The Value of Value Added Products from Farm to Farm Market

Project Overview

FNC01-354
Project Type: Farmer/Rancher
Funds awarded in 2001: $4,858.00
Projected End Date: 12/31/2002
Matching Non-Federal Funds: $5,239.00
Region: North Central
State: South Dakota
Project Coordinator:

Annual Reports

Commodities

  • Fruits: melons, apples, grapes, plums, berries (strawberries)
  • Vegetables: garlic, onions, peppers, tomatoes
  • Additional Plants: herbs, native plants, ornamentals
  • Animals: bees

Practices

  • Education and Training: demonstration, farmer to farmer, networking, on-farm/ranch research
  • Farm Business Management: whole farm planning, new enterprise development, budgets/cost and returns, marketing management, feasibility study, agricultural finance, market study, value added
  • Sustainable Communities: social networks, sustainability measures

    Summary:

    [Editors Note: Tables are included in this report that could not be posted online. If you would like see these please contact us through our email: ncrsare@umn.edu or call us at 1-800-529-1342.]

    PROJECT BACKGROUND
    Our 180 acre vegetable farm is located on Little Jim Creek, 15 miles north of Mitchell, SD. We grow a wide range of vegetables, melons, medicinal herbs, culinary herbs and flowers on approximately 30 rotational drip irrigated acres. We market most of our products at our farm market stand in Mitchell. Our planting and harvesting are all done by hand by myself and my husband, Jordan. Our tractors are used minimally for tilling, cultivating and mowing. We have converted the old dairy farm buildings into processing areas for washing and packaging bulk vegetables and have installed a kitchen area for food processing and packaging. It continues to be a work in progress!

    The Enormous Brontosaurus Organic Farm has been certified organic and has been following a sustainable and organic practice since it’s inception in 1990. We are currently certified through USDA-MOSA. Philosophically and spiritually we can not imagine farming through conventional methods.

    PROJECT DESCRIPTION AND RESULTS
    The main goal of our grant was to determine which value added products made from our raw farm materials offered our farm the greatest economic return. Our long term goal is to create a livelihood wholly from our farm operation without having to work off the farm to help sustain it. The purpose of the grant was to try to help identify what items we could produce here on the farm that may help us become more economically independent.

    Process:
    We decided on a variety of value added items that we could produce on the farm that we thought would be salable at our farm market and other retail outlets. From our past experience at Colorado markets, we chose a variety of edible, decorative and cosmetic products that we could produce mostly from products that we grow or wild craft on the farm.

    Our project included cost and income evaluation of 10 value added products through sales from the farm and our farm market. The raw products used in the value added products are current items that we already produce and sell.

    We compared the income from the raw product to the income from a value added product. Example: the income from 3# of garlic sold as compared to the income from 3# of braided garlic sold less then the production expense. Documentation of cost began from the end of point of harvest through processing to direct sale. We compared the costs of producing the items with the customer demand for the product by tracking sales with customer surveys at our markets.

    Value added products were advertised in our monthly newsletter which is mailed to 350 customers and given out at our farm market.

    People:
    Our project would not have been possible if it weren’t for the help of all the folks who assisted us. We involved as many folks as we could in the area who are interested in organics, sustainable farming, environmental issues, health and nutrition.

    We involved other area farmers via our Mitchell farm market. Local farmers we have either bought organic or natural products from or who have sold their products at our market include:
    – Rob and John Koskon, Wood, organic wheat
    – Roger Schmit, Artesian, organic corn
    – Doug and Sharon Brandt, Avon, natural meats, eggs and organic sweet corn
    – John Hart, Ethan, sweet corn
    – Terry Carlson, Canton, Pop corn
    – Mary Hyke, Parkston, Asparagus, strawberries, mulberries, rhubarb, jams and jellies, wreathes, fresh flowers, dried flower arrangements, garlic braids
    – Tom and Joe Hyke, Parkston, chili ristras, birdhouses, bird feeders, gourds, flowers, dried flowers
    – Lyle and Doreen Tollefson, Mt. Vernon, apples, pears, grapes
    – Lee and Janet Hinker, Forestburg, melons, squash and pumpkins
    – Richard Barkman, Artesian, honey
    – Brad Fosland, Oldham, honey
    – Gretchen McClintock-Ames, Woonsocket, herbal soaps, herbal hair products, herbal oils, herbal salves
    – Charlie Johnson, Madison, Wheat
    – The Goosemoblie, Canistota, natural meats
    – Eulyla Foster, Fulton, eggs

    Those involved with our farm tour and SARE proposal include:
    – Chanda Engel, Sanborn Cooperative Extension Agent, Woonsocket, farm tour and tour advertising and headed up the hands on making of organic ice cream and organic butter. A big hit in the 95 degree heat.
    – Dr.Robert Tatina, Professor of Botony and Biology, Dakota Wesleyan University, Mitchell, conducted a native plant walk on the farm
    – Richard Madson, Wildlife Biologist, US Fish and Wildlife Dept. Huron, conducted a wildlife walk on the farm for the farm tour. Also identified areas of wildlife habitat and species identification and general overall encouragement for our farm vision.
    – Gretchen McClintock-Ames, local herbalist, Woonsocket, provided information and expertise on herbal oils for salves and native herbal uses. Conducted native medicinal plant walk on farm.
    – Roger Schmit, local organic grain farmer, Artesian, gave a tour and talk on his nearby organic soybean field.

