channel of distribution, the common denominator of which is their unusually high quality. (8)
For more information and resources on the specialty foods industry, visit the National Association for the Specialty Food Trade’s Web site at www.specialtyfood.com.
Consumers with special dietary needs— both for specific health conditions and the general health concerns of our aging pop- ulation—offer more opportunities for new products. For example, there are more than two million Americans with life-long, incur- able celiac disease, who must avoid all gluten (from wheat, rye, and barley) in their diets. Gluten-free foods have been difficult to find and remain expensive, but for celiac disease sufferers, they are well worth the effort and expense. (9) For more information on health conditions requiring special diets, and the companies supplying these special foods, visit www.specialdiets.org.
Other specialty foods options that have paid off for producers include production and marketing of unusually colored or shaped, “heirloom,” and “ethnic” crop varieties (request the ATTRA publication Specialty Vegetables for more information). Livestock can also be marketed as a specialty food, often in conjunction with religious or cultural celebrations and festivals or events, to use in traditional recipes. For example, meat goat and sheep producers have the options of serving many ethnic markets and providing special products such as sheep for the Muslim Ramadan holidays and cabrito (young goat) for the Hispanic Easter market. Some producers even offer buyers facilities on farm to slaughter according to Halal or other religious requirements.
Some of the main challenges in food processing include developing formulations and preparation schedules, dealing with regulations and regulatory agencies, product coding and labeling, and product liability insurance. (10) Researching the market potential for food products is a crucial first step. You will need to have a good idea of who will buy your product in the amounts and prices that will generate a profit for you. For more information on market research, v isit www.agmrc.org/agmrc/business/
Case History:
Value-Added Agriculture
Radiance Dairy, Francis and Susan Thicke, owners, Fairfield, Iowa
Former Minnesota dairy producers Francis and Susan Thicke have oper- ated Radiance Dairy in Fairfield, Iowa, since 1992. When they took over the herd of Jersey cows—a breed that produces high-butterfat, high- protein milk that receives a premium price—the Thickes added more value by turning the dairy into an organic operation.
Today, 99 percent of their organic whole, skim, and two-percent milk, as well as cream, yogurt, and a soft cheese called Panir, are sold under the Radiance Dairy label by three local grocery retailers. Chocolate- and vanilla-flavored soft-serve ice cream is sold in restaurants. Other products such as new yogurts and cheeses are in development.
What does value-added mean to the Thickes? According to Francis: “Value-added products have features that go beyond what is gener- ally found in the conventional market. Most people think value-added means processing raw materials into a finished product. That’s true, but value-added can be more than that. We believe organic products are value-added because of the extra care that goes into making the product. Radiance Dairy products really have two value-added features: they’re organic, and they’ve been processed to deliver additional value to our customers.”
startingbusiness/marketresearch.htm, and see the Business Planning Resources section below.
Once you have an idea for a food product that you believe will appeal to consumers in the marketplace, you need to develop a detailed description of your product. This description should include where you will get all ingredients, a formulation (recipe), a method of preparation, processing procedures, and packaging. Revealing the amount of each ingredient or the spices in your formulation is not necessary. This should remain secret and be revealed only to federal or state regulatory agencies. Reliable suppliers for equipment, ingredients, and other supplies are critical to the operation of a successful food processing business. Identification of reliable suppliers is an important step prior to beginning your business.
If you are uncertain about any of the details needed in this plan, check with your county Extension office to see whether you can get help from your land-grant university. Most have a department of food science or food technology, with staff who can help you in the initial stages of product development. If you work with a food technologist to develop your product or process, you will be asked for your complete formula. This information will remain confidential.
Bring as many details about your product as you have, including a sample. The product will be evaluated and classified regarding the type of processing needed. This classi- fication will be based on the product’s acid and water contents.
