Evaluating Agroforestry Enterprise Opportunities for Specialty Forest Products: Decision Tools for Producers

Final Report for LNC01-197

Project Type: Research and Education
Funds awarded in 2001: $99,308.00
Projected End Date: 12/31/2004
Matching Federal Funds: $170,000.00
Matching Non-Federal Funds: $86,306.00
Region: North Central
State: Nebraska
Project Coordinator:
Scott Josiah
Nebraska Forest Service
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Project Information

Summary:

Gathering, organizing, and extending a large amount of specialty forest product (SFP) cultivar performance, product, and financial and market data and information has considerably improved producer decision making for on-farm SFP enterprise opportunities. This information, transferred to producers through comprehensive outreach and training efforts and a web based Market Information System, has substantially increased producer adoption of more diverse, profitable, and sustainable agricultural systems that integrate annual and woody perennial crops in Nebraska and the Midwest. Impacts include enhancing the capacity of natural resource agencies and non-profits to support producer assessment of SFP enterprises, and the organization of a specialty woody crop processing and marketing cooperative in Nebraska.

Introduction:

Chronically low commodity prices and rising production costs are forcing producers throughout the Great Plains and Midwest to search for alternatives to current crops and farming systems to improve farm profitability and system sustainability. Many producers have shown considerable interest in producing “alternative crops” (including specialty forest products for the niche food, medicinal, decorative floral and handicraft markets), but the barriers to adopting these crops (and their associated integrated cropping systems) are substantial.

Perhaps the greatest barrier to large-scale adoption of these alternatives is the critical lack of specific, believable, science-based information that producers need to 1) decide whether a particular crop fits with their enterprise, 2) grow the material, and 3) market the products. Easy access to information that does exist is extremely limited, usually located in obscure or hard-to-locate publications, and fairly general in nature. Unfortunately, many alternative crops are often promoted using inaccurate or questionable production, yield, local suitability, or market data, making producers reluctant to enter into new ventures. Indeed, many alternative crops are promoted most heavily by those who stand to profit most from their adoption (e.g., nurseries). Further exacerbating the problem, most producers that currently grow “alternative crops” (especially SFPs) are very reluctant to share their production and market expertise, for fear of assisting potential competitors. Little of this rich source of “indigenous knowledge” is published or available in any form.

This paucity of information limits many potentially profitable and environmentally beneficial opportunities to use woody plants that produce commercially valuable products in more sustainable farming systems (agroforestry). The result is that natural resource professionals are reluctant to promote SFPs without science-based data, and/or producers are unwilling to adopt the practices because they are unable to evaluate the financial benefits and risks.

This project addresses these barriers by consolidating knowledge gained in past and current SARE and other initiatives, and creating science-based, producer-accessible tools and databases intended to assist producers in identifying and customizing SFP enterprises with the most potential. In fact, this project provides SARE with a means to consolidate and transfer agroforestry and specialty forest product technologies and information gained in a number of other SARE-funded projects, and make them widely available to producers in the North Central region and nationwide.

Literature Review

Research conducted on the financial and economic benefits of agroforestry systems that produce specialty forest products is limited, particularly when products are produced in intentional systems. Research on agroforestry system economics relevant to the Great Plains and Midwest is largely limited to the economic benefits of windbreaks (Kort and Brandle, 1991a and 1991b, Brandle et al, 1992), the value of agroforestry plantings for hunting (Cable and Cook 1990), and black walnut alleycropping systems (Kurtz and Garrett 1990, Kurtz et al 1991).

Smith’s (1929) classic study on a “permanent agriculture” was one of the first to describe the general economic potential of producing special forest products on marginal cropland. Douglas et al (1980) updated and expanded on Smith’s ideas, describing potential tree/crop assemblages in various agricultural systems worldwide. A number of publications provide broad reviews of the special forest products industry, usually in the Pacific Northwest, and generally focus on “wildcrafting” (harvesting from natural populations in existing forests) (Jones 1995, Schnepf 1994, Thomas 1993, Wills and Lipsey 1999, Mater Engineering 1993 and 1994, Hill 1990, and Western Forestry and Conservation Association 1998). Several efforts (Mater Engineering 1993 and 1994) attempt to document the markets for a variety of special forest products, and include some information on prices. Little work has been done on production costs or yields, particularly under cultivated conditions, or on the development of optimization models for integrated systems (Scherr 1991).

