Center for Profitable Agriculture

PROJECT HIGHLIGHTS | PRODUCTS ON THE MARKET

Value-Added Projects — Project Highlights — 10

	Packaging Farm Waste Products
	Pastured Poultry Processing and Marketing
	Pick-Your-Own Enterprise Marketing
	Popcorn
	Produce Auction Analysis
	Poultry-Waste Compost
	Puree Foods
	Rabbit Enterprise Development
	Retail Meat and Specialty Products Marketing
	Retail Meat Marketing
	Roadside Retail Marketing

Packaging Farm Waste Products

Potential consumers of a value-added product must be able to associate potential uses, benefits and results of the product. However, regulatory and labeling regulations tend to vary with certain product claims, positioning and labeling. The conflict between increasing sales with certain product claims and adhering to the regulatory requirements associated with making such claims is very apparent with packaged farm waste products such as compost, pelletized poultry litter and worm castings. State registration and regulations apply to all fertilizer packages of less than 25 pounds and all soil conditioners, soil amendments and specialty fertilizers. Consumers of such products desire to know several product attributes such as, N-P-K, weight, use, application suggestions, expected benefits and other product features such as product ingredients, production process and organic ingredients. Because many farm waste products do not tend to compete well with synthetic fertilizer products on a strictly N-P-K basis, other “specialty” product features should be emphasized on the product package and in all promotion materials.

Pastured Poultry Processing and Marketing

There is much concern for opportunities, or lack thereof, regarding small-scale poultry processing in Tennessee and other states. Investment in and operation of a USDA-approved slaughtering and processing facility is often deemed "prohibitive" for small-scale operations. However, USDA exemptions and traditionally higher market prices for free-range, pastured poultry, organic and the like may be reasons to re-visit value-added poultry enterprises. Plans must be made for complete compliance with all USDA rules, regulations and inspections for poultry processing and slaughtering. Start-up costs could range from $75,000 to several million and annual operating costs could range from $600,000 to the millions depending on size, scale, distribution and location. Increases over the past 30 years in poultry consumption along with product differentiation opportunities for free-range and pastured poultry yield optimistic marketing opportunities. However, significant investment in marketing, promotion and public relations should be expected. A quality, safe, reliable and consistent product is a given and cannot be sacrificed or compromised.

Pick-Your-Own Enterprise Marketing
Starting a new enterprise can require significant start-up capital. Often, entrepreneurs run low on cash when it comes time to market their enterprise. This situation should be avoided by careful planning when at all possible, but when it happens, operators often seek relatively low-cost (in dollars) marketing options, although these options oftern require significant investments of time. Options may include developing relationships with media and aggressively submitting news releases, developing relationships with local tourism organizations, working with other area tourism ventures to developcooperative marketing arrangements, and utilizing free listings in community events calendars and organizational Web sites. Another low-cost method is to collectcustomer e-mail addresses and, with their permission, send e-mail notifications of crop availability or special events.

Popcorn

Utilization of Tennessee-grown popcorn in a value-added enterprise seems to have a market potential. In 1997, Tennessee’s 23 popcorn producing farms grew 2,563 acres and produced just over 8 million pounds. Retail sales of microwave popcorn have grown substantially since microwave packaging was introduced. Consumer preferences for microwave popcorn products include an attractive and eye-catching package design and flavorful taste, good popping aroma and a high percent of kernels popped.

Poultry Waste Compost

The increased costs and regulations of livestock waste management have spurred interest in managing waste at low-cost levels, preferably at a profit. A compost product must be consistent, safe and satisfactory to the intended customer. Customers must be informed of the new product, its benefits and uses, and the product should be marketed through outlets frequented by target customers. Disease, health and odor concerns should be addressed and eliminated through the composting procedure. Use of the term “organic” and positioning the product as a fertilizer or soil conditioner should be approved and certified by the appropriate governing organization(s). Records should be maintained on a regular basis and laboratory analyses should be conducted to satisfy regulations, to ensure a quality and consistent product and to minimize the potential for public relation problems. The packaging used to deliver and promote the product must be carefully designed and purchased to satisfy both cost and marketing considerations.

