Value-Added Marketing
Perspectives On Line: The Magazine of the College of Agriculture and Life Sciences

NC State University

Winter 2004 Home
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An Enterprising FutureRamping UpProfit from (Bio)ProcessGolden Diversification OpportunityClearly HealthierValue-Added Marketing All Systems GoLocation, Location, LocationA Profitable OptionPremium PartnershipThe State of Agriculture
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Photo of tomatoes-- by Theresa Nartea

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"Value-Added Marketing"-- Farmers can count on the College's assistance as they sell through community-supported agriculture, grower cooperatives or produce auctions---by Natalie Hampton
The College has helped farmers establish new markets like this CSA at Research Triangle Institute. Photo by Theresa Nartea.

Ornate letter "A"
s farmers shift from commodity-based to value- added agriculture, they are also looking for new ways to market new products.

Bob Usry, Extension specialist in the Agricultural and Resource Economics Department, calls this “value-added marketing.” The idea, he says, is that farmers need to consider a niche or market for products they grow. Marketing these products is the key to successful operations. The College of Agriculture and Life Sciences has helped farmers establish new markets for value-added products in a variety of ways, including community-supported agriculture systems, grower cooperatives and the state’s only produce auction.

Marketing through a community-supported agriculture system

The College is a partner in the Center for Environmental Farming Systems (CEFS), which this summer sponsored a corporate community-supported agriculture (CSA) program at Research Triangle Institute in nearby Research Triangle Park.

Summer 2003 was the first season for the CSA at RTI, a non-profit research organization with more than 2,000 employees. The effort was organized by Cooperative Extension agents near the RTP, along with Theresa Nartea, CEFS program director for marketing and education.

In a CSA, or subscriber system, shareholders purchase shares of a farmer’s crop, paying for the entire season up front. In return, the farmer provides fresh produce or other goods to the subscriber on a weekly basis. A CSA provides the farmer with capital for the growing season up front, rather than his having to take out loans. And the consumer shares in any potential losses from weather-related catastrophes. Successful CSA farmers can build long-lasting relationships with shareholders.

The CSA at RTI initially involved 16 farmers, who offered 17 subscription choices to RTI employees. Subscription choices included a variety of farm products such as cheese, eggs, flowers, meats, processed foods and produce. A total of 118 employees purchased shares, with farmers reporting income of more than $35,000.

The effort helps support local and organic agriculture. Consumers benefit by receiving a plentiful supply of fresh, local produce and farm products from growers they know, and farmers benefit from the guaranteed income that CSA provides.

Last year was a learning experience, Nartea said. Of the initial 16 farmers involved, most of the profit went to about five operations. The operations that did well were those that offered a variety of products and allowed customers flexibility in buying shares.

The demonstration has now been adopted by RTI, and an 11-member employee committee will assist with and promote the program in 2004. They hope to have most of the farmer shares sold to employees by late January. CEFS has tentative plans to help develop a hybrid CSA/farmers market in the future.

Nartea said that CSA thrives in urban centers near rural farm communities. She advised those interested in starting such a program to work with a trained Cooperative Extension agent or local growers who have experience with CSA.

Pooling produce through grower cooperatives

Other alternative marketing systems have had mixed success. In 2002, drought and heat greatly impacted fruit and vegetable crops sold. And in 2003, high rainfall played havoc with growers, first delaying and even preventing planting of certain crops then bringing diseases and other problems to the crops that were produced.

Grower cooperatives are a way for farmers to market by pooling their produce to sell to buyers like grocery stores that need a large, reliable supply. In 2001, eight Richmond County produce growers decided to form a melon cooperative. Although an individual grower probably could not produce enough melons to attract a buyer’s attention, eight growers probably could.

They store their melons in a large cooler rented from a former peach cooperative. When they had enough melons to fill a truck, they would contact a buyer to sell the load. Some of their melons went to Aldi, a grocery store chain now operating in North Carolina.

Disease brought on by a wet growing season depressed melon production this year, according to Richmond County Extension Director Taylor Williams, who helped the co-op get started. Other crops grown by the co-op this year included sweetpotatoes, squash and sweet corn.

The growers’ biggest problem at the moment is finding a location for a new cooler they would like to build with a $100,000 grant from the U.S. Department of Agriculture’s Rural Development program. They needed to find a site by Dec. 31 or risk losing the grant. Electricity costs at their rented facility are high.

The co-op members still haven’t turned a profit, but they remain committed to the concept. And other growers have expressed in joining the co-op, but the group wants to remain small until members develop a workable business plan.

The Stokes County Growers’ Cooperative started in 1999, with help from Jeffrey Boyles, associate Extension agent with N.C. Cooperative Extension in Stokes County. The co-op initially had about 20 growers, who grew a variety of produce: sweetpotatoes, squash, zucchini, green beans, cucumbers, tomatoes, green peppers, hydroponic lettuce and watermelons.

Boyles said this season was challenging for the co-op due to weather-related problems and the loss of marketing opportunities with Food Lion and Lowes Foods grocery chains. About 15 producers participated in the co-op this season.

The group’s biggest successes were with zucchini and sweetpotatoes, Boyles said. A wholesaler in Winston-Salem bought the zucchini. Sweetpotatoes, which came in late, were bought by a local grocery store chain that planned to pack them in five-pound boxes. The remaining sweetpotatoes were to be sold to a supplier in Eastern North Carolina.

The co-op has had access to a storage facility with two rooms. This season, one of the rooms was converted to refrigeration, giving growers a place to cool down summer produce and store it for market. Sweetpotatoes also can be cooled after curing, Boyles said.

The Stokes County Growers Co-op has received grants from Z. Smith Reynolds Foundation, the U.S. Department of Agriculture’s Rural Development program, the Duke Endowment and Stokes County Commissioners. Boyles believes the number of growers participating will continue to grow.

Produce auction helps farmers to maximize profits

In Oxford, the state’s only produce auction recently ended its second season. Like the other marketing operations, the produce auction suffered from decreased production brought on by heavy spring and summer rains that delayed planting.

The produce auction operates much like a tobacco auction, with buyers bidding on lots of produce. Sales go to the high bidder. The process allows farmers to maximize profits by selling directly to buyers, who benefit from easy access to fresh produce.

This season, the auction, which operates in Billy Yeargin’s Tobacco Warehouse, sold produce on Tuesdays and Thursdays from July through September, and Thursdays only beginning in October. A Golden LEAF grant provided a new cooler and forklift for the auction this year. The cooler allowed growers to store unsold produce for another day’s auction.

Sales at the auction totaled $25,000, only about a quarter of last years’ sales. But interest was up: 88 growers and 214 buyers registered with the auction, an increase over last year. Buyers come mainly from small produce markets and stands, Extension Agent Carl Cantaluppi said. Many sellers at the market also buy produce to take back to their own sales operations.

In addition, the auction received a small marketing grant from N.C. Department of Agriculture and Consumer Services to run radio ads about the auction early in the season.

Popular produce items sold at the auction this year were cantaloupes, butter beans, purple hull peas, turnip salad, sweetpotatoes and an array of summer fruits. Next year, the auction will be back at Yeargin’s Warehouse.


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