    The following folks set up vendor tables at our farm and are part of our local organic and sustainable network in the area.
    – Wayne and Mary’s Nutrition Center, Mitchell
    – The Goose Mobil, Canistota
    – D & S Natural Meats, Avon
    – From the Ground Up, Vermillion
    – Northern Plains Sustainable Ag Society, Brookings
    – Sanborn County Extension Service, Woonsocket

    The following agencies provided information for our info tables at the farm tour:
    – USDA Sustainable Agriculture and Research Education (SARE)
    – Appropriate Technology Transfer for Rural Areas (ATTRA)
    – Sanborn County Weed Control
    – Midwest Organic Service Association
    – South Dakota Organic Crop Improvement Association

    The following people helped us with either farm tour logistics, preparations or on site needs:
    – Florence Stechmann, Dr. LeRoy & Janet Krause, Wayne & Mary Puetz, Sandy Butterfield, all of Mitchell
    – Mary, Mark, Tom, Joe, Jeff and Katie Hyke, Parkston
    – Rich Little, Tonya Haigh, Helen Little, Bruce
    – Miles Wheeler, Philip
    – John, Gayle, Howard & Mary Bechen, and Gene & Len Sundstrom of Letcher
    – Francis & Cleo Effling and Roger & Cheryl Schmit of Artesian

    Helping us with the processes of the grant
    – Mary, Tom and Joe Hyke of Parkston. Made all the crafts, birdhouses, bird feeders, dried flower arrangements, flower wreathes, some of the jams and jellies and some of the garlic braids. Also responsible for product layout and presentation at the farm market.
    – Gretchen Ames, local herbalist, Woonsocket. Assisted with local and native herbal knowledge for herbal salves and herbal salve preparations.
    – Mike Randall, marketing consultant, Mitchell. Sage advice on marketing and developmental stages of the product ideas, product packaging and survey ideas.
    – Anne Anderson and Kate Kramer, grant writers and grant administrators for Mitchell Public School System, Mitchell. Compiled the customer survey data and analyzed the results of customer demand and cost effectiveness ofproducing each value added item.
    – Ross Determan, CPA, Mitchell. Provided information needed to setup accounting and financial review for each product along with the expertise of handling the accounting for grant monies.
    – Jordan Dawn, farmer, Letcher, provided the materials and all the raw products used in the study- a monumental task in this drought year.
    – Gail Daw developed the product line, (i.e. chief cook and bottle washer), tracked the costs of each item, kept records and finalized the report.
    – John Deppe, Lower James RC & D, USDA, Mitchell, helped with the proposal strategies and will help with the distribution of the findings of the results of the value added products.
    – Ellyn Eddy, Extension Agency Home Economist, Davison County, Mitchell, advised us on food processing.
    2. (c) Results (Also see attached Unit Cost Information sheet page 7)

    – Jams & Jellies – We produced 6 kinds this year, strawberry, strawberry-rhubarb, plum, hot pepper, crab apple and apple from our own fruits. These are all sweetened with our honey and made with a natural pectin and calcium water. We produced them for $2.02 each, sold them for $3.37 each and sold 256 of 288 produced. We used culled fruits, raw honey and purchase the pectin. We are very pleased with the results of the jams and jellies and will continue next year.

    – Basil Pesto – We grow the basil and garlic used in the pesto, but have to purchase olive oil, cheese, walnuts, salt and pepper. We use top quality basil and use culled garlic. We produced them for $4.15 and sold them for $5.29. We made 120 – 8 oz. packages and sold 96 and have 16 – 8 oz. packages on hand in the freezer for sale during the winter. We feel that this adds a good item to the market with many people coming just for the pesto. We will continue to carry it.

    – Dried Tomato Pesto – We grow the tomatoes, basil and garlic and purchase the olive oil, cheese, walnuts, salt and pepper. We dehydrate culled tomatoes, use culled garlic and top quality basil. We produced them for $4.32 each and sold them for $5.29. We produced 96 – 8 oz. packages and sold 80. We have 12 on hand for sale this winter. We should probably up our price for the dried tomato pesto to keep it in line with the basil pesto. We will continue to carry it.

    – Fresh Salsa – All the salsas are made form culled fruit or vegetables. We made them fr3esh the morning of the market and grew all the ingredients except the lime juice and salt. They varied every week depending upon culls and the cook’s inspiration. We used culls of hot and sweet peppers, onions, garlic, rip red and yellow tomatoes, green tomatoes, fresh herbs, and melons. We produced them for an average of $.96 each and sold them for $2.88 each. We made 80 and sold 69. We will be putting more effort into these next year.

