Family Farm Forum

1. Family Farm Forum AGRICULTURE OF THE MIDDLE Welcome May 26th 2010 2:00 – 3:30 p.m.

2. Introduction The Family Farm Forum consists of: • Bi-annual Update on a topic of importance to small and medium-sized family farms • 1st Forum: Farm Transition – Exit, Entry and Planning • 2nd Forum: Local Food Systems • 3rd Forum: Entrepreneurship • 4th Forum: Small & Mid-Sized Animal Operations • Bi-annual web-conference to discuss selected NIFA programs, funded projects and stakeholder interests

3. Purpose of FFF Enhance research, teaching and outreach programs on key topics for family farms • Promote discussion and networking among stakeholders • Provide information about NIFA funding opportunities • Enhance impacts of NIFA supported programs by disseminating information and encouraging participation

4. Agenda for Webinar • Q & A #1 - General • Overview of Selected Programs • Steve Stevenson – U. Wisconsin – Renewing an Agriculture-of-the-Middle • Shermain Hardesty , Gail Feenstra – U. California • Michael Rozyne – Red Tomato • Q & A #2 – Programs in the states.

5. Agenda for Webinar • USDA Programs and Initiatives • Lucas Knowles – USDA • Debra Tropp – Agricultural Marketing Service • Thomas Gray – Rural Development • Overview of Other NIFA Programs • Q&A #3 – USDA Programs and Initiatives • General Discussion: How do we build on our strengths and address our weaknesses? • Closing remarks

6. Technology • Use the chat pod to ask questions and respond to others • You can respond to individuals or to the group • Repeat your question if it is not answered • Contact Patricia for a copy of this webinar or the Update pmcaleer@nifa.usda.gov

7. Polling Question # 1 The topic for the next Family Farm Forum should be: • Food Security and Family Farms • Food Safety Research and Outreach • Access to Credit • Other send suggestions to Patricia: pmcaleer@nifa.usda.gov

8. First Q & A

9. Renewing an Agriculture-of-the-Middle Dr. G. W. Stevenson, Senior Scientist Center for Integrated Agricultural Systems University of Wisconsin– Madison Telephone: 608-212-9078

10. Renewing an Agriculture-of-the-Middle

11. Business & Marketing Options Value- Added 1. Direct Marketing 2. Opportunity Area Multi-Farm Food Value Chains Farm Stands Farmers’ Markets CSA’s Very Small Very Large 4. Troubled Zone 3. Commodity Marketing Small & Mid-scale Commodity Producers Large-scale commodity markets Commodity

12. Strategies for Mid-Sized Commodity Farmers • Individual Strategies • Get Bigger • Shift to value-adding, direct marketing • Shift to lower input cost/higher margin farming systems, e.g., grazing dairy systems…Other farming systems? • Collective Strategies: Multi-Farm Food Value Chains • Direct-to-wholesale marketing (regional supermarkets & food service) [Completed Case Studies] • Direct-to-consumer marketing through multi-farm CSA’s & Internet sales [Current Case Studies]

13. Multi-Farm Food Value Chains are Strategic Business Alliances that: • Deal in significant volumes of aggregated, high-quality, differentiated food products • Treat farmers as strategic partners, not as interchangeable input suppliers • Distribute rewards and responsibilities equitably across the supply chain • Emphasize strategic interests in the well-being of all partners (farmers, processors, distributors, retailers) • Build value beyond the product to include the story of the people and the business practices • Operate effectively at regional levels

14. Agreements Among Value Chain Partners Ensure that: • Prices are negotiated on the basis of production and transaction costs • Agreements are fair and for appropriate time frames • Opportunities exist for farmers and ranchers to control their brand identity up the supply chain, and • Co-branding with supply chain partners is a strategic option

15. Completed Case Studies • Country Natural Beef [www.oregoncountrybeef.com] • Shepherd’s Grain [www.shepherdsgrain.com] • Organic Valley Family of Farms [www.organicvalley.coop] • Red Tomato [www.redtomato.org]

