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in Value-Added Agriculture
By Holly Bor
Bornn
A publication of
Southern Sustainable Agriculture Working Group
and
The National Center for Appropriate Technology’s
ATTRA Project
Januar
Januaryy 2001
“Number one
is having a good
product.”
Make decisions based on good records —a specialty
condiments
“Our biggest challenge was adapt- producer
ing to a new environment. Keeping
careful records and maps to deter-
mine what to plant, based on what Since these farmers can’t compete in the high-
grows well here and what sells, volume commodity markets, they have to
has been crucial.” concentrate on quality, not quantity. “Offer a
—a flower grower very, very, very high-quality product,” says a
grower. “Quality” is made up of many dimen-
Trying to manage and grow an enterprise sions. Fresh, better tasting, clean, reliable,
without good records is like trying to find an sustainably produced…it may be hard to
address in a strange city without a map. With- define, but these producers know it when they
out records, you are limited to making edu- grow and process it. And consumers know it
cated guesses about the progress of your busi- when they taste it!
ness, whether or not you are meeting your
goals, and the possible reasons why or why While it may be tempting to use seconds, culls,
not. Only two of the producers said that they or damaged fruits, vegetables, and herbs in
were not keeping records, but even these two processed food products, the wise grower will
turned out to be keeping at least some records resist that temptation if he or she is serious
for tax purposes. about developing the enterprise. As one
grower says, “For goodness’ sake, do it right!
Fifty-seven percent of the producers relied on a No low-grade, substandard ingredients, since
computerized system, with QuickBooks soft- the buyer knows what he’s getting. No blend-
ware mentioned by three respondents as their ing! This is a downfall for a lot of specialty
system of choice. “QuickBooks is a really great farmers, who don’t want to throw away half
computer bookkeeping system,” says one. the crop if it is substandard.”
Quicken was mentioned by one respondent
and the other four did not specify what soft- With growing concern today about food safety,
ware they used. Two respondents relied on old- it is important that products be safe to eat and
fashioned ledgers, and the others relied on to use. This is a vital dimension of quality.
sales and production records and notes and “Cleanliness and attending sanitation school
minutes of their corporate meetings. are crucial. If I would not eat my
A beef producer says, “ I market my beef direct “Farmers need to become more aware of
to the consumer and through some local stores. value-adding. Be mobile—get into
I got into value-adding after going to a sale townships and share information, look
barn. I never wanted to go there again! I into partnerships and cooperatives.”
wanted some control over the price and I knew —a beef producer
I wouldn’t get fairly compensated at the sale
barn. I like doing something different, but if “Your local, most experienced, best, friendly
I’m spending time and energy doing something grower-processors—and visiting their place
different then I should get extra revenue. and taking pictures and notes—are the abso-
lutely best resources,” says a flower grower.
“As a first step in planning, I did some adver-
tising to see if I would get any response. I also Hands down, other farmers involved in value-
did some research on feeds and how to finish adding were identified as the best information
the cattle. I got a lot of responses from the resources. Farm visits, telephone and e-mail
classified ads I placed, and started selling half conversations, and networking at conferences
and quarter beeves. Word of mouth helped and other events can give you information and
attract new customers. insights that you can’t get any other way.
However, be aware that others may see you as
“Customers wanted separate cuts of meat, so I competition and not be willing to share their
started doing that. I give away many pounds knowledge. A good idea is to do as the salad
of hamburger, which brings in business, either mix grower did, and solicit information from a
directly or through building a relationship with grower in another state who will not be threat-
the community in general. I’ve probably given ened by you.
away more beef than I needed to, but I think I
help the community as much as they help me. Trade shows are especially recommended for
producers of specialty and gourmet products. A
“Selling quarters proved too unwieldy—it was producer of specialty vinegars, dry spice mixes,
more work to get the same amount of revenue, and other condiments says, “In the first year, I
and customers didn’t understand how much loaded up the pickup and headed to [the
meat is in a quarter and thought they were nearest big city] with a list of shops that I got
getting ripped off. Now I’m thinking about from a friend. We also relied on word of
only selling half and whole beeves, since mouth. We tried to target high-traffic stores. I
selling separate cuts requires a lot more paper- attended trade shows sponsored by the state
work and effort. agriculture department, which increased our
statewide exposure. We now supply specialty
“Labeling is part of my marketing strategy. My and gourmet food shops, do mail order, and
beef is labeled with our brand name and ‘raised have supplied restaurants in the past. We also
hormone-free and antibiotic-free’, which I think supply catalog companies. I don’t drive around
helps in marketing by building recognition and in the truck anymore, but prefer to concentrate
making us a ‘name brand’. on trade shows for my marketing. For whole-
sale, trade shows are the most effective market-
“If I had it to do over, I would have planned ing strategy. There used to be wine festivals for
more, especially for growth. I would have tried retail, but that market is now saturated. We
to get all the meat sold before slaughter, since I offer free garden tours as a draw. We now also
have difficulties in matching production and have a presence on the Internet, with a retail
sales. It seems like you’re either a bad producer website. We’re trying to increase sales. The
or a bad marketer. ” upswing in the economy has helped a lot!”