Transferring recipes for food products made in small batches or in a home kitchen to commercial-size formulas that can be manu- factured in larger batches using commercial equipment is not an easy task. Frequently, simply multiplying ingredient amounts to get larger-size batches does not result in a product comparable to that made with smaller recipes. Plan on contracting with a state- approved facility, such as a private-label manufacturer, to manufacture a fairly large quantity of your best formulation(s). This
will give you an opportunity to revise and adjust your formula so that your final product is exactly the way you want it. Most private-label manufacturers can also provide formulation assistance. The county health department may be able to help you with information about such facilities located in your county.
A key point to remember is that adding value by processing food products increases safety risks. Therefore, rules and regulations are established to protect the public health. Each state has its own regulations about processing kitchens, and some local governments have building codes that also apply. If there is any possibility that you will be selling your food out of state, you must also comply with the federal regulations as stated in the Federal Food, Drug, and Cosmetic Act and enforced by the Food and Drug Administration (FDA). The FDA has what it calls Good Manufacturing Prac- tices (GMP), upon which state regulations are based. GMPs include requirements that walls, floors, and ceilings be wash- able, and the kitchen must be ventilated so that drip or condensation from ceiling or fixtures won’t fall into food. Food contact surfaces, tools, and equipment must be resistant to corrosion and made of non- toxic materials. Seams on surfaces must be smoothly bonded to prevent accumu- lation of food particles, dirt, etc. The room must be screened to keep out birds, insects, and other pests. You must have a bathroom, i f you have employ- ees. You must have a hand-wash- ing sink separate from sinks for wash- ing, rinsing, and sanitizing equipment and utensils. Water must be from an approved source.
If your food product contains more than five percent meat, you must have a USDA Food Safety and Inspection Service inspec- tor present during processing. You must also comply with USDA regulations, whether the product is sold in-state only or out of state. The full description of GMPs is printed in the Code of Federal Regula- tions 21 CFR, Part 110, available on-line at www.access.gpo.gov/nara/cfr/index.html.
Adding value
by process-
ing food
products increases
safety risks.
All products need to include a product code that shows where the product was packed, the date and year packed, and the product and batch number. Individual con- tainers and cases should be coded. The codes should be kept in records pertain- ing to the product and should be written on your invoices to identify distribution. The codes provide a means of tracking a product, should there be complaints or a recall be necessary. Organic processing involves addit ional record-keeping and other regulatory requirements.
The label is the means by which consumers identify your product, so time and thought should be given to developing your label. Both the state and the FDA have very specific regulations concerning labeling requirements. Contact the appropriate agency regarding information you must include on the product label. The FDA requires nutritional labeling if you do more than $50,000 in business annually. The regulations for nutritional labeling are quite extensive, with very specific requirements about information to include and the for- mat for presenting this information. Details of these requirements can be obtained from any FDA office or the FDA Small Business representative.
If you plan to sell your product through retail stores, you should plan to display a Uniform Product Code (UPC) on the label. This bar code provides a means for automated identification of your product. Brokers, wholesalers, and retail buyers will not handle a product without a UPC. It is your responsibility to obtain a UPC for each product you produce. Contact the Uniform Code Coun- cil to apply for a UPC assignment. The fee for assignment is based on the size of your business. Contact:
Uniform Code Council 937-435-3870 937-435-7317 FAX [email protected] www.uc-council.org/ ean_ucc_system/index.cfm
While it can be difficult to find a liability insurance provider, and insurance may be
costly, product liability insurance is a must. Many farmers’ markets and most retail outlets will require a minimum level (normally $1 to 2 million) of product liability coverage before you can sell your products in their markets. There are no standard rates for liability coverage for food products, because the premium depends on the specific characteristics of the product, the manufacturing process, and marketing plan. Most insurance companies require a great deal of information—including submission of production, distribution, and marketing plans—even to provide a rate quote.
Product design and market ing t ips are covered in more detail in Fresh to Processed: Adding Value for Specialty Markets. (11) Created as a training and resource tool for value-added processors, with funding from the North Central Region SARE program, Fresh to Processed: Adding Value for Specialty Markets provides an overview of the main aspects of starting a food business. Contact ATTRA for a copy of this resource.
