Iowa Public Television

 

Midwest business forms marketing firm

posted on November 9, 2007


While locally-produced foods account for only about 2 percent of total U.S. food sales, their market share is increasing rapidly. The growth is due, in part, to a perception, by some, that the goods may be more wholesome.

A study released in September by the Leopold Center for Sustainable Agriculture revealed 70 percent of those polled believed foods produced locally are healthier. Despite a lack of evidence supporting that notion, local food proponents typically pay hefty premiums for the goods.

While that presents an attractive market, local food producers often find it difficult to place their items in larger venues.

But a Midwestern firm is stepping-in to help small-scale farmers sell their milk, eggs and produce in larger markets. Nancy Crowfoot explains.

 

The scenery in southeast Iowa couldn't be more picture postcard perfect: green rolling hills, red barns and occasional horse and buggies giving hint of the Amish community located here in Kalona.

The Amish farms are typically 80 acres … where many farmers are raising and selling to local processors or distributors their organic produce, their natural and organic eggs and organic milk.

It is a system that has worked for these farmers for years. But in the opinion of one local businessman -- sales of the products could be improved.

Bill Evans, Kalona Organics: "I was doing some consulting here at the dairy from a financial standpoint and realized early on that what this facility needed was sales and marketing expertise. And I started to look around at various other businesses in our community and went through the thought pattern of I bet there'd be other business out there that could use the sales and marketing expertise."

In 2005 Bill Evans started a marketing firm, Kalona Organics. The first product marketed was organic milk for "Farmers' All Natural Creamery"– of which Evans last year, became part owner and now heads up the operation. Today, Kalona Organics also markets organic yogurt made in Wisconsin – and Kalona area organic produce … and natural and organic eggs.

Ryan Miller, Farmers Hen House: "We were finding that we were running into a lot of the same customers as the creamery was. Ya know, they were calling on them, we were calling on them, and then when Bill created Kalona Organics it just made a natural fit that they could have one person calling on them to sell multiple products."

Farmers Hen House this year expects to process 6 to 7 million dozen eggs for other companies as well as their own brand. Ryan Miller said since signing up with Kalona Organics, their own Farmers Hen House brand has reached new markets and increased sales – up from 10,000 dozen a week to 25,000.

Of the sales, Kalona Organics, of course, takes its cut.

Bill Evans, Kalona Organics: "We determine what the market price should be then we take a percent off the top of that."

Evans says Kalona Organics makes an average of 7 to 7 1/2 percent return on the sales of all the products it markets.

The processors and some of the farmers like produce grower Joni Miller – who would allow us to record just the audio portion of his interview—say the price is worth it.

Voice of Joni Miller, Kalona, IA: "It leaves us maybe like several hours time, the time we can use to raise another half pallet load of produce."

More produce just may be needed as Kalona Organics founder Bill Evans says he expects a 40 percent increase in sales for 2007—up to $6.5 million dollars.

The increase may be due in part to the growth in a couple of large accounts, including sales to the Hy-Vee grocery chain which has more than 200 stores in 7 Midwest states.

Bill Evans, Kalona Organics: "Hy-Vee started with milk. I called them once a week for a year until we finally pulled that out. They wanted to use a local milk as their private label and it just took some time to put that together."

Jon Wendel, VP Perishables, Hy-Vee Foods: "We took a close look at the product, researched food safety and everything and determined that they would be a great match for Hy-Vee to enter into business on a Hy-Vee Health Market milk. And that was the very beginning and its carried on to the dairy and their operations got a little larger and in the meantime Hy-Vee is looking at different products that we can develop with them."

As the market share expands for Kalona Organics, so too do the opportunities for the farmers. For example, Bill Evans says the Farmers' All Natural Creamery is operating at just 50 percent capacity. He is confident he can find additional small dairy producers to expand milk production. And current producers like Menno Borntrager, who would not allow us to show his face on camera – hope the success of the creamery will lead eventually to the creation of additional products for his milk.

Voice of Menno Borntrager, Kalona, IA: "My goal is to switch to grass-fed entirely. No grain. And they're working on a market, the creamery is working on a market for grass fed cheese."

So far, the marketing arrangement seems a win-win situation for the farmers … the processors … and the retailers. And it is something that proponents of the area's local food alliance say is a long time in coming.

Leah Wilson, Johnson County Local Food Alliance: "I think that a business like Kalona Organics is really vital to getting products to market and I think that farmers are beginning to see some avenues that didn't exist for them before."

The success in the local food movement is part demand by consumers and part willingness of independent farmers to work together on a marketing strategy. And if it works with produce, milk and eggs --- Kalona Organics hopes its model can be expanded to meats from local lockers.

Bill Evans "We're still trying to work that plan through but we would love to go through local lockers. If we could get a program that we can tie to local producers, the locker and the consumer, that would be what I think could be a very positive program."

For Market to Market,I'm Nancy Crowfoot.


Tags: agriculture dairy eggs farmers Iowa Kalona local food marketing markets milk news organic