    – Dried Flower Arrangements/Wall Décor/Wreaths – We grown and/or wildcraft and dry the flowers. Some are put into sleeves as simple flower arrangements, some in vases as arrangements, some were created wall décor and others as wreathes. It cost us $247.75 to make 31 pieces that sold from $7.55 to $28.30. We produced enough to sell $349.05 and sold $192.45. In our market these are not good sellers. We will make 4 or 5 for decoration at the market next year as they add to the ambiance, but will not look to them as an income item.

    – Garlic Braids – We grow the garlic and use top quality garlic. We used 225# of garlic to make 50 braids that sold from $12.50 to $15.00. We sold only 138# of the braids for a total of $390.00. It cost us $631.50 to produce all 50 braids. In our market, this is not a good seller, although we will make a few for the decoration of the market, we will not be making them for the market next year.

    – Birdhouses & Bird Feeders – We grow the gourds and either grow or wildcraft the grains. Twine, wire, wooden dowels & lacquer or stains are purchased. We used 22 gourds to create 20 bird houses and 2 feeders. It cost us $151.60 to make them and we sold $141.50. We still have 9 on hand to sell next spring when the early bird may buy them for their nesting birds. A fun project to make into an activity at the farm market or take to a school and let the kids make their own bird houses.

    – Dried Culinary Herbs – We grow all the herbs,basil, parsley, oregano, sage, thyme,marjoram, & rosemary. We dehydrated top quality herbs and then cleaned from the stems and crushed or sifted them. It cost us $114.80 to produce 70 – .05 oz bags. We started out at selling them at $2.00 per bag and sold none. We finally sold at $1.00 per bag. On a small scale it does not pay to do the dried herbs. We will continue to dry for our own home use – we don’t care if we have a few stems in them.

    – Herbal Salves – Herbal Skin Salve. We either grow or wildcraft all of the herbs we use and the beeswax is from our own hives. We purchase the organic olive oil and the organic golden seal powder. We sell in 1 oz and 2 oz. jars. We used nine herbs in the skin salve. It cost us $2.21 per oz or $158.92 total produce. We sold them at $3.63 per 1 oz and $7.22 per 2 oz. container. We sold a total of $198.97 and have 3 1oz and 5-2oz onhand to sell during the winter month or at the early market next year. These have a 2 year shelf life if kept refrigerated so will sell all we can make.

    – Herbal Teas – We grow and wildcraft the herbs. We sold only tea bags with 8 per pack. It cost us $38.08 to make 12 pkgs. Of 8 tea bags each. We thought it tasted great – we labeled it Mellow Morning Tea. It was very time consuming to dry and clean the herbs, then to package it into the tea bags. We marketed it at $2.00 per pkg. and sold none. All the more for us to drink this winter. It’s made from mint and lemon balm – try it! We will not market these at this market next year.

    – Flavored Vinegars – We did not attempt this one. The only items we produce ourselves for this would be the herbs, peppers or garlic that would be put into the vinegar. We would have to buy the vinegar and the jars. The jars were very hard to find in small quantities and when found in small quantities they were very expensive. If anyone inquires, have them go see the Vinegar Man in Roswell, SD.

    – Dried Tomatoes – We dehydrated and sold in 4 oz. pkgs. We used culled tomatoes and dehydrated them. It cost us $2.73 per 4oz pkg. to produce. We made them as we had time and produced 25 pkgs., sold 24 at $2.88 each. It’s not profitable at this small level, but we rather enjoyed doing these as it was either use them or feed them to the chickens and this time of the year the chickens have plenty to eat.

    2. (d) Discussion
    Items that bear promise for the future were those which require very little labor to produce and for which there is respectable customer demand. Those are both Pestos, the Fresh Salsas and the Jams and Jellies. Items that we feel hold promises in cost to price potential are the Dried Tomatoes and Herbal Salves. The value added items that are decorative in nature proved to be non-profitable for us because of the labor and production cost and/or because of customer demand.

    Change in marketing, packaging and presentation could change the outcome of any of these items. Considerations that we will be looking into to increase our value added sales are:
    – South Dakota Made Labeling
    – Package herbs in a variety pack with recipes
    – Package teas in larger bags for sun tea
    – Increase size of, duration of summer market
    – Vary layout of market to increase customer flow past value added areas
    – Investigate retail outlets for value added products and winter sales
    – Utilize a website
    – Sell value added products at local community events

    -When we look at our sales we take into consideration our rural market area with its lower income, items that would draw a top dollar in a more urban environment may not even sell here. We know that fresh sells and food sells in this market niche.
    – It is wise to know your market before you put your money and time into producing products. We are wiser through the grant experience.

    IV. Project Impacts
    See enclosed form

    V. Outreach
    We had our farm tour on July 14, 2002. We noted in the People portion of Project Description and Results, that we had about 30 people and 12 agencies involved in the tour and had between 150 and 170 people from the area attend. We advertised through our customer/community newsletter which directly reaches 350 folks and through the other agencies that we involved. We also posted flyers in the surrounding communities. Results will be filtered through the Lower James RC & D, Division of the US Ag Dept., our local extension agencies and will be available at the 2003 Northern Plains Sustainable Ag Conference.

    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.