VALUE-ADDED CORNER

Ag Marketing Resource Center helping
producers develop value-added strategies

By Christa Hartsook

Editor’s note: Hartsook is communications
specialist for AgMRC.

he Agricultural Marketing Resource Center (AgMRC) is a newly formed national electronic or virtual resource center for value-added agricultural groups. The purpose and mission of the AgMRC is to provide producers and processors with critical information to build successful value-added agricultural enterprises.

The Center combines expertise at Iowa State University, Kansas State University and the University of California to help clients locate the resources that can aid them in their efforts to develop a value-added agricultural business. The center works with other leading land-grant universities, such as Oklahoma State University and Montana State University, as well as organizations, such as Sparks Companies and CoBank, on value-added projects. Partial support is derived from the Rural Business-Cooperative Service of USDA Rural Development.

The Center’s Web site, www.AgMRC.org, contains information on various commodities and products, including many market niches farmers can pursue. There is also information on how to start a business and selecting a business structure. Other topics include how to write feasibility, marketing and business plans.

This extensive collection of resources and tools can help anyone involved in agriculture develop and improve any aspect of their business.

The site contains links and AgMRC-developed pieces on everything from networks of ethanol cooperatives to organic beef producers to a value-added worm business. Directories list value-added consultants, valueadded agriculture businesses and applicable laws specific to each state.

The goals of the center include the creation of a powerful, electronic Web-based library with search capabilities to make value-added market, economic and business information available to producers; to provide value-added business and economic analysis tools, including information on business principles, legal, financial and logistical issues; conduct research and analysis on economic issues facing producers involved in value-added business ventures and to link producers with electronically available information on major commodities.

Governing AgMRC
An advisory board, comprised of individuals from across the nation involved in value-added agriculture, governs the center.

Current members include Duane Acker, Talycoed II, Atlantic, Iowa; Mark Hanson, Lindquist & Vennum, P.L.L.P., Minneapolis, Minn.; Elizabeth Hund, Rabobank, San Francisco, Calif.; Steve Hunt, U.S. Premium Beef, Kansas City, Mo.; Stanley R. Johnson, Iowa State University, Ames, Iowa; Jeff Kistner, CoBank, Omaha, Neb.; Barry Kriebel, Sun-Maid Growers, Kings burg, Calif.; Eugene Quast, Swiss Valley Farms, Dubuque, Iowa; Richard E. Rominger, Rominger Farms, Winters, Calif.; Kenneth Rutledge, West Liberty Foods, West Liberty, Iowa and Chris Williams, 21st Century Alliance, Manhattan, Kan.

A representative from the Rural Business-Cooperative Service of USDA Rural Development also sits on the board.

Web site content
Initially, staff conferred with individuals from the USDA Ag Library to develop the most efficient method for categorizing information and to share common resources, whenever possible. Since the Web site became available to the public in April 2002 it has received more than 1.4 million hits. The content portion of the AgMRC Web site is divided into four main sections:

Commodities and Products;
Markets and Industries;
Business Development;
Directories and State Resources.

The Commodities and Products section and the Markets and Industries section are for producers to use to explore the market potential of a valueadded idea. The Business Development section is for producers to use to put “wheels” under an idea after determining its feasibility.

The Commodities and Products section provides information from the perspective of adding value to the commodities and products traditionally produced on the farm. Examples are corn, beef, fruits, etc. Information is provided along the supply chain, from production, processing and marketing for each commodity/product, focusing on marketing.

Specific information on the product differentiation is presented. For example, organic, natural and direct marketing aspects of each specific commodity are detailed in the individual commodity sections. General food industry information is presented under Food Industry in the Markets and Industries section.

Only information specific to valueadded agriculture is provided in the commodity section.

The Markets and Industries section provides information on the major markets and industries (food, energy, etc.) that producers may enter during the process of adding value to their commodities.

The Business Development section focuses on information needed to create and operate a viable value-added business. The information is provided sequentially for use during the business analysis, creation, development and operation process.

The Directories & State Resources section includes directories created for the Web site by AgMRC staff. Staff initially compiled a list of 300 service providers and notified them of a new directory for “Value-added Consultants and Service Providers.” In the past year, 200 service providers registered on the directory, providing assistance to groups with legal, commodity-specific, financial, marketing expertise and more. A value-added business directory was also created to give new valueadded businesses a resource to contact.