16. Big Themes & Available Resources • Themes: • Value Chains Can Be Both “Smart” and “Right” • Value Chains Can Be the Foundation for a “Third Tier” in the US Food System • Resources: • www.agofthemiddle.org • http://cdp.wisc.edu • Lyson, et.al. 2008. Food and The Mid-Level Farm: Renewing an Agriculture of the Middle. MIT Press, Cambridge MA • gwsteven@wisc.edu

17. Developing Values-Based Distribution Networks for Small and Mid-scale Producers Project Directors: Director: Shermain Hardesty, Ag & Resource Economics, UC Davis, shermain@primal.ucdavis.edu Co-Director: Gail Feenstra, Sustainable Agriculture Research & Education Program, UC Davis, gwfeenstra@ucdavis.edu Project Partners: Dawn Thilmany: Ag & Resource Economics, Colorado State University Tom Gilpatrick: Food Industry Leadership Center, Portland State University Jim Dyer: Southwest Marketing Network, Durango, CO Bob Corshen & Josh Edge: Community Alliance with Family Farmers

18. Project Goals: • Identify how successful distribution networks involving small- and mid-scale producers are affected by 3 factors • Access to financial capital • Governmental regulations and policies • Business/entrepreneurial savvy • Describe how these networks generate environmental & social benefits, enhance financial viability of small- & mid-size producers • Educate producers, agbusiness lenders/funders, policy-makers & small business/community development consultants about factors critical to the development of successful values-based distribution networks

19. Methodology: 2-phase research process • Phase 1: 9 case studiesof western US food distribution networks that are part of values-based supply chains or more conventional supply chains • Phase 2: Survey of 3 institutional segmentsexpected to affect development of value chains: • Agribusiness lenders & funders • Government agencies • Small business/community development consultants • Outreach: • Advisory board includes stakeholders involved in distribution networks • Share findings through regional workshops, professional meetings, academic & practical publications

20. Preliminary Findings:Financing/ Business Saavy • Access to capital for established distributors does not contribute significantly to success unless the distributor is associated with a nonprofit or dependent on grant funds • Distribution expertise and prior investment in infrastructure is important for distributors • The “right balance” of small, mid-scale and large producers in distribution networks is important for financial stability of distributors

21. Preliminary Findings:Regulations • Retailers and institutional buyers, rather than government, have been largely responsible for imposing food safety standards (GAP, HAACP, etc.) • Small growers, in particular, will need to prepare for new GAP standards • Group GAPS?

22. Preliminary Findings:Emerging Trends • “Aggregation hubs” or “Regional food hubs” are emerging in various forms for small and mid-scale producers to consolidate product. • May involve existing distribution warehouses • May involve farmers markets • Ability to communicate authentic stories of producers is bottom line. May trump “local”

23. Red Tomato Michael Rozyne Red Tomato Canton, MA 02021 781-575-8911  x 24 mrozyne@redtomato.org www.redtomato.org

24. We Differentiate Products (decommodify) • Locally-grown • Ecologically-grown • Fair trade • Intrinsic product • Aggregation, consolidation • Brand • Storytelling, promotion • Day-to-day: we develop product lines and packaging, brand, sell, finance, food safety, insure, take and fulfill orders, manage logistics • We coordinate a network of 40 Northeast mid-sized growers

25. Lettuce, Pleasant Valley Gardens Methuen, MA

26. “Michael, my job is to imitate California; same varieties, same box, same pack. And then deliver it for a couple bucks less. It’s June. Sorry, I don’t have time to talk.” • Richard Bonanno, Pleasant Valley Gardens, Methuen, MA • 3rd generation vegetable grower • 70 years selling lettuce, peppers, squash, etc. • PhD in weed science • 90’s: $8.50/ case for 24 heads lettuce • Canada: $7-8/ case • labor + 80%, box + 50%, truck/fuel +100%

