Food processing and community sustainability project

At the beginning of our project in July 2007, two members of the Project Advisory Committee visited ComLinks, a nonprofit organization in Malone, New York, that warehouses and distributes food to food pantries across the region. These committee members interviewed the manager and toured the cold-storage facility and a commercial kitchen, which ComLinks is in the process of installing.

In August, the entire committee toured Nelson Farms in Morrisville, New York, and interviewed the director, Dave Evans. Nelson Farms is a nonprofit, state-of-the-art facility equipped to help food entrepreneurs every step of the way from initial concept to final marketing. On this visit, we realized that it would be pointless to try to duplicate this kind of service in St. Lawrence County since Nelson Farms is more advanced and sophisticated than we could match any time soon, and it is easily accessible to food entrepreneurs in our area. Instead, it would be helpful to publicize the availability of this service to would-be food entrepreneurs in St. Lawrence County.

Meanwhile, the advisory committee began identifying stakeholders from two key sectors: food service professionals who are potential buyers of food from our facility and small-scale farmers who are potential suppliers/users of such a facility. We invited stakeholders from each of these two groups to participate in focus groups led by the two sociologists on our committee.

In October, three professionals drawn from senior care, university, and public school food services participated in a focus group for potential buyers. This session explored such issues as current food purchases and incentives, interest in purchasing local foods, and barriers to such purchases.

In November, a focus group was held with eight small-scale farmers and also the director of the New Strategies for Farm Viability Project. This session explored interest in market expansion, food processing possibilities, and challenges such as transportation distances, labor shortages, and regulatory issues.

In December, to solicit as much input from farmers as possible, a questionnaire was mailed to ninety-nine small-scale farmers in St. Lawrence County. The survey invited feedback regarding what kind of facility, if any, could help them expand their production; where such a facility would best be located; and what challenges and opportunities local food processing could present. Twelve surveys were completed and returned to us, showing a wide range of responses but a strong general interest in the possibility of a facility to help farmers expand their market opportunities beyond the growing season.

In January 2008, seven committee members traveled to Rochester to visit Foodlink, a nonprofit involved in many aspects of food processing. The Foodlink Farmers Fulfillment Center offers farm pickup and delivery via refrigerated trucks; web-based ordering and centralized billing; and product packaging and storage. We toured the Foodlink cold storage facility and flash-freezing operation and interviewed the director, project manager, and several key staff members.

The project advisory committee then reviewed what had been learned over the past several months of research. We had surveyed area farmers and held focus groups to interview key people in local agriculture and food retailing. We had sought out the advice of more than a hundred people and listened carefully to what they had told us. Committee members had also taken field trips to visit three food-processing operations elsewhere.

We had considered shared-use community kitchens, blast freezers, refrigeration facilities, and meal-assembly operations. We had discussed regional branding, food business incubation, specialty marketing, farm-to-school, restaurant sourcing, and job creation. In addition, we had looked at the regulatory challenges and at past attempts to create such facilities. Along the way, we had discarded some of our early assumptions, and we had explored some new directions.

Among a segment of the farmers, we identified a strong interest in developing farm-specific food products, such as jams, jellies, sauerkraut, apple cider. This led us to realize that one positive but unanticipated outcome of this project could be to publicize the services offered to just such food entrepreneurs by Nelson Farms in Morrisville. We began exploring how this could be incorporated into our forum.

But gradually our attention began to focus on the idea of a cold-storage facility where small-scale farmers could store their excess crops and meats for later sale.

With such a facility, vegetable growers, for example, could expand their production of certain vegetable crops, store the excess that cannot be sold immediately, and then sell the stored vegetables to university dining services when the colleges are in session over the winter. Meat could be similarly stored in a freezer section of the facility.

This would follow the rules of thumb that our committee had given itself:

Find the shortest path between the producers and the buyers that we already have: The buyers (university dining services) are already poised to buy more local food; the farmers in North Country Grown Cooperative are already connecting with this market during the growing season.

Keep it simple; fewest moving parts, best chance for success: This facility would be relatively affordable to establish and simple to operate.

Do it well; lay a solid foundation upon which to build and expand later: A successful cold-storage operation could later expand into more complex forms of food processing (such as blast freezing and shredding).

Other uses for such a facility would also be possible. CSA farmers, for example, could offer winter shares to their members by storing root crops and other farm products in the facility.

We were ready to present our findings and invite responses from the community.

