Commercial Small-Scale Food Processing in New York: Value-Adding For Sustainable Agriculture

Commercial Small-Scale Food Processing in New York: Value-Adding For Sustainable Agriculture

Summary

Summary
This project addresses small-scale food processing as a way to enhance farm income, rural employment, and quality of life. It particularly address issues of policy that can enhance or impede the success of small-scale processing.

Results from previous years suggest that successful small-scale processors have developed unique, attractive products in which quality is consistently high; they then market these products creatively by having sound business plans and correct assessments of potential markets. Barriers to success tend to be similar to the barriers to other small businesses. One of the important results of the project has been the development of a statewide food processors’ organization to promote networking and cooperation.

Objectives
* Establish a database to track farmer and other entrepreneurs starting and operating small-scale food processing businesses in New York.

* Develop a classification of small-scale food processing businesses according to whether they are farm-based or non-farm-based, and according to their assistance needs, income or sales classes, and types of products.

* Identify the keys to success in small-scale food processing and also barriers.

* Develop a series of case studies of processors.

* Assess the need for and interest in at trade association in New York or the Northeast specifically for small-scale processors. Facilitate the establishment of such and organization, if justified.

* Develop strategies that communities can use to promote local development through small-scale food processing.

* Organize a statewide conference for small-scale food processors to meet with food scientists, policy makers, and regulators to discuss issues and concerns and share information.

* Develop policy recommendations.

Background
This project evolved from a collaboration between the New York Sustainable Agriculture Working Group and the Cornell Farming Alternatives Program. Since inception, the project has developed a database of over 5,000 farmers and entrepreneurs starting and operating small-scale processing operations and extensive networking, mentoring, case-study, and support efforts have taken shape.

Behind these efforts is an awareness that increasing on-farm efficiency may not be enough to sustain farms and farming communities in the Northeast. Small-scale processing, specifically on-farm processing, allows farmers to capture more profit and meet consumer demand for local and specialty products; the model may also encourage job creation, and tends to keep local dollars circulating in the community.

Key Findings
During the final year of this project, we have developed case studies of several processors and food processing incubators (FPIs). FPIs, which support small processors, are proliferating throughout the U.S. Some of these case studies are published in a publication, “Value-Adding for Sustainability: A Guidebook for Cooperative Extension Agents and Other Agricultural Specialists” co-authored with the Pennsylvania Association for Sustainable Agriculture.

Technical training, product development facilities, advertising, product distribution, supply purchases, educating consumers, and obtaining group insurance all continued. There has also been a new initiative in which we formed an association with regional chapters, each representing one tourist region of New York State and capitalizing on the already established identity of that region. We currently have six regional chapters initiated and contacts for four additional regional chapters. Work on this objective will continue after the project ends because the organization is considering how it could be extended to the rest of the Northeastern states. In addition, we collaborated with the Pennsylvania Association for Sustainable Agriculture (PASA) on developing resources to help potential processors and participated for two years in workshops at their annual meeting. The first workshop was for current and potential processors and the second was for extension agents and other agricultural professionals.

Operational Recommendations
Since we began working on this project, we have learned much about small-scale food processing and what makes such enterprises successful. The successful entrepreneurs often are those who develop attractive and unique products, devote attention to detail, produce consistently high quality products, market these products creatively, correctly assess potential markets, have sound business plans, and have good matches between their own characteristics and their businesses. We have also identified eight key needs faced by many potential and operating small-scale food processors.

* Most need processing technical support for developing procedures for processing high-quality, safe foods.

* Most need regulatory technical support to help them get the needed permits and to comply with regulations.

* Most need facilities technical support to assist them in finding, installing, operating, and maintaining processing equipment.

* Most need assistance in finding sources of new or used equipment appropriate for their scale at prices realistic for small and startup enterprises.

* Most need marketing technical support for developing markets, selling their products at a good price, and creating distinctive and attractive product identities through packaging and advertising.

* Most need financial support for funding startup, expansion, or modernization, either in loans or in assistance in getting funds from commercial sources.

* Most need labor technical support, including assistance in managing business and family life and many need assistance in managing and motivating employees.

* Many need business support, including assistance on operating a business, getting liability insurance, trademarking, maintaining financial records, and meeting tax and labor regulatory requirements.

To meet the needs of small-scale food processors and to harness the potential small-scale food processing in supporting agriculture in the Northeast, we have developed a set of policy recommendations for local, state, and the federal governments. These recommendations include adding staff in the state department of agriculture to support farm-based and small-scale enterprises, expanding of technical support, improving the availability of grants and revolving loan funds, creating an insurance pool for small processors, integrating technical support with business support, linking small-scale processing with tourism, funding research on scale-appropriate marketing and other topics pertinent to the food processing business, and building regional labels and identities while avoiding excessive bureaucratic interference.

Other policy recommendations include making small-scale food processing an explicit element in sustainable economic development programs, developing and printing an annual directory of small-scale processors, and making health insurance affordable for families and employees in small business. At the federal level, the creation of new intellectual and other property institutions would give small businesses more protection against the appropriation of their ideas and, at the state or federal level, the creation of program pattered after the SARE farmer grants that offer support to innovators.

While we make many recommendations about what should be done to promote small-scale food processing, we also have considered what to avoid. In developing policies and implementing them, we need particular efforts to avoid promoting wholesale adoption of a few particular types of enterprises (such as making holiday wreaths, for example) that can lead to overproduction and subsequent severe decline in profitability among the producing firms. The products produced should reflect the skills and interests of the producers and the local ecological and historical niches of the producers’ communities. We should also avoid focusing on economic efficiency as the main criterion for evaluating local entrepreneurial efforts — most products could be produced elsewhere more cheaply. But this production would not yield for the local community a host of benefits, including giving people access to local specialties, involving local people in meaningful work that integrates them into their communities and gives them stakes in their communities, and generating secondary economic activity for supporting other businesses.

Reported December 1998. 1999 Northeast Region SARE/ACE Report.

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