Beyond Fresh: Expanding Markets for Sustainable Value-added Food Products in Texas

Beyond Fresh: Expanding Markets for Sustainable Value-added Food Products in Texas

Summary

A team led by the National Center for Appropriate Technology is researching opportunities to create value-added food products from local and sustainably-grown ingredients: a market sector that appears ripe for expansion in Texas.  We have already identified several promising products for closer study. For each of these products we will now determine methods, equipment, and a scale of production that are feasible and most profitable for farmers. We will educate growers about these opportunities, engage food industry and economic development leaders, create business planning workbooks and templates, and share our findings and tools with communities throughout the Southern SARE region.

Objectives/Performance Targets

Objective 1. Research opportunities for value-added processing of sustainably-grown fruits and vegetables in Texas, with special attention to the appropriate scale of production.

Performance Targets:

• Conduct face-to-face interviews and brainstorming sessions with at least six cooperating farmers on their preferred crops and value-added products.
• Interview and conduct focus groups with stakeholders including buyers, consumers, processors, packers, rural community economic development leaders, food banks, commercial kitchen owners, regulators, coordinators of related SARE-funded projects, and potential enterprise funders.
• Survey farmers and processors across the Southern SARE region and around the country.
• Create a market research report identifying at least six promising value-added products using local and sustainably-produced inputs and meeting supply, demand, and manufacturing needs in central Texas.
• For each of these products, Oklahoma State University will research and identify an appropriate processing scale, including recommendations for specific equipment, production methods, labeling, packaging, and so on.
• Meet in person or by phone with at least eight retail and wholesale buyers, including restaurants, to understand existing production capacity, needs, and gaps
• Texas A&M will complete an economic impact analysis of local, sustainably-produced, and value-added products on rural economic development in central Texas.
• Create and widely distribute a report that summarizes supply, demand, and production costs and requirements for potential value-added products, and their economic impacts to rural communities, including case studies.

Objective 2. Increase the sales and profitability of value-added products by sustainable and organic fruit and vegetable growers in Texas.

Performance Targets:

• Interview experts in the fields of entrepreneurial development, business incubation, and natural and organic manufacturing and retailing.
• Meet one-on-one and in groups with select central Texas wholesale buyers to learn likely best practice marketing methods and branding strategies.
• Create a directory of potential buyers and existing resources, including commercial kitchens, food manufacturing facilities, food brokers, food distributors and food analysis labs.
• Assist in the initial planning of at least three value-added enterprises, including creating business plans and identifying funding sources.

Objective 3. Educate and organize growers, facilitating key decisions about topics such as appropriate business structures, values-based branding, sustainability requirements, and scale of production.

Performance Targets:

• Conduct a thorough literature review – including educational materials prepared by SARE projects in the Southern region and nationally. 
• Hold monthly work sessions with Grower Lead Team throughout the project, where producers decide key questions that include labeling, branding, and how to define sustainability criteria for value-added products.
• Host business incubation experts who specialize in food products to present successful businesses and products to Texas farmers.
• Host relationship-building workshops of farmers interested in cooperating and organizing to pursue value-added processing opportunities.
• Conduct at least two webinars.
• The New Farm Institute training will offer a full-day Media Training for Farmers to introduce and hone farmers’ presentation skills.
• The Texas Organic Farmers and Gardeners’ Association will add workshops on value-added products to its annual conference, organize workshops at locations throughout Texas, maintain a contact list of workshop attendees, communicate regularly with them about progress of this grant, and provide ongoing education to its members about value-added enterprise opportunities.
• Create and distribute a process workbook with templates that contains worksheets and spreadsheets that producers can use to explore budgets and feasibility of value-added processing opportunities.
• Present findings at at least five meetings of regional grower organizations, the Southern SAWG conference, and via social media and the project blog.
• Create an online resource center that includes all the materials and tools created through this project, used by more than 100 farmers per year.
• Conduct follow-up surveys with growers and entrepreneurs to assess changes in action and short-term economic benefits, including a summary report on evaluation outcomes.

Objective 4. Cultivate increased collaboration, coordination, and support for value-added enterprise development in the sustainable and organic sector by strengthening inter-industry value chains and rural-urban linkages and quantifying regional economic impacts.

Performance Targets:

• The City of Austin will host a gathering of policy makers and economic development directors from within 40 miles of Austin to explore interurban linkages and economic impacts of our regional food system.
• Create a resource guide on grant and loan programs, private funders, crowdfunding, and direct technical assistance, including tips on fundraising and material from our Media Training for Farmers.

