VALUE - ADDED CORNER
Trading on Tradition
Heartland Farm Foods uses country
tradition to market members’ beef
By Erica Coble
Editor’s note: Coble grew up on her family’s
beef cattle and alfalfa hay farm in the
southwest Missouri town of Dadeville. She
is a senior majoring in ag journalism,
with a minor in ag economics, at the
University of Missouri-Columbia.
consumer walks into a
grocery store looking for
a meat product that’s easy
to prepare, stores conveniently
and is safe for her
family. Walking down the canned food
aisle, the consumer spots a product
she’s never seen before. There on the
shelf, wrapped in a red label, is
Heartland Farm Foods’ fully cooked
ground and chunked beef. Curious, the
consumer picks up the can and turns it
around to look at the ingredients; only
one is listed: beef. In addition, the beef
is hormone-free, has no preservatives,
salt or other additives and can be traced
back to the farm where it was raised.
Heartland Farm Foods LLC, a subsidiary
of the Farm Foods
Cooperative, was formed in 2001 by
39 east-central Missouri farm families.
Headquartered in
Montgomery City,
Mo., the cooperative
uses family
home-canning
recipes to produce
high-quality canned
ground and chunked
beef. The shelf-stable
product is allnatural
and contains only beef.
Canning food is, of course, a traditional
food-preservation technique
used by Americans for generations. It
remained popular longer in rural areas,
especially where electricity for refrigeration
was slow in coming. Irene
Edwards of Montgomery City had
been canning beef for years and giving
it away in glass jars. People loved the
flavor and the convenience. The family
gradually realized there might be a
business opportunity in those jars.
After a study showed market potential
for the product, the Edwards family
shared the plan with their neighbors
and decided to pursue a value-added
business venture. The goal: provide
consumers with a convenient, tasty,
high-quality beef product while creating
a new business channel that would
help farm families realize more profits
from their cattle.
Since the initial introduction of two
canned-beef products, the co-op and
its LLC subsidiary have been working
to build brand recognition and to get
their product on the shelf. Four years
after the launch, the cooperative has its
own canning facility that employs five
full-time employees and is set to introduce
new products this spring.
Shares prove popular
Forming cooperatives can be an
attractive idea for producers, but the
farmers involved in Heartland Farm
Foods will tell you that it is not an easy
venture to undertake. Building a successful
business takes hard work and
patience. The first organizational
meeting was held in December 2000,
a steering committee was formed in
early 2001 and the business was organized
as a new-generation cooperative
in December of 2001.
Once the steering committee was
formed, the group set out to create the
governing rules and elect a temporary
board. “The steering committee went
through a lot of challenging times,”
says Adam Blaue, a
Missouri beef producer
from Wellsville and
board chairman of the
Farm Foods Cooperative.
“It’s always an interesting
process when you get a
group of six to eight
farmers together who all
have different experiences
and strong opinions on how a business should work.”
The group initially incorporated as
Farm Foods Inc. As they progressed
towards becoming a value-added
enterprise, they were advised by legal
counsel to form an LLC to address liability
concerns. This resulted in the
creation of the co-op’s wholly owned
subsidiary, Heartland Farm Foods.
In February 2002, the temporary
board started selling memberships on a
per cattle basis. The initial goal was to
secure 1,000 cattle per year, with members
required to commit a minimum of
10 and a maximum of 50 head of cattle.
Each share sold for $200 and represented
a commitment by the member
to deliver one head of cattle per year.
It didn’t take long for the idea to
catch on. In just two weeks, 90 percent
of the memberships were sold;
within a month all were sold.
Membership was extended to 39 farm
families in Montgomery, Audrain,
Pike, Lincoln and Warren counties.
The goal of the first phase of the
plan was to get the business moving as
soon as possible, so a decision was
made to keep membership under 40.
Key help from USDA, Extension
Assistance has come from a number
of sources. Jim Foster, vice president
of the board, says that Gary Hoette, a
local University of Missouri extension
agent, played a key role in helping
organize the cooperative. “Gary had
helped in getting an ethanol cooperative
started, so he had been there and
knew how to advise us on things that
could have been potentially disastrous
for us,” Foster says. Hoette now serves
as the co-op’s at-large board member.
The business received additional
help from Chris Cobb with the
University of Missouri Extension
office. She advises and assists the cooperative
on a variety of issues.
Business and financial support from
USDA Rural Development and the
Missouri Department of Agriculture
was instrumental in getting the
resources the group needed to get
their business started. Farm Foods Coop
Inc. received a $200,000 Value-Added Producer Grant (VAPG) from
USDA Rural Development in 2002.
Funds were used for working capital
to support the start-up operations of
the hormone, steroid- and antibioticfree
beef canning operation. These
funds were matched with the co-op’s
investment and $118,000 in grant
funds from the Missouri Department
of Agriculture for a feasibility study
and a business plan.
