Center for Profitable Agriculture

PROJECT HIGHLIGHTS | PRODUCTS ON THE MARKET

Value-Added Projects — Project Highlights — 4

	Commercial Turfgrass-Sod Production
	Composted Cotton Gin Trash
	Composting & Marketing Bagged Broiler Litter
	Composting & Marketing Poultry Waste Products
	Considering Packaged Corn, Marketing Hay and Wheat Straw Bales
	Considering a Wilderness Retreat
	Consumer Survey for Old-Time Butcher Shop
	Cottage Cheese Whey
	Custom Beef Marketing

The housing industry, golf courses, recreation areas, road construction and athletic fields are the primary users of commercial sod. Current and projected economic and population growth in the market area have created a strong outlook for commercial sod. However, the market for commercial sod is not guaranteed, and the demand for turfgrass sod is often seasonal. Start-up equipment costs for a small operation will be around $200,000. Annual debt servicing of start-up costs can exceed $45,000 per year and annual per-acre operating expenses are estimated at approximately $2,583, while the per-acre gross revenue projections are around $4,900. The cash flow and profit potential for a small commercial turfgrass sod operation appear good as well. While the estimated net return per acre, cash flow and profit potential make a small commercial sod operation an attractive alternative farm enterprise, the labor requirements, market structure, investment & environmental risks and managerial requirements must not be overlooked.

Developing a stable, composted, cotton-gin-trash, end-product requires a complex composting recipe to produce a bagged product that is marketable as a contaminant-free soil conditioner/fertilizer. If a stable compost product can be developed, the cost associated with production requires a healthy sales volume for the operation to break even. Per-unit cost estimates will likely require that the product be positioned in high-end, niche markets. Under these conditions, many retail outlets will likely be needed, as each is only expected to sell a limited number of bags. Preliminary estimates indicate that as many as 200 different retail outlets could be necessary to provide the sales volume needed for the operation to break even. Existing research studies have found that composted gin trash can be a valuable soil amendment. However, developing a consumer product and an appropriate distribution network—with low risk, under regulated conditions, at a competitive price—is challenging.

Composting & Marketing Bagged Broiler Litter
Developing a market for bagged broiler litter is not an easy task. Creating a bag that meets regulatory requirements, promotes the product and attracts customers does not happen overnight and developing an automated bagging system, within a tight budget, can be tricky. In addition, developing a pricing strategy that covers costs and fits local market parameters takes some time. Finally, pushing the product through retailers and directly to consumers requires time, skill and endurance. Proper planning, management and persistence can help navigate through many obstacles of developing and marketing bagged broiler litter as a value-added farm product.

Composting & Marketing Poultry Waste Products

East Tennessee poultry operations often seek additional farm income from the sale of broiler waste. General market conditions predict approximately $15 to $25 per ton for bulk broiler waste. However, this rate often does not cover all the handling and delivery costs. Properly composted poultry wastes that is bagged and marketed to small-volume consumers can return over $200 per ton. However, the composting procedure, bagging and commercial fertilizer regulations cannot be overlooked. Indeed, composting and bagging provide good methods of adding value to poultry wastes, but developing, retaining and replacing buyers (markets) requires constant attention to marketing.

There appears to be a small market for packaged corn as squirrel or small wildlife feed. There is more demand for dried corn on the cob than whole shelled corn because of an abundance of whole shelled corn in some areas of the state. Most retailers and consumers relate squirrel feed to dried corn on the cob. Special product attributes such as quality, hand selected, farm grown and locally produced should be emphasized. Challenges will include increased labor and marketing costs and competing brands of similar products. When considering marketing hay and wheat straw, small square bales are preferred by most consumers. The bales should be bright in color, tight, clean, and free of excess dust and mold. A growing number of horses and horse farms increase the demand for high-quality, small bales of hay, but this is a very competitive market to get into.

The CPA assisted an entrepreneur with the marketing and feasibility aspects of operating a wilderness retreat. The retreat would provide primitive camping spots as well as freestanding camping structures and RV slots. In addition, a camp store, fee-fishing pond, and restaurant will be added. The average volume of vehicle traffic on highways and roads in the area and seasonal attractions were studied to determine the need for such a facility. Marketing efforts were directed toward becoming listed in the Official Tennessee Vacation Guide, becoming a part of the Tennessee Department of Transportation’s Tourist Oriented Directional Signs (TODS) and Specific Service Signs Programs. In addition, the benefits of different types of mass media advertising and promotional strategies were analyzed. The feasibility analysis focused on the initial start-up and operating costs as well as revenues generated by such a facility. The retreat’s ability to produce a sustainable profit was also analyzed.

A total of 2,500 surveys were mailed to randomly selected residents within 30 miles of the selected site of the proposed retail outlet. The survey found that residents shop, on average, at two stores a week for groceries and they currently drive between four and six miles to purchase pork and meat products. The respondents were less than satisfied with their current stores meat and cite appearance, freshness and quality as the most important criteria in selecting a meat. The results indicate that an old-time butcher shop would appeal to area residents, however the shop would need to be located near a major population center to attract enough customers to be economically feasible.

Utilization of by products in the development and marketing of consumer goods must adhere to economics. That is, the cost to develop and market a product should not exceed the value of the finished product to the end user. Therefore, the cost of recovering, processing, packaging and marketing whey derived from the production of cottage cheese must not exceed the value of edible grade dry whey as a livestock feed or human nutritional supplement. As might be expected, a large volume of by-product cheese whey could not recover the estimated $1 to $2 million start-up costs incurred in producing the product as well as reduce the per-unit, end-product cost of edible grade whey. Therefore, it is apparent that the debt payments, annual operating costs and per unit variable costs for a business which transports liquid, by-product, cottage cheese whey to a processing facility, extracts the whey and bags and distributes an edible-grade whey will greatly exceed the income potential in an organized market that pays between $0.10 and $0.22 per pound for dry whey.

The market potential (population) of selling beef directly to consumers appears to be significant enough to support a direct-to-consumer beef sales business in certain geographic locations in Tennessee. However, the eating habits of consumers have changed significantly over the years and theses changes have not been researched to determine their impact on a direct-to-consumer beef sales business. Consumers are eating away-from-home more often now than ever before, they are demanding more convenient and easy-to-prepare food products and the average household size has decreased. Current eating habits may pose significant obstacles to a custom-beef marketing business in Tennessee.