County food producers limited by processing barriers

Local food processors face many challenges. They are in competition with large-scale producers, whose abundance of resources allow them to...

By Ryan Wynne

When Sherry and George Keizer decided to sell Keizer A A Meats in Lynden, they wanted to make sure the business would end up in good hands. That’s because without Keizer Meats, USDA certification would not be available to most meat producers in Whatcom County, and without USDA certification meat can’t be sold in stores or restaurants in Washington. No Keizer Meats would mean limited selling options for local producers.

Local real estate agent Ron Bennett immediately thought of two buyers who would likely be interested in purchasing Whatcom County’s only USDA-certified meat processing facility. For Bennett, USDA certification is of particular significance. In addition to selling commercial real estate, he raises and sells grass-fed beef to local stores and at his farm in Everson.

The buyers he had in mind didn’t bite. Those rejections, along with the concern that the wrong buyer could decide to use the facility for another kind of processing, inspired Bennett to explore another option. He decided to talk to other meat prodcers with a similar interest in the facility. Bennett wanted to know whether they would be interested in starting a corporation and buying shares in Keizer Meats.

Word spread quickly. Weeks after Bennett was turned down by the two potential buyers, a meeting was  held just to see what kind of serious interest was out there and to talk out details of the corporation. People filed into the Lynden Senior Center ready to invest.

“Some people had their checks out and were ready to go,” Bennett said.

Sherry Keizer said that because of the need for the facility to stay as is, she hopes the corporation is able to form and buy the business. But meat producers aren’t alone in their need for processing options. Clayton Burrows, director of Growing Washington, said Whatcom County has very few food processing facilities, which means consumers have less access to local foods, especially in darker, low-production months. It also means producers can’t reach their full sale potential.

“There is not enough processing infrastructure in the county, nor for that matter, the region,” Burrows said.

The power of processing

In 2007, when the last agricultural census was done, the market value of agricultural production for the county was more than $326 million. Jeff Voltz, project manager for the Northwest Agriculture Business Center, said Whatcom County has the largest farm gate sales of all western Washington counties and is among the top in the state.

More milk and raspberries are produced in the county than can be consumed here, Voltz said, and there is even more capacity to grow more food. So, with all the potential to grow even more food, and thus grow the local economy, why don’t producers produce more?

“The issue is pretty complex really, and pretty simple at the same time,” said Fred Berman, WSDA Small Farm Program coordinator.

Part of the reason, Berman said, is a lack of processing facilities.

Voltz said nearly all capacity to process food has left the county.

Burrows said there is a demand for local food year round, and processing facilities would enable producers to meet that demand, if only in part, by putting food in a form that preserves it, such as canning or freezing.

The need for processing goes beyond putting food in a form that preserves it, though. Burrows said there is also a need for post-harvest facilities that have the capacity to turn milk into cheese or yogurt, and those where carrots and onions could be sliced and packaged. The latter process is important because institutional kitchens, such as those in schools and hospitals, don’t have the facilities or staff to prepare vegetables themselves, Burrows said.

Berman said post-harvest production is key to opening new markets for local producers, but because of expenses, it would be advantageous for groups of producers to establish and run processing facilities cooperatively — think Keizer Meats.

One market that could be accessed if a large-scale commercial processing facility were available is Western Washington University, which has a food-service contract with Sodexho. Berman said local producers’ food is getting to Western already, but it’s a small amount and has to go through at least two back doors to get there, which cuts into producers’ profits.

In order for most foods to be sold on campus, they have to be routed through a Sodexho network — Sodexho only buys from businesses on the company’s preferred sellers list. Local producers could get on that list, but doing so would require a large group of committed producers and a large post-production processing facility, and even then, costs would probably need to be offset with grant money, Berman said.

And why would food production require grant money? Because increasing processing capacity isn’t all that’s needed to increase local food production and the economic value of Whatcom County agriculture. Berman said processing is the easy part of the answer. The remainder of the solution is the more difficult.

Don’t have a cow, have 49,000

Part of the issue is convincing producers it is economically viable for them to put, or in some cases keep, their products in forms that make them available to local consumers year round, Berman said, and the only way to do that is to create a market for those goods. Creating that market is the hard part. The reason: Costs of small-scale, local production and processing are higher than those for mass production.

Voltz said more production would benefit Whatcom County’s food economy, but consumers have to be willing to buy so producers have an outlet for their products.