27. The Dignity DealNot a formula, rather a process—our way of doing business • Based on values • Fairness, Transparency, Shared risks and rewards, Triple bottom line accountability, (Economics, Social, Ecological) • Baseline • Striving for freshness and flavor through continuous improvement • Origins of dignity pricing • Began with costs of production + reinvestment and fair/limited profit • Unrealistic, so moved on to the dignity price

28. Characteristics of the Dignity Deal • Close the distance between grower and consumer • Farm identity preserved • Feedback loops • Constant communication • Continuous improvement • Risk sharing • Buyer commitment • Advance planning • Dignity pricing • Farmer is at the table for strategy and price making • Externalities are part of the conversation

29. Locally-grown: farm identity preservation and promotion

30. Second Q & A • How do we identify and disseminate information about programs at various states to enhance the impacts? • Other?

31. www.USDA.gov/KnowYourFarmer KnowYourFarmer@usda.gov Lucas Knowles, Marketing and Reg. Programs Lucas.knowles@usda.gov

32. USDA’s Vision for Rural Economies • Regional Food Systems and Supply Chains • Broadband • Ecosystem Market Incentives • Forest Restoration and Private Land Conservation • Renewable Energy and Biofuels

33. Our Mission: Know Your Farmer, Know Your Food (KYF2) strengthens the critical connection between farmers and consumers and supports local and regional food systems.

34. Participation across the Department • Existing authorities and programs • Emphasis on collaboration • Areas of focus: • Meat and Poultry • Food Hubs • Farm to School and School to Farm • Food Deserts • Research and Analysis

35. Agricultural Marketing Service Contact info: Debra Tropp Branch Chief Farmers Markets and Direct Marketing Research USDA Agricultural Marketing Service 202-720-8326 Debra.Tropp@ams.usda.gov www.ams.usda.gov (home page) www.ams.usda.gov/WholesaleFarmersMarkets www.ams.usda.gov/MarketingServicesPublications.htm

36. What We Do to Support “Ag Of The Middle” • The Agricultural Marketing Service works every day for producers of all sizes - including farmers in the middle - to help them move product through the food supply chain in an efficient and cost-effective manner • AMS strategic mission and legislative authority mandates that our programs: • facilitate the competitive and efficient marketing of agricultural products • quickly move wholesome, affordable agricultural products from the farm to the consumer • reduce the price spread between producers and consumers

37. What We Do to Support “Ag Of The Middle” • In particular, our Marketing Services Division focuses on helping small and mid-size farm operators by supporting the expansion of direct and local marketing opportunities for their products • Our Farmers Market Promotion Program, currently funded at $5 million per year • awards competitive grants to a number of eligible entities, including producer cooperatives and networks • supports demonstration projects and technical assistance initiatives in farmers markets, roadside stands, community-supported agriculture programs, agri-tourism activities and other direct-to-consumer marketing

38. What We Do to Support “Ag Of The Middle” • Meanwhile, the research branch of our Marketing Services Division conducts baseline research and case study analysis of direct and local marketing issues and trends, and provides site-specific technical assistance to food market planners and managers on design issues and consumer demographics • Much of our research involves identifying promising distribution and marketing models and practices to help local producers/processors—and the stakeholders that support the—make better informed business decisions

39. What We Do to Support “Ag Of The Middle” • We see the development of direct“business to business” market opportunities between mid-size farm producers/networks and institutional, restaurant, and retail buyers as a potential major contributor to farm income and rural economic vitality

40. Direct Marketing from Farm To Firm(and Institution) • Brief history: • Agency involvement dates back to mid-1990’s • Was first agency at USDA to support and implement two pilot farm-to-school marketing projects—among the earliest projects in the US! • Developed three guidance documents on farm to school marketing between 2000-2005 (one in partnership with FNS and CFSC) • Early pioneer in examining competitive advantage of local meat processors in supplying restaurants—published Enhancing Commercial Food Service Sales by Small Meat Processing Firmsin 2004

41. Direct Marketing from Farm To Firm (and Institution) • Recent accomplishments: • Published a handbook in 2009 on direct institutional and retail sales strategies, in an effort to provide practical information to farmers and processors from those who actually source local product • Content of the handbook was based on lessons learned from a training event organized by AMS in 2008, which involved the participation of a hospital food service director who purchases locally grown food, a regional produce manager from a major national food retail chain, and a regional produce distributor

