Potential Markets for the Prairie's Edge Sustainable Woods Cooperative

Project Overview

FNC01-357
Project Type: Farmer/Rancher
Funds awarded in 2001: $15,000.00
Projected End Date: 12/31/2003
Matching Non-Federal Funds: $9,029.29
Region: North Central
State: Iowa
Project Coordinator:

Annual Reports

Commodities

  • Additional Plants: trees, ornamentals

Practices

  • Farm Business Management: feasibility study, market study

    Summary:

    PROJECT BACKGROUND
    At the time of the grant award, Prairie’s Edge Sustainable Woods Cooperative (PESWC) had 20 members who had each paid a $100 membership fee. Five members served on a steering committee to guide the cooperative through its initial stages of development and organization. The cooperative was incorporated in January 2001.

    PROJECT DESCRIPTION AND RESULTS
    This producer grant was awarded in June 2001 for PESWC for the purpose of:
    1) Marketing – feasibility market study
    2) Outreach – membership brochure and newsletter, and
    3) Administration – mailings for member outreach, postage, limited office supplies

    The objectives of this project were to 1) assist the cooperative in determining baseline information regarding feasibility of two alternative marketing strategies: a cooperative log marketing pool and a local wood system designed to produce high quality hardwoods and to a lesser extent, softwoods for use by local builders, carpenters, woodworkers and the public and 2) develop outreach and education efforts.

    Process:
    In order to develop the feasibility market study, the coop considered various contractors it determined were eligible to conduct such a study. The selected contractor was the Community Forestry Resource Center (CFRC), a non-profit arm of the Institute for Agriculture and Trade Policy, in Minneapolis, Minnesota. CFRC’s mission is to promote responsible forest management by encouraging the long term health and prosperity of small, privately owned woodlots, their owners, and their communities. CFRC carries out this mission by providing organizational development, technical assistance and forest management and certification.

    After meeting with the Prairie’s Edge Board, CFRC submitted a proposal to approach the development of a full marketing and business plan for the coop in three phases. The first phase, the feasibility study, had four deliverables:
    1) Identify and map forest types, acreages, species, log volumes (including seasonal fluctuations) and log grades from the potential, targeted geographic range of the cooperative based on current and potential cooperative membership and board direction.
    2) Identify and describe the current forest product marketing systems and capacities within the geographical reach of the cooperative. This will include identifying and detailing forestry services, logging services, log buyers, and primary and secondary wood product manufacturers.
    3) Based on the above information, identify and describe in detail a number of alternative strategies for marketing logs from the cooperative focusing on two primary alternatives, a log sort yard or processing and marketing higher value products.
    4) Present the strengths, weaknesses, opportunities and risks of each alternative to the coop board. This report will include information on potential capital investments required, other costs and benefits, and other factors to consider such as direct competition and possible collaboration with existing businesses for value adding internally and/or working with existing infrastructure.

    The Feasibility Study was completed in February 2002 and provided to the cooperative. A final copy of the feasibility study was provided to the SARE Producer Grant Program in the year one report.

    Phase two, the Marketing Study, was begun in March 2002 with the following deliverables:
    1) Timber cruises on all or a sample of member’s lands to determine a more precise estimate of the species, grades, and potential products from the current land base of the cooperative. Inventory information already completed by the DNR or consulting foresters will be used where available.
    2) Determine optimal marketing system based on inventory information on member’s land and information from the first phase feasibility study, and identify specific product markets that are available for the inventory of the cooperative.
    3) Identify ecological services the cooperative could provide, including a cost and benefit analysis.
    4) Determine the costs and benefits of the optimal system to include the amount of capital investment required, time frames and the requirements for board and membership involvement.
    5) Develop a “decision tree” structure for the marketing and business planning phases. This structure will indicate the volume and/or economic targets that will act as signals for when the coop has the capacity to develop additional services or operations and the associated costs and benefits.

    The marketing study was completed in August 2002 and provided to the cooperative. A final copy of the marketing study was provided to the SARE producer grant program in the year one report.

    People:
    Five members of the coop’s initial steering committee and a member of the marketing committee provided guidance and feedback for development of the feasibility study. These included: Scot Christiansen, Chair; Mike Natvig; Francis Blake; Steve Gearhart; Wayne Wangsness and Kevin Sand

    The seven members of the first Board of Directors provided guidance and feedback for development of the marketing study. These included: Kevin Sand, President; Scot Christiansen; Mike Natvig; Wayne Wangsness; Phil Specht; Garth Frable and Greg Koether.

    At all stages input was sought from the coop’s general membership which was steadily increasing during this time period.

    Iowa Department of Natural Resources’ District Foresters, Bruce Blair and Gary Beyer, provided professional forestry services and advice throughout the development of the plans and progression of the coop.

    Teresa Hay McMahon, also of the Iowa DNR, provided organizational and developmental assistance to the coop.

    Teresa Steffens of the Resource Conservation and Development for Northeast Iowa provided administrative support primarily consisting of copying and mailing to PESWC members without email capabilities.