For instance, according to the most recent agriculture census, in 2007 there were approximately 49,000 milk cows in Whatcom County — for reference, that’s about one milk cow for every four residents.

approximately 133 million gallons of milk are produced in Whatcom County each year and local residents only consume about 4 million gallons of milk each year, Voltz said, but most of that milk is shipped out of the county and processed into powder.

“The milk produced here goes somewhere else,” Voltz said. “We need to bring that capacity back locally.”

Nearly all milk producers in the county sell their milk to Darigold, which turns it into powder, Voltz said. Producers need viable business models and most don’t see selling milk in-county is not an option because local consumers can’t drink all the milk produced here and producing and processing dairy independently can be expensive.

Still, that abundance of milk shouldn’t be looked at in terms of milk sales alone. Some milk could be processed into yogurt, which adds value to the milk and results in a larger profit for the milk producer, Voltz said. The same holds true for other value-added dairy products.

So why aren’t brilliant entrepreneurs building post-production processing facilities? Again, the answer is costs. The cost of building and operating small post-production facilities is high relative to larger operations, which translates into higher priced foods.

“It gets to be price, price, price is everything,” Voltz said.

Larry Stap, owner of Twin Brook Creamery in Lynden agreed. He said dairy processing plants have continued to grow and become more cost efficient, which makes it difficult for small, independent producers to offer competitive pricing. That’s why cooperatives such as Darigold are appealing, he said.

Stap said that, in his opinion, most consumers want cheap meat and cheap dairy, not high-quality local products. While small, local processing plants will help a few, they won’t be used to feed the masses because most people won’t pay more, he said.

“The simple part is processing,” Stap said. “The complicated part is where are you going to market it.”

Estimates for the amount of locally produced food consumed locally support Stap’s opinion. That amount ranges from 1 percent to 5 percent, with five agreed upon as incredibly generous and even unlikely. Voltz said demand is key.

“With more local and regional demand for locally produced food, the agricultural economy would blossom,” Voltz said.

Finding your niche

Stap used to be a member of the Darigold cooperative, but changed directions. Twin Brook starting selling milk independently and in 2007, began selling milk in glass bottles. That set their product apart from others, Stap said, and it paid off. He said the business has taken off and to such a degree that an expansion is in order.

The key for small-scale producers, Stap said, is finding a niche.

Berman said that now, more than ever, producers need to have a marketing plan to reach consumers who are used to buying based on price comparisons alone. For many producers, that could mean diversifying product options or finding a niche, he said.

Voltz said a lot more food could be produced in Whatcom County, and Stap said more food production would create more farming and processing jobs, which would result in demand for tractor dealers, feed producers and countless others down the line.

But, Berman said, increasing the amount of food produced locally would take more than individual producers coming up with impressive marketing plans. He said it would require systemic change — people have to be willing to pay for it.

“We really are looking at a paradigm shift,” Berman said.

That shift has started to happen, and not just within county borders. Berman said the federal government is investing in localized and regional food systems.

Federal investments, local food advocates’ grassroots efforts and marketing efforts are starting to pay off. Voltz said there is a growing demand for local food. Berman said the same and Bennett said there is definitely a demand for his local, grass-fed beef. Bennett said he sells 200 to 250 pounds per week to the downtown Bellingham Community Food Co-op alone.

Both Twin Brook Creamery and Keizer Meats are planning facility expansions and Twin Brook is now selling glass milk in King, Pierce and Snohomish counties.

“We have to look at expanding,” Stap said. “It has just taken off.”

Tags: , , ,

2 thoughts on “County food producers limited by processing barriers

  1. The notion that people who are not currently customers of Keizer Meats can not be participants in a cooperative formed to buy that business is simply wrong.

    At Wednesday's meeting (7/14/10) at Lynden Library, as well as ranchers and farmers, many retailers, processors and restauranteurs spoke strongly of their desire to have KM continue as it has, and of their desire to support it financially one way or another.

    Cooperatives are non-profit businesses; their owners benefit by using the business rather than receiving profits from the net based on investment. There is no reason consumers could not invest in a cooperative based on KM's operations as a meat processor for growers as well: purchase of the meat is as much a use of the business as buying its processing services.

    It would be a shame if both consumers and producers could not come together to form a cooperative that would keep Keizer Meats operating locally if a mere misunderstanding of how cooperatives operate was all that stood in the way.

Comments are closed.

Related Stories