You may or may not need a Most of the respondents did not
formal business plan, but you do think a business plan was neces-
need a strategic plan. This plan sary. A cheese maker, for ex-
will define your business mission, ample, says she didn’t plan
your present situation, and where beforehand but just fell into it:
you want to be in the next few “The cheese business happened
years. You will need to cover gradually. I wanted to maximize
assumptions and risks, goals and my efforts with the idea of only
objectives and how you will so many hours in the day.” She
report progress. “Be realistic in says she wouldn’t plan if she
terms of goals, pricing, and the had it to do over again because
limits of your time. Factor quality of life in “my enterprise began as a path of spiritual
there somewhere,” advises one interviewee. growth.” She says, “I did write a business plan,
Another says “Start on a shoestring and re- but only to show the lender to borrow start-up
main flexible. Realize that the best-laid plans money.”
can go wrong and that things change. You need
to roll with the punches.” The easiest parts of business planning seemed
to be figuring out the production requirements;
About half the respondents wrote a business since the respondents were already producing,
plan to start with and another wrote one later they were most familiar with these. Judging
in order to secure an expansion loan. While from what our interviewees had to say, farmers
one respondent had previous experience in without previous experience often have real
business and was able to write her own plan, difficulty dealing with financial issues in
and another had children who were able to planning. Asked what was the hardest part of
write the plan, the others relied on sources such writing a business plan, “putting real numbers
as Extension, the loan coordinator , the Small in the plan”, in the words of one respondent,
Business Development Center, and the local emerged as the main difficulty. There were
Economic Development Center. One respon- difficulties in knowing which numbers to
dent said that she just made it up and that it include and in finding or estimating accurate
was as much a projection as a plan, in numbers. Projections of
production volume are particularly difficult to
Once their businesses were past the start-up A plan that is not periodically reviewed is
stage, marketing issues and competition posed nearly useless. Your business is constantly
the major barriers to success for respondents. changing and your plan must be reviewed and
One said she is trying to redesign her promo- modified accordingly. The plan must be kept
tional materials to target the needs of new current for you to effectively measure your
customers; another said that, “It’s a letdown performance. “Be ready to change in mid-
when sales deals fall through because my stream, as there is no way you can predict
product does not have a long enough shelf life. marketing,” says an interviewee. As you gain
I may need contracts in the future.” Another more experience and knowledge, you should
producer said, “Competitors are using cheap incorporate your new perspectives and insights
vinegar in very fancy packages that sell better into your plannning. Be sure to keep examining
than my own high-quality vinegars.” your original goals and make sure that your
business is still meeting your goals.
When asked about whether they had a market-
ing plan, about half the respondents said they When asked about whether or not their goals
did, although only three had prepared a formal had changed since they started, eight respon-
plan. Those who had chosen their products dents said yes and six no. Those whose goals
based on market opportunity had plans, had changed seemed about evenly divided
whether written or not. Some respondents said between growing the business and scaling it
that they didn’t need a plan, since experience back in order to have more personal time.
and trial and error make marketing needs clear When asked what sorts of problems they face
eventually. in managing their enterprises, it was clear that
people are, in the words of one respondent,
Many respondents did not get much help with finding it difficult to “balance attention to the
marketing, but rather developed their own business with quality of life.” Nearly thirty
approach with experience and talking to their percent of the respondents said that this was
customers and to other growers. A few of the their biggest problem. For example, one re-
respondents got help from state agriculture spondent said, “Then, my goal was to find
departments and economic development anything that was profitable. Now, my goal is
centers. One respondent tried taking samples to expand my ongoing profitable business.”
into her state’s small business development However, another respondent said, “The point
center, and never heard from them again. comes when I have to stop pushing the cart
Publications such as Growing for Market were uphill. I’ve made a conscious decision not to
also mentioned. Some respondents had grow past a certain point. ”
“Make sure your product is unique. It’s He started out by wholesaling, but found it
very tough to compete with large com- unprofitable. “The least effective marketing
panies on their turf, so identify a unique strategy is wholesaling. If your strategy is to
niche that you can fill better than the sell large amounts to very large corporate users,
big guys are.”—a rice grower such as hotels or chains, and dealing with
purchasing agents, you won’t succeed.”
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