    Results:
    As of November 2003, Prairie’s Edge Sustainable Woods Cooperative has 79 members, representing approximately 9800 acres. This makes Prairie’s Edge one of the largest sustainable forestry coops in the upper Midwest.

    Building on the information gathered through the feasibility and marketing studies, the coop worked with the Resource Conservation and Development for the Northeast Iowa (RC&D) which applied for and was awarded an USDA Rural Business Enterprise Grant (RBEG) to provide funds for development of a business plan for the coop. A draft business plan has been prepared and remaining grant funds were used to hire a part-time temporary coordinator for the coop. The primary duties of the coordinator are to implement the business plan by matching member demand for forest services and education with supply by area forest professionals, coordinate forest inventories of members, and direct the cooperative’s marketing efforts and develop value added opportunities and strategies as appropriate.

    Continuing to build on the groundwork laid by the SARE grant, the cooperative applied for a USDA Value Added Development Grant in October 2003 to implement the coop’s business plan.

    Discussion:
    The SARE grant provided Prairie’s Edge the assistance necessary to get past the initial hurdles that face any new enterprise: how to determine what options are most feasible and how the coop might best proceed. Developing this baseline information helped the coop avoid the mistakes made by similar cooperatives that of incurring debt before an adequate cash flow could be created.

    The business plan ultimately developed for the coop settled on a service/education model that will facilitate member’s economic returns through sustainable management of their timber. This coordination service enables individual landowners, no matter the amount of their timber, to obtain the best timber management services possible and know that the practices are implemented in an environmentally sound manner, no matter any potential economic or education constraints on their part.

    While the cooperative has taken a different approach than that originally envisioned in the SARE grant application, it is nonetheless achieving both environmental and social impacts. Coop members are scheduled to be re-surveyed in the upcoming months.

    OUTREACH
    Prairie’s Edge used a variety of methods to tell Northeast Iowans about the cooperative, educational sessions and the first two annual meetings.

    In January 2002, 1300 copies of a tri-fold membership brochure were printed. The brochure included the coop’s mission statement, goals and a coupon to join the coop or request more information. 1098 of the brochures were mailed to Northeast Iowa timber landowners along with a cover letter announcing the cooperative’s first annual meeting and inviting attendance. Two hundred copies of the brochure were distributed to various offices and individuals in Northeast Iowa with whom timber owners might have contact, including district foresters, Natural Resource Conservation Service (NRCS) offices, and the Resource Conservation and Development for Northeast Iowa office.

    400 copies of an updated brochure were printed in June 2002. Almost 200 of these brochures were distributed to Northeast Iowa area realtors to provide to new owners of timbered land. The remaining were used for on going member solicitation.

    Both versions of this brochure were provided to the SARE producer grant program in the year one report.

    400 copies of the cooperative’s first quarterly four page newsletter, The Edge, were printed in July 2002. The Edge included a member profile, general articles of interest to timber landowners, news from other sustainable forestry cooperatives around the region and information regarding the development of Prairie’s Edge Sustainable Woods Cooperative. In addition to being mailed to Prairie’s Edge members, copies of the newsletter were provided to area newspapers with a press release, used for a target mailing and related promotional activities.

    350 copies of The Edge were printed and distributed in the fall of 2002. In addition to being mailed to the members of the cooperative, approximately 200 copies were mailed to a targeted portion of the mailings list of Northeast Iowa timber landowners. These complimentary copies included a solicitation to join this new cooperative effort.

    400 copies of The Edge were printed and mailed in both the winter and the spring of 2003. The spring 2003 issue was six pages. In each instance, the coop again mailed extra copies to targeted portions of the Northeast Iowa timber landowner’s mailing list.

    While eight newsletters were originally planned with the SARE grant, actual cost of the newsletter resulted in just four issues being printed. The coop is currently reworking the newsletter to reduce printing costs.

    The coop instituted a policy of conducting member education sessions immediately following all board meetings. Since April 2002, board meetings are held the first Saturday of every other month. To date, educational sessions have provided training on timber cruising, invasive species identification, seed collection for sale and propagation, chainsaw safety and maintenance, sawmill demonstration, timber mapping with Global Positioning Satellites, horse logging, woodland management for wildlife, woodland plants, propagation of native prairie seeds and plants, invasive species identification and control, winter tree and shrub identification.

    In January 2003, a sidebar article regarding Prairie’s Edge and the upcoming Annual Meeting accompanied a newspaper article profiling the new home of two coop members. This sidebar was featured in three Northeast Iowa newspaper.

    In August 2003, the Oneota Food Coop of Decorah, Iowa published an article on Prairie’s Edge in their newsletter, received by 1800 members.

    Renewing the Countryside – Iowa is a collection of 38 stories about innovative Iowans revitalizing rural communities. Published in October 2003 in cooperation with the Leopold Center for Sustainable Agriculture, the Iowa Natural Heritage Foundation, the Iowa Rural Development Council and the Institute for Agriculture and Trade Policy, the book includes a story about Prairie’s Edge Sustainable Woods Cooperative. The cooperative is also featured in the 2004 Renewing the Countryside – Iowa calendar.

    Periodic mailings are also provided to members regarding upcoming coop sponsored events and educational opportunities.

    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.