PROVIDING FARMERS THE TOOLS TO MANAGE RISK IN VALUE-ADDED VENTURES National Women in Agriculture Educators Conference Memphis TNMarch 27-29, 2012 Winifred.

PROVIDING FARMERS THE TOOLS TO MANAGE RISK IN VALUE-ADDED VENTURES

National Women in Agriculture Educators Conference Memphis TN March 27-29, 2012Winifred McGee, Senior Extension Educator, Penn State ExtensionLynn Kime, Senior Extension Associate, Penn State Extension

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."

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

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)

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)

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)

Farmer’s Share of Food Dollar

Farmer ShareSupply Chain

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

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?

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.

Food for Profit ProgramBasic 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

Incorporating Risk ManagementIn 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

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

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

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

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

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

Knowledge Gain: Food Code/Business Liabilities

Remained theSameOne Step Increase

Two or MoreSteps Increase

Knowledge Gain – Business Start-up Steps

Remained theSameOne Step Increase

Two or MoreSteps Increase

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

SomewhatImportantModeratelyImportantVery Important

Food Risk Aspects in Food for Profit

0

10

20

30

40

50

60

70

80

90

100

GAP/GHP HACCP Insurance List Allergens Recall Plan

First Exposure

Not Applicable

Want > Info

Will Adopt

Managing Risk for Food Businesses: Post-program Knowledge Levels

0

5

10

15

20

25

GAP/GHP HACCP Insurance List Allergens Recall Plan

Minimal

Moderate

Considerable

Attitude Change: Need to Pre-Test Recall Plan

Remained theSame1 Step Increase

2 Steps Increase

3 Steps Increase

Practice Change: Strategies that Resonated

InsuranceRecall/InventoryWritten PlanFood SafetyGAP/GHPAllergens

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)

Discussion/Questions