Little is publicly known of the production functions of most of these species or varieties as they perform in agroforestry applications. Production data from some of these species that are currently being produced in commercial plantations are considered proprietary information and are closely held by private companies. These data are not generally available to researchers, landowners, or potential investors.

Of the few papers in the literature reporting production data, Miller et al (1994) reported from Indiana that beginning two growing seasons after planting it was possible to selectively harvest 84 marketable pussy willow branches (>60cm) per plant, with a density of 1631 plants/ha. Hausher (1987) in a survey of the saskatoon industry in Alberta Canada, reported saskatoon yields of 500 lbs/acre the first year to a average of 2000 lbs/acre (ranging from 1650 to 6000 lbs/acre) on bushes seven years and older. Davis (1995) lists nut yields from a number of nut and fruit species, bearing ages, and prices obtained for pick-your-own operations, although the source of this information is not reported. Various financial analyses of black walnut alleycropping systems in Missouri have determined internal rates of return ranging from 4-11%, with nut revenues being particularly important (Kurtz et al 1991, Garrett et al 1994, Kurtz et al 1996, Kurtz et al 1984). However, even this relatively intensely studied system lacks detailed information on actual walnut production under managed conditions (Garrett and Harper 1999). And nut production data from trees derived from wild open pollinated seed can vary enormously between trees and from year to year (Jones et al 1995).
The Native Fruit Development program at the University of Saskatchewan develops and commercializes the saskatoon serviceberry and other native fruit-bearing woody species for the production of high value berry and fruit crops. It is an excellent example of the powerful role a university can play to stimulate the development of new agroforestry-based industries. The goal of this program is to support the diversification and health of agricultural economies and operations, and to expand the food processing industry. These cultivars are now being adopted on a large scale by producers, who are using them in windbreak systems across the province (St. Pierre 1992). Kort (1994) reports that over the past 20 years, the culture of saskatoons in Saskatchewan has grown from simply harvesting wild berries to the cultivation of 250,000 pounds/year (in 1994), and the industry is expanding.

Published financial evaluations of utilizing these species are limited but intriguing. Miller et al (1994), in a study of the use of species for the production of fruit, nuts and decorative florals in a designed riparian buffer, reported very high estimated gross financial returns (up to $13,590/acre) based on some production data. Robles-Diaz-de-Leon (1997) conducted a similar appraisal for the production of specialty forest products in riparian zones, reporting theoretical gross returns of $60,000/ha/year. The financial analysis methods to determine these returns were not reported. Evaluations of fruit crops such as saskatoons in Alberta showed returns of 8.5% if production exceeds 3,000 lbs./acre/year (Hausher, 1987). St. Pierre (1992) reports projected income ranges from the production of specialty fruit crops in Saskatchewan of Can$3,600/ha to Can$67,500/ha, with relatively high development costs (Can$3,600/ha to Can$12,000/ha). Williams (1991) conducted a financial analysis of a 10 ha saskatoon plantation in Saskatchewan, where 33,000 pounds of fruit were produced, providing a net income of nearly Can$25,000. Kort (1994) estimates that chokecherry plantations would require less management than do saskatoons, with higher yields and lower prices.

Additional information on SFPs is scattered throughout the gray literature, including conference proceedings, internal reports, etc. (Josiah 1999, Streed in press, Streed 2001, Vance 1995, Saskatchewan Agriculture and Food, Alberta Agriculture, Food and Rural Development A and B, newsletters of the Northern Nut Grower Associations and of various state chapters, and SARE project reports). Unpublished cultivar production, yield and fruit quality data are also available for saskatoons, chokecherry, pincherry. highbush cranberry and black currants from the Native Fruit Development Center in Saskatoon, Canada (R. St. Pierre, personal communication 2000). Hazelnut cultivar and yield information, though sketchy and limited, is available. For example, Farris (2000) summarized 25 years of breeding work on hybrid hazels in Michigan in his book “The Hazel Tree,” though this work does not include specific information on yields by cultivar. Pellett et al (1998) examined production and yield data from certain lines of hybrid hazels developed by Badgersett Farms. Ricks and Cely (1991) and the UNL Food Processing Center (2000) examined the Midwestern and national markets for hazelnuts.