Accomplishments/Milestones

Project Management and Timeline

• We finalized our agreement with Southern SARE and executed contracts with all 11 of our paid consultants.
• We finalized our evaluation plan, methods, tools, and baseline metrics, in consultation with our evaluation specialist.
• We established clear responsibilities and deadlines for all deliverables.
• We established a collaborative workspace using Trello as our web-based platform.
• The project team met approximately monthly: face-to-face and by frequent phone calls and e-mails.
• After some delays in the first few months the project gained momentum in the second half of the year and we are nearly on schedule. We will need to maintain a fast pace to meet all of the ambitious targets we have set for Year 2.

Research (Objective 1)

• We held many interviews and brainstorming sessions with growers, including our three-member Grower Lead Team and our five-member Grower Support Team. This project came about at the direct request of farmers and they have been involved in all aspects of our work.
• We interviewed many other stakeholders. For example, Sue Beckwith and Robert Maggiani met with the Texas Department of Health and Human Services, Texas Department of Agriculture, the Food Service Directors of Austin Independent School District and Northeast Independent School District (in San Antonio), as well as the Director of Nutrition at the San Antonio Food Bank.
• We attended many related events and workshops, such as the meeting “Austin–the New Hotbed for Food Business Innovation?” 
• Beckwith and Maggiani attended the very large September 15-19 Natural Product Expo East in Baltimore, Maryland, where they met with dozens of entrepreneurs and saw hundreds of natural food products. Only a small percentage of vendors featured local products or ingredients, although Beckwith noted a strong emphasis on organic and commented that “transparency and country-of-origin demands from consumers will drive source-identified foods which may include local farms.”
• We developed a survey for food entrepreneurs, sent it out to over 600 people, and received 86 responses. The survey asks about demand for value-added fruits and vegetables as ingredients in existing products.
• A second survey aimed at growers was tested at the annual meeting of the Texas Organic Farmers and Gardeners Association (TOFGA), and will be distributed in the spring of 2016. The survey asks growers about their interest in value-added enterprises and crops that they would particularly like to use.
• We created a list of 11 promising candidate products. These were: fermented sauerkraut, salsas, and ketchup; dehydrated vegetable snacks and vegetable soup mix; freeze dried vegetables, relishes (of many kinds), ready-to-eat meals (most likely frozen), vacuum-fried vegetables, fruit jams and jellies, and freeze dried fruit. All of these products are made from fruits and vegetables that are easy to grow in central Texas (often in excess) and at high risk of spoilage.
• Dr. Holcomb and his colleagues began market research on these candidate products and have compiled some preliminary recommendations on equipment, operations, packaging, and other topics.
• Dozens of other interesting product ideas emerged from our brainstorming sessions. Examples are: freeze dried fruit; fruit ketchup; fruit paste; frozen shredded zucchini; frozen zucchini fritters; chocolate zucchini muffins; dehydrated squash chips, kale chips, or tomatoes; smoked tomatoes, peppers, or salsa; frozen ratatouille soup; kimchi; hot pickled okra; jarred tomatoes or peppers; green garlic paste; flax seed; dried greens (from brocolli leaves, chard, kale, collards, etc.) as powders for smoothies or ingredients sold to food makers; and products made from brassica leaves or moringa. 
• Based on our literature review and interviews, some other fruits and vegetables that appear to have good potential for value-added products in Texas are tree fruits (such as peaches, pears, and figs), cantaloupes or specialty melons, sweet potatoes, and butternut squash.

Market Development (Objective 2)

• We created a one-page project summary, introducing the project to potential partners and supporters.
• We interviewed a number of experts in the fields of entrepreneur development and natural and organic manufacturing and retailing. For example, we received detailed comments and advice from a New Products Specialist with the Natural Grocers chain.
• We met one-on-one with a number of wholesale buyers. For example, Robert Maggiani met with Errol Schweizer, Global Coordinator for the Grocery Team at Whole Foods Market in Austin, and Chris Moore, Chill Buyer for Wheatsville Co-op in Austin. Both expressed interested in helping us develop, test, and market new products.

