Final Report for FNC01-351
Members of the group working on this project included the Neubergers and three other families. Team leader, Tom Neuberger, hosted the project on his 160-acre grass farm. A poultry processing facility is located on the farm. The chickens used for the project were raised in a free-range manner and cattle and sheep raised on the farm were rotationally grazed.
Tom Neuberger and his group were looking for ways to add value to their products and income to their operations. Rather than purchasing more chickens, they looked at ways to improve the chickens that they already had. The SARE grant assisted them in acquiring the equipment and supplies necessary to create products that would not only increase profits but also provide convenient food products for consumers.
Through further processing of the chickens, they were able to come up with several new products such as, cut-up chicken, split and quartered chicken, ground chicken, BBQ wings, chicken snack sticks, and dog food. The products require a variety of processing techniques and involve different amounts of time and effort to produce.
During the second year of the project, a local family was employed to be an independent contractor and actually produce the eight products that were created in the project’s first year. Consumers were able to purchase these products at a local farmers market and at the farm. The Neubergers have been direct marketing for 21 years, and have generated a customer list of over 3,000 people. Periodically, they send a newsletter to customers to let them know which products are available and the current prices.
While this project did not produce a profit due to large labor costs and time spent producing the products, it did confirm that there is potential to add profits by adding value to products on the farm. It took 144 hours at $9 per hour ($1,296) to produce $6,301 worth of value-added products. The 781 processed whole chickens from which the value-added products were made were valued at $5 each ($3,905). Many of the birds were seconds and would have been sold at a discount if sold as whole birds. However, the cost of bags and labels, equipment depreciation, and overhead added to the cost of the new products and eliminated any profits during the testing phase.
Neuberger analyzed the labor and cost data for producing the 8 products and determined that a producer could further process 5.42 chickens per hour. Using a rate of $9 per hour for labor, he determined that a producer could add $1.66 worth of value to each bird raised on his farm. Neuberger noted that there are several factors that could alter the results of the project. A location with a high demand for value-added products would allow producers to charge a higher price and make the process more profitable.