A method to consolidate the massive amounts of SFP production, economic, market, and price information producers need into a usable format was developed by Koppell (1995). This Market Information System (MIS) was locally developed in the Philippines for non-timber forest products, and was found to be useful by many farmers. It shows considerable potential to be adapted to Midwestern U.S. crops and conditions, and to be useful to Midwest producers. Given recent advances in electronic information technologies, the system can be continually updated, enhanced, and made available to all producers via use of the World Wide Web.

Project Objectives:

1) Assemble existing SFP production, price and market data, and collect additional data as needed.
2) Develop a web-based Financial Analysis Tool that producers can use to assess the returns from on-farm agroforestry investments using plants that produce SFPs.
3) Develop a web-based SFP Marketing Information System (MIS) that will provide producers with comprehensive information on SFP product characteristics, distribution channels, prices, markets, and financial, botanical and production information, by cultivar.
4) Integrate the data collected in (1) into both the Financial Analysis and MIS Tools.
5) Transfer these information and decision assistance tools to producers and resource professionals through workshops, a newly developed SFP website that will list the Financial Analysis Tool, the MIS and their user guides, as well as other SFP publications.

Cooperators

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  • Dean Current

Research

Materials and methods:

1. Assemble Existing SFP Botanical, Production, Price, and Market data

To characterize the markets for SFPs, we used five regional or national SFP market assessments that focus on hazelnuts, other tree nuts, small fruits, and woody decorative florals conducted by the University of Nebraska-Lincoln. We also consulted with businesses and producers with market experience to further understand and characterize these markets. We collected market, price, and labor data from the harvest and sale of specialty woody crops from three field trials in Nebraska.

2. Develop a Web-Based SFP Enterprise Financial Analysis Tool

Building on a financial analysis model used to evaluate the whole farm financial performance of hybrid poplar timberbelts (Josiah et al 1998), and a model developed by CATIE in Costa Rica, the project team developed a producer-friendly financial analysis model that determines financial returns from linear woody plantings that produce SFPs. The model can be tailored specifically to the unique situation of each producer. Pre-programmed yields based on empirical experience, as well as costs, prices, and yields are incorporated into the model. Default values can be overruled if the user believes they have more accurate information for their particular situation.

3. Develop a web-based SFP Marketing Information System (MIS)

We designed a Microsoft Access-based SFP Market Information System that is integrated into a specialty forest product website, and that can be periodically updated with ease. Detailed SFP information collected in this project flowed into the MIS. The MIS can be found at http://snr.unl.edu/forestry/.

4. Transfer these information and decision assistance tools to producers and resource professionals

We use several approaches to transfer this mass of information to producers and resource professionals. We conducted numerous workshops for resource professionals: staff from Cooperative Extension, RCandDs, SWCDs, Nebraska Natural Resource Districts, NRCS, rural development agencies, state Departments of Agriculture and Natural Resources.

All producers have access to the website, and thus the Financial Analysis Tool, the MIS, and links to many SFP publications.

To inform potential users of the newly available website, containing the financial analysis tool, MIS and publications, we worked with other organizations, including the National Arbor Day Foundation, USDA National Agroforestry Center, the Association For Temperate Agroforestry, ATTRA (Appropriate Technology Transfer for Rural Areas), AFSIC (Alternative Farming System Information Center), the Northern Nut Grower Association, and various state and federal extension organizations, to publicize the existence and location of these systems and tools.

Research results and discussion:

Objective 1. Assemble existing SFP production, price, and market data, and collect additional data.

We collected a large amount of specialty forest product (SFP) cultivar performance, product information, financial, and market data and information. These data have been gleaned from six major field trials in Nebraska, and from interviewing over 60 individual producers in 11 states. Three years of woody floral production and sales data from three sites were acquired. Building on strong relationships with wholesale floral distributors and new growers developed during this project, we then arranged with these producers to process and market the stems. We helped by providing them with all processing, market and contact information we had. These producers are currently organizing a woody floral growers association to collectively process and market florals.

