Mentoring small fresh produce farmers who want to increase farm revenue by selling value-added products through direct-market channels

Final Report for LNE05-221

Project Type: Research and Education
Funds awarded in 2005: $65,000.00
Projected End Date: 12/31/2007
Matching Non-Federal Funds: $12,400.00
Region: Northeast
State: Delaware
Project Leader:
Anne Fitzgerald
Delaware Department of Agriculture
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Project Information

Summary:

It is no revelation that traditional marketing systems are failing to support family farmers. USDA statistics repot that farm product prices are 35 to 50 percent lower than they were fifteen years ago. Since we are now in a global economy the pressures on small U.S. farmers will continue to increase as more foreign agricultural products reach the marketplace in the United States. Also unprecedented consolidation throughout the food system has led to restrictions and even elimination of market access for small farmers in this country.

This project worked with a small group of farmers through a collaborative mentoring process to help them develop new ways to add value to their products, help them identify and overcome barriers they face, and empower them to sell through all direct market channels available.

Introduction:

This two-year project (April 1, 2005 to March 31, 2007) worked to mentor twelve farmer collaborators helping them to evaluate the value-added possibilities of products they grow or could grow by empowering them to sell their products through all direct market channels available. The project also sought to transfer new skill sets through discussions about direct marketing, business planning, financial planning, and product marketing/sales. These small farmers are all eager to increase their revenues and believe they can be successful if they can learn new skill sets in value-added direct marketing.

Performance Target:

Of 20 farmers engaged in this project, 12 will be using the new added-value direct marketing model within two years and will be selling value-added products through one or more direct channels.

This target was nearly met, since eleven farmers made operational changes that included adding value and direct marleting, but there were changes in the project and several useful lessons learned along the way. In summarizing the results from this project a number of key items stand out:

1. Small farmers are in need of the kind of help one-on-one mentoring can provide. Finding them requires some up-front hard work and trust building that works better with face-to-face recruiting.

2. Mentoring requires a long-term commitment to yield sustainable results and good data. A three-growing-season minimum is required and, ideally. a five-year program would be best.

3. This project stands as a proof that one-on-one mentoring works.

Cooperators

Click linked name(s) to expand
  • Michael Alexander
  • Tim Bell
  • Kathy Brooks
  • Eric Chouri
  • Rick Felker
  • Shannon Freeman
  • John Johnston
  • Ben Lonsk
  • Mark Maloney
  • Ilene Milburn
  • Gary Petitt
  • Wayne Quidas
  • Jacob lovett

Research

Materials and methods:

Our recruitment brochure, mailed to 199 possible farmer candidates at the beginning of the project, was not successful. We abandoned our follow-up telephone campaign to non-respondents for the same reason. We then proceeded with face-to face-interviews and were able to find twenty potential candidates. From this group we were able to select a group of twelve farmers who would commit to the project.

Because of the way our farmer collaborators were geographically dispersed, and because of the difficulties in coordinating dates and times for the kick-off and quarterly meetings, we decided to drop them. Also, it took a much longer time to get our twelve candidates than we originally planned–eight to ten months vs. two to four months.

Research results and discussion:

Twelve farmer collaborators were mentored through one growing season to empower them to take ownership of a new marketing model to increase revenues by selling value-added products through any direct marketing channel available.

These farmer collaborators were from the three states the make up the Delmarva Peninsula. Seven were from Delaware, three were from the eastern shore of Maryland and two were from the eastern shore of Virginia. Eight of them grow traditional products, three grow organic products and one of them wanted to sell a niche product. The outcomes of these farmer collaborators are as follows:

Farmer #1:

This husband and wife farm was only in operation a few years on a half an acre growing watermelons, cantaloupe and peppers. They were locked into a commodity marketing model and were eager to see an increase in revenues for their efforts. They originally thought they should be organic but had a lot of unanswered questions in that area. We spent time discussing the differences and cost components of “Certified Organic,” “Naturally Grown,” and just “Fresh Locally Grown Produce.” They decided they wouldn’t use chemical pesticides or fertilizers, but would market their products as fresh locally grown produce. Our meetings covered niche marketing, market selection, pricing, business planning, and branding. We agreed to start selling to small retail vendors with a backup road side farm stand to sell any excess. There wasn’t enough traffic to support the stand in their area but they found a CSA that was interested in their products. They were quick to learn the new skills and eager to take the lead in defining their future. Although they started on small acreage, they are planning to get a few more acres nearby in 2007. They were able to increase their revenues in 2006 and are excited about their future.