In April 2008, we held a public forum on the theme “Food Storage/Processing Opportunities for Small-Scale Farmers.” Invitations were sent to 155 people; 60 attended in addition to organizers and presenters. Attenders included 32 food producers, 8 food buyers, and 31 others (including representatives from economic development agencies, chambers of commerce, local universities, the county legislature, health agencies, nonprofit organizations, as well as other people interested in expanding local food consumption in St. Lawrence County).

The forum’s morning session, “Benefiting from a Cold Storage Facility,” invited responses to the proposal to establish a cold-storage facility where small-scale farmers could store their excess crops and meats for later sale. It began with a panel presentation, a summation of the information we had collected over the past ten months from farmers and food service professionals and a discussion of the benefits such a facility could have for food retailers and restaurateurs and for our local economy. One of our sociologists reviewed the focus group findings. Then a university food buyer presented the perspective of a food buyer, and the coordinator of the North Country Grown farmers’ marketing cooperative gave the perspective of a food producer. The floor was then opened to questions and comments from the audience.

The challenges of agriculture in the North Country—weather, distances, labor—were clearly articulated by a number of participants. But opportunities also emerged, as two food distributors expressed an interest in collaborating with GardenShare to help move the project forward. The executive director of the county Chamber of Commerce also voiced support and an offer to help facilitate meetings with economic developers.

Two note takers recorded the comments, suggestions, and concerns voiced. Participants were also given the opportunity to write out their comments and leave these cards with us (six did). Other suggestions came to light informally during the lunch break.

A lunch was served highlighting as many local foods as could be obtained in April.

The afternoon session was entitled “Developing Your Own Food Products.” This session was the result of our finding that many local producers are interested in this topic. Dave Evans of Nelson Farms presented the services his organization offers both to novice and to established food entrepreneurs. Olga Padilla-Zakour, director of the Northeast Center for Food Entrepreneurship, discussed the technical assistance available from her center and answered questions about equipment, product development, and food regulations.

In the days following the forum, the committee met to debrief and to review our findings from the past year. We concluded that our efforts had garnered the following:

Increased clarity and direction about the kind of facility most needed and viable in St. Lawrence County. We had succeeded in eliminating some options, such as establishing a commercial kitchen for the development of new food products (because Nelson Farms already makes this service available to food entrepreneurs in our area). We subsequently began to focus on a cold storage facility as the most likely opportunity to expand off-season marketing opportunities for small-scale farms in St. Lawrence County.

Identified key stakeholders in food retailing who are potential food buyers and key stakeholders among food distributors who are potential collaborators in transport and storage.

Compiled basic anecdotal and statistical research among both the producers and buyers of local foods, which will be of use in further market research.

We were now ready to move forward into Stage 4 of our process: market research.

Our Project Advisory Committee met several times with Thomas Plastino, executive director of CITEC, Inc., a local firm specializing in market research and with previous experience in agricultural marketing and the food service industry. Upon the advice of the committee, GardenShare subsequently commissioned CITEC to conduct a formal feasibility study of the economic viability of establishing and operating a food storage/processing facility in St. Lawrence County.

The additional funding necessary for this feasibility study represented considerable “buy-in” by the local community. This funding was provided by the dining service at SUNY Potsdam (a major purchaser of local food); the agriculture task force of the North Country Symposium of St. Lawrence University (whose dining service is another major purchaser of local food); and North Country Grown (a farmers’ cooperative that would benefit from a food storage/processing facility).

The feasibility study involved some 60 hours of research conducted by the staff of CITEC and included the following:

A buyer analysis, in which CITEC reviewed previous research done by GardenShare and others among local producers and buyers and, in cooperation with the Project Advisory Committee, refined the list of key buyers whose business situations and intentions would be surveyed. The key result of this step was to assemble enough data about institutional and commercial buyers’ current purchasing patterns of locally produced foods (products, quantities, prices, and delivery specifications) and their future needs for such products so that CITEC could project quantities and revenues for a season-extending, locally produced vegetable and fruit storage/processing facility. While the data collected included current purchases and unmet demand for in-season locally produced vegetable and fruits, the data focused on potential market demand for stored and/or processed vegetables and fruits that could be delivered to the buyers out of their normal growing season.

A producer survey, in which CITEC collected some sample data on producer behavior. CITEC relied on the managers of North Country Grown to supply them with current production and sales information, as well as data on growers’ future plans and expectations for production. At the same time, CITEC interviewed other large growers who are not members of and who do not sell substantial amounts of produce through North Country Grown in order to develop additional data about such growers’ current production of in-season products and their interest in making use of a season-extending facility.

