The Value-Adding Initiative

By Regina Durkan/Farm to Fork

In recent years, farmers have been seeking ever more ways to increase income to their farms. Farmers who used to “just farm” now process, distribute and sell goods and hold tourist events at their establishments.

According to Carl Chaney, owner of Chaney’s Dairy Barn in Bowling Green, Ky., it’s becoming harder and harder for small-time farmers to compete with big industry farming. The only way to survive is by providing a new product rather than raw produce.

The family’s ice cream shop, which opened in 2003, is what’s keeping the farm alive, Chaney said. Last year, the shop made four times as much income as the milk from the farm’s dairy cows.

Farmers have always made some efforts to add value to their products, but now the incentive to do so is increasing. “The marketplace is so competitive that I think that farmers need to do it every chance they get,” said Mac Stone, executive director of ag marketing for the Kentucky Department of Agriculture. “They need to look at all the different steps of adding value and capture all of them they can for that very reason.”

The Kentucky Department of Agriculture offers several programs to help farmers add value. He said the state’s first and foremost attempt is the Kentucky Proud Program, which he described as a dating service between Kentucky products and retailers, restaurants, and wholesalers. The program gives marketing assistance by assessing products to see if they can fit a niche in the market. Chaney’s Dairy Barn is part of Kentucky Proud.

In addition, Kentucky’s Agriculture Development Board divvies tobacco settlement funds on the county level to help tobacco farmers find new products and new ways to add value to Kentucky farms as the tobacco industry declines.

Nationally, the USDA’s Value-Added Producer Grant Program provided American producers in 2009 with $18 million to help them enter into value-added activities. Tracey Kennedy, the program manager for the USDA Rural Development Programs, explained that adding value to farms adds stability because raw commodity markets are very volatile, especially from competitive pressures from international markets.

“It’s to everyone’s benefit to have a strong and stable agricultural sector. This is one way we can do that,” said Kennedy, who is based in Washington D.C. “Also it’s difficult for producers or any small business these days to find capital from commercial sources that are willing to help them take that next step on a good idea.”

John Sharpe, one of the founders of Grasshoppers Distribution, a farmer-owned local food distribution service based in Louisville, said his company received a USDA start-up grant. Now in its third year, the distribution service has grown from 54 subscriptions to a goal of 804 subscriptions this year.

According to the USDA 2007 Census of Agriculture and American Farm Bureau, the average size of an American farm has increased from 157 acres in 1930 to 418 acres in 2007, while the overall number of farm operators has been decreasing since World War II.

In the following videos, three different producers explain their attempts to add value and sustain themselves in a challenging industry.

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Carl Chaney of Chaney’s Dairy Barn

In an attempt to sustain themselves in the declining dairy industry, the Chaney family opened up an ice cream shop in 2003 in Bowling Green, Ky. According to owner, Carl Chaney, after seven years of dedication and expansion, Chaney’s Dairy Barn is what’s keeping the farm alive. Last year, the shop made four times as much as the farm’s milk. The Chaney family is not only selling ice cream, they’re holding events, giving tours, educating students on agriculture, and continually looking for avenues to add value. Chaney’s next big project is in conjunction with Houchens Industries to process the farm’s milk in Russellville and then sell it at 12 local Houchens stores processed instead of selling the raw product. Carl Chaney goes into detail about the establishment of the store and the need to add value nowadays in the following video.

Chaney’s Dairy Barn – Carl Chaney from Fleischaker-Greene Scholars on Vimeo.

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Dr. David Hall of Black Oak Vineyard

As a cardiologist and viticulturist, Dr. David Hall is well-diversified. Hall and his wife, Dr. Jenny Franke, are the owners of Black Oak Vineyard in Princeton, Kentucky. Dr. Hall still practices cardiology even though his vineyard was established in 2002. He has been dedicating more time to his vineyard, which provides the outdoor atmosphere that he’s been missing working in a laboratory. Only one year old, the vineyard’s wines are already award-winning. Black Oak Vineyard’s Chambourcin won Concordance Gold at the Wines of The South Competition, and its Chardonel received a silver award at an international contest, the 2010 Finger Lakes International Wine Competition. In the following video, Dr. Hall delves into how the vineyard was started and his family’s endeavors to increase value to their company.

Black Oak Vineyard – Dr. David Hall from Fleischaker-Greene Scholars on Vimeo.

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John Sharpe of Grasshoppers Distribution

Grasshoppers Distribution bills itself as the first farmer-owned local food distribution service in Kentucky. Based out of Louisville, the company’s aim is to provide local food to Kentuckians directly from local producers, all of whom collectively work towards promoting and selling Grasshoppers’ products. Funds received from USDA’s Value-Added Producer Grant Program allowed for Grasshoppers to open for business in May 2007.

With the decline of the tobacco industry, tobacco farmer John Sharpe had to find another avenue to make a living. He became one of the founders of the business and, now, he farms produce, beef, and pork for Grasshoppers Distribution. In the following video, John Sharpe explains the workings of the company and his reasons for adding value.

Grasshoppers Distribution – John Sharpe from Fleischaker-Greene Scholars on Vimeo.