Farmer #2:

This is another husband-and-wife team that was a start-up and committed to growing certified naturally grown produce. The husband had recently been downsized from his career and the decided to launch this new venture. Prior to our first working meeting they had already purchased a 20’X48’ state-of-the-art greenhouse to grow their starts. They didn’t have a written business plan and had not decided what type of business setup they would use for tax purposes. We had a series of discussions about business plans and I provided them with business setup information they could use to decide what type of business structure wanted. Other discussions included market identification and penetration, branding, and marketing/sales. I provided them with a contact for the state organization for restaurants for potential customers.

Their plan included on-farm retail sales as well as an off-farm roadside stand on a high-traffic road. They had some initial success from their launch but soon found that they were undercapitalized and couldn’t sustain their operation full time and meet their financial commitments. In mid-2006 the husband had to return to work in his previous profession, but they were committed to continuing part time to build up the business. They had conceptual proof that their venture could eventually meet their needs.

Farmer #3:

This farmer is a woman in her sixties who grows organic herbs, selling them at her farm and at a local farmers’ market with moderate success to supplement her retirement income. She wanted to increase her revenues. She is very knowledgeable about herbs but needed help in marketing and sales skills. Our meetings included discussions about requirements to market specialized products like herbs because the general public has a lack of understanding about the value and many benefits and uses of herbs. I explained that to build a sustainable customer following the customers need to be educated and cultivated. Other meetings included developing a marketing program that included product information, presentation, pricing, and branding. I began to see a sense of empowerment building in her as the meetings progressed.

During this period she told me how she had personally constructed her small backyard greenhouse and heated it using a compost water heater system she read about in a 1980 Mother Earth News article written by a French farmer. I told her that was a great idea that could help a lot of small growers. I encouraged her to get hooked up with the Delaware State extension service and apply for a SARE Grant to document and perfect a replicable model. Recently she received a SARE Grant for her project. She was also successful at increasing her revenues in 2006.

Farmer #4:

This farmer is an immigrant from India who was moderately successful at selling his fresh produce at local farmers’ markets. He was frustrated because he was the target of much discrimination because of his race, culture and verbal communication skills. He was eager for help and desperately wanted to increase his revenues from his half acre plot.

We spent much time in the early meetings discussing his frustrations about being frozen out of many opportunities. I began coaching him on how he could improve working within the American culture he found himself in. I explained that some of his problems came from his verbal communication. I explained that he thinks in his native language, converts his thoughts to English, but then speaks at the same speed level he uses for his native language. This makes his English difficult for people to understand.

Other meetings focused on business planning, marketing skills and operational issues. I also pointed him toward people and agencies to aid him in his plans to increase farm revenues. He is intelligent and worked very hard in 2005 and 2006. He has increased his revenues, increased his acreage, and established two roadside stands.

Farmer #5:

This farmer gained organic certification for 80 products on his 30-acre farm in August of 2005. He is an intelligent businessman who was looking for information and discussions on marketing of organic products, market identification and penetration, web site setup and use, branding, packaging, and GAP. He was eager to learn as much as possible and wanted to get validation of what he had already done and what he wanted to do. I introduced him to Peter Sloan, head buyer and merchandiser for Food Source. Food Source is a high division of Clements Markets. They sell high quality organic produce in their stores.
This farmer’s operation is in a controlled growth mode and increasing revenues.

Farmer #6:

This young farmer and his sister were in a start-up project as a separate offshoot of their two uncles’ wholesale farm operation. Their dream is to carve out a new career in agriculture which will provide a full-time opportunity in on- and off-farm retail sales within ten years. They wanted to begin by selling their products in a new farmers’ market opening in their area in 2006. They, along with their uncles, participated in the monthly meetings that included discussions on a variety of subjects including Business planning, marketing, market penetration, market planning, market research, and branding. They intended to sell produce grown on the farm along with cut flowers they would also grow. They would do market research with their customers and attempt to brand their operation to ensure growth and sustainability.

They were successful in their first year and are looking toward the future with enthusiasm.

