Creating a value chain system for local and regional farm products

Final Report for LS03-155

Project Type: Research and Education
Funds awarded in 2003: $19,310.00
Projected End Date: 12/31/2006
Region: Southern
State: South Carolina
Principal Investigator:
Dr. Geoff Zehnder
Clemson University
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Project Information

Abstract:

This planning project will address the lack of sufficient lucrative market opportunities for small scale, family-owned farms. A “Value Chain” concept will be used to organize a network of committed individuals and organizations in the Carolinas (Local Food Task Force) who will investigate and implement many different approaches to exploit existing market opportunities and to create new markets. The focus of this project will be on season-extension commodities, specifically organically-grown broccoli, greens and lettuces. The Task Force will develop a 3-year research and education plan to establish a local food market database, create linkages between farmers and the community, conduct model marketing programs, and to increase consumer interest in and demand for locally grown products. The planning project will culminate in a full proposal to be submitted to Southern SARE Research & Education Program.

Project Objectives:

Specific Objectives are:
1)Organize a network or infrastructure of committed individuals and organizations in the Carolinas (Local Food Task Force) who can investigate and implement many different approaches to exploit existing market opportunities and to create new markets for small, family-owned farming operations
2)Develop a research and education plan for a three year pilot project to expand and develop new markets for cool season vegetables. The plan will include the following: a) procedures to fill gaps in research and education related to production and marketing, b) provisions to establish linkages between farmers and the community including development of a local food market database accessible to farmers and consumers, c) procedures to conduct model marketing programs, and d) plans to increase consumer interest in and demand for locally grown products.
3)Develop a full proposal to implement the Project to the Southern SARE Research and Education Program to support the project.

Introduction:

South Carolina and other southern states are experiencing unprecedented rates in growth of acreage converted from farmland into developed land status. From 1992 to 1997, 30.2% of South Carolina farm and forestland was converted for development (London and Hill 2000). This ranks South Carolina 6th in the nation among states in this category, and the rate of development and loss of farmland is expected to continue. Concurrent with development has been an increase in land values and property tax rates making it more difficult for farmers to maintain profitable enterprises. Reductions in markets and profits for conventional row crops have contributed to this dramatic loss of farmland as growers decide to sell their farms. Farmers on small acreage farms typical of North and South Carolina can no longer survive economically solely by growing and marketing conventional, low-value row crops. Thus, farmers are interested in alternative niche market crops where the per-acre profit potential is high. SARE PDP-supported projects are underway in North and South Carolina to enhance the proficiency of extension agents, NRCS and DNR staff, and other agricultural educators and professionals through training in areas related to production of organic and other value-added commodities. These projects have or will provide educational opportunities for farmers to develop or increase skills in the areas of production. However, farmers cannot risk expansion into new production areas without readily available markets. In many cases farmers are not able to find adequate local market outlets for their products, and although most farmers lack marketing expertise, the ability to find or develop markets is essential to maintain farm profits.
Surveys have indicated that farmers are often not sure how to contact or locate potential markets such as farmers’ markets or other local wholesale or retail markets. Thus farmers often plan their production schemes hoping to find markets, rather than identifying lucrative markets in advance. Farmers need an easily accessible information source to help them establish buyer contacts and to identify “hot” markets. This would enable them to better plan their production schemes to maximize their profits. Conversely, networks that link consumers in the community with local farmers could further increase market opportunities. Private and public establishments in the community (e.g., hospitals, schools, universities, restaurants, city markets) often have a demand for locally-grown food products but have no means to establish contacts with local farmers.
We also believe that completely new markets for locally-grown products can be developed based on increasing public awareness of the importance of locally-grown, fresh farm products for proper nutrition (particularly for children), concerns over pesticide residues on food commodities, and a loss of the connection with our agricultural heritage. A recent survey indicated that consumers are highly supportive of locally grown foods, and that they purchase locally grown for superior taste, quality, nutrition, and because they want to support local family farms (Anonymous 2001). The survey results indicated that lucrative market opportunities exist for local producers who can meet consumer needs related to the above attributes. Another recent survey in South Carolina indicated that a majority of consumers are concerned about the health effects of pesticide residues on produce, and that if given a choice, they would prefer to purchase produce grown using organic farming practices compared with conventionally grown produce (Zehnder et al. 2002). The results further showed that consumers would be willing to pay more (5-25%) for organic produce than for conventionally grown produce, even if the organic produce had slight cosmetic blemishes. Consumer interest in and demand for these products would increase if community outreach programs were developed to further promote the benefits of organic and other locally grown food products.
Consumers on the one hand may wish to support local farms but may have to limit the quantity of products purchased because they lack information and expertise on food preservation (e.g., canning, freezing, drying, pickling, jam and jelly making, etc.). Consumer education programs in food preservation and food safety would create greater demand for local farm products (e.g., consumers would purchase bushel basket quantities of produce and could preserve what was not immediately consumed).
The NC and SC Departments of Agriculture conduct marketing programs to promote farm products grown in their states, but because of their scale they do not have special programs with a focus on small, family farms or other programs that establish linkages between farmers and the community. These efforts are being made in some areas by public (e.g., Chatham County [NC] Extension; http://www.ces.ncsu.edu/chatham/ag/SustAg/index.html) and private (e.g., the Appalachian Sustainable Agriculture Project; http://www.asapconnections.org) organizations, but efforts are not coordinated among the various groups.

