Increase Profitability by Adding Value to Farm Products

Published with permission from guest author Brenda Reau, Michigan State University Extension, MSU Product Center

The term “value-added agriculture” gets tossed around a lot, but what does it really mean? Many farmers want to increase profitability and adding value to raw agricultural products in one way to accomplish that goal. To achieve this however, farmers need to think in new and different ways and break away from focusing all of their efforts on production. There are two ways to add value: by capturing value or creating value.

Capturing Value

Capturing value relates to capturing some of the value that is added to a product by processing or marketing. The farmer’s share of every dollar that consumers pay for food has been shrinking over the years. It was about $.33 per $1 in the 1970s and in recent years has dropped to about $.16 per $1.  The farmer continues to get less and the rest goes to processing, distribution and marketing. These figures sound discouraging but clearly illustrate the potential opportunity to attain more value.

Farmers can capture value by entering the processing arena—turning farm products into food products adds significant value. This involves risk and requires a new skill set. Often farmers can create alliances in cooperatives or limited-liability companies that can combine resources to achieve common goals. One very successful example is the Michigan Turkey Producers Cooperative.

Direct Marketing is also a way to capture value and can be done in a variety of ways on both a small or large scale. On-farm stores, farmers’ markets, CSAs, mail order and Internet sales have proven to be beneficial in capturing value. Many farmers are also now achieving a bigger profit margin by direct sales to the food service industry serving restaurants, schools and hospitals.

Creating Value

Creating value is another strategy that involves developing products that are differentiated in some way. The product difference may be real or perceived.

The key to success is that the consumer feels there is added value to the product and is willing to pay for it. Creating value can be accomplished with branded products or those with special certification. One product that combines both of these attributes is Certified Angus Beef. Products produced using special methods such as organic or environmentally friendly practices also create value. The current consumer trend of preference for locally produced foods fits with creating value. In this case the production practice is not different but methods of marketing the products become key in creating the perception of value to consumers.

If you are interested in exploring the development of value added agricultural products, contact the MSU Product Center. Specially trained innovation counselors are located throughout Michigan and can assist producers in developing value added products and businesses.

This article was published by Michigan State University Extension.
Interested in adding value to your farm? Take a look into agritourism: “How to Get Started in Agritourism“.

Do you practice any value added techniques?

Two For All

 

Two for All Blog Photo

 

Just 2%.

The percentage of our North American population that works every day to provide the rest with one of our most basic needs to sustain life – food.

Our global food system is the single most powerful force unleashed on the planet today, yet a rapidly swelling population means we have to find ways to double our food production. Our footprint is large as the food system continues its significant and complex effects on our environment, our economy, and our rural social fabric.

 

So Where Do We Begin?

Farmer’s are an easy target as they grow the food. Increasingly society is demanding sustainable agricultural practices yet have little understanding of the impact they themselves have on the food system.   Farming practices develop to meet the demands of the system. Consumer’s expectations for cheap food, huge variety, desire for convenience and not having to grow their own food has been the number one driver in the creation of this food system impacting our world.

Sustainable agriculture means the efficient production of safe, high quality products in a way that protects and improves the natural environment, the social and economic conditions of farmers, farm workers and local communities and safeguards the health and welfare of all farmed species. There are some challenges as we move to a sustainable food system.

 

Economic Sustainability

The economic realities of farming make it extremely difficult to attract young farmers as we lose them to higher paying careers. It would seem that an aging farmer population provides a window of opportunity for young farmers however, each generation is in a state of continual refinancing for the same property to ensure the outgoing generation has enough money to retire. The cost of the land and the equipment is so astronomical that even those who want to farm don’t have the means to. Input costs have soared, while profits have not, forcing many farmers to take second jobs so they can feed their own families. On average, farmers today receive, on average, 16 cents of every food dollar, and that’s BEFORE expenses. In other words, a farmer’s work has become more humanitarian in nature as making a living solely from farming becomes more and more difficult.

Now we are asking farmers to fix what’s wrong and save our planet and resources by employing sustainable practices that can make a difference. The simple fact of the matter is that we cannot put all of the burden and expense on the shoulders of the 2%, who are already being crushed by the weight and demands of the whole as they are barely staying afloat. One misstep, one wrong choice or the implementation of one ineffective practice can mean disaster and the risk of collapsing their entire operation, essentially gambling their family’s future and home. We cannot ask so much without offering to assist and support those who hold the land in their hands to become economically, environmentally and socially sustainable.

 

What Can We Do To Help?