“We were very excited that Family
Farms Co-op could benefit from the
VAPG program, which had to compete
with 712 applications requesting over
$121 million when only $33 million was
available in 2002,” says Nathan
Chitwood, business and community
specialist for USDA Rural Development
in Missouri. “Their proposal was
well written and complied fully with the
intent of the VAPG program.”
Heartland Farm Foods was awarded
a second VAPG grant of $150,000 in
the fall of 2004. “Rural Development
believes that providing funds to help
farmers and ranchers launch valueadded
businesses such as this project is
vital to the future of the nation’s agriculture
economy,” says Greg Branum,
Missouri state director for USDA
Rural Development.
Strong manager essential
The membership drive netted
$200,000 to go toward building the
processing plant. An anonymous donation
helped pay for the rest of the
$425,000 in construction costs. The
groundbreaking ceremony was held
March 21, 2003, where Farm Foods
Cooperative owns a 10-acre lot.
From the beginning, the board set
three main goals for the cooperative:
(1) supply a high-quality product to
consumers; (2) be a positive influence
and support the community, and (3)
create a consistent, profitable market
for member cattle and create a future
for the next generation of beef farmers.
Members knew that an experienced
general manager to move their ideas
and vision forward was vital to their
success. In October 2002, the board
hired Mark Uthlaut, who has an extensive
agricultural background. He was a
farm manager at Iowa State University,
has marketed wool products for a
cooperative marketing group and
worked in retailing farm meats.
“Mark has been a big factor in taking
us where we need to go,” says
Blaue. “He went through a USDA
required processing school and through
Hazard Analysis Critical Control Point
(HACCP) certification in Nebraska.”
Traceability reassures consumers
From the beginning, members wanted
consumers to know that the co-op’s
producers take good care of their animals,
which helps ensure that they get
a safe, high-quality beef product.
“The main selling point of our
product is that it is born, raised and
processed in the USA,” says Foster.
“With all of the concerns about food
safety, our consumers know exactly
where their product comes from.”
The cooperative has taken product
accountability to a high level.
Numbers printed on the bottom of
each can may be traced back to the
farm of origin.
“We are planning to have a Web
site so that consumers can see firsthand
where their meat comes from,”
says Uthlaut. “Consumers will be able
to enter the number on the bottom of
the can into the Web site and pull up
information about the exact family and
where the animal was raised.”
Heartland Farm Food’s philosophy
is based on promising the consumer
that they are getting the highest quality
and safest product possible. Cattle used
for the product are produced under a
grower agreement that requires that all
cattle are hormone-free and must meet
a number of other quality standards.
“We always told them [members]
not to get involved unless they could
be proud of the cattle they send,”
Blaue says.
Cattle are needed throughout the
year. Producers typically let Uthlaut
know when they have cattle ready to
be processed, and he solicits for cattle
when it’s time to go into production.
Cattle are slaughtered at two nearby
locations, and then brought to the
Montgomery City facility to be
processed. The ground and chunked
beef products are fully cooked, creating
a broth and separating the fat from
the beef. No additives, salts or preservatives
are added to the product, making
it 100 percent pure beef.
In addition to helping with inhouse
processing, the five employees
focus on opening up new market outlets,
developing recipes and general
marketing strategies. A big target market
is outdoor and recreational consumers.
The shelf life and convenience
of the product make it attractive for
camping and other outdoor use.
“We want to get our product into
some of the major outdoor shops, but
we have to make some changes before
that is possible,” says Uthlaut. “It’s definitely
a high-priority market for us.”
Heartland Farm Foods ground and
chunked beef products can currently be
found in super markets and specialty
food stores in St. Louis and throughout
east central and central Missouri.
Expanding product line
Bill Diechman, board treasurer, says
that members have been pleased with
the progress thus far, but he adds that
this is just the beginning for Heartland
Farm Foods.
“The members have continually
expressed their support of the plans and
facilities,” says Diechman. “We keep in
touch with the members through
newsletters and annual meetings. We’re
such a small group that if a member
has a question, they’ll come talk to us
in town, or just come up to the facility
and find out what’s going on.”
“Our members have been so patient
with us, and that has been key,” says
Blaue.
The group is set to release six new
canned beef products this spring. The
products include beef and nacho cheese
dip, beef ‘n’ bean dip, taco beef, chili,
chili cheese dip, and new ground beef.
“If we want to get into more markets,
we’re going to have to have more
products,” says Uthlaut.
The co-op is also selling steaks to
local restaurants and markets packaged
under the Heartland Farm Foods label.
For more information, contact Uthlaut
by e-mail: muthlaut@heartlandfarmfoods.
com, phone (573) 564-1600, or
visit the Web site: www.heartlandfarmfoods.
com.