We evaluated the production rates of elderberry fruit for two growing seasons, and flowers from 2003. The fruit was tested in various formulations of ice cream by the UNL Food Processing Center. We collected and provided Nebraska wineries with Corneliancherry dogwood fruit to test for production of fruit wines (a common product in Europe).

Several other studies occurred as a result of this project. We are in the final stages of producing a scientific paper on deer browse and rub preference of 30 trees and shrubs that produce woody crops. A scientist from the School of Natural Resources used one of the hazelnut trials to conduct a rigorous assessment of water use requirements for eight cultivars of hybrid hazelnuts, providing insights into irrigation requirements. A UNL graduate student is currently conducting a study of optimal harvest times (based on color intensity) for woody florals, as well as optimal storage regimes – two questions frequently asked by producers. The UNL Dept. of Biological Systems Engineering developed a hybrid hazelnut husking machine, a major and critically important development in mechanization. Finally, building on this project’s accomplishments and momentum, the University of Nebraska and USDA funded a study to assess the major hybrid hazelnut field trial at the Arbor Day Farm in Nebraska City, Nebraska, gathering parentage, morphology, production and quality data on over 5,000 plants. These data are being integrated into our web-based database. These efforts have identified approximately 10 superior cultivars of hybrid hazelnuts that produce heavy yields of reasonably high quality nuts.

Objective 2. Develop a web-based Financial Analysis Tool that producers can use to assess the returns from on-farm agroforestry investments using plants that produce SFPs.

The project team developed a producer-friendly financial analysis model that determines financial returns from linear plantings of woody plants that produce SFPs. The financial analysis can be tailored specifically to the unique characteristics of each producer’s situation. Yield, cost, market and price data are incorporated into the model.

Objective 3. Develop a web-based SFP Marketing Information System (MIS) that will provide producers with comprehensive information on SFP product characteristics, distribution channels, prices, markets, and financial, botanical and production information, by cultivar.

Project partners developed a Microsoft Access database that forms the SFP Marketing Information System (MIS). The MIS includes product characteristics, markets, financial, botanical, and cultivation information by species or cultivar. This systematic approach organizes, analyzes, and communicates via the web the massive amounts of information pertaining to a wide range of SFPs in a clear, concise and usable manner. With the MIS in place, we continue to enter new data as available (post project). Data gaps still exist within the database. However, future efforts to collect and acquire data and information will be added to the database in the future, making it increasingly useful over time to producers interested in exploring enterprise opportunities with specialty woody crops. The MIS is integrated into the Forestry Extension Website at UNL, and can be found (after 9/30/04) at http://snr.unl.edu/forestry/.

Objective 4. Integrate the data collected in (1) into both the Financial Analysis and MIS Tools.

As stated in 2 and 3, we inputted much existing data into the MIS, as well as continue to collect new production and market data, particularly with woody florals. The financial analysis tool defaults to pre-selected values, but can be adapted to local situations.

Objective 5. Transfer these information and decision assistance tools to producers and resource professionals through workshops, a newly developed SFP website that will list the Financial Analysis Tool, the MIS and their user guides, as well as other SFP publications.

We used a comprehensive approach to communicate SFP knowledge and information generated by this project to producers and natural resource professionals, sometimes leveraging the assets of other projects to maximize impacts. Because of the nature of both partners’ positions – that of straddling extension and research – we have been particularly effective in transferring these technologies. Thousands of copies of four full-color publications on the production and marketing of specialty products that were developed under a separate SARE-funded project headed by the National Arbor Day Foundation have been distributed to over 40 states and 21 countries. The National Agroforestry Center has provided financial support to continue the work started by this SARE project through the end of 2004 to maintain and monitor field trials and to collect and analyze data. Attendees to a 2002 SARE-funded train-the trainer-workshop on specialty forest products conducted 33 workshops across 12 states, reaching 905 people with the latest information on producing and marketing SFPs. Two NRCS Deputy Directors highlighted the “Productive Conservation” concept in a 2-page article in their nationally distributed newsletter NRCS Technology (August 29, 2003).