FarmOn has committed to bringing context to the story by bringing together the best and the brightest to share knowledge, generate new thinking and inspire bold solutions. We owe it to ourselves, our farmers and our planet to check in and become an active part of the solution for a food system we all had a hand in creating. We can do better. Because we must do better.

You too can support our mission.

 

An Open Letter to Activists

Dear Activists;

Your message is clear. You don’t like livestock production, and you don’t much like the farmer/producer either.

You think we don’t care, we hide the truth and have no interest in caring for the earth with sustainable practices. You use words that are much more direct and even vulgar but essentially, you are committed to ‘outing’ us for our insensitive, ‘produce at all costs’ ways.

Throughout history, we have witnessed some amazing activism, from the civil rights movement to the suffragette movement and many more. The leaders of these movements understood that rallying people together as one, through steadfast commitment to benefitting the lives of their fellow man and through inspiring others is how change came about. Activism that employs moral aggression to strike out harshly and repeatedly to hurt those who don’t share your views is unlikely to achieve what you are looking for. The tactic of using public shaming, harassment and intimidation to try and dominate those who oppose your view accomplishes little. In history, we have seen oppressing leaders who have used these very tactics to carry out some of the most atrocious acts in human history. It is not the kind of culture that benefits humanity in any way.

We understand passion. Passion is that strong and barely controllable emotion that is put into action with as much heart, mind, body and soul as is possible. We get it.

We are passionate, too. We believe that sharing our stories and encouraging dialogue creates an opportunity to learn more about other’s perspectives and passions. It is when points of view become confused with ‘absolute truth’ that communications break down.

Yesterday – Earth Day – was a day we had chosen for all farmers to share their stories with the hash tag#FarmVoices, so others could learn more about their perspectives and passions. It was their turn. We know that one of the most sincere forms of respect is to listen – there is as much wisdom in listening as there is in speaking.

Each year we lose more and more family farms. It has become harder to farm. Harder because there are fewer farmers to support each other, harder because so many have off farm jobs, harder to make economic sense of the business of farming and harder to find time to explore new technologies and information they need. Often the only way to connect with each other is online.

We have no doubt that there have been instances where animals could have been cared for in a better way. However, best practices come as a result of people sharing and demonstrating better outcomes, which happens when they connect with each other.

We assume you eat to sustain your bodies, and must be aware that farmers grow your food, too. You believe that all living beings deserve to be treated with respect. We believe that farmers deserve that respect as well.

We hope you take the time to listen and watch some of the stories, to seek to understand and to allow space for dialogue. In turn, we promise to use our time and our passion to connect, promote best practices and support ALL of agriculture in whatever way we can.

FarmOn Team

 

Farmer vs. Farmer: The War We Never Saw Coming

Stand for farmers (with logo)

The Farmer Wars are here and we’ve gotta say, they ain’t pretty! As more companies continue to use the great food debate as a marketing gimmick, often with controversy being their main goal, the agriculture industry has rounded up the troops and launched a counter attack at…each other. Wait…what???

Let’s be honest, unless you’ve been living under a rock, you’ve probably been witness to, or maybe even part of one of these battles. A knock ‘em down, drag ‘em out, no holds barred, good old fashioned mud slinging; farmer vs. farmer style. And if you’re like us, you’ve probably shook your head and thought “What the hell? Why are we fighting the wrong fight?”

Why do we continue to let companies like Chipotle pit farmers against one another? We have a bad habit in agriculture of allowing outside forces to divide us, and our first instinct is to tear fellow farmers apart in an attempt to prove that our way is the right way. Again, why? In the end, we are no further ahead, we feel crappy for the way we’ve treated a brother or sister in farming, and while we are busy fighting one another, we’re allowing others to sneak up the middle and tell a biased, tainted and self-serving story of farming, that has only proved to confuse our customers three ways to Sunday!

Companies like Chipotle know exactly the effect they are creating with sensationalized marketing ploys, and they succeed beautifully. Social media is all over it. Twitter is abuzz. And the comment forums are ripe with low blows and outrageous judgments. And now, they sit back and let the controversy fester, watching their campaign gain inertia thanks to the heated farmer wars taking place all around them. Well played Chipotle…well played.

But here’s a proposition. How about instead of fighting one another, we join together for the betterment of our industry and livelihood? It takes all kinds of farmers. That’s the great thing about a vast industry catering to consumers who are looking for different things: there is room for ALL. Period. We don’t need to criticize and shame each other, and here’s why: because YOU are the best farmer for your operation. You know what works best for your farm business and the reason you operate the way you do. And if you’re farming from a place of integrity, you’re doing it right.

