GVEDC presentations aim to educate local producers
The Greenbrier Valley Economic Development Corporation hosted two presentations last week at its office in Lewisburg to try and help improve local farm and produce operations.
Jill Young, coordinator of the Greenbrier Valley Local Foods Initiative, said the GVEDC is a state-supported office that works in three counties in the Greenbrier Valley — Pocahontas, Greenbrier and Monroe. She said the GVEDC strives to move economic development projects forward in the valley.
Young said the project aims to show people that they can actually make money from their farms, and they don’t have to operate at a loss.
“Agriculture is a whole new venue for the economic development corporation to take on,” explained Young. “Tonight was a reflection, and an opportunity, to share and to educate other producers so we don’t all have to make the same mistakes — so we can learn from each other in a cooperative manner.”
Eric Johnson, owner of Morgan Orchards in Sink Grove, said his presentation was about a specialty-crop block grant he received through the West Virginia Department of Agriculture.
The grant allowed Johnson to purchase new equipment in order to produce and sell apple cider at his orchard. He said the grant helped him expand his business, and in turn, his talk was intended to enlighten local producers.
According to Johnson, Morgan Orchards has been a commercial orchard since 1896, but Johnson and his wife bought the property seven years ago. He said they have about 16,500 apples trees, 700 peach trees and a few plum trees. They also grow nectarines, blackberries, black raspberries, asparagus, wine and table grapes and apricots. Johnson said they sell their produce at the orchard and at the Monroe Farm Market.
Johnson began his presentation with what he called “the real basics of business.”
“Revenue, minus cost — equals profit,” explained Johnson. “You have to keep that in mind, you can never forget it. Everything falls in one of those three categories.”
Johnson said thousands, or even tens-of-thousands of businesses in the United States start-up and fail every year. He talked about some of the important factors one needs to consider before starting their own business, like competition, marketing, sales and growth potential.
“You have to think about your customers,” said Johnson. “Is your value-added product going to be something your customer purchases weekly? Monthly? Once a season? Is there growth potential? We’ve had some jams and jellies made for us in the past. If you sell a jar of jam this week — your customer probably won’t need one next week, so you’re going to need a big customer base.”
At Morgan Orchards, Johnson said there’s a strong customer-producer relationship.
“We like to think about customer-producer interaction,” Johnson said. “Is there going to be one associated with your product? That’s a good thing to think about. Is the customer going to be someone you’re going to have a relationship with?”
Johnson talked about local producers facing off against what he called “the big boys.”
“Who is going to be your competitor out there?” asked Johnson. “If you have smaller competitors in your area, what’s their response gonna be? Before we purchased the orchard, the owners were set up and had the equipment to make apple slices in bags. Good little product — or it was for a little bit. What happened was Dole, Chiquita and all the big boys got into it.”
According to Johnson, marketing and sales are key to running a successful small business. He used his orchard as an example.
“If you have a new product, you’re going to have to do some marketing and sales,” recommended Johnson. “One of things we’re looking at right now, we’re looking at getting into the new small apples. There’s several names for them out there — junior apples, lunchbox apples. They’re smaller. For kids that don’t need a big apple, that fits in their lunchbox to take to school. That’s becoming a trend in the industry, and I think we can do some — but we’re going to have to do some marketing and sales.”
Johnson said sales and marketing are not the same thing.
“Marketing is how you’re going to get people to buy it,” he said. “Sales is who’s going to sell it and where you’re going to sell it — a farmers market, road-side stands, sales reps, wholesalers.”
Distribution is another important facet of small business that Johnson said is often ignored.
“You have to have a reasonable, cost-effective way to get your product to the customer,” he said. “Even with Internet sales. With packaging, you can spend a lot of money. What size do you want to do? Are you going to have black-and-white labels? Are they going to be rainbow-colored, dazzle-them-on-the-shelf labels?”
Johnson tied the second half of his presentation in with the first half with a new venture he and wife took on at Morgan Orchards recently.
“We decided to look into producing cider,” explained Johnson. “We had quite a few customers come up to us and say ‘man, I wish you made cider. Not that pasteurized stuff either.’ They wanted raw cider, for a couple reasons. For one, it tastes a whole lot better. Then, some of our customers wanted to be able to convert it to hard cider.”
Johnson openly shared his business strategy with attendees.
“We wanted to stay in a fifty-mile radius and we were trying to saturate that market,” he explained. “If we went beyond that, and started going farther out, we’d have to hire somebody else — because I do the deliveries most of the time.”
At Morgan Orchards, Johnson applied for a specialty-crop block grant to purchase new equipment to process and sell the cider.
“We found this system called CiderSure — it came out of Cornell [University]. What it is, is a system that uses ultraviolet light. Ultraviolet light does not heat the cider — therefore it doesn’t change the taste. It kills all five known strains of eColi. The shelf life is much better than raw — it’s about twice what raw cider is, and CiderSure is approved by the FDA.”
Johnson said next they looked at volume.
“How many units are we going to sell? One gallon a week? Customers probably aren’t going to buy more than that. Restaurants and bars? Yeah, maybe we could sell three or four gallons a week this time of year.”