Three new extension publications are in press or nearly so as of September 2004: 1) Woody Floral Production, 2) Wholesale Sources of Woody Plant Material That Produce Specialty Crops, and 3) Retail Sources of Woody Plant Material That Produce Specialty Crops. We also developed a training manual, a resource CD, and four full-color publications (Association of Natural Resource Extension Professionals National Award Winners) on the production and marketing of specialty products, and several scientific papers (see Publications section).

Several Nebraska-based institutional developments have occurred in large part due to this project. Woody floral growers in Nebraska and nearby states are currently assessing organizational models to jointly process and market woody florals. And in 2003, nut growers, with technical assistance from this project’s PI, organized Heartland Nuts n’ More, a Nebraska-based specialty woody crop processing and marketing cooperative for walnuts, pecans and other specialty forest products. This cooperative provides a key link in the processing/marketing chain that is critical for continued SFP enterprise development.

We also maintained and significantly enlarged our specialty forest product listserve for the Midwest, which is used to disseminate salient and timely information on SFPs. We conducted 45 workshops on specialty products to 1,600 people in four states. We organized and held four hands-on field days for 130 producers in September and December 2002 and 2003, training them in the field on plant and product characteristics, harvesting, processing and marketing procedures for woody florals. Based on invited presentations and feedback from other states, this SFP program is now recognized as a major and important effort region wide. Further, due to project-supported efforts and our unique approach of “Productive Conservation,” the project PI participated in deliberations at the 2003 World Forestry Congress, integrating the productive conservation concept into a major Congress Declaration on non-wood forest products.

Research conclusions:

This project has had a considerable impact in several ways:

• Using producer adoption as the ultimate gauge of a technology’s value and sustainability, this project has stimulated at least 25 producers (that we know of) to adopt SFPs as a supplemental source of income. This project is enhancing the profitability, biodiversity and sustainability of these producers’ farming systems, exceeding original expectations listed in the project Workplan.

• By training natural resource professionals in the production, processing, markets, and marketing of SFPs, and by collaborating with many agencies and non-profits, we have created a large multiplier effect that considerably expanded the impacts of this particular project far beyond the immediate funding period and the two original partner organizations. In essence, we have created and enhanced the long-term capacity of state and federal agencies and non-profits to better support producers with their SFP-related technology and information needs. Highlighting the productive conservation concept by NRCS Deputy Directors is an encouraging development. We have also expanded this concept to tribal lands in North Dakota, South Dakota and Nebraska via educational programming through another project. Several tribes have or will be installing their own SFP trials in the coming year (2004-2005).

• By participating in the marketplace and selling our production, we have acquired an “inside” view of how the market works, and have collected detailed information essential to producer decision making, which is not easily or commonly available. By making this available on the MIS website, producers have a much better information base upon which they can make their on-farm enterprise decisions.

• Building on the production and market analyses conducted in this project, a processing and marketing cooperative for a range of SFPs, primarily nuts and woody florals has been legally established, dramatically enhancing the ability of local SFP producers to collectively pool, process and market their production.

Economic Analysis

This project did not conduct economic analyses, though it did collect considerable financial data, which is integrated into the MIS. It did however develop a financial analysis model that producers can use to conduct their own analyses based on their own local conditions.

Farmer Adoption

Given the number of presentations, workshops, field days and other extension efforts, it is difficult to determine exactly the level of adoption of woody crop production as a result of this project. However, we have identified at least 25 producers who have installed plantings of woody florals for commercial production.

The key to stimulating landowner adoption of this technology was the team’s provision of a comprehensive package that directly addressed all major landowner concerns. This package contained practical, straightforward research-based information on species/cultivar selection, sources and prices of planting stock, production, harvesting, processing and packaging guidelines, labor requirements, and real-world cost, price and market information. Adoption did not occur until we provided producers with all of this information.

Participation Summary

Educational & Outreach Activities

Participation Summary

Education/outreach description:

Published Peer-Reviewed Research Reports:

Gold, M., Godsey, L. and S.J. Josiah. 2004. Markets and Marketing Strategies for Agroforestry Specialty Products in North America. J. Agroforestry Systems. 61: 371-382. Also in: Nair PKR, Rao MR, and Buck LE (eds) New Vistas in Agroforestry: A Compendium for the 1st World Congress of Agroforestry. 2004. Klewer, Dordrecht, The Netherlands. Pages 271-382.