Produce Auction Analysis

With farmers using different marketing methods for produce, some may consider using a produce auction as an alternative at the wholesale level. Building and operating a successful produce auction comes with many challenges. There are several factors needed to make a produce auction successful, including committed buyers and sellers; a convenient location; and a large volume and variety of high-quality, fresh produce. Roadside vendors, small grocers, restaurateurs, wholesale buyers and those who re-sell at farmers' markets should be targeted as buyers. It is important to incorporate packaging and grading standards to create consistency and speed the buying process. Seasonality of produce may require the need for the auction firm to consider sellilng other products such as hay, flowers, farm equipment or horses. The auction may not generate enough income to be the sole income source of the owner. Income generated is dependent also upon start-up and operating costs as well as the commission charged.

Puree Foods

Increases in the “aging” population may make this consumer group a target for certain value-added food products, such as prepared puree foods. However, such a business should be carefully evaluated, studied and planned. Such a business will require a complex combination of production and market feasibility analysis. Proper raw-product inputs should be used in a quality processing procedure. End products should be appropriately packaged and competitively priced for a narrowly defined target . While the target market for such a value-added product may be easily described, actual identification and notification of the targeted consumers may not be so straight forward. Therefore, marketing efforts should not be underestimated.

Rabbit Enterprise Development

Rabbit production is occasionally considered a possible alternative enterprise for Tennessee farmers. Rabbits can be raised for meat, research stock, hobby/pets or as a pet-food ingredient. While there are some production hurdles such as disease, feed conversion and environmental conditions, production of rabbits is not normally considered a major limitation in the industry. Marketing, however, is a bit more concerning. The size of the US rabbit population and actual marketing data are difficult to determine. The US exports very little rabbit and imported rabbit accounts for more than half of the US consumption. There are more pet rabbits in the US than there are rabbits slaughtered for meat – approximately 55 percent of the total number of rabbits in the US are pets. Different rabbit producers have had very different experiences in the industry. Indications are that success in the industry is often a reflection of perseverance, creativity, low-cost production and unique market developments. Evaluating the potential success of a rabbit enterprise is difficult due to the lack of industry/market data. However, careful study must still be invested in a possible rabbit enterprise.

Retail Meat and Specialty Products Marketing

Developing a retail business in rural areas of Tennessee that will feature value-added farm products takes a significant amount of planning, development and market evaluation. Despite the tourism potential and uniqueness of the planned business, the enterprise should be evaluated and positioned with success contingent on a local customer base. Therefore, market assessment and development should include a complete understanding of the potential consumers that reside within a close proximity (5 to 20 miles) of the venture. In addition to consumer demographics, a diversified product line, multiple sales outlets, multiple promotion techniques and multiple retailing techniques should be evaluated and planned. While an Internet presence will be essential in the business development process, caution should be taken not to expect a significant volume of sales via the Internet, especially in the short term. Competition for the business and per capita consumption trends should also be evaluated and utilized.

Retail Meat Marketing

A study was conducted to determine the target market for a retail meat market. Industry research suggests that the tastes and preferences of consumers have changed over time. Consumers are now purchasing food products based on taste and freshness rather than focusing solely on health benefits. Consumers are spending less time preparing meals and are demanding convenience products. In a recent study, retailers were asked which promotional programs were most effective at increasing product movement and which promotional programs were the most effective at differentiating the store in the marketplace. The promotional programs overlap, and not only help position and distinguish the store in the market, but they contribute to increasing displays, direct mail, in-store demonstrations, sampling and frequent shopper programs. As a general rule consumers consider price, fat content, freshness and color when they are considering a meat product.

Roadside Retail Marketing

Based on per capita consumption data, Americans consume more fruits and vegetables now than any time in history. As consumers demand more fruits and vegetables, their tastes have changed from purchasing pre-cut and packaged produce to purchasing fresh, high-quality produce. Roadside stands are well-positioned to benefit from this trend in fruit and vegetable consumption. However, to capitalize on these trends, roadside stands need to develop strategies and tactics to increase potential customer awareness, increase customer traffic and increase sales per customer. However, no single tactic can guarantee additional customer traffic and additional sales. Rather, success will hinge on a combination of tactics and their implementation. Fortunately for the roadside farm market, a variety of tactics (such as festivals, frequent shopper programs, brochures, mass media advertising and roadside signs) can help promote a business to new customers. Similarly, in-store sampling, displays, store layout, product identification and informed sales people can attribute to additional sales per customer.