After a lot of research and crunching the numbers, the Johnson’s were convinced they were onto something.
“We thought we could do about 2,000 gallons a season,” Johnson said. “It fit our product customer model — we like to sell what we produce and provide personal service. One-on-one sales, produced locally — by us. It still fit right in with our apple and peach sales.”
After his talk, Johnson took the time to answer questions from the audience. One question he said he always gets is why they don’t make peach cider at Morgan Orchards.
“People do make peach cider,” offered Johnson. “I’ve had it other places, but you have to be really careful — the peach pit has a lot of natural arsenic in it. You start shaving peach pits into your peach cider — you’re going to lose some customers,” joked Johnson.
The second presenter, Joe Heathcock, has been working through a grant administered by the GVEDC to coordinate and market local food. According to him, his presentation was kind of a re-cap of the work he’s done over the past year and an assessment of market conditions in the Greenbrier Valley.
He said part of his talk focused on what he views as challenges to a better local agricultural system.
“I coordinated a weekly delivery from mid-May through November,” explained Heathcock. “We got premium prices from direct-to-consumer and businesses-to-business sales — no retail, no wholesale. At the beginning of each week, producers could update what they had available that week, what their inventory was, and I would make sales calls. We got orders in on Tuesdays and Wednesdays and then Thursdays was the delivery route — timed to fit the restaurants’ schedule.”
Heathcock said a total of 16 farms participated, and they were almost all in Pocahontas County, with the exception of one in Randolph County and one in Greenbrier County. He said the deliveries consisted of fresh produce, eggs, meat and honey.
“The farms that base their businesses on direct-to-consumer sales average higher profits than those who simply sell at the stockyard or the wholesaler,” he said. “There were three areas where we saw the best potential for growers — owner-operated restaurants, health food consumers, then public institutions — especially the school districts.”
Heathcock said there is a disconnect between agricultural production and local demand in Pocahontas County.
“Total sales for Pocahontas County farm produce are a little more than $8 million annually,” explained Heathcock. “Of that — $7.6 million is livestock. It’s all meat. A very, very small portion of anything else. Of the crops — the vast majority are for animal food — hay and silage. The crops grown were less than $500,000, and the fruits and vegetables sold were less than $25,000 combined — vegetables a total of $16,000, and $9,000 in fruit. In the 2007 census — the census of agriculture, a USDA thing — Pocahontas County ranked number six out of fifty-five counties in terms of head of cattle, and thirty-sixth in production of vegetables. There’s clearly a hole in the production system.”
“We live in this really rich agricultural area with all this great land and sunshine and water — and we consistently lose money farming,” Heathcock said. “There has not been a profitable year farming in the Greenbrier Valley, on average, since 1994 — that includes subsidies.”
Heathcock said on average, over the last 40 years, Pocahontas County farms lose $9 million every year.
“Right now, we can sell what we have, but quantity-wise, it’s not enough,” said Heathcock. “So the impetus behind the project is not to just sell food, but develop a system and move it in the right direction. To try and make agriculture more in-tune with eating. What we do produce, there’s all this meat, all this grain — it’s all for animals. There’s very little food for people in the agriculture system. One farm can’t produce enough produce to consistently satisfy the quantities of lettuce in demand at the NRAO, but six farms can all produce enough. We need to make the system reflect more what healthy foods are, than commodity crops.”
Heathcock talked about developing a local produce cooperative.
“With cooperatives, it’s a business — first and foremost,” he said. “It’s owned by the members, it’s operated by the members. It’s a non-profit — all the profits are returned to members at the end of the year, called patronage dividends. Anything that a corporation can do, an agricultural cooperative can do, they just have to redistribute their funds back to members at the end of the year.”
Heathcock said the idea behind a food cooperative is to help producers market and distribute food in unfavorable market conditions.
“The bottlenecks in the current agriculture system that are preventing more small-scale growers from expanding and doing more are cold storage and handling capacity, consistent quantity and quality, and sales and distribution infrastructure. The infrastructure required is not massive, you just need a way to get the produce clean and handled in a way that is acceptable to the health department.”
Heathcock said one of the biggest strengths of a cooperative is it can save on distribution and storage costs.
“If each of us is growing a product and want to get it to the same restaurant, and everybody drives it, it’s going to be a lot higher transportation cost than if there’s an efficient route where everybody shares a vehicle,” he said.
Heathcock said there are other benefits for growers to organize a cooperative.
“There’s the branding, which in my mind is something that’s neglected in this agricultural environment,” he said. “Having a brand makes customers feel comfortable paying those higher prices — they feel like they’re actually getting something.”
Heathcock said long-term arrangements, multi-year marketing contracts, and public support are all advantages associated with developing a co-op, as well.
According to Heathcock, the farmer’s share of the final consumer’s food dollar is at a historic low.
“In the 50s, the farmer would average getting paid $0.41 out of every food dollar, with the rest going to packaging, processing, transportation and retail. Today the farmer is getting less than $0.12, out of each final consumer’s food dollar. The Greenbrier Valley has the human, and natural resources, to make agriculture far more profitable than it is currently, and it’s moving in the right direction.”