Research into comparable facilities, in which CITEC reviewed previous research done by GardenShare and others into outside system models. The idea was to identify three or four comparable rural, northeastern or upper midwestern communities that have mounted successful food storage/processing facilities and identify the key factors that allowed them to start and continue their operations.

First-cut analysis, in which, based on information developed in the first three steps, CITEC developed a conceptual facility/system configuration for collecting, processing, storing, and distributing season-extending vegetable/fruit products by defining its legal/operational structure and by estimating its start-up capital and soft costs and operational costs. CITEC estimated the gross revenues that would need to be developed to defray these costs and described the increased production that local growers would have to produce in order to make such a facility viable, together with any other relevant operational assumptions and boundary conditions. CITEC summarized all this data, together with the data developed about the current and future local demand for locally produced food products and the current and future local producers capacity to satisfy that demand.

CITEC estimated the annual operating cost of a relatively modest but functional facility to be about $100,000. (This estimate included a part-time general manager, a part-time driver, clerical support, rent, utilities, office expenses, and delivery costs. It assumed that startup and capital costs would be funded by outside grants.) Assuming that growers would be charged a 15 percent fee on sales made through the facility (the same percentage that North Country Grown currently charges its members for collecting and delivering their produce to area institutions), gross revenues would have to exceed $650,000 annually to meet these operating costs. This would represent more than a sevenfold increase in what local growers currently sell to area institutions through North Country Grown.

This calculation led to two crucial questions for the feasibility study: Are area institutions willing and able to purchase locally grown food at this level? And can growers increase their production sufficiently to sustain such an increase in sales? In other words, is there sufficient demand and is there sufficient supply?

In answer to the question about demand, CITEC reported, as expected, a “substantial opportunity to expand sales” to several key buyers in the county, particularly the four colleges in the area. The study noted that two key customers of North Country Grown currently buy 10 to 15 percent of their produce through the cooperative and would be willing to double that amount if certain products were available year round. However, CITEC also noted that the sale of products most suitable for a storage facility (turnips, potatoes, garlic, beets, winter squash, cabbage, onions, etc.) comprised only about 23 percent of the cooperative’s revenue in 2008—calling into question whether there is enough of a market for such storage products to expand sales to the $650,000 level. CITEC did not attempt a further analysis of this market due to the answer it uncovered to the second crucial question, regarding supply.

Contrary to expectations, CITEC found that “the most significant limiting condition” to the creation of a food storage/processing facility was “the lack of supply and the lack of interest in supplying products, not the lack of markets.”

Despite previous perceptions of enthusiasm on the part of local producers, closer examination by CITEC uncovered “significant barriers that would prevent producers from substantially increasing their production—even if they were confident that the markets for their produce were functional and dependable.” In particular, the study found that most small-scale farmers are unable or reluctant to expand their production sufficiently to sustain such a facility. Examples of this reluctance included the following:

a reluctance to trade high-margin retail sales at roadside stands and farmers’ markets for low-margin wholesale sales to institutions via a food storage/processing facility;

a reluctance to meet (perceived) wholesale buyers’ requirements for uniformity and packaging, given that their current retail customers at roadside stands and farmers’ markets are more forgiving in this regard;

a disinclination among the aging farmer population to embrace the greater work load necessary to increase production;

among farms already at capacity for on-farm (family) labor, an unwillingness or incapacity to hire off-farm labor (often due to costs and regulatory issues) or to purchase automated equipment to increase production; and

among small farms, a restriction on expansion due to limited tillable acreage.

The feasibility study concluded that there is “very little evidence that the time is opportune for the creation of a self-sustaining, season-extending food storage/processing facility that would link local producers of fruits and vegetables with wholesale consumers to the benefit of both.”

The researchers did, however, note two promising opportunities worthy of further exploration as ways to expand supply/production in the future:

Identify, recruit, and train more small-scale farmers for St. Lawrence County. Opportunities include outreach programs to attract farmers from outside the area; training programs to develop the next generation of farmers; and farm incubation programs to support farm startups.

Develop the untapped pool of small-scale farmers in the county’s growing Amish community. Generally, Amish farmers in our area have a ready, skilled labor force; a strong desire to remain agricultural; and an entrepreneurial interest in finding new marketing opportunities, especially for young farmers.