Farm and Food Business Profile: Persimmon Hill Berry Farm The story of Earnie and Martha Bohner’s Persimmon Hill Berry Farm shows what can happen when creative and persistent farmers team up with supporters from the state university, state department of agriculture, and many others.
Although both Earnie and Martha trained and worked in other professions, the small- farm lifestyle of the southern Missouri Ozarks appealed to them, and in 1983— starting with no buildings, no electricity, and no running water—the Bohners began developing their pastured hill land. They chose the name Persimmon Hill because the farm was covered with young persimmon trees. Within 10 years they were cultivating three acres of blueberries, an acre of blackberries, 2,000 hardwood logs for growing shiitake mushrooms, and 120 apple trees. (12)
Contact the FDA by mail, telephone, or Internet:
Food and Drug Administration 5600 Fishers Lane Rockville, MD 20857 1-888-INFO-FDA (1-888-463-6332) www.fda.gov
The berries were initially marketed to pick- your-own customers. The added value is the experience of a day on a farm with a friendly and helpful host. “We create a place where people can enjoy themselves,” Earnie says. Clean restrooms, a picnic table, and shade trees provide for the com- fort of visitors to the farm. Keeping the field edges mowed and trimmed contributes to the clean image needed to attract visitors. “People don’t come all the way out here to get cheap food. They come because it’s fun, and the berries are absolutely fresh. As much as we can, we give them contact with ‘the farmers.’ The more we can do that, the more people go away with that memory.”
In 1986 the Bohners began adding value through processing. “After considerable study, we decided to turn ripe berries into full-fruit jams, although it would take more work than the U-pick operation and spread our management thinner,” says Martha. “From the first, we were committed to quality, and quality entails a lot of time and cost. Our recipe is simple: fresh, ripe fruit; sugar; natural pectin; a bit of lemon juice, and nothing else. We want our product to have a distinctive, berry taste.” Earnie and Martha worked with a chef to perfect recipes for other products such as shiitake mushroom sauce. The first products were prepared in rented kitchens, a good way to make the step without the cost of building your own kitchen. The Bohners now have their own processing kitchen on the farm, just a few steps from the blueberry patch. The business office and storage space are in the same two-story building. Processed products (their famous blueberry Thunder Muffins, a range of jams, shiitake mushroom sauce, blueberry and other barbecue sauces, dried shiitake spe- cialties, a refreshing blueberry slush, and a cookbook) now account for a large share of the farm’s gross income. Processing fruits and shiitake mushrooms allows them to use produce that isn’t sold fresh, to extend the marketing season and to diversify their marketing outlets. The Bohners have sold as many as 1,400 Thunder Muffins in a single day, and Martha Bohner says the
muffins carry the farm through the unprof- itable winter months. (13)
Direct marketing is another way to add value. In addition to U-pick and farm stand sales, the Bohners have created a Christmas gift mail-order market. Previous customers and gift recipients receive a mail-order folder describing packages that will be sent directly to them. The cover of the flyer features the farm’s black Labs shown watch- ing St. Nick’s sleigh heading off into the Ozark night.
Business planning has been critical to the development of Persimmon Hill Berry Farm. Earnie tries to reorganize each Jan- uary, after he reviews production and marketing records for the previous season. He adjusts long-range plans, sets goals for the next 12 months, and then breaks down jobs by two-week periods. Earnie says, “In an ideal situation, I would look at these goals monthly. On a daily basis, I have a list that I carry with me that supports the overall plan.” He is always looking for ideas for new products, niches, and services. In regard to finding help for business planning, Earnie says, “SCORE has been really helpful.” (SCORE, the Ser- vice Corps of Retired Executives, is a Small Business Administration program. For more information on SCORE, request the ATTRA publication Agricultural Business Planning Templates and Resources.) “We also have had graduate students from a university business department out here. It is a useful experience for them, and they can give a business owner another perspective. And we get lots of ideas from Ron Macher’s Small Farm Today magazine.” Beyond the financial aspects of the business, a visit to the farm will show anyone that a vision for a beautiful place in the country and love for life are driving forces. To pay a virtual visit to the farm, visit www.persimmonhill.com.