#FARMVOICES is a day for joining together to celebrate both our differences as farmers and our commonalities. It’s a chance to put our foot down and say no more. No longer will we allow others to tell our farm story. We know the REAL story of farming, and nobody but us have earned the right to tell it! We’ve got this.

So this Earth Day, let’s take back control and stop tearing each other apart. We owe it to one another, but more importantly, to ourselves, to stop buying into the notion that there is only one way t ofarm. We think it’s time.

 

The FarmOn Team

Farmer’s Log

What is a day in the life of a young farmer really like?

We Love Farmers

Farming is more than a job. It’s a way of life. At farmon.com we seriously love farmers. So if you’re a farmer, or you know a farmer, share the love.

When you think about farmers and the work that they do, you may wonder, are they crazy? But farming is more than a job, it’s a way a life. It’s a labour of love that tugs at our being. Many of us were born to this calling with deeply planted rural roots, while other they must be adventure seekers. Because le’ts be honest, who would willingly trust their fate to mother-nature?

Risk is what sets us apart and we’ve seen the reward. We spend time cultivating a bounty fit to feed the world because this is our land and we were stewards of it long before being green was a cause. We rise with the sun, even though it inevitably beats us to bed, and we know we’re better people for it. But we play like champs, all the while knowing morning comes fast and we’ll get up and do it all over again. And even though we understand the hardships, we can’t imagine our lives any different.

Farming is freedom.

It’s life. I guess when you think about it, yeah it is crazy, and we wouldn’t have it any other way.

 

Even When the Roof Collapsed, These Dairy Farmers Refused to Quit

Amanda and Markus Helhi are a young couple, operating the Helhi Family dairy operation near Rimbey, Alberta.  Markus has been working side by side with his father, Heini Helhi, for his entire life, and they are now in the process of succession planning as Markus and Amanda transition into the driver’s seat of the family operation.

amanda_7_498x280

amanda_6_498x280

When we visited Markus and Amanda last month to do some filming at the dairy, we arrived at about 5:15am and they were already hard at work in the milking parlour.  As each cow finished being milked the next would be brought into the double 6 flat parlour system, and you could see that even though they’d been through the motions a thousand times before, Amanda and Markus took great care with each and every animal.  Every teat was carefully cleaned and prepped, and Markus several times would stop to jot down notes on his notepad, tracking details that help him to maximize production and also watch out for the health and welfare of the animals.

amanda_2_500x350

Later in the day, Markus shared with us a story that I cannot imagine having to cope with.  A few years ago during an extreme winter snow storm, their dairy barn’s roof collapsed under the heavy snow load, in the middle of the night.  The way that the Helhi family and their friends and neighbours jumped into action and rallied together to first of all save the animals, and then carry on their operation and rebuild with a new and improved barn, is just inspiring.

amanda_4_500x280

How did the barn collapse?

“From one end to the other was down, the whole barn.  But because it happened in the middle of the night, the cows were in their stalls and the roof rested on the stalls.  So they were trapped and couldn’t get up, but they were okay.”

“It was minus 25C, and we had come out prepared to milk, so we went back and got dressed warmer, grabbed flashlights and called a few neighbours.  We thought about calling the fire department but decided not to, because once they’re there, it’s their scene and they’re most concerned for human safety, where we were more worried about the cows.”

amanda_3_499x310

“We had tractors right outside, so we took the stalls apart and then put halters on the cows and brought them out where they could get up and walk on their own, chased them into the holding pen, milked them, then put them along the outside of the barn.  Our parlour was ok, so we were able to milk.  Had the parlour gone done we wouldn’t have been able to milk.”

 

Where did the cows stay while the new barn was being built?

“It took 3 tractors all day to clean out the hay barn.  We put all the hay and straw outside, and then bedded it up and somebody brought over some panels and got a bunch of tarps and tarped it all off.  So it was really good, people were just right there to help.”

amanda_5_500x280

We all know that farmers work hard, and dairy farmers in particular have that reputation for dependability and determination, as those traits are basically built right into the job description and the demands of their milking schedule.  Markus and Amanda’s story is one that we hope will inspire many young people in agriculture to carry on, no matter what obstacles get in the way.

 

If you liked Markus and Amanda’s story, check out the rest of the#Farmvoice Stories here.

 

 

 

 

This Young Family Has Figured Out the Ultimate Food for the Soul

Ben and Stephanie describe themselves as just a couple of regular people who want to make a positive difference for their community and the environment. But believe me, they are far from ordinary!
Having both grown up on family farms, and now with a family of their own (their two boys are 2 years old and 10 weeks old!), their dream is to build up their grass finished beef business, Grazed Right, to the point where Ben can leave his day job as a construction engineer. Ben and Steph are building much more than an agrricultural business that sells healthy, sustainable, local food to consumers. They are building a business, and building their family, upon a set of core values that will truly resonate with anyone in the business of farming. And when you hear what those values are, I think you’ll agree that if anyone can make it in agriculture – and quit their day job – it’s Ben, Steph and their amazing family.