Josiah, S.J., Brott, H. and J. Brandle. 2004. Producing Woody Floral Products in an Alleycropping System in Nebraska. J. of HortTechology, April-June, 14(2):

Josiah, S.J. St. Pierre, R., Brott, H. and J. Brandle. 2004. Productive Conservation: Diversifying Farm Enterprises by Producing Specialty Woody Products in Agroforestry Systems. Journal of Sustainable Agriculture. 23(3):93-108.

Research Papers under development:

Hygnstrom, S.E., Josiah S.J., Gilsdorf, J.A., Virchow D.R., Kumar, A., Eskridge, K., Brandle, J.A., K.C., VerCauteren, White-tailed Deer Browsing and Rubbing Preferences for Trees and Shrubs that Produce Specialty Products. J. HortTechnology.

Proceedings Papers

Josiah, S.J., Brott, H. and P. Skelton. 2003. Market-Driven Conservation: Diversifying Farm Enterprises by Producing Woody Florals in Agroforestry Systems In: Proceedings of the 8th Biennial Conference on North American Agroforestry, June, 2003. Portland OR.

Extension Publications

Josiah S.J. and C. Meyer. 2002. Woody floral informational brochure for retail florists. 2 p.

Josiah S.J. and C. Meyer. 2002. Woody floral info brochure for wholesale florists. 2 p.

Josiah, S.J. 2002. Developing the hazelnut as an alternate crop for sustainable agroforestry systems. Northern Nut Growers 92nd Annual Report. pages 1-2.

Josiah, SJ 2001. Productive Conservation: Growing Specialty Forest Products in Agroforestry Plantings. 4 pp. (Winner, 2002 Gold Award, Association of Natural Resource Extension Professionals (ANREP))

Josiah, SJ 2001. Marketing Specialty Forest Products. 4 pp. (Winner, 2002 Gold Award,ANREP)

Josiah, SJ and J. Lackey. 2001. Edible Landscapes for People and Wildlife. 4 pp.
(Winner, 2002 Gold Award ANREP)

Pulsipher, G and SJ Josiah. 2001. Hybrid Hazelnuts: An Agroforestry Opportunity. 4 pp. Peer Reviewed. (Winner, 2002 Gold Award ANREP)

Josiah, S.J. 2001. Specialty Forest Product Production and Marketing – A Training Manual. UNL Extension Forestry and the National Arbor Day Foundation.

Electronic Media

Josiah, S.J. and C. Meyer. 2002. Specialty Woody Crops Workshop CD. Compilation of Specialty Woody crop powerpoint presentations, image archive and workshop aids for trainers.

Josiah, S.J., Erdkamp, B., Mesarch, M., and C. Meyer 2004. Specialty Forest Product Website. http://snr.unl.edu/forestry/

Extension Publications in Press as of 9/15/04

Meyer, C., Josiah S.J. In Press. Producing Woody Florals. University of Nebraska Nebguide.

Erdkamp, B., Brott, H. and S.J. Josiah. In Press. Wholesale Sources of Woody Plant Material that Produce Specialty Products. University of Nebraska NebFact.

Erdkamp, B., Brott, H. and S.J. Josiah. In Press. Retail Sources of Woody Plant Material that Produce Specialty Products. University of Nebraska NebFact.

Project Outcomes

Recommendations:

Areas needing additional study

While this project made very substantial gains in the development of viable on-farm enterprises based on alternative specialty woody crops, much work still needs to be done.

Building on these gains, we now need to accelerate the large-scale, profitable integration of these woody crops into small-to-medium sized farm enterprises. These crops have the potential to generate substantial economic, social and environmental benefits to Midwestern farm families and rural communities.

We need to: 1) increase woody crop visibility and demonstrated profitability; 2) improve profitability and create stronger producer-consumer links; 3) increase profitability; 4) identify superior cultivars and develop the technology to mass produce them; 5) improve producer access to woody crop information; and 6) increase production and marketing knowledge.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.