Page 3: Market Research

COVID-19 has revealed major food system problems that affect food security for all income groups, particularly food industry workers. In response, I am proposing a series of public meetings on new designs for local and regional food systems. These meetings would be followed by market research on how food prices and access to healthy foods affect consumer demand. The study area would include Omaha, Des Moines, Kansas City and surrounding communities.

Demand

The consumers in these three metropolitan areas spend at least 350 million dollars annually on organic foods. Nearly all is produced and processed outside of this region (USDA, Census and OTA data*). We want to know if they would buy organic and other specialty foods that are produced on near-by farms and ranches and processed in our region. More important, how much would they buy and what prices? Further, would this extra regional income be sufficient to pay for new organic farms, professional marketing and modern food processing operations?

If industry projections are correct, demand for organic food will continue to increase relative to conventionally produced food. This assumes the virus: 1) Does not cause a global financial collapse, or 2) That a depression will not force consumers to buy the least expensive foods, and 3) That the conventional food system will continue to deliver the least expensive food.

Processing

We know that small and medium-income farmers and ranchers cannot compete with large, well financed producers who supply big food processing companies and retailers. This website is about organizing meat and poultry from local producers around new multi-species processing operations and nearby urban retail markets.

However, before we begin to organize, we must answer key questions about plant design, location and investor support. We intend to ask industry experts, engineers, investors and consumers for their input on processing plant designs, locations and profit potential.

These questions lead in several directions. Can new designs with short supply lines help increase farm profits for pasture-based organic producers? Can more efficient designs and plant locations protect workers’ health, pay living wages and still compete on price with the big plants? Who will finance these new plants? What happens to farm prices, investor returns, wages and working conditions if big food companies adopt multi-species technology and movie closer to big cities? Clearly, the answers to these questions will affect consumer prices.

Production

As noted on page 2 of this website, USDA data on soil erosion and fertility point to major food security threats posed by energy and chemical-intensive crop and livestock production systems. At least in theory, certified organic farms and ranches are managed to avoid harmful chemicals and maintain soil fertility with crop rotations and pasture-based meat, dairy and poultry production.

But who will finance much larger and more efficient pasture-based crop and livestock systems? Stated differently, will farm and ranch business plans offer sufficient incentives to investors who back organic producers? These plans must show investors how to make money by backing producers’s soil building programs while reducing consumer costs for foods with high nutritional values. Again, the answers directly affect consumer’s ability and willingness-to-pay.

Research Funding and Oversight

We are inviting food marketing experts, engineers, government agencies and financial experts to join us in special research partnerships that center on the questions outlined above. We believe that these projects can be funded by individuals, corporations and government agencies with interests in urban and rural economic development, regenerative agriculture, consumer health and profitable producer-owned food brands.

With our business model, farmers and ranchers will lead oversight committees for each research project. They will select researchers and approve research designs, budgets, schedules and final reports. A preliminary research process is outlined below. For reasons outlined in page 2 of this website, the proposed research process is focused on beef, pork and poultry.

Task I: Introductory Public Meetings

The goal for these meetings is to recruit research participants, including farmers and ranchers, food processors, retailers, potential investors, and most important, residents of Omaha, Des Moines and Kansas City. These meetings will stress: 1) The need for a regional approach to regenerative agriculture, and 2) Farmer control of retail food brands. Discussion topics will include:

• Cooperative business structures with qualified investors

• Building regenerative production and processing capacity

• Benefits and limitations of producer-owned retail brands

• Public access to market information

• Financing farm and ranchland succession

• Business planning for producers and processors

Task II: Definition of Terms

Our objective here is to define standard production methods that can be easily understood by consumers and verified across supply chains. These definitions will include humane animal treatment, antibiotic and hormone-free, certified organic, non-GMO and pasture-raised. These definitions will be based on the most common industry meanings. They will be used in Tasks III and IV to explain production methods.

Task III: Current Sales and Sources

With Task I definitions in hand, feeders, packers, brokers and dealers will be asked to provide anonymous data on the amounts and prices of products purchased within the region, and from outside of the regional trade area. Regional boundaries will be mapped and adjusted during this task. Some price information is available through USDA and private sources; however, very little volume and quality data is available.

Task IV: Consumer Demand

Prior to the start of work, consumers, restaurant and grocery store owners and food service executives will be invited to participate in educational events, surveys, tasting and focus groups.

The overall objective is to determine consumers’s price limits on pasture-raised organic beef, pork and poultry. Stated differently, representative groups of consumers will be asked how much more they would pay for organic products from near-by farmers and ranchers, compared to similar imported (non-local) products. These data will underpin business plans for selected products and markets.  

Task V: Business Plans and Producer Meetings

Producers will review and discuss two types of business plans: retail and commodity.

Retail (Target) Plan

The retail plan will provide production estimates with break-even targets for the products with the best retail potential. This forward looking plan will include estimated costs for marketing, USDA inspection, processing and distribution to participating retail outlets.

The retail plan will include a requirement that grocery and food service outlets provide sales data for selected local and competing products. These data will go to producers through their local production cooperatives. The data requirements are outlined here.

Commodity (Capacity Building) Plan

The commodity business plan will focus on building production and processing capacity for the products with the best retail potential, as indicated in the retail plan. Producers who decide to develop a retail brand will be asked to organize one or more local production cooperatives, as described elsewhere on this website. The commodity plan will be based on preliminary forward contracts with selected wholesale buyers. These contracts will govern prices paid to producers along with delivery dates, quantities and quality.

Both the retail and commodity plans will include descriptions and cost estimates for financing, accounting, financial reports and legal services for the local production cooperatives, and for a regional marketing cooperative and land trust. However, the marketing cooperative and land trust will be organized once sufficient retail capacity and financing are available.

Task VI: Investor Meetings

Investor meetings will be hosted by producers with support from marketers, engineers and investment advisors. The objectives are to introduce investors to the profit potential of producer-owned retail brands, and secure financing for the commodity plan.

Qualified investors, securities professionals, fund managers and major employers in Des Moines, Omaha and Kansas City will be invited. These groups are important because they represent, or do business with, economic development groups, retirement funds, insurance companies and food industry firms that will benefit from large-scale, locally-controlled sustainable food systems.  

Both the retail and commodity plans will be adjusted during these meetings. If financing is available, operations will commence as soon as forward contracts, legal documents and credit lines are in place.

Please contact me for more information. Thank you.

Jim Steffen
js@raisedfree.org
402-317-2639

* 2016 USDA ERS foods purchased home and away x OTA percent organic x Census population data

Posted 04-06-2020, edited 5-16-2020