The Business Development section focuses on information needed to create and operate a viable value-added business. The information is provided sequentially for use during the business analysis, creation, development and operation process.

The Directories & State Resources section includes directories created for the Web site by AgMRC staff. Staff initially compiled a list of 300 service providers and notified them of a new directory for “Value-added Consultants and Service Providers.” In the past year, 200 service providers registered on the directory, providing assistance to groups with legal, commodity-specific, financial, marketing expertise and more. A value-added business directory was also created to give new valueadded businesses a resource to contact.

Currently, 90 successful and non-successful businesses are listed on the site.

A state resource directory was established to give producers at least one contact name in value-added agriculture for each state. Additionally within the directory, individual state laws have been added pertaining to specific regulations within each state such as establishing a cooperative, sale of foods, etc. A calendar of value-added events is included. This allows producers interested in attending value-added events to determine what is coming up within their region.

Research focus
Several of the AgMRC partners are focusing their efforts on research projects geared to assist producers involved in value-added agriculture. The Center for Agricultural and Rural Development (CARD) at Iowa State University finalized research on four projects and submitted working papers for the AgMRC Web site. These four papers are now listed in the Business Development and New Information sections of the site. The four papers are: “Farmer-Owned Brands”; “Information Sharing and Oligopoly in Agricultural Markets: The Role of Bargaining Associations”; “An Initial Analysis of Adoption of Animal Welfare Guidelines on the U.S. Egg Industry”; and “Can Spot and Contract Markets Co- Exist in Agriculture?”

Kansas State University started a case research study on Ocean Spray Cranberries to understand brand creation and valuation. Other studies have recently been compiled on South Dakota Soybean Processors, Dakota Growers Pasta and 21st Century Alliance. KSU completed an ethanol pre-feasibility model which can be accessed on the Internet at: www.agecon. ksu.edu/renewableenergy/working with CoBank and Sparks Companies. They are now beginning a similar project for bio-based diesel. Kansas State visited with General Mills on the feasibility of developing a certification program for hard white wheat varieties and tracking those individually from producer to elevator, to flour mill and baking lab. This helped develop research for the hard white wheat incentive program in the Farm Bill.

The University of California has begun studies designed to improve practical understanding of how different industries have evolved in their approaches to value-added marketing. Studies include:

Investigating the effect of public policy, especially milk marketing orders, on marketing and processing cooperatives;
The role of pistachio industry marketing orders in maintaining quality and the industry’s reputation for food safety.

The University of California also has launched a project to better understand the value-added relationships between growers and processors in the tomato industry, especially the effects of vertical integration by growers on the processing side of the industry. A case study will focus on four large growers who have joined together to build a tomato processing plant.

UC has also begun to apply an economic model to evaluate the payoff to producers from innovations in the use of whey proteins. This work represents close collaboration among food scientists and economists. The costs and potential market for the new uses of whey have been analyzed. Now those results are being applied in a model of dairy supply and demand that includes the complications of federal and state policy such as price supports and milk marketing orders. UC is also studying several key aspects of the wine grape industry and is compiling data on China’s production and demand for horticultural crops. This is the first time such information has been available for industry analysts to consider the role of China in many of these commodities.

Other projects
Recognizing that many farmers are selling directly to consumers via farmers markets, Community Supported Ag (CSA) programs and other avenues, AgMRC teamed up with the Iowa Farm Bureau Federation to pilot a project that gives farmers the opportunity to sell their product via a Web site and assists in the development to provide a site for producers to list their goods at an affordable price. This service is being offered as a pilot project in Iowa and will be expanded to other states in the coming months.

Another unique opportunity for the AgMRC Web site is the development of a Web site for a Pork Niche Market Working Group. This group, comprised of individuals from commodity groups, ISU Extension and other agribusinesses, works to develop new niche market opportunities for small pork producers. Because their activities directly influence value-added pork operations, AgMRC is hosting a Web site within the AgMRC Web site for the group.

In addition to external links, staff members write pieces for posting on the Web site. Staff interviewed valueadded agriculture businesses and wrote business profiles from those interviews. Business profiles were added for four enterprises, including Cory’s Country Lamb, County Line Orchard, Tammen Treeberry Farm and Northern Vineyard Winery. Additional profiles have been started for U.S. Premium Beef, Loess Hills Aquaculture and West Liberty Foods.

