Mitigating Legal and Financial Risk for Value- Added Food Producers Mariane Kiraly, Ag Team Leader Cornell Cooperative Extension Delaware County, New York

Northeast Extension Risk Management Education Grant Awarded in 2014  Grant focus on mitigating legal risk that value-added food producers could encounter  Need to get producers on the right track as a surge of new and diversifying producers were asking for resources to assist them  An inordinate amount of time was being spent with producers one-on-one  Producers needed networks along with education  Secondary focus on the financial risk that accompanies start-up ventures in value- added food production  Many producers did not have a business plan or a partial budget that would give further clarity to their ideas  We could get many start-up issues solved in the process of the educational forums

How to streamline and focus the program for the multi-county region  Three distinct groups of farmers were asking for value- added education:  Horticulture producers  Meat producers  Dairy producers  These 3 groups made a logical division for three conferences to bring in experts, agencies, and farmers that make value-added products successfully

Program took place in Southern Tier of NY within 120 miles of NY City

Region Demographics  Rural region with few cities  Small farms with dairy and beef predominating enterprises  Much interest in serving metropolitan area of NYC due to its proximity and growing food hubs to transport products  15 in-county seasonal farmers’ markets  Tourism in season brings many visitors to the area  Catskills are close with many tourist venues  Many new farmers who may have purchased or owned second homes or farms now retiring to start ag ventures  Graduates of ag schools coming home to the area with open minds and a lot of energy

Program Development  Contacts were made with Federal and State regulators such as USDA Food Safety Inspection Service, New York Agriculture and Markets Inspection Service, New York State Department of Health to present food regulations at conferences  Cornell University Food Venture Center-processes, labels  Cornell Department of Food Science-equipment, food safety  Resources such as “Becoming a Small Scale Food Processor” and the “Legal Guide for NY Farmers & Food Entrepreneurs” were located and would be made available to participants  Dates in the fall were chosen in September, October and December to accommodate harvest schedules of potential attendees  The title was chosen for the 3-part program – “Food Rules”

Publicity for “Food Rules”  While it costs money, publicity can make or break a program along with timing, topic, location, and cost to attend  Every effort was made to cast a wide net to the regional area  Press releases along with paid advertising was developed  Cost of attendance was capped at $10/person-bring your own lunch-to reduce any financial barrier  All area newsletters carried the advertising weeks in advance  Location was central at our CCE Education Center  Attendees were encouraged to bring their own products for critique or bring other local products with “issues”  Our mid-August Fair provided a good venue to offer publicity to farmers prior to the program

Poster/advertisement of “Food Rules” using CCE colors consistent with other brochures

Farmer Panel Recruitment-or “no surprises”…  An integral component of each workshop was a farmer panel at the end of the presentations to bring the program to life  Farmers who were already doing a good job on all fronts (legal and financial) were vetted to attend the workshop and serve on the panel  Farmers were paid a stipend, offered lunch, and brought samples of their own products with them  Attendees were also encouraged to bring local products so the group could evaluate them with respect to labels, process, marketability, shelf life, etc.  Many times the farmer panelists were on a first name basis with the regional and local inspectors  There were “no surprises” after a thorough vetting process

Program Agendas  Each program was similar in the make-up of the agenda  A pre-program survey was conducted to get a good idea of the audience following sign-in and prior to program start  Technical information from local, state and federal agency representatives was followed by Q and A  Each agency provided resources for potential value-added processors specific to each area  Regulations to keep producers legal, transparent, and confident that they knew what they were doing were presented and reviewed  Examples and hands-on activities were helpful reinforcement of concepts such as critique of products that participants or farmer panel brought in  Follow-up assistance was made available to all who attended

Pre-program survey and Post Program Evaluation

Food Rules Post Program Evaluations  An evaluation of the program followed immediately that day  A second evaluation of the program followed a few months later  In-between, consultations with Agricultural Staff with respect to business planning, cash flow considerations, loan applications, and record keeping were offered as way to keep connected to the farmers and reinforce program concepts  The later work with individuals kept them on track, helped them further with specific resources, helped remove stumbling blocks and gave them more confidence to follow-through  While participants had all of the tools, some decided not to pursue a product while others were “full steam ahead”

Food Rules follow-up survey

Continued Follow-up and Resources  Each group of attendees received a specific “reading list” tailored to the type of food product they were interested in  Each participant in the series received the book “Legal Guide for New York Farmers and Food Entrepreneurs”  Each received a list of contacts for local, state and federal agency representatives to contact for further needs  Each received the link to the “Guide to Farming in New York” put together by Cornell University and Northeast Beginning Farmers  Each received Circular 933 – Rules and Regulations relating to Human Foods: Current Good Manufacturing Practice  Each received the New York State Food Labeling Guide

Encouragement, Not Intimidation  Farmers in our area are primarily dairy farmers used to selling milk wholesale and have little experience with value-added production  It was apparent that these farmers and new farmers could feel overwhelmed and intimidated by “inspectors, compliance officers, legal terminology  For some, a place to start was with a simple product that they could experiment with using a Home Processor’s Exemption, such as jam  Packaging, marketing and distribution would be areas that we would address in subsequent workshops and were of concern to this audience  While 57 attended, there were 48 farms represented  12 followed up with a value-added product, so far, or 25%

Audience Demographic and Success  81% of the audience were women  Over 50% were new or diversifying into new ventures  From a 7 county area  All learned the critical need to limit liability by following the regulations  All were concerned with food safety and the issues that can make a product safe, legal and marketable  12 followed through with a value-added product to be sold at a farmers’ market, farm store, farm stand or CSA

Attendee Feedback  Participants cited the importance of meeting people in the regulatory agencies to assist them in setting up a processing facility and get it right the first time  Clarification of rules and regulations was key to making a value-added product decision  Participants were glad to learn of the Cornell University resources that were available, further resources tailored to their individual needs and products  Networking opportunities that were gained by meeting others with the same mind or mentor/farmers doing what they want to do  Learn about the details of actually producing a value-added products from experienced farmers who took part in the farmer panels  Having the confidence to move forward armed with the right information that will make a food business legal, safe and profitable

Subsequent work with these producers  Business planning and record keeping – one-on-one and in workshops  Specific production events such as:  Organic dairy discussion group  IPM in greenhouses  Beef, sheep and goat workshops  Hops production workshop  Food hub readiness work  CCE opened up a local food outlet in 2015 with farmers that already were well-prepared with excellent value-added products

Other benefits of risk management in value added food production  Producers realize a direct benefit during and after the program  Legal and financial risk management is a topic that addresses needs that producers know they have when venturing into “new” territory  Excellent and relevant programs bring new people into Extension  Producers are more likely to then belong to production and discussion groups that further solidify risk management education  More products generate more economic activity and keep agriculture strong  Farmers fulfill their aspirations and are in a better position to be profitable  The reach of Extension is greater and word travels, support grows

Questions?