Keeping ag dollars close to home

Area farmers diversify, add value, to offerings

For most consumers, the next meal is just as close as the nearest supermarket.
But the journey from field to table is a long series of out-of-state processing steps that add value to crops and livestock, and some farmers and agronomists would keep that money, and those jobs, a little closer to home.
“If you go over to the bakery, you can see bread that sells for three or four dollars a loaf, and a loaf is about 90 percent wheat. We’re getting about 20 cents for that wheat,´ said Jean Hediger, a dryland farmer who, with her husband, Randy, grows about 3,400 acres of wheat and millet west of Nunn.
About 25 percent of their own 2,100-acre farm is certified organic.
“Nobody’s going to sell me on the idea that there is $3.80 between me and the bakery,” Hediger said.
Bob Hamblen, Larimer County’s ag-extension officer, estimates that between 18 percent and 21 percent of Northern Colorado’s economy is directly “involved in the food chain,” either growing or processing crops and livestock. Toss in ag-related retail, wholesale and manufacturing and that figure jumps to about 32 percent of the income generated in Larimer and Weld counties.
The ag economy could strengthen dramatically, Hamblen said, if the region is more aggressive about attracting agribusinesses that add value to commodities before they leave the state.
“We need to find a niche market and do it very quickly,” Hamblen said, “or we’re going to see family farms get smaller and smaller, and farmers will start finding off-farm jobs and begin sharing equipment. Or they will make the decision that they are going to get bigger and move out of the area.”
Weld County has a handful of large “value-added” businesses that not only purchase from area farmers and ranches but also employ substantial numbers of nonfarm workers. Zateca Foods, for example, manufactures dehydrated refried beans for the fast-food industry. Monfort of Colorado Inc.’s operation has been expanded to include a product-development center to develop markets for “underutilized” cuts of meat that would otherwise have been tossed into the hamburger grinder.
On a smaller scale, farmers are beginning to cultivate their own markets, attempting to keep more of the added value at home.
“Three years ago, no farmer even knew that term (value-added),” Hediger said. “Farmers are not marketers. Traditionally, they have put 1,000 bushels of wheat in a truck, driven it to the elevator and called it a day.
“But really, the family farm is a dying institution, so those of us who are committed to family farming really need to look at some alternatives.”
Hediger began her organic operation in 1989 with a 63-acre patch of land. In the summer of 1993, she incorporated Golden Prairie Certified Organic Wheat and a year later opened an organic flour mill that purchases grain locally and sells packaged and bulk flours to local retailers and national distributors. Golden Prairie products are now stocked in stores in about 30 states.
“When I was marketing organic grains, we had a lot, lot, lot of requests for organic flour, and I was thinking, RWhy are people on the Front Range buying wheat from California?’ Economically, it didn’t make sense to be importing from California, or even Kansas.”
Hediger can’t meet the demand for organic flour with the crop she and Randy grow, so she buys grain from her neighbors’ certified organic farms, paying them $1 more per bushel than the market price.
“It’s not just about added value for me, but added value for others too,” Hediger said.
Small farmer cooperatives are another, relatively simple method for boosting the bottom line for growers. Statewide, cooperatives do about $800 million in business annually, providing service to about 33,000 members.
“In cooperatives, growers band together and get market power,´ said Joan Fulton, a Colorado State University professor of agriculture and resource economics.
In North Dakota, troubled sugar-beet farmers successfully organized a cooperative to purchase the defunct American Crystal Sugar Co. processing facility, and over a decade, watched their investment expand 1,000 times.
At Rocky Mountain Pork Association, Northern Colorado growers did about $3.75 million in sales to Western and Midwestern packing plants last year, through associations carefully cultivated by General Manager Brian Barry. By culling growers with lower-quality market hogs, Barry has been able to consistently get far above market prices for the pigs moving through the Ault facility.
But coops sometimes have their limits.
Necessity was the value-added mother of invention at the Fritzler family farms near Peckham. Glen and Steve Fritzler grow substantially more fresh potatoes than they can market at the nearby cooperative.
“We’re members, but there are other farmers, too, so we’re limited on how many hundred weight we can do in a day,” Glen said.
But rather than cut back on the lucrative crop — in 1990, an acre of fresh potatoes was valued at about $4,200 — the brothers and their wives began marketing about two-thirds of their potatoes themselves.
Each fall, Glen’s wife, Kim, operates a loading facility at Steve’s farm, while Steve lines up trucks to ship their product across the country, competing with growers from Washington, Idaho, Wisconsin and Texas. Steve’s wife, Char, handles the billing.
“It is risky. There is a chance to lose,” Glen said. “But it increases the volume.”
Something as basic as self marketing a product helps keep more profit on farm, but the real value-added operations require extensive planning, and sometimes government incentives.
In the San Luis Valley, potato farmers have worked five years to put together $8 million to $10 million in local financing to build a hashbrown plant that will allow them to market their entire crop, rather than dumping or feeding their small or misshapen potatoes. Organizer John Brownell, owner of Alpine Potato Co. in Hooper, expects to process the 1996 crop there, and about 70 percent of that potential production is already sold.
In Morgan County, the state’s enterprise-zone program has helped to attract businesses to Northeastern Colorado. Enterprise-zone administrator Larry Worth, who is also director of the Northeastern Colorado Association of Local Governments, said a minimal tax investment translated to 200 jobs at LePrino Foods’ cheese-processing plant in Fort Morgan. Similar incentives have been instrumental in drawing large, vertically integrated livestock operations to the eastern plains from Nebraska and Kansas.