Non-Food Options The difficulty of coping with regulatory requirements, as well as the highly competitive nature and the relatively low margins of the food industry, have
“People
to get cheap food.
led many producers to consider non- food options for adding value to their farm products. Some of these non-food options are discussed below. Your options for adding value with non-food products and services are limited only by your resources and your imagination.
Energy Energy production from agricultural products is on the rise. It includes producing biofuels, such as ethanol and biodiesel, and electricity from crops, wastes, and wind. Producers may be interested only in reduc- ing on-farm fuel costs by producing biofuels for their own use. Many producer groups, on the other hand, have invested in biofuels manufacturing as a way to add value to agricultural products such as corn and soybeans. The viability of many of these investments, such as corn producers invest- ing in ethanol production, depends on gov- ernment subsidies and programs. (5) The Agricultural Utilization Research Institute’s Center for Producer-Owned Energy offers useful information on many biofuels options on their Web site at www.mncpoe.org. The ATTRA publication Biodiesel: a Primer not only describes the process of making biodiesel on-farm but also provides further resources on many aspects of renewable energy. For more information on energy and agriculture, visit ATTRA’S Energy and Agriculture section at www.attra.org/ energy.html.
Fiber Organic cotton fiber is enjoying a developing market (14); however, these markets are still limited and subject to competition from imported cotton. For more information on organic cotton, request Organic Cotton Production from ATTRA. There are also small niche markets for naturally colored cotton. The increasing consumer interest in hand spinning, knitting, and weaving has led to increased marketing opportunities for sheep and goat producers for organic, naturally colored, hand-made wool, yarns, and other products, as well as finished goods such as blankets and clothing.
Wood Woodlot enterprises, both timber and non- timber, may offer another option. Request a copy of Woodlot Enterprises from ATTRA for more information. Another good place to start investigating woodlot enterprises is the WoodWeb at www.woodweb.com/ KnowledgeBase/KBIndex.html.
Personal Care Products Adding value to products such as milk, honey, and wax by producing soaps, lotions, and other personal care products is a popular option. The market for “natural” personal care products reached $5 billion in 2004, increasing by more than 50 percent since 2000, and should continue to grow. (15) Learn more about natural personal care products at www.soap-wire.com.
Farm Entertainment According to Agriculture Special ist Katherine Adam, in Entertainment Farm- ing and Agri-Tourism, “While the popular- ity of specific enterprises—such as pump- kin patches or U-pick orchards—may ebb and flow, the public’s desire for a ‘farm experience’ remains.”
Small diversified farms are ideally suited to agri-entertainment. Unlike the mega-hog facility or a corn/soybean operation producing bulk commodities, the small farm can recre- ate an earlier, simpler, human-scale vision of
Many farm machines at ARS’ Beltsville Agricul- tural Research Center run on a mixture of die- sel fuel and biodiesel, which is made from soybean oil. Photo by Bob Nichols. Courtesy of USDA/ARS.
farming. The chief qualification for the rural landowner who expects to make a living from the land through agri-tourism is the desire and the ability to cater to tourists and meet their expectations of a farm visit.
Request a copy of Entertainment Farm- ing and Agri-Tourism from ATTRA for more informat ion on many different opt ions to add entertainment and educational value to your farm and farm products.
Keys to Success Although no simple blueprint for success exists when you’re trying to add value to your farm products, a few general practices emerge from interviews with a number of southern farmers. No matter how you
end up adding value to your farm products, these principles apply.
Start small and grow naturally.
Make decisions based on good records.
Create a high-quality product.
Keep informed.