Farmer #7:

This farmer is in his 50s and farms about 50 acres of beets, turnips, parsnips, and a few other miscellaneous crops. He was looking for a way to gear down from his traditional operation and start to grow some specialty products on less acreage while increasing his potential revenues. Early in our meetings we talked about a variety of options in specialty products. He finally settled on growing specialty lettuces for spring mix and full mix salads that he intends to package in small serving sizes. He also decided to grow high-quality asparagus from seed in raised beds, 6’ X 240’. This he also intended to package in small serving sizes. We had discussions in our meetings on niche marketing, market selection, penetration, packaging, and branding.

He launched his lettuce project with one acre planted in 2006 and began selling it to several retail outlets. He targeted his planting of the asparagus, which would take a year or two to begin to yield a crop. His planning was sound and well thought out and his commitment strong for this new venture. I believe he will accomplish his goal to do more with less.

Farmer #8:

This farmer, along with his son, wanted to do a startup one-acre plot of fresh produce and sell it at an on-farm roadside stand. His farm is surrounded by large single-family housing communities. He is on a heavily traveled road. Their long-range plan is to take 20 acres out of leasing at the end of 2007 to expand the operation. Both the father and son are well known in their communities. We had discussions on business planning, marketing, and sales. They decided to build a quaint farm market wagon to display their products which also included a pop-up tent.

They had a good plan and the knowledge and will to see it through. They had a successful launch.

Farmer #9:

This young farmer was in the process of taking over the family farm operation of 400 acres. His father is in his late 50s and has health issues. They grew mainly wheat and corn which they sold in a commodity environment. As prices fell over the years they leased additional acreage (800 acres) but continued having trouble getting ahead of their debt structure. In 2005 they lost their leased acreage and the son decided they needed to do something different. He chose to grow fresh produce and sell it directly to local supermarkets. He still was not profitable. He decided to augment his produce line by purchasing additional products at the terminal market in Philadelphia. He managed to increase his revenues but not his profit. He was overworked and overwhelmed by his situation.

In our first working meeting we talked about the importance of a business plan. He had nothing on paper. He also operated using slips of paper, writing notes on things to get done and commitments, which he often missed. He realized at the end of that meeting he needed to get control of his operation and his life. Over the next couple of meetings I got him set up with a day-timer planner and a farm planning workbook course. We continued on with farm management and planning discussions. He began to feel less stressed and frustrated as he learned new skills. We also worked through real-life scenarios, looking at cost components of things he had done. We analyzed his purchasing of produce from the terminal market for resale and found he was making a wage that was less than half as much as he was paying his Mexican laborers per hour. He realized why his revenues increased but gained no profit from that venture. I encouraged him to do a cost/benefit analysis on every part of his operation. We discussed how he could do more with less and make better decisions on what and how much of what products he could grow to get a certain level of return for his efforts. Although the pendulum began to turn slightly in his favor in 2006, I told him much more needed to be done. I pointed him toward agencies, contacts and training that would help him on an ongoing basis to address things like restructuring debt and crop selection and management.

He is a hardworking person, and if he can continue to make progress he can get his operation under control and in the green.

Farmer #10:

This farmer inherited the family farm and it was sitting mostly fallow for years. He decided he wanted to do a startup operation to grow shitake mushrooms and sell them in retail and wholesale markets. He had done some research and wanted some help and additional information to get started.

In our first few meetings we talked about the growing environment needed to be successful. His first inclination was to resurrect and upgrade an old chicken house on the property to grow the product. Further research and discussions pointed to the need for a readymade turnkey operation to be successful. We agreed that Crop King had the best package available. A medium-sized house that could produce 200 lbs of product per week and would require $30,000 to $40,000 of capital to get into production with a
potential break-even payback of less than 18 months. The farmer said he could handle the required capitalization.

Next we discussed a business plan that Crop King said they would provide, and then a marketing plan. We looked at the demographics of the peninsula and the projected growth rate. We identified the white-tablecloth restaurants in the area. We reviewed what special events we could use to promote the venture such as farmers’ markets, agricultural meetings, etc., to advertise for the on-farm retail component. We reviewed the wholesale market outlets in Baltimore and Philadelphia. All the information indicated good probabilities of a successful launch.

Although he said he felt good about the projects possibilities, he said he wanted to obtain commitments and pricing guarantees from wholesaler outlets before launching. I advised that it would be impossible to get the wholesalers to do that since he had no working operation to show them what he could provide as a grower. He said he understood but he was not convincing in his body language. We discussed there is always risk in new ventures and that you must base your decisions on the quality of your research and information you put together about a venture; there are no guarantees. He said he would pick a launch date and let me know. At our next meeting he said he needed to put this project on hold for a while because he needed to turn his attention to another business, a used car sales operation in which he was co-owner but was run by his wife. He did not launch in 2006.