Education (Objective 3)

• We conducted extensive literature research on topics such as branding, market positioning, scale, packaging, labeling, product development strategies, and requirements for new product presentations to buyers. We studied over 15 reports from previous SARE-funded projects on related topics.
• We spoke about our project and presented our research at the annual conference of the Texas Organic Farmers & Gardeners Association in Rockwall, Texas in January 2016.  A full room of 35 attendees responded very favorably and signed up to be kept informed as our project goes forward. The presentation and workshop evaluations are attached to this report.
• Beckwith organized a food safety orientation planning session on January 6, 2016, attended by six of our lead and support farmers.  This session served as a focus group to identify what farmers need to know about these new rules, and prepared us for an in-depth workshop offered March 22. 
• Our very successful March 22 workshop on food safety was attended by 31 producers. Speaker Judith McGeary  explained that the impacts of the Food Safety Modernization Act (FSMA) on value-added farm enterprises are going to be complicated and scale-dependent. Farms selling wholesale to grocers, schools, and hospitals will generally face new food safety requirements, as will many food processors and distributors. The growers in our project are somewhat apprehensive about the potential impact of FSMA rules on their ability to add value to their farm products. See the attached workshop agenda and evaluations.
• Beckwith wrote a brief report Value-added Processing Options (attached), outlining various combinations of processing facility, sales outlets, brand ownership, product ownership, and distribution.  The process workbook that we will be creating in Year 2 will address many of these combinations.

Building Linkages and Collaboration (Objective 4)

• We have made many of the arrangements for the regional economic development seminar that will be held April 27, 2016:  “Local Food as an Economic Development Driver.”  This seminar will be an essential step towards developing the relationships and collaboration outlined in our proposal.

Work Remaining (Many of these tasks are described more fully in the Objectives/Performance Targets section of this report above.)

• Continue to interview diverse stakeholders.
• Continue to hold approximately monthly work sessions with our Grower Lead Team.
• Conduct a second survey, targeting Texas farmers who are already doing some form of value-added processing. 
• For the candidate products identified in our first year, Dr. Holcomb and his colleagues will research and identify an appropriate processing scale, including recommendations for specific equipment, production methods, labeling, packaging, and so on.
• Arrange and facilitate additional meetings. These will include an April 27 gathering of policy makers and economic development directors from within 40 miles of Austin as well as other meetings between state and federal agencies, grower organizations, university researchers, sustainable agriculture non-profits, and business incubation experts who specialize in food products.
• Texas A&M will complete its analysis of the impact of local, sustainably-produced, and value-added products on rural economic development in central Texas.
• Create and widely distribute a report that summarizes supply, demand, and production costs and requirements for potential value-added products, and their economic impacts to rural communities, including case studies.
• The Texas Organic Farmers and Gardeners’ Association (TOFGA) will hold at least three additional workshops on value-added products at its 2017 conference. TOFGA will also organize other workshops throughout Texas, maintain a contact list of workshop attendees, communicate regularly with them about progress of this grant, and provide ongoing education to its members about value-added enterprise opportunities.
• Offer and provide consultations and technical assistance to growers. This help will included consultations on regulatory issues and constraints related to food processing, relationship-building workshops for farmers interested in cooperating and organizing to pursue value-added processing opportunities, and a full-day Media Training for Farmers.
• Create and distribute new educational materials including a directory of potential buyers and existing resources, a process workbook with templates and worksheets for exploring the feasibility of value-added processing opportunities, a resource guide on fundraising and technical assistance, and an online resource center that includes all the materials and tools created through this project.
• Present findings at more regional grower meetings, through webinars, and via social media and a project blog.
• Conduct follow-up surveys with growers and entrepreneurs to assess changes in action and short-term economic benefits, including a summary report on evaluation outcomes.

Related Work (Accomplishments that leverage SARE’s investment, inspired or partly caused by this project but requiring no expenditure of SARE funds)

• NCAT released its Feasibility Study for a Texas Organic Food Hub and Food Hub Planning Workbook in June 2015, co-authored by Robert Maggiani and Mike Morris.
• Team member Rebekka Dudensing co-authored an article, “What Do We Mean by Value-added Agriculture?”, that appeared in the December issue of Choices: a publication of the Agricultural and Applied Economics Association. (Lu, R., and R. Dudensing. 2015. “What Do We Mean by Value-added Agriculture?” Choices. Quarter 4.)
• A new Texas Center for Local Food was created in March 2016, a project of the Growers’ Alliance of Central Texas.

Impacts and Contributions/Outcomes

This research and education project will benefit family farmers and rural economies in Texas by answering fundamental questions about the market for value-added goods that are made from sustainably-grown fruits and vegetables. We will stimulate the growth of this market and improve access to it by farmers. Producers will enjoy the high profit margins available for food products that are local, sustainably-grown, and value-added. They will increase their incomes by having products to offer in months when they don’t have fresh produce to sell. And they will be able to sell more of the fruits and vegetables they grow, including those that are imperfect or cosmetically blemished.

We will share and widely distribute research results, tools, and templates from this project, allowing producers and communities throughout the Southern SARE region to derive similar benefits.

Collaborators: