Final Report for FNC00-299
The project had as its goal to develop alternative marketing strategies, national markets, and logistical infrastructure for small family farms in Iowa. The one year SARE funding partially supported the initial development stage of a farmer-owned organic meat company that will buy farmer direct, process, and retail sell its own brand to consumers. The new model will offer a way for sustainable Ag minded farmers to get better profits than wholesale commodity pricing, to get guaranteed contract prices on niche crops locked in, and to get the opportunity to own valuable food corporation stock.
The recipients of this grant, married couple Wende Elliott and Joseph Rude live on an organic transitional farm where their personal goal is to direct market organic meat.
PROJECT DESCRIPTION AND RESULTS
The problem that the Project addressed was the unsupported conventional wisdom that only way for a farm to survive is to spend more on agri-chemical products and farm more acres. This misguided sentiment over the years has only reduced the profit per acre when adjusted for inflation while inflicting serious environmental damage. The project sought to substantiate the theory that smaller farms could generate the same profit as a mega commodity farm with more earnings per acre using organic practices for a diversified meat production that would be direct marketed in collaborative efforts to reach larger markets.
The project successfully completed a feasibility study for direct marketing in the test market of Des Moines, designed a website and marketing materials, completed national market research, wrote a business plan, applied for other sources of funding and met with producers across the state.
The project then went a step further and accepted orders from gourmet restaurants for free range chickens, then organized a producer production schedule, infrastructure for processing and distribution, and successfully marketed its first products in June 2001.
The producer groups are planning on permanently supplying the high end Iowa restaurant industry and beginning website sales soon. The prices paid to producers were benchmarked against Organic Valleys and then increased. It may be the highest organic chicken price paid to producers nationally.
Producers participating in the group or planning on participating shortly include Lyle Rossiter (Newell), Karol DeNooy (Sioux Center), Tom Durr (Colo), Connie Tjelmland (McCallsburg), Dale Olsen (Cedar Falls), Amos Charlander (Edgewood), Calvin Yoder (Kalona), Rosie McGuness (Stuart), Mark Pauley (Crawfordsville), Ed Nelson (Lockridge), Margo Bucher (Ollie), Steve Dejong (Oskaloosa), Doug Stensland (Sioux Center). Approximately 15 other farmers have attended meetings or are receiving information to possibly participate in the future.
Advisors to the group include Tom Olsen (ISU Field Extension), Rick Hartman (PFI) Rick Pirog (Leopold Center), Dave Holmes (Institute for Coops), Jeff Jobe (USDA), Robert Karp (PFI) Todd Thompson (Organic Alliance), Katherine DiMatteo (Organic Trade Association), Pat Paustian (IA Department of Ag), Maury Wills (IA Organic Certifying program) and many others.
Possible strategic partners that have been contacted include Heartland Organic Feed Coop, Welps Hatchery, Nieman Ranch, Iowa Farm Fresh Processing Coop.
Organic and direct marketing leaders among IA niche agriculture have been abreast of the development for their insights and support.
The market that has been located for organic meat pays a premium and the business model that has been created is designed to return the maximum percentage of profits possible to the farm. The target prices for chicken are $0.95/lb carcass weight and $1.50/lb hanging weight for beef. These prices paid to the producer are above what Organic Valley pays. Financial analysis reveals that over 47% of the retail price is paid to the producer and producer services which are excellent in the industry.
Although the prices are excellent, the opportunity isn’t for all chicken producers. Some people want to expand their markets and production, some want to stay the size they are and individually market retail to friends and neighbors using farmers markets for more local sales strategies. Both of these camps are valid and a farmer can reach both markets simultaneously. However, for the medium size organic farmer, it is usually impossible to sell all his production capacity in the local community. The Amish and Mennonite members of our group take the chicken market more seriously and accordingly grow more birds and realize bigger profits than the other sustainable Ag farmers in the state that grow and market a couple hundred a year and don’t see the opportunities for expansion. It has become evident in meeting with some producers that some people do not accept that the costs for transportation, storage, marketing, direct sales, web maintenance and administration of a farmer-owned food corporations are real costs, not secret profits for staff. Although they would own the company and be the beneficiaries of corporate profits they complained “the profits are going to someone else” which I guess was a memorized complaint. Producers and advisors who read this report are encouraged to form coalitions where efficiencies can be achieved and larger markets can be pursued. Organic chicken marketing in Iowa should be at minimum a state wide effort vs. smaller localized groups competing against each other for the same limited local market with no one having the production capacity to supply consumers outside of region, where premium markets exist.
Wholesome Harvest adds value to processed Iowa agricultural products by creating the logistics infrastructure and marketing channels to reach the end user of gourmet organic meats. The project’s administrator is working as the marketing rep for approximately 10 organic farmers now and is actively signing up more producers and clients on a weekly basis.
Wholesome Harvest creates high tech good paying jobs for the state by leveraging the digital economy and basing itself in rural Iowa. It is projected that in 2002 the staff will number 8 and by 2006, over 50 professional salaried employees. Wholesome Harvest benefits farmers with premium prices and anticipates having over 55 producers participating in 2002 and 267 in year 2006. Wholesome Harvest targets young, new and small farmers with opportunities to diversify that do not require massive capital investment into equipment.
In an ear when fewer cents of each dollar spent on food actually return to the farmer, Wholesome Harvest makes fair compensation a cornerstone of its business ethics and returns over 40% of revenue to the small farmer. Additionally, Wholesome Harvest seeks to form alliance with small town Iowa family owned processing facilities to strengthen regional and decentralized value added infrastructure. Wholesome Harvest’s business model keeps money in state, contributing to rural revitalization and state tax revenue. Wholesome Harvest benchmarked against the successful Organic Valley group of Wisconsin and offers better prices then the Wisconsin group and projects to increase price paid every year to outpace inflation and support a good standard of living for small Iowa Farmers. A percentage of profits will be donated to charitable causes such as rural revitalization projects, Ag scholarships, and environmental stewardship.
The Project Administrator traveled around the state meeting with producers and visiting their farm operations. She drafted a producer production handbook based on the information and consensus that was gathered. It was shared with producers and feedback is coming in. an article will be written about the group in the next issue of the PFI newsletter and Wende Elliot has offered to present at the PFI conference in January 2002. a producer newsletter was created to keep people abreast of developments and a chef newsletter was designed to remind the chef of the substance of the group that they are supporting. Our website is wholesomeharvest.com.