Business Planning Resources
A comprehensive business plan that includes marketing and finances can help determine the feasibility of a value-added enterprise. Developing your business and marketing plan helps you define your business, creates a road map to operate the business, sets the goals you will aim for, and satisfies outsiders’ requests for a written explanation. The basics of a business plan include the following.
What? Describe your product or service.
Why? Describe the need for your product or service.
Who? Describe the customer.
When? Draw a timeline and list all the tasks that need to be accomplished.
Where? Describe the location of your business.
Building a Sustainable Business: a Guide to Developing a Business Plan for Farms and Rural Businesses helps alternative and sustainable agriculture entrepreneurs develop profitable enterprises. Sample worksheets illustrate how real farm families set goals, researched processing alternatives, determined potential markets, and evaluated financing options. Blank worksheets help producers develop detailed, lender-ready business plans and map out strategies to take advantage of new opportunities. It is available at no charge on the Internet at www.misa.umn.edu/publications/bizplan.html. Print copies are available for $14 (plus $3.95 shipping and handling charge).
To order copies, contact:
Useful resources from ATTRA include:
Agricultural Business Planning Templates and Resources Sources of agricultural business planning templates and other resources.
Enterprise Budgets and Production Costs for Organic Production Sources of information on costs and returns of organic production.
Establish a loyal customer base.
Choose something you love to do and something that fits your personality and goals.
These points are described in detail in the ATTRA publication Keys to Success in Value-Added Agriculture. Call ATTRA to request a copy. The publication also provides farmer profiles and information about the resources that they found useful.
Adding value to your farm products can be a great way to increase farm income, diversify production, and enter new markets. Understanding the risks and rewards of different approaches to adding value, investigating the wide range of options for adding value, and thoughtful business planning are all important to success.
References Richards, Keith, and Deborah S. Wechsler.
1996. Making It On the Farm: Increasing Sustainability Through Value-added Process- ing and Marketing. Southern Sustainable Agriculture Working Group. 40 p. Compiled from interviews with southern farmers and ranchers who are adding value to their products, it describes some of their practices, discusses 10 keys to success, and includes a list of resources. Available for $12 (includes shipping and handling) from: Southern SAWG Publications P.O. Box 324 Elkins, AR 72727 501-587-0888 [email protected]
Brees, Melvin, Joe Parcell, and Nancy Giddens. No date. Capturing vs. Creating Value. MU Agricultural Guide, University of Missouri Cooperative Extension. www.agmrc.org/agmrc/business/gettingstarted/ capturingvscreatingvalue.htm
Smith, Stewart. 1991. Is There Farming in Agriculture’s Future? Presentation to College of Agriculture and Life Sciences. University of Vermont. November 14.
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Fulton, Joan. Value-Added Business Ventures Through Producer Alliances. 2003. Purdue University Cooperative Extension Service Pub- lication ID-318. www.ces.purdue.edu/extmedia/ID/ID-318.pdf
Our Future’s on the Table. The Web site of an Iowa consortium seeking to increase the value of Iowa farm products includes links to a number of case histories. Contact can also be made through the address below. Ag Initiative 2000 Consortium 200 East Grand Ave Des Moines, IA 50309 515-242-4805 515-242-4832 FAX
Sparks Companies, Inc. 2003. Top-Down Com- petition in the Food Industry: Trends and Implications. Strategic Forum Discussion Paper. Sept. 23. 46 p. www.mda.state.mn.us/ams/whitepapers/ topdown.pdf
Food Industry Resources & Worksheets. Prod- uct Development: Identifying Your Market Seg- ment. Appalachian Center for Economic Net- works (ACEnet) Food Ventures Web site. www.acenetworks.org/frames/ framesfoodventures.htm
Choi, Candice. 2005. Gluten-Free Market Goes Mainstream. Associated Press. July 27.
Brady, Pamela, et al. 1997. Starting a Food Business. Institute of Food Science and Engi- neering. University of Arkansas, Fayetteville, AR. 6 p.
Durham, Deni. 1996. Fresh to Processed: Adding Value for Specialty Markets. Missouri Organic Association, Ashland, MO. 33 p.