 

When we were visiting with Ben and Steph as they played with Henry on the living room floor, the topic of “risk” and “security” came up, and the question of “will the benefits outweigh the risks?”.

ben_3_498x280

Ben’s response was one that I’ve never heard before from a farmer, and it’s one that I think more of us should really adopt!

“When you don’t have a lot, then if it all fails we’ll just be back where we were a couple of years ago. We’ve been behind everyone all our lives you know, we could have finished university when we were 22 and had a job engineering in the city downtown and made lots of cash. And instead you know, we went to Africa and we spent more time in school, and I took a year off and did falconry, and we did all sorts of stuff so we’re way behind anyways. We’re running a different race now.”

ben_2_500x280

ben_1_500x280

 

 

 

 

 

The Fast Farmer: Grazing

Grazing management is an incredibly powerful way to increase the profitability of your farm business. In fact, a study using data from the AgriProfit Business Analysis & Research Program compared the profit per acre of growing grass to the profit of growing spring wheat, barley and canola, and grazing had the highest profit per acre every single time, over a 10 year period. As a bonus, grazing management also offers your farm the following benefits:

• Improving the land’s ability to withstand drought
• Reduction of soil erosion
• Promotion of biodiversity
• Enhancement of water quality and quantity
• Production of healthy food products
• Providing habitat for wildlife and insects that pollinate crops
• Assistance in carbon sequestration, mitigating climate change

However, it’s also a tool that can be intimidating to learn about if you’re new to it. If you’re like us, you’ve probably seen and heard just enough about grazing that you’re intimidated to give it a try and unsure where to start.
Working with the Alberta Forages Industry Network, we designed this series of workshops specifically to give you only the critical starting steps you’ll need to create a basic plan and install a simple fencing and water system. It will also walk you through the 4 essential principles of grazing and give powerful examples of how those principles have been used by successful producers in various climates, ranging from large operations to very small farms starting from scratch.
This page is set up so that you can go through the series in a linear flow from top to bottom, or you can jump ahead and click on any of the workshop links that interest you. As this grazing series is the initial “pilot” of FarmOn’s new Fast Farmer program, we would love to know what you think of the content and this format of learning. You can get in touch with Sarah or Ben any time to let us know what you think, or send an email to info@farmon.com

 

Grazing Stories

rsz_thumb_grazing_stories_300x169

We’ve found that there’s something people have in common who are good at rotational grazing. They have a huge passion for growing grass, caring for livestock, restoring land and soil, protecting water and habitats, and finding innovative ways to produce a healthy profit. And we thought the best way to get that across was with a few short videos. Click the photo above to check them out.

 

The Four Principles of Grazing
There are 4 basic principles that apply to all successful grazing operations, regardless of location, size or climate. They work in South Africa and they work in northern Alberta. This workshop will explain what each of the 4 principles are, and how you can get started in implementing them in your operation.

The 4 Principles of Grazing Management

rsz_thumb_grazing_principles_300x169

The 4 Principles of Grazing are:
1) Overgrazing – What is it and how can you tell if you’re doing it?
2) Rest – What is it and how can you tell when your pasture has had enough rest?
3) Stocking Density – How can you tell if you’re stocking density is too heavy or too light?
4) Monitoring – How to track changes in your pasture and its productivity.

 

Planning

The best place to set up your grazing system isn’t anywhere on your pasture, it’s in your office. Do yourself a massive favour and before you go setting anything up, spend a bit of time planning it out. Are you going to use permanent cross fencing or portable wire? How are you getting water out to each area of your pasture? What’s the best route to get animals back to a processing location for treating a sick animal? Are there riparian or wooded areas that you’ll need to fence off or graze differently? Figuring it out ahead of time on paper, as much as possible, will save you time, money, and headaches.
The following two workshops will walk you through a simple process to get some of the basic elements of a grazing system down on paper. We’ve created one for designing a plan using portable cross fencing, and one using permanent cross fencing with an alley system. Feel free to check them both out and see which one is the best fit for your operation.

