Final Report for FW00-317
This project successfully demonstrated that producing a value-added product increases a farm family’s income, while still allowing them to stay on their farm, maintain their business and experience increased revenue from a product they already grow. The Roundys experienced a $5.54 per pound increase in revenue over their traditional sales methods. They have plotted a “road map” for future farm entrepreneurs to follow that should improve their experiences.
Grain producers in the Northern Utah area face low prices for their traditionally sold grain crops. Developing a value-added grain product to sell from the farm would help producers earn enough to support the operation and a family. The product will provide a higher net return on the crop grown. As they scale up to meet customer demands, they will purchase wheat from other grain growers at prices above those offered by elevator buyers.
The Roundy family members are third-generation full-time farmers who have worked their owned and leased land in northern Utah for over 80 years. They own 1900 acres and lease another 1500. The owners of the leased land are starting to sell off pieces bit by bit because the price they can get for development property is higher than the price they get leasing it for wheat ground. They currently grow wheat, barley, safflower and alfalfa hay in rotation. The only market for their wheat is to store it in an elevator or keep it in bins and wait to sell when the markets are highest. Selling a value-added product may stabilize their farm income and provide a good living for them, their children and grandchildren.
Phase one of the project included the following: market analysis; determination of regulations; identifying of labeling and packaging requirements; nutrient testing of product to include on label; refining of logo, print material, brochures and forms, and a search for start-up funding.
If the results from phase one indicate only slight to moderate acceptance of the product, the project will not be continued. However, if the marketing analysis phase is successful, the project will move into phase two for product production. This second phase includes development or renting of an appropriate facility; purchasing product inputs, salt, spices, oil, and bacon bits, and print materials for labels, brochures, and business cards; making the product; and travel to food trade shows and regional chambers of commerce to market and sell the product. Sales will start slow, but will grow as the product becomes more familiar to customers.
The result of this project will be measured in bags of “The Original Cache Junction Family Popped Wheat Snack” in stores, markets, gift baskets and in consumer’s homes. To date, 900 pounds of popped wheat have been sold. The Roundys developed Christmas and gift packaging and the sales are increasing. The gross revenues that would have been generated by traditional sales of the wheat are $3.50/bushel or $52.50 for 900 pounds. Gross revenues generated by “adding value” to the wheat are $0.35/oz. or $5,040 for the 900 pounds. This is an increased income of $5.54 per pound of product.
The production methods for this project are not unique, so process or product patents cannot be secured. Instead of farm tours or showing off the production process, we have developed information sheets with generic value-added product information. To help other farmers bridge the gap from raw commodity producer to value-added manufacturer, we have established a non-profit corporation, Sustainable Agriculture Association of the Bear River Area (SAABRA), which will focus on promoting sustainable agriculture and wise resource use. This association will produce and distribute informational and educational materials to aid farm entrepreneurs developing value-added products. SAABRA has secured grant funds and is developing a shared-use commercial kitchen so the Roundy’s and others like them can rent space during their start-up years instead of having to pay the full capitalization costs of a regulation kitchen. Additionally, the Roundys have presented their experiences at a Small Farms workshop in Idaho, and have sent their product and story to the national SARE meeting in Washington, DC, and a Small Farm workshop that will be presented in Ogden in January. The Roundys will contribute to a mini booklet that SAABRA will produce that will help new farmers become food entrepreneurs.
POTENTIAL BENEFITS OR IMPACTS ON AGRICULTURE
We have successfully demonstrated that a farm family can begin a business featuring a value-added farm product. The grant money from Western SARE helped buffer the risk involved in this startup venture. We have plotted a “road map” for future farm entrepreneurs to follow that should make their experiences easier. While this project involved only one family, they were able to stay on their farm, maintain this business in their extra time and experience increased revenue from a product they already grow.
FARMER ADOPTION AND DIRECT IMPACT
For farmers interested in adopting our methods, we have already laid much of the groundwork. Many farmers in Northern Utah will be changing hands in the near future and it is a challenge to generate livable incomes for more than one family. Farm entrepreneurship is a plausible solution to that problem.
REACTIONS FROM FARMERS AND RANCHERS
Though comments from other farmers have not been collected formally, many have expressed appreciation for the product the Roundys make and are interested in a similar venture of their own, but an equal number feel that starting an additional business is just too much of a time commitment. If they expand their operations, they would like to receive the extra income from sales of their raw product to the Roundys.
WHAT WOULD YOU DO DIFFERENT?
The value-added sector of agriculture is often promoted as a way to add income to a farm, but not many of the details are available. Many of these business concepts are far outside of a farm families experience base, and a good advisor is very important. The creation of SAABRA will benefit producers in this area because all the technical information on these activities will be available through this one organization.