Bohner, Earnie. 1998. Personal communication with Janet Bachmann.
Anon. 2003. True blue: Loyal berry fans line up across Missouri to get a taste of summer’s sweetest treat. Columbia (MO) Daily Tribune. June 29. http://archive.columbiatribune.com/2003/jun/ 20030629feat004.asp
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mailto:[email protected]
http://www.agmrc.org/agmrc/business/gettingstarted/capturingvscreatingvalue.htm
Dimitri, Carolyn, and Catherine Greene. 2002. Recent Growth Patterns in the U.S. Organic Foods Market. U.S. Department of Agricul- ture, Economic Research Service, Market and Trade Economics Division and Resource Eco- nomics Division. Agriculture Information Bul- letin Number 777. 42 pp. www.ers.usda.gov/publications/aib777/
Anon. 2005. Three Years of Double-Digit Growth Powers the Natural Personal Care Mar- ket to $5 Billion. Soap Wire Online. June 22. www.soap-wire.com/2005/06/ three_years_of _.html
Further Resources
General Value-Added The Ag Marketing Resource Center (AgMRC)
(www.agmrc.org) is an excellent electronic, national resource for producers interested in value-added agriculture. This comprehensive Web site offers information on value-added opportunities for agricultural commodities and products, market and industry trends, learning how to create and operate a business, research results of value-added markets and businesses, and how to locate national, state, and local value-added resources. A comprehensive set of directories, including agricultural innovation centers, consultants, service providers, and value-added businesses that can be contacted by individuals with similar interests, and specific resources for all 50 states, is available at www. agmrc.org/agmrc/directories/.
Hamilton, Neil. 2000. The Legal Guide for Direct Farm Marketing. Drake University Law School. Des Moines, IA. 235 p. This book is an excellent resource to help you begin the process of learning about the rules and regulations that may affect you. Prepared under a grant from the USDA Sustainable Agriculture Research and Education Program, it is available from:
Agricultural Law Center Drake University Law School 507 University Ave. Des Moines, IA 50311 www.law.drake.edu
14.
15.
One great source of innovative, farm-tested ideas for adding value and generating more income is FARM SHOW magazine. For more information, contact:
Circulation Department FARM SHOW P.O. Box 1029 Lakeville, MN 55044 800-834-9665 952-469-5575 FAX [email protected] www.farmshow.com
Another source of ideas is Small Farm Today magazine. For more information, contact:
Small Farm Today 3903 W Ridge Trail Rd Clark, MO 65243-9525 573-687-3525 573-687-3148 FAX 800-633-2535 [email protected] www.smallfarmtoday.com
USDA Rural Business-Cooperative Services offers two grant programs for value-added project development. The Section 9006 Renewable Energy System and Energy Efficiency Improve- ment Grants provide grants and guaranteed loan funds to farmers, ranchers, and rural small businesses looking to finance a renewable energy or energy efficiency project. Visit http:// attra.ncat.org/guide/n_z/renewable.html for more information. The Value-Added Producer Grant program makes grants available to inde- pendent producers and producer groups for planning activities to establish a viable value-added marketing opportunity for an agricultural product or for acquiring working capital to operate a value-added business venture. Visit http:// attra.ncat.org/guide/n_z/value_added.html for more information.
Resources for Starting a Food Business In addition to the directories available at the AgMRC Web site mentioned above, there are some other resources that are especially helpful for starting a food business.
Appalachian Center for Economic Networks (ACEnet) runs the Food Ventures program, which works with entrepreneurs in their service area in the southeastern Ohio area to create and grow specialty food businesses. ACEnet also offers excellent advice and information on their Web site at www.acenetworks.org/frames/ framesfoodventures.htm for anyone interested in the specialty foods business.