Farmer #11:

This woman’s husband is a part owner in his family’s farm and orchard business. They have an on-farm retail outlet and do some agritourism. She wanted to do a project that would use some of the product they grew and add value by developing special recipes, process the product into a sauce, package the product, brand it, and sell it in their on-farm retail outlet as well as other retail outlets in the area. Their retail outlet on the farm had a commercial kitchen that they used for baking pies and apple fritters used in conjunction with their agritourism events. She had some ideas about recipes for a fruit sauce that could be used for toppings on a variety of foods. We talked about marketing and branding, and I suggested she develop and test her recipes for quality, taste, and consistency, and in quantities capable of replicating the production levels required. She also needed to begin to work on her business plan, as well as marketing, promotion, and sales.

She began to test some recipes and selected a raspberry that could be used on a variety of foods from ice cream to pork to pancakes. I tested it myself on family and friends who found it to be quite delicious. She started limited marketing in late 2006 and was looking at others recipes to develop.

Farmer #12:

This farmer has a 400-acre wholesale operation growing mainly sweet corn, but also cantaloupes, watermelons, tomatoes, strawberries, peas, squash, cucumbers, and pumpkins. He is intelligent successful and always looking for new ways to generate additional revenues. He also had a desire to get into some retailing on or off the farm.

In our discussions about developing a farm retail business we explored the possibilities of tying in the American Indian history of the farm and surrounding area. He possesses a large collection of artifacts found on the farm and we discussed how we could also work that into some agritourism activities and make it a family event to promote the retail aspect.

Also during our discussions I learned that his early-season watermelon crop produces quite a number of small melons. He said they are as sweet as the full size ones and for the most part are just left in the field to rot. I suggested the personalized melons are all the rage now. I pointed him toward a small local retailer with two outlets who would buy them for $.50 to a $1.00 each. The revenue from the quantities he has wouldn’t be large but it might pay for some equipment maintenance or service. I also learned that his strawberry operation was a u-pick, and he always had a significant amount that just rotted in the field. I pointed him toward a retailer who would be interested in buying them.

His retail operation plans were always in our discussions. We talked about logo development and branding strategies that would help that venture. We talked about the kinds of issues that would need to be addressed for a project like that to become a reality. He started to look at possible off-farm sites for a retail operation in late 2006.

Participation Summary

Education

Educational approach:

Not Applicable

Additional Project Outcomes

Project outcomes:

Impacts of Results/Outcomes

The key element to this project was mentoring to facilitate beneficial changes for our farmer collaborators to increase their revenue opportunity potential from ventures they had in their minds or those that appeared to be a good match for their operations that they might not have identified. Mentoring is a powerful tool to help people explore new ideas in an empowered non-threatening environment of confidence, rather than leaving them to chance. We believe this project is proof of concept that personal mentoring works better than the passive approaches that have been tried for years by ag-based educators. We think that our model can tweaked and improved.

Although this project spanned two years, it only covered one complete growing season. We believe at least two seasons would be the minimum required to maximize results. Mentoring is based upon creating a strong personal relationship with the mentee. Each mentee is unique and the length of time for the bond of trust to strengthen is variable.

We believe this project has opened a window of opportunity for further development and use of the model which we hope will be utilized for the benefit of more small farmers.

Economic Analysis

We did not conduct any economic analysis because the Farmer Collaborators were not agreeable to discuss or commit to providing any financial data. Additionally, this program covered only one growing season and some of the projects did not get fully implemented in time to put any numeric on the level of expenses incurred, increased revenues derived and sustainability over multiple growing seasons.

Farmer Adoption

Eleven of the twelve participants adopted the concept of adding value to their products and believe value-added direct marketing would raise their income and could be implemented in their future operations.

Assessment of Project Approach and Areas of Further Study:

Areas needing additional study

There were farmer collaborators from three states participating in this project. Going forward, each state’s agriculture marketing group could put together local projects similar to this one and partner with any agriculture groups in their states to build a mentoring program that could yield good results and supporting data over a five-year span. The key to successful mentoring is direct, one-on-one contact. The group mentoring programs that have been tried countless times in the past have not been successful.

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.