42. Direct Marketing from Farm To Firm (and Institution) • Ongoing activity: • To further expand the marketing opportunities available to mid-size farmers and farmer networks, anewly created USDA farm-to-school tactical team, comprised of personnel from the Commodity Procurement Branch of AMS’s Fruit and Vegetable Programand FNS, is conducting 15 site visits this year to farm-to-school programs across the country to learn about how farmers can establish new markets in local schools • Information collected from these site visits will assist schools, farmers and the Department in developing the tools to address existing challenges and replicate successful programs

43. Guidance on Supply Chain Management • Accomplishments: • Created “Supply Chain Management Basics” series, designed to help small and mid-sized producers and processors better understand the changing landscape of buyer requirements regarding quality control, inventory management, packaging, vendor selection, and food safety • Completed modules include: • The Dynamics of Change in the U.S. Food Marketing Environment • Technology:  How Much—How Soon? • Tracking Trucks with GPS • Niche Agricultural Marketing: The Logistics • Intend to complete this series with an additional training module on food safety practices and considerations, currently under development

44. Guidance on Supply Chain Management • Ongoing activity: • Assessing distribution and logistical challenges faced by mid-sized producers who are attempting to broaden their customer base.  • Studying nine distribution models being used by farmer networks and alliances across the country • Many farmers continue to be challenged by the lack of distribution, aggregation and processing infrastructure that would give them wider access to retail, institutional, and commercial foodservice markets • Problem is especially acute for mid-size farm operators, who are too large to rely on direct marketing channels as their sole market outlet, but too small to compete effectively in traditional wholesale supply chains by themselves

45. Agricultural Marketing Service

46. Guidance on Supply Chain Management • Ongoing activity: • Working with the Wallace Center of Winrock International and approximately two dozen leading national researchers and practitioners to: • develop a common framework for how we define, study and understand value chains in the food system • summarize analysis from current research on the major lessons learned, challenges, and opportunities for establishing value chains • create a compilation of practical tools/applications that can be utilized by practitioners to establish or strengthen value chain development. (To be completed summer 2010)

47. Agriculture of the Middle Thomas W. Gray, Ph.D. Rural Sociologist/Agricultural Economist USDA, Rural Development--Co-op Programs 1400 Independence Av-SW Washington, DC 20250 Ph. 202-690-3402 E-mail: Thomas.Gray@usda.gov

48. Democratizing Democracy: Agriculture of the Middle and Cooperatives • Democracy presumably seeks to create political-economic (and sociological) room for people to influence decisions that have an impact on their lives (Roussopoulos and Benello Participatory Democracy, 2005) • Over the last several decades farmers and much of the consuming public’s influence on food and agriculture have been subordinated to larger socio-economic forces, e.g. globalization, Fordist industrialization, corporate conglomeration, and technological developments that create a redundancy among farmers and communities

49. Two parallel food and agricultural systems • Two parallel food and agriculture systems have emerged with the development of these larger tendencies • One progressively large scale and vertically integrated into a global and corporate food system • The other composed of much smaller and more diverse farms oriented primarily to local and regional markets

50. A series of choices and tensions have come out of these dynamics as well, and include (among others) consideration of: • Farming as a business and a way of life versus farming as a business. (Economic and social sustainability) • Reduced reliance on external sources of energy, purchased inputs, and credit versus continued reliance on these inputs. (Economic sustainability) • Emphases on use of renewable resources and conservation of non-renewable resources versus continued heavy reliance on non-renewables. (Ecological sustainability) • Emphases on dispersed control of land, resources, and capital versus continued reliance on processes that concentrate them. (Social sustainability) • Rural Communities understood as essential to a sustainable agriculture versus rural communities understood as non-essential and dispensable (Beus and Dunlap 1990; Flora and Chiappe 1998). (Social sustainability)