Better Process Control School (BPC) is required by federal regulations for any supervisors of low-acid food thermal processing systems and container closure operations. It is strongly recommended that anyone involved in any phase of food processing who is not familiar with the principles of food preservation attend this school. Several universities hold a BPC school at vari- ous times during the year. To locate a BPC school near you and learn about the many other training resources available, contact:
Food Processors Institute 1350 I Street, NW Suite 300 Washington, DC 20005-3305 202-639-5945 800-355-0983 (toll-free) 202-639-5932 FAX [email protected] www.fpi-food.org
The Fooddude’s Food Marketing 101 at http://www.fooddude.com/foodmarketing101. htm is an on-line resource designed primarily for potential manufacturers or marketers of specialty food products. The purpose is to pose questions (and provide some answers) for those interested in producing food products for sale. Included is information about retail trade channels; distribution channels; product positioning, branding, packaging, and pricing; packaged food sales; marketing and promotion; customer service and data use; as well as links to general resources and food industry associations.
Getting Started in the Food Specialty Business www.efsonline.uga.edu/EFS_NFB/ New%20Food%20Business%20Packet/ Getting%20Started%20in%20the%20Food% 20Specialty%20Business.pdf
Hall, Stephen F. 1992. From Kitchen to Market: Selling Your Gourmet Food Specialty. Upstart
Publishing, Chicago. 190 pp. ISBN-0- 926894-34-2. A good resource to determine whether your food product has potential.
Exploring the Potential for New Food Products http://msucares.com/pubs/publications/ p2170.html
Starting a Value Added Farm-Food Business www.uwex.edu/ces/agmarkets/
Page 12 ATTRA
Adding Value to Farm Products: An Overview By Holly Born and Janet Bachmann NCAT Agriculture Specialists ©2006 NCAT
Paul Driscoll, Editor Cynthia Arnold, Production
This publication is available on the Web at: www.attra.ncat.org/attra-pub/valueovr.html and www.attra.ncat.org/attra-pub/PDF/valueovr.pdf
IP141 Slot 136 Version 032206
Dr. Daniel V. Rainey
Agricultural Economics and Agribusiness
• Written document describing all relevant internal and external elements, and strategies for starting a new venture. • A road map for the business.
• An integration of functional plans.
• Addresses shortterm and longterm decision making for the first three years.
• Should be prepared by the entrepreneur in consultation with other sources.
• Entrepreneur can make an objective assessment of his or her own skills before deciding to hire a consultant.
Who should write the business plan?
• Valuable to the entrepreneur, potential investors, or even new personnel.
• It is important to these people because: • Helps determine viability of the venture in a designated market.
• Provides guidance to the entrepreneur in organizing his or her planning activities.
• Serves as an important tool in helping to obtain financing.
Value of the Business Plan (1 of 2)
• The thinking process required to complete the plan is a valuable experience for the entrepreneur. • Provides a selfassessment by the entrepreneur.
• Forces the entrepreneur to bring objectivity to the idea.
• Helps consider obstacles that might prevent the venture from succeeding.
• Plan ways to avoid such obstacles.
Value of the Business Plan (2 of 2)
• Before creating a business plan, entrepreneur must undertake a feasibility study. • Information for a feasibility study should focus on:
• Marketing.
• Production.
• Finance.
2
• UA Small Business and Technology Development Center • sbtdc.uark.edu or 4795755148
• AgPlan • https://www.agplan.umn.edu/
Dr. Daniel V. Rainey
Agricultural Economics and Agribusiness
What is market research?
• Market research is the systematic process entrepreneurs use to gain insight into market problems and opportunities.
• The term market includes not only customers, but all players who are responsible for bringing certain products and services to market including suppliers, competitors, producers, wholesale distributors, retailers, logistics, and so on.
Marketing Mix (4Ps)
• Marketing Mix: describes elements needed to deliver product or service to the consumer • Product • Place • Price • Promotion
Product • Have you identified a need customers cannot
currently adequately satisfy? • How will your product meet these needs? • Are you including attributes that the customer won't
actually use? (adding cost) • How and where will the customer use your product? • How is it branded? &bull

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