How To Design a Grazing Plan Using Portable Cross Fencing

rsz_planning_workshot_with_portable_fence_300x169

How To Design a Grazing Plan Using an Alley System

rsz_planning_workshot_with_alley_300x169

With either of the above systems, a good plan always starts with getting a good aerial or satellite view of your land. If you don’t have one yet and aren’t familiar with using Google Earth, check out How To Print a Satellite Photo of Your Farm from Google Earth

 

Fencing

Grazing is nothing new, in fact farmers have been grazing cattle since the beginning of the agricultural revolution thousands of years ago. But “intensive grazing management” is relatively new. By using lectric fencing you can control stocking density on your pasture by setting up small paddocks, at a low cost. Without electric fence it just wouldn’t be feasible or economical.
We recommend setting up a permanent perimeter fence, which is actually pretty easy to do if you already have an existing barbed wire fence, by using offset insulators and high tensile wire. This workshop lays out the steps, tools and materials needed to get it done.

Installing Permanent Electric Fence

rsz_fencing_workshop_thumbnail_300x169

How To Set Up Portable Electric Fence

rsz_thumb_setting_up_portable_fence_wire_300x169

How To Brace a Corner Fence Post, Underground

rsz_thumb_how_to_brace_a_corner_post__no_border__300x169

How To Splice High Tensile Fencing Wire

rsz_thumb_how_to_splice__no_border__300x169

If you’re fairly new to using electric fencing, here’s a great fact sheet that outlines how it works, with some useful tips and important safety considerations.

 

Water Systems

I think every grazer would agree that the ideal watering system is the one that requires the least amount of maintenance, and has the least number of things that can fail. We came across some brilliant ideas from some of the best grazers around, and the workshops below will walk you through how to set up something similar for your own operation.

How To Set Up a Gravity Feed Watering System

rsz_thumb_gravity_water_system_300x169

How To Set Up a Pasture Pipeline Watering System

rsz_thumb_pasture_pipeline_300x169

 

Case Studies

We’ve spoken to several of the most successful grazers in Alberta, and it’s amazing how different their backgrounds are, as well as their experiences and even the types of business models they use to create profitable operations. We picked a few of their stories and created these 3 powerful case studies for you to learn from. We take a look at how each of them got started in grazing, how they adapted the 4 Priciples of Grazing, and how they turned it into a successful business.

Key points:
• Be adaptable/flexible: in land, in resources and in your mindset
• Anyone can develop a profitable grazing enterprise
• Simple, yet planned changes result in big results both for the land and for your business
• Looking after the land – will look after your profits
• Anyone can start today with small steps

rsz_case_studies_thumbnail_300x169

 

Further Resources

If you have any questions about the Fast Farmer Grazing Edition we would love to hear from you. You can Tweet us a comment or question to @FarmOn with the hash tag #FastFarmer, or email us directly at sarah.wray@farmon.com. Below are a few extra resources that we also thought you might find useful. Good luck!

Here’s a great Podcast from Permaculture Voices, interviewing a successful rancher in California who uses rotational grazing.

ForageBeef.ca offers a lot of information and fact sheets on everything from cow/calf economics to feed testing and drought management.

Thank You
The Fast Farmer: Grazing Series is the result of a lot of great people, experienced grazers and innovative farmers providing FarmOn with information and connecting us with great resources. We’d like to thank the Alberta Forages Industry Network, the Grey Wooded Forage Association, and the Alberta Livestock and Meat Agency in particular, for their amazing support.

grey_wooded_logo_200x51

afin_logo_199x108

alma_logo_200x82

Grazing Stories

Iain Aitken’s Story 

Iain Aitken grew up on an 8th generation cattle ranch in Scotland.  When he picked up everything and moved to Canada he was determined to learn everything he could about rotational grazing from some of the best producers in the area, and how to transfer his existing skills and knowledge from Scotland to the vastly different climate in central Alberta.

 

Don Ruzicka’s Story 

Don shares his story about transitioning from a conventional commodity operation to a grass based system, using intensive grazing management and holistic management principles.

 

Kristie and Brent Vallet’s Story

Kristie and Brent never planned to be goat farmers, but once their children reached the age where they wanted to become more involved in the operation they did some market research and found that their land and their family were a perfect fit for a grazing operation.  They started out small, and have learned a lot along the way.

 

The Fast Farmer – Grazing Edition

The Fast Farmer is all about giving you the hands on steps necessary to get started and experience some quick wins in your business.  If you’re interested in tapping into the profit that rotational grazing can add to your operation, check out The Fast Farmer – Grazing Edition.

 

rsz_fast_farmer_screenshot_300x169


Other Stories

Blain Hjertaas farms near Redvers, Saskatchewan, and wrote this article for the Western Producer:  Healthy Soil Makes For Healthy Humans.

Holistic Management International has written some helpful book reviews for anyone interested in grazing management – check them out here.