Cooperating for Success: Building a Value-added Marketing Cooperative for Advantage in the Marketplace

Appalachian Spring Cooperative’s SARE Producer Grant Project, “Cooperating for Success: Building a Value-added Marketing Cooperative for Advantage in the Marketplace”, was intended to demonstrate:

• That genuine and sustainable alternatives exist to the traditional agricultural enterprises in the region (i.e., tobacco, cattle, and hay);
• That value-added processing of raw agricultural inputs can maximize the potential returns from alternative crops;
• That effective cooperative marketing of our members’ value-added food products can maximize the profitability and sustainability of small farm operations; and
• That wealth and self-sufficiency can be created in the local and regional economies by marketing members’ products in regional and extra-regional markets not easily or normally accessible to small-scale producers acting independently.

To achieve these goals, the project focused on developing the sales and marketing component of the Cooperative’s operation in four distinct areas:

• Market research to gage the demand for the types of value-added foods most likely to be manufactured in the project region;
• Sales/marketing staff to develop and implement marketing initiatives;
• Development of sales and promotional materials (catalog, brochures, order forms, product displays, point-of-sale mat’ls, product labels, presentations, website content, etc.) to support the implementation of the sales and marketing program; and
• Data collection and evaluation of program activities and marketing initiatives.

Year One

Concurrent with the hiring of a ¾ time staffer for Sales & Marketing, the Cooperative initiated a program of market research and analysis with the active involvement of project collaborators Rob Holland & Shasta Hubbs, UT Agricultural Development Center; Wes Snyder, Proprietor, Big S Farms; John Humphreys, Marketer, Appalachian Harvest Organics; and Steve Hodges, Executive Director, Jubilee Project, Inc. While emphasizing the challenges facing start-up specialty foods businesses (over 90% of such start-ups fail), project collaborators and Coop staff were able to develop a clear picture of growing demand and a growing market for high-quality, specialty, natural & organic, regional, and locally-made foods. The market for organic foods, for example, has been growing steadily for over a dozen years at an annual rate of 15-20%.

Further, it was clear that the types of products either currently in the Cooperative’s catalog or in development by member-producers fit well with this growing market for specialty foods and that many, if not most, could be manufactured utilizing locally-grown specialty crops which could, in turn, offer alternatives to the traditional (and decreasingly lucrative) mix of tobacco, cattle and hay in this region. Indeed, at the time of this summary report, the Cooperative catalog of approximately 50 specialty foods and personal care products includes items composed wholly or in part of locally-grown: tomatoes, peppers, garlic, herbs, onions, strawberries, blackberries, squash, pumpkins, raspberries, cucumbers, and honey.

As staff and collaborators examined the marketplace and promising avenues for market access, the Cooperative’s sales & marketing staffer, Wes Moore, with assistance from other Coop staff, began implementation of an interim marketing plan focused on developing a network of local and regional retailers for volume sales of members’ products; an annual schedule of retail events, staffed by Coop members and staff; and an Internet marketing initiative via the Cooperative’s website at www.apspringcoop.com.

This interim marketing strategy was, in turn, supported by the design and production of professional quality sales and promotional materials; by the development of an outstanding website capable of serving both members and customers in the development and sales of members’ specialty foods and personal care products; and by the initiation of data collection to gage the success of marketing activities and to demonstrate the potential of value-added manufacture to increase income from production of specialty crops.

Year Two

A review of project activities, output, and progress toward achieving stated goals was conducted by Cooperative staff and collaborators at the conclusion of year one. This review, in concert with a review of then-current market conditions, in turn informed a revision of short-term strategies employed in year one and served as the foundation for a medium and long-term marketing plan for the Cooperative, implemented in year two and formulated to guide the Cooperative’s growth as a value-added marketing association from its first efforts at local and regional sales to a profitable and sustainable distributor of specialty food products to national (and even international) markets via an integrated wholesale, retail and Internet sales & marketing program.

At the commencement of this project the Cooperative consisted of eight members, two producers and four products in its catalog, no paid staff, and one wholesale customer. At the time of this report, the Cooperative has 68 members, 15 active producers, 48 products in its catalog, four paid staff, 35 wholesale customers, a retail sales program, an annual holiday gift basket program, and a solid Internet marketing program. Revenue to member/producers in 2004 was approximately $25,000. Six new producers and 15 new products are expected to be added to the Coop’s catalog in the first quarter of 2005, a period during which we also expect to make our first shipments to extra-regional, large-volume buyers who are seen as key to opening up markets for those Coop members looking to grow. We ascribe our growth and (qualified) success to-date in no small measure to the plan and resources provided by this project and their focus on developing the Cooperative’s marketing capabilities.

Finally, we hold it to be part of the Cooperative’s mission to create models for economic development which can apply to disadvantaged communities in other places. To that end, Coop staff and collaborators frequently present the results of our work to local, regional, and national audiences, including Southern SAWG, The Community Food Security Coalition, US Department of Commerce, the Association for Enterprise Opportunity, and the Appalachian Regional Commission, among others. Moreover, resources from this and other Cooperative grant projects have contributed to the production of educational publications and presentations promoting the role of value-added production in the creation of opportunities for rural and farm-based economic development. These include a web/cdrom-based “Growers Guide to Value-Added Agricultural Production”, a distilled, tri-fold brochure version of the “Growers Guide”, and several PowerPoint presentations for Coop members, the general public, agricultural producers, and professional audiences. Our work and our members have also been the subjects of numerous radio, television, newspaper and periodical features during the term of this project.