Pooling product can enhance marketing, but start slowly

02/21/2012 04:05:00 PM
By Renee Stern, Contributing Editor

Growers can find strength—and profit—in numbers, banding together for marketing, distribution and other efforts.

From multi-farm community-supported agriculture, or CSA, outlets to cooperatives and pools under a common label, this joining of forces allows small- to medium-sized operations to reach new customers increasingly interested in local produce.

Some commonalities filter through the various formats.

Together, growers can offer enough volume or range of crops to attract retailers, foodservice outlets or institutions that might be out of reach for each individual farm.

They may also be able to gain volume discounts by pooling such purchases as packaging or fertilizer.

Growers also can tailor organizational structures to meet their needs. And whether they sell all or part of their crops through the group, that outlet provides a steady, reliable income.

Andy Ross, owner of Skagit Flats Farm in Mount Vernon, Wash., sells about 80 percent of his product through Farmers Own, a regional organic label owned by Seattle-based Charlie’s Produce that represents about 20 Northwest growers.

That gives Ross the leeway to work with smaller, more local customers who provide higher margins for the remainder.

Someone needs to lead

Some common pitfalls emerge as well.

Someone—ideally one of the producers—needs to take charge, but finding someone with the time, aptitude and inclination may mean hiring a manager, says Shermain Hardesty, a University of California Cooperative Extension economist at Davis.

Relationships among members or with the organization may fall apart, Ross says.

“You need a lot of trust in the relationship,” Ross says.

“It’s a mutually beneficial arrangement,” says Farmers Own manager Diane Dempster.

The company gains a marketing tool with the steady source of locally grown produce, and in return supplies packaging and handles sales, transportation and bookkeeping for participating growers.

Dempster works with growers to plan production quantities and schedules, to stretch the season as long as possible and avoid gluts and shortages that wreak havoc with prices.

Finding the right mix of people is important, says Jim Crawford, a founding member and president of the board of directors at Tuscarora Organic Growers, a 25-year-old cooperative centered in Hustontown, Penn.

“We have a good group of people, members who are willing to work together and are committed to the needs of the co-op,” Crawford says. “Part of that is luck.”

The group, with a full-time manager, has collectively “done better than I could do it myself,” he says.

Good communication is key

Good communication and transparent operations for everyone involved are the key, says Susan Futrell, marketing director for Red Tomato, a Boston-based nonprofit that handles sales and distribution for about 40 Northeast growers.

“When you’re working in a network like this, you need to be accessible and open about your needs,” Futrell says.

Red Tomato is more decentralized than some groups, coordinating rather than owning warehouses and trucks.

The network includes growers with storage and hauling capacity but also taps outside trucking companies to help move produce directly from farms to retailers.

That approach allows Red Tomato staff to concentrate on developing markets and servicing customers, Futrell says.

Maintaining quality standards across a group of growers is a critical requirement.

Whether the pool’s brand identifies individual farms on a package, such as with Red Tomato’s Eco Apple program, or aggregates everything under a single label such as Farmers Own, delivering inconsistent quality can sink collective efforts for everyone.

A strong reputation for consistent, highquality produce has helped the Tuscarora co-op grow from $30,000 in annual sales to $3 million today, Crawford says.

Tuscarora requires members to follow an 18-page set of quality standards covering not only individual crops but also on-farm packaging, says general manager Jeff Taylor.

A committee of staff and member growers establishes the guidelines.

Members also sign on to a “commitment chart,” a spreadsheet projecting a certain number of boxes per week for so many weeks of each item they offer the co-op.

“They commit to growing that, and we commit to selling it,” Taylor says.

Slow and steady wins the race

Another potential hazard lies in aiming too high too soon.

A slow, steady growth curve is more sustainable for the long run, Crawford says.

That’s a lesson taken to heart at Pilot Mountain Pride, a public-private partnership that opened in 2010 to encourage new crops in tobacco-growing Surry County, N.C., and seven neighboring counties along the Virginia border.

The other aims, says Surry County Extension director Bryan Cave, include meeting a demand for local food and infusing new blood into the ranks of farmers nearing retirement.

Pilot Mountain is a single-member limited liability company, owned by the county economic development office; growers pay a fee for packaging, sales and distribution services.

Although initial efforts focused on selling only fresh produce, a new venture is in the works to add processing—steaming and flash-freezing—to reach institutional customers such as schools, Cave says.

Participating growers so far either have agricultural experience in tobacco but not produce, or are new to farming altogether.

“This is a way for them to learn and grow their business,” Cave says.

Forecasts for the first year projected $30,000 in sales.

Instead Pilot Mountain topped $250,000 that year and had to add a mechanized, larger washing line.

But while growth for the overall group has exceeded expectations, Cave still advises caution.

“Don’t try to go from zero to 100 overnight,” he says. He saw first-year farmers overwhelmed after planting 20 acres of sweet corn.

Multifarm CSAs are another way to achieve incremental growth, Hardesty says.

One CSA farmer might take the lead by contracting with a neighboring operation to add more variety to the product mix, later adding additional growers or expanding the relationships into a more formal partnership.

Collaborative box or bundled CSAs work together to market their products and manage the arrangement. More products and more volume create greater visibility for everyone. And, as with cooperatives, CSAs can start up relatively quickly, she says.

Whatever the format, keep in mind the formula for success, “under-promise and over-deliver,” Futrell says. “Take small steps and do them well.”



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