Operation and Management of the Nebraska Based Small Farms Cooperative

Project Overview

FNC01-368
Project Type: Farmer/Rancher
Funds awarded in 2001: $12,750.00
Projected End Date: 12/31/2005
Region: North Central
State: Nebraska
Project Coordinator:

Annual Reports

Commodities

  • Agronomic: corn, grass (misc. perennial), hay
  • Animals: bovine, poultry, goats, sheep, swine
  • Animal Products: dairy

Practices

  • Animal Production: feed/forage, feed formulation, feed rations, preventive practices, stockpiled forages
  • Education and Training: extension, farmer to farmer, focus group, mentoring, networking, on-farm/ranch research
  • Farm Business Management: cooperatives, budgets/cost and returns, marketing management, agricultural finance, market study, value added, whole farm planning
  • Pest Management: sanitation
  • Production Systems: holistic management
  • Sustainable Communities: new business opportunities, social networks, sustainability measures

    Summary:

    BACKGROUND
    Small Farms Cooperative (SFC) organized as a marketing group in 1999. Beginning with a core group of nine Nebraska farmers/ranchers, the cooperative has grown to have a membership of 29 farmer/ranchers located in the eastern half of the state. The cooperative ahs a waiting list of approximately 150 other producers across the entire state, and expects to be adding more members as the natural market requires.

    In 2000, Small Farms Cooperative was awarded a SARE producer grant of $15,000 to complete organizational requirements; attend the Anaheim Natural Food Show; develop approved labels for products being marketed by SFC; and hire a number of professionals to guide the cooperative during the organizational/beginning phase of its history. The major expense for which this final reimbursement is being requested was attendance at the October, 2005 Anuga Foods Expo in Cologne, Germany. Attendees at the Food Expo shared information and experiences learned at the Anuga Food Show in Cologne with other members of Small Farms Cooperative as the educational component of the grant.

    OBJECTIVE
    Following the award of this 2001 SARE grant of $15,000, the cooperative initially focused on entry in the retail natural meat market in Lincoln and Omaha, with work started on entry into the international beef market. The current focus is a two pronged marketing effort: Component 1 is marketing Non-Hormone Treated Cattle (NHTC) beef in the European Union (EU) and Component 2 is marketing pre-cooked beef entrees in the United States. To date, Small Farms Cooperative has expended all $15,000 of the FNC01-368 grant funds.

    Members of the cooperative have invested $15,000 as cash match to the SARE funds. Each of the 29 members of Small Farms Cooperative paid a $1,000 fee to become a member. The $15,000 matching amount came form three primary income streams: a portion of the $29,000 in membership fees; a portion from the sale of meat products; and a portion from state grant funds (LB1348). The matching funds for sampling in Omaha were in-kind match (time devoted to sampling products at several stores for several months), otherwise the funds were matched in cash.

    SARE funds (and SFC matching funds) were expended in the following manner:

    Marketing Representative – Lorrie Orman SARE FUNDS-$500 MATCHING-$500
    Marketing Representative – Larry Knopik SARE FUNDS-$2,750 MATCHING-$2,750
    Legal Fees – Larry Bird, Attorney SARE FUNDS-$100 MATCHING-$100
    Financial Advice – William R. Lewis, CPA SARE FUNDS-$750 MATCHING-$750
    Consultants – Prime Label; Website SARE FUNDS-$250 MATCHING-$250
    Sampling in Omaha – Travel, Samples SARE FUNDS-$3,150 MATCHING-$3,150
    Sandra Davis – MDI Marketing SARE FUNDS-$5,250 MATCHING-$5,250
    Anuga Food Show – Cologne, Germany SARE FUNDS-$2,250 MATCHING-$14,361
    Total SARE FUNDS-$15,000 TOTAL MATCHING-$27,111

    During the time in which the 2001 SARE funds were expended, marketing representatives for Small Farms Cooperative made contact with several HyVee stores in the Omaha area. Negotiations began with a number of the HyVee markets to sell beef, pork and bison products. HyVee asked that members of the cooperative be present at several stores in order to promote SFC products, which are marketed under the Nebraska Natural Products (NNP) brand. SFC found that sales were good on days where sampling was done, but dropped off significantly when no sampling was being done. Members have since decided to look elsewhere for their market. Several thousand dollars in product was moved through a number of HyVee stores in the Omaha area.

    While marketing beef, pork and bison through the Omaha area HyVee stores, the Board of Directors for Small Farms Cooperative began exploring a new business relationship with a marketing firm based in Oklahoma. The relationship has blossomed over the three years into a partnership. SFC has introduced a line of unique meat products in the domestic US market – pre-cooked, “heat and eat” natural meat entrees. Four entrees are in the US market at this time: meat loaf with Red Sauce, Pot Roast in Au Jus, Beef Tips in Gravy, and BBQ Brisket. There are currently no other such “heat and eat” meat products (using certified natural animals) on the market in the United States. Copies of the product “sleeves” (packaging/labeling) have been included with this report. Additionally, SFC is selling beef to countries of the EU despite the ban on beef imports from the US to the EU following the BSE case in Washington State. SFC has concentrated on beef and will follow the beef with pork, poultry, lamb and bison.

    RESULTS
    At this time, members of SFC are and have been (for about three years) at the forefront of the NHTC program (Non-Hormone Treated Cattle). The NHTC program is required for any American farmer or rancher trying to sell beef to the EU. Six of the 26 NHTC certified cattle operations in the United States belong to Small Farms Cooperative. Beef raised by SFC member continues to be sold in the EU despite the ban on US beef following the BSE case in Washington State.

    SFC has developed a comprehensive program of documentation for its beef, and the documentation and production standards are considered by EU buyers and governments to be worthy of an exemption to the ban on US beef.

    The marketing department is also working on introducing at least one pork and poultry meat entrée before the end of 2006 (depending upon funds available for product development).

    At least initially, SFC will be the only company in the USA who can make two important claims on meat products marketed domestically under its new brand: “certified natural processes” (both in production and processing) and “source verified.”

    The past year has seen sales skyrocket for members of SFC. Beef sales alone have dramatically since 2002. Unfortunately, development costs and marketing costs have eaten up most of the income realized from these beef sales (the income after paying producers a premium and paying for the processing). Additionally, the individual cost to producers, who are all committed to sustainable agriculture, to become NHTC certified is also significant, but members believe that the cost of certification is worth the guarantee of a minimum price for their cattle.

    Like the organizational SARE grant of 2000, the SARE funds provided by the 2001 Producer Grant Program have been a vital part in the development of Small Farms Cooperative and its markets. Since being organized in 1999, SFC has serviced a number of different markets, and has now settled on a market that involves both national and international sales. It is important to note that SFC has continued to sell beef products to the European Union despite the ban on imports of US beef following the BSE case in Washington State.

    SFC has also had inquires from a number of Asian buyers about selling beef to Asian countries that have also banned US beef. Supply, however, is limited at this time, so no contracts have been signed with and Asian buyers. The environmentally sound, sustainable and humane standards, along with the documentation requirements established by SFC, the DU and SUDA, has impressed European buyers and European governments so the SFC beef is still being sold in nations of the EU. The standards are also attractive to Asian buyers who have inquired about possibly purchasing SFC beef.

    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.