Cooperators

Click linked name(s) to expand
  • Emile DeFelice
  • Tony Kleese

Research

Materials and methods:

The “Value Chain” concept will be used in the planning project to recruit the necessary individuals and organizations and to develop the project plan. The value chain model as it is used in industry is a string of companies working together to satisfy market demands. The value chain typically consists of one or a few primary value (product or service) suppliers and many other suppliers that add on to the value that is ultimately presented to the buying public. We will use this model to develop the necessary market networks and linkages.
A Local Food Task Force will be organized and will serve as an overall advisory group. The Task Force will have a broad charge to investigate and develop strategies to increase market opportunities and to develop new markets. This group will consist of representatives from key public and private organizations (no more than 6-8 individuals) who are able to look at the “big picture” and can identify and secure needed resources and establish linkages with other consumer or supplier groups. Representative organizations on the Task Force will include:
•1862 and 1890 Land Grant Universities in North and South Carolina
•Carolina Farm Stewardship Association
•South Carolina Sustainable Universities Initiative
•Appalachian Sustainable Agriculture Project
•North and South Carolina Departments of Agriculture Marketing Divisions

Representatives from other key organizations may be added if deemed necessary. The Task Force will meet early in 2003 to identify strategies (research and education) to exploit existing market opportunities and to create new markets. Potential areas of targeted research, education and outreach could include (to be identified by group consensus):
•Research on novel marketing strategies such as web-based marketing, agri-tainment and agri-education
•Analytical research to quantify the nutritional benefits of fresh and organic produce
•Outreach programs to promote the benefits of local, fresh and organic products
•Organize Master Food Preserver classes
•Develop model Community Kitchen programs
•Develop model “farm to school” or “farm to hospital” programs
•Develop a comprehensive local food market database for farmers and consumers

Members of the Task Force will contact leaders of successful local food marketing initiatives in other states and may make site visits. The Task Force will also identify individuals and organizations in the Carolinas to participate as “value-added” links in the value chain (e.g., grower organizations and cooperatives, farm market organizations, community organizations, representatives from local schools and hospitals, cooperative extension, etc.). A series of meetings with these groups will be organized to determine how they may contribute and their value to the system. Once all the essential “links” are in place the Task Force will develop a draft plan for implementation of a three-year project to exploit current market opportunities and to create new markets. Representatives of the value added groups will provide input into the plan. Once the plan is written and reviewed the Task Force will develop a full proposal to the Southern SARE Research & Education Program for submission in 2003. The proposal may also be appropriate for submission to the Kellogg Foundation.

Research results and discussion:

A meeting of the project collaborators was held in July 2003 in Rock Hill, SC. The purpose of the meeting was to review project objectives and goals, identify individuals and organizations that need to be involved, and to develop a project plan outline and timeline. It was decided that the commodity focus for the project be on organically-grown, season-extension vegetables including broccoli, lettuce, greens and other “in-demand” products. Other items/activities identified for development were:
•Hiring a project coordinator/marketing advisor to oversee production, marketing and distribution
•Development of a network database to link growers and retailers
•Point of origin labeling for the products
•Regional segmentation for production and distribution (coast, piedmont and mountains)
•Incentives for retailers to buy local
•Grower surveys on feasibility
•Develop “model rotations” for year-round production; scheduling is critical
•Variety trial research in all three regions
•Identify three growers in each region to participate in on-farm research who become mentors to other growers
•Develop regional crop production guides for model rotations
•Research economics of transition to organic production
•Identify and characterize customer base
•Consumer education on benefits of local and organic produce

A survey of growers was conducted in association with the Carolina Farm Stewardship Association Sustainable Agriculture Conference in November, 2003. The purpose of the survey was to collect information on farm and grower demographics, commonly used marketing strategies and ideas for improvement, and their interest in participating in the development of a more coordinated production/marketing system. Approximately 50 growers provided complete responses. Survey results indicated that the majority of farmers were not satisfied with their current marketing programs. Most of these indicated that they wanted to explore new and more profitable market opportunities but did not have the time or expertise to do so. A majority (75%) of respondents indicated that they would be interested in expanding production to include more “in-demand” crops if market opportunities were created. These growers also indicated that they would be interested in participating in a coordinated, year round, marketing program, and that they would be willing to pay a nominal check-off fee to participate. Based on survey results and strong interest indicated by local retailers (e.g., Garner’s and Earthfare markets), a decision was made to proceed with development of a grant proposal to support the project (for submission to Southern SARE). Emile DeFelice, an organic grower from Columbia, South Carolina, was hired on a contract basis to develop the grant proposal for submission in June 2004. A no-cost extension has been requested to complete development of the proposal and to collect information on the development of coordinated, regional production and marketing efforts in other states.

Participation Summary

Project Outcomes

Project outcomes:

This planning project has resulted in the formation of a group of individuals and organizations in the Carolinas committed to the creation of new and more lucrative market opportunities for locally grown farm products. Survey results have indicated that vegetable growers in North and South Carolina have a strong interest in exploring new market opportunities, and are willing to participate in a regional effort to coordinate the production, marketing and distribution of season-extension vegetables. A proposal to implement the full project was submitted to the Southern SARE Research and Education Program, however the proposal was not approved for funding.

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.