Creating a Farmers-Owned Value-Added Production/Processing Facility for Dairy Farmers in Central PA; A Joint Farmer/Community R-D Project

1998 Annual Report for LNE98-099

Project Type: Research and Education
Funds awarded in 1998: $40,000.00
Projected End Date: 12/31/2000
Matching Federal Funds: $745.00
Matching Non-Federal Funds: $10,000.00
Region: Northeast
State: Pennsylvania
Project Leader:
Jill Abrahamson
Union Co. Planning Department
Bill Deitrick
Union Co. Conservation District
Joe Detelj
Union Co. Chamber of Commerce
Nancy Roberts DePoe
Penn State Extension

Creating a Farmers-Owned Value-Added Production/Processing Facility for Dairy Farmers in Central PA; A Joint Farmer/Community R-D Project


The purpose of this project was to facilitate the creation of a farmer-owned processing facility, and to introduce the concept of value-added production in the agricultural community. This educational process was designed to recruit local leadership and include them in the project. The coordinators hired a consultant to perform a feasibility study and a follow-up market analysis.

To help local farmers enhance the sustainability of their operations.
To respond to the interest of these farmers in marketing value-added products.
To educate local farmers about the potential for marketing value-added products.
To explore the feasibility of establishing a value-added dairy foods processing facility through a farmer-owned cooperative.

This project was designed as a follow-up to a Union County initiative, conducted by the American Farmland Trust, that looked at farmland preservation in Union County. The Union County Agricultural Committee was concerned that the preservation of farmers themselves also needed to be addressed directly.

The approach taken was twofold. First, the committee wanted as much involvement with the agricultural community as possible, with an emphasis placed on farmer ownership of the project. The Cooperative Extension, Chamber of Commerce, and Conservation District offices would support the grass-roots effort we were seeking.

We held a series of public meetings held in four locations convenient to the target communities, and the committee invited all the official agricultural agencies and encouraged them to offer information and displays. Farmers already engaged in value-added production were invited to speak to their peers. After the meetings, the committee was able to recruit local farmers in the effort, and these farmers were critical in directing the content of the reports that resulted from the research component of the project.

For this second component, the committee developed a request for proposals and employed Yellow Wood Associates to do a two-part study. The first part of the study looked at the feasibility for value-added dairy products in Union and surrounding counties; the second part was a market analysis of appropriate retail outlets for value-added dairy products. The project concluded with the distribution of the reports and with two on-site field trips to existing value-added operations, and the committee will continue exploring several avenues of value-added production.

One immediate result of this effort was a subcommittee of the group that opened a farmers’ market in Mifflinburg; another was that a local dairy co-op received USDA loan guarantees and private financing for $1,000,000 to construct a retail and bottling operation. Another local dairyman and committee member is engaged in starting a bottling operation with an emphasis on local retail sales.

The study helped clarify our purpose and energized a core group of producers to continue developing retail and value-added opportunities through their participation in the project.

Methods and Approach
The formal studies were contracted as two separate transactions, chiefly because the committee was very concerned about managing costs and being specific about what we expected to receive. By splitting the contract, we could evaluate the feasibility study and then clearly spell out what we needed for the market analysis.

A collaborative approach allowed for critiques from the audience we were looking to reach. This method, though more time-consuming, ultimately produced a more valuable body of work for our producers.

Public meetings were also valuable in pointing to the complimentary activities that we could develop. Though some of the insights offered in these meetings were not directly related to dairy value-added, they were of importance to our overriding concern of farmer preservation, and they did provide insight into corollary opportunities.

The Mifflinburg Farmers Market, which is a grower-only market, was an offshoot of the meetings by the committee, and it now has about a dozen local producers involved. This effort has attracted support from local elected officials and has established a continuing presence for the marketing of value-added products.

The two reports—feasibility and marketing—supported the USDA approval process and influenced their decision to provide an 80% guarantee on a million-dollar loan to local producers who are developing a retail and bottling operation. The mechanics of volume and excess capacity have been worked out in great detail by the participants, and what was missing was the market analysis. The second of our two reports served that purpose beautifully.

A small group of committee members are also presently formulating strategy around a cooperatively owned retail outlet that would serve local producers of food and fiber.

A significant result of the work was the recognition that a major need existed for a full-time marketing specialist to work with local producers. Funding to support this full-time position for a multi-county territory has been presented to the County Commissioners, Penn State Extension, and a local philanthropic foundation.

Another result of the project is that a local dairyman is in the later stages of creating a retail dairy. He will sell his own milk, ice cream, and yogurt, along with outlet cheese.

The committee continues to function, and the farm community continues to monitor our progress with interest. The full impact of our work will not be calculated until the bottling operations come on line and we secure the full-time marketing position. Enthusiasm and commitment are high, and the committee has received many calls from other groups, particularly in the Northeast, who have learned of the project through the SARE network. We have distributed dozens of our reports to them and shared our insights.

Reports have also been made available to all the dairymen in the Susquehanna Valley.
In large measure, as a result of this project, a plan of work has been developed by the committee that details the essential components required for the full market development of locally produced agricultural products. It is our mission to continue promoting value-added production systems in order to preserve farms and farmers in the Susquehanna Valley by engaging and educating our local producers. It is our desire to promote economic security through the cultivation of marketing expertise and support.

Reported October 2000