Staff developed an ethanol pre-feasibility model that included an Iowa emphasis with Co-Bank. The model is adaptable to most corn-belt states. Staff members also wrote several other pieces within Business Development, including “Introduction to Grant Writing,” “Farmer Alliances A New Breed is Emerging” and “Funding Sources.”

AgMRC staff organized and planned a workshop for producers titled “Telling Your Story, Selling Your Idea.” The two-day workshop focused on the communication needs of value-added agricultural groups.

Contact AgMRC
Producers, extension personnel and rural development specialists contact the resource center either via toll-free phone at 866-277-5567, e-mail at agmrc@ iastate.edu or the Web site, www.agmrc.org.

AgMRC staff will speak at large, value- added agricultural gatherings or at annual meetings to share with your group what the Center can offer. Additionally, we would be happy to provide promotional or other background information for meetings and events.

Please contact us through the above channels with any questions or opportunities to share the message of the Center. We look forward to hearing from you.

The Greene Bean Project:
Growers’ field of dreams is edible beans

By Sandra Clarke

Editor’s note: Clarke is communications manager at
the Center for Agricultural & Rural Development (CARD),
Iowa State University.

Named for the central Iowa county where producers have grown soybeans for generations, the Greene Bean Project is introducing a new kind of bean for its rural community: the edible bean. The project was formulated out of the desire of several Greene County farmers to diversify their crops and promote value-added agriculture in their area.

Having witnessed failed attempts by other producers to try alternative crops, the group of 24 producers took a more perceptive approach to the challenge one that led them to an attitude of cooperation and risk sharing.

“We learned early on that a cooperative effort, sharing the learning curve and risks and rewards, far outpaced any one individual’s effort in all aspects of starting a new business,” says Chris Henning Cooklin, project manager for the Greene Bean Project-Alternative Crop Enterprises. “No one person could have expertise in all areas, but by sharing freely of our individual expertise, we could overcome obstacles more quickly.”

In their 2001 inaugural year, the group adopted a mindset of experimentation and research to evaluate the potential of the alternative crop and to establish a baseline of production practices. First, they had to determine if they could grow a quality, edible bean with market potential before they could seek additional resources or capital investment.

The Greene Bean Project sought help from Iowa State University Extension and the Agricultural Marketing Resource Center for information and access to research. Production and management practices of growers in other regions were collected, and regional variations of weather, soils, pests, and other agronomic variables were considered.

The Project steering committee used Internet research, collaborated via e-mail and brought in experi enced producers for numerous meetings before the first growing season. “From organizational and communication skills to agronomics and marketing, the AgMRC and ISU Extension staff brought their own special skills and shared experiences with our growers,” says Henning Cooklin.

As the Greene Bean Project developed, so too did the Agricultural Marketing Resource Center. The AgMRC added more and more resources to its Web site, and offered outreach opportunities to clients. Henning Cooklin took advantage of the Center’s Grant Writing 101 and Marketing Your Business workshops.

“Both were helpful in networking and with basic skills training in writing press releases, talking with the press, and in preparing budgets for grants,” she says.

Once the group had obtained the critical market research and had formulated its production and riskmanagement plan, they were ready to embark on beginning their crop-diversification experiment. The other crucial factor in launching the alternative crop was to find a buyer for their untested crop. This is an area where the cooperative nature of the enterprise really helps. Several producers can grow quantities on a scale that can attract the attention of the marketplace.

Two edible beans were selected for compatibility with the producers’ existing cropping practices: the adzuki and the chickpea. Producers were encouraged to grow only the number of acres they were willing to put at risk, to perform their own production tasks and to absorb all personal production costs. A common machine and operator harvested the crop, and sales revenues were divided equally among the growers, based on acres in production.

In the group’s first growing season, it was able to raise enough product to truly test the market and members were left with a favorable impression. They continued the endeavor into the 2002 growing season, and were excited by the results. “We have this year’s crop of adzuki beans almost sold already,” says Henning Cooklin, “and at a good price, too.”

The group plans to adopt a quality management system in the future to further differentiate their product.

Greene Bean Project growers also are contemplating the potential of other additional crops. Expansion of the group base and acres is predicated on further research and careful evaluation of new markets, a prime example of what the Agricultural Marketing Resource Center aims to provide. “There are so many good resources out there,” says Henning Cooklin. “Do the research, share the knowledge and you’ll be able to share the benefits, too!”

May/June Table of Contents