Value-added ag grows markets

With nearly 14 million acres of corn expected to yield more than 2.2 billion bushels when harvested in Iowa this fall, there is no doubt corn is king. In fact, there are more corn acres in Iowa than all other crops combined. However, more and more producers in Iowa are looking for ways to expand markets for the crops they produce by developing value-added opportunities.

Key Points

Iowa farmers continue to look for ways to expand markets, add value to products.

Value-added opportunities create jobs and help support local foods initiatives.

Requesting locally grown, consumers want to know where food is coming from

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“Not only does value-added agriculture create jobs, it can also help support exciting local foods initiatives that are surfacing across Iowa,” says Bill Menner, USDA Rural Development state director in Iowa. “People want to know where their food is coming from and are requesting locally grown foods. They also recognize the importance of supporting local producers and local economies.”

Mark and Julie Schuett have farmed near Hartley in northwest Iowa for 25 years. During this time they have run a farrow-to-finish swine operation, raised corn and soybeans and have owned a small soybean extrusion business processing whole soybeans into feed-grade soy protein. Like many smaller producers, they felt the pressure to either get bigger or get out.

Ten years ago the Schuetts realized they needed to do things a little different to keep their farm operation profitable. So, in 2000 they made a transition to organic farming practices to ensure their operation’s future success. They also decided to take their soy protein from feed grade to food grade.

From feed to food grade

“The idea of entering into food-grade production was a little overwhelming at first, but we decided the only way to know if we could achieve success was to try,” says Julie.

The Schuetts created American Natural Soy, thanks to assistance from a Value Added Producer Grant from USDA Rural Development, to process organic and non-genetically modified soybeans, and convert the seeds into high-value organic soy oil and soy meal.

A second Value Added Producer Grant helped the Schuetts commercialize the world’s only line of organic soy lecithin, which is used in Estee Lauder’s organic cosmetics.

“It is important to do your due diligence before you consider a change to your operation,” says Julie. “It is very important that your family is supportive of your venture. Also, be certain you are at a time and place in your life where you can devote long hours to your work.”

The Schuetts have continued to grow their business. In 2008 they formed Iowla and entered into the organic canola oil market. The business received a $300,000 working capital grant from USDA to help construct the first canola crushing facility in Iowa. The canola seed is crushed and pressed using continuous-pressing technology.

The oil is then refined into edible food-grade oil and sold as organic canola oil. Canola is known for its healthy, edible oils, but in the U.S. the supply does not sufficiently meet demand due to a lack of processing facilities. The gap between producers and processors seemed like more of an opportunity than a problem to the Schuett family.

Frisian Farms makes cheese

Frisian Farms, owned and operated by brothers Jason and Mike Bandstra of Oskaloosa, also exemplifies a successful venture in value-added agribusiness.

The Bandstras come from a long line of dairy farmers originating from the Friesland province in Holland. Jason and Mike are Iowa State University grads. Jason graduated in 2000 with an agronomy degree, and Mike followed with a dairy science degree in 2002. When they came back to the farm, they wanted to reach out and make something new. In 2009, they began researching the benefits of adding Dutch Gouda cheese production to their farm.

“After a few attempts on our own to try and make an authentic Gouda, we realized we would need to hire a Dutch cheese maker to teach us the tried-and-true methods for making a great artisan Gouda cheese,” says Jason. “Having a cheese maker come and live with us for a short time saved us lots of time and money.”

Once they realized the full potential of the venture, which promised to increase farm revenue by a factor of 10 over their raw milk sales, they decided to move forward but needed assistance. A $69,000 Value Added Producer Grant from USDA Rural Development financed a feasibility study and the development of business and marketing plans.

“Through this feasibility study, we learned that our best markets for our cheese were the ones right next door,” Mike says. “It has been important to us to build our presence at farmers markets and by getting into local supermarkets where loyal customers could continue buying our cheese.”

Today, Frisian Farms Cheese produces and markets high-quality Gouda cheese across central Iowa, successfully filling the supply-and-demand gap for high-quality, locally made farmstead Gouda. “Our cheese has an amazing flavor because we start with a superior milk supply,” Mike adds.

Gouda cheese from Frisian Farms can be found in many grocery stores in Iowa, including most Hy-Vee stores; at the farmers markets in Des Moines, Cedar Rapids and Iowa City; at select wineries in Iowa; and even at specialty cheese shops and Whole Foods markets in the Chicago area.

Leach is the public information coordinator with USDA Rural Development in Iowa.

Grants available

USDA Rural Development’s Value-Added Producer Grant program helps producers develop strategies to create marketing opportunities for their value-added agriculture products.

Planning grants of up to $100,000 help determine the viability of a potential value-added venture including feasibility studies, marketing plans, business plans and legal evaluations. Working capital grants of up to $300,000 may be used to pay for operating costs such as purchasing inventory, paying salaries and marketing the value-added product to customers.

Applicants must provide matching funds at least equal to the grant. Since 2001, 130 businesses in Iowa have been awarded more than $21 million in grant funds through this nationally competitive program. For more information, call 515-284-4663 or visit www.rurdev.usda.gov/ia.


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COMMITTED TO QUALITY: Mike Bandstra credits a superior milk supply for Frisian Farms’ high-quality Gouda cheese. Frisian Farms cheese can be found at farmers markets in Iowa, as well as in many local grocery stores.

This article published in the October, 2011 edition of WALLACES FARMER.

All rights reserved. Copyright Farm Progress Cos. 2011.