Providing Farmers the Tools to Manage Risk in Value-Added VENTURES

1. National Women in Agriculture Educators Conference Memphis TN March 27-29, 2012 Winifred McGee, Senior Extension Educator, Penn State Extension Lynn Kime, Senior Extension Associate, Penn State Extension Providing Farmers the Tools to Manage Risk in Value-Added VENTURES

2. The Pennsylvania State University is an affirmative action, equal opportunity university. This presentation includes material is based upon work supported by USDA/NIFA under Award Number 2010-49200-06201."

3. Agenda • The Setting -- local foods marketplace • consumer expectations • farmers’ response • Need for food business knowledge/skills • The Food for Profit project • workshop • on-line • fact sheets • risk management for food businesses • KASA gains and impacts of the project

4. Consumers and Local Foods • Demand for fresher, more nutritious foods • Desire to support local economies and local farmers • Desire for better food security • Safe growing and processing practices • Enough food for all citizens • Concern about environmental effects of food transportation Source: Measuring and Understanding Local Foods: The Case of Vermont, David S. Timmons, University of Vermont (May 2006)

5. Farmers’ Response to the Demand • Farmers’ markets • Community-supported agriculture (CSA) • Local food policy councils and coalitions • State buy-local programs • Community gardening • New emphasis on food security Source: The restructuring of food systems: trends, research, and policy issues M. Koc and K. Dahlberg. Agriculture and Human Values 16 (1999)

7. Farmers’ Response to the Demand • Farmers’ markets • Community-supported agriculture (CSA) • Local food policy councils and coalitions • State buy-local programs • Community gardening • New emphasis on food security Source: The restructuring of food systems: trends, research, and policy issues M. Koc and K. Dahlberg. Agriculture and Human Values 16 (1999)

8. Farmer’s Share of Food Dollar

9. Statistical Support for Growth • 136,817 farms (in 2007) selling agricultural products directly for human consumption • An 17.2 % increase from 2002 statistics • $1.21 billion in direct sales nationwide • Small farms (sales <$250,000) generated 56.7% of the total value of agricultural products sold directly to consumers • 93.3% of farms selling directly were family farms (limited resource, P/T and lifestyle) Source: 2007 Census of Agriculture USDA NASS

10. Translation of a Trend • Farmers see direct marketing of fresh and value-added products as • Source of additional income (diversifying) • Low cost, low risk(?) entry into agriculture • Consumers see local foods as • Regaining a feeling of “safe food” • Opportunity to support the community • Reducing the “carbon footprint” How to mesh the opportunities and threats?

11. USDA ERS Report – Local Foods “Growers often need education and training” • Meeting the market requirements • Respond to consumer-expectation issues: • Risk management • Postharvest practices • Recordkeeping • GAP certification • Liability insurance requirements Source: Martinez, Steve, et al. Local Food Systems: Concepts, Impacts, and Issues, ERR 97. May 2010. U.S. Department of Agriculture, Economic Research Service.

12. Food for Profit Program Basic food business start-up instruction: • Realities of business ownership • Legal requirements • Food safety • Developing a business plan • Niche marketing strategies • Packaging and labeling • Pricing your product

13. Incorporating Risk Management In 2011, added these topics to the workshop: • Good Agricultural Practices (GAP)/Good Handling Practices (GHP) • Hazard Analysis Critical Control Points (HACCP) • Adequate/correct Insurance Coverage • Allergen notification • Pro-active recall planning

14. Growing the Program • Massive updates/changes (since 1990s) • Focus changed from “pin money” to “serious business” • Increasing percentage of farmers seeking diversification of income • Increasing percentage of food entrepreneurs seeking locally grown commodities

15. The Workshop • “Annie’s Project” type class • Interactive environment • Discussion-based learning • Learning facets include • Guest entrepreneur • PDA/Municipal sanitarian • In-class activities • Post-class application/individualization

16. The Fact Sheets • Before You Start • Registering Your Business • Home Food Processing • Working with PDA • Insurance for Food Entrepreneurs • Food Labels • Business Planning • Marketing Your Food Product • Price and Pricing • Price and Pricing Worksheet

17. The On-line Course • Six Modules: • Getting Started • Safe Home-Based Food Production • Developing a Game Plan • Finding a Marketing Niche • Packaging Your Product • Pricing Your Product • NE SARE Grant supported this project • 24/7 access to much of workshop material

18. Client Response • Since fall 2010, 463 participants; 235 of those since Sept 2011 • Demand exceeding the “supply” • 168 respondents, 2011/12 post-survey tool: • 91% (n = 152) rated “Information Met My Needs” as Very Good or Excellent • 95% (n = 159) rated “Quality of Materials” as Very Good or Excellent • 54% (n = 90) said program Met Expectations; 37% (n = 61) said program Exceeded Expectations

19. Knowledge Gain: Food Code/Business Liabilities

20. Knowledge Gain – Business Start-up Steps

21. Post-Session Attitude: Importance of Identifying/Studying Market Niche

22. Food Risk Aspects in Food for Profit

23. Managing Risk for Food Businesses: Post-program Knowledge Levels

24. Attitude Change: Need to Pre-Test Recall Plan

25. Practice Change: Strategies that Resonated

26. Future Opportunities • 2012 NE SARE funding for PA, MD, WV • Train/apprentice additional educators • Develop additional fact sheets/resources • Goals – 3 year project • 23 Additional educators (2012) • At least 135 farmers attend resulting workshops (2013) • At least 20 new food ventures (2014) • At least 20 adopt recommended risk strategy (2014)

27. Discussion/Questions