Chicken & Egg: The Problem of LOCAL Value Added Production

Every time I draft an update for this project, I remember the tremendous hope I have about producing food from unpretty, extra or otherwise discarded products that took not only months to grow but months to plan. These products are grown by those who work harder than most people these days can fathom. Full disclosure, I lose focus about what to include from the multitude of conversations and readings I’ve encountered... There’s so much to tell. So, I’ll do my best.

Winter 2016 - Spring 2017:

The Short Version

In early 2017 I approached people either distributing or making similar products around the country.  I asked if they would give honest financial, technical. or marketing experiential data for our feasibility study. The reception was mixed but those businesses who were open and frank gave extremely useful information. In February I drove around the metro area to gather price data for ketchup, tomatoes (cans or jars), and marinara sauce (the three products we initially settled on producing). This data allowed an examination of raw ingredient costs (based on data from the discussions) to retail pricing costs.

Our group’s final discussions in May focused on three main points:

  • An estimated of cost of ingredients and materials (bottles/lids/labels) without other operational costs.
  • The cost per pound for produce from our farmers.
  • The price of competing products after retail markup.

Our findings redirected our plan.

The Reality Check

  1. To produce the items would be costly and set us outside of what a consumer might pay for a pantry staple (less than $8/unit).

  2. We wouldn’t be able to pay the farmers a price per pound that made it worth them harvesting the product and still come in under the pre-retail markup.

  3. Saving costs by going through a co-packer would be extremely difficult if using farm-direct and imperfect produce - most regional processors require high levels of guaranteed food safety and uniformity of product that would add additional time and effort (i.e. costs) to the farmers’ work load.

  4. Pre-processing facilities to turn the produce into a uniform and “safe” ingredient are needed to ensure their processing lines aren’t contaminated and their food safety guidelines are met.

Summer 2017: So What Next?

Casual conversations with other food system advocates in our area mirrored this picture of our  “chicken or the egg” situation in the Twin Cities. I like to summarize in this infographic at right.

As someone who champions local food as an intersectional solution for local communities and has already heard so much of this before, the reiteration that more infrastructure is needed before we can do something (but not enough demand exists to fund or rationalize it)... has been defeating.

Until demand exists, communities without small or medium processing facilities that serve small local growers are forced to wait for grant or philanthropic funding to build the necessary infrastructure and hope revenue projections will allow them to offset the long-term operation of the facilities through sales.

Looking Forward: What Then?

If no such co-packer or processor exists, and you are determined to start making a product in hopes it will find consumer backing - you may have to do it yourself. This is often more complicated than someone might think at first and it may be entirely necessary for someone to show us what this looks like.

To create a wholesale value added product that adds off-farm ingredients in Minnesota or aggregates from several different farms, you can expect to have to do most of the following (this varies greatly depending on your product and does not include general business preparedness):

  • Product and recipe development
  • Lab testing for pH and shelf life (for certain products)
  • Find/invest/rent a kitchen and/or equipment as well as other operational items (materials, packaging, ingredient sourcing)
  • Label and lot/unit tracking system design
  • Creation of operating procedures and policies
  • Drafting of food safety plans and training for high-risk products (acidified foods)

Value Added Reflections & Resources

This update sounds like defeat, but it isn’t. The colleague support and inspiration for this type of work is abundant in our region and worth celebrating. The resources I’ve found, or created, in the past year have been a big part of understanding the barriers and the areas where more advice is needed when searching for answers. These resources have also been instrumental to me being able to offer support for potential kitchen tenants or food makers in our area as they navigate starting their businesses.

As a result I’ve realized how difficult it can be to find assistance without proper research or someone to point you in the right direction.

In the next month, I plan to create a resources page (2/23/18 UPDATE: You can find the first version of my Resources Page Here to share items that inform this work. Some that I’ve created for food processors and businesses may be available for purchase and others will be free of charge and shared on the Food System Roadmap that I hope will be published online by late Spring 2018 along with other collaborators. Until then, I hope each lesson learned and shared can close that gap between the chicken and the egg in your community and encourage you to speak up about fair food costing at your own grocer, restaurant, institution, family gathering or friendly food debate.